Exhibit 10.2

 

Execution Copy

 

THE NUMBER OF PREFERRED SHARES 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.

 

MagneGas Corporation

 

Warrant to Purchase
Series E Convertible Preferred Stock

 

Preferred Warrant No.: E-[ ]

 

Date of Issuance: September [ ], 2017 (“Issuance Date”)

 

MagneGas Corporation, a Delaware corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, [_____________], the registered holder hereof or its
permitted assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon exercise of this Warrant to Purchase Series E Convertible
Preferred Stock (including any Warrants to Purchase Series E Convertible
Preferred 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), [________]
(subject to adjustment as provided herein) fully paid and non-assessable shares
of Series E Convertible Preferred Stock (the “Warrant Preferred Shares”). Except
as otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 16. This Warrant is one of the Warrants (as
defined in the Securities Purchase Agreement (as defined below)) to Purchase
Series E Convertible Preferred Stock (the “SPA Preferred Warrants”) issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of
September 15, 2017 (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”)

 

1.                  EXERCISE OF WARRANT.

 

(a)               Mechanics of Exercise. Subject to the terms and conditions
hereof, this Warrant may be exercised by the Holder on any day on or after the
Issuance 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 Preferred 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 Preferred 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 Preferred Shares. Execution and delivery of an Exercise Notice for
all of the then-remaining Warrant Preferred Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the Warrant
Preferred Shares in accordance with the terms hereof. 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 Preferred Shares initiated on the applicable Exercise Date), the Company
shall 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 Warrant Preferred Shares to which the
Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise
Notice and the release, at the direction of the Holder, of a wire of the
Aggregate Exercise Price to the Company (the “Exercise Conditions”), the Holder
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Preferred Shares with respect to which this Warrant has been
exercised (including, without limitation, the right to convert such Warrant
Preferred Shares), irrespective of the date of delivery of the certificates
evidencing such Warrant Preferred Shares (as the case may be). If a certificate
with respect to this Warrant is delivered to the Company in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Preferred
Shares represented by this Warrant submitted for exercise is greater than the
number of Warrant Preferred Shares being acquired upon an exercise, 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 6(d)) representing the right to purchase the number of Warrant
Preferred Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Preferred Shares with respect to which this
Warrant is exercised. No fractional Warrant Preferred Shares are to be issued
upon the exercise of this Warrant, but rather the number of Warrant Preferred
Shares 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 that may be payable with respect to the issuance and delivery of
Warrant Preferred Shares upon exercise of this Warrant. Notwithstanding the
foregoing, the Company’s failure to deliver Warrant Preferred 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 Preferred 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 Deadline”) shall not be
deemed to be a breach of this Warrant. For the avoidance of doubt, the Holder
may convert the Warrant Preferred Shares into shares of Common Stock in
accordance with the terms of the Certificate of Designations at any time, at the
option of the Holder, following its satisfaction of the applicable Exercise
Conditions (whether or not a certificate with respect to such Warrant Preferred
Shares has been delivered to the Holder on or prior to such time of conversion).

 

 

 

 

(b)               Exercise Price. For purposes of this Warrant, “Exercise Price”
means $1.36 subject to adjustment as provided herein.

 

(c)               Disputes. In the case of a dispute as to the determination of
the Exercise Price or the arithmetic calculation of the number of Warrant
Preferred Shares to be issued pursuant to the terms hereof, the Company shall
promptly issue to the Holder the number of Warrant Preferred Shares that are not
disputed and resolve such dispute in accordance with Section 12.

 

(d)               Forced Exercise.

 

(i)                 General. Commencing on the tenth (10) Trading Day after the
initial Issuance Date (the “Eligibility Date”), so long as (I) no Equity
Conditions Failure then exists (unless waived in writing by the Holder), (II) no
more than 100,000 Preferred Shares are then outstanding and (III) no Forced
Exercise (as defined below) has occurred in the seven (7) Trading Day period
immediately prior to the applicable date of determination, the Company shall
have the right to require the Holder to exercise this Warrant into up to such
aggregate number of fully paid, validly issued and non-assessable Warrant
Preferred Shares equal to the lesser of (x) 500,000 and (y) 30% of the aggregate
dollar trading volume of the Common Stock (as reported by Bloomberg) during the
three consecutive Trading Day period immediately prior to the applicable Forced
Exercise Notice Date (as defined below)(such lesser number of Warrant Preferred
Shares, the “Maximum Forced Exercise Share Amount”), as designated in the
applicable Forced Exercise Notice (as defined below) to be issued and delivered
in accordance with Section 1(a) hereof (each, a “Forced Exercise”). The Company
may exercise its right to require a Forced Exercise under this Section 1(d) by
delivering a written notice thereof, at one, or more times, by facsimile or
electronic mail to all, but not less than all, of the holders of SPA Preferred
Warrants (each, a “Forced Exercise Notice”, and the date thereof, each a “Forced
Exercise Notice Date”). For purposes of Section 1(a) hereof, “Forced Exercise
Notice” shall be deemed to replace “Exercise Notice” for all purposes thereunder
as if the Holder delivered an Exercise Notice to the Company on the Forced
Exercise Notice Date, mutatis mutandis. Each Forced Exercise Notice shall be
irrevocable. Each Forced Exercise Notice shall state (i) the Trading Day
selected for the Forced Exercise in accordance with this Section 1(d), which
Trading Day shall be the third (3rd) Trading Day following the applicable Forced
Exercise Eligibility Date (each, a “Forced Exercise Date”), (ii) the aggregate
portion of this Warrant and the SPA Preferred Warrants subject to forced
exercise from the Holder and all of the holders of the SPA Preferred Warrants
pursuant to this Section 1(d) (and analogous provisions under the SPA Preferred
Warrants), (iii) the Maximum Forced Exercise Share Amount applicable to the
Holder (including calculations and any other documents reasonably requested by
the Holder with respect thereto) and (iv) that there has been no Equity
Conditions Failure (or specifying any such Equity Conditions Failure that then
exists, with an acknowledgement that unless such Equity Conditions are waived,
in whole or in part, such Forced Exercise Notice will be invalid).
Notwithstanding anything herein to the contrary, if an Equity Conditions Failure
occurs at any time after a Forced Exercise Notice Date and prior to the related
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 and the applicable
Forced Exercise Notice shall be null and void. For the avoidance of doubt, if
any Triggering Event has occurred and continuing, unless such Triggering Event
(as defined in the Certificate of Designations) has been waived, in whole or in
part, in writing by the Holder, Company shall have no right to effect a Forced
Exercise; provided, that such Triggering Event shall have no effect upon the
Holder’s right to exercise this Warrant in its discretion.

 

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(ii)              Pro Rata Exercise Requirement. If the Company elects to cause
a Forced Exercise of this Warrant pursuant to this Section 1(d), then it must
simultaneously take the same action in the same proportion with respect to all
of the SPA Preferred Warrants.

 

(e)               Reservation of Shares. So long as this Warrant remains
outstanding, the Company shall at all times keep reserved for issuance under
this Warrant a number of Preferred Shares at least equal to 100% of the maximum
number of Preferred Shares as shall be necessary to satisfy the Company’s
obligation to issue Preferred Shares under the SPA Preferred Warrants then
outstanding (without regard to any limitations on exercise) (the “Required
Reserve Amount”); provided that at no time shall the number of Preferred Shares
reserved pursuant to this Section 1(e) be reduced other than proportionally in
connection with any exercise or redemption of SPA Preferred 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 Preferred
Warrants based on number of Preferred Shares issuable upon exercise of SPA
Preferred 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 Preferred Warrants,
each transferee shall be allocated a pro rata portion of such holder’s
Authorized Share Allocation. Any Preferred Shares reserved and allocated to any
Person which ceases to hold any SPA Preferred Warrants shall be allocated to the
remaining holders of SPA Preferred Warrants, pro rata based on the number of
Warrant Preferred Shares issuable upon exercise of the SPA Preferred Warrants
then held by such holders (without regard to any limitations on exercise). If,
notwithstanding the foregoing, and not in limitation thereof, at any time while
any of the SPA Preferred 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 Preferred Shares to an amount sufficient to
allow the Company to reserve the Required Reserve Amount for all the SPA
Preferred 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 forty-five (45) 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 Preferred Shares. 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 Preferred
Shares and to cause its board of directors to recommend to the stockholders that
they approve such proposal.

 

2.                  ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT PREFERRED
SHARES. The Exercise Price and number of Warrant Preferred 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. 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 Warrant Preferred Shares or otherwise makes a distribution
on any class of capital stock that is payable in Warrant Preferred Shares, (ii)
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its then outstanding Warrant Preferred Shares into a
larger number of shares or (iii) combines (by combination, reverse stock split
or otherwise) one or more classes of its then outstanding Warrant Preferred
Shares 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
Warrant Preferred Shares outstanding immediately before such event and of which
the denominator shall be the number of Warrant Preferred Shares 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)               Number of Warrant Preferred Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to this Section 2, the number of
Warrant Preferred 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 Preferred 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).

 

(c)               Voluntary Adjustment By Company. 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.                  FUNDAMENTAL TRANSACTIONS.

 

(a)               Fundamental Transactions. The Company shall not enter into or
be party to 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 3(a) 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
Series E Convertible Preferred Stock acquirable and receivable upon 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 Series E Convertible
Preferred 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 Series E Convertible Preferred Stock (or
other securities, cash, assets or other property) 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 completely exercised (and the underlying Warrant Preferred Shares
completely converted) immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the conversion of the Warrant
Preferred Shares), as adjusted in accordance with the provisions of this
Warrant. Notwithstanding the foregoing, the Holder may elect, at its sole
option, by delivery of written notice to the Company to waive this Section 3(a)
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 and conversion of the
underlying Warrant Preferred Shares 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) issuable upon the exercise of the Warrant and conversion of the
underlying Warrant Preferred Shares 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 and converted into
Warrant Preferred Shares 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.

 

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(b)               Application. The provisions of this Section 3 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)).

 

4.                  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 Warrant Preferred Shares 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 Warrant Preferred Shares upon
the exercise of this Warrant.

 

5.                  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 Preferred 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, except for Forced Exercise, described under Section 1(d) herein,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, 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.

 

6.                  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 6(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Preferred Shares being
transferred by the Holder and, if less than the total number of Warrant
Preferred Shares then underlying this Warrant is being transferred, a new
Warrant (in accordance with Section 6(d)) to the Holder representing the right
to purchase the number of Warrant Preferred 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 6(d)) representing the right to purchase the Warrant Preferred Shares
then underlying this Warrant.

 

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(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 6(d))
representing in the aggregate the right to purchase the number of Warrant
Preferred Shares then underlying this Warrant, and each such new Warrant will
represent the right to purchase such portion of such Warrant Preferred Shares as
is designated by the Holder at the time of such surrender; provided, however, no
warrants for fractional Warrant Preferred Shares 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 Preferred Shares
then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 6(a) or Section 6(c), the Warrant Preferred Shares
designated by the Holder which, when added to the number of Warrant Preferred
Shares underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Preferred 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.

 

7.                  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 Warrant Preferred Shares
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 Preferred 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 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, (iii) at least ten (10) Trading Days prior to the consummation of any
Fundamental Transaction and (iv) within one (1) Business Day of the occurrence
of a Triggering Event (as defined in the Certificate of Designations), setting
forth in reasonable detail any material events with respect to such Triggering
Event and any efforts by the Company to cure such Triggering Event. 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.

 

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8.                  AMENDMENT AND WAIVER. Except as otherwise provided herein,
the provisions of this Warrant may be amended or waived 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
Required Holders (as defined in the Securities Purchase Agreement).

 

9.                  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).

 

10.              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.

 

7 

 

 

11.              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.

 

12.              DISPUTE RESOLUTION.

 

(a)               Submission to Dispute Resolution.

 

(i)                 In the case of a dispute relating to the Exercise Price,
Closing Sale Price or fair market value or the arithmetic calculation of the
number of Warrant Preferred 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 or electronic mail (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 or such fair market value or such arithmetic calculation of
the number of Warrant Preferred 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 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 12 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).

 

8 

 

 

(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. Such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.

 

(iv)             Any reasonable costs and/or fees, including all reasonable
attorneys’ fees of all parties and/or the reasonable fees of the investment
bank, shall be paid at the resolution of the dispute by the losing party.

 

(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 or the Company is authorized to apply for
an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel
compliance with this Section 12, (ii) 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, in its sole discretion, shall have the right to submit any dispute
described in this Section 12 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 12 and (iii) nothing in this Section 12 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 12).

 

13.              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.

 

9 

 

 

14.              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.

 

15.              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.

 

16.              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)               “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.

 

(d)               “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.

 

10 

 

 

(e)               “Bloomberg” means Bloomberg, L.P.

 

(f)                “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.

 

(g)               “Certificate of Designations” means that certain Certificate
of Designation for the Series E Convertible Preferred Stock of the Company,
dated as of September [ ], 2017, as amended from time to time.

 

(h)               “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.

 

(i)                 “Eligible Market” means The New York Stock Exchange, the
NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, or the
Principal Market.

 

(j)                 “Equity Conditions” means, with respect to an given date of
determination: (i) on such applicable date of determination one or more
Registration Statements shall be effective and the prospectus contained therein
shall be available on such applicable date of determination (with, for the
avoidance of doubt, any Warrant Preferred Shares previously issued pursuant to
such prospectus deemed unavailable) for the issuance to the Holder of all
Warrant Preferred Shares issuable upon exercise of this Warrant in connection
with the event requiring such determination (each, the “Forced Exercise
Registration Statement”); (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 all shares of Common Stock
issuable upon conversion of the Preferred Shares then outstanding and the
Warrant Preferred Shares 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) a writing by such Eligible Market or (B) the Company
falling below the minimum listing maintenance requirements of the Eligible
Market on which the Common Stock is then listed or designated for quotation (as
applicable) other than as disclosed in the SEC Documents (as defined in the
Securities Purchase Agreement) prior to the Issuance Date; (iii) during the
Equity Conditions Measuring Period, the Company shall have delivered all Warrant
Preferred 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) any Warrant Preferred Shares 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 Fundamental Transaction 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 all Warrant Preferred Shares
issuable upon exercise of this Warrant in connection with the event requiring
such determination and no Current Information Failure exists or is continuing;
(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 otherwise shall have been in compliance with each, and shall not
have breached any representation or warranty in any material respect (other than
representations or warranties subject to material adverse effect or materiality,
which may not be breached in any respect) or any covenant or other term or
condition of any 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 Volume Failure or
Price 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 (x) all of the Preferred Shares issued pursuant to the Securities
Purchase Agreement and issuable upon exercise of the SPA Preferred Warrants and
(y) all shares of Common Stock issuable upon conversion of such Warrant
Preferred Shares and Warrant Preferred Shares are available under the
certificate of incorporation of the Company and reserved by the Company to be
issued pursuant to the terms of the Certificate of Designations and (B) all
Warrant Preferred Shares to be issued in connection with the event requiring
this determination may be issued in full without resulting in an Authorized
Share Failure; (xi) on each day during the Equity Conditions Measuring Period,
there shall not have occurred and there shall not exist a Triggering Event or an
event that with the passage of time or giving of notice would constitute a
Triggering Event; (xii) the issuance of the shares of Common Stock issuable upon
conversion of such Warrant Preferred Shares and the Preferred Shares then
outstanding (assuming, for such purpose, that all the Preferred Shares then
outstanding and such Warrant Preferred Shares are converted at the Alternate
Conversion Price (as defined in the Certificate of Designations) then in effect
and without regard to any limitations on conversion set forth in the Certificate
of Designations) will not result in an Authorized Share Failure (as defined in
the Certificate of Designations); (xiii) the shares of Common Stock issuable
upon conversion of all of the Preferred Shares issued pursuant to the Securities
Purchase Agreement and issuable upon exercise of the SPA Preferred Warrants are
duly authorized and listed and eligible for trading without restriction on an
Eligible Market; and (xiv) the Company shall have obtained the Stockholder
Approval (as defined in the Securities Purchase Agreement), which shall remain
in full force and effect as of such date of determination.

 

11 

 

 

(k)               “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).

 

(l)                 “Expiration Date” means the date that is the third
anniversary of the Issuance Date (or such later date as extended by written
consent of the Company and the Holder) 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.

 

(m)             “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 Voting 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 (w) 35% of the
outstanding shares of Series A Preferred Stock of the Company, (x) 50% of the
outstanding shares of Voting Stock, (y) 50% of the outstanding shares of Voting
Stock calculated as if any shares of Voting 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 Voting 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 Voting
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 (w) at
least 35% of the outstanding shares of Voting Stock of the Company, (x) at least
50% of the outstanding shares of Voting Stock, (y) at least 50% of the
outstanding shares of Voting Stock calculated as if any shares of Voting 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
Voting 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 Voting Stock, or (v) reorganize, recapitalize or
reclassify its Voting 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 Voting Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (w) at least 35% of the outstanding shares of Voting Stock
of the Company, (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Voting Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and outstanding Voting
Stock not held by all such Subject Entities as of the date of the Preferred
Shares calculated as if any shares of Voting 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 Voting 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 Voting 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.

 

12 

 

 

(n)               “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.

 

(o)               “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.

 

(p)               “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.

 

(q)               “Preferred Shares” means the Series E Convertible Preferred
Stock.

 

(r)                “Price Failure” means, with respect to a particular date of
determination, the VWAP of the Common Stock on any Trading Day during any
Trading Day during the twenty (20) Trading Day period ending on the Trading Day
immediately preceding such date of determination fails to exceed $0.65 (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 measuring period.

 

(s)                “Principal Market” means the Nasdaq Capital Market.

 

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

 

(u)               “Series E Convertible Preferred Stock” means (i) the Company's
Series E Convertible Preferred Stock, $0.001 par value per share, issued and
issuable pursuant to the Series E Certificate of Designations and (ii) any
capital stock into which such Series E Convertible Preferred Stock shall have
been changed or any share capital resulting from a reclassification of such
Series E Convertible Preferred Stock.

 

13 

 

 

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

 

(w)             “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.

 

(x)               “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.

 

(y)               “Voting Stock” of a Person means the Common Stock and each
series or other class of capital stock of such Person pursuant to which the
holders thereof have the general voting power to elect, or the general power to
appoint, at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time capital stock of any
series or other class or classes shall have or might have voting power by reason
of the happening of any contingency).

 

(z)               “Volume Failure” means, with respect to a particular date of
determination, the aggregate daily dollar trading volume (as reported on
Bloomberg) of the Common Stock on the Principal Market on at least five (5)
Trading Days during the twenty (20) Trading Day period ending on the Trading Day
immediately preceding such date of determination (such period, the “Volume
Failure Measuring Period”), is less than $200,000.

 

(a)               “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 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP”
function (set to weighted average) 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 9:30:01 a.m., New York time, and ending at 4:00:00 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 12. 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]

 

14 

 

 

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

 

  MagneGas Corporation         By:       Name: Ermanno Santilli
Title: Chief Executive Officer

 

 

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE SERIES E CONVERTIBLE PREFERRED STOCK

 

MAGNEGAS CORPORATION

 

The undersigned holder hereby elects to exercise the Warrant to Purchase Series
E Convertible Preferred Stock, No. E-[ ] (the “Warrant”) of MagneGas
Corporation, 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 Preferred Shares. The Company shall deliver to
Holder, or its designee or agent as specified below, __________ shares of Series
E Convertible Preferred Stock in accordance with the terms of the Warrant.
Delivery shall be made to Holder, or for its benefit, as a certificate to the
following name and to the following address:

 

Issue to:          

 

Date: _____________ __,           

 

    Name of Registered Holder  

 

By:       Name:     Title:        

  Tax ID:    

 

  Facsimile:    

 

  E-mail Address: