Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 23, 2019,
is by and among comScore, Inc., a Delaware corporation with offices located at
11950 Democracy Drive, Suite 600, Reston, VA 20190 (the “Company”), and CVI
Investments, Inc. (the “Buyer”).

RECITALS

A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”).

B. The Buyer wishes to purchase, and the Company wishes to issue and sell, upon
the terms and conditions stated in this Agreement, (i) such aggregate number of
shares of Common Stock as set forth opposite the Buyer’s name in column (3) on
the Schedule of Buyers (which shall be 2,728,513 shares of Common Stock and
shall collectively be referred to herein as the “Common Shares”), (ii) a Series
A Warrant to initially acquire up to such aggregate number of shares of Common
Stock set forth opposite the Buyer’s name in column (4) on the Schedule of
Buyers, as evidenced by a certificate in the form attached hereto as Exhibit A
(the “Series A Warrants”) (as exercised, collectively, the “Series A Warrant
Shares”), (iii) a Series B-1 Warrant to initially acquire up to such aggregate
number of shares of Common Stock set forth opposite the Buyer’s name in column
(5) on the Schedule of Buyers, as evidenced by a certificate in the form
attached hereto as Exhibit B-1 (the “Series B-1 Warrants”) (as exercised,
collectively, the “Series B-1 Warrant Shares”), (iv) a Series B-2 Warrant to
initially acquire up to such aggregate number of shares of Common Stock set
forth opposite the Buyer’s name in column (6) on the Schedule of Buyers, as
evidenced by a certificate in the form attached hereto as Exhibit B-2 (the
“Series B-2 Warrants”, and together with the Series B-1 Warrants, the “Series B
Warrants”) (as exercised, collectively, the “Series B-2 Warrant Shares” and
together with the Series B-1 Warrant Shares, the “Series B Warrant Shares”) and
(v) a Series C Warrant to initially acquire up to such aggregate number of
shares of Common Stock set forth opposite the Buyer’s name in column (7) on the
Schedule of Buyers, as evidenced by a certificate in the form attached hereto as
Exhibit C (the “Series C Warrants”, and together with the Series A Warrants and
the Series B Warrants, the “Warrants”) (as exercised, collectively, the “Series
C Warrant Shares”, and together with the Series A Warrant Shares and the Series
B Warrant Shares, the “Warrant Shares”).

C. At the Closing, the parties hereto shall execute and deliver a Registration
Rights Agreement, in the form attached hereto as Exhibit D (the “Registration
Rights Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement), under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.

D. The Common Shares, the Warrants and the Warrant Shares are collectively
referred to herein as the “Securities.”

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AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:

 

1.

PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.

(a) Purchase of Common Shares and Warrants. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to the Buyer, and the Buyer agrees to purchase from the Company
on the Closing Date (as defined below) (A) such aggregate number of Common
Shares as is set forth opposite the Buyer’s name in column (3) on the Schedule
of Buyers, (B) Series A Warrants to initially acquire up to that aggregate
number of Series A Warrant Shares as is set forth opposite the Buyer’s name in
column (4) on the Schedule of Buyers, (C) Series B-1 Warrants to initially
acquire up to such aggregate number of Series B-1 Warrant Shares as is set forth
opposite the Buyer’s name in column (5) on the Schedule of Buyers, (D) Series
B-2 Warrants to initially acquire up to such aggregate number of Series B-2
Warrant Shares as is set forth opposite the Buyer’s name in column (6) on the
Schedule of Buyers and (E) Series C Warrants to initially acquire up to such
aggregate number of Series C Warrant Shares as is set forth opposite the Buyer’s
name in column (7) on the Schedule of Buyers.

(b) Closing. The closing (the “Closing”) of the purchase of the Common Shares
and the Warrants by the Buyer shall occur at the offices of Kelley Drye & Warren
LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the
“Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business
Day on which the conditions to the Closing set forth in Sections 6 and 7 below
are satisfied or waived (or such other date as is mutually agreed to by the
Company and the Buyer). As used herein “Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks in New York, New York
are authorized or required by law to remain closed.

(c) Purchase Price. The aggregate purchase price for the Common Shares and the
Warrants to be purchased by the Buyer (the “Purchase Price”) shall be the amount
set forth opposite the Buyer’s name in column (8) on the Schedule of Buyers.

(d) Form of Payment. On the Closing Date, (i) the Buyer shall pay the Purchase
Price (less, in the case of the Buyer, the amounts withheld pursuant to
Section 4(g)) to the Company for the Common Shares and the Warrants to be issued
and sold to the Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Flow of Funds Letter (as defined below) and
(ii) the Company shall deliver to the Buyer (A) a confirmation of the Buyer’s
DRS account on the books of the Company’s transfer agent for such aggregate
number of Common Shares as is set forth opposite the Buyer’s name in column (3)
of the Schedule of Buyers and (B) (x) a Series A Warrant to initially acquire up
to that aggregate number of Series A Warrant Shares as is set forth opposite the
Buyer’s name in column (4) on the Schedule of Buyers, (C) a Series B-1 Warrant
to initially acquire up to such aggregate number of Series B-1 Warrant Shares as
is set forth opposite the Buyer’s name in column (5) on the Schedule of Buyers,
(D) a Series B-2 Warrant to

 

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initially acquire up to such aggregate number of Series B-2 Warrant Shares as is
set forth opposite the Buyer’s name in column (6) on the Schedule of Buyers and
(E) a Series C Warrant to initially acquire up to such aggregate number of
Series C Warrant Shares as is set forth opposite the Buyer’s name in column (7)
on the Schedule of Buyers, in each case, duly executed on behalf of the Company
and registered in the name of the Buyer or its designee.

 

2.

BUYER’S REPRESENTATIONS AND WARRANTIES.

The Buyer represents and warrants to the Company with respect to only itself
that, as of the date hereof and as of the Closing Date:

(a) Organization; Authority. The Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.

(b) No Public Sale or Distribution. The Buyer (i) is acquiring its Common Shares
and Warrants, and (ii) upon exercise of its Warrants (other than pursuant to a
Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares
issuable upon exercise thereof, in each case, for its own account and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof in violation of applicable securities laws, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, by making the
representations herein, the Buyer does not agree, or make any representation or
warranty, to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption from registration
under the 1933 Act. The Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities in violation of applicable securities laws. For purposes of this
Agreement, “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and any Governmental Entity or any department or
agency thereof.

(c) Accredited Investor Status. The Buyer is an “institutional accredited
investor” within the meaning of Rule 501 of Regulation D or a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act.

(d) Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities. No Buyer nor any of its Affiliates has taken, and the Buyer will
not, and will cause its Affiliates not to, take any action that would otherwise
cause the Securities to be purchased hereunder to be subject to the registration
requirements of the Securities Act, except as provided in the Registration
Rights Agreement.

 

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(e) Information. The Buyer and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities that have been
requested by the Buyer. The Buyer and its advisors, if any, have been afforded
(i) the opportunity to ask questions of and receive answers from the Company
concerning the terms and conditions of the offering of the Securities and the
merits and risks of investing in the Securities; and (ii) access to information
about the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors, if any, or its representatives shall
modify, amend or affect the Buyer’s right to rely on the Company’s
representations and warranties contained herein. Buyer acknowledges that, other
than as set forth in this Agreement and in the certificates or other instruments
delivered pursuant hereto, none of the Company or its Subsidiaries or any of
their respective directors, officers, employees, Affiliates, equityholders,
agents or representatives makes or has made any representation or warranty,
either express or implied, (a) as to the accuracy or completeness of any of the
information provided or made available to Buyer or any of its respective agents,
representatives, lenders or Affiliates prior to the execution of this Agreement
and (b) with respect to any projections, forecasts, estimates, plans or budgets
of future revenues, expenses or expenditures, future results of operations (or
any component thereof), future cash flows (or any component thereof) or future
financial condition (or any component thereof) of the Company or its
Subsidiaries heretofore or hereafter delivered to or made available to Buyer or
any of its respective agents, representatives, lenders or Affiliates. The Buyer
understands that its investment in the Securities involves a high degree of
risk. The Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

(f) Non-Reliance and Exculpation. The Buyer acknowledges that it is not relying
upon, and has not relied upon, any statement, representation or warranty made by
any person, firm or corporation (including, without limitation, Goldman Sachs,
any of its affiliates or any of its or their control persons, officers,
directors and employees), other than the statements, representations and
warranties contained in this Agreement, in making its investment or decision to
invest in the Company. The Buyer agrees that Goldman Sachs, its affiliates or
any of its or their control persons, officers, directors or employees, shall not
be liable to the Buyer for any action heretofore or hereafter taken or omitted
to be taken by any of them in connection with the purchase of the Common Shares
and the Warrants.

(g) No Governmental Review. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.

(h) Transfer or Resale. The Buyer understands that except as provided in the
Registration Rights Agreement and Section 4(h) hereof: (i) the Securities have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless
(A) subsequently registered thereunder, (B) the Buyer shall have delivered to
the Company an opinion of counsel, in a form reasonably acceptable to the
Company, to the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration, or (C) the Buyer provides the Company with reasonable assurance
that such Securities can be sold, assigned or transferred

 

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pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor
rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made
in reliance on Rule 144 may be made only in accordance with the terms of Rule
144, and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the Person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the 1933
Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the United States Securities and Exchange Commission
(“SEC”) promulgated thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. Notwithstanding the foregoing, the Securities may be
pledged in connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and no
Buyer effecting a pledge of Securities shall be required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document (as defined in
Section 3(b)), including, without limitation, this Section 2(h).

(i) Validity; Enforcement. This Agreement and the Registration Rights Agreement
have been duly and validly authorized, executed and delivered on behalf of the
Buyer and shall constitute the legal, valid and binding obligations of the Buyer
enforceable against the Buyer in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

(j) No Conflicts. The execution, delivery and performance by the Buyer of this
Agreement and the Registration Rights Agreement and the consummation by the
Buyer of the transactions contemplated hereby and thereby will not (i) result in
a violation of the organizational documents of the Buyer, or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Buyer is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to the Buyer, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations which could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Buyer to perform its obligations hereunder.

(k) Residency. The Buyer is a resident of that jurisdiction specified below its
address on the Schedule of Buyers.

(l) Exclusivity of Representations and Warranties. The representations and
warranties made by the Buyer in this Section 2 are in lieu of and are exclusive
of all other representations and warranties, including any implied warranties.
The Buyer hereby disclaims any other representations or warranties of any kind,
express or implied.

 

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3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each of the Buyers that, as of the date
hereof and as of the Closing Date:

(a) Organization and Qualification. Each of the Company and each of its domestic
Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authority to own their properties and to carry on their
business as now being conducted and as presently proposed to be conducted. Each
of the Company and each of its domestic Subsidiaries is duly qualified as a
foreign entity to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing has not had, or would not reasonably be
expected to have, a Material Adverse Effect (as defined below). As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on
(i) the business, properties, assets, liabilities, operations (including results
thereof) or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, or (ii) the authority or ability of the Company
or any of its Subsidiaries to perform any of their respective obligations under
any of the Transaction Documents (as defined below); provided, however, that,
with respect to clause (i), any development, fact, circumstance, condition,
event, change, occurrence or effect resulting from (A) changes in general
economic, financial market, business or geopolitical conditions, (B) changes or
developments in any of the industries in which the Company or its Subsidiaries
operate, (C) changes in any applicable laws or applicable accounting regulations
or principles, or the interpretation or enforcement thereof, (D) any change in
the price or trading volume of the Common Stock or any failure to meet any
financial projections, forecasts or forward looking statements, (E) natural
disaster or any outbreak or escalation of hostilities or war or any act of
terrorism, (F) the announcement of and performance of this Agreement by the
Company, the pendency or consummation of the transactions contemplated
hereunder, or the identity of the Buyer or any of its Affiliates, or (G) any
action taken, or omission to take action, by the Company or any of its
Subsidiaries, the taking or omitting of which, as applicable, the Buyer has
consented to or requested in writing, shall not constitute a Material Adverse
Effect, but any event, occurrence, fact, condition or change referred to in
clauses (A) through (C) and (E) above shall be taken into account in determining
whether a Material Adverse Effect has occurred or would reasonably be expected
to occur to the extent that such event, occurrence, fact, condition or change
has a disproportionate effect on the Company and its Subsidiaries (taken as a
whole) compared to other participants in the industries in which the Company and
its Subsidiaries operate. Other than the Persons set forth in Exhibit 21.1 to
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2018, the Company has no domestic Subsidiaries. “Subsidiaries” means any Person
that would be a “significant subsidiary” of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the SEC, as such regulation is in
effect as of the date hereof, and each of the foregoing, is individually
referred to herein as a “Subsidiary.”

(b) Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Securities in accordance with
the terms hereof and thereof. The execution and delivery of this Agreement and
the other Transaction Documents by the Company, and the consummation by the
Company of the transactions contemplated hereby and thereby

 

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(including, without limitation, the issuance of the Common Shares and the
issuance of the Warrants and the reservation for issuance and issuance of the
Warrant Shares issuable upon exercise of the Warrants) have been duly authorized
by the Company’s board of directors or other governing body, as applicable, and
(other than the filing with the SEC of one or more Registration Statements (as
defined in the Registration Rights Agreement) in accordance with the
requirements of the Registration Rights Agreement, any filings as may be
required by any state securities agencies, the filing of one or more Forms 8-K
and prospectus supplements with the SEC and a Listing of Additional Shares
Notification and applicable MarketWatch notices with the Principal Market
(collectively, the “Required Filings and Notices”)) no further filing, consent
or authorization is required by the Company, its Subsidiaries, their respective
boards of directors or their stockholders or other governing body. This
Agreement has been, and the other Transaction Documents to which it is a party
will be prior to the Closing, duly executed and delivered by the Company, and
each constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its respective terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Common Shares, the Warrants,
the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
(as defined below) and each of the other agreements and instruments entered into
or delivered by any of the parties hereto in connection with the transactions
contemplated hereby and thereby, as may be amended from time to time.

(c) Issuance of Securities. The issuance of the Common Shares and the Warrants
are duly authorized and upon issuance in accordance with the terms of the
Transaction Documents shall be validly issued, fully paid and non-assessable and
free from all preemptive or similar rights, mortgages, defects, claims, liens,
pledges, charges, rights of first refusal, encumbrances, security interests and
other encumbrances (collectively “Liens”) with respect to the issuance thereof.
As of the Closing, the Company shall have reserved from its duly authorized
capital stock not less than 100% of the maximum number of Warrant Shares
initially issuable upon exercise of the Warrants (without taking into account
any limitations on the exercise of the Warrants set forth therein). Upon
issuance or exercise in accordance with the Warrants, the Warrant Shares, when
issued, will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights or Liens with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.
Subject to the accuracy of the representations and warranties of the Buyer in
this Agreement, the offer and issuance by the Company of the Securities is
exempt from registration under the 1933 Act.

(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Common Shares, the Warrants and the Warrant Shares and the reservation for
issuance of the Warrant Shares) will not (i) result in a violation of the
Certificate of Incorporation (as defined below) (including, without limitation,
any certificate of designation contained therein), Bylaws (as defined below),
certificate of formation, memorandum of association, articles of association,
bylaws or other organizational documents of the Company or any of its
Subsidiaries, or any capital stock or other securities of the Company or any of
its Subsidiaries, (ii) conflict with, or constitute a default

 

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(or an event which with notice or lapse of time or both would become a default)
in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, applicable foreign, federal and state securities laws and
regulations and the rules and regulations of the Nasdaq Global Select Market
(the “Principal Market”) and including all applicable foreign, federal and state
laws, rules and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of each of clauses
(ii) and (iii) above, for any such conflict, default, right or violation,
individually or in the aggregate, that has not had, or would not reasonably be
expected to have, a Material Adverse Effect.

(e) Consents. Neither the Company nor any domestic Subsidiary is required to
obtain any consent from, authorization or order of, or make any filing or
registration with (other than the Required Filings and Notices), any
Governmental Entity (as defined below) or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of
its respective obligations under or contemplated by the Transaction Documents,
in each case, in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company or any
domestic Subsidiary is required to obtain pursuant to the preceding sentence
have been or will be obtained or effected on or prior to the Closing Date, and
neither the Company nor any of its domestic Subsidiaries are aware of any facts
or circumstances which would reasonably be expected to prevent the Company or
any of its Subsidiaries from obtaining or effecting any of the registration,
application or filings contemplated by the Transaction Documents. The Company is
not in violation of the requirements of the Principal Market and has no
knowledge of any facts or circumstances, other than as disclosed in the SEC
Documents, which could reasonably lead to delisting or suspension of the Common
Stock in the foreseeable future. “Governmental Entity” means any applicable
nation, state, county, city, town, village, district, or other political
jurisdiction of any nature, federal, state, local, municipal, foreign, or other
government, governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal), or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any of the foregoing.

(f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries or (ii) to its knowledge,
a “beneficial owner” of more than 10% of the shares of Common Stock (as defined
for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a
financial advisor or fiduciary of the Company or any of its Subsidiaries (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and any advice given by the Buyer
or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Buyer’s purchase of the Securities. The Company further
represents to the Buyer that the Company’s and each Subsidiary’s decision to
enter into the Transaction Documents to which it is a party has been based
solely on the independent evaluation by the Company, each Subsidiary and their
respective representatives.

 

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(g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor
any of its Subsidiaries or affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
in connection with the offer or sale of the Securities. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions (other than for Persons engaged by the Buyer or
its investment advisor) relating to or arising out of the transactions
contemplated hereby, including, without limitation, placement agent fees payable
to Goldman Sachs & Co., LLC, as placement agent (the “Placement Agent”) in
connection with the sale of the Securities. The Company shall pay, and hold the
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney’s fees and out-of-pocket expenses) arising in connection
with any such claim. The Company acknowledges that it has engaged the Placement
Agent in connection with the sale of the Securities. Other than the Placement
Agent, neither the Company nor any of its Subsidiaries has engaged any placement
agent or other agent in connection with the offer or sale of the Securities.

(h) No Integrated Offering. None of the Company, its Subsidiaries, nor any
Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the issuance of any of the
Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or cause this offering of the Securities to require approval of
stockholders of the Company for purposes of the 1933 Act or under any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the Principal Market. None of the Company, its Subsidiaries,
or, to the Company’s knowledge, their affiliates nor any Person acting on their
behalf will take any action or steps that would require registration of the
issuance of any of the Securities under the 1933 Act (other than pursuant to the
Registration Rights Agreement) or cause the offering of any of the Securities to
be integrated with other offerings of securities of the Company.

(i) Dilutive Effect. The Company understands and acknowledges that the number of
Warrant Shares will increase in certain circumstances. The Company further
acknowledges that its obligation to issue the Warrant Shares upon exercise of
the Warrants (except to the extent of any limitations expressly set forth in the
Warrants) in accordance with this Agreement and the Warrants is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.

(j) Application of Takeover Protections; Rights Agreement. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, interested stockholder, business
combination, poison pill (including, without limitation, any distribution under
a rights agreement), stockholder rights plan or other similar anti-takeover
provision under the Certificate of Incorporation, Bylaws or other organizational
documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and the Buyer’s ownership of the Securities. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of shares of Common Stock or a
change in control of the Company.

 

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(k) SEC Documents; Financial Statements. Since March 23, 2018, the Company has
timely filed all reports, schedules, forms, proxy statements, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934 (as amended, the
“1934 Act”) (all of the foregoing filed on or after March 23, 2018 and prior to
the date hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has
delivered or has made available to the Buyer or its respective representatives
true, correct and complete copies of each of the SEC Documents not available on
the EDGAR system. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as in effect as of the time of filing. Such
financial statements were prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”), consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of the unaudited statements to
normal year-end audit adjustments). The reserves, if any, established by the
Company or the lack of reserves, if applicable, are reasonable based upon facts
and circumstances known by the Company on the date hereof and there are no loss
contingencies that are required to be accrued by the Statement of Financial
Accounting Standard No. 5 of the Financial Accounting Standards Board (or
successor standard) which are not provided for by the Company in its financial
statements or otherwise. The Company is not currently contemplating to amend or
restate any of the financial statements (including, without limitation, any
notes or any letter of the independent accountants of the Company with respect
thereto) included in the SEC Documents (the “Financial Statements”), nor is the
Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in
order for any of the Financial Statements to be in compliance with GAAP and the
rules and regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend or restate
any of the Financial Statements or that there is any need for the Company to
amend or restate any of the Financial Statements.

(l) Absence of Certain Changes. Except as disclosed in the SEC Documents, since
the date of the Company’s most recent audited financial statements contained in
a Form 10-K, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations
(including results thereof) or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole. Except as disclosed in the SEC
Documents,

 

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since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, neither the Company nor any of its Subsidiaries has
(i) declared or paid any dividends, (ii) sold any material assets, individually
or in the aggregate, outside of the ordinary course of business, excluding
equipment sales having a maximum value of $5.0 million, or (iii) made any
material capital expenditures, individually or in the aggregate, outside of the
ordinary course of business. Other than the entry into a plan of liquidation by
Rentrak Corporation in 2018 for tax purposes, neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any law or
statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary have any
knowledge or reason to believe that any of their respective creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. The Company and its
subsidiaries on a consolidated basis, are not as of the date hereof, and after
giving effect to the transactions contemplated hereby to occur at the Closing,
will not be Insolvent (as defined below). For purposes of this Section 3(l),
“Insolvent” means, (i) with respect to the Company and its subsidiaries, on a
consolidated basis, (A) the present fair saleable value of the Company’s and its
subsidiaries’ assets is less than the amount required to pay the Company’s and
its subsidiaries’ total Indebtedness (as defined below), (B) the Company and its
subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured or (C) the Company and its subsidiaries intend to incur or believe that
they will incur debts that would be beyond their ability to pay as such debts
mature. The Company and its subsidiaries, taken as a whole, have not engaged in
any business or in any transaction, and are not about to engage in any business
or in any transaction, for which the Company and its subsidiaries’ remaining
assets, taken as a whole, constitute unreasonably small capital with which to
conduct the business in which they are engaged as such business is now conducted
and is proposed to be conducted.

(m) No Undisclosed Events, Liabilities, Developments or Circumstances. Except as
disclosed in the SEC Documents, no event, liability, development or circumstance
has occurred or exists with respect to the Company and its Subsidiaries or their
respective businesses, properties, liabilities, operations (including results
thereof) or condition (financial or otherwise), that (i) would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced (other
than the disclosure of the issuance of shares of Common Stock in respect of
interest due on the Company’s senior secured convertible notes, the disclosure
of related party transactions under Item 404 of Regulation S-K since
December 31, 2018 not otherwise required to be disclosed on Form 8-K, and
equipment sales having a maximum value of $5.0 million), (ii) has had, or would
reasonably be expected to have, a material adverse effect on the Buyer’s
investment hereunder or (iii) has had, or would reasonably be expected to have,
a Material Adverse Effect.

(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in material violation of any term of or in material default
under its Certificate of Incorporation, any certificate of designation,
preferences or rights of any outstanding series of preferred stock of the
Company or any of its Subsidiaries or Bylaws or their organizational charter,
certificate of formation, memorandum of association or articles of association.
Neither the Company nor any of its Subsidiaries is in material violation of any
judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries,

 

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except in all cases for violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in material
violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances other than those
disclosed in the SEC Documents that could reasonably lead to delisting or
suspension of the Common Stock by the Principal Market in the foreseeable
future. Except as set forth in the SEC Documents, during the two years prior to
the date hereof, (i) the Common Stock has been listed or designated for
quotation on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the Principal
Market. The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits, individually or in the
aggregate, has not had, or would not reasonably be expected to have, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit, except where such revocation or
modification has not had or would not reasonably be expected to have a Material
Adverse Effect. There is no agreement, commitment, judgment, injunction, order
or decree binding upon the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries is a party which has or would reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its Subsidiaries, any acquisition of property
by the Company or any of its Subsidiaries or the conduct of business by the
Company or any of its Subsidiaries as currently conducted other than such
effects, individually or in the aggregate, which have not had, and would not
reasonably be expected to have, a Material Adverse Effect.

(o) Foreign Corrupt Practices. Neither the Company, the Company’s Subsidiaries
or any director, officer, nor, to the Company’s knowledge, any agent, employee,
nor any other person acting for or on behalf of the foregoing (individually and
collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt
Practices Act (the “FCPA”) or any other applicable anti-bribery or
anti-corruption laws, nor, to the Company’s knowledge, has any Company Affiliate
offered, paid, promised to pay, or authorized the payment of any money, or
offered, given, promised to give, or authorized the giving of anything of value,
to any officer, employee or any other person acting in an official capacity for
any Governmental Entity to any political party or official thereof or to any
candidate for political office (individually and collectively, a “Government
Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or
thing of value would be offered, given or promised, directly or indirectly, to
any Government Official, for the purpose of:

(i) (A) influencing any act or decision of such Government Official in his/her
official capacity, (B) inducing such Government Official to do or omit to do any
act in violation of his/her lawful duty, (C) securing any improper advantage, or
(D) inducing such Government Official to influence or affect any act or decision
of any Governmental Entity, or

 

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(ii) assisting the Company or its Subsidiaries in obtaining or retaining
business for or with, or directing business to, the Company or its Subsidiaries.

(p) Sarbanes-Oxley Act. Except as disclosed in the SEC Documents, the Company
and each Subsidiary is in compliance in all material respects with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and any
and all applicable rules and regulations promulgated by the SEC thereunder.

(q) Transactions with Affiliates. Except as set forth in the SEC Documents, none
of the officers or directors of the Company or its Subsidiaries and, to the
knowledge of the Company, none of the employees of the Company or its
Subsidiaries is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors)
required to be disclosed under Item 404 of Regulation S-K under the 1934 Act.

(r) Equity Capitalization.

(i) Definitions:

(A) “Common Stock” means (x) the Company’s shares of common stock, $0.001 par
value per share, and (y) any capital stock into which such common stock shall
have been changed or any share capital resulting from a reclassification of such
common stock.

(B) “Preferred Stock” means (x) the Company’s blank check preferred stock,
$0.001 par value per share, the terms of which may be designated by the board of
directors of the Company in a certificate of designations and (y) any capital
stock into which such preferred stock shall have been changed or any share
capital resulting from a reclassification of such preferred stock (other than a
conversion of such preferred stock into Common Stock in accordance with the
terms of such certificate of designations).

(ii) Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 150,000,000 shares of
Common Stock, of which 60,563,456 (as of June 20, 2019) are issued and
outstanding and approximately 24,327,828 shares are reserved for issuance
pursuant to Convertible Securities (as defined below) (other than the Warrants)
exercisable or exchangeable for, or convertible into, shares of Common Stock and
(B) 5,000,000 shares of Preferred Stock, none of which are issued and
outstanding. 6,764,796 shares of Common Stock are held in the treasury of the
Company.

(iii) Valid Issuance; Available Shares; Affiliates. All of such outstanding
shares are duly authorized and have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. The SEC Documents accurately
reflect in all material respects, as of the dates referred to therein, the
number of shares of Common Stock that were, as of the date referred to therein,
owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act
and calculated based on the assumption that only officers, directors and holders
of at least 10% of the Company’s issued and outstanding Common Stock are
“affiliates” without conceding that any such Persons are “affiliates” for
purposes of federal

 

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securities laws) of the Company, it being understood that the Company reports
the ownership information of holders of at least 10% of the Company’s issued and
outstanding Common Stock set forth in the SEC Documents solely based its review
of the reports filed with the SEC by such holders under the 1934 Act.

(iv) Existing Securities; Obligations. Except as disclosed in the SEC Documents:
(A) none of the Company’s or any Subsidiary’s shares, interests or capital stock
is subject to preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary, other than the Permitted Liens;
(B) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its domestic Subsidiaries,
or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional shares,
interests or capital stock of the Company or any of its domestic Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares, interests or capital stock of the
Company or any of its domestic Subsidiaries, other than awards granted
subsequent to March 31, 2019 under the Company’s equity incentive plans;
(C) there are no agreements or arrangements under which the Company or any of
its Subsidiaries is obligated to register the sale of any of their securities
under the 1933 Act (except pursuant to the Registration Rights Agreement); (D)
there are no outstanding securities or instruments of the Company or any of its
domestic Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any of its domestic Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (E) there are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; and (F) neither the Company nor any
domestic Subsidiary has any stock appreciation rights or “phantom stock” plans
or agreements or any similar plan or agreement. “Permitted Lien” means any of
the following types of Liens (other than any such Lien imposed pursuant to
Section 430(k) of the Internal Revenue Code or pursuant to ERISA and any Lien
relating to or imposed in connection with any Environmental Claim): (i) Liens
for Taxes, assessments or governmental charges or claims that are not yet
delinquent or the payment of which are being contested in accordance with
Permitted Contest Procedures; (ii) Liens, pledges or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the
performance of statutory obligations, surety and appeal bonds, leases, and
performance bonds, and other similar obligations (exclusive of obligations for
the payment of borrowed money); (iii) judgment Liens that are not material in
amount, that have been bonded and that are being contested in accordance with
Permitted Contest Procedures; (iv) statutory Liens of landlords, statutory Liens
of banks and rights of set-off, mechanics’ and materialmen’s liens, and other
Liens imposed by applicable law, in each case arising in the ordinary course of
business in respect of sums not yet delinquent or sums which are being contested
in accordance with Permitted Contest Procedures; (v) easements or other matters
affecting the real property of the Company or its Subsidiaries which do not
constitute Liens securing any monetary obligations, do not materially detract
from the value or

 

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marketability of such property and which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect; (vi) Liens arising
out of that certain Pledge and Security Agreement, dated as of January 16, 2018,
by and among the Company, the subsidiaries signatory thereto and Starboard Value
and Opportunity Master Fund Ltd., as Collateral Agent; (vii) Liens arising out
of that certain Guarantee Agreement, dated as of January 16, 2018, made by the
subsidiary guarantors signatory thereto; (viii) Liens arising out of that
certain Amended and Restated Security Agreement (Deposit Accounts – Specific),
dated as of January 11, 2018, by and among the Company, the subsidiaries
identified therein, Bank of America, N.A. and the other lenders party thereto;
(ix) Liens arising out of that certain Letter of Credit Agreement with Wells
Fargo Bank National Association, dated June 6, 2018; and (x) Liens arising out
of those certain corporate credit card programs with PNC Bank National
Association and Barclays Bank PLC dated July 31, 2014 and July 12, 2016,
respectively.

(v) Organizational Documents. The Company has furnished to the Buyer true,
correct and complete copies of the Company’s Certificate of Incorporation, as
amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s bylaws, as amended and as in effect on the
date hereof (the “Bylaws”), and the material terms of all Convertible Securities
and the material rights of the holders thereof in respect thereto are set forth
in, or filed as exhibits to, the SEC Documents.

(s) Indebtedness and Other Contracts. Except as disclosed in the SEC Documents,
neither the Company nor any of its Subsidiaries (i) has any outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound, other than Indebtedness incurred in the ordinary course of business not
exceeding $25 million in the aggregate or Indebtedness solely among members of
the Company group, (ii) is a party to any contract, agreement or instrument, the
violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument is currently known or anticipated and would
reasonably be expected to result in a Material Adverse Effect, (iii) has any
financing statements securing obligations in any amounts filed in connection
with the Company or any of its Subsidiaries, other than pursuant to Permitted
Liens or those securing equipment and other assets used in the ordinary course
of the Company’s and its Subsidiaries’ business; (iv) is in violation of any
term of, or in default under, any contract, agreement or instrument relating to
any Indebtedness, except for such violations and defaults that, individually or
in the aggregate, have not resulted in or would not reasonably be expected to
result in, a Material Adverse Effect, or (v) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company’s officers after taking into account the
consummation of the transactions contemplated hereby, has had, or would
reasonably be expected to have, a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses and which, individually or in the aggregate,
do not or could not reasonably be expected to have, a Material Adverse Effect.
For purposes of this Agreement: (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services
(including, without limitation, “capital leases” in

 

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accordance with GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; and (y) “Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto.

(t) Litigation. Except as set forth in the SEC Documents, there is no action,
claim, suit, investigation or proceeding, whether commenced or threatened,
before any court, governmental agency or body, domestic or foreign, now pending
or, to the knowledge of the Company, threatened against the Company or its
Subsidiaries wherein an unfavorable decision, ruling or finding would reasonably
be expected to, individually or in the aggregate, (i) materially adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, the Transaction Documents or (ii) have
a Material Adverse Effect. The Company is not a party to or subject to the
provisions of any injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental agency or body that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

(u) Insurance. The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has any reason to believe that it will be unable
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.

 

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(v) Employee Relations. Neither the Company nor any of its domestic Subsidiaries
is a party to any collective bargaining agreement or employs any member of a
union. The Company and its Subsidiaries believe that their relations with their
employees are good. No executive officer (as defined in Rule 501(f) promulgated
under the 1933 Act) of the Company or any of its Subsidiaries has notified the
Company or any such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer’s employment with the
Company or any such Subsidiary; provided, that the Interim Chief Executive
Officer occupies that position on an interim basis. To the knowledge of the
Company, no executive officer of the Company or any of its Subsidiaries is, or
is now expected to be, in material violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and to the knowledge of the Company, the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.
The Company and its Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(w) Title.

(i) Real Property. Each of the Company and its Subsidiaries holds good title to
all real property, leases in real property, facilities or other interests in
real property owned or held by the Company or any of its Subsidiaries (the “Real
Property”), except where such failure to hold such title would not reasonably be
expected to have a Material Adverse Effect. Except as set forth in the SEC
Documents, the Real Property is free and clear of all material Liens and is not
subject to any material rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except for (a) Liens for
current taxes not yet due and (b) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto. Any Real Property held under lease by the Company or any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company or any of
its Subsidiaries.

(ii) Fixtures and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal
property and appurtenances that are used by the Company or its Subsidiary in
connection with the conduct of its business (the “Fixtures and Equipment”),
except where such failure to have such title or leasehold interest would not
reasonably be expected to have a Material Adverse Effect. The Fixtures and
Equipment are structurally sound, are in good operating condition and repair,
are adequate for the uses to which they are being put, are not in need of
maintenance or repairs except for ordinary, routine maintenance and repairs and
are sufficient for the conduct of the Company’s and/or its Subsidiaries’
businesses (as applicable) in the manner as conducted prior to the Closing.
Except as set forth in the SEC Documents and Permitted Liens, each of the
Company and its Subsidiaries owns all of its Fixtures and Equipment free and
clear of all material Liens except for (a) liens for current taxes not yet due
and (b) zoning laws and other land use restrictions that do not impair the
present or anticipated use of the property subject thereto.

 

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(x) Intellectual Property Rights. Except as set forth in the SEC Documents, and
except, in each case, to the extent as would not be reasonably expected to
result in a Material Adverse Effect, (i) the Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, original works of authorship,
patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted;
(ii) none of the Company’s Intellectual Property Rights have expired or
terminated or have been abandoned or are expected to expire or terminate or are
expected to be abandoned, within three years from the date of this Agreement;
(iii) the Company does not have any knowledge of any infringement by the Company
or its Subsidiaries of Intellectual Property Rights of others; and (iv) there is
no claim, action or proceeding being made or brought, or to the knowledge of the
Company, being threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. Neither the Company nor any of its
Subsidiaries is aware of any facts or circumstances that could reasonably be
expected to give rise to any of the foregoing infringements or claims, actions
or proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
material Intellectual Property Rights.

(y) Environmental Laws. Except for such matters that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect:
(1) the operations of the Company and its Subsidiaries (the “Subject Companies”)
comply in all material respects with all Environmental Laws; (2) each of the
Company and its Subsidiaries has timely applied for and pursued issuance of or
has obtained all Authorizations under Environmental Laws necessary for its
respective operations as currently performed, and all such Authorizations are in
good standing or reasonably expected to be issued with no interruption in
operations, and each of the Company and its Subsidiaries is in compliance in all
material respects with the terms and conditions of such Authorizations; (3) none
of the Company or its Subsidiaries has received (a) any written notice or claim
to the effect that it is or may be liable to any Person or Governmental Entity
as a result of or in connection with any Hazardous Materials or (b) written
notice that the operations of any Subject Company are the subject of an
investigation by a Governmental Entity relating to or in connection with any
Hazardous Materials at any of the Subject Companies’ properties or at any other
location; (4) none of the operations of any Subject Company are subject to any
judicial or administrative Proceeding alleging the violation of or liability
under any Environmental Laws; (5) no Subject Company nor any of its respective
operations is subject to any outstanding written order or agreement with any
Governmental Entity or private party relating to (A) any Environmental Laws or
(B) any Environmental Claims; (6) no Subject Company nor any predecessor of any
Subject Company has notified any Governmental Entity under any Environmental Law
indicating past or present treatment or release of Hazardous Materials at any of
the Subject Companies’ properties, except where such past or present treatment
or release is in compliance with applicable laws; (7) there are not any, and
there have been no, conditions, occurrences or Hazardous Materials that exist
on, under or about any of the Subject Company’s properties in a manner that have
a reasonable possibility of giving rise to an Environmental Claim and no Subject
Company has notified any Governmental Entity of a release of any Hazardous
Materials that has a reasonable possibility of giving rise to an Environmental
Claim; (8) no Subject Company nor any of its respective predecessors has
disposed of any Hazardous Materials in a manner that would reasonably be
expected to give rise to an Environmental Claim; (9) no Lien in favor of any
Person

 

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relating to or in connection with any Environmental Claim has been filed or has
been attached to any the Subject Companies’ properties; and (10) compliance with
all current Environmental Laws would not, individually or in the aggregate,
reasonably be expected to give rise to a Material Adverse Effect. The term
“Environmental Laws” means all applicable federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous Materials”) into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder. “Authorizations” means all permits,
licenses, orders, approvals, consents, exemptions, rulings, decrees, tariffs,
filings, certifications, franchises, building permits, plot plan approvals,
subdivision approvals, site plan reviews, environmental approvals (including an
environmental impact statement or other reviews or environmental assessment
report required under Environmental Laws), sewer and waste discharge permits,
national pollutant discharge elimination system permits, water permits, zoning
and land use entitlement, drilling permits and other authorizations, whether now
existing or hereafter issued to, or obtained by, any Subject Company that,
(i) relate to or concern in any way the business of any of the Subject
Companies, any of the transactions contemplated hereby or by any Transaction
Document and (ii) are given or issued by any Governmental Entity; provided,
however, that “Authorizations” exclude patent and trademark rights.
“Environmental Claim” means any investigation, notice, notice of violation,
claim, demand, abatement order or other order or direction (conditional or
otherwise) by any Governmental Authority or any Person for any damage, including
personal injury (including death), property damage, contribution, indemnity,
indirect or consequential damages, damage to the environment or natural
resources, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or operating restrictions, in each case
relating to, resulting from or in connection with Hazardous Materials or the
violation or alleged violation of any Environmental Law and relating to the
Subject Companies or any property thereof.

(z) Subsidiary Rights. The Company or one of its subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such subsidiary.

(aa) Tax Status. Except as disclosed in the SEC Documents or as would not have a
Material Adverse Effect, the Company and each of its Subsidiaries (i) has timely
made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has timely paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and
(iii) has set aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. Except as would not have a Material Adverse
Effect, there are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company and
its Subsidiaries know of no basis for any such claim. The Company is not
operated in such a manner as to qualify as a passive foreign investment company,
as defined in Section 1297 of the Code.

 

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(bb) Internal Accounting and Disclosure Controls. Except as disclosed in the SEC
Documents, the Company and its Subsidiaries, on a consolidated basis, maintain
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP, including
that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. Except
as disclosed in the SEC Documents, the Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that
are effective in ensuring that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure. Except as disclosed in the SEC Documents, during the twelve months
prior to the date hereof, neither the Company nor any of its domestic
Subsidiaries has received any notice or correspondence from any accountant,
Governmental Entity or other Person relating to any potential material weakness
in any part of the internal controls over financial reporting of the Company or
any of its Subsidiaries.

(cc) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse Effect.

(dd) Investment Company Status. The Company is not, and upon consummation of the
sale of the Securities will not be, an “investment company,” a company
controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.

(ee) Acknowledgement Regarding Buyer’s Trading Activity. It is understood and
acknowledged by the Company that (i) following the public disclosure of the
transactions contemplated by the Transaction Documents, in accordance with the
terms thereof, the Buyer has not been asked by the Company or any of its
Subsidiaries to agree, nor has the Buyer agreed with the Company or any of its
Subsidiaries, to desist from effecting any transactions in or with respect to
(including, without limitation, purchasing or selling, long and/or short) any
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold any of

 

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the Securities for any specified term; (ii) the Buyer, and counterparties in
“derivative” transactions to which any the Buyer is a party, directly or
indirectly, presently may have a “short” position in the Common Stock which was
established prior to the Buyer’s knowledge of the transactions contemplated by
the Transaction Documents; and (iii) the Buyer may rely on the Company’s
obligation to timely deliver shares of Common Stock upon conversion, exercise or
exchange, as applicable, of the Securities as and when required pursuant to the
Transaction Documents for purposes of effecting trading in the Common Stock of
the Company. The Company further understands and acknowledges that following the
public disclosure of the transactions contemplated by the Transaction Documents
pursuant to the Press Release (as defined below) the Buyer may engage in hedging
and/or trading activities (including, without limitation, the location and/or
reservation of borrowable shares of Common Stock) at various times during the
period that the Securities are outstanding, including, without limitation,
during the periods that the value and/or number of the Warrant Shares
deliverable with respect to the Securities are being determined and such hedging
and/or trading activities (including, without limitation, the location and/or
reservation of borrowable shares of Common Stock), if any, can reduce the value
of the existing stockholders’ equity interest in the Company both at and after
the time the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement, the Warrants or any other Transaction
Document or any of the documents executed in connection herewith or therewith.

(ff) Manipulation of Price. Neither the Company nor any of its Subsidiaries has,
and, to the knowledge of the Company, no Person acting on their behalf has,
directly or indirectly, (i) taken any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company or
any of its Subsidiaries to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities (other than the Placement Agent),
(iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company or any of its
Subsidiaries (other than the Placement Agent in connection with the offering of
the Securities) or (iv) paid or agreed to pay any Person for research services
(other than ordinary course stock surveillance services) with respect to any
securities of the Company or any of its Subsidiaries.

(gg) U.S. Real Property Holding Corporation. Neither the Company nor any of its
Subsidiaries is, or has ever been, and so long as any of the Securities are held
by the Buyer, shall become, a U.S. real property holding corporation within the
meaning of Section 897 of the Code, and the Company and each Subsidiary shall so
certify upon the Buyer’s request.

(hh) Registration Eligibility. The Company is eligible to register the
Registrable Securities (as defined in the Registration Rights Agreement) for
resale by the Buyer using its Registration Statement on Form S-3ASR (File
No. 333-231778).

(ii) Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the issuance, sale and transfer of the Securities to be sold to the Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.

 

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(jj) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries
is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and
to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries owns or
controls, directly or indirectly, five percent (5%) or more of the outstanding
shares of any class of voting securities or twenty-five percent (25%) or more of
the total equity of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve. Neither the Company nor any of its
Subsidiaries exercises a controlling influence over the management or policies
of a bank or any entity that is subject to the BHCA and to regulation by the
Federal Reserve.

(kk) Shell Company Status. The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i).

(ll) Illegal or Unauthorized Payments; Political Contributions. Neither the
Company nor any of its Subsidiaries nor, to the Company’s knowledge, any of the
officers, directors, employees, agents or other representatives of the Company
or any of its Subsidiaries or any other business entity or enterprise with which
the Company or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, acting for or on behalf of the Company or any of its
Subsidiaries, made or authorized any payment, contribution or gift of money,
property, or services, (i) as a kickback or bribe to any Person or (ii) to any
political organization, or the holder of or any aspirant to any elective or
appointive public office except for personal political contributions not
involving the direct or indirect use of funds of the Company or any of its
Subsidiaries.

(mm) Money Laundering. Except as disclosed in the SEC Documents, the Company and
its Subsidiaries are in compliance with, and have not previously violated, the
USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, without limitation, the laws,
regulations and Executive Orders and sanctions programs administered by the U.S.
Office of Foreign Assets Control, including, but not limited, to (i) Executive
Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”
(66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR,
Subtitle B, Chapter V.

(nn) Management. Except as disclosed in the SEC Documents, during the past five
year period, no current officer or director of the Company has been the subject
of:

(i) a petition under bankruptcy laws or any other insolvency or moratorium law
or the appointment by a court of a receiver, fiscal agent or similar officer for
such Person, or any partnership in which such person was a general partner at or
within two years before the filing of such petition or such appointment, or any
corporation or business association of which such person was an executive
officer at or within two years before the time of the filing of such petition or
such appointment;

(ii) a conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations or other minor offenses);

 

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(iii) any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any such person from, or otherwise limiting, the following activities:

(1) Acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures
Trading Commission or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;

(2) Engaging in any particular type of business practice; or

(3) Engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of securities laws or
commodities laws;

(iv) any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting for more
than sixty (60) days the right of any such person to engage in any activity
described in the preceding sub paragraph, or to be associated with persons
engaged in any such activity;

(v) a finding by a court of competent jurisdiction in a civil action or by the
SEC to have violated any securities law, regulation or decree and the judgment
in such civil action or finding by the SEC has not been subsequently reversed,
suspended or vacated; or

(vi) a finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated.

(oo) Stock Option Plans. Each outstanding stock option granted by the Company
was granted (i) in accordance with the terms of the applicable stock option plan
of the Company and (ii) with an exercise price at least equal to the fair market
value of the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No outstanding stock option granted under
the Company’s stock option plan has been backdated.

(pp) No Disagreements with Accountants and Lawyers. There are no material
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise (excluding matters relating to the investigation by the SEC
that are described in the SEC Documents), between the Company and the
accountants and lawyers formerly or presently employed by the Company which
could affect the Company’s ability to perform any of its obligations under any
of the Transaction Documents. In addition, on or prior to the date hereof, the
Company had discussions with its accountants about its financial statements
previously filed with the SEC on and after March 23, 2018. Based on those
discussions, the Company has no reason to believe that it will need to restate
any such financial statements or any part thereof.

 

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(qq) Other Covered Persons. The Company is not aware of any Person (other than
the Placement Agent) that has been or will be paid (directly or indirectly)
remuneration for solicitation of the Buyer or potential purchasers in connection
with the sale of any Securities.

(rr) No Additional Agreements. The Company does not have any agreement or
understanding with the Buyer with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction Documents.

(ss) Public Utility Holding Act. None of the Company nor any of its Subsidiaries
is a “holding company,” or an “affiliate” of a “holding company,” as such terms
are defined in the Public Utility Holding Act of 2005.

(tt) Federal Power Act. None of the Company nor any of its Subsidiaries is
subject to regulation as a “public utility” under the Federal Power Act, as
amended.

(uu) Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided the Buyer or its agents or counsel with any
information that constitutes or could reasonably be expected to constitute
material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that the Buyer will rely on the foregoing representations in effecting
transactions in securities of the Company. To the Company’s knowledge, no event
or circumstance has occurred or information exists with respect to the Company
or any of its domestic Subsidiaries or its or their business, properties,
liabilities, operations (including results thereof) or conditions (financial or
otherwise), which, under applicable law, rule or regulation, requires public
disclosure at or before the date hereof or announcement by the Company but which
has not been so publicly disclosed. The Company acknowledges and agrees that the
Buyer neither makes or has made any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in Section 2.

(vv) Exclusivity of Representations and Warranties. Except as otherwise
expressly set forth in this Section 3, the Company expressly disclaims any
representations or warranties of any kind or nature, express or implied, with
respect to the Company or any of its subsidiaries or their respective
businesses, assets, conditions, operations (financial or otherwise), or the
transactions contemplated by the Transaction Documents.

 

4.

COVENANTS.

(a) Satisfaction of Conditions. The Buyer shall use its reasonable best efforts
to timely satisfy each of the conditions to be satisfied by it as provided in
Section 6 of this Agreement. The Company shall use its reasonable best efforts
to timely satisfy each of the conditions to be satisfied by it as provided in
Section 7 of this Agreement.

(b) Blue Sky. The Company shall, on or before the Closing Date, take such action
as the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to, qualify the Securities for sale to the Buyer at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the

 

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Buyer on or prior to the Closing Date. Without limiting any other obligation of
the Company under this Agreement, the Company shall timely make all filings and
reports relating to the offer and sale of the Securities required under all
applicable securities laws (including, without limitation, all applicable
federal securities laws and all applicable “Blue Sky” laws), and the Company
shall comply with all applicable foreign, federal, state and local laws,
statutes, rules, regulations and the like relating to the offering and sale of
the Securities to the Buyer.

(c) Reporting Status. Until the date on which the Buyer shall have sold all of
the Underlying Securities (as defined below) (the “Reporting Period”), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require such status or otherwise
permit such termination. “Underlying Securities” means the (i) the Common
Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company
issued or issuable with respect to the Common Shares, the Warrant Shares, or the
Warrants, respectively, including, without limitation, (1) as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise and (2) shares of capital stock of the Company into which the shares
of Common Stock are converted or exchanged and shares of capital stock of a
Successor Entity (as defined in the Warrants) into which the shares of Common
Stock are converted or exchanged, in each case, without regard to any
limitations on exercise of the Warrants.

(d) Use of Proceeds. The Company will use the proceeds from the sale of the
Securities for general corporate purposes, including the repayment of
indebtedness.

(e) Financial Information. The Company agrees to send the following to each
Investor (as defined in the Registration Rights Agreement) during the Reporting
Period (i) unless the following are filed with the SEC through EDGAR and are
available to the public through the EDGAR system, within one (1) Business Day
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, any interim reports or any consolidated
balance sheets, income statements, stockholders’ equity statements and/or cash
flow statements for any period other than annual, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, and (ii) unless the following are filed with the SEC
through EDGAR, copies of any notices and other information made available or
given to the stockholders of the Company generally, contemporaneously with the
making available or giving thereof to the stockholders.

(f) Listing. The Company shall use reasonable best efforts to promptly secure
the listing or designation for quotation (as the case may be) of all of the
Underlying Securities upon each national securities exchange and automated
quotation system, if any, upon which the Common Stock is then listed or
designated for quotation (as the case may be) (subject to official notice of
issuance) and shall use reasonable best efforts to maintain such listing or
designation for quotation (as the case may be) of all Underlying Securities from
time to time issuable under the terms of the Transaction Documents on such
national securities exchange or automated quotation system. The Company shall
use reasonable best efforts to maintain the Common Stock’s listing or
authorization for quotation (as the case may be) on the Principal Market, The
New York Stock Exchange, the NYSE American, the Nasdaq Capital Market or the
Nasdaq Global Market (each, an “Eligible Market”). Neither the Company nor any
of its Subsidiaries shall take any action which would be reasonably expected to
result in the delisting or suspension of the Common Stock on an Eligible Market.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f).

 

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(g) Fees. The Company shall reimburse the Buyer a non-accountable amount of
$100,000 for all costs and expenses incurred by it or its affiliates in
connection with the structuring, documentation, negotiation and closing of the
transactions contemplated by the Transaction Documents (including, without
limitation, as applicable, all reasonable legal fees of outside counsel and
disbursements of Kelley Drye & Warren LLP, counsel to the Buyer, any other
reasonable fees and expenses in connection with the structuring, documentation,
negotiation and closing of the transactions contemplated by the Transaction
Documents and due diligence and regulatory filings in connection therewith) (the
“Transaction Expenses”) and such amount shall be withheld by the Buyer from its
Purchase Price at the Closing; provided, that the Company shall promptly
reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so
reimbursed through such withholding at the Closing. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, Transfer Agent fees, DTC (as defined below) fees or broker’s commissions
(other than for Persons engaged by the Buyer or its affiliates) relating to or
arising out of the transactions contemplated hereby (including, without
limitation, any fees or commissions payable to the Placement Agent, who is the
Company’s sole placement agent in connection with the transactions contemplated
by this Agreement). The Company shall pay, and hold the Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys’ fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment. Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyer.

(h) Pledge of Securities. Notwithstanding anything to the contrary contained in
this Agreement, the Company acknowledges and agrees that the Securities may be
pledged by the Buyer in connection with a bona fide margin agreement or other
loan or financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(h) hereof; provided that the
Buyer and its pledgee shall be required to comply with the provisions of
Section 2(h) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by the Buyer.

(i) Disclosure of Transactions and Other Material Information.

(i) Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New
York time, on the first (1st) Business Day after the date of this Agreement,
issue a press release (the “Press Release”) reasonably acceptable to the Buyer
disclosing all the material terms of the transactions contemplated by the
Transaction Documents. On or before 9:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, the Company shall file a Current
Report on Form 8-K describing all the material terms of the

 

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transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching all the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this Agreement), the
form of the Warrants and the form of the Registration Rights Agreement)
(including all attachments, the “8-K Filing”). From and after the filing of the
8-K Filing, the Company shall have disclosed all material, non-public
information (if any) provided to the Buyer by the Company or any of its
Subsidiaries or any of their respective officers, directors, employees or agents
in connection with the transactions contemplated by the Transaction Documents.
In addition, effective upon the filing of the 8-K Filing, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and the Buyer or any of its affiliates, on
the other hand, shall terminate.

(ii) Limitations on Disclosure. The Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents not to, knowingly provide the Buyer with any
material, non-public information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written
consent of the Buyer (which may be granted or withheld in the Buyer’s sole
discretion). To the extent that the Company delivers any material, non-public
information to the Buyer without the Buyer’s consent, the Company hereby
covenants and agrees that the Buyer shall not have any duty of confidentiality
with respect to such material, non-public information. Subject to the foregoing,
neither the Company, its Subsidiaries nor the Buyer shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be entitled, without
the prior approval of the Buyer, to make the Press Release and any press release
or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) the Buyer shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release). Without the
prior written consent of the applicable Buyer (which may be granted or withheld
in the Buyer’s sole discretion), the Company shall not (and shall cause each of
its Subsidiaries and directors, officers and agents to not) disclose the name of
the Buyer in any filing, announcement, release or otherwise, except as required
by applicable law or regulation. Notwithstanding anything contained in this
Agreement to the contrary and without implication that the contrary would
otherwise be true, the Company expressly acknowledges and agrees that no Buyer
shall have (unless expressly agreed to by a particular Buyer after the date
hereof in a written definitive and binding agreement executed by the Company and
such particular Buyer (it being understood and agreed that no Buyer may bind any
other Buyer with respect thereto)), any duty of confidentiality with respect to
any material, non-public information regarding the Company or any of its
Subsidiaries.

(j) Additional Issuance of Securities. The Company agrees that for the period
commencing on the date hereof and ending on the date immediately following the
105th calendar day after the Closing Date (provided that such period shall be
extended by the number of calendar days during such period and any extension
thereof contemplated by this proviso on which any

 

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Registration Statement is not effective or any prospectus contained therein is
not available for use or any Current Public Information Failure (as defined in
the Registration Rights Agreement) exists) (the “Restricted Period”), neither
the Company nor any of its domestic Subsidiaries shall directly or indirectly
issue, offer, sell, grant any option or right to purchase, or otherwise dispose
of (or announce any issuance, offer, sale, grant of any option or right to
purchase or other disposition of) any equity security or any equity-linked or
related security of the Company and its domestic Subsidiaries (including,
without limitation, any “equity security” (as that term is defined under Rule
405 promulgated under the 1933 Act), any Convertible Securities (as defined
below), any preferred stock or any purchase rights) (any such issuance, offer,
sale, grant, disposition or announcement (whether occurring during the
Restricted Period or at any time thereafter) other than to the Buyer as
contemplated by the Transaction Documents is referred to as a “Subsequent
Placement”). Notwithstanding the foregoing, this Section 4(j) shall not apply in
respect of the issuance of (i) shares of Common Stock, restricted stock units,
options to purchase Common Stock or other equity awards (and any shares of
Common Stock issued upon exercise or settlement thereof) to directors, officers,
employees or consultants of the Company in their capacity as such pursuant to an
Approved Stock Plan (as defined below), provided that the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects the Buyer; (ii) shares of Common Stock or other securities issued upon
the conversion or exercise of Convertible Securities (other than options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) issued prior to the date hereof, provided that the
conversion, exercise or other method of issuance (as the case may be) of any
such Convertible Security is made solely pursuant to the conversion, exercise or
other method of issuance (as the case may be) provisions of such Convertible
Security that were in effect on the date immediately prior to the date of this
Agreement, the conversion, exercise or issuance price of any such Convertible
Securities (other than options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) is not lowered (except
pursuant to the terms thereof that were in effect on the date immediately prior
to the date of this Agreement), none of such Convertible Securities (other than
options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) are amended to increase the number of shares
issuable thereunder (except pursuant to the terms thereof that were in effect on
the date immediately prior to the date of this Agreement) and none of the terms
or conditions of any such Convertible Securities (other than options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (i) above) are otherwise materially changed in any manner that adversely
affects the Buyer (except pursuant to the terms thereof that were in effect on
the date immediately prior to the date of this Agreement); (iii) shares of
Common Stock issued in payment of interest due with respect to the Company’s
outstanding senior secured convertible notes and (iv) the Warrant Shares (each
of the foregoing in clauses (i) through (iv), collectively the “Excluded
Securities”), and any issuance of Excluded Securities shall not be considered a
Subsequent Placement under this Agreement. “Approved Stock Plan” means any plan
or program which has been approved by the board of directors of the Company (or
a committee thereof) prior to or subsequent to the date hereof pursuant to which
shares of Common Stock, restricted stock units, options to purchase Common Stock
and other equity awards may be issued to any employee, officer, director or
consultant for services provided to the Company in their capacity as such.
“Convertible Securities” means any capital stock or other security of the
Company or any of its Subsidiaries that is at any time and under any
circumstances directly or indirectly convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other security of the Company (including, without limitation,
Common Stock) or any of its domestic Subsidiaries.

 

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(k) Additional Registration Statements. At any time during the Restricted
Period, the Company shall not file a registration statement or an offering
statement under the 1933 Act relating to securities that are not the Registrable
Securities (other than a registration statement on Form S-8 or such supplements
or amendments to registration statements that are outstanding and (i) have been
declared effective by the SEC as of the date hereof or (ii) relate to the
Company’s outstanding senior secured convertible notes or shares of Common Stock
issued in payment of interest thereon (in each case, solely to the extent
necessary to keep such registration statements effective and available and not
with respect to any Subsequent Placement)).

(l) Reservation of Shares. So long as any of the Warrants remain outstanding,
the Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 100% of the maximum number of
Warrant Shares issuable upon exercise of all the Warrants then outstanding
(without regard to any limitations on the exercise of the Warrants set forth
therein) (collectively, the “Required Reserve Amount”); provided that at no time
shall the number of shares of Common Stock reserved pursuant to this
Section 4(j) be reduced other than proportionally in connection with any
exercise and/or redemption, as applicable of Warrants. If at any time the number
of shares of Common Stock authorized and reserved for issuance is not sufficient
to meet the Required Reserve Amount, the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, by calling a special meeting of
stockholders to authorize additional shares to meet the Company’s obligations
pursuant to the Transaction Documents, in the case of an insufficient number of
authorized shares, soliciting stockholder approval of an increase in such
authorized number of shares, and voting the management shares of the Company in
favor of an increase in the authorized shares of the Company to ensure that the
number of authorized shares is sufficient to meet the Required Reserve Amount.

(m) Conduct of Business. The business of the Company and its Subsidiaries shall
not be conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.

(n) Variable Securities. At any time on or prior to the first anniversary of the
Closing Date, the Company and each domestic Subsidiary shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Placement
involving a Variable Rate Transaction. “Variable Rate Transaction” means a
transaction in which the Company or any Subsidiary (i) issues or sells any
Convertible Securities either (A) at a conversion, exercise or exchange rate or
other price that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the initial issuance
of such Convertible Securities, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the initial
issuance of such Convertible Securities or upon the occurrence of specified or
contingent events directly or indirectly related to the business of the Company
or the market for the Common Stock, other than, in each case, pursuant to a
customary “weighted average” anti-dilution

 

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protection or “make-whole” or similar protection or (ii) enters into any
agreement (including, without limitation, an equity line of credit or an
“at-the-market” offering) whereby the Company or any domestic Subsidiary may
sell securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights); provided that for the avoidance of
doubt, any public offering or private placement of Convertible Securities with a
conversion, exercise or exchange rate or other price that is fixed at the time
of issuance (subject to adjustment pursuant to a customary “weighted average”
anti-dilution protection or “make-whole” or similar protection) shall not be
deemed a “Variable Rate Transaction.” The Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.

(o) Dilutive Issuances. For so long as any Warrants remain outstanding, the
Company shall not, in any manner, enter into or affect any Dilutive Issuance (as
defined in the Warrants) if the effect of such Dilutive Issuance is to cause the
Company to be required to issue upon exercise of any Warrant any shares of
Common Stock in excess of that number of shares of Common Stock which the
Company may issue upon exercise of the Warrants without breaching the Company’s
obligations under the rules or regulations of the Principal Market.

(p) Passive Foreign Investment Company. The Company shall conduct its business,
and shall cause its domestic Subsidiaries to conduct their respective
businesses, in such a manner as will ensure that the Company will not be deemed
to constitute a passive foreign investment company within the meaning of
Section 1297 of the Code.

(q) Exercise Procedures. The form of Exercise Notice (as defined in the
Warrants) included in the Warrants sets forth the totality of the procedures
required of the Buyer in order to exercise the Warrants. Except as provided in
Section 5(d), no additional legal opinion or other information or instructions
shall be required of the Buyer to exercise its Warrants. The Company shall honor
exercises of the Warrants and shall deliver the Warrant Shares in accordance
with the terms, conditions and time periods set forth in the Warrants. Without
limiting the preceding sentences, no ink-original Exercise Notice shall be
required, nor shall any medallion guarantee (or other type of guarantee or
notarization) of any Exercise Notice form be required in order to exercise the
Warrants.

(r) Regulation M. The Company will not take any action prohibited by Regulation
M under the 1934 Act, in connection with the distribution of the Securities
contemplated hereby.

(s) General Solicitation. None of the Company, any of its controlled
“affiliates” (as defined in Rule 501(b) under the 1933 Act) or any person acting
on behalf of the Company or such affiliate will solicit any offer to buy or
offer or sell the Securities by means of any form of general solicitation or
general advertising within the meaning of Regulation D, including: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio; and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

 

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(t) Integration. None of the Company, any of its controlled “affiliates” (as
defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of
the Company or such affiliate will sell, offer for sale, or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the 1933
Act) which will be integrated with the sale of the Securities in a manner which
would require the registration of the Securities under the 1933 Act or require
stockholder approval under the rules and regulations of the Principal Market and
the Company will take all action that is appropriate or necessary to assure that
its offerings of other securities will not be integrated for purposes of the
1933 Act or the rules and regulations of the Principal Market, with the issuance
of Securities contemplated hereby.

(u) Closing Documents. On or prior to twenty eight (28) calendar days after the
Closing Date, the Company agrees to deliver, or cause to be delivered by
Vinson & Elkins L.L.P., to the Buyer and Kelley Drye & Warren LLP a complete
closing set of the executed Transaction Documents, Securities and any other
document required to be delivered to any party pursuant to Section 7 hereof or
otherwise.

 

5.

REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

(a) Register. The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to each
holder of Warrants), a register for the Warrants in which the Company shall
record the name and address of the Person in whose name the Warrants have been
issued (including the name and address of each transferee) and the number of
Warrant Shares issuable upon exercise of the Warrants held by such Person. The
Company shall keep the register open and available at all times during business
hours for inspection of the Buyer or its legal representatives.

(b) Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent and any subsequent transfer agent (as
applicable, the “Transfer Agent”) in a form acceptable to the Buyer (the
“Irrevocable Transfer Agent Instructions”) to issue certificates or credit
shares to (i) the applicable balance accounts at The Depository Trust Company
(“DTC”) or (ii) a book-entry account of the Transfer Agent, registered in the
name of the Buyer or its respective nominee(s), for the Common Shares and the
Warrant Shares in such amounts as specified from time to time by the Buyer to
the Company upon the exercise of the Warrants (as the case may be). The Company
represents and warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5(b), and stop transfer
instructions to give effect to Section 2(h) hereof, will be given by the Company
to its Transfer Agent with respect to the Securities, and that the Securities
shall otherwise be freely transferable on the books and records of the Company,
as applicable, to the extent provided in this Agreement, the other Transaction
Documents and applicable law. If the Buyer effects a sale, assignment or
transfer of the Securities in accordance with Section 2(h), the Company shall
permit the transfer and shall promptly instruct its Transfer Agent to issue one
or more certificates or credit shares to the applicable balance accounts at DTC
in such name and in such denominations as specified by the Buyer to effect such
sale, transfer or assignment. In the event that such sale, assignment or
transfer involves Common Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144,
then, subject to the conditions set forth in Section 5(d) below, the Transfer
Agent shall issue such shares to the Buyer, assignee or transferee (as the case
may be) without any restrictive legend in accordance with Section 5(d) below.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section 5(b) will
be inadequate and agrees, in the event

 

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of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that the Buyer shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required. The Company
shall cause its counsel to issue a legal opinion to the Company’s Transfer Agent
on each Effective Date (as defined in the Registration Rights Agreement). Any
fees (with respect to the Transfer Agent, counsel to the Company or otherwise)
associated with the issuance of such opinion or the removal of any legends on
any of the Securities shall be borne by the Company.

(c) Legends. The Buyer understands that the Securities have been issued (or will
be issued in the case of the Warrant Shares) pursuant to an exemption from
registration or qualification under the 1933 Act and applicable state securities
laws, and except as set forth below, the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][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 OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933 AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

(d) Removal of Legends. Certificates or book-entry accounts evidencing
Securities shall not be required to contain the legend set forth in Section 5(c)
above or any other legend (i) following any sale of such Securities pursuant to
Rule 144 (assuming the transferor is not an affiliate of the Company) or
pursuant to an effective Registration Statement, (ii) if such Securities are
eligible to be sold, assigned or transferred under Rule 144 (provided that the
Buyer provides the Company with reasonable assurances that such Securities are
eligible for sale, assignment or transfer under Rule 144 or an effective
Registration Statement, as applicable, by duly executing and delivering to the
Company a letter in the form attached hereto as Exhibit E which shall not
include an opinion of Buyer’s counsel), (iii) in connection with a sale,
assignment or other transfer (other than under Rule 144), provided that the
Buyer provides the Company with an opinion of

 

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counsel to the Buyer, in a form reasonably acceptable to the Company, to the
effect that such sale, assignment or transfer of the Securities may be made
without registration under the applicable requirements of the 1933 Act or
(iv) if such legend is not required under applicable requirements of the 1933
Act (including, without limitation, controlling judicial interpretations and
pronouncements issued by the SEC). If a legend is not required pursuant to the
foregoing, the Company shall no later than two (2) Trading Days (as defined in
the Warrants) (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade initiated
on the date the Buyer delivers such legended certificate representing such
Securities to the Company) following the delivery by the Buyer to the Company or
the Transfer Agent (with notice to the Company) of a legended certificate
representing such Securities (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer, if applicable), together with any other deliveries from the Buyer as
may be required above in this Section 5(d), as directed by the Buyer, either:
(A) provided that the Company’s Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program and such Securities are Common Shares or
Warrant Shares, credit the aggregate number of shares of Common Stock to which
the Buyer shall be entitled to the Buyer’s or its designee’s balance account
with DTC through its Deposit/Withdrawal at Custodian system or (B) if the
Company’s Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver (via reputable overnight courier)
to the Buyer, a certificate representing such Securities that is free from all
restrictive and other legends, registered in the name of the Buyer or its
designee (the date by which such credit is so required to be made to the balance
account of the Buyer’s or the Buyer’s designee with DTC or such certificate is
required to be delivered to the Buyer pursuant to the foregoing is referred to
herein as the “Required Delivery Date”, and the date such shares of Common Stock
are actually delivered without restrictive legend to the Buyer or the Buyer’s
designee with DTC, as applicable, the “Share Delivery Date”). The Company shall
be responsible for any Transfer Agent fees or DTC fees with respect to any
issuance of Securities or the removal of any legends with respect to any
Securities in accordance herewith.

(e) Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or
for no reason, to issue and deliver (or cause to be delivered) to the Buyer (or
its designee) by the Required Delivery Date, either (I) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer Program, a
certificate for the number of Common Shares or Warrant Shares (as the case may
be) to which the Buyer is entitled and register such Common Shares or Warrant
Shares (as the case may be) on the Company’s share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to
credit the balance account of the Buyer or the Buyer’s designee with DTC for
such number of Common Shares or Warrant Shares (as the case may be) submitted
for legend removal by the Buyer pursuant to Section 5(d) above or (II) if the
Registration Statement covering the resale of the Common Shares or Warrant
Shares (as the case may be) submitted for legend removal by the Buyer pursuant
to Section 5(d) above (the “Unavailable Shares”) is not available for the resale
of such Unavailable Shares and the Company fails to promptly, but in no event
later than as required pursuant to the Registration Rights Agreement (x) so
notify the Buyer and (y) deliver the Common Shares or Warrant Shares, as
applicable, electronically without any restrictive legend by crediting such
aggregate number of Common Shares or Warrant Shares (as the case may be)
submitted for legend removal by the Buyer pursuant to Section 5(d) above to the
Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal At Custodian system (the event described in the immediately
foregoing clause (II) is hereinafter referred as a “Notice Failure” and together

 

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with the event described in clause (I) above, a “Delivery Failure”), and if on
or after such Trading Day the Buyer purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Buyer of shares of Common Stock submitted for legend removal by the Buyer
pursuant to Section 5(d) above that the Buyer is entitled to receive from the
Company (a “Buy-In”), then the Company shall, within two (2) Trading Days after
the Buyer’s request and in the Buyer’s discretion, either (i) pay cash to the
Buyer in an amount equal to the Buyer’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any, for the shares
of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s
obligation to so deliver such certificate or credit the Buyer’s balance account
shall terminate and such shares shall be cancelled, or (ii) promptly honor its
obligation to so deliver to the Buyer a certificate or certificates or credit
the balance account of the Buyer or the Buyer’s designee with DTC representing
such number of shares of Common Stock that would have been so delivered if the
Company timely complied with its obligations hereunder and pay cash to the Buyer
in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Shares or Warrant Shares (as the case may
be) that the Company was required to deliver to the Buyer by the Required
Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the
Warrants) of the Common Stock on any Trading Day during the period commencing on
the date of the delivery by the Buyer to the Company of the applicable Common
Shares or Warrant Shares (as the case may be) and ending on the date of such
delivery and payment under this clause (ii). Nothing shall limit the Buyer’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 (or to electronically deliver
such shares of Common Stock) as required pursuant to the terms hereof.
Notwithstanding anything herein to the contrary, with respect to any given
Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the
applicable Buyer the extent the Company has already paid such amounts in full to
the Buyer with respect to such Notice Failure and/or Delivery Failure, as
applicable, pursuant to the analogous sections of the Warrant held by the Buyer.

(f) FAST Compliance. While any Warrants remain outstanding, the Company shall
maintain a Transfer Agent that participates in the DTC Fast Automated Securities
Transfer Program.

 

6.

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

(a) The obligation of the Company hereunder to issue and sell the Common Shares
and the related Warrants to the Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion by providing
the Buyer with prior written notice thereof:

(i) The Buyer shall have executed each of the other Transaction Documents to
which it is a party and delivered the same to the Company.

(ii) The Buyer shall have delivered to the Company the Purchase Price (less, in
the case of the Buyer, the amounts withheld pursuant to Section 4(g)) for the
Common Shares and the related Warrants being purchased by the Buyer at the
Closing by wire transfer of immediately available funds in accordance with the
Flow of Funds Letter.

 

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(iii) The representations and warranties of the Buyer shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct in all
material respects (except for such representations and warranties qualified by
materiality, which shall be true and correct in all respects) as of such
specific date), and the Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date.

 

7.

CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.

(a) The obligation of the Buyer hereunder to purchase its Common Shares and its
related Warrants at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer’s sole benefit and may be waived by the Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:

(i) The Company shall have duly executed and delivered to the Buyer each of the
Transaction Documents to which it is a party and the Company shall have duly
executed and delivered to the Buyer (A) such aggregate number of Common Shares
set forth across from the Buyer’s name in column (3) of the Schedule of Buyers,
(B) a Series A Warrant (initially for such aggregate number of Series A Warrant
Shares as is set forth opposite the Buyer’s name in column (4) on the Schedule
of Buyers), (C) a Series B-1 Warrant (initially for such aggregate number of
Series B-1 Warrant Shares as is set forth opposite the Buyer’s name in column
(5) on the Schedule of Buyers), (D) a Series B-2 Warrant (initially for such
aggregate number of Series B-2 Warrant Shares as is set forth opposite the
Buyer’s name in column (6) on the Schedule of Buyers) and (E) a Series C Warrant
(initially for such aggregate number of Series C Warrant Shares as is set forth
opposite the Buyer’s name in column (7) on the Schedule of Buyers), in each
case, as being purchased by the Buyer at the Closing pursuant to this Agreement.

(ii) The Buyer shall have received the opinion of Vinson & Elkins L.L.P., the
Company’s counsel, dated as of the Closing Date, in a form reasonably
satisfactory to the Buyer.

(iii) The Company shall have delivered to the Buyer a copy of the Irrevocable
Transfer Agent Instructions, in the form acceptable to the Buyer, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s Transfer Agent.

(iv) The Company shall have delivered to the Buyer a certificate evidencing the
formation and good standing of the Company issued by the Secretary of State of
Delaware as of a date within ten (10) days of the Closing Date.

 

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(v) The Company shall have delivered to the Buyer a certified copy of the
Certificate of Incorporation as certified by the Delaware Secretary of State
within ten (10) days of the Closing Date.

(vi) The Company shall have delivered to the Buyer a certificate, in the form
acceptable to the Buyer, executed by the Secretary of the Company and dated as
of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company’s board of directors (or an authorized committee of the
board) with respect to the Transaction Documents, (ii) the Certificate of
Incorporation of the Company and (iii) the Bylaws of the Company, each as in
effect at the Closing.

(vii) The representations and warranties of the Company shall be true and
correct in all material respects (except for such representations and warranties
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct in all
material respects (except for such representations and warranties qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of such specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer shall have received a
certificate, in the form attached hereto as Exhibit F, duly executed by the
Interim Chief Executive Officer or Chief Financial Officer of the Company, dated
as of the Closing Date, to the foregoing effect in the form acceptable to the
Buyer.

(viii) The Company shall have delivered to the Buyer a letter from the Company’s
Transfer Agent certifying the number of shares of Common Stock outstanding on
the Closing Date immediately prior to the Closing.

(ix) The Common Stock (A) shall be designated for quotation or listed (as
applicable) on the Principal Market and (B) shall not have been suspended, as of
the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Closing Date, either (I) in writing by the SEC or the
Principal Market or (II) by falling below the minimum maintenance requirements
of the Principal Market.

(x) The Company shall have obtained all governmental, regulatory or third party
consents and approvals (or waiver thereof), if any, necessary for the sale of
the Securities, including without limitation, those required by the Principal
Market, if any.

(xi) No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.

 

36

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(xii) Since the date of execution of this Agreement, no event or series of
events shall have occurred and is continuing that would reasonably be expected
to result in a Material Adverse Effect.

(xiii) The Company shall have obtained approval of the Principal Market to list
or designate for quotation (as the case may be) the Common Shares and the
Warrant Shares.

(xiv) The Buyer shall have received a letter on the letterhead of the Company,
duly executed by the Interim Chief Executive Officer or Chief Financial Officer
of the Company, setting forth the wire amounts of the Buyer and the wire
transfer instructions of the Company (the “Flow of Funds Letter”).

(xv) The Company shall have delivered to the Buyer such other documents,
instruments or certificates relating to the transactions contemplated by this
Agreement as the Buyer or its counsel may reasonably request.

 

8.

TERMINATION.

In the event that the Closing shall not have occurred with respect to the Buyer
within ten (10) days after the date hereof due to the Company’s failure to
satisfy the conditions set forth in Section 7, then the Buyer shall have the
right to terminate its obligations under this Agreement with respect to itself
at any time on or after the close of business on such date without liability of
the Buyer to any other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be available to the Buyer if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of the Buyer’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Common Shares and the
Warrants shall be applicable only to the Buyer providing such written notice,
provided further that no such termination shall affect any obligation of the
Company under this Agreement to reimburse the Buyer for the expenses described
in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.

 

9.

MISCELLANEOUS.

(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. The Company and the
Buyer 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 under any of
the other Transaction Documents or with any transaction contemplated hereby or
thereby, 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 brought
in an inconvenient forum or that

 

37

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the venue of such suit, action or proceeding is improper. 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 to such
party at the address for such 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 manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Company or the Buyer from bringing suit or
taking other legal action against the Buyer or the Company, respectively, in any
other jurisdiction to collect on the Buyer’s or the Company’s respective
obligations hereunder or to enforce a judgment or other court ruling in favor of
the Company or the Buyer, respectively. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR
IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof.

(c) Headings; Gender. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like
import shall be construed broadly as if followed by the words “without
limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.

(d) Severability; Maximum Payment Amounts. If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective expectations or reciprocal obligations of the parties or the
practical realization, in all material respects, of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s). Notwithstanding
anything to the contrary contained in this Agreement or any other Transaction
Document (and without implication that the following is required or applicable),
it is the intention of the parties

 

38

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that in no event shall amounts and value paid by the Company and/or any of its
Subsidiaries (as the case may be), or payable to or received by the Buyer, under
the Transaction Documents (including without limitation, any amounts that would
be characterized as “interest” under applicable law) exceed amounts permitted
under any applicable law. Accordingly, if any obligation to pay, payment made to
the Buyer, or collection by the Buyer pursuant the Transaction Documents is
finally judicially determined to be contrary to any such applicable law, such
obligation to pay, payment or collection shall be deemed to have been made by
mutual mistake of the Buyer, the Company and its Subsidiaries and such amount
shall be deemed to have been adjusted with retroactive effect to the maximum
amount or rate of interest, as the case may be, as would not be so prohibited by
the applicable law. Such adjustment shall be effected, to the extent necessary,
by reducing or refunding, at the option of the Buyer, the amount of interest or
any other amounts which would constitute unlawful amounts required to be paid or
actually paid to the Buyer under the Transaction Documents. For greater
certainty, to the extent that any interest, charges, fees, expenses or other
amounts required to be paid to or received by the Buyer under any of the
Transaction Documents or related thereto are held to be within the meaning of
“interest” or another applicable term to otherwise be violative of applicable
law, such amounts shall be pro-rated over the period of time to which they
relate.

(e) Entire Agreement; Amendments. This Agreement, the other Transaction
Documents and the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein supersede all other prior oral or
written agreements between the Buyer, the Company, its Subsidiaries, their
affiliates and Persons acting on their behalf, including, without limitation,
any transactions by the Buyer with respect to Common Stock or the Securities,
and the other matters contained herein and therein, and this Agreement, the
other Transaction Documents, the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements the Buyer has entered into with, or any instruments the Buyer has
received from, the Company or any of its Subsidiaries prior to the date hereof
with respect to any prior investment made by the Buyer in the Company or
(ii) waive, alter, modify or amend in any respect any obligations of the Company
or any of its Subsidiaries, or any rights of or benefits to the Buyer or any
other Person, in any agreement entered into prior to the date hereof between or
among the Company and/or any of its Subsidiaries and the Buyer, or any
instruments the Buyer received from the Company and/or any of its Subsidiaries
prior to the date hereof, and all such agreements and instruments shall continue
in full force and effect. Except as specifically set forth herein or therein,
neither the Company nor the Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. For clarification purposes, the
Recitals are part of this Agreement. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Required Holders (as defined below), and any amendment to any provision of this
Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on the Buyer and holders of Securities, as applicable; provided that no
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Securities then outstanding. No waiver shall be effective
unless it is in writing and signed by an authorized representative of the
waiving party, provided that the Required Holders may waive any provision of
this Agreement, and any waiver of any provision of this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on the
Buyer and holders of Securities, as applicable, provided that

 

39

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no such waiver shall be effective to the extent that it applies to less than all
of the holders of the Securities then outstanding (unless a party gives a waiver
as to itself only). No consideration (other than reimbursement of legal fees)
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the
same consideration also is offered to all of the parties to the Transaction
Documents, the Buyer or all holders of the Warrants (as the case may be). From
the date hereof and while any Warrants are outstanding, the Company shall not be
permitted to receive any consideration from the Buyer or a holder of Warrants
that is not otherwise contemplated by the Transaction Documents in order to,
directly or indirectly, induce the Company or any Subsidiary (i) to treat the
Buyer or holder of Warrants in a manner that is more favorable than to other
holders of Warrants, as applicable, or (ii) to treat the Buyer or holder(s) of
Warrants in a manner that is less favorable than the other holder of Warrants
that is paying such consideration. The Company has not, directly or indirectly,
made any agreements with the Buyer relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, Buyer has not made any commitment
or promise or has any other obligation to provide any financing to the Company,
any Subsidiary or otherwise. As a material inducement for the Buyer to enter
into this Agreement, the Company expressly acknowledges and agrees that (x) no
due diligence or other investigation or inquiry conducted by the Buyer, any of
its advisors or any of its representatives shall affect the Buyer’s right to
rely on, or shall modify or qualify in any manner or be an exception to any of,
the Company’s representations and warranties contained in this Agreement or any
other Transaction Document and (y) unless a provision of this Agreement or any
other Transaction Document is expressly accompanied by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC Documents
shall affect the Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document.
“Required Holders” means (I) prior to the Closing Date, the Buyer entitled to
purchase Common Shares and Warrants at the Closing and (II) on or after the
Closing Date, holders of a majority of the Underlying Securities (as defined
above) as of such time (excluding any Underlying Securities held by the Company
or any of its Subsidiaries as of such time) issued or issuable hereunder or
pursuant to the Warrants.

(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party) or electronic mail (provided that such sent email is kept on file
(whether electronically or otherwise) by the sending party and the sending party
does not receive an automatically generated message from the recipient’s email
server that such e-mail could not be delivered to such recipient); or (iii) one
(1) Business Day after deposit with an overnight courier service with next day
delivery specified, in each case, properly addressed to the party to receive the
same. The addresses, facsimile numbers and e-mail addresses for such
communications shall be:

 

40

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If to the Company:

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, VA 20190

Telephone: (703) 234-2682

Facsimile: (703) 234-2684

Attention: Carol DiBattiste, General Counsel

E-Mail: cdibattiste@comscore.com

With a copy to:

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, VA 20190

Telephone: (703) 438-2105

Attention: Ashley Wright, Deputy General Counsel

E-Mail: awright@comscore.com

With a copy (for informational purposes only) to:

Vinson & Elkins L.L.P.

2801 Via Fortuna

Suite 100

Austin, TX 78746

Telephone: (512) 542-8450

Facsimile: (512) 576-7635

Attention: Paul Tobias

E-Mail: ptobias@velaw.com

If to the Transfer Agent:

American Stock Transfer & Trust Company

6201 15th Ave

Brooklyn, NY 11219

Telephone: (972) 684-5308

Facsimile: (718) 765-8763

Attention: Bill Torre

E-mail: admin12@astfinancial.com

If to the Buyer, to its address, e-mail address or facsimile number set forth on
the Schedule of Buyers, with copies to the Buyer’s representatives as set forth
on the Schedule of Buyers.

with a copy (for informational purposes only) to:

Kelley Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

E-mail: madelstein@kelleydrye.com

 

41

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or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Kelley Drye & Warren LLP shall only be provided
copies of notices sent to the Buyer. Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
or e-mail containing the time, date, recipient facsimile number and, with
respect to each facsimile transmission, an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

(g) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any purchasers of any of the Common Shares and Warrants (other than
purchasers of Common Shares in open market transactions). The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Required Holders, including, without limitation, by way
of a Fundamental Transaction (as defined in the Warrants) (unless the Company is
in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Warrants). Subject to the conditions set forth in this
Agreement, the Buyer may assign some or all of its rights hereunder in
connection with any transfer of any of its Securities without the consent of the
Company, in which event such assignee shall be deemed to be the Buyer hereunder
with respect to such assigned rights.

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, other than the Indemnitees referred to in Section 9(k).

(i) Survival. The representations and warranties set forth in Sections 3(a)—(e),
(g)-(i) and (r) shall survive the Closing. All other representations and
warranties set forth in this Agreement shall survive until the first anniversary
of the Closing Date. The covenants made in this Agreement to be performed on or
before the Closing Date shall terminate at the Closing, and each other covenant
made in this Agreement shall survive the Closing indefinitely until performed in
accordance with its terms.

(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

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(k) Indemnification.

(i) In consideration of the Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and all of its
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(i) any misrepresentation or breach of any representation or warranty made by
the Company or any Subsidiary in any of the Transaction Documents (each, a
“Representation Breach”), (ii) any breach of any covenant, agreement or
obligation of the Company or any Subsidiary contained in any of the Transaction
Documents (each a “Covenant Breach”) or (iii) any cause of action, suit,
proceeding or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company or any Subsidiary) or which otherwise involves such Indemnitee that
arises out of or results from (A) the execution, delivery, performance or
enforcement of any of the Transaction Documents or (B) any disclosure properly
made by the Buyer pursuant to Section 4(i) (each, a “Third Party Action”).

(ii) The Company will not be liable to any Indemnitee under this Agreement to
the extent that Indemnified Liabilities are proximately caused by any
Indemnitee’s gross negligence, willful misconduct, or any Indemnified Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Indemnified Party in this Agreement or in the other Transaction
Documents. In calculating the amount of any Indemnified Liabilities hereunder,
there shall be subtracted the amount of any insurance proceeds and third-party
payments received by the Indemnified Parties with respect to such Indemnified
Liabilities, if any, net of any actual costs or expenses incurred in connection
with securing or obtaining such proceeds or payments. In no event shall any
Indemnified Party be entitled to recover or make a claim for any amounts in
respect of, and in no event shall “Indemnified Liabilities” be deemed to
include, consequential or indirect damages, lost profits or punitive damages
and, in particular, no “diminution of value”, “multiple of profits” or “multiple
of cash flow” or similar valuation methodology shall be used in calculating the
amount of any Indemnified Liabilities, unless in any such case, such Indemnified
Liabilities are awarded to a third party. The Company shall not be liable to the
Indemnitees for a breach of any representation or warranty made by the Company
in this Agreement unless and until the aggregate amount of Indemnified
Liabilities individually equaling at least $25,000 for which the Indemnitees are
entitled to indemnification hereunder exceeds $50,000, in which case the Company
shall be liable to the Indemnitees only to the extent their Indemnified
Liabilities exceed such amount. Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under this
Section 9(k) shall be the same as those set forth in Section 6 of the
Registration Rights Agreement. Except in the event of actual fraud, the

 

43

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indemnification obligation of the Company shall be the sole and exclusive remedy
of any Indemnitee against the Company for monetary damages for breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any of the transactions contemplated hereby; provided, however, that nothing
herein shall limit a party’s right to seek injunctive or other equitable relief
in connection with the enforcement of this Agreement. Except in the event of
actual fraud committed by the Company, in no event shall the Company’s aggregate
liability to the Buyer with respect to any Representation Breach hereunder
exceed the Purchase Price paid by the Buyer to the Company (the “Aggregate
Representation Liability Limitation”); provided, that such Aggregate
Representation Liability Limitation shall not apply to the Company’s
indemnification obligations under this Section 9(k) with respect to any Covenant
Breach or Third Party Action.

(l) Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party. No specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to
the Common Stock shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions
that occur with respect to the Common Stock after the date of this Agreement.
Notwithstanding anything in this Agreement to the contrary, for the avoidance of
doubt, nothing contained herein shall constitute a representation or warranty
against, or a prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of, and/or securing
of, securities of the Company in order for the Buyer (or its broker or other
financial representative) to effect short sales or similar transactions in the
future.

(m) Remedies. The Buyer shall have all rights and remedies set forth in the
Transaction Documents and all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate. The remedies provided in this
Agreement and the other Transaction Documents shall be cumulative and in
addition to all other remedies available under this Agreement and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief).

(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
the Buyer exercises a right, election, demand or option under a Transaction
Document and the Company or any Subsidiary does not timely perform its related
obligations within the periods therein provided, then the Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company or such Subsidiary (as the case may be), any relevant notice, demand or
election in whole or in part without prejudice to its future actions and rights.

 

44

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(o) Currency. Unless otherwise expressly indicated, all dollar amounts referred
to in this Agreement and the other Transaction Documents are in United States
Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all
other Transaction Documents shall be paid in U.S. Dollars. All amounts
denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of
calculation. “Exchange Rate” means, in relation to any amount of currency to be
converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange
rate as published in the Wall Street Journal on the relevant date of
calculation.

(p) Judgment Currency.

(i) If for the purpose of obtaining or enforcing judgment against the Company in
connection with this Agreement or any other Transaction Document in any court in
any jurisdiction it becomes necessary to convert into any other currency (such
other currency being hereinafter in this Section 9(p) referred to as the
“Judgment Currency”) an amount due in US Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Trading Day
immediately preceding:

(1) the date actual payment of the amount due, in the case of any proceeding in
the courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date: or

(2) the date on which the foreign court determines, in the case of any
proceeding in the courts of any other jurisdiction (the date as of which such
conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter
referred to as the “Judgment Conversion Date”).

(ii) If in the case of any proceeding in the court of any jurisdiction referred
to in Section 9(p)(i)(2) above, there is a change in the Exchange Rate
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.

(iii) Any amount due from the Company under this provision shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of this Agreement or any other Transaction
Document.

[signature pages follow]

 

45

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IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

COMPANY: COMSCORE, INC. By:  

/s/ Gregory A. Fink

  Name: Gregory A. Fink   Title: Chief Financial Officer and Treasurer

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

IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

BUYER: CVI INVESTMENTS, INC. By: Heights Capital Management, Inc., its
authorized agent By:  

/s/ Martin Kobinger

  Name: Martin Kobinger   Title: Investment Manager

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

SCHEDULE OF BUYERS

 

(1)   (2)   (3)     (4)   (5)     (6)     (7)     (8)     (9)

Buyer

 

Address and Facsimile Number

  Aggregate
Number
of
Common
Shares    

Aggregate

Number of

Series A

Warrant Shares

  Aggregate
Number of
Series B-1
Warrant
Shares     Aggregate
Number of
Series B-2
Warrant
Shares     Aggregate
Number of
Series C
Warrant
Shares     Purchase Price    

Legal Representative’s

Address and Facsimile Number

CVI Investments, Inc.  

c/o Heights Capital Management

101 California Street

Suite 3250

San Francisco, CA 94111

Attention: Martin Kobinger,

Investment Manager

Facsimile: 415-403-6525

E-Mail: martin.kobinger@sig.com

    2,728,513     2,728,513 (subject to increase to maximum of 5,457,026 to the
extent of exercise of Series C Warrants)     2,347,418       1,121,076      
2,728,513       $ 20,000,000.29    

Kelley Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

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Exhibit A

Form of Series A Warrant

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[FORM OF SERIES A WARRANT]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON
THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.

COMSCORE, INC.

WARRANT TO PURCHASE COMMON STOCK

Warrant No.: A-[                ]

Date of Issuance: [                        ], 2019 (“Issuance Date”)

comScore, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CVI Investments, Inc., the registered holder hereof or its
permitted assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times on or after the
Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), up to 2,728,513 (subject to adjustment as provided herein)
fully paid and non-assessable shares of Common Stock (as defined below) (the
“Warrant Shares”, and such aggregate number of Warrant Shares in which this
Warrant is exercisable, from time to time, the “Warrant Number”). Except as
otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 17. This Warrant is one of the Warrants to
Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that
certain Securities Purchase Agreement, dated as of June 23, 2019 (the
“Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (the “Securities Purchase
Agreement”).

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1. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
and on or prior to the Expiration Date (an “Exercise Date”), in whole or in
part, by delivery (whether via facsimile or otherwise) of a written notice, in
the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant. Within one (1) Trading Day following an
exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such
exercise multiplied by the number of Warrant Shares as to which this Warrant was
so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds did not notify the Company in such Exercise Notice
that such exercise was made pursuant to a Cashless Exercise (as defined in
Section 1(d)). The Holder shall not be required to deliver the original of this
Warrant in order to effect an exercise hereunder. Execution and delivery of an
Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as cancellation of the original of this Warrant and issuance of
a new Warrant evidencing the right to purchase the remaining number of Warrant
Shares. Execution and delivery of an Exercise Notice for all of the
then-remaining Warrant Shares shall have the same effect as cancellation of the
original of this Warrant after delivery of the Warrant Shares in accordance with
the terms hereof. On or before the first (1st) Trading Day following the date on
which the Company has received an Exercise Notice, the Company shall transmit by
facsimile or electronic mail an acknowledgment of confirmation of receipt of
such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder
and the Company’s transfer agent (the “Transfer Agent”), which confirmation
shall constitute an instruction to the Transfer Agent to process such Exercise
Notice in accordance with the terms herein. On or before the second (2nd)
Trading Day following the date on which the Company has received such Exercise
Notice (or such earlier date as required pursuant to the 1934 Act or other
applicable law, rule or regulation for the settlement of a trade of such Warrant
Shares initiated on the applicable Exercise Date), the Company shall
(X) provided that the Transfer Agent is participating in The Depository Trust
Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of
the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system, or
(Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, upon the request of the Holder, issue and deliver
(via reputable overnight courier) to the address as specified in the Exercise
Notice, a certificate, registered in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder shall be entitled
pursuant to such exercise. Upon delivery of an Exercise Notice, 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). If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise and upon surrender of this
Warrant to the Company by the Holder, then, at the request of the Holder, the
Company shall as soon as practicable and in no event later than two (2) Business
Days after any exercise and at its own expense, issue and deliver to the Holder
(or its designee) a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the number of

 

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Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number. The Company shall pay
any and all transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer Agent) that
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant. Notwithstanding the foregoing, except in the case
where an exercise of this Warrant is validly made pursuant to a Cashless
Exercise, the Company’s failure to deliver Warrant Shares to the Holder on or
prior to the later of (i) two (2) Trading Days after receipt of the applicable
Exercise Notice (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade of such
Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1)
Trading Day after the Company’s receipt of the Aggregate Exercise Price (or
valid notice of a Cashless Exercise) (such later date, the “Share Delivery
Date”) shall not be deemed to be a breach of this Warrant. Notwithstanding
anything to the contrary contained in this Warrant or the Registration Rights
Agreement, after the effective date of the Registration Statement (as defined in
the Registration Rights Agreement) and prior to the Holder’s receipt of the
notice of a Grace Period (as defined in the Registration Rights Agreement), the
Company shall cause the Transfer Agent to deliver unlegended shares of Common
Stock to the Holder (or its designee) in connection with any sale of Registrable
Securities (as defined in the Registration Rights Agreement) with respect to
which the Holder has entered into a contract for sale, and delivered a copy of
the prospectus included as part of the particular Registration Statement to the
extent applicable, and for which the Holder has not yet settled. From the
Issuance Date through and including the Expiration Date, the Company shall
maintain a transfer agent that participates in the DTC’s Fast Automated
Securities Transfer Program.

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $12.00,
subject to adjustment as provided herein.

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail,
for any reason or for no reason, on or prior to the Share Delivery Date, either
(I) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, to issue and deliver to the Holder (or its
designee) a certificate for the number of Warrant Shares to which the Holder is
entitled and register such Warrant Shares on the Company’s share register or, if
the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise of this Warrant (as the case may be) or
(II) if a Registration Statement covering the resale of the Warrant Shares that
are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not
available for the resale of such Unavailable Warrant Shares and the Company
fails to promptly, but in no event later than as required pursuant to the
Registration Rights Agreement (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such
aggregate number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Delivery
Failure”), and if on or after such Share Delivery Date the Holder purchases (in
an open market transaction or

 

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otherwise) shares of Common Stock corresponding to all or any portion of the
number of shares of Common Stock issuable upon such exercise that the Holder is
entitled to receive from the Company and has not received from the Company in
connection with such Delivery Failure or Notice Failure, as applicable (a
“Buy-In”), then, in addition to all other remedies available to the Holder, the
Company shall, within two (2) Business Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including, without limitation, by any other Person in respect, or on behalf, of
the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so
issue and deliver such certificate (and to issue such shares of Common Stock) or
credit the balance account of such Holder or such Holder’s designee, as
applicable, with DTC for the number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue
such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to
so issue and deliver to the Holder a certificate or certificates representing
such Warrant Shares or credit the balance account of such Holder or such
Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case
may be) and pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of Warrant Shares
multiplied by (B) the lowest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date of the applicable Exercise
Notice and ending on the date of such issuance and payment under this clause
(ii) (the “Buy-In Payment Amount”). Nothing shall limit the 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 (or to electronically deliver
such shares of Common Stock) upon the exercise of this Warrant as required
pursuant to the terms hereof. In addition to the foregoing rights, (i) if the
Company fails to deliver the applicable number of Warrant Shares upon an
exercise pursuant to Section 1 by the applicable Share Delivery Date, then the
Holder shall have the right to rescind such exercise in whole or in part and
retain and/or have the Company return, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an exercise shall not affect the Company’s obligation to
make any payments that have accrued prior to the date of such notice pursuant to
this Section 1(c) or otherwise, and (ii) if a registration statement covering
the resale of the Warrant Shares that are subject to an Exercise Notice is not
available for the resale of such Warrant Shares and the Holder has submitted an
Exercise Notice prior to receiving notice of the non-availability of such
registration statement and the Company has not already delivered the Warrant
Shares underlying such Exercise Notice electronically without any restrictive
legend by crediting such aggregate number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian system, the
Holder shall have the option, by delivery of notice to the Company, to
(x) rescind such Exercise Notice in whole or in part and retain or have
returned, as the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this Section 1(c)
or otherwise, and/or (y) switch some or all of such Exercise Notice from a cash
exercise to a Cashless Exercise.

 

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(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary
(other than Section 1(f) below), if at the time of exercise hereof a
Registration Statement (as defined in the Registration Rights Agreement) is not
effective (or the prospectus contained therein is not available for use) for the
resale by the Holder of all of the Warrant Shares, then the Holder may, in its
sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of Warrant Shares determined
according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

  

D

For purposes of the foregoing formula:

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

B = the VWAP of the Common Stock at the close of business on the Principal
Market as of the Trading Day immediately prior to the date of the delivery of
the applicable Exercise Notice.

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

D = the VWAP of the Common Stock at the close of business on the Principal
Market on the date of the delivery of the applicable Exercise Notice.

If the Warrant Shares are issued in a Cashless Exercise, the parties acknowledge
and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant
Shares take on the registered characteristics of the Warrants being exercised.
For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the
Subscription Date, it is intended that the Warrant Shares issued in a Cashless
Exercise shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Securities Purchase
Agreement.

(e) Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the number of Warrant Shares to be issued
pursuant to the terms hereof, the Company shall promptly issue to the Holder the
number of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 13.

(f) Limitations on Exercises.

(i) Beneficial Ownership. The Company shall not effect the exercise of any
portion of this Warrant, and the Holder shall not have the right to exercise any
portion of this Warrant, pursuant to the terms and conditions of this Warrant
and any such exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder together with
the other Attribution Parties collectively would beneficially own in excess of
4.99% (the “Maximum Percentage”) of the shares of

 

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Common Stock outstanding immediately after giving effect to such exercise. For
purposes of the foregoing sentence, the aggregate number of shares of Common
Stock beneficially owned by the Holder and the other Attribution Parties shall
include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution Parties and
(B) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company (including, without limitation, any convertible
notes or convertible preferred stock or warrants, including other SPA Warrants)
beneficially owned by the Holder or any other Attribution Party subject to a
limitation on conversion or exercise analogous to the limitation contained in
this Section 1(f)(i). For purposes of this Section 1(f)(i), beneficial ownership
shall be calculated in accordance with Section 13(d) of the 1934 Act. For
purposes of determining the number of outstanding shares of Common Stock the
Holder may acquire upon the exercise of this Warrant without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the Company’s most recent Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public
filing with the SEC, as the case may be, (y) a more recent public announcement
by the Company or (z) any other written notice by the Company or the Transfer
Agent, if any, setting forth the number of shares of Common Stock outstanding
(the “Reported Outstanding Share Number”). If the Company receives an Exercise
Notice from the Holder at a time when the actual number of outstanding shares of
Common Stock is less than the Reported Outstanding Share Number, the Company
shall (i) notify the Holder in writing of the number of shares of Common Stock
then outstanding and, to the extent that such Exercise Notice would otherwise
cause the Holder’s beneficial ownership, as determined pursuant to this
Section 1(f)(i), to exceed the Maximum Percentage, the Holder must notify the
Company of a reduced number of Warrant Shares to be acquired pursuant to such
Exercise Notice (the number of shares by which such purchase is reduced, the
“Reduction Shares”) and (ii) as soon as reasonably practicable, the Company
shall return to the Holder any exercise price paid by the Holder for the
Reduction Shares. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder and any other
Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of Common Stock to
the Holder upon exercise of this Warrant results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Maximum Percentage of the number of outstanding shares of Common Stock
(as determined under Section 13(d) of the 1934 Act), the number of shares so
issued by which the Holder’s and the other Attribution Parties’ aggregate
beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall
be deemed null and void and shall be cancelled ab initio, and the Holder shall
not have the power to vote or to transfer the Excess Shares. As soon as
reasonably practicable after the issuance of

 

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the Excess Shares has been deemed null and void, the Company shall return to the
Holder the exercise price paid by the Holder for the Excess Shares. Upon
delivery of a written notice to the Company, the Holder may from time to time
increase (with such increase not effective until the sixty-first (61st) day
after delivery of such notice) or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% as specified in such notice; provided that
(i) any such increase in the Maximum Percentage will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company and
(ii) any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of SPA Warrants that is not an
Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Warrant in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934
Act. No prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of exercisability. 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(f)(i) to the extent
necessary to correct this paragraph or any portion of this paragraph which may
be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 1(f)(i) or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitation contained
in this paragraph may not be waived and shall apply to a successor holder of
this Warrant.

(ii) Exchange Cap. The Company shall not issue any shares of Common Stock upon
the exercise of this Warrant if the issuance of such shares of Common Stock
taken together with each prior issuance of Common Shares (as defined in the
Securities Purchase Agreement) under the Securities Purchase Agreement and any
prior issuance of shares of Common Stock upon exercise of the SPA Warrants,
collectively, would exceed the aggregate number of shares of Common Stock which
the Company may issue under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such rules and
regulations, the “Exchange Cap”), except that such limitation shall not apply in
the event that the Company (A) obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for issuances of shares
of Common Stock in excess of such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Holder. Until such approval or such
written opinion is obtained, no holder of Warrants (each, a “SPA Warrant
Holder”) shall be issued in the aggregate, upon exercise of any of the SPA
Warrants, shares of Common Stock in an amount greater than the product of
(i) the Exchange Cap as of the Issuance Date multiplied by (ii) the quotient of
(1) the aggregate number of Common Shares issued to such SPA Warrant Holder as
of the Closing Date (as defined in the Securities Purchase Agreement) divided by
(2) the aggregate number of Common Shares issued to the SPA Warrant Holders as
of the Closing Date (with respect to each SPA Warrant Holder, the “Exchange Cap
Allocation”); provided, that the Exchange Cap Allocation shall be allocated
among the Holder’s SPA Warrants (unless the Company and the Holder mutually
agree otherwise) as follows: first, to any shares of Common Stock issued or
issuable under the Series C Warrants (without regards to any limitations on
exercise set forth in Section 1(f)(i) thereof),

 

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second, to any shares of Common Stock issued or issuable under the Series B-1
Warrants (without regards to any limitations on exercise set forth in
Section 1(f)(i) thereof), third, to any shares of Common Stock issued or
issuable under the Series B-2 Warrants (without regards to any limitations on
exercise set forth in Section 1(f)(i) thereof) and fourth, to any shares of
Common Stock issued or issuable under the Series A Warrants (without regards to
any limitations on exercise set forth in Section 1(f)(i) thereof). In the event
that any SPA Warrant Holder shall sell or otherwise transfer any of such SPA
Warrant Holder’s SPA Warrants, the transferee shall be allocated a pro rata
portion of such SPA Warrant Holder’s Exchange Cap Allocation with respect to
such portion of such SPA Warrants so transferred, and the restrictions of the
prior sentence shall apply to such transferee with respect to the portion of the
Exchange Cap Allocation so allocated to such transferee. Upon exercise in full
of an SPA Warrant Holder’s Warrants, the difference (if any) between such SPA
Warrant Holder’s Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such SPA Warrant Holder upon such SPA Warrant Holder’s
exercise in full of such SPA Warrants shall be allocated, to the respective
Exchange Cap Allocations of the remaining SPA Warrant Holders of SPA Warrants on
a pro rata basis in proportion to the shares of Common Stock underlying the SPA
Warrants then held by each such SPA Warrant Holder of SPA Warrants. In the event
that the Company is then prohibited from issuing any shares of Common Stock
pursuant to this Section 1(f)(ii) (the “Exchange Cap Shares”), in lieu of
issuing and delivering such Exchange Cap Shares to the Holder, the Company shall
pay cash to the Holder in exchange for the cancellation of such portion of this
Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment
Amount”) at a price equal to the sum of (x) the product of (A) such number of
Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock
on any Trading Day during the period commencing on the date the Holder delivers
the applicable Exercise Notice with respect to such Exchange Cap Shares to the
Company and ending on the date of such payment under this Section 1(f)(ii)
(“Exchange Cap Price”) and (y) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

(g) Reservation of Shares.

(i) Required Reserve Amount. So long as this Warrant remains outstanding, the
Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the SPA Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g)(i) be reduced other than proportionally in connection with any
exercise or redemption of SPA Warrants or such other event covered by
Section 2(a) below. The Required Reserve Amount (including, without limitation,
each increase in the number of shares so reserved) shall be allocated pro rata
among the holders of the SPA Warrants based on number of shares of Common Stock
issuable upon exercise of SPA Warrants held by each holder on the Closing Date
(without regard to any limitations on exercise) or increase in the number of
reserved

 

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shares, as the case may be (the “Authorized Share Allocation”). In the event
that a holder shall sell or otherwise transfer any of such holder’s SPA
Warrants, each transferee shall be allocated a pro rata portion of such holder’s
Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any SPA Warrants shall be allocated to the
remaining holders of SPA Warrants, pro rata based on the number of shares of
Common Stock issuable upon exercise of the SPA Warrants then held by such
holders (without regard to any limitations on exercise).

(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above,
and not in limitation thereof, at any time while any of the SPA Warrants remain
outstanding, the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the
Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
immediately take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for all the SPA Warrants then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days after the occurrence of such Authorized Share Failure, the
Company shall hold a meeting of its stockholders for the approval of an increase
in the number of authorized shares of Common Stock. In connection with such
meeting, the Company shall provide each stockholder with a proxy statement and
shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such proposal. In
the event that the Company is prohibited from issuing shares of Common Stock
upon an exercise of this Warrant due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the
“Authorization Failure Shares”), in lieu of delivering such Authorization
Failure Shares to the Holder, the Company shall pay cash in exchange for the
cancellation of such portion of this Warrant exercisable into such Authorization
Failure Shares at a price equal to the sum of (i) the product of (x) such number
of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the
Holder delivers the applicable Exercise Notice with respect to such
Authorization Failure Shares to the Company and ending on the date of such
issuance and payment under this Section 1(f); and (ii) to the extent the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of Authorization Failure Shares,
any Buy-In Payment Amount, brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith. Nothing
contained in this Section 1(g) shall limit any obligations of the Company under
any provision of the Securities Purchase Agreement.

 

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2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 2.

(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b),
Section 3 or Section 4, if the Company, at any time on or after the Subscription
Date, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital
stock that is payable in shares of Common Stock, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
then outstanding shares of Common Stock into a larger number of shares or
(iii) combines (by combination, reverse stock split or otherwise) one or more
classes of its then outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

(b) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or
after the Subscription Date, the Company issues or sells, or in accordance with
this Section 2 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 any Excluded Securities issued or
sold or deemed to have been issued or sold) for a consideration per share (the
“New Issuance Price”) less than a price equal to the Exercise Price in effect
immediately prior to such issuance or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to herein as the “Applicable Price”)
(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. Notwithstanding the foregoing, no adjustment pursuant
to this Section 2(b) shall occur with respect to any reduction in the exercise
price of any Series B-1 Warrant or B-2 Warrant, as applicable, to an Adjustment
Price (as defined in the applicable Series B-1 Warrant and/or Series B-2
Warrant) following an Adjustment Date (as defined in the applicable Series B-1
Warrant and/or Series B-2 Warrant). For all purposes of the foregoing
(including, without limitation, determining the adjusted Exercise Price and the
New Issuance Price under this Section 2(b)), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is at
any time 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 or otherwise pursuant to the terms 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
granting or sale of such Option for such price per share. For purposes of this
Section 2(b)(i), the “lowest price per share for which one share of Common Stock
is at any time issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof” shall be
equal to (1) the lower of (x) 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 such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible

 

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Security issuable upon exercise of such Option or otherwise pursuant to the
terms thereof and (y) the lowest exercise price set forth in such Option for
which one share of Common Stock is issuable (or may become issuable assuming all
possible market conditions) upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof minus
(2) the sum of all amounts paid or payable to the holder of such Option (or any
other Person) upon the granting or sale of such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option or otherwise pursuant to the terms thereof
plus the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock or of such Convertible
Securities upon the exercise of such Options or otherwise pursuant to the terms
of or upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities.

(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 at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms 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 2(b)(ii), the “lowest price per share for which one
share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof” shall be equal to
(1) the lower of (x) 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 or otherwise pursuant to the
terms thereof and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable (or may become issuable
assuming all possible market conditions) upon conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such Convertible Security (or any other
Person) upon the issuance or sale of such Convertible Security plus the value of
any other consideration received or receivable by, or benefit conferred on, the
holder of such Convertible Security (or any other Person). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities or otherwise pursuant to the
terms thereof, and if any such issuance or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section 2(b), except
as contemplated below, no further adjustment of the Exercise Price shall be made
by reason of such issuance or sale.

 

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(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise
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 (other than proportional changes in conversion or exercise prices, as
applicable, in connection with an event referred to in Section 2(a)), the
Exercise Price in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price 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 2(b)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Subscription Date 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 2(b) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.

(iv) Calculation of Consideration Received. If any Option and/or Convertible
Security and/or Adjustment Right is issued in connection with the issuance or
sale or deemed issuance or sale of any other securities of the Company (as
determined by the Holder, the “Primary Security”, and such Option and/or
Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction, (or one or more transactions if
such issuances or sales or deemed issuances or sales of securities of the
Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated
under the same plan of financing) the aggregate consideration per share of
Common Stock with respect to such Primary Security shall be deemed to be equal
to the difference of (x) the lowest price per share for which one share of
Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i)
or 2(b)(ii) above, as applicable) in such integrated transaction solely with
respect to such Primary Security, minus (y) with respect to such Secondary
Securities, the sum of (I) the Black Scholes Consideration Value of each such
Option, if any, (II) the fair market value (as determined by the Holder in good
faith) or the Black Scholes Consideration Value, as applicable, of such
Adjustment Right, if any, and (III) the fair market value (as determined by the
Holder) of such Convertible Security, if any, in each case, as determined on a
per share basis in accordance with this Section 2(b)(iv). 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 (for the
purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of
consideration 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 (for the
purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which
case the amount of consideration received by the Company for such securities
will be the arithmetic average of the VWAPs of such security for each of the
five (5) Trading Days immediately preceding the date of receipt. If any shares
of Common

 

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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 (for the purpose of
determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Black Scholes
Consideration Value) 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 publicly traded
securities will be determined jointly by the Company and the Holder. 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) Trading Days after the tenth
(10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. 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.

(v) Record Date. If the Company takes a record of the holders of shares of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) 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 issuance 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).]

(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to Section 2(a), the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein).

(d) Other Events. In the event that the Company (or any Subsidiary (as defined
in the Securities Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Exercise Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(d) will increase the
Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be
borne by the Company.

 

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(e) Calculations. All calculations under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issuance or sale of Common
Stock.

(f) Voluntary Adjustment by Company. Subject to the rules and regulations on the
Principal Market, the Company may at any time during the term of this Warrant,
with the prior written consent of the Required Holders (as defined in the
Securities Purchase Agreement), 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.

3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, 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 participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to the extent of any such excess) and
the portion of such Distribution shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution
(and any Distributions declared or made on such initial Distribution or on any
subsequent Distribution held similarly in abeyance) to the same extent as if
there had been no such limitation).

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
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 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 number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date

 

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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, issuance or sale
of such Purchase Rights (provided, however, that to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder and
the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to the extent of the
Maximum Percentage (and shall not be entitled to beneficial ownership of such
shares of Common Stock as a result of such Purchase Right (and beneficial
ownership) to the extent of any such excess) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times, if ever, as its right thereto would not result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, at which time or
times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase
Right held similarly in abeyance) to the same extent as if there had been no
such limitation).

(b) Fundamental Transactions. The Company shall not consummate a Fundamental
Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents (as defined in the Securities Purchase Agreement) in accordance with
the provisions of this Section 4(b) pursuant to written agreements in form and
substance satisfactory to the Holder and approved by the Holder prior to such
Fundamental Transaction, including agreements to deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with
an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction) and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market. Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents 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 this Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein. Upon
consummation of each Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the
exercise of this Warrant prior to the applicable Fundamental Transaction, such
shares of publicly traded common stock (or its equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled
to receive upon the happening of the applicable Fundamental Transaction had this
Warrant

 

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been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant), as adjusted
in accordance with the provisions of this Warrant. Notwithstanding the
foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at
its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the assumption of
this Warrant. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities or
other assets with respect to or in exchange for shares of Common Stock (a
“Corporate Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction but prior to the Expiration Date, in lieu of the shares of the
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. Notwithstanding the foregoing, this Section 4(b) shall not apply if
the Holder or the Company exercises its respective rights pursuant to
Section 4(c) or 4(d), as applicable, and the Company pays the applicable Black
Scholes Value or Company Black Scholes Value to the Holder in such manner and at
such time as required thereunder.

(c) Holder Cash-Out Option. Notwithstanding the foregoing and the provisions of
Section 4(b) above, at the request of the Holder delivered at any time
commencing on the earliest to occur of (x) the public disclosure of any Change
of Control, (y) the consummation of any Change of Control and (z) the Holder
first becoming aware of any Change of Control through the date that is
(I) thirty (30) days after the first public disclosure in a Current Report on
Form 8-K filed with the SEC of the consummation of such Change of Control and
(II) solely to the extent the Company has publicly disclosed in a Current Report
on Form 8-K filed with the SEC at least thirty (30) days prior to the date of
consummation of such Change of Control, the anticipated time of consummation of
such Change of Control, two (2) Trading Days prior to such disclosed anticipated
time of consummation of the Change of Control (or, if later, two (2) Trading
Days prior to the actual time of consummation of the Change of Control), as
applicable, the Company or the Successor Entity (as the case may be) shall
purchase this Warrant from the Holder on the date of such request by paying to
the Holder cash in an amount equal to the Black Scholes Value. Payment of such
amounts shall be made by the Company (or at the Company’s direction) to the
Holder on or prior to the later of (x) the second (2nd) Trading Day after the
date of such request and (y) the date of consummation of such Change of Control
(the “Holder Redemption Date”).

(d) Company Cash-Out Option. Notwithstanding the foregoing and the provisions of
Section 4(b) above, the Company shall have the right, with prior written notice
delivered to the Holder, not more than twenty (20) Trading Days and not less
than two (2) Trading Days prior to the anticipated time of consummation of the
Change of Control, to redeem all, but not less than all, of this Warrant at a
price in cash equal to the Company Black Scholes Value for this Warrant. Payment
of such amounts shall be made by the Company (or at the Company’s direction) to
the

 

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Holder on the date of consummation of such Change of Control (the “Company
Redemption Date”). Notwithstanding anything herein to the contrary, at any time
after the Company’s election in writing to the Holder to effect a redemption
pursuant to this Section 4(d) through the date that is twenty (20) Trading Days
prior to the anticipated time of consummation of the Change of Control (or, if
less, one-half of the remaining days prior to anticipated time of consummation
of the Change of Control), this Warrant may be exercised, in whole or in part,
by the Holder into shares of Common Stock pursuant to Section 1 and the Company
Black Scholes Value to be paid on the Company Redemption Date shall be adjusted
accordingly. For the avoidance of doubt, (A) if both the Company and the Holder
elects to effect a redemption pursuant to Section 4(c) and Section 4(d), as
applicable, the redemption pursuant to Section 4(d) shall govern such Change of
Control and (B) the Company may only elect to effect a redemption pursuant to
this Section 4(d) if the Company Black Scholes Value is to be paid in cash.

(e) Application. The provisions of this Section 4 shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied as if this Warrant (and any such subsequent warrants) were fully
exercisable and without regard to any limitations on the exercise of this
Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital
stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation (as defined in the
Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase
Agreement) or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance 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 (a) 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 (b) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant.
Notwithstanding anything herein to the contrary, if after the sixty
(60) calendar day anniversary of the Issuance Date, the Holder is not permitted
to exercise this Warrant in full for any reason (other than pursuant to
restrictions set forth in Section 1(f) hereof), the Company shall use its best
efforts to promptly remedy such failure, including, without limitation,
obtaining such consents or approvals as necessary to permit such exercise into
shares of Common Stock.

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant,
shall not be entitled to vote or receive dividends or be deemed the holder of
share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in its capacity as
the Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior

 

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to the issuance to the Holder of the Warrant Shares which it is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing contained in
this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the Company
shall provide the Holder with copies of the same notices and other information
given to the stockholders of the Company generally, contemporaneously with the
giving thereof to the stockholders.

7. REISSUANCE OF WARRANTS.

(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 7(d)), registered as the Holder may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less than the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional shares of
Common Stock shall be given.

(d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and
(iv) shall have the same rights and conditions as this Warrant.

 

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8. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Warrant
(other than the issuance of shares of Common Stock upon exercise in accordance
with the terms hereof), including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s), (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder, and (iii) at least ten (10) Trading
Days prior to the consummation of any Fundamental Transaction. To the extent
that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of its Subsidiaries, the
Company shall simultaneously file such notice with the SEC (as defined in the
Securities Purchase Agreement) pursuant to a Current Report on Form 8-K. If the
Company or any of its Subsidiaries provides material non-public information to
the Holder that is not simultaneously filed in a Current Report on Form 8-K and
the Holder has not agreed to receive such material non-public information, the
Company hereby covenants and agrees that the Holder shall not have any duty of
confidentiality to the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agents with respect to,
or a duty to any of the foregoing not to trade on the basis of, such material
non-public information. It is expressly understood and agreed that the time of
execution specified by the Holder in each Exercise Notice shall be definitive
and may not be disputed or challenged by the Company.

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant (other than Section 1(f)) may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Holder. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.

10. SEVERABILITY. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

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11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company 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 to the Company at the
address set forth in Section 9(f) of the Securities Purchase Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. The Company 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, 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 brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court ruling in
favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

13. DISPUTE RESOLUTION.

(a) Submission to Dispute Resolution.

(i) In the case of a dispute relating to the Exercise Price, the Closing Sale
Price, the Black Scholes Consideration Value, the Company Black Scholes Value,
the Black Scholes Value or the fair market value or the arithmetic calculation
of the number of Warrant Shares (as the case may be) (including, without
limitation, a dispute relating to the determination of any of the foregoing),
the Company or the Holder (as the case may be) shall submit the dispute to the
other party via facsimile (A) if by the Company, within two (2) Business Days
after the occurrence of the circumstances giving rise to such dispute or (B) if
by the Holder, at any time after the Holder learned of the circumstances giving
rise to such dispute. If the Holder and the Company are unable to promptly
resolve such dispute

 

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relating to such Exercise Price, such Closing Sale Price, such Black Scholes
Consideration Value, Company Black Scholes Value, Black Scholes Value or such
fair market value or such arithmetic calculation of the number of Warrant Shares
(as the case may be), at any time after the second (2nd) Business Day following
such initial notice by the Company or the Holder (as the case may be) of such
dispute to the Company or the Holder (as the case may be), then the Holder may,
at its sole option, select an independent, reputable investment bank, reasonably
acceptable to the Company, to resolve such dispute.

(ii) The Holder and the Company shall each deliver to such investment bank (A) a
copy of the initial dispute submission so delivered in accordance with the first
sentence of this Section 13 and (B) written documentation supporting its
position with respect to such dispute, in each case, no later than 5:00 p.m.
(New York time) by the fifth (5th) Business Day immediately following the date
on which the Holder selected such investment bank (the “Dispute Submission
Deadline”) (the documents referred to in the immediately preceding clauses
(A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the
Company fails to so deliver all of the Required Dispute Documentation by the
Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such investment bank shall
resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or
otherwise requested by such investment bank, neither the Company nor the Holder
shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the
Required Dispute Documentation).

(iii) The Company and the Holder shall cause such investment bank to determine
the resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. The fees and expenses of such investment bank shall
be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.

(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this
Section 13 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect
under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and
that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13,
(ii) a dispute relating to the Exercise Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of
Common Stock occurred under Section 2(b), (B) the consideration per share at
which an issuance or deemed issuance of Common Stock occurred, (C) whether any
issuance or sale or deemed issuance or sale of Common Stock was an issuance or
sale or deemed issuance or sale of Excluded Securities, (D) whether an
agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the
terms of this Warrant and each other applicable

 

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Transaction Document shall serve as the basis for the selected investment bank’s
resolution of the applicable dispute, such investment bank shall be entitled
(and is hereby expressly authorized) to make all findings, determinations and
the like that such investment bank determines are required to be made by such
investment bank in connection with its resolution of such dispute (including,
without limitation, determining (A) whether an issuance or sale or deemed
issuance or sale of Common Stock occurred under Section 2(b), (B) the
consideration per share at which an issuance or deemed issuance of Common Stock
occurred, (C) whether any issuance or sale or deemed issuance or sale of Common
Stock was an issuance or sale or deemed issuance or sale of Excluded Securities,
(D) whether an agreement, instrument, security or the like constitutes and
Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and
in resolving such dispute such investment bank shall apply such findings,
determinations and the like to the terms of this Warrant and any other
applicable Transaction Documents, (iv) the Holder (and only the Holder), in its
sole discretion, shall have the right to submit any dispute described in this
Section 13 to any state or federal court sitting in The City of New York,
Borough of Manhattan in lieu of utilizing the procedures set forth in this
Section 13 and (v) nothing in this Section 13 shall limit the Holder from
obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 13).

14. REMEDIES, CHARACTERIZATION, 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 and consequential damages for any failure
by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for
herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available remedies, to
specific performance and/or temporary, preliminary and permanent injunctive or
other equitable relief from any court of competent jurisdiction in any such case
without the necessity of proving actual damages and without posting a bond or
other security. The Company shall provide all information and documentation to
the Holder that is requested by the Holder to enable the Holder to confirm the
Company’s compliance with the terms and conditions of this Warrant (including,
without limitation, compliance with Section 2 hereof). The issuance of shares
and certificates for shares as contemplated hereby upon the exercise of this
Warrant shall be made without charge to the Holder or such shares for any
issuance tax or other costs in respect thereof, provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.

 

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15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the holder otherwise takes action to
collect amounts due under this Warrant or to enforce the provisions of this
Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the
company or other proceedings affecting company creditors’ rights and involving a
claim under this Warrant, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees and disbursements.

16. TRANSFER. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company, except as may otherwise be required
by Section 2(g) of the Securities Purchase Agreement; provided that unless the
transferee is an Affiliate of, and after such transfer or assignment continues
to be an Affiliate of, the Holder, no portion of this Warrant representing less
than at least 25% of the Warrant Shares issuable hereunder shall be
transferred..

17. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:

(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

(c) [Intentionally Omitted]

(d) [Intentionally Omitted]

(e) “Adjustment Right” means any right granted with respect to any securities
issued in connection with, or with respect to, any issuance or sale (or deemed
issuance or sale in accordance with Section 2) of shares of Common Stock (other
than rights of the type described in Section 3 and 4 hereof) that could result
in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any
cash settlement rights, cash adjustment or other similar rights).

(f) [Intentionally Omitted]

(g) [Intentionally Omitted]

(h) “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

(i) “Approved Stock Plan” means any employee benefit plan which has been
approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer or director for
services provided to the Company in their capacity as such.

 

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(j) “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

(k) “Black Scholes Consideration Value” means the value of the applicable
Option, Convertible Security or Adjustment Right (as the case may be) as of the
date of issuance thereof calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price
per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive
documents with respect to the issuance of such Option, Convertible Security or
Adjustment Right (as the case may be), (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of such Option, Convertible Security or Adjustment Right (as the case may be) as
of the date of issuance of such Option, Convertible Security or Adjustment Right
(as the case may be), (iii) a zero cost of borrow and (iv) an expected
volatility equal to the 30 day volatility obtained from the “HVT” function on
Bloomberg (determined utilizing a 365 day annualization factor) as of the
Trading Day immediately following the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be).

(l) “Black Scholes Value” means the value of the unexercised portion of this
Warrant remaining on the date of the Holder’s request pursuant to Section 4(c),
which value is calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share
equal to the greater of (1) the highest Closing Sale Price of the Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on the Holder Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the date of the Holder’s
request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the greater of (1) the remaining
term of this Warrant as of the date of the Holder’s request pursuant to
Section 4(c) and (2) the remaining term of this Warrant as of the Holder
Redemption Date (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

 

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(m) “Change of Control” means any Fundamental Transaction other than (i) any
merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization,
recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, are, in all material respects, the holders of the voting
power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a
corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, or (iii) pursuant to a migratory merger
(or similar transaction) effected solely for the purpose of changing the
jurisdiction of incorporation of the Company or any of its Subsidiaries.

(n) “Company Black Scholes Value” means the value of the unexercised portion of
this Warrant remaining on the applicable Company Redemption Date, which value is
calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the
greater of (1) the highest Closing Sale Price of the shares of Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on such Company Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the Company Redemption
Date, (iii) 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 the Company
Redemption Date, (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

(o) “Bloomberg” means Bloomberg, L.P.

(p) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

(q) “Common Shares” shall have the meaning as set forth in the Securities
Purchase Agreement.

(r) “Common Stock” means (i) the Company’s shares of Common Stock, $0.001 par
value per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.

(s) “Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market

 

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for such security, the last trade 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 the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.

(t) “Convertible Securities” means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

(u) “Eligible Market” means the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.

(v) [Intentionally Omitted]

(w) [Intentionally Omitted]

(x) “Excluded Securities” means (i) shares of Common Stock or standard options
to purchase Common Stock issued to directors, officers or employees of the
Company for services rendered to the Company in their capacity as such pursuant
to an Approved Stock Plan (as defined above), provided that (A) all such
issuances (taking into account the shares of Common Stock issuable upon exercise
of such options) after the Subscription Date pursuant to this clause (i) do not,
in the aggregate, exceed more than 5% of the Common Stock issued and outstanding
immediately prior to the Subscription Date and (B) the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (ii) shares of Common Stock issued upon the
conversion or exercise of Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) issued prior to the Subscription Date, provided that the
conversion price of any such Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) is not lowered, none of such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) are otherwise materially changed in any manner that
adversely affects any of the Buyers, and (iii) shares of Common Stock issued
pursuant to the exercise of any Series C Warrant. For the avoidance of doubt,
any issuance pursuant to any SPA Warrant other than a Series C Warrant shall not
be an Excluded Security hereunder and, the Exercise Price hereunder shall be
subject to adjustment with respect thereto pursuant to Section 2(b) above.

 

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(y) “Expiration Date” means the date that is the fifth anniversary of the
Issuance Date or, if such date falls on a day other than a Trading Day or on
which trading does not take place on the Principal Market (a “Holiday”), the
next date that is not a Holiday.

(z) [Intentionally Omitted]

(aa) [Intentionally Omitted]

(bb) [Intentionally Omitted]

(cc) “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding shares of Common Stock, or
(iv) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all
such Subject Entities, individually or in the aggregate, acquire, either (x) at
least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or other
business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its Common Stock, (B) that the Company shall, directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or more related
transactions, allow any Subject Entity individually or the Subject Entities in
the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power

 

27

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represented by issued and outstanding Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant
calculated as if any shares of Common Stock held by all such Subject Entities
were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other shareholders of
the Company to surrender their shares of Common Stock without approval of the
shareholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the
issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this definition
which may be defective or inconsistent with the intended treatment of such
instrument or transaction.

(dd) “Group” means a “group” as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

(ee) “Market Price” means, as of any given date, that price which shall be the
lower of (i) the VWAP of the Common Stock as of the Trading Day immediately
preceding such given date and (ii) the price computed as the quotient of (I) the
sum of the VWAP of the Common Stock for each Trading Day during the five
(5) consecutive Trading Day period ending and including the Trading Day
immediately preceding such given date, divided by (II) five (5) (such period,
the “Market Price Measuring Period”). All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction that proportionately decreases or
increases the Common Stock during such Market Price Measuring Period.

(ff) [Intentionally Omitted]

(gg) “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

(hh) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.

(ii) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency thereof.

(jj) [Intentionally Omitted]

(kk) “Principal Market” means The Nasdaq Global Select Market.

 

28

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(ll) “Registration Rights Agreement” means that certain registration rights
agreement, dated as of the Closing Date, by and among the Company and the
initial holders of the Common Shares and SPA Warrants, relating to, among other
things, the registration of the resale of the Common Shares and the Common Stock
issuable upon exercise of the SPA Warrants, as may be amended from time to time.

(mm) [Intentionally Omitted]

(nn) “SEC” means the United States Securities and Exchange Commission or the
successor thereto.

(oo) “Series A Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

(pp) “Series B-1 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(qq) “Series B-2 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(rr) “Series C Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

(ss) “Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.

(tt) “Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.

(uu) “Trading Day” means, as applicable, (x) with respect to all price or
trading volume determinations relating to the Common Stock, any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder or
(y) with respect to all determinations other than price or trading volume
determinations relating to the Common Stock, any day on which The New York Stock
Exchange (or any successor thereto) is open for trading of securities.

 

29

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(vv) [Intentionally Omitted]

(ww) “VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal
Market is not the principal trading market for such security, then on the
principal securities exchange or securities market on which such security is
then traded), during the period beginning at 9:30 a.m., New York time, and
ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP”
function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York time, and ending at 4:00
p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any
of the market makers for such security as reported in the “pink sheets” by OTC
Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated
for such security on such date on any of the foregoing bases, the VWAP of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 13. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.

[signature page follows]

 

30

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

 

COMSCORE, INC. By:                  Name:   Title:

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EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

COMSCORE, INC.

The undersigned holder hereby elects to exercise the Warrant to Purchase Common
Stock No. _______ (the “Warrant”) of comScore, Inc., a Delaware corporation (the
“Company”) as specified below. Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.

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

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

☐ a “Cashless Exercise” with respect to _______________ Warrant Shares.

In the event that the Holder has elected a Cashless Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that this Exercise Notice was executed by the
Holder at __________ [a.m.][p.m.] on the date set forth below.

2. Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

3. Delivery of Warrant Shares. The Company shall deliver to Holder, or its
designee or agent as specified below, __________ shares of Common Stock in
accordance with the terms of the Warrant. Delivery shall be made to Holder, or
for its benefit, as follows:

☐ Check here if requesting delivery as a certificate to the following name and
to the following address:

 

  Issue to:                      

☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

 

  DTC Participant:       DTC Number:       Account Number:    

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Notwithstanding anything to the contrary contained herein, this Exercise Notice
shall constitute a representation by the Holder of the Warrant submitting this
Exercise Notice that after giving effect to the exercise provided for in this
Exercise Notice, such Holder (together with its affiliates) will not have
beneficial ownership (together with the beneficial ownership of such Person’s
affiliates) of a number of Common Shares which exceeds the Maximum Percentage
(as defined in the Warrant) of the total outstanding shares of Common Stock of
the Company as determined pursuant to the provisions of Section 1(f)(i) of the
Warrant.

 

Date: _____________ __,__     Name of Registered Holder  

 

By:       Name:     Title:  

  Tax ID:               

  Facsimile:               

  E-mail Address:               

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EXHIBIT B

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs
______________ to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated _________, 2019, from the
Company and acknowledged and agreed to by _______________.

 

COMSCORE, INC. By:       Name:   Title:

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Exhibit B-1

Form of Series B-1 Warrant

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[FORM OF SERIES B-1 WARRANT]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON
THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.

COMSCORE, INC.

WARRANT TO PURCHASE COMMON STOCK

Warrant No.: B-1-[                ]

Date of Issuance: [                        ], 2019 (“Issuance Date”)

comScore, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CVI Investments, Inc., the registered holder hereof or its
permitted assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times on or after the
Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), up to 2,347,418 (subject to adjustment as provided herein)
fully paid and non-assessable shares of Common Stock (as defined below) (the
“Warrant Shares”, and such aggregate number of Warrant Shares in which this
Warrant is exercisable, from time to time, the “Warrant Number”). Except as
otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 17. This Warrant is one of the Warrants to
Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that
certain Securities Purchase Agreement, dated as of June 23, 2019 (the
“Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (the “Securities Purchase
Agreement”).

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1. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
and on or prior to the Expiration Date (an “Exercise Date”), in whole or in
part, by delivery (whether via facsimile or otherwise) of a written notice, in
the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant. Within one (1) Trading Day following an
exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such
exercise multiplied by the number of Warrant Shares as to which this Warrant was
so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds. The Holder shall not be required to deliver the
original of this Warrant in order to effect an exercise hereunder. Execution and
delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to purchase the
remaining number of Warrant Shares. Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the Warrant
Shares in accordance with the terms hereof. On or before the first (1st) Trading
Day following the date on which the Company has received an Exercise Notice, the
Company shall transmit by facsimile or electronic mail an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”), which confirmation shall constitute an instruction to the Transfer
Agent to process such Exercise Notice in accordance with the terms herein. On or
before the second (2nd) Trading Day following the date on which the Company has
received such Exercise Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a
trade of such Warrant Shares initiated on the applicable Exercise Date), the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at
Custodian system, or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, upon the request of the Holder,
issue and deliver (via reputable overnight courier) to the address as specified
in the Exercise Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall
be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, 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). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise and upon surrender of this
Warrant to the Company by the Holder, then, at the request of the Holder, the
Company shall as soon as practicable and in no event later than two (2) Business
Days after any exercise and at its own expense, issue and deliver to the Holder
(or its designee) a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant, less the number of Warrant Shares with

 

2

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respect to which this Warrant is exercised. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but rather the number of
shares of Common Stock to be issued shall be rounded up to the nearest whole
number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of
the Transfer Agent) that may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the
foregoing, the Company’s failure to deliver Warrant Shares to the Holder on or
prior to the later of (i) two (2) Trading Days after receipt of the applicable
Exercise Notice (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade of such
Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1)
Trading Day after the Company’s receipt of the Aggregate Exercise Price (such
later date, the “Share Delivery Date”) shall not be deemed to be a breach of
this Warrant. Notwithstanding anything to the contrary contained in this Warrant
or the Registration Rights Agreement, after the effective date of the
Registration Statement (as defined in the Registration Rights Agreement) and
prior to the Holder’s receipt of the notice of a Grace Period (as defined in the
Registration Rights Agreement), the Company shall cause the Transfer Agent to
deliver unlegended shares of Common Stock to the Holder (or its designee) in
connection with any sale of Registrable Securities (as defined in the
Registration Rights Agreement) with respect to which the Holder has entered into
a contract for sale, and delivered a copy of the prospectus included as part of
the particular Registration Statement to the extent applicable, and for which
the Holder has not yet settled. From the Issuance Date through and including the
Expiration Date, the Company shall maintain a transfer agent that participates
in the DTC’s Fast Automated Securities Transfer Program.

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $8.52
(or, with respect to any Forced Exercise (as defined below), the Forced Exercise
Price), subject to adjustment as provided herein.

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail,
for any reason or for no reason, on or prior to the Share Delivery Date, either
(I) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, to issue and deliver to the Holder (or its
designee) a certificate for the number of Warrant Shares to which the Holder is
entitled and register such Warrant Shares on the Company’s share register or, if
the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise of this Warrant (as the case may be) or
(II) if a Registration Statement covering the resale of the Warrant Shares that
are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not
available for the resale of such Unavailable Warrant Shares and the Company
fails to promptly, but in no event later than as required pursuant to the
Registration Rights Agreement (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such
aggregate number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Delivery
Failure”), and if on or after such Share Delivery Date the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock corresponding to
all or any portion of the number of shares of Common Stock issuable upon such
exercise that the Holder is entitled to receive from the

 

3

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Company and has not received from the Company in connection with such Delivery
Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all
other remedies available to the Holder, the Company shall, within two
(2) Business Days after the Holder’s request and in the Holder’s discretion,
either (i) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder)
(the “Buy-In Price”), at which point the Company’s obligation to so issue and
deliver such certificate (and to issue such shares of Common Stock) or credit
the balance account of such Holder or such Holder’s designee, as applicable,
with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant
Shares) shall terminate, or (ii) promptly honor its obligation to so issue and
deliver to the Holder a certificate or certificates representing such Warrant
Shares or credit the balance account of such Holder or such Holder’s designee,
as applicable, with DTC for the number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of Warrant Shares multiplied by (B) the lowest
Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date of the applicable Exercise Notice and ending on the date
of such issuance and payment under this clause (ii) (the “Buy-In Payment
Amount”). Nothing shall limit the 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 (or to electronically deliver such shares of Common Stock) upon the
exercise of this Warrant as required pursuant to the terms hereof. In addition
to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the
applicable Share Delivery Date, then the Holder shall have the right to rescind
such exercise in whole or in part and retain and/or have the Company return, as
the case may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of an exercise
shall not affect the Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or otherwise, and
(ii) if a registration statement covering the resale of the Warrant Shares that
are subject to an Exercise Notice is not available for the resale of such
Warrant Shares and the Holder has submitted an Exercise Notice prior to
receiving notice of the non-availability of such registration statement and the
Company has not already delivered the Warrant Shares underlying such Exercise
Notice electronically without any restrictive legend by crediting such aggregate
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit / Withdrawal At Custodian system, the Holder shall have the option, by
delivery of notice to the Company, to rescind such Exercise Notice in whole or
in part and retain or have returned, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an Exercise Notice shall not affect the Company’s
obligation to make any payments that have accrued prior to the date of such
notice pursuant to this Section 1(c) or otherwise.

(d) [Intentionally Omitted]

(e) Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the number of Warrant Shares to be issued
pursuant to the terms hereof, the Company shall promptly issue to the Holder the
number of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 13.

 

4

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(f) Limitations on Exercises.

(i) Beneficial Ownership. The Company shall not effect the exercise of any
portion of this Warrant, and the Holder shall not have the right to exercise any
portion of this Warrant, pursuant to the terms and conditions of this Warrant
and any such exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder together with
the other Attribution Parties collectively would beneficially own in excess of
4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the number of shares
of Common Stock held by the Holder and all other Attribution Parties plus the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (A) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by the Holder
or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or convertible preferred
stock or warrants, including other SPA Warrants) beneficially owned by the
Holder or any other Attribution Party subject to a limitation on conversion or
exercise analogous to the limitation contained in this Section 1(f)(i). For
purposes of this Section 1(f)(i), beneficial ownership shall be calculated in
accordance with Section 13(d) of the 1934 Act. For purposes of determining the
number of outstanding shares of Common Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage, the Holder
may rely on the number of outstanding shares of Common Stock as reflected in
(x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as
the case may be, (y) a more recent public announcement by the Company or (z) any
other written notice by the Company or the Transfer Agent, if any, setting forth
the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives an Exercise Notice from the Holder at a
time when the actual number of outstanding shares of Common Stock is less than
the Reported Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding and, to the
extent that such Exercise Notice would otherwise cause the Holder’s beneficial
ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of Warrant
Shares to be acquired pursuant to such Exercise Notice (the number of shares by
which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as
reasonably practicable, the Company shall return to the Holder any exercise
price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one
(1) Business Day confirm orally and in writing or by electronic mail to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the

 

5

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Company, including this Warrant, by the Holder and any other Attribution Party
since the date as of which the Reported Outstanding Share Number was reported.
In the event that the issuance of shares of Common Stock to the Holder upon
exercise of this Warrant results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined
under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and
void and shall be cancelled ab initio, and the Holder shall not have the power
to vote or to transfer the Excess Shares. As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the exercise price paid by the Holder for the
Excess Shares. Upon delivery of a written notice to the Company, the Holder may
from time to time increase (with such increase not effective until the
sixty-first (61st) day after delivery of such notice) or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Maximum Percentage will not
be effective until the sixty-first (61st) day after such notice is delivered to
the Company and (ii) any such increase or decrease will apply only to the Holder
and the other Attribution Parties and not to any other holder of SPA Warrants
that is not an Attribution Party of the Holder. For purposes of clarity, the
shares of Common Stock issuable pursuant to the terms of this Warrant in excess
of the Maximum Percentage shall not be deemed to be beneficially owned by the
Holder for any purpose including for purposes of Section 13(d) or Rule
16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. 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(f)(i) to the extent necessary to correct this paragraph or any
portion of this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 1(f)(i) or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant.

(ii) Exchange Cap. The Company shall not issue any shares of Common Stock upon
the exercise of this Warrant if the issuance of such shares of Common Stock
taken together with each prior issuance of Common Shares (as defined in the
Securities Purchase Agreement) under the Securities Purchase Agreement and any
prior issuance of shares of Common Stock upon exercise of the SPA Warrants,
collectively, would exceed the aggregate number of shares of Common Stock which
the Company may issue under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such rules and
regulations, the “Exchange Cap”), except that such limitation shall not apply in
the event that the Company (A) obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for issuances of shares
of Common Stock in excess of such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Holder. Until such approval or such
written opinion is obtained, no holder of Warrants (each, a “SPA Warrant
Holder”) shall be issued in the

 

6

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aggregate, upon exercise of any of the SPA Warrants, shares of Common Stock in
an amount greater than the product of (i) the Exchange Cap as of the Issuance
Date multiplied by (ii) the quotient of (1) the aggregate number of Common
Shares issued to such SPA Warrant Holder as of the Closing Date (as defined in
the Securities Purchase Agreement) divided by (2) the aggregate number of Common
Shares issued to the SPA Warrant Holders as of the Closing Date (with respect to
each SPA Warrant Holder, the “Exchange Cap Allocation”); provided, that the
Exchange Cap Allocation shall be allocated among the Holder’s SPA Warrants
(unless the Company and the Holder mutually agree otherwise) as follows: first,
to any shares of Common Stock issued or issuable under the Series C Warrants
(without regards to any limitations on exercise set forth in Section 1(f)(i)
thereof), second, to any shares of Common Stock issued or issuable under the
Series B-1 Warrants (without regards to any limitations on exercise set forth in
Section 1(f)(i) thereof), third, to any shares of Common Stock issued or
issuable under the Series B-2 Warrants (without regards to any limitations on
exercise set forth in Section 1(f)(i) thereof) and fourth, to any shares of
Common Stock issued or issuable under the Series A Warrants (without regards to
any limitations on exercise set forth in Section 1(f)(i) thereof). In the event
that any SPA Warrant Holder shall sell or otherwise transfer any of such SPA
Warrant Holder’s SPA Warrants, the transferee shall be allocated a pro rata
portion of such SPA Warrant Holder’s Exchange Cap Allocation with respect to
such portion of such SPA Warrants so transferred, and the restrictions of the
prior sentence shall apply to such transferee with respect to the portion of the
Exchange Cap Allocation so allocated to such transferee. Upon exercise in full
of an SPA Warrant Holder’s Warrants, the difference (if any) between such SPA
Warrant Holder’s Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such SPA Warrant Holder upon such SPA Warrant Holder’s
exercise in full of such SPA Warrants shall be allocated, to the respective
Exchange Cap Allocations of the remaining SPA Warrant Holders of SPA Warrants on
a pro rata basis in proportion to the shares of Common Stock underlying the SPA
Warrants then held by each such SPA Warrant Holder of SPA Warrants. In the event
that the Company is then prohibited from issuing any shares of Common Stock
pursuant to this Section 1(f)(ii) (the “Exchange Cap Shares”), in lieu of
issuing and delivering such Exchange Cap Shares to the Holder, the Company shall
pay cash to the Holder in exchange for the cancellation of such portion of this
Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment
Amount”) at a price equal to the sum of (x) the product of (A) such number of
Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock
on any Trading Day during the period commencing on the date the Holder delivers
the applicable Exercise Notice with respect to such Exchange Cap Shares to the
Company and ending on the date of such payment under this Section 1(f)(ii)
(“Exchange Cap Price”) and (y) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

 

7

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(g) Reservation of Shares.

(i) Required Reserve Amount. So long as this Warrant remains outstanding, the
Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the SPA Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g)(i) be reduced other than proportionally in connection with any
exercise or redemption of SPA Warrants or such other event covered by
Section 2(a) below. The Required Reserve Amount (including, without limitation,
each increase in the number of shares so reserved) shall be allocated pro rata
among the holders of the SPA Warrants based on number of shares of Common Stock
issuable upon exercise of SPA Warrants held by each holder on the Closing Date
(without regard to any limitations on exercise) or increase in the number of
reserved shares, as the case may be (the “Authorized Share Allocation”). In the
event that a holder shall sell or otherwise transfer any of such holder’s SPA
Warrants, each transferee shall be allocated a pro rata portion of such holder’s
Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any SPA Warrants shall be allocated to the
remaining holders of SPA Warrants, pro rata based on the number of shares of
Common Stock issuable upon exercise of the SPA Warrants then held by such
holders (without regard to any limitations on exercise).

(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above,
and not in limitation thereof, at any time while any of the SPA Warrants remain
outstanding, the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the
Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
immediately take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for all the SPA Warrants then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days after the occurrence of such Authorized Share Failure, the
Company shall hold a meeting of its stockholders for the approval of an increase
in the number of authorized shares of Common Stock. In connection with such
meeting, the Company shall provide each stockholder with a proxy statement and
shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such proposal. In
the event that the Company is prohibited from issuing shares of Common Stock
upon an exercise of this Warrant due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the
“Authorization Failure Shares”), in lieu of delivering such Authorization
Failure Shares to the Holder, the Company shall pay cash in exchange for the
cancellation of such portion of this Warrant exercisable into such Authorization
Failure Shares at a price equal to the sum of (i) the product of (x) such number
of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the
Holder delivers the applicable Exercise Notice with respect to such
Authorization Failure Shares to the Company and ending on the date of such
issuance and payment under this Section 1(f); and (ii) to the extent the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of Authorization Failure Shares,
any Buy-In Payment Amount, brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith. Nothing
contained in this Section 1(g) shall limit any obligations of the Company under
any provision of the Securities Purchase Agreement.

 

8

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(h) Forced Exercise.

(i) General. As long as no Equity Conditions Failure (other than as a result of
an Allowable Grace Period (as defined in the Registration Rights Agreement)
being outstanding) exists during the period commencing on the applicable Forced
Exercise Notice Date (as defined below) through and including the applicable
Forced Exercise Eligibility Date (as defined below (unless waived in writing by
the Holder), the Company shall have the right, with at least twenty
(20) calendar day prior written notice, to require the Holder to exercise this
Warrant on [    ]1 (or, if an Allowable Grace Period (as defined in the
Registration Rights Agreement) is outstanding as of such date, the Trading Day
immediately following the end of such Allowable Grace Period) (the “Forced
Exercise Eligibility Date”, and if properly exercised by the Company hereunder,
the “Forced Exercise Date”), in whole or in part, as designated in the
applicable Forced Exercise Notice (as defined below) to be issued and delivered
in accordance with Section 1(a) hereof (the “Forced Exercise”).

(ii) Mechanics. The Company may exercise its right to require the Forced
Exercise under this Section 1(h) by delivering a written notice thereof, by
facsimile or electronic mail to all, but not less than all, of the SPA Warrant
Holders (the “Forced Exercise Notice”, and the date thereof, the “Forced
Exercise Notice Date ”); provided that any failure to deliver such written
notice due to the failure of an SPA Warrant Holder to notify the Company of any
change in notice information or any transfer of this Warrant shall not be deemed
a failure to notify less than all of the SPA Warrant Holders pursuant to this
sentence. For purposes of Section 1(a) hereof, if the Forced Exercise occurs
hereunder, the Holder shall be deemed to have delivered an Exercise Notice on
the Forced Exercise Date for the aggregate number of Warrant Shares specified to
be issued to the Holder in the Forced Exercise Notice (subject to any
adjustments thereto pursuant to Section 2 and this Section 1(h) that may occur
prior to the Forced Exercise Date). For the avoidance of doubt, the Share
Delivery Date with respect to the Forced Exercise shall be the later of (x) the
second (2nd) Trading Day after the Forced Exercise Date and (y) the first (1st)
Trading Day after the Company’s receipt of the applicable Aggregate Exercise
Price with respect to the Forced Exercise. Each Forced Exercise Notice shall be
irrevocable. Each Forced Exercise Notice shall (x) be delivered at least twenty
(20) calendar days prior to [    ]2, (y) state the aggregate number of Warrant
Shares to be issued in such Forced Exercise by the Holder and all of the holders
of the Series B-1 Warrants on the Forced Exercise Date (subject to any
adjustments thereto pursuant to Section 2 and this Section 1(h) that may occur
prior to the Forced Exercise Date), and (z) contain a certification from an
officer or director of the Company that the Equity Conditions shall have been
satisfied as of the Forced Exercise Notice Date. The Company shall be permitted
to deliver only

 

 

 

1 

Insert six month anniversary of initial Issuance Date for Series B-1 Warrant

2 

Insert six month anniversary of initial Issuance Date for Series B-1 Warrant

 

9

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one Forced Exercise Notice hereunder. Notwithstanding anything herein to the
contrary, if an Equity Conditions Failure occurs at any time after the Forced
Exercise Notice Date and on or prior to the Forced Exercise Date, (A) the
Company shall provide the Holder a subsequent notice to that effect and
(B) unless the Holder waives the applicable Equity Conditions Failure, the
Forced Exercise shall be cancelled, the applicable Forced Exercise Notice shall
be null and void and the Company shall not have any right thereafter to effect a
Forced Exercise hereunder. Notwithstanding the foregoing, any portion of this
Warrant subject to the Forced Exercise may be exercised by the Holder hereunder
prior to the Forced Exercise Date and such aggregate number of Warrant Shares
exercised hereunder on or after the Forced Exercise Notice Date and prior to the
Forced Exercise Date shall reduce, on a share by share basis, the aggregate
number of Warrant Shares subject to the Forced Exercise hereunder on such Forced
Exercise Date.

(iii) Forced Exercise Blocked Share Amount. Notwithstanding the foregoing, if as
of the Forced Exercise Date the issuance of Warrant Shares in the Forced
Exercise would violate Section 1(f)(i) above, such aggregate number of shares of
Common Stock to be issued in the Forced Exercise that would result in a
violation of Section 1(f)(i) above shall, in lieu of being issued to the Holder
in the Forced Exercise on the Forced Exercise Date, upon payment by the Holder
of the Aggregate Exercise Price, increase the aggregate number of shares of
Common Stock issuable upon exercise of the Series C Warrant of the Holder on a
share by share basis (the “Forced Exercise Blocked Share Amount”) and,
thereafter, the Company shall be deemed to have satisfied its delivery
obligations hereunder with respect to such Warrant Shares for all purposes
hereunder (but not, with respect to any subsequent exercise of the Series C
Warrant of the Holder). The Holder shall use its reasonable best efforts prior
to the Forced Exercise Date to promptly notify the Company of any Forced
Exercise that would result in any Forced Exercise Blocked Share Amount.

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 2.

(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b),
Section 3 or Section 4, if the Company, at any time on or after the Subscription
Date, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital
stock that is payable in shares of Common Stock, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
then outstanding shares of Common Stock into a larger number of shares or
(iii) combines (by combination, reverse stock split or otherwise) one or more
classes of its then outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

 

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(b) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or
after the Subscription Date, the Company issues or sells, or in accordance with
this Section 2 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 any Excluded Securities issued or
sold or deemed to have been issued or sold) for a consideration per share (the
“New Issuance Price”) less than a price equal to the Exercise Price in effect
immediately prior to such issuance or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to herein as the “Applicable Price”)
(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. For all purposes of the foregoing (including, without
limitation, determining the adjusted Exercise Price and the New Issuance Price
under this Section 2(b)), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is at
any time 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 or otherwise pursuant to the terms 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
granting or sale of such Option for such price per share. For purposes of this
Section 2(b)(i), the “lowest price per share for which one share of Common Stock
is at any time issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof” shall be
equal to (1) the lower of (x) 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 such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option or otherwise pursuant to the terms thereof
and (y) the lowest exercise price set forth in such Option for which one share
of Common Stock is issuable (or may become issuable assuming all possible market
conditions) upon the exercise of any such Options or upon conversion, exercise
or exchange of any Convertible Securities issuable upon exercise of any such
Option or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such Option (or any other Person) upon
the granting or sale of such Option, upon exercise of such Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option or otherwise pursuant to the terms thereof plus the
value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Option (or any other Person). Except as contemplated
below, no further adjustment of the Exercise Price shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or otherwise pursuant to the terms of or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

 

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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 at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms 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 2(b)(ii), the “lowest price per share for which one
share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof” shall be equal to
(1) the lower of (x) 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 or otherwise pursuant to the
terms thereof and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable (or may become issuable
assuming all possible market conditions) upon conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such Convertible Security (or any other
Person) upon the issuance or sale of such Convertible Security plus the value of
any other consideration received or receivable by, or benefit conferred on, the
holder of such Convertible Security (or any other Person). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities or otherwise pursuant to the
terms thereof, and if any such issuance or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section 2(b), except
as contemplated below, no further adjustment of the Exercise Price shall be made
by reason of such issuance or sale.

(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise
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 (other than proportional changes in conversion or exercise prices, as
applicable, in connection with an event referred to in Section 2(a)), the
Exercise Price in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price 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 2(b)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Subscription Date 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 2(b) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.

 

12

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(iv) Calculation of Consideration Received. If any Option and/or Convertible
Security and/or Adjustment Right is issued in connection with the issuance or
sale or deemed issuance or sale of any other securities of the Company (as
determined by the Holder, the “Primary Security”, and such Option and/or
Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction, (or one or more transactions if
such issuances or sales or deemed issuances or sales of securities of the
Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated
under the same plan of financing) the aggregate consideration per share of
Common Stock with respect to such Primary Security shall be deemed to be equal
to the difference of (x) the lowest price per share for which one share of
Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i)
or 2(b)(ii) above, as applicable) in such integrated transaction solely with
respect to such Primary Security, minus (y) with respect to such Secondary
Securities, the sum of (I) the Black Scholes Consideration Value of each such
Option, if any, (II) the fair market value (as determined by the Holder in good
faith) or the Black Scholes Consideration Value, as applicable, of such
Adjustment Right, if any, and (III) the fair market value (as determined by the
Holder) of such Convertible Security, if any, in each case, as determined on a
per share basis in accordance with this Section 2(b)(iv). 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 (for the
purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of
consideration 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 (for the
purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which
case the amount of consideration received by the Company for such securities
will be the arithmetic average of the VWAPs of such security for each of the
five (5) Trading Days immediately preceding 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 (for the purpose of
determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Black Scholes
Consideration Value) 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 publicly traded
securities will be determined jointly by the Company and the Holder. 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) Trading Days after the tenth
(10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. 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.

 

13

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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 (A) to receive a dividend or
other distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) 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 issuance 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).

(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to Section 2(a), the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein).

(d) Other Events. In the event that the Company (or any Subsidiary (as defined
in the Securities Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Exercise Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(d) will increase the
Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be
borne by the Company.

(e) Calculations. All calculations under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issuance or sale of Common
Stock.

(f) Voluntary Adjustment by Company. Subject to the rules and regulations on the
Principal Market, the Company may at any time during the term of this Warrant,
with the prior written consent of the Required Holders (as defined in the
Securities Purchase Agreement), 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.

 

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(g) Post-Current Public Information Failure Adjustment. If on the Adjustment
Date, the Exercise Price is greater than the Adjustment Price, on the Trading
Day immediately following the Adjustment Date, the Exercise Price shall
automatically adjust to the Adjustment Price (as adjusted for stock splits,
stock dividends, stock combinations, recapitalizations and similar events).

3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, 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 participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to the extent of any such excess) and
the portion of such Distribution shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution
(and any Distributions declared or made on such initial Distribution or on any
subsequent Distribution held similarly in abeyance) to the same extent as if
there had been no such limitation).

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
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 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 number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) 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, issuance or sale of such
Purchase Rights (provided, however, that to the extent that the Holder’s right
to participate in any such Purchase Right would result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to the extent of the
Maximum Percentage (and shall not be entitled to beneficial ownership of such
shares of Common Stock as a result of such

 

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Purchase Right (and beneficial ownership) to the extent of any such excess) and
such Purchase Right to such extent shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such right (and
any Purchase Right granted, issued or sold on such initial Purchase Right or on
any subsequent Purchase Right held similarly in abeyance) to the same extent as
if there had been no such limitation).

(b) Fundamental Transactions. The Company shall not consummate a Fundamental
Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents (as defined in the Securities Purchase Agreement) in accordance with
the provisions of this Section 4(b) pursuant to written agreements in form and
substance satisfactory to the Holder and approved by the Holder prior to such
Fundamental Transaction, including agreements to deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with
an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction) and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market. Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents 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 this Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein. Upon
consummation of each Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the
exercise of this Warrant prior to the applicable Fundamental Transaction, such
shares of publicly traded common stock (or its equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled
to receive upon the happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant),
as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the assumption of
this Warrant. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities

 

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or other assets with respect to or in exchange for shares of Common Stock (a
“Corporate Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction but prior to the Expiration Date, in lieu of the shares of the
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. Notwithstanding the foregoing, this Section 4(b) shall not apply if
the Holder or the Company exercises its respective rights pursuant to
Section 4(c) or 4(d), as applicable, and the Company pays the applicable Black
Scholes Value or Company Black Scholes Value to the Holder in such manner and at
such time as required thereunder.

(c) Holder Cash-Out Option. Notwithstanding the foregoing and the provisions of
Section 4(b) above, at the request of the Holder delivered at any time
commencing on the earliest to occur of (x) the public disclosure of any Change
of Control, (y) the consummation of any Change of Control and (z) the Holder
first becoming aware of any Change of Control through the date that is
(I) thirty (30) days after the first public disclosure in a Current Report on
Form 8-K filed with the SEC of the consummation of such Change of Control and
(II) solely to the extent the Company has publicly disclosed in a Current Report
on Form 8-K filed with the SEC at least thirty (30) days prior to the date of
consummation of such Change of Control, the anticipated time of consummation of
such Change of Control, two (2) Trading Days prior to such disclosed anticipated
time of consummation of the Change of Control (or, if later, two (2) Trading
Days prior to the actual time of consummation of the Change of Control), as
applicable, the Company or the Successor Entity (as the case may be) shall
purchase this Warrant from the Holder on the date of such request by paying to
the Holder cash in an amount equal to the Black Scholes Value. Payment of such
amounts shall be made by the Company (or at the Company’s direction) to the
Holder on or prior to the later of (x) the second (2nd) Trading Day after the
date of such request and (y) the date of consummation of such Change of Control
(the “Holder Redemption Date”).

(d) Company Cash-Out Option. Notwithstanding the foregoing and the provisions of
Section 4(b) above, the Company shall have the right, with prior written notice
delivered to the Holder, not more than twenty (20) Trading Days and not less
than two (2) Trading Days prior to the anticipated time of consummation of the
Change of Control, to redeem all, but not less than all, of this Warrant at a
price in cash equal to the Company Black Scholes Value for this Warrant. Payment
of such amounts shall be made by the Company (or at the Company’s direction) to
the Holder on the date of consummation of such Change of Control (the “Company
Redemption Date”). Notwithstanding anything herein to the contrary, at any time
after the Company’s election in writing to the Holder to effect a redemption
pursuant to this Section 4(d) through the date that is twenty (20) Trading Days
prior to the anticipated time of consummation of the Change of Control (or, if
less, one-half of the remaining days prior to anticipated time of consummation
of the Change of Control), this Warrant may be exercised, in whole or in part,
by the Holder into shares of Common Stock pursuant to Section 1 and the Company
Black Scholes Value to be paid

 

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on the Company Redemption Date shall be adjusted accordingly. For the avoidance
of doubt, (A) if both the Company and the Holder elects to effect a redemption
pursuant to Section 4(c) and Section 4(d), as applicable, the redemption
pursuant to Section 4(d) shall govern such Change of Control and (B) the Company
may only elect to effect a redemption pursuant to this Section 4(d) if the
Company Black Scholes Value is to be paid in cash.

(e) Application. The provisions of this Section 4 shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied as if this Warrant (and any such subsequent warrants) were fully
exercisable and without regard to any limitations on the exercise of this
Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital
stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation (as defined in the
Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase
Agreement) or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance 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 (a) 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 (b) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant.
Notwithstanding anything herein to the contrary, if after the sixty
(60) calendar day anniversary of the Issuance Date, the Holder is not permitted
to exercise this Warrant in full for any reason (other than pursuant to
restrictions set forth in Section 1(f) hereof), the Company shall use its best
efforts to promptly remedy such failure, including, without limitation,
obtaining such consents or approvals as necessary to permit such exercise into
shares of Common Stock.

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant,
shall not be entitled to vote or receive dividends or be deemed the holder of
share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in its capacity as
the Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which it is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 6, the Company shall provide the Holder
with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.

 

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7. REISSUANCE OF WARRANTS.

(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 7(d)), registered as the Holder may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less than the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional shares of
Common Stock shall be given.

(d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and
(iv) shall have the same rights and conditions as this Warrant.

8. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Warrant
(other than the issuance of shares of Common Stock upon exercise in accordance
with the terms hereof), including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s), (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common

 

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Stock, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or
liquidation, provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the
Holder, and (iii) at least ten (10) Trading Days prior to the consummation of
any Fundamental Transaction. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company
or any of its Subsidiaries, the Company shall simultaneously file such notice
with the SEC (as defined in the Securities Purchase Agreement) pursuant to a
Current Report on Form 8-K. If the Company or any of its Subsidiaries provides
material non-public information to the Holder that is not simultaneously filed
in a Current Report on Form 8-K and the Holder has not agreed to receive such
material non-public information, the Company hereby covenants and agrees that
the Holder shall not have any duty of confidentiality to the Company, any of its
Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents with respect to, or a duty to any of the foregoing not to
trade on the basis of, such material non-public information. It is expressly
understood and agreed that the time of execution specified by the Holder in each
Exercise Notice shall be definitive and may not be disputed or challenged by the
Company.

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant (other than Section 1(f)) may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Holder. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.

10. SEVERABILITY. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company 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 to the Company at the
address set forth in Section 9(f) of the Securities

 

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Purchase Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. The Company 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, 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
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Nothing contained
herein shall be deemed or operate to preclude the Holder from bringing suit or
taking other legal action against the Company in any other jurisdiction to
collect on the Company’s obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other
court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

13. DISPUTE RESOLUTION.

(a) Submission to Dispute Resolution.

(i) In the case of a dispute relating to the Exercise Price, the Closing Sale
Price, the Adjustment Price, the Forced Exercise Price, the Black Scholes
Consideration Value, the Company Black Scholes Value, the Black Scholes Value or
the fair market value or the arithmetic calculation of the number of Warrant
Shares (as the case may be) (including, without limitation, a dispute relating
to the determination of any of the foregoing), the Company or the Holder (as the
case may be) shall submit the dispute to the other party via facsimile (A) if by
the Company, within two (2) Business Days after the occurrence of the
circumstances giving rise to such dispute or (B) if by the Holder, at any time
after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to promptly resolve such dispute relating
to such Exercise Price, such Closing Sale Price, such Adjustment Price, such
Forced Exercise Price, such Black Scholes Consideration Value, Company Black
Scholes Value, Black Scholes Value or such fair market value or such arithmetic
calculation of the number of Warrant Shares (as the case may be), at any time
after the second (2nd) Business Day following such initial notice by the Company
or the Holder (as the case may be) of such dispute to the Company or the Holder
(as the case may be), then the Holder may, at its sole option, select an
independent, reputable investment bank, reasonably acceptable to the Company, to
resolve such dispute.

 

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(ii) The Holder and the Company shall each deliver to such investment bank (A) a
copy of the initial dispute submission so delivered in accordance with the first
sentence of this Section 13 and (B) written documentation supporting its
position with respect to such dispute, in each case, no later than 5:00 p.m.
(New York time) by the fifth (5th) Business Day immediately following the date
on which the Holder selected such investment bank (the “Dispute Submission
Deadline”) (the documents referred to in the immediately preceding clauses
(A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the
Company fails to so deliver all of the Required Dispute Documentation by the
Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such investment bank shall
resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or
otherwise requested by such investment bank, neither the Company nor the Holder
shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the
Required Dispute Documentation).

(iii) The Company and the Holder shall cause such investment bank to determine
the resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. The fees and expenses of such investment bank shall
be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.

(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this
Section 13 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect
under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and
that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13,
(ii) a dispute relating to the Exercise Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of
Common Stock occurred under Section 2(b), (B) the consideration per share at
which an issuance or deemed issuance of Common Stock occurred, (C) whether any
issuance or sale or deemed issuance or sale of Common Stock was an issuance or
sale or deemed issuance or sale of Excluded Securities, (D) whether an
agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the
terms of this Warrant and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such
investment bank determines are required to be made by such investment bank in
connection with its resolution of such dispute (including, without limitation,
determining (A) whether an issuance or sale or deemed issuance or sale of Common
Stock occurred under Section 2(b), (B) the consideration per share at which an
issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded

 

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Securities, (D) whether an agreement, instrument, security or the like
constitutes and Option or Convertible Security and (E) whether a Dilutive
Issuance occurred) and in resolving such dispute such investment bank shall
apply such findings, determinations and the like to the terms of this Warrant
and any other applicable Transaction Documents, (iv) the Holder (and only the
Holder), in its sole discretion, shall have the right to submit any dispute
described in this Section 13 to any state or federal court sitting in The City
of New York, Borough of Manhattan in lieu of utilizing the procedures set forth
in this Section 13 and (v) nothing in this Section 13 shall limit the Holder
from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).

14. REMEDIES, CHARACTERIZATION, 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 and consequential damages for any failure
by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for
herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available remedies, to
specific performance and/or temporary, preliminary and permanent injunctive or
other equitable relief from any court of competent jurisdiction in any such case
without the necessity of proving actual damages and without posting a bond or
other security. The Company shall provide all information and documentation to
the Holder that is requested by the Holder to enable the Holder to confirm the
Company’s compliance with the terms and conditions of this Warrant (including,
without limitation, compliance with Section 2 hereof). The issuance of shares
and certificates for shares as contemplated hereby upon the exercise of this
Warrant shall be made without charge to the Holder or such shares for any
issuance tax or other costs in respect thereof, provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.

15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the holder otherwise takes action to
collect amounts due under this Warrant or to enforce the provisions of this
Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the
company or other proceedings affecting company creditors’ rights and involving a
claim under this Warrant, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees and disbursements.

 

23

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16. TRANSFER. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company, except as may otherwise be required
by Section 2(g) of the Securities Purchase Agreement; provided that unless the
transferee is an Affiliate of, and after such transfer or assignment continues
to be an Affiliate of, the Holder, no portion of this Warrant representing less
than at least 25% of the Warrant Shares issuable hereunder shall be
transferred..

17. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:

(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

(c) [Intentionally Omitted]

(d) [Intentionally Omitted]

(e) “Adjustment Right” means any right granted with respect to any securities
issued in connection with, or with respect to, any issuance or sale (or deemed
issuance or sale in accordance with Section 2) of shares of Common Stock (other
than rights of the type described in Section 3 and 4 hereof) that could result
in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any
cash settlement rights, cash adjustment or other similar rights).

(f) “Adjustment Price” means the greater of (x) the Floor Price and (y) 85% of
the Market Price as of the Adjustment Date.

(g) “Adjustment Date” means, if any Current Public Information Failure occurs
from and after the Issuance Date, the 30th calendar day after the initial Resale
Availability Date after such Current Public Information Failure.

(h) “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

(i) “Approved Stock Plan” means any employee benefit plan which has been
approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer or director for
services provided to the Company in their capacity as such.

 

24

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(j) “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

(k) “Black Scholes Consideration Value” means the value of the applicable
Option, Convertible Security or Adjustment Right (as the case may be) as of the
date of issuance thereof calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price
per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive
documents with respect to the issuance of such Option, Convertible Security or
Adjustment Right (as the case may be), (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of such Option, Convertible Security or Adjustment Right (as the case may be) as
of the date of issuance of such Option, Convertible Security or Adjustment Right
(as the case may be), (iii) a zero cost of borrow and (iv) an expected
volatility equal to the 30 day volatility obtained from the “HVT” function on
Bloomberg (determined utilizing a 365 day annualization factor) as of the
Trading Day immediately following the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be).

(l) “Black Scholes Value” means the value of the unexercised portion of this
Warrant remaining on the date of the Holder’s request pursuant to Section 4(c),
which value is calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share
equal to the greater of (1) the highest Closing Sale Price of the Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on the Holder Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the date of the Holder’s
request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the greater of (1) the remaining
term of this Warrant as of the date of the Holder’s request pursuant to
Section 4(c) and (2) the remaining term of this Warrant as of the Holder
Redemption Date (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

(m) “Change of Control” means any Fundamental Transaction other than (i) any
merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such

 

25

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reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respects, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, or (iii) pursuant to
a migratory merger (or similar transaction) effected solely for the purpose of
changing the jurisdiction of incorporation of the Company or any of its
Subsidiaries.

(n) “Company Black Scholes Value” means the value of the unexercised portion of
this Warrant remaining on the applicable Company Redemption Date, which value is
calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the
greater of (1) the highest Closing Sale Price of the shares of Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on such Company Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the Company Redemption
Date, (iii) 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 the Company
Redemption Date, (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

(o) “Bloomberg” means Bloomberg, L.P.

(p) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

(q) “Common Shares” shall have the meaning as set forth in the Securities
Purchase Agreement.

(r) “Common Stock” means (i) the Company’s shares of Common Stock, $0.001 par
value per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.

(s) “Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade 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 the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for

 

26

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such security by Bloomberg, the average of the ask prices of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 13. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

(t) “Convertible Securities” means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

(u) “Eligible Market” means the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.

(v) “Equity Conditions” means, with respect to an given date of determination:
(i) on such applicable date of determination one or more registration statements
(each, the “Forced Exercise Registration Statement”) shall be effective and the
prospectus contained therein shall be available on such applicable date of
determination (with, for the avoidance of doubt, any shares of Common Stock
previously issued pursuant to such prospectus deemed unavailable) for the resale
of all the shares of Common Stock issuable upon exercise of this Warrant and the
SPA Warrants in connection with the event requiring determination (such
applicable aggregate number of shares of Common Stock, each, a “Required Minimum
Securities Amount”); (ii) on each day during the period beginning thirty
(30) calendar days prior to the applicable date of determination and ending on
and including the applicable date of determination (the “Equity Conditions
Measuring Period”), the Common Stock (including the shares of Common Stock to be
issued in the event requiring this determination) is listed or designated for
quotation (as applicable) on an Eligible Market and shall not have been
suspended from trading on an Eligible Market (other than suspensions of not more
than two (2) days and occurring prior to the applicable date of determination
due to business announcements by the Company) nor shall delisting or suspension
by an Eligible Market have been threatened (with a reasonable prospect of
delisting occurring after giving effect to all applicable notice, appeal,
compliance and hearing periods) or reasonably likely to occur or pending as
evidenced by a writing by such Eligible Market; (iii) during the Equity
Conditions Measuring Period, the Company shall have delivered all Warrant Shares
issuable upon exercise of this Warrant on a timely basis as set forth in
Section 1 hereof and all other shares of capital stock required to be delivered
by the Company on a timely basis as set forth in the other Transaction
Documents; (iv) the Required Minimum Securities Amount of Common Stock to be
issued in connection with the event requiring determination may be issued in
full without violating the rules or regulations of the Eligible Market on which
the Common Stock is then listed or designated for quotation (as applicable); (v)
on each day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Change of Control shall have
occurred which has not been abandoned, terminated or consummated; (vi) the
Company shall have no knowledge of any fact that would reasonably be expected to
cause the applicable Forced Exercise Registration Statement to not be effective
or the prospectus contained therein to not be

 

27

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available for the issuance of the Required Minimum Securities Amount of shares
of Common Stock in connection with the event requiring such determination;
(vii) the Holder shall not be in possession of any material, non-public
information provided to any of them by the Company, any of its Subsidiaries or
any of their respective affiliates, employees, officers, representatives, agents
or the like; (viii) on each day during the Equity Conditions Measuring Period,
the Company shall have been in compliance in material respects will each
covenant and other term or condition of each Transaction Document, including,
without limitation, the Company shall not have failed to timely make any payment
pursuant to any Transaction Document; (ix) there shall not have occurred any
Price Failure or Volume Failure as of such applicable date of determination;
(x) on the applicable date of determination (A) no Authorized Share Failure
shall exist or be continuing and (B) all Warrant Shares to be issued in
connection with the event requiring this determination may be issued in full
without resulting in an Authorized Share Failure (as defined in Section 1(g)
above); (xi) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating
Section 1(f)(ii) hereof (or the equivalent provisions of any other applicable
SPA Warrants), and (xii) no bona fide dispute shall exist, by and between any of
SPA Warrant Holders, the Company, the Principal Market (or such applicable
Eligible Market in which the Common Stock of the Company is then principally
trading) and/or FINRA with respect to any term or provision of this Warrant or
any other Transaction Document.

(w) “Equity Conditions Failure” means that on each day during the period
commencing twenty (20) Trading Days prior to the applicable Forced Exercise
Notice Date through and including the applicable Forced Exercise Date, the
Equity Conditions have not been satisfied (or waived in writing by the Holder).

(x) “Excluded Securities” means (i) shares of Common Stock or standard options
to purchase Common Stock issued to directors, officers or employees of the
Company for services rendered to the Company in their capacity as such pursuant
to an Approved Stock Plan (as defined above), provided that (A) all such
issuances (taking into account the shares of Common Stock issuable upon exercise
of such options) after the Subscription Date pursuant to this clause (i) do not,
in the aggregate, exceed more than 5% of the Common Stock issued and outstanding
immediately prior to the Subscription Date and (B) the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (ii) shares of Common Stock issued upon the
conversion or exercise of Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) issued prior to the Subscription Date, provided that the
conversion price of any such Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) is not lowered, none of such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) are otherwise materially changed in any manner that
adversely affects any of the Buyers, and (iii) shares of Common Stock issued
pursuant to the exercise of any Series C Warrant. For the avoidance of doubt,
any issuance pursuant to any SPA Warrant other than a Series C Warrant shall not
be an Excluded Security hereunder and, the Exercise Price hereunder shall be
subject to adjustment with respect thereto pursuant to Section 2(b) above.

 

28

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(y) “Expiration Date” means the date that is the Trading Day immediately
following the six month anniversary (subject to automatic extension, on a day by
day basis, by any Extension Day Amount) of the Issuance Date or, if such date
falls on a day other than a Trading Day or on which trading does not take place
on the Principal Market (a “Holiday”), the next date that is not a Holiday.

(z) “Extension Day Amount” means, as of any date of determination, the sum of
(i) thirty (30) and (ii) such aggregate number of calendar days from and after
the Issuance Date and prior to such date of determination on which a
Registration Statement (as defined in the Registration Rights Agreement) is not
effective or any prospectus contained therein is not available for use to permit
the resale by the Holder of all of the Registrable Securities of the Holder or
any Current Public Information Failure exists.

(aa) “Floor Price” means $[    ]3 (as adjusted for stock splits, stock
dividends, stock combinations, recapitalizations and similar events), or subject
to the rules and regulations of the Principal Market, such other lower price as
the Company and the Holder shall mutually agree, from time to time.

(bb) “Forced Exercise Price” means the lower of (i) the Exercise Price in effect
as of the Forced Exercise Date and (ii) the greater of (x) the Floor Price and
(y) 85% of the Market Price as of the Trading Day ended immediately prior to the
Forced Exercise Eligibility Date.

(cc) “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding shares of Common Stock, or
(iv) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all
such Subject Entities, individually or in the aggregate, acquire, either (x) at
least 50% of the outstanding shares of

 

 

3 

Insert 20% of the Closing Bid Price as of the Trading Day ended immediately
prior to the time of execution of the Securities Purchase Agreement.

 

29

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Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to,
such stock purchase agreement or other business combination were not
outstanding; or (z) such number of shares of Common Stock such that the Subject
Entities become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock,
or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the
Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock,
merger, consolidation, business combination, reorganization, recapitalization,
spin-off, scheme of arrangement, reorganization, recapitalization or
reclassification or otherwise in any manner whatsoever, of either (x) at least
50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock, (y) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock not held by all such Subject
Entities as of the date of this Warrant calculated as if any shares of Common
Stock held by all such Subject Entities were not outstanding, or (z) a
percentage of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of the Company
sufficient to allow such Subject Entities to effect a statutory short form
merger or other transaction requiring other shareholders of the Company to
surrender their shares of Common Stock without approval of the shareholders of
the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or
the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this definition to the extent necessary to
correct this definition or any portion of this definition which may be defective
or inconsistent with the intended treatment of such instrument or transaction.

(dd) “Group” means a “group” as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

(ee) “Market Price” means, as of any given date, that price which shall be the
lower of (i) the VWAP of the Common Stock as of the Trading Day immediately
preceding such given date and (ii) the price computed as the quotient of (I) the
sum of the VWAP of the Common Stock for each Trading Day during the five
(5) consecutive Trading Day period ending and including the Trading Day
immediately preceding such given date, divided by (II) five (5) (such period,
the “Market Price Measuring Period”). All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction that proportionately decreases or
increases the Common Stock during such Market Price Measuring Period.

(ff) [Intentionally Omitted]

(gg) “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

30

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(hh) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.

(ii) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency thereof.

(jj) “Price Failure” means, with respect to a particular date of determination,
that the quotient of (i) sum of the VWAP of the Common Stock for each Trading
Day during the ten (10) consecutive Trading Day period (the “Price Failure
Measuring Period”) ending and including the Trading Day immediately preceding
such date of determination, divided by (ii) ten (10) fails to exceed $3.96 (as
adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions occurring after the Subscription
Date). All such determinations to be appropriately adjusted for any stock
splits, stock dividends, stock combinations, recapitalizations or other similar
transactions during any such Price Failure Measuring Period.

(kk) “Principal Market” means The Nasdaq Global Select Market.

(ll) “Registration Rights Agreement” means that certain registration rights
agreement, dated as of the Closing Date, by and among the Company and the
initial holders of the Common Shares and SPA Warrants, relating to, among other
things, the registration of the resale of the Common Shares and the Common Stock
issuable upon exercise of the SPA Warrants, as may be amended from time to time.

(mm) [Intentionally Omitted]

(nn) “SEC” means the United States Securities and Exchange Commission or the
successor thereto.

(oo) “Series A Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

(pp) “Series B-1 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(qq) “Series B-2 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(rr) “Series C Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

 

31

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(ss) “Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.

(tt) “Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.

(uu) “Trading Day” means, as applicable, (x) with respect to all price or
trading volume determinations relating to the Common Stock, any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder or
(y) with respect to all determinations other than price or trading volume
determinations relating to the Common Stock, any day on which The New York Stock
Exchange (or any successor thereto) is open for trading of securities.

(vv) “Volume Failure” means, with respect to a particular date of determination,
the aggregate daily composite trading volume (as reported on Bloomberg) of the
Common Stock on the Principal Market on any Trading Days during the ten
(10) Trading Day period ending on the Trading Day immediately preceding such
date of determination (such period, the “Volume Failure Measuring Period”), is
less than 150,000 shares (as adjusted for any stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions occurring
after the Subscription Date).

(ww) “VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal
Market is not the principal trading market for such security, then on the
principal securities exchange or securities market on which such security is
then traded), during the period beginning at 9:30 a.m., New York time, and
ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP”
function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York time, and ending at 4:00
p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any
of the market makers for such security as reported in the “pink sheets” by OTC
Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated
for such security on such date on any of the foregoing bases, the VWAP of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 13. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.

[signature page follows]

 

32

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

 

COMSCORE, INC. By:  

 

  Name:   Title:

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EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

COMSCORE, INC.

The undersigned holder hereby elects to exercise the Warrant to Purchase Common
Stock No. _______ (the “Warrant”) of comScore, Inc., a Delaware corporation (the
“Company”) as specified below. Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.

1. Payment of Exercise Price. The Holder shall pay the Aggregate Exercise Price
in the sum of $___________________ to the Company in accordance with the terms
of the Warrant.

2. Delivery of Warrant Shares. The Company shall deliver to Holder, or its
designee or agent as specified below, __________ shares of Common Stock in
accordance with the terms of the Warrant. Delivery shall be made to Holder, or
for its benefit, as follows:

☐ Check here if requesting delivery as a certificate to the following name and
to the following address:

  Issue to:                      

☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

 

  DTC Participant:       DTC Number:       Account Number:    

Notwithstanding anything to the contrary contained herein, this Exercise Notice
shall constitute a representation by the Holder of the Warrant submitting this
Exercise Notice that after giving effect to the exercise provided for in this
Exercise Notice, such Holder (together with its affiliates) will not have
beneficial ownership (together with the beneficial ownership of such Person’s
affiliates) of a number of Common Shares which exceeds the Maximum Percentage
(as defined in the Warrant) of the total outstanding shares of Common Stock of
the Company as determined pursuant to the provisions of Section 1(f)(i) of the
Warrant.

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Date: _____________ __,__

  Name of Registered Holder

 

By:       Name:     Title:  

  Tax ID:               

  Facsimile:               

  E-mail Address:               

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EXHIBIT B

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs
______________ to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated _________, 2019, from the
Company and acknowledged and agreed to by _______________.

 

COMSCORE, INC. By:  

             

  Name:   Title:

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Exhibit B-2

Form of Series B-2 Warrant

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[FORM OF SERIES B-2 WARRANT]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON
THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.

COMSCORE, INC.

WARRANT TO PURCHASE COMMON STOCK

Warrant No.: B-2-[        ]

Date of Issuance: [                ], 2019 (“Issuance Date”)

comScore, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CVI Investments, Inc., the registered holder hereof or its
permitted assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times on or after the
Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), up to 1,121,076 (subject to adjustment as provided herein)
fully paid and non-assessable shares of Common Stock (as defined below) (the
“Warrant Shares”, and such aggregate number of Warrant Shares in which this
Warrant is exercisable, from time to time, the “Warrant Number”). Except as
otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 17. This Warrant is one of the Warrants to
Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that
certain Securities Purchase Agreement, dated as of June 23, 2019 (the
“Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (the “Securities Purchase
Agreement”).

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1. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
and on or prior to the Expiration Date (an “Exercise Date”), in whole or in
part, by delivery (whether via facsimile or otherwise) of a written notice, in
the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant. Within one (1) Trading Day following an
exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such
exercise multiplied by the number of Warrant Shares as to which this Warrant was
so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds. The Holder shall not be required to deliver the
original of this Warrant in order to effect an exercise hereunder. Execution and
delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to purchase the
remaining number of Warrant Shares. Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the Warrant
Shares in accordance with the terms hereof. On or before the first (1st) Trading
Day following the date on which the Company has received an Exercise Notice, the
Company shall transmit by facsimile or electronic mail an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”), which confirmation shall constitute an instruction to the Transfer
Agent to process such Exercise Notice in accordance with the terms herein. On or
before the second (2nd) Trading Day following the date on which the Company has
received such Exercise Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a
trade of such Warrant Shares initiated on the applicable Exercise Date), the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at
Custodian system, or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, upon the request of the Holder,
issue and deliver (via reputable overnight courier) to the address as specified
in the Exercise Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall
be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, 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). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise and upon surrender of this
Warrant to the Company by the Holder, then, at the request of the Holder, the
Company shall as soon as practicable and in no event later than two (2) Business
Days after any exercise and at its own expense, issue and deliver to the Holder
(or its designee) a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant, less the number of Warrant Shares with

 

2

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respect to which this Warrant is exercised. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but rather the number of
shares of Common Stock to be issued shall be rounded up to the nearest whole
number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of
the Transfer Agent) that may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the
foregoing, the Company’s failure to deliver Warrant Shares to the Holder on or
prior to the later of (i) two (2) Trading Days after receipt of the applicable
Exercise Notice (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade of such
Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1)
Trading Day after the Company’s receipt of the Aggregate Exercise Price (such
later date, the “Share Delivery Date”) shall not be deemed to be a breach of
this Warrant. Notwithstanding anything to the contrary contained in this Warrant
or the Registration Rights Agreement, after the effective date of the
Registration Statement (as defined in the Registration Rights Agreement) and
prior to the Holder’s receipt of the notice of a Grace Period (as defined in the
Registration Rights Agreement), the Company shall cause the Transfer Agent to
deliver unlegended shares of Common Stock to the Holder (or its designee) in
connection with any sale of Registrable Securities (as defined in the
Registration Rights Agreement) with respect to which the Holder has entered into
a contract for sale, and delivered a copy of the prospectus included as part of
the particular Registration Statement to the extent applicable, and for which
the Holder has not yet settled. From the Issuance Date through and including the
Expiration Date, the Company shall maintain a transfer agent that participates
in the DTC’s Fast Automated Securities Transfer Program.

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $8.92
(or, with respect to any Forced Exercise (as defined below), the Forced Exercise
Price), subject to adjustment as provided herein.

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail,
for any reason or for no reason, on or prior to the Share Delivery Date, either
(I) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, to issue and deliver to the Holder (or its
designee) a certificate for the number of Warrant Shares to which the Holder is
entitled and register such Warrant Shares on the Company’s share register or, if
the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise of this Warrant (as the case may be) or
(II) if a Registration Statement covering the resale of the Warrant Shares that
are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not
available for the resale of such Unavailable Warrant Shares and the Company
fails to promptly, but in no event later than as required pursuant to the
Registration Rights Agreement (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such
aggregate number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Delivery
Failure”), and if on or after such Share Delivery Date the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock corresponding to
all or any portion of the number of shares of Common Stock issuable upon such
exercise that the Holder is entitled to receive from the

 

3

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Company and has not received from the Company in connection with such Delivery
Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all
other remedies available to the Holder, the Company shall, within two
(2) Business Days after the Holder’s request and in the Holder’s discretion,
either (i) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder)
(the “Buy-In Price”), at which point the Company’s obligation to so issue and
deliver such certificate (and to issue such shares of Common Stock) or credit
the balance account of such Holder or such Holder’s designee, as applicable,
with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant
Shares) shall terminate, or (ii) promptly honor its obligation to so issue and
deliver to the Holder a certificate or certificates representing such Warrant
Shares or credit the balance account of such Holder or such Holder’s designee,
as applicable, with DTC for the number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of Warrant Shares multiplied by (B) the lowest
Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date of the applicable Exercise Notice and ending on the date
of such issuance and payment under this clause (ii) (the “Buy-In Payment
Amount”). Nothing shall limit the 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 (or to electronically deliver such shares of Common Stock) upon the
exercise of this Warrant as required pursuant to the terms hereof. In addition
to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the
applicable Share Delivery Date, then the Holder shall have the right to rescind
such exercise in whole or in part and retain and/or have the Company return, as
the case may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of an exercise
shall not affect the Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or otherwise, and
(ii) if a registration statement covering the resale of the Warrant Shares that
are subject to an Exercise Notice is not available for the resale of such
Warrant Shares and the Holder has submitted an Exercise Notice prior to
receiving notice of the non-availability of such registration statement and the
Company has not already delivered the Warrant Shares underlying such Exercise
Notice electronically without any restrictive legend by crediting such aggregate
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit / Withdrawal At Custodian system, the Holder shall have the option, by
delivery of notice to the Company, to rescind such Exercise Notice in whole or
in part and retain or have returned, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an Exercise Notice shall not affect the Company’s
obligation to make any payments that have accrued prior to the date of such
notice pursuant to this Section 1(c) or otherwise.

(d) [Intentionally Omitted]

(e) Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the number of Warrant Shares to be issued
pursuant to the terms hereof, the Company shall promptly issue to the Holder the
number of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 13.

 

4

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(f) Limitations on Exercises.

(i) Beneficial Ownership. The Company shall not effect the exercise of any
portion of this Warrant, and the Holder shall not have the right to exercise any
portion of this Warrant, pursuant to the terms and conditions of this Warrant
and any such exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder together with
the other Attribution Parties collectively would beneficially own in excess of
4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the number of shares
of Common Stock held by the Holder and all other Attribution Parties plus the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (A) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by the Holder
or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or convertible preferred
stock or warrants, including other SPA Warrants) beneficially owned by the
Holder or any other Attribution Party subject to a limitation on conversion or
exercise analogous to the limitation contained in this Section 1(f)(i). For
purposes of this Section 1(f)(i), beneficial ownership shall be calculated in
accordance with Section 13(d) of the 1934 Act. For purposes of determining the
number of outstanding shares of Common Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage, the Holder
may rely on the number of outstanding shares of Common Stock as reflected in
(x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as
the case may be, (y) a more recent public announcement by the Company or (z) any
other written notice by the Company or the Transfer Agent, if any, setting forth
the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives an Exercise Notice from the Holder at a
time when the actual number of outstanding shares of Common Stock is less than
the Reported Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding and, to the
extent that such Exercise Notice would otherwise cause the Holder’s beneficial
ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of Warrant
Shares to be acquired pursuant to such Exercise Notice (the number of shares by
which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as
reasonably practicable, the Company shall return to the Holder any exercise
price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one
(1) Business Day confirm orally and in writing or by electronic mail to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the

 

5

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Company, including this Warrant, by the Holder and any other Attribution Party
since the date as of which the Reported Outstanding Share Number was reported.
In the event that the issuance of shares of Common Stock to the Holder upon
exercise of this Warrant results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined
under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and
void and shall be cancelled ab initio, and the Holder shall not have the power
to vote or to transfer the Excess Shares. As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the exercise price paid by the Holder for the
Excess Shares. Upon delivery of a written notice to the Company, the Holder may
from time to time increase (with such increase not effective until the
sixty-first (61st) day after delivery of such notice) or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Maximum Percentage will not
be effective until the sixty-first (61st) day after such notice is delivered to
the Company and (ii) any such increase or decrease will apply only to the Holder
and the other Attribution Parties and not to any other holder of SPA Warrants
that is not an Attribution Party of the Holder. For purposes of clarity, the
shares of Common Stock issuable pursuant to the terms of this Warrant in excess
of the Maximum Percentage shall not be deemed to be beneficially owned by the
Holder for any purpose including for purposes of Section 13(d) or Rule
16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. 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(f)(i) to the extent necessary to correct this paragraph or any
portion of this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 1(f)(i) or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant.

(ii) Exchange Cap. The Company shall not issue any shares of Common Stock upon
the exercise of this Warrant if the issuance of such shares of Common Stock
taken together with each prior issuance of Common Shares (as defined in the
Securities Purchase Agreement) under the Securities Purchase Agreement and any
prior issuance of shares of Common Stock upon exercise of the SPA Warrants,
collectively, would exceed the aggregate number of shares of Common Stock which
the Company may issue under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such rules and
regulations, the “Exchange Cap”), except that such limitation shall not apply in
the event that the Company (A) obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for issuances of shares
of Common Stock in excess of such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Holder. Until such approval or such
written opinion is obtained, no holder of Warrants (each, a “SPA Warrant
Holder”) shall be issued in the

 

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aggregate, upon exercise of any of the SPA Warrants, shares of Common Stock in
an amount greater than the product of (i) the Exchange Cap as of the Issuance
Date multiplied by (ii) the quotient of (1) the aggregate number of Common
Shares issued to such SPA Warrant Holder as of the Closing Date (as defined in
the Securities Purchase Agreement) divided by (2) the aggregate number of Common
Shares issued to the SPA Warrant Holders as of the Closing Date (with respect to
each SPA Warrant Holder, the “Exchange Cap Allocation”); provided, that the
Exchange Cap Allocation shall be allocated among the Holder’s SPA Warrants
(unless the Company and the Holder mutually agree otherwise) as follows: first,
to any shares of Common Stock issued or issuable under the Series C Warrants
(without regards to any limitations on exercise set forth in Section 1(f)(i)
thereof), second, to any shares of Common Stock issued or issuable under the
Series B-1 Warrants (without regards to any limitations on exercise set forth in
Section 1(f)(i) thereof), third, to any shares of Common Stock issued or
issuable under the Series B-2 Warrants (without regards to any limitations on
exercise set forth in Section 1(f)(i) thereof) and fourth, to any shares of
Common Stock issued or issuable under the Series A Warrants (without regards to
any limitations on exercise set forth in Section 1(f)(i) thereof). In the event
that any SPA Warrant Holder shall sell or otherwise transfer any of such SPA
Warrant Holder’s SPA Warrants, the transferee shall be allocated a pro rata
portion of such SPA Warrant Holder’s Exchange Cap Allocation with respect to
such portion of such SPA Warrants so transferred, and the restrictions of the
prior sentence shall apply to such transferee with respect to the portion of the
Exchange Cap Allocation so allocated to such transferee. Upon exercise in full
of an SPA Warrant Holder’s Warrants, the difference (if any) between such SPA
Warrant Holder’s Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such SPA Warrant Holder upon such SPA Warrant Holder’s
exercise in full of such SPA Warrants shall be allocated, to the respective
Exchange Cap Allocations of the remaining SPA Warrant Holders of SPA Warrants on
a pro rata basis in proportion to the shares of Common Stock underlying the SPA
Warrants then held by each such SPA Warrant Holder of SPA Warrants. In the event
that the Company is then prohibited from issuing any shares of Common Stock
pursuant to this Section 1(f)(ii) (the “Exchange Cap Shares”), in lieu of
issuing and delivering such Exchange Cap Shares to the Holder, the Company shall
pay cash to the Holder in exchange for the cancellation of such portion of this
Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment
Amount”) at a price equal to the sum of (x) the product of (A) such number of
Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock
on any Trading Day during the period commencing on the date the Holder delivers
the applicable Exercise Notice with respect to such Exchange Cap Shares to the
Company and ending on the date of such payment under this Section 1(f)(ii)
(“Exchange Cap Price”) and (y) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

 

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(g) Reservation of Shares.

(i) Required Reserve Amount. So long as this Warrant remains outstanding, the
Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the SPA Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g)(i) be reduced other than proportionally in connection with any
exercise or redemption of SPA Warrants or such other event covered by
Section 2(a) below. The Required Reserve Amount (including, without limitation,
each increase in the number of shares so reserved) shall be allocated pro rata
among the holders of the SPA Warrants based on number of shares of Common Stock
issuable upon exercise of SPA Warrants held by each holder on the Closing Date
(without regard to any limitations on exercise) or increase in the number of
reserved shares, as the case may be (the “Authorized Share Allocation”). In the
event that a holder shall sell or otherwise transfer any of such holder’s SPA
Warrants, each transferee shall be allocated a pro rata portion of such holder’s
Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any SPA Warrants shall be allocated to the
remaining holders of SPA Warrants, pro rata based on the number of shares of
Common Stock issuable upon exercise of the SPA Warrants then held by such
holders (without regard to any limitations on exercise).

(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above,
and not in limitation thereof, at any time while any of the SPA Warrants remain
outstanding, the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the
Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
immediately take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for all the SPA Warrants then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days after the occurrence of such Authorized Share Failure, the
Company shall hold a meeting of its stockholders for the approval of an increase
in the number of authorized shares of Common Stock. In connection with such
meeting, the Company shall provide each stockholder with a proxy statement and
shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such proposal. In
the event that the Company is prohibited from issuing shares of Common Stock
upon an exercise of this Warrant due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the
“Authorization Failure Shares”), in lieu of delivering such Authorization
Failure Shares to the Holder, the Company shall pay cash in exchange for the
cancellation of such portion of this Warrant exercisable into such Authorization
Failure Shares at a price equal to the sum of (i) the product of (x) such number
of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the
Holder delivers the applicable Exercise Notice with respect to such
Authorization Failure Shares to the Company and ending on the date of such
issuance and payment under this Section 1(f); and (ii) to the extent the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of Authorization Failure Shares,
any Buy-In Payment Amount, brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith. Nothing
contained in this Section 1(g) shall limit any obligations of the Company under
any provision of the Securities Purchase Agreement.

 

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(h) Forced Exercise.

(i) General. As long as no Equity Conditions Failure (other than as a result of
an Allowable Grace Period (as defined in the Registration Rights Agreement)
being outstanding) exists during the period commencing on the applicable Forced
Exercise Notice Date (as defined below) through and including the applicable
Forced Exercise Eligibility Date (as defined below (unless waived in writing by
the Holder), the Company shall have the right, with at least twenty
(20) calendar day prior written notice, to require the Holder to exercise this
Warrant on [    ]1 (or, if an Allowable Grace Period (as defined in the
Registration Rights Agreement) is outstanding as of such date, the Trading Day
immediately following the end of such Allowable Grace Period) (the “Forced
Exercise Eligibility Date”, and if properly exercised by the Company hereunder,
the “Forced Exercise Date”), in whole or in part, as designated in the
applicable Forced Exercise Notice (as defined below) to be issued and delivered
in accordance with Section 1(a) hereof (the “Forced Exercise”).

(ii) Mechanics. The Company may exercise its right to require the Forced
Exercise under this Section 1(h) by delivering a written notice thereof, by
facsimile or electronic mail to all, but not less than all, of the SPA Warrant
Holders (the “Forced Exercise Notice”, and the date thereof, the “Forced
Exercise Notice Date ”); provided that any failure to deliver such written
notice due to the failure of an SPA Warrant Holder to notify the Company of any
change in notice information or any transfer of this Warrant shall not be deemed
a failure to notify less than all of the SPA Warrant Holders pursuant to this
sentence. For purposes of Section 1(a) hereof, if the Forced Exercise occurs
hereunder, the Holder shall be deemed to have delivered an Exercise Notice on
the Forced Exercise Date for the aggregate number of Warrant Shares specified to
be issued to the Holder in the Forced Exercise Notice (subject to any
adjustments thereto pursuant to Section 2 and this Section 1(h) that may occur
prior to the Forced Exercise Date). For the avoidance of doubt, the Share
Delivery Date with respect to the Forced Exercise shall be the later of (x) the
second (2nd) Trading Day after the Forced Exercise Date and (y) the first (1st)
Trading Day after the Company’s receipt of the applicable Aggregate Exercise
Price with respect to the Forced Exercise. Each Forced Exercise Notice shall be
irrevocable. Each Forced Exercise Notice shall (x) be delivered at least twenty
(20) calendar days prior to [    ]2, (y) state the aggregate number of Warrant
Shares to be issued in such Forced Exercise by the Holder and all of the holders
of the Series B-2 Warrants on the Forced Exercise Date (subject to any
adjustments thereto pursuant to Section 2 and this Section 1(h) that may occur
prior to the Forced Exercise Date), and (z) contain a certification from an
officer or director of the Company that the Equity Conditions shall have been
satisfied as of the Forced Exercise Notice Date. The Company shall be permitted
to deliver only

 

1 

Insert first anniversary of initial Issuance Date for Series B-2 Warrant

2 

Insert first anniversary of initial Issuance Date for Series B-2 Warrant

 

9

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one Forced Exercise Notice hereunder. Notwithstanding anything herein to the
contrary, if an Equity Conditions Failure occurs at any time after the Forced
Exercise Notice Date and on or prior to the Forced Exercise Date, (A) the
Company shall provide the Holder a subsequent notice to that effect and
(B) unless the Holder waives the applicable Equity Conditions Failure, the
Forced Exercise shall be cancelled, the applicable Forced Exercise Notice shall
be null and void and the Company shall not have any right thereafter to effect a
Forced Exercise hereunder. Notwithstanding the foregoing, any portion of this
Warrant subject to the Forced Exercise may be exercised by the Holder hereunder
prior to the Forced Exercise Date and such aggregate number of Warrant Shares
exercised hereunder on or after the Forced Exercise Notice Date and prior to the
Forced Exercise Date shall reduce, on a share by share basis, the aggregate
number of Warrant Shares subject to the Forced Exercise hereunder on such Forced
Exercise Date.

(iii) Forced Exercise Blocked Share Amount. Notwithstanding the foregoing, if as
of the Forced Exercise Date the issuance of Warrant Shares in the Forced
Exercise would violate Section 1(f)(i) above, such aggregate number of shares of
Common Stock to be issued in the Forced Exercise that would result in a
violation of Section 1(f)(i) above shall, in lieu of being issued to the Holder
in the Forced Exercise on the Forced Exercise Date, upon payment by the Holder
of the Aggregate Exercise Price, increase the aggregate number of shares of
Common Stock issuable upon exercise of the Series C Warrant of the Holder on a
share by share basis (the “Forced Exercise Blocked Share Amount”) and,
thereafter, the Company shall be deemed to have satisfied its delivery
obligations hereunder with respect to such Warrant Shares for all purposes
hereunder (but not, with respect to any subsequent exercise of the Series C
Warrant of the Holder). The Holder shall use its reasonable best efforts prior
to the Forced Exercise Date to promptly notify the Company of any Forced
Exercise that would result in any Forced Exercise Blocked Share Amount.

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 2.

(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b),
Section 3 or Section 4, if the Company, at any time on or after the Subscription
Date, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital
stock that is payable in shares of Common Stock, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
then outstanding shares of Common Stock into a larger number of shares or
(iii) combines (by combination, reverse stock split or otherwise) one or more
classes of its then outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

 

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(b) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or
after the Subscription Date, the Company issues or sells, or in accordance with
this Section 2 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 any Excluded Securities issued or
sold or deemed to have been issued or sold) for a consideration per share (the
“New Issuance Price”) less than a price equal to the Exercise Price in effect
immediately prior to such issuance or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to herein as the “Applicable Price”)
(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. For all purposes of the foregoing (including, without
limitation, determining the adjusted Exercise Price and the New Issuance Price
under this Section 2(b)), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is at
any time 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 or otherwise pursuant to the terms 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
granting or sale of such Option for such price per share. For purposes of this
Section 2(b)(i), the “lowest price per share for which one share of Common Stock
is at any time issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof” shall be
equal to (1) the lower of (x) 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 such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option or otherwise pursuant to the terms thereof
and (y) the lowest exercise price set forth in such Option for which one share
of Common Stock is issuable (or may become issuable assuming all possible market
conditions) upon the exercise of any such Options or upon conversion, exercise
or exchange of any Convertible Securities issuable upon exercise of any such
Option or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such Option (or any other Person) upon
the granting or sale of such Option, upon exercise of such Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option or otherwise pursuant to the terms thereof plus the
value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Option (or any other Person). Except as contemplated
below, no further adjustment of the Exercise Price shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or otherwise pursuant to the terms of or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

 

11

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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 at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms 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 2(b)(ii), the “lowest price per share for which one
share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof” shall be equal to
(1) the lower of (x) 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 or otherwise pursuant to the
terms thereof and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable (or may become issuable
assuming all possible market conditions) upon conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such Convertible Security (or any other
Person) upon the issuance or sale of such Convertible Security plus the value of
any other consideration received or receivable by, or benefit conferred on, the
holder of such Convertible Security (or any other Person). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities or otherwise pursuant to the
terms thereof, and if any such issuance or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section 2(b), except
as contemplated below, no further adjustment of the Exercise Price shall be made
by reason of such issuance or sale.

(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise
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 (other than proportional changes in conversion or exercise prices, as
applicable, in connection with an event referred to in Section 2(a)), the
Exercise Price in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price 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 2(b)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Subscription Date 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 2(b) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.

 

12

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(iv) Calculation of Consideration Received. If any Option and/or Convertible
Security and/or Adjustment Right is issued in connection with the issuance or
sale or deemed issuance or sale of any other securities of the Company (as
determined by the Holder, the “Primary Security”, and such Option and/or
Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction, (or one or more transactions if
such issuances or sales or deemed issuances or sales of securities of the
Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated
under the same plan of financing) the aggregate consideration per share of
Common Stock with respect to such Primary Security shall be deemed to be equal
to the difference of (x) the lowest price per share for which one share of
Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i)
or 2(b)(ii) above, as applicable) in such integrated transaction solely with
respect to such Primary Security, minus (y) with respect to such Secondary
Securities, the sum of (I) the Black Scholes Consideration Value of each such
Option, if any, (II) the fair market value (as determined by the Holder in good
faith) or the Black Scholes Consideration Value, as applicable, of such
Adjustment Right, if any, and (III) the fair market value (as determined by the
Holder) of such Convertible Security, if any, in each case, as determined on a
per share basis in accordance with this Section 2(b)(iv). 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 (for the
purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of
consideration 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 (for the
purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which
case the amount of consideration received by the Company for such securities
will be the arithmetic average of the VWAPs of such security for each of the
five (5) Trading Days immediately preceding 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 (for the purpose of
determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Black Scholes
Consideration Value) 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 publicly traded
securities will be determined jointly by the Company and the Holder. 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) Trading Days after the tenth
(10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. 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.

 

13

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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 (A) to receive a dividend or
other distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) 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 issuance 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).

(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to Section 2(a), the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein).

(d) Other Events. In the event that the Company (or any Subsidiary (as defined
in the Securities Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Exercise Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(d) will increase the
Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be
borne by the Company.

(e) Calculations. All calculations under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issuance or sale of Common
Stock.

(f) Voluntary Adjustment by Company. Subject to the rules and regulations on the
Principal Market, the Company may at any time during the term of this Warrant,
with the prior written consent of the Required Holders (as defined in the
Securities Purchase Agreement), 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.

 

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(g) Post-Current Public Information Failure Adjustment. If on the Adjustment
Date, the Exercise Price is greater than the Adjustment Price, on the Trading
Day immediately following the Adjustment Date, the Exercise Price shall
automatically adjust to the Adjustment Price (as adjusted for stock splits,
stock dividends, stock combinations, recapitalizations and similar events).

3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, 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 participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to the extent of any such excess) and
the portion of such Distribution shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution
(and any Distributions declared or made on such initial Distribution or on any
subsequent Distribution held similarly in abeyance) to the same extent as if
there had been no such limitation).

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
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 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 number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) 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, issuance or sale of such
Purchase Rights (provided, however, that to the extent that the Holder’s right
to participate in any such Purchase Right would result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to the extent of the
Maximum Percentage (and shall not be entitled to beneficial ownership of such
shares of Common Stock as a result of such

 

15

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Purchase Right (and beneficial ownership) to the extent of any such excess) and
such Purchase Right to such extent shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such right (and
any Purchase Right granted, issued or sold on such initial Purchase Right or on
any subsequent Purchase Right held similarly in abeyance) to the same extent as
if there had been no such limitation).

(b) Fundamental Transactions. The Company shall not consummate a Fundamental
Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents (as defined in the Securities Purchase Agreement) in accordance with
the provisions of this Section 4(b) pursuant to written agreements in form and
substance satisfactory to the Holder and approved by the Holder prior to such
Fundamental Transaction, including agreements to deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with
an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction) and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market. Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents 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 this Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein. Upon
consummation of each Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the
exercise of this Warrant prior to the applicable Fundamental Transaction, such
shares of publicly traded common stock (or its equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled
to receive upon the happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant),
as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the assumption of
this Warrant. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities

 

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or other assets with respect to or in exchange for shares of Common Stock (a
“Corporate Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction but prior to the Expiration Date, in lieu of the shares of the
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. Notwithstanding the foregoing, this Section 4(b) shall not apply if
the Holder or the Company exercises its respective rights pursuant to
Section 4(c) or 4(d), as applicable, and the Company pays the applicable Black
Scholes Value or Company Black Scholes Value to the Holder in such manner and at
such time as required thereunder.

(c) Holder Cash-Out Option. Notwithstanding the foregoing and the provisions of
Section 4(b) above, at the request of the Holder delivered at any time
commencing on the earliest to occur of (x) the public disclosure of any Change
of Control, (y) the consummation of any Change of Control and (z) the Holder
first becoming aware of any Change of Control through the date that is
(I) thirty (30) days after the first public disclosure in a Current Report on
Form 8-K filed with the SEC of the consummation of such Change of Control and
(II) solely to the extent the Company has publicly disclosed in a Current Report
on Form 8-K filed with the SEC at least thirty (30) days prior to the date of
consummation of such Change of Control, the anticipated time of consummation of
such Change of Control, two (2) Trading Days prior to such disclosed anticipated
time of consummation of the Change of Control (or, if later, two (2) Trading
Days prior to the actual time of consummation of the Change of Control), as
applicable, the Company or the Successor Entity (as the case may be) shall
purchase this Warrant from the Holder on the date of such request by paying to
the Holder cash in an amount equal to the Black Scholes Value. Payment of such
amounts shall be made by the Company (or at the Company’s direction) to the
Holder on or prior to the later of (x) the second (2nd) Trading Day after the
date of such request and (y) the date of consummation of such Change of Control
(the “Holder Redemption Date”).

(d) Company Cash-Out Option. Notwithstanding the foregoing and the provisions of
Section 4(b) above, the Company shall have the right, with prior written notice
delivered to the Holder, not more than twenty (20) Trading Days and not less
than two (2) Trading Days prior to the anticipated time of consummation of the
Change of Control, to redeem all, but not less than all, of this Warrant at a
price in cash equal to the Company Black Scholes Value for this Warrant. Payment
of such amounts shall be made by the Company (or at the Company’s direction) to
the Holder on the date of consummation of such Change of Control (the “Company
Redemption Date”). Notwithstanding anything herein to the contrary, at any time
after the Company’s election in writing to the Holder to effect a redemption
pursuant to this Section 4(d) through the date that is twenty (20) Trading Days
prior to the anticipated time of consummation of the Change of Control (or, if
less, one-half of the remaining days prior to anticipated time of consummation
of the Change of Control), this Warrant may be exercised, in whole or in part,
by the Holder into shares of Common Stock pursuant to Section 1 and the Company
Black Scholes Value to be paid

 

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on the Company Redemption Date shall be adjusted accordingly. For the avoidance
of doubt, (A) if both the Company and the Holder elects to effect a redemption
pursuant to Section 4(c) and Section 4(d), as applicable, the redemption
pursuant to Section 4(d) shall govern such Change of Control and (B) the Company
may only elect to effect a redemption pursuant to this Section 4(d) if the
Company Black Scholes Value is to be paid in cash.

(e) Application. The provisions of this Section 4 shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied as if this Warrant (and any such subsequent warrants) were fully
exercisable and without regard to any limitations on the exercise of this
Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital
stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation (as defined in the
Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase
Agreement) or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance 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 (a) 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 (b) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant.
Notwithstanding anything herein to the contrary, if after the sixty
(60) calendar day anniversary of the Issuance Date, the Holder is not permitted
to exercise this Warrant in full for any reason (other than pursuant to
restrictions set forth in Section 1(f) hereof), the Company shall use its best
efforts to promptly remedy such failure, including, without limitation,
obtaining such consents or approvals as necessary to permit such exercise into
shares of Common Stock.

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant,
shall not be entitled to vote or receive dividends or be deemed the holder of
share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in its capacity as
the Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which it is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 6, the Company shall provide the Holder
with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.

 

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7. REISSUANCE OF WARRANTS.

(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 7(d)), registered as the Holder may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less than the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional shares of
Common Stock shall be given.

(d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and
(iv) shall have the same rights and conditions as this Warrant.

8. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Warrant
(other than the issuance of shares of Common Stock upon exercise in accordance
with the terms hereof), including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s), (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common

 

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Stock, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or
liquidation, provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the
Holder, and (iii) at least ten (10) Trading Days prior to the consummation of
any Fundamental Transaction. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company
or any of its Subsidiaries, the Company shall simultaneously file such notice
with the SEC (as defined in the Securities Purchase Agreement) pursuant to a
Current Report on Form 8-K. If the Company or any of its Subsidiaries provides
material non-public information to the Holder that is not simultaneously filed
in a Current Report on Form 8-K and the Holder has not agreed to receive such
material non-public information, the Company hereby covenants and agrees that
the Holder shall not have any duty of confidentiality to the Company, any of its
Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents with respect to, or a duty to any of the foregoing not to
trade on the basis of, such material non-public information. It is expressly
understood and agreed that the time of execution specified by the Holder in each
Exercise Notice shall be definitive and may not be disputed or challenged by the
Company.

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant (other than Section 1(f)) may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Holder. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.

10. SEVERABILITY. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company 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 to the Company at the
address set forth in Section 9(f) of the Securities

 

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Purchase Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. The Company 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, 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
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Nothing contained
herein shall be deemed or operate to preclude the Holder from bringing suit or
taking other legal action against the Company in any other jurisdiction to
collect on the Company’s obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other
court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

13. DISPUTE RESOLUTION.

(a) Submission to Dispute Resolution.

(i) In the case of a dispute relating to the Exercise Price, the Closing Sale
Price, the Adjustment Price, the Forced Exercise Price, the Black Scholes
Consideration Value, the Company Black Scholes Value, the Black Scholes Value or
the fair market value or the arithmetic calculation of the number of Warrant
Shares (as the case may be) (including, without limitation, a dispute relating
to the determination of any of the foregoing), the Company or the Holder (as the
case may be) shall submit the dispute to the other party via facsimile (A) if by
the Company, within two (2) Business Days after the occurrence of the
circumstances giving rise to such dispute or (B) if by the Holder, at any time
after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to promptly resolve such dispute relating
to such Exercise Price, such Closing Sale Price, such Adjustment Price, such
Forced Exercise Price, such Black Scholes Consideration Value, Company Black
Scholes Value, Black Scholes Value or such fair market value or such arithmetic
calculation of the number of Warrant Shares (as the case may be), at any time
after the second (2nd) Business Day following such initial notice by the Company
or the Holder (as the case may be) of such dispute to the Company or the Holder
(as the case may be), then the Holder may, at its sole option, select an
independent, reputable investment bank, reasonably acceptable to the Company, to
resolve such dispute.

 

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(ii) The Holder and the Company shall each deliver to such investment bank (A) a
copy of the initial dispute submission so delivered in accordance with the first
sentence of this Section 13 and (B) written documentation supporting its
position with respect to such dispute, in each case, no later than 5:00 p.m.
(New York time) by the fifth (5th) Business Day immediately following the date
on which the Holder selected such investment bank (the “Dispute Submission
Deadline”) (the documents referred to in the immediately preceding clauses
(A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the
Company fails to so deliver all of the Required Dispute Documentation by the
Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such investment bank shall
resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or
otherwise requested by such investment bank, neither the Company nor the Holder
shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the
Required Dispute Documentation).

(iii) The Company and the Holder shall cause such investment bank to determine
the resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. The fees and expenses of such investment bank shall
be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.

(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this
Section 13 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect
under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and
that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13,
(ii) a dispute relating to the Exercise Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of
Common Stock occurred under Section 2(b), (B) the consideration per share at
which an issuance or deemed issuance of Common Stock occurred, (C) whether any
issuance or sale or deemed issuance or sale of Common Stock was an issuance or
sale or deemed issuance or sale of Excluded Securities, (D) whether an
agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the
terms of this Warrant and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such
investment bank determines are required to be made by such investment bank in
connection with its resolution of such dispute (including, without limitation,
determining (A) whether an issuance or sale or deemed issuance or sale of Common
Stock occurred under Section 2(b), (B) the consideration per share at which an
issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded

 

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Securities, (D) whether an agreement, instrument, security or the like
constitutes and Option or Convertible Security and (E) whether a Dilutive
Issuance occurred) and in resolving such dispute such investment bank shall
apply such findings, determinations and the like to the terms of this Warrant
and any other applicable Transaction Documents, (iv) the Holder (and only the
Holder), in its sole discretion, shall have the right to submit any dispute
described in this Section 13 to any state or federal court sitting in The City
of New York, Borough of Manhattan in lieu of utilizing the procedures set forth
in this Section 13 and (v) nothing in this Section 13 shall limit the Holder
from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).

14. REMEDIES, CHARACTERIZATION, 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 and consequential damages for any failure
by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for
herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available remedies, to
specific performance and/or temporary, preliminary and permanent injunctive or
other equitable relief from any court of competent jurisdiction in any such case
without the necessity of proving actual damages and without posting a bond or
other security. The Company shall provide all information and documentation to
the Holder that is requested by the Holder to enable the Holder to confirm the
Company’s compliance with the terms and conditions of this Warrant (including,
without limitation, compliance with Section 2 hereof). The issuance of shares
and certificates for shares as contemplated hereby upon the exercise of this
Warrant shall be made without charge to the Holder or such shares for any
issuance tax or other costs in respect thereof, provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.

15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the holder otherwise takes action to
collect amounts due under this Warrant or to enforce the provisions of this
Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the
company or other proceedings affecting company creditors’ rights and involving a
claim under this Warrant, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees and disbursements.

 

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16. TRANSFER. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company, except as may otherwise be required
by Section 2(g) of the Securities Purchase Agreement; provided that unless the
transferee is an Affiliate of, and after such transfer or assignment continues
to be an Affiliate of, the Holder, no portion of this Warrant representing less
than at least 25% of the Warrant Shares issuable hereunder shall be
transferred..

17. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:

(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

(c) [Intentionally Omitted]

(d) [Intentionally Omitted]

(e) “Adjustment Right” means any right granted with respect to any securities
issued in connection with, or with respect to, any issuance or sale (or deemed
issuance or sale in accordance with Section 2) of shares of Common Stock (other
than rights of the type described in Section 3 and 4 hereof) that could result
in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any
cash settlement rights, cash adjustment or other similar rights).

(f) “Adjustment Price” means the greater of (x) the Floor Price and (y) 85% of
the Market Price as of the Adjustment Date.

(g) “Adjustment Date” means, if any Current Public Information Failure occurs
from and after the Issuance Date, the 30th calendar day after the initial Resale
Availability Date after such Current Public Information Failure.

(h) “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

(i) “Approved Stock Plan” means any employee benefit plan which has been
approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer or director for
services provided to the Company in their capacity as such.

 

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(j) “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

(k) “Black Scholes Consideration Value” means the value of the applicable
Option, Convertible Security or Adjustment Right (as the case may be) as of the
date of issuance thereof calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price
per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive
documents with respect to the issuance of such Option, Convertible Security or
Adjustment Right (as the case may be), (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of such Option, Convertible Security or Adjustment Right (as the case may be) as
of the date of issuance of such Option, Convertible Security or Adjustment Right
(as the case may be), (iii) a zero cost of borrow and (iv) an expected
volatility equal to the 30 day volatility obtained from the “HVT” function on
Bloomberg (determined utilizing a 365 day annualization factor) as of the
Trading Day immediately following the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be).

(l) “Black Scholes Value” means the value of the unexercised portion of this
Warrant remaining on the date of the Holder’s request pursuant to Section 4(c),
which value is calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share
equal to the greater of (1) the highest Closing Sale Price of the Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on the Holder Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the date of the Holder’s
request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the greater of (1) the remaining
term of this Warrant as of the date of the Holder’s request pursuant to
Section 4(c) and (2) the remaining term of this Warrant as of the Holder
Redemption Date (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

(m) “Change of Control” means any Fundamental Transaction other than (i) any
merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such

 

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reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respects, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, or (iii) pursuant to
a migratory merger (or similar transaction) effected solely for the purpose of
changing the jurisdiction of incorporation of the Company or any of its
Subsidiaries.

(n) “Company Black Scholes Value” means the value of the unexercised portion of
this Warrant remaining on the applicable Company Redemption Date, which value is
calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the
greater of (1) the highest Closing Sale Price of the shares of Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on such Company Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the Company Redemption
Date, (iii) 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 the Company
Redemption Date, (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

(o) “Bloomberg” means Bloomberg, L.P.

(p) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

(q) “Common Shares” shall have the meaning as set forth in the Securities
Purchase Agreement.

(r) “Common Stock” means (i) the Company’s shares of Common Stock, $0.001 par
value per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.

(s) “Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade 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 the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for

 

26

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such security by Bloomberg, the average of the ask prices of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 13. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

(t) “Convertible Securities” means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

(u) “Eligible Market” means the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.

(v) “Equity Conditions” means, with respect to an given date of determination:
(i) on such applicable date of determination one or more registration statements
(each, the “Forced Exercise Registration Statement”) shall be effective and the
prospectus contained therein shall be available on such applicable date of
determination (with, for the avoidance of doubt, any shares of Common Stock
previously issued pursuant to such prospectus deemed unavailable) for the resale
of all the shares of Common Stock issuable upon exercise of this Warrant and the
SPA Warrants in connection with the event requiring determination (such
applicable aggregate number of shares of Common Stock, each, a “Required Minimum
Securities Amount”); (ii) on each day during the period beginning thirty
(30) calendar days prior to the applicable date of determination and ending on
and including the applicable date of determination (the “Equity Conditions
Measuring Period”), the Common Stock (including the shares of Common Stock to be
issued in the event requiring this determination) is listed or designated for
quotation (as applicable) on an Eligible Market and shall not have been
suspended from trading on an Eligible Market (other than suspensions of not more
than two (2) days and occurring prior to the applicable date of determination
due to business announcements by the Company) nor shall delisting or suspension
by an Eligible Market have been threatened (with a reasonable prospect of
delisting occurring after giving effect to all applicable notice, appeal,
compliance and hearing periods) or reasonably likely to occur or pending as
evidenced by a writing by such Eligible Market; (iii) during the Equity
Conditions Measuring Period, the Company shall have delivered all Warrant Shares
issuable upon exercise of this Warrant on a timely basis as set forth in
Section 1 hereof and all other shares of capital stock required to be delivered
by the Company on a timely basis as set forth in the other Transaction
Documents; (iv) the Required Minimum Securities Amount of Common Stock to be
issued in connection with the event requiring determination may be issued in
full without violating the rules or regulations of the Eligible Market on which
the Common Stock is then listed or designated for quotation (as applicable); (v)
on each day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Change of Control shall have
occurred which has not been abandoned, terminated or consummated; (vi) the
Company shall have no knowledge of any fact that would reasonably be expected to
cause the applicable Forced Exercise Registration Statement to not be effective
or the prospectus contained therein to not be

 

27

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available for the issuance of the Required Minimum Securities Amount of shares
of Common Stock in connection with the event requiring such determination;
(vii) the Holder shall not be in possession of any material, non-public
information provided to any of them by the Company, any of its Subsidiaries or
any of their respective affiliates, employees, officers, representatives, agents
or the like; (viii) on each day during the Equity Conditions Measuring Period,
the Company shall have been in compliance in material respects will each
covenant and other term or condition of each Transaction Document, including,
without limitation, the Company shall not have failed to timely make any payment
pursuant to any Transaction Document; (ix) there shall not have occurred any
Price Failure or Volume Failure as of such applicable date of determination;
(x) on the applicable date of determination (A) no Authorized Share Failure
shall exist or be continuing and (B) all Warrant Shares to be issued in
connection with the event requiring this determination may be issued in full
without resulting in an Authorized Share Failure (as defined in Section 1(g)
above); (xi) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating
Section 1(f)(ii) hereof (or the equivalent provisions of any other applicable
SPA Warrants), and (xii) no bona fide dispute shall exist, by and between any of
SPA Warrant Holders, the Company, the Principal Market (or such applicable
Eligible Market in which the Common Stock of the Company is then principally
trading) and/or FINRA with respect to any term or provision of this Warrant or
any other Transaction Document.

(w) “Equity Conditions Failure” means that on each day during the period
commencing twenty (20) Trading Days prior to the applicable Forced Exercise
Notice Date through and including the applicable Forced Exercise Date, the
Equity Conditions have not been satisfied (or waived in writing by the Holder).

(x) “Excluded Securities” means (i) shares of Common Stock or standard options
to purchase Common Stock issued to directors, officers or employees of the
Company for services rendered to the Company in their capacity as such pursuant
to an Approved Stock Plan (as defined above), provided that (A) all such
issuances (taking into account the shares of Common Stock issuable upon exercise
of such options) after the Subscription Date pursuant to this clause (i) do not,
in the aggregate, exceed more than 5% of the Common Stock issued and outstanding
immediately prior to the Subscription Date and (B) the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (ii) shares of Common Stock issued upon the
conversion or exercise of Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) issued prior to the Subscription Date, provided that the
conversion price of any such Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) is not lowered, none of such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) are otherwise materially changed in any manner that
adversely affects any of the Buyers, and (iii) shares of Common Stock issued
pursuant to the exercise of any Series C Warrant. For the avoidance of doubt,
any issuance pursuant to any SPA Warrant other than a Series C Warrant shall not
be an Excluded Security hereunder and, the Exercise Price hereunder shall be
subject to adjustment with respect thereto pursuant to Section 2(b) above.

 

28

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(y) “Expiration Date” means the date that is the Trading Day immediately
following the first anniversary (subject to automatic extension, on a day by day
basis, by any Extension Day Amount) of the Issuance Date or, if such date falls
on a day other than a Trading Day or on which trading does not take place on the
Principal Market (a “Holiday”), the next date that is not a Holiday.

(z) “Extension Day Amount” means, as of any date of determination, the sum of
(i) thirty (30) and (ii) such aggregate number of calendar days from and after
the Issuance Date and prior to such date of determination on which a
Registration Statement (as defined in the Registration Rights Agreement) is not
effective or any prospectus contained therein is not available for use to permit
the resale by the Holder of all of the Registrable Securities of the Holder or
any Current Public Information Failure exists.

(aa) “Floor Price” means $[    ]3 (as adjusted for stock splits, stock
dividends, stock combinations, recapitalizations and similar events), or subject
to the rules and regulations of the Principal Market, such other lower price as
the Company and the Holder shall mutually agree, from time to time.

(bb) “Forced Exercise Price” means the lower of (i) the Exercise Price in effect
as of the Forced Exercise Date and (ii) the greater of (x) the Floor Price and
(y) 85% of the Market Price as of the Trading Day ended immediately prior to the
Forced Exercise Eligibility Date.

(cc) “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding shares of Common Stock, or
(iv) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all
such Subject Entities, individually or in the aggregate, acquire, either (x) at
least 50% of the outstanding shares of

 

3 

Insert 20% of the Closing Bid Price as of the Trading Day ended immediately
prior to the time of execution of the Securities Purchase Agreement.

 

29

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Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to,
such stock purchase agreement or other business combination were not
outstanding; or (z) such number of shares of Common Stock such that the Subject
Entities become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock,
or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the
Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock,
merger, consolidation, business combination, reorganization, recapitalization,
spin-off, scheme of arrangement, reorganization, recapitalization or
reclassification or otherwise in any manner whatsoever, of either (x) at least
50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock, (y) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock not held by all such Subject
Entities as of the date of this Warrant calculated as if any shares of Common
Stock held by all such Subject Entities were not outstanding, or (z) a
percentage of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of the Company
sufficient to allow such Subject Entities to effect a statutory short form
merger or other transaction requiring other shareholders of the Company to
surrender their shares of Common Stock without approval of the shareholders of
the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or
the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this definition to the extent necessary to
correct this definition or any portion of this definition which may be defective
or inconsistent with the intended treatment of such instrument or transaction.

(dd) “Group” means a “group” as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

(ee) “Market Price” means, as of any given date, that price which shall be the
lower of (i) the VWAP of the Common Stock as of the Trading Day immediately
preceding such given date and (ii) the price computed as the quotient of (I) the
sum of the VWAP of the Common Stock for each Trading Day during the five
(5) consecutive Trading Day period ending and including the Trading Day
immediately preceding such given date, divided by (II) five (5) (such period,
the “Market Price Measuring Period”). All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction that proportionately decreases or
increases the Common Stock during such Market Price Measuring Period.

(ff) [Intentionally Omitted]

(gg) “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

30

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(hh) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.

(ii) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency thereof.

(jj) “Price Failure” means, with respect to a particular date of determination,
that the quotient of (i) sum of the VWAP of the Common Stock for each Trading
Day during the ten (10) consecutive Trading Day period (the “Price Failure
Measuring Period”) ending and including the Trading Day immediately preceding
such date of determination, divided by (ii) ten (10) fails to exceed $3.96 (as
adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions occurring after the Subscription
Date). All such determinations to be appropriately adjusted for any stock
splits, stock dividends, stock combinations, recapitalizations or other similar
transactions during any such Price Failure Measuring Period.

(kk) “Principal Market” means The Nasdaq Global Select Market.

(ll) “Registration Rights Agreement” means that certain registration rights
agreement, dated as of the Closing Date, by and among the Company and the
initial holders of the Common Shares and SPA Warrants, relating to, among other
things, the registration of the resale of the Common Shares and the Common Stock
issuable upon exercise of the SPA Warrants, as may be amended from time to time.

(mm) [Intentionally Omitted]

(nn) “SEC” means the United States Securities and Exchange Commission or the
successor thereto.

(oo) “Series A Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

(pp) “Series B-1 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(qq) “Series B-2 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(rr) “Series C Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

 

31

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(ss) “Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.

(tt) “Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.

(uu) “Trading Day” means, as applicable, (x) with respect to all price or
trading volume determinations relating to the Common Stock, any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder or
(y) with respect to all determinations other than price or trading volume
determinations relating to the Common Stock, any day on which The New York Stock
Exchange (or any successor thereto) is open for trading of securities.

(vv) “Volume Failure” means, with respect to a particular date of determination,
the aggregate daily composite trading volume (as reported on Bloomberg) of the
Common Stock on the Principal Market on any Trading Days during the ten
(10) Trading Day period ending on the Trading Day immediately preceding such
date of determination (such period, the “Volume Failure Measuring Period”), is
less than 150,000 shares (as adjusted for any stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions occurring
after the Subscription Date).

(ww) “VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal
Market is not the principal trading market for such security, then on the
principal securities exchange or securities market on which such security is
then traded), during the period beginning at 9:30 a.m., New York time, and
ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP”
function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York time, and ending at 4:00
p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any
of the market makers for such security as reported in the “pink sheets” by OTC
Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated
for such security on such date on any of the foregoing bases, the VWAP of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 13. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.

[signature page follows]

 

32

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

 

COMSCORE, INC. By:       Name:   Title:

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

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

COMSCORE, INC.

The undersigned holder hereby elects to exercise the Warrant to Purchase Common
Stock No.              (the “Warrant”) of comScore, Inc., a Delaware corporation
(the “Company”) as specified below. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

1. Payment of Exercise Price. The Holder shall pay the Aggregate Exercise Price
in the sum of $                     to the Company in accordance with the terms
of the Warrant.

2. Delivery of Warrant Shares. The Company shall deliver to Holder, or its
designee or agent as specified below,              shares of Common Stock in
accordance with the terms of the Warrant. Delivery shall be made to Holder, or
for its benefit, as follows:

☐ Check here if requesting delivery as a certificate to the following name and
to the following address:

 

Issue to:  

 

 

 

 

 

☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

 

DTC Participant:  

 

DTC Number:  

 

Account Number:  

 

Notwithstanding anything to the contrary contained herein, this Exercise Notice
shall constitute a representation by the Holder of the Warrant submitting this
Exercise Notice that after giving effect to the exercise provided for in this
Exercise Notice, such Holder (together with its affiliates) will not have
beneficial ownership (together with the beneficial ownership of such Person’s
affiliates) of a number of Common Shares which exceeds the Maximum Percentage
(as defined in the Warrant) of the total outstanding shares of Common Stock of
the Company as determined pursuant to the provisions of Section 1(f)(i) of the
Warrant.

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

Date:                      ,        

 

 

Name of Registered Holder

 

By:

     

Name:

 

Title:

Tax ID:____________________________

Facsimile:__________________________

E-mail Address:_____________________

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

EXHIBIT B

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs
                 to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated             , 2019,
from the Company and acknowledged and agreed to by                    .

 

COMSCORE, INC. By:       Name:   Title:

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

Exhibit C

Form of Series C Warrant

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

[FORM OF SERIES C WARRANT]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON
THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.

COMSCORE, INC.

WARRANT TO PURCHASE COMMON STOCK

Warrant No.: C-[            ]

Date of Issuance: [                ], 2019 (“Issuance Date”)

comScore, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CVI Investments, Inc., the registered holder hereof or its
permitted assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times on or after the
Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date
(as defined below), up to 2,728,513 (subject to adjustment as provided herein)
fully paid and non-assessable shares of Common Stock (as defined below) (the
“Warrant Shares”, and such aggregate number of Warrant Shares in which this
Warrant is exercisable, from time to time, the “Warrant Number”). Except as
otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 17. This Warrant is one of the Warrants to
Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that
certain Securities Purchase Agreement, dated as of June 23, 2019 (the
“Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (the “Securities Purchase
Agreement”).

Notwithstanding anything herein to the contrary, (i) no more than the Maximum
Eligibility Number of Warrant Shares shall be issued (or issuable) hereunder and
(ii) the Aggregate Exercise Price (as defined below) of this Warrant, except for
a nominal exercise

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

price of $0.001 per Warrant Share (the “Nominal Exercise Price”), was pre-funded
to the Company on or prior to the initial Issuance Date and, consequently, no
additional consideration (other than the nominal exercise price of $0.001 per
Warrant Share) shall be required to be paid by the Holder to any Person to
effect any exercise of this Warrant.

1. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
and on or prior to the Expiration Date (an “Exercise Date”), in whole or in
part, by delivery (whether via facsimile or otherwise) of a written notice, in
the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant. Within one (1) Trading Day following an
exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such
exercise multiplied by the number of Warrant Shares as to which this Warrant was
so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds if the Holder did not notify the Company in such
Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as
defined in Section 1(d)). The Holder shall not be required to deliver the
original of this Warrant in order to effect an exercise hereunder. Execution and
delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to purchase the
remaining number of Warrant Shares. Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the Warrant
Shares in accordance with the terms hereof. On or before the first (1st) Trading
Day following the date on which the Company has received an Exercise Notice, the
Company shall transmit by facsimile or electronic mail an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”), which confirmation shall constitute an instruction to the Transfer
Agent to process such Exercise Notice in accordance with the terms herein. On or
before the second (2nd) Trading Day following the date on which the Company has
received such Exercise Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a
trade of such Warrant Shares initiated on the applicable Exercise Date), the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at
Custodian system, or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, upon the request of the Holder,
issue and deliver (via reputable overnight courier) to the address as specified
in the Exercise Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall
be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, 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). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant

 

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submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise and upon surrender of this Warrant to the Company by
the Holder, then, at the request of the Holder, the Company shall as soon as
practicable and in no event later than two (2) Business Days after any exercise
and at its own expense, issue and deliver to the Holder (or its designee) a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but rather the number of shares of Common Stock to
be issued shall be rounded up to the nearest whole number. The Company shall pay
any and all transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer Agent) that
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant. Notwithstanding the foregoing, except in the case
where an exercise of this Warrant is validly made pursuant to a Cashless
Exercise, the Company’s failure to deliver Warrant Shares to the Holder on or
prior to the later of (i) two (2) Trading Days after receipt of the applicable
Exercise Notice (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade of such
Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1)
Trading Day after the Company’s receipt of the Aggregate Exercise Price (or
valid notice of a Cashless Exercise) (such later date, the “Share Delivery
Date”) shall not be deemed to be a breach of this Warrant. Notwithstanding
anything to the contrary contained in this Warrant or the Registration Rights
Agreement, after the effective date of the Registration Statement (as defined in
the Registration Rights Agreement) and prior to the Holder’s receipt of the
notice of a Grace Period (as defined in the Registration Rights Agreement), the
Company shall cause the Transfer Agent to deliver unlegended shares of Common
Stock to the Holder (or its designee) in connection with any sale of Registrable
Securities (as defined in the Registration Rights Agreement) with respect to
which the Holder has entered into a contract for sale, and delivered a copy of
the prospectus included as part of the particular Registration Statement to the
extent applicable, and for which the Holder has not yet settled. From the
Issuance Date through and including the Expiration Date, the Company shall
maintain a transfer agent that participates in the DTC’s Fast Automated
Securities Transfer Program.

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $7.33,
subject to adjustment as provided herein.

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail,
for any reason or for no reason, on or prior to the Share Delivery Date, either
(I) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, to issue and deliver to the Holder (or its
designee) a certificate for the number of Warrant Shares to which the Holder is
entitled and register such Warrant Shares on the Company’s share register or, if
the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise of this Warrant (as the case may be) or
(II) if a Registration Statement covering the resale of the Warrant Shares that
are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not
available for the resale of such Unavailable Warrant Shares and the Company
fails to promptly, but in no event later than as required pursuant to the
Registration Rights Agreement (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such
aggregate

 

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number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit/Withdrawal At Custodian system (the event described in the immediately
foregoing clause (II) is hereinafter referred as a “Notice Failure” and together
with the event described in clause (I) above, a “Delivery Failure”), and if on
or after such Share Delivery Date the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock corresponding to all or any
portion of the number of shares of Common Stock issuable upon such exercise that
the Holder is entitled to receive from the Company and has not received from the
Company in connection with such Delivery Failure or Notice Failure, as
applicable (a “Buy-In”), then, in addition to all other remedies available to
the Holder, the Company shall, within two (2) Business Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the shares of Common
Stock so purchased (including, without limitation, by any other Person in
respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the
Company’s obligation to so issue and deliver such certificate (and to issue such
shares of Common Stock) or credit the balance account of such Holder or such
Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case
may be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly
honor its obligation to so issue and deliver to the Holder a certificate or
certificates representing such Warrant Shares or credit the balance account of
such Holder or such Holder’s designee, as applicable, with DTC for the number of
Warrant Shares to which the Holder is entitled upon the Holder’s exercise
hereunder (as the case may be) and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
Warrant Shares multiplied by (B) the lowest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date of the
applicable Exercise Notice and ending on the date of such issuance and payment
under this clause (ii) (the “Buy-In Payment Amount”). Nothing shall limit the
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 (or to electronically deliver
such shares of Common Stock) upon the exercise of this Warrant as required
pursuant to the terms hereof. In addition to the foregoing rights, (i) if the
Company fails to deliver the applicable number of Warrant Shares upon an
exercise pursuant to Section 1 by the applicable Share Delivery Date, then the
Holder shall have the right to rescind such exercise in whole or in part and
retain and/or have the Company return, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an exercise shall not affect the Company’s obligation to
make any payments that have accrued prior to the date of such notice pursuant to
this Section 1(c) or otherwise, and (ii) if a registration statement covering
the resale of the Warrant Shares that are subject to an Exercise Notice is not
available for the resale of such Warrant Shares and the Holder has submitted an
Exercise Notice prior to receiving notice of the non-availability of such
registration statement and the Company has not already delivered the Warrant
Shares underlying such Exercise Notice electronically without any restrictive
legend by crediting such aggregate number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian system, the
Holder shall have the option, by delivery of notice to the Company, to
(x) rescind such Exercise Notice in whole or in part and retain or have
returned, as the case may be, any portion of this Warrant that has not been
exercised

 

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pursuant to such Exercise Notice; provided that the rescission of an Exercise
Notice shall not affect the Company’s obligation to make any payments that have
accrued prior to the date of such notice pursuant to this Section 1(c) or
otherwise, and/or (y) switch some or all of such Exercise Notice from a cash
exercise to a Cashless Exercise.

(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary
(other than Section 1(f) below), then the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of Warrant Shares determined according to the
following formula (a “Cashless Exercise”):

Net Number = (A x B) - (A x C)

                                     D

For purposes of the foregoing formula:

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

B = the VWAP of the Common Stock at the close of business on the Principal
Market as of the Trading Day immediately prior to the date of the delivery of
the applicable Exercise Notice.

C = the Nominal Exercise Price (as adjusted for stock splits, stock dividends,
stock combinations, recapitalizations and similar events).

D = the VWAP of the Common Stock at the close of business on the Principal
Market on the date of the delivery of the applicable Exercise Notice.

If the Warrant Shares are issued in a Cashless Exercise, the parties acknowledge
and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant
Shares take on the registered characteristics of the Warrants being exercised.
For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the
Subscription Date, it is intended that the Warrant Shares issued in a Cashless
Exercise shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Securities Purchase
Agreement.

(e) Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the number of Warrant Shares to be issued
pursuant to the terms hereof, the Company shall promptly issue to the Holder the
number of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 13.

 

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(f) Limitations on Exercises.

(i) Beneficial Ownership. The Company shall not effect the exercise of any
portion of this Warrant, and the Holder shall not have the right to exercise any
portion of this Warrant, pursuant to the terms and conditions of this Warrant
and any such exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder together with
the other Attribution Parties collectively would beneficially own in excess of
4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the number of shares
of Common Stock held by the Holder and all other Attribution Parties plus the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (A) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by the Holder
or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or convertible preferred
stock or warrants, including other SPA Warrants) beneficially owned by the
Holder or any other Attribution Party subject to a limitation on conversion or
exercise analogous to the limitation contained in this Section 1(f)(i). For
purposes of this Section 1(f)(i), beneficial ownership shall be calculated in
accordance with Section 13(d) of the 1934 Act. For purposes of determining the
number of outstanding shares of Common Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage, the Holder
may rely on the number of outstanding shares of Common Stock as reflected in
(x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as
the case may be, (y) a more recent public announcement by the Company or (z) any
other written notice by the Company or the Transfer Agent, if any, setting forth
the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives an Exercise Notice from the Holder at a
time when the actual number of outstanding shares of Common Stock is less than
the Reported Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding and, to the
extent that such Exercise Notice would otherwise cause the Holder’s beneficial
ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of Warrant
Shares to be acquired pursuant to such Exercise Notice (the number of shares by
which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as
reasonably practicable, the Company shall return to the Holder any exercise
price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one
(1) Business Day confirm orally and in writing or by electronic mail to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and any other Attribution Party since the date as of
which the Reported Outstanding Share Number was reported. In the event that the
issuance of shares of Common Stock to the Holder upon exercise of this Warrant
results in the Holder and the other Attribution Parties being deemed to
beneficially own, in the aggregate, more than the Maximum Percentage of the
number of outstanding shares of Common Stock (as determined under Section 13(d)
of the 1934 Act), the number of shares so issued by which the Holder’s and the
other Attribution Parties’ aggregate beneficial

 

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ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed
null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Shares. As soon as reasonably
practicable after the issuance of the Excess Shares has been deemed null and
void, the Company shall return to the Holder the exercise price paid by the
Holder for the Excess Shares. Upon delivery of a written notice to the Company,
the Holder may from time to time increase (with such increase not effective
until the sixty-first (61st) day after delivery of such notice) or decrease the
Maximum Percentage to any other percentage not in excess of 9.99% as specified
in such notice; provided that (i) any such increase in the Maximum Percentage
will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company and (ii) any such increase or decrease will apply only
to the Holder and the other Attribution Parties and not to any other holder of
SPA Warrants that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. 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(f)(i) to the extent necessary to correct this
paragraph or any portion of this paragraph which may be defective or
inconsistent with the intended beneficial ownership limitation contained in this
Section 1(f)(i) or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitation contained in this
paragraph may not be waived and shall apply to a successor holder of this
Warrant.

(ii) Exchange Cap. The Company shall not issue any shares of Common Stock upon
the exercise of this Warrant if the issuance of such shares of Common Stock
taken together with each prior issuance of Common Shares (as defined in the
Securities Purchase Agreement) under the Securities Purchase Agreement and any
prior issuance of shares of Common Stock upon exercise of the SPA Warrants,
collectively, would exceed the aggregate number of shares of Common Stock which
the Company may issue under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such rules and
regulations, the “Exchange Cap”), except that such limitation shall not apply in
the event that the Company (A) obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for issuances of shares
of Common Stock in excess of such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Holder. Until such approval or such
written opinion is obtained, no holder of Warrants (each, a “SPA Warrant
Holder”) shall be issued in the aggregate, upon exercise of any of the SPA
Warrants, shares of Common Stock in an amount greater than the product of
(i) the Exchange Cap as of the Issuance Date multiplied by (ii) the quotient of
(1) the aggregate number of Common Shares issued to such SPA Warrant Holder as
of the Closing Date (as defined in the Securities Purchase Agreement) divided by
(2) the aggregate number of Common Shares issued to the SPA Warrant Holders as
of the Closing Date (with respect to each SPA Warrant Holder, the “Exchange Cap
Allocation”); provided, that the Exchange Cap Allocation shall be allocated
among the

 

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Holder’s SPA Warrants (unless the Company and the Holder mutually agree
otherwise) as follows: first, to any shares of Common Stock issued or issuable
under the Series C Warrants (without regards to any limitations on exercise set
forth in Section 1(f)(i) thereof), second, to any shares of Common Stock issued
or issuable under the Series B-1 Warrants (without regards to any limitations on
exercise set forth in Section 1(f)(i) thereof), third, to any shares of Common
Stock issued or issuable under the Series B-2 Warrants (without regards to any
limitations on exercise set forth in Section 1(f)(i) thereof) and fourth, to any
shares of Common Stock issued or issuable under the Series A Warrants (without
regards to any limitations on exercise set forth in Section 1(f)(i) thereof). In
the event that any SPA Warrant Holder shall sell or otherwise transfer any of
such SPA Warrant Holder’s SPA Warrants, the transferee shall be allocated a pro
rata portion of such SPA Warrant Holder’s Exchange Cap Allocation with respect
to such portion of such SPA Warrants so transferred, and the restrictions of the
prior sentence shall apply to such transferee with respect to the portion of the
Exchange Cap Allocation so allocated to such transferee. Upon exercise in full
of an SPA Warrant Holder’s Warrants, the difference (if any) between such SPA
Warrant Holder’s Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such SPA Warrant Holder upon such SPA Warrant Holder’s
exercise in full of such SPA Warrants shall be allocated, to the respective
Exchange Cap Allocations of the remaining SPA Warrant Holders of SPA Warrants on
a pro rata basis in proportion to the shares of Common Stock underlying the SPA
Warrants then held by each such SPA Warrant Holder of SPA Warrants. In the event
that the Company is then prohibited from issuing any shares of Common Stock
pursuant to this Section 1(f)(ii) (the “Exchange Cap Shares”), in lieu of
issuing and delivering such Exchange Cap Shares to the Holder, the Company shall
pay cash to the Holder in exchange for the cancellation of such portion of this
Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment
Amount”) at a price equal to the sum of (x) the product of (A) such number of
Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock
on any Trading Day during the period commencing on the date the Holder delivers
the applicable Exercise Notice with respect to such Exchange Cap Shares to the
Company and ending on the date of such payment under this Section 1(f)(ii)
(“Exchange Cap Price”) and (y) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

(g) Reservation of Shares.

(i) Required Reserve Amount. So long as this Warrant remains outstanding, the
Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the SPA Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g)(i) be reduced other than proportionally in connection with any
exercise or redemption of SPA Warrants or such other event covered by
Section 2(a) below. The Required Reserve Amount (including, without limitation,
each increase in the number of shares so reserved) shall be

 

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allocated pro rata among the holders of the SPA Warrants based on number of
shares of Common Stock issuable upon exercise of SPA Warrants held by each
holder on the Closing Date (without regard to any limitations on exercise) or
increase in the number of reserved shares, as the case may be (the “Authorized
Share Allocation”). In the event that a holder shall sell or otherwise transfer
any of such holder’s SPA Warrants, each transferee shall be allocated a pro rata
portion of such holder’s Authorized Share Allocation. Any shares of Common Stock
reserved and allocated to any Person which ceases to hold any SPA Warrants shall
be allocated to the remaining holders of SPA Warrants, pro rata based on the
number of shares of Common Stock issuable upon exercise of the SPA Warrants then
held by such holders (without regard to any limitations on exercise).

(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above,
and not in limitation thereof, at any time while any of the SPA Warrants remain
outstanding, the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the
Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
immediately take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for all the SPA Warrants then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days after the occurrence of such Authorized Share Failure, the
Company shall hold a meeting of its stockholders for the approval of an increase
in the number of authorized shares of Common Stock. In connection with such
meeting, the Company shall provide each stockholder with a proxy statement and
shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such proposal. In
the event that the Company is prohibited from issuing shares of Common Stock
upon an exercise of this Warrant due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the
“Authorization Failure Shares”), in lieu of delivering such Authorization
Failure Shares to the Holder, the Company shall pay cash in exchange for the
cancellation of such portion of this Warrant exercisable into such Authorization
Failure Shares at a price equal to the sum of (i) the product of (x) such number
of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the
Holder delivers the applicable Exercise Notice with respect to such
Authorization Failure Shares to the Company and ending on the date of such
issuance and payment under this Section 1(f); and (ii) to the extent the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of Authorization Failure Shares,
any Buy-In Payment Amount, brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith. Nothing
contained in this Section 1(g) shall limit any obligations of the Company under
any provision of the Securities Purchase Agreement.

 

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2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 2.

(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b),
Section 3 or Section 4, if the Company, at any time on or after the Subscription
Date, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital
stock that is payable in shares of Common Stock, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
then outstanding shares of Common Stock into a larger number of shares or
(iii) combines (by combination, reverse stock split or otherwise) one or more
classes of its then outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

(b) [Intentionally Omitted]

(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to Section 2(a), the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein).
Notwithstanding anything herein to the contrary, if as of any given time the
Warrant Number is less than the Maximum Eligibility Number, the Warrant Number
shall automatically increase as of such time to the Maximum Eligibility Number.

(d) Other Events. In the event that the Company (or any Subsidiary (as defined
in the Securities Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Exercise Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(d) will increase the
Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be
borne by the Company.

 

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(e) Calculations. All calculations under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issuance or sale of Common
Stock.

(f) Voluntary Adjustment by Company. Subject to the rules and regulations on the
Principal Market, the Company may at any time during the term of this Warrant,
with the prior written consent of the Required Holders (as defined in the
Securities Purchase Agreement), 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.

3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, 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 participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to the extent of any such excess) and
the portion of such Distribution shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution
(and any Distributions declared or made on such initial Distribution or on any
subsequent Distribution held similarly in abeyance) to the same extent as if
there had been no such limitation).

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
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 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 number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date

 

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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, issuance or sale
of such Purchase Rights (provided, however, that to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder and
the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to the extent of the
Maximum Percentage (and shall not be entitled to beneficial ownership of such
shares of Common Stock as a result of such Purchase Right (and beneficial
ownership) to the extent of any such excess) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times, if ever, as its right thereto would not result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, at which time or
times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase
Right held similarly in abeyance) to the same extent as if there had been no
such limitation).

(b) Fundamental Transactions. The Company shall not consummate a Fundamental
Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents (as defined in the Securities Purchase Agreement) in accordance with
the provisions of this Section 4(b) pursuant to written agreements in form and
substance satisfactory to the Holder and approved by the Holder prior to such
Fundamental Transaction, including agreements to deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with
an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction) and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market. Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents 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 this Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein. Upon
consummation of each Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the
exercise of this Warrant prior to the applicable Fundamental Transaction, such
shares of publicly traded common stock (or its equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled
to receive upon the happening of the applicable Fundamental Transaction had this
Warrant

 

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been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant), as adjusted
in accordance with the provisions of this Warrant. Notwithstanding the
foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at
its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the assumption of
this Warrant. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities or
other assets with respect to or in exchange for shares of Common Stock (a
“Corporate Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the applicable Fundamental
Transaction but prior to the Expiration Date, in lieu of the shares of the
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. Notwithstanding the foregoing, this Section 4(b) shall not apply if
the Holder or the Company exercises its respective rights pursuant to
Section 4(c) or 4(d), as applicable, and the Company pays the applicable Black
Scholes Value or Company Black Scholes Value to the Holder in such manner and at
such time as required thereunder.

(c) [Intentionally Omitted]

(d) [Intentionally Omitted]

(e) Application. The provisions of this Section 4 shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied as if this Warrant (and any such subsequent warrants) were fully
exercisable and without regard to any limitations on the exercise of this
Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital
stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation (as defined in the
Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase
Agreement) or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance 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 (a) 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 (b) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of

 

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Common Stock upon the exercise of this Warrant. Notwithstanding anything herein
to the contrary, if after the sixty (60) calendar day anniversary of the
Issuance Date, the Holder is not permitted to exercise this Warrant in full for
any reason (other than pursuant to restrictions set forth in Section 1(f)
hereof), the Company shall use its best efforts to promptly remedy such failure,
including, without limitation, obtaining such consents or approvals as necessary
to permit such exercise into shares of Common Stock.

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant,
shall not be entitled to vote or receive dividends or be deemed the holder of
share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in its capacity as
the Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which it is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 6, the Company shall provide the Holder
with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.

7. REISSUANCE OF WARRANTS.

(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 7(d)), registered as the Holder may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less than the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional shares of
Common Stock shall be given.

 

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(d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and
(iv) shall have the same rights and conditions as this Warrant.

8. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Warrant
(other than the issuance of shares of Common Stock upon exercise in accordance
with the terms hereof), including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s), (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder, and (iii) at least ten (10) Trading
Days prior to the consummation of any Fundamental Transaction. To the extent
that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of its Subsidiaries, the
Company shall simultaneously file such notice with the SEC (as defined in the
Securities Purchase Agreement) pursuant to a Current Report on Form 8-K. If the
Company or any of its Subsidiaries provides material non-public information to
the Holder that is not simultaneously filed in a Current Report on Form 8-K and
the Holder has not agreed to receive such material non-public information, the
Company hereby covenants and agrees that the Holder shall not have any duty of
confidentiality to the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agents with respect to,
or a duty to any of the foregoing not to trade on the basis of, such material
non-public information. It is expressly understood and agreed that the time of
execution specified by the Holder in each Exercise Notice shall be definitive
and may not be disputed or challenged by the Company.

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant (other than Section 1(f)) may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Holder. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.

 

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10. SEVERABILITY. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company 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 to the Company at the
address set forth in Section 9(f) of the Securities Purchase Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. The Company 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, 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 brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court ruling in
favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

 

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13. DISPUTE RESOLUTION.

(a) Submission to Dispute Resolution.

(i) In the case of a dispute relating to the Exercise Price, the Closing Sale
Price, the Black Scholes Consideration Value, the Company Black Scholes Value,
the Black Scholes Value or the fair market value or the arithmetic calculation
of the number of Warrant Shares (as the case may be) (including, without
limitation, a dispute relating to the determination of any of the foregoing),
the Company or the Holder (as the case may be) shall submit the dispute to the
other party via facsimile (A) if by the Company, within two (2) Business Days
after the occurrence of the circumstances giving rise to such dispute or (B) if
by the Holder, at any time after the Holder learned of the circumstances giving
rise to such dispute. If the Holder and the Company are unable to promptly
resolve such dispute relating to such Exercise Price, such Closing Sale Price,
such Black Scholes Consideration Value, Company Black Scholes Value, Black
Scholes Value or such fair market value or such arithmetic calculation of the
number of Warrant Shares (as the case may be), at any time after the second
(2nd) Business Day following such initial notice by the Company or the Holder
(as the case may be) of such dispute to the Company or the Holder (as the case
may be), then the Holder may, at its sole option, select an independent,
reputable investment bank, reasonably acceptable to the Company, to resolve such
dispute.

(ii) The Holder and the Company shall each deliver to such investment bank (A) a
copy of the initial dispute submission so delivered in accordance with the first
sentence of this Section 13 and (B) written documentation supporting its
position with respect to such dispute, in each case, no later than 5:00 p.m.
(New York time) by the fifth (5th) Business Day immediately following the date
on which the Holder selected such investment bank (the “Dispute Submission
Deadline”) (the documents referred to in the immediately preceding clauses
(A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the
Company fails to so deliver all of the Required Dispute Documentation by the
Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such investment bank shall
resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or
otherwise requested by such investment bank, neither the Company nor the Holder
shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the
Required Dispute Documentation).

(iii) The Company and the Holder shall cause such investment bank to determine
the resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. The fees and expenses of such investment bank shall
be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.

 

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(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this
Section 13 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect
under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and
that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13,
(ii) a dispute relating to the Exercise Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of
Common Stock occurred under Section 2(b), (B) the consideration per share at
which an issuance or deemed issuance of Common Stock occurred, (C) whether any
issuance or sale or deemed issuance or sale of Common Stock was an issuance or
sale or deemed issuance or sale of Excluded Securities, (D) whether an
agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the
terms of this Warrant and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such
investment bank determines are required to be made by such investment bank in
connection with its resolution of such dispute (including, without limitation,
determining (A) whether an issuance or sale or deemed issuance or sale of Common
Stock occurred under Section 2(b), (B) the consideration per share at which an
issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security
and (E) whether a Dilutive Issuance occurred) and in resolving such dispute such
investment bank shall apply such findings, determinations and the like to the
terms of this Warrant and any other applicable Transaction Documents, (iv) the
Holder (and only the Holder), in its sole discretion, shall have the right to
submit any dispute described in this Section 13 to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of utilizing the
procedures set forth in this Section 13 and (v) nothing in this Section 13 shall
limit the Holder from obtaining any injunctive relief or other equitable
remedies (including, without limitation, with respect to any matters described
in this Section 13).

14. REMEDIES, CHARACTERIZATION, 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 and consequential damages for any failure
by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for
herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available remedies, to
specific performance and/or temporary, preliminary and permanent injunctive or
other equitable relief from any court of competent jurisdiction in any such case
without the necessity of proving actual damages and without posting a bond or
other security. The

 

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Company shall provide all information and documentation to the Holder that is
requested by the Holder to enable the Holder to confirm the Company’s compliance
with the terms and conditions of this Warrant (including, without limitation,
compliance with Section 2 hereof). The issuance of shares and certificates for
shares as contemplated hereby upon the exercise of this Warrant shall be made
without charge to the Holder or such shares for any issuance tax or other costs
in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the Holder or its agent on its
behalf.

15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the holder otherwise takes action to
collect amounts due under this Warrant or to enforce the provisions of this
Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the
company or other proceedings affecting company creditors’ rights and involving a
claim under this Warrant, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees and disbursements.

16. TRANSFER. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company, except as may otherwise be required
by Section 2(g) of the Securities Purchase Agreement; provided that unless the
transferee is an Affiliate of, and after such transfer or assignment continues
to be an Affiliate of, the Holder, no portion of this Warrant representing less
than at least 25% of the Warrant Shares issuable hereunder shall be
transferred..

17. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:

(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

(c) “Adjustment Common Share Amount” means, as of the applicable Adjustment
Common Share Measuring Time, the lesser of (I) 2,726,663 (as adjusted for stock
splits, stock dividends, stock combinations, recapitalizations and similar
events) or (II) greater of (i) zero (0) and (ii) such aggregate number of shares
of Common Stock equal to (A) 2,726,663 multiplied by (B) the difference between
(1) the quotient of (x) the Holder’s Purchase Price (as defined in the
Securities Purchase Agreement) divided by (y) 92.5% of the Market Price as of
such Adjustment Common Share Measuring Time, minus (2) the aggregate number of
Common Shares issued to the Holder at the Closing (as defined in the Securities
Purchase Agreement) (as adjusted for share splits, share dividends, share
combinations, recapitalizations and similar events).]

 

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(d) “Adjustment Common Share Measuring Time” means the close of the Principal
Market on [    ]1.

(e) [Intentionally Omitted]

(f) [Intentionally Omitted]

(g) [Intentionally Omitted]

(h) “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

(i) [Intentionally Omitted]

(j) “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

(k) [Intentionally Omitted]

(l) [Intentionally Omitted]]

(m) “Change of Control” means any Fundamental Transaction other than (i) any
merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization,
recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, are, in all material respects, the holders of the voting
power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a
corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, or (iii) pursuant to a migratory merger
(or similar transaction) effected solely for the purpose of changing the
jurisdiction of incorporation of the Company or any of its Subsidiaries.

 

1 

Insert the 90th calendar day after the Signing Date

 

20

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(n) “Company Black Scholes Value” means the value of the unexercised portion of
this Warrant remaining on the applicable Company Redemption Date, which value is
calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the
greater of (1) the highest Closing Sale Price of the shares of Common Stock
during the period beginning on the Trading Day immediately preceding the
announcement of the applicable Change of Control (or the consummation of the
applicable Change of Control, if earlier) and ending on such Company Redemption
Date and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash
consideration being offered in the applicable Change of Control (if any), (ii) a
strike price equal to the Exercise Price in effect on the Company Redemption
Date, (iii) 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 the Company
Redemption Date, (iv) a zero cost of borrowing and (v) an expected volatility
equal to the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of
Control and (C) the date on which the Holder first became aware of the
applicable Change of Control.

(o) “Bloomberg” means Bloomberg, L.P.

(p) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

(q) “Common Shares” shall have the meaning as set forth in the Securities
Purchase Agreement.

(r) “Common Stock” means (i) the Company’s shares of Common Stock, $0.001 par
value per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.

(s) “Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade 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 the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.

 

21

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(t) “Convertible Securities” means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

(u) “Eligible Market” means the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.

(v) [INSERT IN SERIES B-1 AND B-2 WARRANTS ONLY: “Equity Conditions” means, with
respect to an given date of determination: (i) on such applicable date of
determination one or more registration statements (each, the “Forced Exercise
Registration Statement”) shall be effective and the prospectus contained therein
shall be available on such applicable date of determination (with, for the
avoidance of doubt, any shares of Common Stock previously issued pursuant to
such prospectus deemed unavailable) for the resale of all the shares of Common
Stock issuable upon exercise of this Warrant and the SPA Warrants in connection
with the event requiring determination (such applicable aggregate number of
shares of Common Stock, each, a “Required Minimum Securities Amount”); (ii) on
each day during the period beginning thirty (30) calendar days prior to the
applicable date of determination and ending on and including the applicable date
of determination (the “Equity Conditions Measuring Period”), the Common Stock
(including the shares of Common Stock to be issued in the event requiring this
determination) is listed or designated for quotation (as applicable) on an
Eligible Market and shall not have been suspended from trading on an Eligible
Market (other than suspensions of not more than two (2) days and occurring prior
to the applicable date of determination due to business announcements by the
Company) nor shall delisting or suspension by an Eligible Market have been
threatened (with a reasonable prospect of delisting occurring after giving
effect to all applicable notice, appeal, compliance and hearing periods) or
reasonably likely to occur or pending as evidenced by a writing by such Eligible
Market; (iii) during the Equity Conditions Measuring Period, the Company shall
have delivered all Warrant Shares issuable upon exercise of this Warrant on a
timely basis as set forth in Section 1 hereof and all other shares of capital
stock required to be delivered by the Company on a timely basis as set forth in
the other Transaction Documents; (iv) the Required Minimum Securities Amount of
Common Stock to be issued in connection with the event requiring determination
may be issued in full without violating the rules or regulations of the Eligible
Market on which the Common Stock is then listed or designated for quotation (as
applicable); (v) on each day during the Equity Conditions Measuring Period, no
public announcement of a pending, proposed or intended Change of Control shall
have occurred which has not been abandoned, terminated or consummated; (vi) the
Company shall have no knowledge of any fact that would reasonably be expected to
cause the applicable Forced Exercise Registration Statement to not be effective
or the prospectus contained therein to not be available for the issuance of the
Required Minimum Securities Amount of shares of Common Stock in connection with
the event requiring such determination; (vii) the Holder shall not be in
possession of any material, non-public information provided to any of them by
the Company, any of its Subsidiaries or any of their respective affiliates,
employees, officers, representatives, agents or the like; (viii) on each day
during the Equity Conditions Measuring Period, the Company shall have been in
compliance in material respects will each covenant and other term or condition
of each

 

22

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Transaction Document, including, without limitation, the Company shall not have
failed to timely make any payment pursuant to any Transaction Document;
(ix) there shall not have occurred any Price Failure or Volume Failure as of
such applicable date of determination; (x) on the applicable date of
determination (A) no Authorized Share Failure shall exist or be continuing and
(B) all Warrant Shares to be issued in connection with the event requiring this
determination may be issued in full without resulting in an Authorized Share
Failure (as defined in Section 1(g) above); (xi) any shares of Common Stock to
be issued in connection with the event requiring determination may be issued in
full without violating Section 1(f)(ii) hereof (or the equivalent provisions of
any other applicable SPA Warrants), and (xii) no bona fide dispute shall exist,
by and between any of SPA Warrant Holders, the Company, the Principal Market (or
such applicable Eligible Market in which the Common Stock of the Company is then
principally trading) and/or FINRA with respect to any term or provision of this
Warrant or any other Transaction Document. [INSERT IN SERIES A AND C WARRANTS
ONLY: [Intentionally Omitted]

(w) [Intentionally Omitted]

(x) [Intentionally Omitted]

(y) “Expiration Date” means the date that is the 90th day after the first
anniversary (subject to automatic extension, on a day by day basis, by any
Extension Day Amount) of the Issuance Date or, if such date falls on a day other
than a Trading Day or on which trading does not take place on the Principal
Market (a “Holiday”), the next date that is not a Holiday.

(z) “Extension Day Amount” means, as of any date of determination, the sum of
(i) thirty (30) and (ii) such aggregate number of calendar days from and after
the Issuance Date and prior to such date of determination on which a
Registration Statement (as defined in the Registration Rights Agreement) is not
effective or any prospectus contained therein is not available for use to permit
the resale by the Holder of all of the Registrable Securities of the Holder or
any Current Public Information Failure exists.

(aa) [Intentionally Omitted]

(bb) [Intentionally Omitted]

(cc) “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any

 

23

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Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the
1934 Act) of at least 50% of the outstanding shares of Common Stock, or
(iv) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all
such Subject Entities, individually or in the aggregate, acquire, either (x) at
least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or other
business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its Common Stock, (B) that the Company shall, directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or more related
transactions, allow any Subject Entity individually or the Subject Entities in
the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant
calculated as if any shares of Common Stock held by all such Subject Entities
were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other shareholders of
the Company to surrender their shares of Common Stock without approval of the
shareholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the
issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this definition
which may be defective or inconsistent with the intended treatment of such
instrument or transaction.

(dd) “Group” means a “group” as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

(ee) “Market Price” means, as of any given date, that price which shall be the
lower of (i) the VWAP of the Common Stock as of the Trading Day immediately
preceding such given date and (ii) the price computed as the quotient of (I) the
sum of the VWAP of the Common Stock for each Trading Day during the five
(5) consecutive Trading Day period ending and including the Trading Day
immediately preceding such given date, divided by (II) five (5) (such period,
the “Market Price Measuring Period”). All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction that proportionately decreases or
increases the Common Stock during such Market Price Measuring Period.

 

24

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(ff) “Maximum Eligibility Number” means initially zero (0), which shall be
subject to increase as follows: (i) at the Adjustment Common Share Measuring
Time, the aggregate number of shares of Common Stock issuable hereunder shall
increase (if at all), on a share by share basis, by the applicable Adjustment
Common Share Amount, and (ii) upon any Forced Exercise (as defined in each of
the Series B-1 Warrant and the Series B-2 Warrant) in which any Forced Exercise
Blocked Share Amount (as defined in the applicable Series B-1 Warrant and/or the
applicable Series B-2 Warrant) exists, the aggregate number of shares of Common
Stock issuable hereunder shall increase on the applicable Forced Exercise Date
(as defined in the applicable Series B-1 Warrant and/or the applicable Series
B-2 Warrant), on a share by share basis, by such Forced Exercise Blocked Share
Amount with respect thereto; provided that if at the Adjustment Common Share
Measuring Time, the Adjustment Common Share Amount is equal to zero (0), then
the Maximum Eligibility Number shall be determined without regard to clause
(i) of this definition. For the avoidance of doubt, if at the Adjustment Common
Share Measuring Time, the Adjustment Common Share Amount is equal to zero (0),
then the Maximum Eligibility Number shall increase (if at all) solely upon a
Forced Exercise.

(gg) “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

(hh) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.

(ii) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency thereof.

(jj) [Intentionally Omitted]

(kk) “Principal Market” means The Nasdaq Global Select Market.

(ll) “Registration Rights Agreement” means that certain registration rights
agreement, dated as of the Closing Date, by and among the Company and the
initial holders of the Common Shares and SPA Warrants, relating to, among other
things, the registration of the resale of the Common Shares and the Common Stock
issuable upon exercise of the SPA Warrants, as may be amended from time to time.

(mm) “Resale Availability Date” means, with respect to any given date of the
determination, the earliest of such date after such applicable date of
determination either (x) one or more registration statements shall be effective
and the prospectus contained therein shall be available (with, for the avoidance
of doubt, any shares of Common Stock previously issued pursuant to such
prospectus deemed unavailable) for the resale of all the shares of Common Stock
issued or issuable upon exercise of this Warrant or (y) all Registrable
Securities shall be eligible for sale pursuant to Rule 144 (as defined in the
Securities Purchase Agreement) without the need for registration under any
applicable federal or state securities laws (in each case, disregarding any
limitation on exercise of the Warrants) and no Current Information Failure
exists or is continuing.

 

25

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(nn) “SEC” means the United States Securities and Exchange Commission or the
successor thereto.

(oo) “Series A Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

(pp) “Series B-1 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(qq) “Series B-2 Warrants” has the meaning ascribed to such term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

(rr) “Series C Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

(ss) “Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.

(tt) “Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.

(uu) “Trading Day” means, as applicable, (x) with respect to all price or
trading volume determinations relating to the Common Stock, any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder or
(y) with respect to all determinations other than price or trading volume
determinations relating to the Common Stock, any day on which The New York Stock
Exchange (or any successor thereto) is open for trading of securities.

(vv) [Intentionally Omitted]

 

26

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(ww) “VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal
Market is not the principal trading market for such security, then on the
principal securities exchange or securities market on which such security is
then traded), during the period beginning at 9:30 a.m., New York time, and
ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP”
function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York time, and ending at 4:00
p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any
of the market makers for such security as reported in the “pink sheets” by OTC
Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated
for such security on such date on any of the foregoing bases, the VWAP of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 13. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.

[signature page follows]

 

27

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

 

COMSCORE, INC. By:       Name:   Title:

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

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

COMSCORE, INC.

The undersigned holder hereby elects to exercise the Warrant to Purchase Common
Stock No.              (the “Warrant”) of comScore, Inc., a Delaware corporation
(the “Company”) as specified below. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

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

 

  ☐

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

 

  ☐

a “Cashless Exercise” with respect to                      Warrant Shares.

In the event that the Holder has elected a Cashless Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that this Exercise Notice was executed by the
Holder at              [a.m.][p.m.] on the date set forth below.

2. Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
$             to the Company in accordance with the terms of the Warrant.

3. Delivery of Warrant Shares. The Company shall deliver to Holder, or its
designee or agent as specified below,              shares of Common Stock in
accordance with the terms of the Warrant. Delivery shall be made to Holder, or
for its benefit, as follows:

☐ Check here if requesting delivery as a certificate to the following name and
to the following address:

 

Issue to:  

 

 

 

 

 

☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

 

DTC Participant:  

 

DTC Number:  

 

Account Number:  

 

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

Notwithstanding anything to the contrary contained herein, this Exercise Notice
shall constitute a representation by the Holder of the Warrant submitting this
Exercise Notice that after giving effect to the exercise provided for in this
Exercise Notice, such Holder (together with its affiliates) will not have
beneficial ownership (together with the beneficial ownership of such Person’s
affiliates) of a number of Common Shares which exceeds the Maximum Percentage
(as defined in the Warrant) of the total outstanding shares of Common Stock of
the Company as determined pursuant to the provisions of Section 1(f)(i) of the
Warrant.

 

Date: _____________ __,__

 

Name of Registered Holder

By:      

Name:

Title:

 

Tax ID:                                                           
                  

 

Facsimile:                                                           
               

 

E-mail Address:                                                   
              

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

EXHIBIT B

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs
             to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated             , 2019, from
the Company and acknowledged and agreed to by             .

 

COMSCORE, INC. By:       Name:   Title:

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

Exhibit D

Form of Registration Rights Agreement

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

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of June [    ],
2019, is by and among comScore, Inc., a Delaware corporation with offices
located at 11950 Democracy Drive, Suite 600, Reston, Virginia 20190 (the
“Company”), and the undersigned buyer (the “Buyer”).

RECITALS

A. In connection with the Securities Purchase Agreement by and among the parties
hereto, dated as of June 23, 2019 (the “Securities Purchase Agreement”), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyer (i) the Common
Shares (as defined in the Securities Purchase Agreement) and (ii) the Warrants
(as defined in the Securities Purchase Agreement) which will be exercisable to
purchase Warrant Shares (as defined in the Securities Purchase Agreement) in
accordance with the terms of the Warrants.

B. To induce the Buyer to consummate the transactions contemplated by the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:

1. Definitions.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:

(a) “Closing Date” shall have the meaning set forth in the Securities Purchase
Agreement.

(b) “Effective Date” means the date that the applicable Registration Statement
or Prospectus Supplement, as applicable, has been declared effective by the SEC
(or automatically became effective, as applicable).

(c) “Effectiveness Deadline” means (i) with respect to the initial Prospectus
Supplement required to be filed pursuant to Section 2(a), on the applicable
Filing Deadline for such initial Prospectus Supplement and (ii) with respect to
any additional Registration Statements that may be required to be filed by the
Company pursuant to this Agreement, (x) if such Registrable Securities are then
eligible by the Company to be registered for resale pursuant to a Prospectus
Supplement to an effective Registration Statement on Form S-3ASR, on the
applicable Filing Deadline for such initial Prospectus Supplement, or
(y) otherwise, on the earlier

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

of the (A) 75th calendar day following (I) if a filing is required by
Section 2(d) as a result of a Current Public Information Failure, the date of
cure of such Current Public Information Failure or (II) otherwise, the date on
which the Company was required to file such additional Registration Statement
hereunder and (B) 5th Business Day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that such Registration
Statement will not be reviewed or will not be subject to further review.

(d) “Filing Deadline” means (i) with respect to initial Prospectus Supplement
required to be filed pursuant to Section 2(a), the 2nd calendar day after the
Closing Date and (ii) with respect to any additional Prospectus Supplements or
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, (x) if a filing is required by Section 2(d) as a result of a
Current Public Information Failure, the fifteenth (15th) Trading Day after the
date of cure of such Current Public Information Failure or (y) otherwise, the
fifteenth (15th) Trading Day after the occurrence of the event or situation
which requires the filing by the Company of such additional Prospectus
Supplements or additional Registration Statement, as applicable, pursuant to the
terms of this Agreement.

(e) “Investor” means a Buyer or any transferee or assignee of any Registrable
Securities or Warrants, as applicable, to whom a Buyer assigns its rights under
this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee thereof to
whom a transferee or assignee of any Registrable Securities or Warrants, as
applicable, assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9.

(f) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof.

(g) “Prospectus Supplement” means a prospectus supplement to an effective
registration statement of the Company filed under the 1933 Act covering
Registrable Securities.

(h) “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 and the declaration of
effectiveness of such Registration Statement(s) by the SEC.

(i) “Registrable Securities” means (i) the Common Shares, (ii) the Warrant
Shares and (iii) any capital stock of the Company issued or issuable with
respect to the Common Shares, the Warrant Shares or the Warrants, including,
without limitation, (1) as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise and (2) shares of
capital stock of the Company into which the shares of Common Stock (as defined
in the Warrants) are converted or exchanged and shares of capital stock of a
Successor Entity (as defined in the Warrants) into which the shares of Common
Stock are converted or exchanged, in each case, without regard to any
limitations on exercise of the Warrants; provided however that any such
Registrable Security will cease to be a Registrable Security (a) when a
registration statement covering such Registrable Security becomes or has been
declared effective by the SEC and such Registrable Security has been sold or
disposed of pursuant to such effective registration

 

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statement; (b) when such Registrable Security has been disposed of pursuant to
any section of Rule 144 (or any similar provision then in effect) under the 1933
Act; (c) when such Registrable Security is held by the Company or one of its
Subsidiaries or affiliates; (d) when such Registrable Security has been sold or
disposed of in a private transaction in which the transferor’s rights under this
Agreement are not assigned to the transferee of such securities pursuant to
Section 9 hereof or (e) when such Registrable Security becomes eligible for
resale without restriction and without the need for current public information
pursuant to any section of Rule 144 (or any similar provision then in effect)
under the 1933 Act.

(j) “Registration Statement” means a registration statement or registration
statements of the Company filed under the 1933 Act covering Registrable
Securities.

(k) “Required Holders” means, as of any given time, the holders of a majority of
the Registrable Securities as of such time (excluding any Registrable Securities
held by the Company or any of its Subsidiaries as of such time).

(l) “Required Registration Amount” means the sum of (i) the number of Common
Shares issued pursuant to the Securities Purchase Agreement and (ii) 100% of the
maximum number of Warrant Shares issued and issuable pursuant to the Warrants
immediately preceding the applicable date of determination (without taking into
account any limitations on the exercise of the Warrants set forth therein), all
subject to adjustment as provided in Section 2(d) and/or Section 2(f).

(m) “Rule 144” means Rule 144 promulgated by the SEC under the 1933 Act, as such
rule may be amended from time to time, or any other similar or successor rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration.

(n) “Rule 415” means Rule 415 promulgated by the SEC under the 1933 Act, as such
rule may be amended from time to time, or any other similar or successor rule or
regulation of the SEC providing for offering securities on a continuous or
delayed basis.

(o) “SEC” means the United States Securities and Exchange Commission or any
successor thereto.

2. Registration.

(a) Mandatory Registration. The Company shall prepare and, as soon as reasonably
practicable, but in no event later than the Filing Deadline, file with the SEC a
Prospectus Supplement to the Company’s effective Registration Statement on Form
S-3ASR (File Number: 333- 231778) covering the resale of all of the Registrable
Securities, provided that such initial Prospectus Supplement shall register for
resale at least the number of shares of Common Stock equal to the Required
Registration Amount as of the date such initial Prospectus Supplement is
initially filed with the SEC; provided further that if Form S-3ASR is
unavailable for such a registration, the Company shall file an initial
Registration Statement on Form S-3, if available (or, otherwise, such other form
as is required by Section 2(c)). Such initial Prospectus Supplement and each
other Registration Statement required to be filed pursuant to the terms of this
Agreement, shall contain (except if otherwise directed by the Required Holders)
the “Selling

 

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Stockholder” and “Plan of Distribution” sections in substantially the form
attached hereto as Exhibit A. The Company shall use its reasonable best efforts
to have such initial Prospectus Supplement, and each other Registration
Statement required to be filed pursuant to the terms of this Agreement, declared
effective by the SEC (or to automatically became effective, as applicable) as
soon as reasonably practicable, but in no event later than the applicable
Effectiveness Deadline for such Registration Statement.

(b) Legal Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP,
counsel solely to the lead investor (“Legal Counsel”) shall review and oversee
any registration, solely on behalf of the lead investor, pursuant to this
Section 2.

(c) Ineligibility to Use Form S-3 or S-3ASR. In the event that Form S-3ASR and
Form S-3 (or any successor forms similar thereto) are both not available for the
registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on Form S-1 or
another appropriate form reasonably acceptable to the Required Holders and
(ii) undertake to register the resale of the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall maintain the
effectiveness of all Registration Statements then in effect until such time as a
Registration Statement on Form S-3 covering the resale of all the Registrable
Securities has been declared effective by the SEC and the prospectus contained
therein is available for use.

(d) Sufficient Number of Shares Registered. In the event the number of shares
available under any Registration Statement is insufficient to cover all of the
Registrable Securities required to be covered by such Registration Statement or
a Registration Statement ceases to be available for the resale of all of the
Registrable Securities as a result of the occurrence of a Current Public
Information Failure or, subject to applicable Grace Periods (if any) otherwise,
the Company shall amend or supplement such Registration Statements (if
permissible), or file with the SEC a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover at least the
Required Registration Amount as of the latest practicable Trading Day (as
defined in the Warrants) immediately preceding the date of the filing of such
amendment or supplement or new Registration Statement, in each case, as soon as
reasonably practicable, but in no event later than the applicable Filing
Deadline. The Company shall use its reasonable best efforts to cause such
amendment or supplement to such Registration Statement and/or such new
Registration Statement (as the case may be) to become effective as soon as
reasonably practicable following the filing thereof with the SEC, but in no
event later than the applicable Effectiveness Deadline for such Registration
Statement. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed “insufficient to cover
all of the Registrable Securities” if at any time during the Registration Period
(as defined below) the number of shares of Common Stock available for resale
under the applicable Registration Statement is less than the product determined
by multiplying (i) the Required Registration Amount as of such time by (ii)
0.90. The calculation set forth in the foregoing sentence shall be made without
regard to any limitations on exercise of the Warrants (and such calculation
shall assume that the Warrants are then fully exercisable for shares of Common
Stock at the then-prevailing applicable Exercise Price (as defined in the
Warrants)).

 

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(e) Effect of Failure to File and Obtain and Maintain Effectiveness of any
Registration Statement. If (i) a Registration Statement (or the initial
Prospectus Supplement, as applicable) covering the resale of all of the
Registrable Securities required to be covered thereby and required to be filed
by the Company pursuant to this Agreement is (A) not filed with the SEC on or
before the Filing Deadline for such Registration Statement (or the initial
Prospectus Supplement, as applicable) (a “Filing Failure”) (it being understood
that if the Company files a Registration Statement (or the initial Prospectus
Supplement, as applicable) without affording each Investor and Legal Counsel the
opportunity to review and comment on the same as required by Section 3(c)
hereof, the Company shall be deemed to not have satisfied this clause (i)(A) and
such event shall be deemed to be a Filing Failure) or (B) not declared effective
by the SEC (or automatically became effective, as applicable) on or before the
Effectiveness Deadline for such Registration Statement (or the initial
Prospectus Supplement, as applicable) (an “Effectiveness Failure”) (it being
understood that if on the Business Day immediately following the Effective Date
for such Registration Statement the Company shall not have filed a “final”
prospectus for such Registration Statement with the SEC under Rule 424(b) in
accordance with Section 3(b) (whether or not such a prospectus is technically
required by such rule), the Company shall be deemed to not have satisfied this
clause (i)(B) and such event shall be deemed to be an Effectiveness Failure) or
(ii) other than during an Allowable Grace Period (as defined below), on any day
after the Effective Date of a Registration Statement (or the initial Prospectus
Supplement, as applicable) sales of all of the Registrable Securities required
to be included on such Registration Statement (or the initial Prospectus
Supplement, as applicable) cannot be made pursuant to such Registration
Statement (or the initial Prospectus Supplement, as applicable) (including,
without limitation, because of a failure to keep such applicable Registration
Statement effective, a failure to disclose such information as is necessary for
sales to be made pursuant to such Registration Statement, a suspension or
delisting of (or a failure to timely list) the shares of Common Stock on the
Principal Market (as defined in the Securities Purchase Agreement) or any other
limitations imposed by the Principal Market, or by reason of a stop order) or
the prospectus contained therein is not available for use for any reason (other
than a material disruption effecting the SEC, the Principal Market or the
primary industry in which the Company is a part, in each case, measured as a
whole, and not specifically or uniquely relating to the Company or any of its
subsidiaries)(a “Maintenance Failure”), or (iii) a Registration Statement is not
effective for any reason or the prospectus contained therein is not available
for use for any reason, and the Company fails for any reason to satisfy the
requirements of Rule 144(c)(1), including, without limitation, the failure to
satisfy the current public information requirement under Rule 144(c) (a “Current
Public Information Failure”) as a result of which any of the Investors are
unable to sell Registrable Securities under Rule 144, then, as the exclusive
monetary remedy for the damages to any holder by reason of any such delay in, or
reduction of, its ability to sell the underlying shares of Common Stock, for
each Filing Failure, Effectiveness Failure, Maintenance Failure or Current
Public Information Failure, as applicable, the Company shall pay to each holder
of Registrable Securities relating to such Registration Statement (or the
initial Prospectus Supplement, as applicable) an amount in cash equal to two
percent (2%) of such Investor’s Purchase Price (as defined in the Securities
Purchase Agreement) (1) on the date of such Filing Failure, Effectiveness
Failure, Maintenance Failure or Current Public Information Failure, as
applicable, and (2) on every thirty (30) day anniversary of (I) a Filing Failure
until such Filing Failure is cured; (II) an Effectiveness Failure until such
Effectiveness Failure is cured; (III) a Maintenance Failure until such
Maintenance Failure is

 

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cured; and (IV) a Current Public Information Failure until the earlier of
(i) the date such Current Public Information Failure is cured and (ii) such time
that such public information is no longer required pursuant to Rule 144 (in each
case, pro-rated for periods totaling less than thirty (30) days). The payments
to which a holder of Registrable Securities shall be entitled pursuant to this
Section 2(e) are referred to herein as “Registration Delay Payments”; provided,
that the aggregate Registration Delay Payments shall not exceed eight percent
(8%) of such Investor’s Purchase Price. Following the initial Registration Delay
Payment for any particular event or failure (which shall be paid within ten
(10) Business Days after the date of such event or failure, as set forth above),
without limiting the foregoing, if an event or failure giving rise to the
Registration Delay Payments is cured prior to any thirty (30) day anniversary of
such event or failure, then such Registration Delay Payment shall be made on the
tenth (10th) Business Day after such cure. In the event the Company fails to
make Registration Delay Payments in a timely manner in accordance with the
foregoing, such Registration Delay Payments shall bear interest at the rate of
two percent (2%) per month (prorated for partial months) until paid in full.
Notwithstanding the foregoing, no Registration Delay Payments shall be owed to
an Investor with respect to any period during which all of such Investor’s
Registrable Securities may be sold by such Investor without restriction under
Rule 144 (including, without limitation, volume restrictions) and without the
need for current public information required by Rule 144(c)(1) (or Rule
144(i)(2), if applicable); further, during periods that the Company is unable to
meet its obligations herein because any Investor fails to comply with its
obligations herein, including Section 4, the Company shall be excused from any
Registration Delay Payments resulting from such failure with respect to such
Investor and any such Filing Failure, Effectiveness Failure or Maintenance
Failure that may otherwise occur because of such failure shall be disregarded
with respect to such Investor.

(f) Offering. Notwithstanding anything to the contrary contained in this
Agreement, the Company will not name an Investor as an underwriter as defined in
Section 2(a)(11) of the 1933 Act in any Registration Statement without such
Investor’s consent. If the staff of the SEC requires the Company to name any
Investor as an underwriter as defined in Section 2(a)(11) of the 1933 Act, and
such Investor does not consent thereto, then such Investor’s Registrable
Securities shall not be included on the Registration Statement and the Company
shall have no further obligations hereunder with respect to Registrable
Securities held by such Holder.

(g) Piggyback Registrations. Without limiting any obligation of the Company
hereunder or under the Securities Purchase Agreement, after the Effectiveness
Deadline, if there is not an effective Registration Statement covering all of
the Registrable Securities or the prospectus contained therein is not available
for use and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans),
then the Company shall deliver to each Investor a written notice of such
determination and, if within fifteen (15) days after the date of the delivery of
such notice, any such Investor shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Investor requests to be registered; provided, however, the
Company shall not be required to register any Registrable Securities

 

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pursuant to this Section 2(g) that are eligible for resale pursuant to Rule 144
without restriction (including, without limitation, volume restrictions) and
without the need for current public information required by Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) or that are the subject of a then-effective
Registration Statement.    Notwithstanding anything to the contrary included in
this Agreement, if an Investor fails to timely furnish such information that
Company determines, after consultation with its counsel, is reasonably required
in order for such Registration Statement or prospectus to comply with the 1933
Act (it being understood that delivery of such information within five
(5) Trading Days of such request shall be deemed timely hereunder), the
applicable Filing Deadline and Effectiveness Deadline of such Registration
Statement shall be automatically extended on a day-by-day basis for each
calendar day thereafter until the Investor has furnished such information to the
Company.

(h) [Reserved].

(i) No Inclusion of Other Securities. Except with respect to the Company’s
effective Registration Statement on Form S-3ASR (File Number: 333-231778) and a
registration statement filed where Section 2(g) is applicable, the Company shall
in no event include any securities other than Registrable Securities on any
Registration Statement filed in accordance herewith without the prior written
consent of the Required Holders.

3. Related Obligations.

In connection with its registration obligations under Section 2, the Company
shall have the following obligations:

(a) The Company shall promptly prepare and file with the SEC a Registration
Statement (or the initial Prospectus Supplement, as applicable) with respect to
all the Registrable Securities (but in no event later than the applicable Filing
Deadline) and use its reasonable best efforts to cause such Registration
Statement (or the initial Prospectus Supplement, as applicable) to become
effective as soon as reasonably practicable after such filing (but in no event
later than the Effectiveness Deadline). Subject to Allowable Grace Periods, the
Company shall keep each Registration Statement effective (and the prospectus
contained therein available for use) pursuant to Rule 415 for resales by the
Investors on a delayed or continuous basis at then-prevailing market prices (and
not fixed prices) at all times until such Investors cease to hold Registrable
Securities (the “Registration Period”). Notwithstanding anything to the contrary
contained in this Agreement, the Company shall use its reasonable best efforts
to ensure that, when filed and at all times while effective, each Registration
Statement (including, without limitation, all amendments and supplements
thereto) and the prospectus (including, without limitation, all amendments and
supplements thereto) used in connection with such Registration Statement shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they
were made) not misleading.

(b) Subject to Section 3(r) of this Agreement, the Company shall prepare and
file with the SEC such amendments (including, without limitation, post-effective
amendments) and supplements to each Registration Statement and the prospectus
used in connection with each such Registration Statement, which prospectus is to
be filed pursuant to Rule 424 promulgated

 

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under the 1933 Act, as may be necessary to keep each such Registration Statement
effective at all times during the Registration Period for such Registration
Statement, and, during such period, comply with the provisions of the 1933 Act
with respect to the disposition of all Registrable Securities of the Company
required to be covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement; provided, however, by 9:30 a.m. (New York time) on
the Business Day immediately following each Effective Date, the Company shall
file with the SEC in accordance with Rule 424(b) under the 1933 Act the final
prospectus to be used in connection with sales pursuant to the applicable
Registration Statement (whether or not such a prospectus is technically required
by such rule). In the case of amendments and supplements to any Registration
Statement which are required to be filed pursuant to this Agreement (including,
without limitation, pursuant to this Section 3(b)) by reason of the Company
filing a report on Form 8-K, Form 10-Q or Form 10-K or any analogous report
under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the
Company shall, if permitted under the applicable rules and regulations of the
SEC, have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration Statement.

(c) The Company shall (A) permit Legal Counsel and legal counsel for each other
Investor to review and comment upon (i) each Registration Statement at least
five (5) Business Days prior to its filing with the SEC and (ii) all amendments
and supplements to each Registration Statement (including, without limitation,
the prospectus contained therein) (except for Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or
successor reports) within a reasonable number of days prior to their filing with
the SEC (it being understood and agreed that the five Business Days period
referred to in this sentence shall not apply to the initial Prospectus
Supplement to the Company’s effective Registration Statement on Form S-3ASR
referred to in Section 2(a)), and (B) make the corrections to such amendments or
supplements reasonably requested by such Legal Counsel or any legal counsel for
any other Investor. Upon request and subject to appropriate confidentiality
obligations, the Company shall promptly furnish to Legal Counsel and legal
counsel for each other Investor, without charge, (i) copies of any
correspondence from the SEC or the Staff to the Company or its representatives
relating to each Registration Statement, provided that such correspondence shall
not contain any material, non-public information regarding the Company or any of
its Subsidiaries (as defined in the Securities Purchase Agreement), (ii) after
the same is prepared and filed with the SEC, one (1) copy of each Registration
Statement and any amendment(s) and supplement(s) thereto, including, without
limitation, financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, and all exhibits and
(iii) upon the effectiveness of each Registration Statement, one (1) copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto. The Company shall reasonably cooperate with Legal Counsel
and legal counsel for each other Investor in performing the Company’s
obligations pursuant to this Section 3.

(d) The Company shall promptly furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i) upon
request, after the same is prepared and filed with the SEC, at least one
(1) copy of each Registration Statement and

 

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any amendment(s) and supplement(s) thereto, including, without limitation,
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor, all exhibits and (ii) such other
documents, including, without limitation, copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.

(e) The Company shall use its reasonable best efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including, without limitation, post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, the
Company shall not be required in connection therewith or as a condition thereto
to (x) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(e), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify Legal
Counsel, legal counsel for each other Investor and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

(f) The Company shall notify Legal Counsel, legal counsel for each other
Investor and each Investor in writing of the happening of any event, as promptly
as practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement that includes such Investor’s
Registrable Shares, as then in effect, may include an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided that in no event shall such
notice contain any material, non-public information regarding the Company or any
of its Subsidiaries), and, subject to Section 3(r), promptly prepare a
supplement or amendment to such Registration Statement and such prospectus
contained therein to correct such untrue statement or omission and deliver such
number of copies of such supplement or amendment to Legal Counsel, legal counsel
for each other Investor and each Investor as such Legal Counsel, legal counsel
for each other Investor or Investor may reasonably request. The Company shall
also promptly as practicable notify Legal Counsel, legal counsel for each other
Investor and each Investor to the extent that any of the following documents
includes such Investor’s Registrable Securities (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, when a
Registration Statement or any post-effective amendment has become effective, and
when the Company receives written notice from the SEC that a Registration
Statement or any post-effective amendment will be reviewed by the SEC, (ii) of
the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate; and (iii) of the receipt of any
request by the SEC or any other federal or state governmental authority for any

 

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additional information relating to the Registration Statement or any amendment
or supplement thereto or any related prospectus. The Company shall respond as
promptly as practicable to any comments received from the SEC with respect to
each Registration Statement or any amendment thereto.

(g) The Company shall (i) use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of each
Registration Statement or the use of any prospectus contained therein, or the
suspension of the qualification, or the loss of an exemption from qualification,
of any of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such order or
suspension as soon as reasonably practicable and (ii) notify Legal Counsel,
legal counsel for each other Investor and each Investor who holds Registrable
Securities of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.

(h) If any Investor may be required under applicable securities law to be
described in any Registration Statement as an underwriter and such Investor
consents to so being named an underwriter, at the written request of such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of such Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to such Investor, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to such
Investor.

(i) If any Investor may be required under applicable securities law to be
described in any Registration Statement as an underwriter and such Investor
consents to so being named an underwriter, upon the written request of such
Investor, the Company shall make available for inspection by (i) such Investor,
(ii) legal counsel for such Investor and (iii) one (1) firm of accountants or
other agents retained by such Investor (collectively, the “Inspectors”), all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company, as shall be reasonably deemed necessary by each
Inspector, and cause the Company’s officers, directors and employees to supply
all information which any Inspector may reasonably request (together such
records, documents and properties and information, the “Records”); provided,
however, each Inspector shall agree in writing to hold in strict confidence and
not to make any disclosure (except to such Investor) or use of any Record or
other information which the Company determines in good faith to be confidential,
and of which determination the Inspectors are so notified, unless (1) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (2) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (3) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
Agreement or any other Transaction Document (as defined in the Securities
Purchase Agreement). Such Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense,

 

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to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in any
other confidentiality agreement between the Company and such Investor, if any)
shall be deemed to limit any Investor’s ability to sell Registrable Securities
in a manner which is otherwise consistent with applicable laws and regulations.

(j) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement or prospectus or is
otherwise required to be disclosed in such Registration Statement or prospectus
pursuant to the 1933 Act, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement or any other Transaction Document. The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow such
Investor, at such Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

(k) Without limiting any obligation of the Company under the Securities Purchase
Agreement, the Company shall use its reasonable best efforts either to (i) cause
all of the Registrable Securities covered by each Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange,
(ii) secure designation and quotation of all of the Registrable Securities
covered by each Registration Statement on an Eligible Market (as defined in the
Securities Purchase Agreement), or (iii) if, despite the Company’s reasonable
best efforts to satisfy the preceding clauses (i) or (ii) the Company is
unsuccessful in satisfying the preceding clauses (i) or (ii), without limiting
the generality of the foregoing, to use its reasonable best efforts to arrange
for at least two market makers to register with the Financial Industry
Regulatory Authority (“FINRA”) as such with respect to such Registrable
Securities. In addition, the Company shall cooperate with each Investor and any
broker or dealer through which any such Investor proposes to sell its
Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule
5110 as requested by such Investor. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 3(k).

(l) [Reserved].

(m) If requested by an Investor, the Company shall as soon as practicable after
receipt of notice from such Investor and subject to Section 3(r) hereof,
(i) incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus

 

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supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement or prospectus
contained therein if reasonably requested by an Investor holding any Registrable
Securities.

(n) The Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.

(o) The Company shall use its reasonable best efforts to make generally
available to its security holders as soon as reasonably practicable, an earnings
statement (in form complying with, and in the manner provided by, the provisions
of Rule 158 under the 1933 Act).

(p) The Company shall otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.

(q) [Reserved].

(r) Notwithstanding anything to the contrary herein (but subject to the last
sentence of this Section 3(r)), at any time after the Effective Date of a
particular Registration Statement, the Company may delay the disclosure of
material, non-public information concerning the Company or any of its
Subsidiaries the disclosure of which at the time is not, in the good faith
opinion of the board of directors of the Company, in the best interest of the
Company and, in the opinion of counsel to the Company, otherwise required (a
“Grace Period”), provided that the Company shall promptly notify the Investors
in writing of the (i) existence of material, non-public information giving rise
to a Grace Period (provided that in each such notice the Company shall not
disclose the content of such material, non-public information to any of the
Investors) and the date on which such Grace Period will begin and (ii) date on
which such Grace Period ends, provided further that (I) no Grace Period shall
exceed fifteen (15) consecutive days and during any three hundred sixty five
(365) day period all such Grace Periods shall not exceed an aggregate of
forty-five (45) days and (II) the first day of any Grace Period must be at least
five (5) Trading Days after the last day of any prior Grace Period and (III) no
Grace Period may exist during the sixty (60) Trading Day period immediately
following the filing of the initial Prospectus Supplement to the Company’s
effective Registration Statement on Form S-3ASR referred to in Section 2(a)
(provided that such sixty (60) Trading Day period shall be extended by the
number of Trading Days during such period and any extension thereof contemplated
by this proviso during which such Registration Statement is not effective or
such initial Prospectus Supplement contained therein is not available for use)
(each, an “Allowable Grace Period”). For purposes of determining the length of a
Grace Period above, such Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) above and shall end on
and include the later of the date the Investors receive the notice referred to
in clause (ii) above and the date referred to in such notice. The provisions of
Section 3(g) hereof shall not be applicable during the period of any Allowable
Grace Period. Upon expiration of each Grace Period, the Company shall again be
bound by the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material, non-public information is no longer
applicable. Notwithstanding anything to the contrary contained in this
Section 3(r), the

 

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Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, prior to such Investor’s
receipt of the notice of a Grace Period and for which the Investor has not yet
settled.

(s) The Company shall take all other reasonable actions necessary to expedite
and facilitate disposition by each Investors of its Registrable Securities
pursuant to each Registration Statement.

(t) Neither the Company nor any Subsidiary or affiliate thereof shall identify
any Investor as an underwriter in any public disclosure or filing with the SEC,
the Principal Market or any Eligible Market (as defined in the Warrant) without
the prior consent of such Investor, and, subject to Section 2(f), any Investor
being deemed an underwriter by the SEC shall not relieve the Company of any
obligations it has under this Agreement or any other Transaction Document (as
defined in the Securities Purchase Agreement); provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the “Plan of Distribution” section attached hereto as Exhibit A in the
Registration Statement.

(u) Neither the Company nor any of its Subsidiaries has entered, as of the date
hereof, nor shall the Company or any of its Subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities, that
would have the effect of impairing the rights granted to the Buyer in this
Agreement or otherwise conflicts with the provisions hereof.

4. Obligations of the Investors.

(a) At least five (5) Business Days prior to the first anticipated filing date
of each Registration Statement (for the avoidance of doubt, excluding the
initial Prospectus Supplement to the Company’s effective Registration Statement
on Form S-3ASR referred to in Section 2(a)), the Company shall notify each
Investor in writing of the information the Company requires from each such
Investor with respect to such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.

(b) Each Investor, by such Investor’s acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of each Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor’s election to exclude all of such Investor’s Registrable Securities
from such Registration Statement.

 

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(c) Each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of Section 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary in this Section 4(c), the
Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of Section 3(f) and for which such Investor has not yet settled.

5. Expenses of Registration.

All reasonable expenses, other than underwriting discounts and commissions or
any broker or similar commissions, incurred in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, FINRA filing fees (if any) and fees and disbursements of
counsel for the Company shall be paid by the Company. The Company shall
reimburse Legal Counsel for its fees and disbursements in connection with
registration, filing or qualification pursuant to Sections 2 and 3 of this
Agreement which amount shall be limited to $5,000 for each such registration,
filing or qualification and shall not exceed $20,000 in the aggregate.

6. Indemnification.

(a) To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor and each of its directors,
officers, shareholders, members, partners, employees, agents, advisors,
representatives (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding the lack of such title or any other
title) and each Person, if any, who controls such Investor within the meaning of
the 1933 Act or the 1934 Act and each of the directors, officers, shareholders,
members, partners, employees, agents, advisors, representatives (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title) of such controlling
Persons (each, an “Indemnified Person”), against any losses, obligations,
claims, damages, liabilities, contingencies, judgments, fines, penalties,
charges, costs (including, without limitation, court costs, reasonable
attorneys’ fees and costs of defense and investigation), amounts paid in
settlement or expenses, joint or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an Indemnified Person is or
may be a party thereto (“Indemnified Damages”), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration

 

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Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made therein
not misleading, in light of the circumstances under which the statements therein
were made or (iii) any violation or alleged violation by the Company of the 1933
Act, the 1934 Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”). Subject to Section 6(c), the Company shall reimburse the
Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any legal fees or other expenses reasonably incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection
with the preparation of such Registration Statement or any such amendment
thereof or supplement thereto it being understood that each Investor has
approved Exhibit A for such purpose); and (ii) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of any of the Registrable Securities by any of the
Investors pursuant to Section 9.

(b) In connection with any Registration Statement in which an Investor is
participating, such Investor agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers and
each Person, if any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case, to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor (or its
representative) expressly for use in connection with such Registration Statement
or prospectus or amendment or supplement thereto; and, subject to Section 6(c)
and the below provisos in this Section 6(b), such Investor will reimburse an
Indemnified Party for any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed, provided further that such Investor shall be
liable under this

 

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Section 6(b) for only that amount of a Claim or Indemnified Damages as does not
exceed the net proceeds to such Investor as a result of the applicable sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of any of the
Registrable Securities by any of the Investors pursuant to Section 9.

(c) Promptly after receipt by an Indemnified Person or Indemnified Party (as the
case may be) under this Section 6 of notice of the commencement of any action or
proceeding (including, without limitation, any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party (as
the case may be) shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party (as the
case may be); provided, however, an Indemnified Person or Indemnified Party (as
the case may be) shall have the right to retain its own counsel with the fees
and expenses of such counsel to be paid by the indemnifying party if: (i) the
indemnifying party has agreed in writing to pay such fees and expenses; (ii) the
indemnifying party shall have failed promptly to assume the defense of such
Claim and to employ counsel reasonably satisfactory to such Indemnified Person
or Indemnified Party (as the case may be) in any such Claim; or (iii) the named
parties to any such Claim (including, without limitation, any impleaded parties)
include both such Indemnified Person or Indemnified Party (as the case may be)
and the indemnifying party, and such Indemnified Person or such Indemnified
Party (as the case may be) shall have been advised by counsel that a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Person or such Indemnified Party and the indemnifying party, in
which case, if such Indemnified Person or such Indemnified Party (as the case
may be) notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, then the indemnifying
party shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the indemnifying party, provided further that in the
case of clause (iii) above the indemnifying party shall not be responsible for
the reasonable fees and expenses of more than one (1) separate legal counsel for
such Indemnified Person or Indemnified Party (as the case may be). The
Indemnified Party or Indemnified Person (as the case may be) shall reasonably
cooperate with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person (as the case may be) which relates to
such action or Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person (as the case may be) reasonably apprised at all times as to
the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person (as the case may be), consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person (as the case may be) of a
release from all liability in respect to such Claim, and such settlement shall
not include any admission as to fault on the part

 

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of the Indemnified Party. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the Indemnified
Party or Indemnified Person (as the case may be) with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party (as the case may be) under this Section 6, except to the
extent that the indemnifying party is materially and adversely prejudiced in its
ability to defend such action.

(d) The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.

(e) The indemnity and contribution agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

7. Contribution.

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however: (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section 6
of this Agreement, (ii) no Person involved in the sale of Registrable Securities
which Person is guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the amount of net
proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the
provisions of this Section 7, no Investor shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the net proceeds
actually received by such Investor from the applicable sale of the Registrable
Securities subject to the Claim exceeds the amount of any damages that such
Investor has otherwise been required to pay, or would otherwise be required to
pay under Section 6(b), by reason of such untrue or alleged untrue statement or
omission or alleged omission.

8. Reports Under the 1934 Act.

With a view to making available to the Investors the benefits of Rule 144, the
Company agrees to use reasonable best efforts to:

(a) make and keep public information available, as those terms are understood
and defined in Rule 144;

 

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(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood and agreed
that nothing herein shall limit any obligations of the Company under the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting, submission and posting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company with the SEC if such reports are not publicly
available via EDGAR, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144
without registration.

9. Assignment of Registration Rights.

All or any portion of the rights under this Agreement shall be automatically
assignable by each Investor to any transferee or assignee (as the case may be)
of all or any portion of such Investor’s Registrable Securities or Warrants if:
(i) such Investor agrees in writing with such transferee or assignee (as the
case may be) to assign all or any portion of such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
transfer or assignment (as the case may be); (ii) the Company is, within a
reasonable time after such transfer or assignment (as the case may be),
furnished with written notice of (a) the name and address of such transferee or
assignee (as the case may be), and (b) the securities with respect to which such
registration rights are being transferred or assigned (as the case may be);
(iii) immediately following such transfer or assignment (as the case may be) the
further disposition of such securities by such transferee or assignee (as the
case may be) is restricted under the 1933 Act or applicable state securities
laws if so required; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer or assignment (as the case
may be) shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement and the Warrants (as the case may be); (vi)
such transfer or assignment (as the case may be) shall have been conducted in
accordance with all applicable federal and state securities laws; and
(vii) unless the transferee or assignee is an Affiliate of, and after such
transfer or assignment continues to be an Affiliate of, the Investor, the amount
of Registrable Securities transferred or assigned to such transferee or assignee
shall represent the lesser of (x) at least $10 million of all Registrable
Securities held by (or issuable to) such Investor or (y) all Registrable
Securities held by (or issuable to) such Investor (in each case, without regard
to any limitation on exercise therein and measured at the VWAP of the Common
Stock as of the Trading Day ended immediately prior to such date of
determination).

10. Amendment of Registration Rights.

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders; provided that any such

 

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amendment or waiver that complies with the foregoing, but that
disproportionately, materially and adversely affects the rights and obligations
of any Investor relative to the comparable rights and obligations of the other
Investors shall require the prior written consent of such adversely affected
Investor. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.

11. Miscellaneous.

(a) Solely for purposes of this Agreement, a Person is deemed to be a holder of
Registrable Securities whenever such Person owns, or is deemed to own, of record
such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable
Securities.

(b) Any notices, consents, waivers or other communications required or permitted
to be given under the terms of this Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail (provided that such sent email is kept on file
(whether electronically or otherwise) by the sending party and the sending party
does not receive an automatically generated message from the recipient’s email
server that such e-mail could not be delivered to such recipient); or (iii) one
(1) Business Day after deposit with a nationally recognized overnight delivery
service with next day delivery specified, in each case, properly addressed to
the party to receive the same. The addresses, facsimile numbers and email
addresses for such communications shall be:

If to the Company:

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, VA 20190

Telephone: (703) 234-2682

Facsimile: (703) 234-2684

Attention: Carol DiBattiste, General Counsel

Email: cdibattiste@comscore.com

With a copy (for informational purposes only) to:

Vinson & Elkins L.L.P.

2801 Via Fortuna, Suite 100

Austin, TX 78746

Telephone: (512) 542-8450

Facsimile: (512) 576-7635

Attention: Paul Tobias

Email: ptobias@velaw.com

 

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If to the Transfer Agent:

American Stock Transfer & Trust Company

6201 15th Ave

Brooklyn, NY 11219

Telephone: (972) 684-5308

Facsimile: (718) 765-8763

Attention: Bill Torre

Email: admin12@astfinancial.com

If to Legal Counsel:

Kelley Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

Email: madelstein@kelleydrye.com

If to the Buyer, to its address, facsimile number and/or email address set forth
on the Schedule of Buyers attached to the Securities Purchase Agreement, with
copies to the Buyer’s representatives as set forth on the Schedule of Buyers, or
to such other address, facsimile number, and/or email address and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Kelley Drye & Warren LLP shall only be provided
notices sent to the lead investor. Notwithstanding anything to the contrary in
this Agreement, if an Investor has not provided the Company with contact
information for its legal counsel (to the extent different than such information
set forth in the Schedule of Buyers attached to the Securities Purchase
Agreement), the Company will not be required to provide notice to such
Investor’s legal counsel. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
or email containing the time, date, recipient facsimile number or email address
and an image of the first page of such transmission or (C) provided by a courier
or overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

(c) Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof. The Company and each Investor acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that each party hereto shall
be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement by any other party hereto and to enforce
specifically the terms and provisions hereof (without the necessity of showing
economic loss and without any bond or other security being required), this being
in addition to any other remedy to which any party may be entitled by law or
equity.

 

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(d) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. 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, 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 brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. 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 to such party at the address for such 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 manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

(e) If any provision of this Agreement is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be valid and
enforceable, and the invalidity or unenforceability of such provision shall not
affect the validity of the remaining provisions of this Agreement so long as
this Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization, in any material
respect, of the benefits that would otherwise be conferred upon the parties. The
parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

(f) This Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto and thereto solely with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto solely with respect to the subject matter hereof and
thereof; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect

 

21

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on any agreements any Investor has entered into with the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior investment made
by such Investor in the Company, (ii) waive, alter, modify or amend in any
respect any obligations of the Company or any of its Subsidiaries or any rights
of or benefits to any Investor or any other Person in any agreement entered into
prior to the date hereof between or among the Company and/or any of its
Subsidiaries and any Investor involving matters separate and apart from the
transactions contemplated by the Transaction Documents and all such agreements
shall continue in full force and effect or (iii) limit any obligations of the
Company under any of the other Transaction Documents.

(g) Subject to compliance with Section 9 (if applicable), this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto. This Agreement is not for the benefit of, nor may
any provision hereof be enforced by, any Person, other than the parties hereto,
their respective permitted successors and assigns and the Persons referred to in
Sections 6 and 7 hereof.

(h) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.

(i) This Agreement may be executed in two or more identical counterparts, each
of which shall be deemed an original, but all of which shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event that any
signature is delivered by facsimile transmission or by an email which contains a
portable document format (.pdf) file of an executed signature page, such
signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such signature page were an original thereof.

(j) Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

(k) The language used in this Agreement will be deemed to be the language chosen
by the parties to express their mutual intent and no rules of strict
construction will be applied against any party. Notwithstanding anything to the
contrary set forth in Section 10, terms used in this Agreement but defined in
the other Transaction Documents shall have the meanings ascribed to such terms
on the Closing Date in such other Transaction Documents unless otherwise
consented to in writing by each Investor.

 

22

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(l) All consents and other determinations required to be made by the Investors
as a whole pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders, determined as if all of the
outstanding Warrants then held by Investors have been exercised for Registrable
Securities without regard to any limitations on exercise of the Warrants.

(m) This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

(n) The obligations of each Investor under this Agreement and the other
Transaction Documents are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this Agreement or any
other Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Investor pursuant hereto or thereto, shall
be deemed to constitute the Investors as, and the Company acknowledges that the
Investors do not so constitute, a partnership, an association, a joint venture
or any other kind of group or entity, or create a presumption that the Investors
are in any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Investors are not acting in
concert or as a group, and the Company shall not assert any such claim, with
respect to such obligations or the transactions contemplated by this Agreement
or any of the other the Transaction Documents. Each Investor shall be entitled
to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained herein was
solely in the control of the Company, not the action or decision of any
Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and
among Investors.

[signature page follows]

 

23

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IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

 

COMPANY: comScore, Inc. By:       Name:   Title:

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

IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

 

BUYER: CVI INVESTMENTS, INC. By:       Name:   Title:

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

EXHIBIT A

SELLING STOCKHOLDER

The shares of common stock being offered by the selling stockholder are those
previously issued to the selling stockholder and those issuable to the selling
stockholder upon exercise of the warrants. For additional information regarding
the issuance of common stock and the warrants, see “Private Placement of Common
Shares and Warrants” above. We are registering the shares of common stock in
order to permit the selling stockholder to offer the shares for resale from time
to time. Except for the ownership of the common stock and the warrants issued
pursuant to the Securities Purchase Agreement, the selling stockholder has not
had any material relationship with us within the past three years.

The table below lists the selling stockholder and other information regarding
the beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
the shares of common stock held by the selling stockholder. The second column
lists the number of shares of common stock beneficially owned by the selling
stockholder, based on its ownership of shares of common stock and warrants, as
of             , 2019, assuming exercise of the warrants held by each such
selling stockholder on that date but taking account of any limitations on
exercise set forth therein.

The third column lists the shares of common stock being offered by this
prospectus by the selling stockholder and does not take in account any
limitations on exercise of the warrants set forth therein.

In accordance with the terms of a registration rights agreement with the holders
of the common stock and the warrants, this prospectus generally covers the
resale of the sum of (i) the number of shares of common stock issued in
connection with the Securities Purchase Agreement and (ii) 100% of the maximum
number of shares of common stock issuable upon exercise of the warrants, in each
case, determined as if the outstanding warrants were exercised in full (without
regard to any limitations on exercise contained therein) as of ______________,
2019. Because the exercise price of the warrants may be adjusted, the number of
shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. The fourth column assumes the sale of
all of the shares offered by the selling stockholder pursuant to this
prospectus.

Under the terms of the warrants, a selling stockholder may not exercise the
warrants to the extent (but only to the extent) such selling stockholder or any
of its affiliates would beneficially own a number of shares of our common stock
which would exceed 4.99%. The number of shares in the second column reflects
these limitations. The selling stockholder may sell all, some or none of their
shares in this offering. See “Plan of Distribution.”

 

Name of Selling Stockholder

   Number of Shares of
Common Stock Owned
Prior to Offering      Maximum Number of Shares
of Common Stock to be Sold
Pursuant to this Prospectus      Number of Shares of
Common Stock of
Owned After Offering  

CVI Investments, Inc. (1)

        

(1) [            ]

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

PLAN OF DISTRIBUTION

We are registering the shares of common stock previously issued and the shares
of common stock issuable upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the common stock and warrants
from time to time after the date of this prospectus. We will not receive any of
the proceeds from the sale by the selling stockholder of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.

The selling stockholder may sell all or a portion of the shares of common stock
held by it and offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the shares of common stock are sold
through underwriters or broker-dealers, the selling stockholder will be
responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,
pursuant to one or more of the following methods:

 

  •  

on any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;

 

  •  

in the over-the-counter market;

 

  •  

in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

 

  •  

through the writing or settlement of options, whether such options are listed on
an options exchange or otherwise;

 

  •  

ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

  •  

block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction;

 

  •  

purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

  •  

an exchange distribution in accordance with the rules of the applicable
exchange;

 

  •  

privately negotiated transactions;

 

  •  

short sales made after the date the Registration Statement is declared effective
by the SEC (or automatically became effective, as applicable);

 

  •  

broker-dealers may agree with a selling security holder to sell a specified
number of such shares at a stipulated price per share;

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

  •  

a combination of any such methods of sale; and

 

  •  

any other method permitted pursuant to applicable law.

The selling stockholder may also sell shares of common stock under Rule 144
promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholder may transfer
the shares of common stock by other means not described in this prospectus. If
the selling stockholder effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholder or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of
the shares of common stock or otherwise, the selling stockholder may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume. The selling stockholder may also sell shares of common stock short and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales. The
selling stockholder may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.

The selling stockholder may pledge or grant a security interest in some or all
of the warrants or shares of common stock owned by it and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending, if necessary, the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus. The selling stockholder
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

To the extent required by the Securities Act and the rules and regulations
thereunder, the selling stockholder and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed, which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholder and any discounts, commissions or concessions allowed or re-allowed
or paid to broker-dealers.

Under the securities laws of some states, the shares of common stock may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

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

There can be no assurance that any selling stockholder will sell any or all of
the shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.

The selling stockholder and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock
by the selling stockholder and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the shares of common stock to engage in market-making
activities with respect to the shares of common stock. All of the foregoing may
affect the marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
shares of common stock.

We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[    ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or “blue sky” laws; provided,
however, a selling stockholder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling stockholder against
liabilities, including some liabilities under the Securities Act in accordance
with the registration rights agreements or the selling stockholder will be
entitled to contribution. We may be indemnified by the selling stockholder
against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements or we may be entitled to contribution.

Once sold under the registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.

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

Exhibit E

Form of Rule 144 Representation Letter and Registration Statement Representation
Letter

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

Rule 144 Representation Letter

Date: [•]

 

To:

American Stock Transfer & Trust Company

6201 15th Avenue

Brooklyn, New York 11219

Attn: Legal Department

With copies to:

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, Virginia 20190

Attention: Carol DiBattiste, General Counsel

Email: cdibattiste@comscore.com

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, Virginia 20190

Attention: Ashley Wright, Deputy General Counsel

Email: awright@comscore.com

Vinson & Elkins L.L.P.

666 Fifth Avenue, 25th Floor

New York, New York 10103

Attention: Stancell K. Haigwood

Email: shaigwood@velaw.com

Pursuant to an exemption provided by Rule 144 under the Securities Act of 1933,
the undersigned requests that [INSERT FOR PERSONS HOLDING BETWEEN SIX AND TWELVE
MONTHS: in connection with the sale of the Securities (as defined below)] the
restrictive legend be removed from [[•] shares of common stock, par value $0.001
per share][Series A Warrant No. A-[•]/Series B-1 Warrant No. B-1-[•]/Series B-2
Warrant No. B-2-[•]/Series C Warrant No. C-[•]] (the “Securities”), in comScore,
Inc., a Delaware corporation (the “Company”), such Securities being owned of
record by the undersigned.

In connection with such legend removal, the undersigned hereby represents and
warrants to you as follows:

 

  1.

The Securities were originally acquired on or about [•]; therefore, a period of
at least [six months][one year] has elapsed since the later of (a) the date the
Securities were originally acquired from the Company and fully paid for as set
forth in Rule 144(d) or (b) the date the Securities were acquired from an
affiliate of the Company and fully paid for as set forth in Rule 144(d).

 

  2.

If the undersigned is a pledgee, donee, trust, estate or any other person
permitted to “tack” its holding period, as defined in Rule 144, representation
is hereby made that the combined holding period is of at least [six months][one
year].

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

  3.

The undersigned represents that the undersigned is not at present and has not
been during the three months preceding the date of this letter an officer or
director of the Company and has not during said period been an “affiliate” of
the Company within the meaning of Rule 144(a).

 

  4.

To the best of the undersigned’s knowledge, the Company is a reporting issuer
that is in compliance with the current public information reporting requirements
contained in Rule 144(c)(1).

 

  5.

[INSERT FOR PERSONS HOLDING BETWEEN SIX AND TWELVE MONTHS: The undersigned
agrees that the sale or delivery of such Securities is being made in a manner
that will satisfy all the applicable requirements of Rule 144 at the time of the
sale or delivery of such Securities, all of which transactions shall be
completed no later than the tenth business day following the date upon which the
Securities have been received by the undersigned without the legend affixed
thereto.]

 

  6.

The representations and warranties contained herein are accurate and complete on
the date hereof. The undersigned agrees and undertakes to notify the Company
immediately of any development that the undersigned becomes aware of that
renders the representations and warranties contained herein inaccurate or
incomplete.

The undersigned is familiar with Rule 144 and agrees that Vinson & Elkins
L.L.P., the Company and the Company’s transfer agent and their agents and
representatives may rely on this letter.

[Signature Page Follows]

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

By: [•]

By:

 

 

Name:

 

 

Title:  

 

SIGNATURE PAGE TO

RULE 144 REPRESENTATION LETTER

(NON-AFFILIATE HOLDER)

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

Representation and Acknowledgement Letter

[DATE]

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, Virginia 20190

Attention: Carol DiBattiste, General Counsel

Email: cdibattiste@comscore.com

With a copy to:

comScore, Inc.

11950 Democracy Drive, Suite 600

Reston, Virginia 20190

Attention: Ashley Wright, Deputy General Counsel

Email: awright@comscore.com

and

Vinson & Elkins L.L.P.

666 Fifth Avenue, 25th Floor

New York, New York 10103

Attention: Stancell K. Haigwood

Email: shaigwood@velaw.com

Ladies and Gentlemen:

In connection with the undersigned’s (“Investor”) request to remove the
restrictive legend on [•] shares of common stock, par value $0.001 per share
(the “Common Stock”, and all such Common Stock issued to or to be issued to
Investor, the “Investor Common Stock”) of comScore, Inc. (the “Company”), in
each case pursuant to Investor’s intent to offer and sell the Investor Common
Stock under the Company’s Registration Statement on Form S-[•] (File
No. 333-[•], the “Registration Statement”), Investor hereby represents and
warrants to, and agrees with, the Company that:

 

  1.

The Investor’s Investor Common Stock shall be sold in the manner described in
the Registration Statement and in accordance with the terms and conditions of
the Registration Rights Agreement, by and among the Company and the other
parties named therein, including the Investor, dated as of June [•], 2019 (as
amended or modified from time to time in accordance with the terms thereof, the
“Registration Rights Agreement”), including the restrictions upon sales that may
be imposed upon delivery of written notice by the Company pursuant to
Section 3(r) of the Registration Rights Agreement, and in compliance with
applicable federal and state securities laws.

 

  2.

To the best of Investor’s knowledge, the Registration Statement will be
effective under the Securities Act of 1933 and no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceeding or examination for such purpose will have been instituted or
threatened by the Securities and Exchange Commission.

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

  3.

The undersigned agrees that, in the event the Company shall in the future
determine that, in the discharge of its duties under the securities laws, it is
necessary to cause Investor’s Investor Common Stock to be evidenced by a
certificate bearing appropriate restrictive transfer legends (or a book-entry
including a notation of restricted security status), the undersigned will take
all reasonable action to cause any of the shares of Investor’s Investor Common
Stock then owned or controlled to be delivered promptly to the Company’s
transfer agent in exchange for one or more certificates bearing restrictive
legends (or book-entries including a notation of restricted security status)
deemed appropriate by the Company.

 

  4.

Investor agrees with and for the benefit of the Company that Investor shall not
offer and sell, or cause to be offered and sold, Investor’s Investor Common
Stock pursuant to the Registration Statement in violation of applicable federal
and state securities laws or in violation of the terms and conditions of the
Registration Rights Agreement.

 

  5.

Investor has in place internal policies and procedures to monitor and ensure
that no sale of such Investor’s Investor Common Stock is made in violation of
the foregoing restrictions. In connection with any transfer of such Investor’s
Investor Common Stock, Investor will act in accordance with any policy of
Investor or any of its affiliates to which Investor is then subject and that
would apply to such transfer.

Investor understands that the Company, its transfer agent, American Stock
Transfer & Trust Company, LLC, their agents and representatives and their
respective in-house and external legal counsel are relying on the
representations and warranties and covenants contained herein, and they are
hereby authorized to do so as though the declaration were addressed to them, in
rendering opinions, instructions or advice with respect to the request of
Investor to effect a transfer of the Investor’s Investor Common Stock.

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

Regards,

                              

By:                       

Name:

 

Title:

 

SIGNATURE PAGE TO

REGISTRATION STATEMENT REPRESENTATION LETTER

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Exhibit F

Form of Officer’s Certificate

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

COMSCORE, INC.

OFFICER’S CERTIFICATE

The undersigned Chief Executive Officer of comScore, Inc., a Delaware
corporation with offices located at 11950 Democracy Drive, Suite 600, Reston, VA
20190 (the “Company”), hereby represents, warrants and certifies to the Buyers
(as defined below), pursuant to Section 7(a)(vii) of that certain Securities
Purchase Agreement, dated as of June ___, 2019 (the “Agreement”), by and among
the Company and the investors identified on the Schedule of Buyers attached to
the Agreement (the “Buyers”), as follows:

 

  1.

Each and every representation and warranty of the Company is true and correct in
all material respects (except for such representations and warranties qualified
by materiality or Material Adverse Effect, which shall be true and correct in
all respects) as of the date when made and as of the date hereof as though
originally made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct in all material
respects (except for such representations and warranties qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of such specific date)

 

  2.

The Company and its Subsidiaries has performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required to be
performed, satisfied or complied with by the Company at or prior to the date
hereof.

Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Agreement.

IN WITNESS WHEREOF, the undersigned has executed this certificate this      day
of             , 2019.

 

 

Name:

Title: