EXHIBIT 10.10

[FORM OF SERIES B 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 (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  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.

JAVO BEVERAGE COMPANY, INC.

SERIES B WARRANT TO PURCHASE COMMON STOCK

Warrant No.: B-             

Number of Shares of Common Stock:             

Date of Issuance: December 15, 2006 (“Issuance Date”)

Javo Beverage Company, Inc., a Delaware corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [CAPITAL VENTURES INTERNATIONAL] [OTHER
BUYERS], 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 surrender 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 June 15, 2007, but not after 11:59 p.m., New York
time, on the Expiration Date (as defined below),
                        (                        )(1) (the “Warrant Share
Total”) fully paid nonassessable shares of Common Stock (as defined below) (the
“Warrant Shares”).  Except as otherwise defined herein, capitalized terms in
this Warrant shall have the meanings set forth in Section 15.  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
December 14, 2006 (the “Subscription Date”), by and among the

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(1)                                  Insert a number of shares equal to a pro
rate portion of $7,000,000 divided by the Exercise Price of the Series B
Warrants.

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Company and the investors (the “Buyers”) referred to therein (the “Securities
Purchase Agreement”).

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 JUNE 15, 2007, IN
WHOLE OR IN PART, BY (I) DELIVERY OF A WRITTEN NOTICE, IN THE FORM ATTACHED
HERETO AS EXHIBIT A (THE “EXERCISE NOTICE”), OF THE HOLDER’S ELECTION TO
EXERCISE THIS WARRANT AND (II) (A) PAYMENT TO THE COMPANY OF AN AMOUNT EQUAL TO
THE APPLICABLE EXERCISE PRICE MULTIPLIED BY THE NUMBER OF WARRANT SHARES AS TO
WHICH THIS WARRANT IS BEING EXERCISED (THE “AGGREGATE EXERCISE PRICE”) IN CASH
OR BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS OR (B) BY NOTIFYING THE
COMPANY THAT THIS WARRANT IS BEING EXERCISED PURSUANT TO A CASHLESS EXERCISE (AS
DEFINED IN SECTION 1(D)).  THE HOLDER SHALL NOT BE REQUIRED TO DELIVER THE
ORIGINAL WARRANT IN ORDER TO EFFECT AN EXERCISE HEREUNDER.  EXECUTION AND
DELIVERY OF THE EXERCISE NOTICE WITH RESPECT TO LESS THAN ALL OF THE WARRANT
SHARES SHALL HAVE THE SAME EFFECT AS CANCELLATION OF THE ORIGINAL WARRANT AND
ISSUANCE OF A NEW WARRANT EVIDENCING THE RIGHT TO PURCHASE THE REMAINING NUMBER
OF WARRANT SHARES.  ON OR BEFORE THE FIRST (1ST) BUSINESS DAY FOLLOWING THE DATE
ON WHICH THE COMPANY HAS RECEIVED EACH OF THE EXERCISE NOTICE AND THE AGGREGATE
EXERCISE PRICE (OR NOTICE OF A CASHLESS EXERCISE) (THE “EXERCISE DELIVERY
DOCUMENTS”), THE COMPANY SHALL TRANSMIT BY FACSIMILE AN ACKNOWLEDGMENT OF
CONFIRMATION OF RECEIPT OF THE EXERCISE DELIVERY DOCUMENTS TO THE HOLDER AND THE
COMPANY’S TRANSFER AGENT (THE “TRANSFER AGENT”).  ON OR BEFORE THE THIRD (3RD)
BUSINESS DAY FOLLOWING THE DATE ON WHICH THE COMPANY HAS RECEIVED ALL OF THE
EXERCISE DELIVERY DOCUMENTS (THE “SHARE DELIVERY 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 AGENT COMMISSION SYSTEM,
OR (Y) IF THE TRANSFER AGENT IS NOT PARTICIPATING IN THE DTC FAST AUTOMATED
SECURITIES TRANSFER PROGRAM, ISSUE AND DISPATCH BY OVERNIGHT COURIER TO THE
ADDRESS AS SPECIFIED IN THE EXERCISE NOTICE, A CERTIFICATE, REGISTERED IN THE
COMPANY’S SHARE REGISTER IN THE NAME OF THE HOLDER OR ITS DESIGNEE, FOR THE
NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER IS ENTITLED PURSUANT TO
SUCH EXERCISE.  UPON DELIVERY OF THE EXERCISE NOTICE AND AGGREGATE EXERCISE
PRICE REFERRED TO IN CLAUSE (II)(A) ABOVE OR NOTIFICATION TO THE COMPANY OF A
CASHLESS EXERCISE REFERRED TO IN SECTION 1(D), 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
OF DELIVERY OF THE CERTIFICATES EVIDENCING SUCH WARRANT SHARES.  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,
THEN THE COMPANY SHALL AS SOON AS PRACTICABLE AND IN NO EVENT LATER THAN THREE
BUSINESS DAYS AFTER ANY EXERCISE AND AT ITS OWN EXPENSE, ISSUE 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

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TAXES WHICH MAY BE PAYABLE WITH RESPECT TO THE ISSUANCE AND DELIVERY OF WARRANT
SHARES UPON EXERCISE OF THIS WARRANT.

(B)   EXERCISE PRICE.  FOR PURPOSES OF THIS WARRANT, “EXERCISE PRICE” MEANS
$2.24, 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 TO ISSUE TO THE HOLDER WITHIN FIVE (5) BUSINESS
DAYS OF RECEIPT OF THE EXERCISE DELIVERY DOCUMENTS, A CERTIFICATE FOR THE NUMBER
OF SHARES OF COMMON STOCK TO WHICH THE HOLDER IS ENTITLED AND REGISTER SUCH
SHARES OF COMMON STOCK ON THE COMPANY’S SHARE REGISTER OR TO CREDIT THE HOLDER’S
BALANCE ACCOUNT WITH DTC FOR SUCH NUMBER OF SHARES OF COMMON STOCK TO WHICH THE
HOLDER IS ENTITLED UPON THE HOLDER’S EXERCISE OF THIS WARRANT, THEN, IN ADDITION
TO ALL OTHER REMEDIES AVAILABLE TO THE HOLDER, THE COMPANY SHALL PAY IN CASH TO
THE HOLDER ON EACH DAY AFTER SUCH FIFTH BUSINESS DAY THAT THE ISSUANCE OF SUCH
SHARES OF COMMON STOCK IS NOT TIMELY EFFECTED AN AMOUNT EQUAL TO 1.0% OF THE
PRODUCT OF (A) THE SUM OF THE NUMBER OF SHARES OF COMMON STOCK NOT ISSUED TO THE
HOLDER ON A TIMELY BASIS AND TO WHICH THE HOLDER IS ENTITLED AND (B) THE
WEIGHTED AVERAGE PRICE OF THE SHARES OF COMMON STOCK ON THE TRADING DAY
IMMEDIATELY PRECEDING THE LAST POSSIBLE DATE WHICH THE COMPANY COULD HAVE ISSUED
SUCH SHARES OF COMMON STOCK TO THE HOLDER WITHOUT VIOLATING SECTION 1(A).  IN
ADDITION TO THE FOREGOING, IF WITHIN FIVE (5) TRADING DAYS AFTER THE COMPANY’S
RECEIPT OF THE FACSIMILE COPY OF A EXERCISE NOTICE THE COMPANY SHALL FAIL TO
ISSUE AND DELIVER A CERTIFICATE TO THE HOLDER AND REGISTER SUCH SHARES OF COMMON
STOCK ON THE COMPANY’S SHARE REGISTER OR CREDIT THE HOLDER’S BALANCE ACCOUNT
WITH DTC FOR THE NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER IS
ENTITLED UPON THE HOLDER’S EXERCISE HEREUNDER, AND IF ON OR AFTER SUCH TRADING
DAY 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 SHARES OF
COMMON STOCK ISSUABLE UPON SUCH EXERCISE THAT THE HOLDER ANTICIPATED RECEIVING
FROM THE COMPANY (A “BUY-IN”), THEN THE COMPANY SHALL, WITHIN THREE (3) 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, IF ANY) FOR THE SHARES OF COMMON STOCK SO
PURCHASED (THE “BUY-IN PRICE”), AT WHICH POINT THE COMPANY’S OBLIGATION TO
DELIVER SUCH CERTIFICATE (AND TO ISSUE SUCH SHARES OF COMMON STOCK) SHALL
TERMINATE, OR (II) PROMPTLY HONOR ITS OBLIGATION TO DELIVER TO THE HOLDER A
CERTIFICATE OR CERTIFICATES REPRESENTING SUCH SHARES OF COMMON STOCK 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 SHARES OF COMMON STOCK, TIMES (B) THE
WEIGHTED AVERAGE PRICE ON THE DATE OF EXERCISE.

(d)           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary, if a Registration Statement (as defined in the Registration Rights
Agreement) covering the Warrant Shares that are the subject of an Exercise
Notice (the “Unavailable Warrant Shares”) is not available for the resale of
such Unavailable Warrant Shares, 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

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THE AGGREGATE EXERCISE PRICE, ELECT INSTEAD TO RECEIVE UPON SUCH EXERCISE THE
“NET NUMBER” OF SHARES OF COMMON STOCK DETERMINED ACCORDING TO THE FOLLOWING
FORMULA (A “CASHLESS EXERCISE”):

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

B

For purposes of the foregoing formula:

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

B= the arithmetic average of the Weighted Average Prices of the shares of Common
Stock (as reported by Bloomberg) for the five (5) consecutive Trading Days
ending on the date immediately preceding the date of the Exercise Notice.

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

(E)   DISPUTES.  IN THE CASE OF A DISPUTE AS TO THE DETERMINATION OF THE
EXERCISE PRICE OR THE ARITHMETIC CALCULATION OF THE WARRANT SHARES, 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 12.

(F)    LIMITATIONS ON EXERCISES.

(1)           BENEFICIAL OWNERSHIP.  THE COMPANY SHALL NOT EFFECT THE EXERCISE
OF THIS WARRANT, AND THE HOLDER SHALL NOT HAVE THE RIGHT TO EXERCISE THIS
WARRANT, TO THE EXTENT THAT AFTER GIVING EFFECT TO SUCH EXERCISE, SUCH PERSON
(TOGETHER WITH SUCH PERSON’S AFFILIATES) WOULD BENEFICIALLY OWN IN EXCESS OF
4.99% OF THE SHARES OF COMMON STOCK OUTSTANDING IMMEDIATELY AFTER GIVING EFFECT
TO SUCH EXERCISE (SUBJECT TO CHANGE AS DESCRIBED BELOW, THE “MAXIMUM
PERCENTAGE”).  FOR PURPOSES OF THE FOREGOING SENTENCE, THE AGGREGATE NUMBER OF
SHARES OF COMMON STOCK BENEFICIALLY OWNED BY SUCH PERSON AND ITS AFFILIATES
SHALL INCLUDE 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 (I)
EXERCISE OF THE REMAINING, UNEXERCISED PORTION OF THIS WARRANT BENEFICIALLY
OWNED BY SUCH PERSON AND ITS AFFILIATES AND (II) EXERCISE OR CONVERSION OF THE
UNEXERCISED OR UNCONVERTED PORTION OF ANY OTHER SECURITIES OF THE COMPANY
BENEFICIALLY OWNED BY SUCH PERSON AND ITS AFFILIATES (INCLUDING, WITHOUT
LIMITATION, ANY CONVERTIBLE NOTES OR CONVERTIBLE PREFERRED STOCK OR WARRANTS)
SUBJECT TO A LIMITATION ON CONVERSION OR EXERCISE ANALOGOUS TO THE LIMITATION
CONTAINED HEREIN.  EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, FOR PURPOSES
OF THIS PARAGRAPH, BENEFICIAL OWNERSHIP SHALL BE CALCULATED IN ACCORDANCE WITH

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SECTION 13(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  FOR PURPOSES
OF THIS WARRANT, IN DETERMINING THE NUMBER OF OUTSTANDING SHARES OF COMMON
STOCK, THE HOLDER MAY RELY ON THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK
AS REFLECTED IN (1) THE COMPANY’S MOST RECENT FORM 10-K, FORM 10-KSB, FORM 10-Q,
FORM 10-QSB, CURRENT REPORT ON FORM 8-K OR OTHER PUBLIC FILING WITH THE
SECURITIES AND EXCHANGE COMMISSION, AS THE CASE MAY BE, (2) A MORE RECENT PUBLIC
ANNOUNCEMENT BY THE COMPANY OR (3) ANY OTHER NOTICE BY THE COMPANY OR THE
TRANSFER AGENT SETTING FORTH THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING. 
FOR ANY REASON AT ANY TIME, UPON THE WRITTEN OR ORAL REQUEST OF THE HOLDER, THE
COMPANY SHALL WITHIN ONE BUSINESS DAY CONFIRM ORALLY AND IN WRITING 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 THE
SPA SECURITIES AND THE SPA WARRANTS, BY THE HOLDER AND ITS AFFILIATES SINCE THE
DATE AS OF WHICH SUCH NUMBER OF OUTSTANDING SHARES OF COMMON STOCK WAS
REPORTED.  BY WRITTEN NOTICE TO THE COMPANY, THE HOLDER MAY FROM TIME TO TIME
INCREASE OR DECREASE THE MAXIMUM PERCENTAGE TO ANY OTHER PERCENTAGE NOT IN
EXCESS OF 9.99% SPECIFIED IN SUCH NOTICE; PROVIDED THAT (I) ANY SUCH INCREASE
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 NOT TO ANY OTHER HOLDER OF SPA WARRANTS.

(2)           PRINCIPAL MARKET REGULATION.  THE COMPANY SHALL NOT BE OBLIGATED
TO ISSUE ANY SHARES OF COMMON STOCK UPON EXERCISE OF THIS WARRANT OR CONVERSION
OF SPA SECURITIES AND NO BUYER SHALL BE ENTITLED TO RECEIVE ANY SHARES OF COMMON
STOCK IF THE ISSUANCE OF SUCH SHARES OF COMMON STOCK WOULD EXCEED THAT NUMBER OF
SHARES OF COMMON STOCK WHICH THE COMPANY MAY ISSUE UPON EXERCISE OR CONVERSION,
AS APPLICABLE, OF THE SPA WARRANTS AND SPA SECURITIES OR OTHERWISE WITHOUT
BREACHING THE COMPANY’S OBLIGATIONS UNDER THE RULES OR REGULATIONS OF ANY
APPLICABLE ELIGIBLE MARKET (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 ELIGIBLE 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 REQUIRED
HOLDERS.  UNTIL SUCH APPROVAL OR WRITTEN OPINION IS OBTAINED, NO BUYER SHALL BE
ISSUED IN THE AGGREGATE, UPON EXERCISE OR CONVERSION, AS APPLICABLE, OF ANY SPA
WARRANTS OR SPA SECURITIES, SHARES OF COMMON STOCK IN AN AMOUNT GREATER THAN THE
PRODUCT OF THE EXCHANGE CAP MULTIPLIED BY A FRACTION, THE NUMERATOR OF WHICH IS
THE TOTAL NUMBER OF SHARES OF COMMON STOCK UNDERLYING THE SPA WARRANTS ISSUED TO
SUCH BUYER PURSUANT TO THE SECURITIES PURCHASE AGREEMENT ON THE ISSUANCE DATE
AND THE DENOMINATOR OF WHICH IS THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK
UNDERLYING THE SPA WARRANTS ISSUED TO THE BUYERS

5

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PURSUANT TO THE SECURITIES PURCHASE AGREEMENT ON THE ISSUANCE DATE (WITH RESPECT
TO EACH BUYER, THE “EXCHANGE CAP ALLOCATION”).  IN THE EVENT THAT ANY BUYER
SHALL SELL OR OTHERWISE TRANSFER ANY OF SUCH BUYER’S SPA WARRANTS, THE
TRANSFEREE SHALL BE ALLOCATED A PRO RATA PORTION OF SUCH BUYER’S EXCHANGE CAP
ALLOCATION, AND THE RESTRICTIONS OF THE PRIOR SENTENCE SHALL APPLY TO SUCH
TRANSFEREE WITH RESPECT TO THE PORTION OF THE EXCHANGE CAP ALLOCATION ALLOCATED
TO SUCH TRANSFEREE.  IN THE EVENT THAT ANY HOLDER OF SPA WARRANTS SHALL EXERCISE
ALL OF SUCH HOLDER’S SPA WARRANTS INTO A NUMBER OF SHARES OF COMMON STOCK WHICH,
IN THE AGGREGATE, IS LESS THAN SUCH HOLDER’S EXCHANGE CAP ALLOCATION, THEN THE
DIFFERENCE BETWEEN SUCH HOLDER’S EXCHANGE CAP ALLOCATION AND THE NUMBER OF
SHARES OF COMMON STOCK ACTUALLY ISSUED TO SUCH HOLDER SHALL BE ALLOCATED TO THE
RESPECTIVE EXCHANGE CAP ALLOCATIONS OF THE REMAINING 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 HOLDER.  IN THE EVENT THAT THE COMPANY IS
PROHIBITED FROM ISSUING ANY WARRANT SHARES FOR WHICH AN EXERCISE NOTICE HAS BEEN
RECEIVED AS A RESULT OF THE OPERATION OF THIS SECTION 1(F)(2), THE COMPANY SHALL
PAY CASH IN EXCHANGE FOR CANCELLATION OF SUCH WARRANT SHARES, AT A PRICE PER
WARRANT SHARE EQUAL TO THE DIFFERENCE BETWEEN THE WEIGHTED AVERAGE PRICE AND THE
EXERCISE PRICE AS OF THE DATE OF THE ATTEMPTED EXERCISE.

(G)           INSUFFICIENT AUTHORIZED SHARES.  IF AT ANY TIME WHILE ANY OF THE
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 FOR ISSUANCE UPON EXERCISE OF THE WARRANTS AT LEAST A NUMBER OF SHARES
OF COMMON STOCK EQUAL TO 130% (THE “REQUIRED RESERVE AMOUNT”) OF THE NUMBER OF
SHARES OF COMMON STOCK AS SHALL FROM TIME TO TIME BE NECESSARY TO EFFECT THE
EXERCISE OF ALL OF THE WARRANTS THEN OUTSTANDING (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 THE 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.

2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  THE EXERCISE
PRICE AND THE NUMBER OF WARRANT SHARES SHALL BE ADJUSTED FROM TIME TO TIME AS
FOLLOWS:

(A)   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

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ISSUANCE OR SALE OF SHARES OF COMMON STOCK OWNED OR HELD BY OR FOR THE ACCOUNT
OF THE COMPANY, BUT EXCLUDING SHARES OF COMMON STOCK DEEMED TO HAVE BEEN ISSUED
BY THE COMPANY IN CONNECTION WITH ANY EXCLUDED SECURITIES (AS DEFINED IN THE SPA
SECURITIES) FOR A CONSIDERATION PER SHARE LESS THAN A PRICE (THE “APPLICABLE
PRICE”) EQUAL TO THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ISSUE OR
SALE OR DEEMED ISSUANCE OR SALE (THE FOREGOING A “DILUTIVE ISSUANCE”), THEN
IMMEDIATELY AFTER SUCH DILUTIVE ISSUANCE, THE EXERCISE PRICE THEN IN EFFECT
SHALL BE REDUCED TO AN AMOUNT EQUAL TO THE PRODUCT OF (A) THE EXERCISE PRICE IN
EFFECT IMMEDIATELY PRIOR TO SUCH DILUTIVE ISSUANCE AND (B) THE QUOTIENT
DETERMINED BY DIVIDING (1) THE SUM OF (I) THE PRODUCT DERIVED BY MULTIPLYING THE
EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH DILUTIVE ISSUANCE AND THE
NUMBER OF SHARES OF COMMON STOCK DEEMED OUTSTANDING IMMEDIATELY PRIOR TO SUCH
DILUTIVE ISSUANCE PLUS (II) THE CONSIDERATION, IF ANY, RECEIVED (OR DEEMED
RECEIVED AS SET FORTH BELOW) BY THE COMPANY UPON SUCH DILUTIVE ISSUANCE, BY (2)
THE PRODUCT DERIVED BY MULTIPLYING (I) THE EXERCISE PRICE IN EFFECT IMMEDIATELY
PRIOR TO SUCH DILUTIVE ISSUANCE BY (II) THE NUMBER OF SHARES OF COMMON STOCK
DEEMED OUTSTANDING IMMEDIATELY AFTER SUCH DILUTIVE ISSUANCE.  UPON EACH SUCH
ADJUSTMENT OF THE EXERCISE PRICE HEREUNDER, THE NUMBER OF WARRANT SHARES SHALL
BE ADJUSTED TO THE NUMBER OF SHARES OF COMMON STOCK DETERMINED BY MULTIPLYING
THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT BY THE NUMBER
OF WARRANT SHARES ACQUIRABLE UPON EXERCISE OF THIS WARRANT IMMEDIATELY PRIOR TO
SUCH ADJUSTMENT AND DIVIDING THE PRODUCT THEREOF BY THE EXERCISE PRICE RESULTING
FROM SUCH ADJUSTMENT.  FOR PURPOSES OF DETERMINING THE ADJUSTED EXERCISE PRICE
UNDER THIS SECTION 2(A), THE FOLLOWING SHALL BE APPLICABLE:

(I)            ISSUANCE OF OPTIONS.  IF THE COMPANY IN ANY MANNER GRANTS ANY
OPTIONS AND THE LOWEST PRICE PER SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS
ISSUABLE UPON THE EXERCISE OF ANY SUCH OPTION OR UPON CONVERSION, EXERCISE OR
EXCHANGE OF ANY CONVERTIBLE SECURITIES ISSUABLE UPON EXERCISE OF ANY SUCH OPTION
IS LESS THAN THE APPLICABLE PRICE, THEN SUCH SHARE OF COMMON STOCK SHALL BE
DEEMED TO BE OUTSTANDING AND TO HAVE BEEN ISSUED AND SOLD BY THE COMPANY AT THE
TIME OF THE GRANTING OR SALE OF SUCH OPTION FOR SUCH PRICE PER SHARE.  FOR
PURPOSES OF THIS SECTION 2(A)(I), THE “LOWEST PRICE PER SHARE FOR WHICH ONE
SHARE OF COMMON STOCK IS ISSUABLE UPON EXERCISE OF SUCH OPTIONS OR UPON
CONVERSION, EXERCISE OR EXCHANGE OF SUCH CONVERTIBLE SECURITIES” SHALL BE EQUAL
TO THE SUM OF THE LOWEST AMOUNTS OF CONSIDERATION (IF ANY) RECEIVED OR
RECEIVABLE BY THE COMPANY WITH RESPECT TO ANY ONE SHARE OF COMMON STOCK UPON THE
GRANTING OR SALE OF THE OPTION, UPON EXERCISE OF THE OPTION AND UPON CONVERSION,
EXERCISE OR EXCHANGE OF ANY CONVERTIBLE SECURITY ISSUABLE UPON EXERCISE OF SUCH
OPTION.  NO FURTHER ADJUSTMENT OF THE EXERCISE PRICE OR NUMBER OF WARRANT SHARES
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 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

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WHICH ONE SHARE OF COMMON STOCK IS ISSUABLE UPON THE CONVERSION, EXERCISE OR
EXCHANGE THEREOF IS LESS THAN THE APPLICABLE PRICE, THEN SUCH SHARE OF COMMON
STOCK SHALL BE DEEMED TO BE OUTSTANDING AND TO HAVE BEEN ISSUED AND SOLD BY THE
COMPANY AT THE TIME OF THE ISSUANCE OR SALE OF SUCH CONVERTIBLE SECURITIES FOR
SUCH PRICE PER SHARE.  FOR THE PURPOSES OF THIS SECTION 2(A)(II), THE “LOWEST
PRICE PER SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS ISSUABLE UPON THE
CONVERSION, EXERCISE OR EXCHANGE” SHALL BE EQUAL TO THE SUM OF THE LOWEST
AMOUNTS OF CONSIDERATION (IF ANY) RECEIVED OR RECEIVABLE BY THE COMPANY WITH
RESPECT TO ONE SHARE OF COMMON STOCK UPON THE ISSUANCE OR SALE OF THE
CONVERTIBLE SECURITY AND UPON CONVERSION, EXERCISE OR EXCHANGE OF SUCH
CONVERTIBLE SECURITY.  NO FURTHER ADJUSTMENT OF THE EXERCISE PRICE OR NUMBER OF
WARRANT SHARES SHALL BE MADE UPON THE ACTUAL ISSUANCE OF SUCH SHARES OF COMMON
STOCK UPON CONVERSION, EXERCISE OR EXCHANGE OF SUCH CONVERTIBLE SECURITIES, AND
IF ANY SUCH ISSUE 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(A), NO FURTHER ADJUSTMENT OF THE
EXERCISE PRICE OR NUMBER OF WARRANT SHARES SHALL BE MADE BY REASON OF SUCH ISSUE
OR SALE.

(III)          CHANGE IN OPTION PRICE OR RATE OF CONVERSION.  IF THE PURCHASE
PRICE PROVIDED FOR IN ANY OPTIONS, THE ADDITIONAL CONSIDERATION, IF ANY, PAYABLE
UPON THE ISSUE, CONVERSION, EXERCISE OR EXCHANGE OF ANY CONVERTIBLE SECURITIES,
OR THE RATE AT WHICH ANY CONVERTIBLE SECURITIES ARE CONVERTIBLE INTO OR
EXERCISABLE OR EXCHANGEABLE FOR SHARES OF COMMON STOCK INCREASES OR DECREASES AT
ANY TIME, THE EXERCISE PRICE AND THE NUMBER OF WARRANT SHARES IN EFFECT AT THE
TIME OF SUCH INCREASE OR DECREASE SHALL BE ADJUSTED TO THE EXERCISE PRICE AND
THE NUMBER OF WARRANT SHARES WHICH WOULD HAVE BEEN IN EFFECT AT SUCH TIME HAD
SUCH OPTIONS OR CONVERTIBLE SECURITIES PROVIDED FOR SUCH INCREASED OR DECREASED
PURCHASE PRICE, ADDITIONAL CONSIDERATION OR INCREASED OR DECREASED CONVERSION
RATE, AS THE CASE MAY BE, AT THE TIME INITIALLY GRANTED, ISSUED OR SOLD.  FOR
PURPOSES OF THIS SECTION 2(A)(III), IF THE TERMS OF ANY OPTION OR CONVERTIBLE
SECURITY THAT WAS OUTSTANDING AS OF THE DATE OF ISSUANCE OF THIS WARRANT 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(A) SHALL BE MADE IF SUCH ADJUSTMENT WOULD
RESULT IN AN INCREASE OF THE EXERCISE PRICE THEN IN EFFECT OR A DECREASE IN THE
NUMBER OF WARRANT SHARES.

(IV)          CALCULATION OF CONSIDERATION RECEIVED.  IN CASE ANY OPTION IS
ISSUED IN CONNECTION WITH THE ISSUE OR SALE OF OTHER SECURITIES OF THE COMPANY,
TOGETHER COMPRISING ONE INTEGRATED TRANSACTION, THE OPTIONS WILL BE DEEMED TO
HAVE BEEN ISSUED FOR THE DIFFERENCE OF (X) THE AGGREGATE FAIR

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MARKET VALUE OF SUCH OPTIONS AND OTHER SECURITIES ISSUED OR SOLD IN SUCH
INTEGRATED TRANSACTION, LESS (Y) THE FAIR MARKET VALUE OF THE SECURITIES OTHER
THAN SUCH OPTION, ISSUED OR SOLD IN SUCH TRANSACTION AND THE OTHER SECURITIES
ISSUED OR SOLD IN SUCH INTEGRATED TRANSACTION WILL BE DEEMED TO HAVE BEEN ISSUED
OR SOLD FOR THE BALANCE OF THE CONSIDERATION RECEIVED BY THE COMPANY.  IF ANY
SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES ARE ISSUED OR SOLD OR
DEEMED TO HAVE BEEN ISSUED OR SOLD FOR CASH, THE CONSIDERATION RECEIVED THEREFOR
WILL BE DEEMED TO BE THE NET AMOUNT RECEIVED BY THE COMPANY THEREFOR.  IF ANY
SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES ARE ISSUED OR SOLD FOR
A CONSIDERATION OTHER THAN CASH, THE AMOUNT OF SUCH CONSIDERATION RECEIVED BY
THE COMPANY WILL BE THE FAIR VALUE OF SUCH CONSIDERATION, EXCEPT WHERE SUCH
CONSIDERATION CONSISTS OF SECURITIES, IN WHICH CASE THE AMOUNT OF CONSIDERATION
RECEIVED BY THE COMPANY WILL BE THE WEIGHTED AVERAGE PRICE OF SUCH SECURITY ON
THE DATE OF RECEIPT.  IF ANY SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE
SECURITIES ARE ISSUED TO THE OWNERS OF THE NON-SURVIVING ENTITY IN CONNECTION
WITH ANY MERGER IN WHICH THE COMPANY IS THE SURVIVING ENTITY, THE AMOUNT OF
CONSIDERATION THEREFOR WILL BE DEEMED TO BE THE FAIR VALUE OF SUCH PORTION OF
THE NET ASSETS AND BUSINESS OF THE NON-SURVIVING ENTITY AS IS ATTRIBUTABLE TO
SUCH SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES, AS THE CASE MAY
BE.  THE FAIR VALUE OF ANY CONSIDERATION OTHER THAN CASH OR SECURITIES WILL BE
DETERMINED JOINTLY BY THE COMPANY AND THE REQUIRED HOLDERS.  IF SUCH PARTIES ARE
UNABLE TO REACH AGREEMENT WITHIN TEN (10) DAYS AFTER THE OCCURRENCE OF AN EVENT
REQUIRING VALUATION (THE “VALUATION EVENT”), THE FAIR VALUE OF SUCH
CONSIDERATION WILL BE DETERMINED WITHIN FIVE (5) BUSINESS DAYS AFTER THE TENTH
DAY FOLLOWING THE VALUATION EVENT BY AN INDEPENDENT, REPUTABLE APPRAISER JOINTLY
SELECTED BY THE COMPANY AND THE REQUIRED HOLDERS.  THE DETERMINATION OF SUCH
APPRAISER SHALL BE FINAL AND BINDING UPON ALL PARTIES ABSENT MANIFEST ERROR AND
THE FEES AND EXPENSES OF SUCH APPRAISER SHALL BE BORNE BY THE COMPANY.

(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 ISSUE OR SALE OF THE SHARES OF COMMON STOCK DEEMED TO HAVE
BEEN ISSUED OR SOLD UPON THE DECLARATION OF SUCH DIVIDEND OR THE MAKING OF SUCH
OTHER DISTRIBUTION OR THE DATE OF THE GRANTING OF SUCH RIGHT OF SUBSCRIPTION OR
PURCHASE, AS THE CASE MAY BE.

(B)   ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK.  IF THE
COMPANY AT ANY TIME ON OR AFTER THE SUBSCRIPTION DATE SUBDIVIDES (BY ANY STOCK
SPLIT, STOCK DIVIDEND, RECAPITALIZATION OR OTHERWISE) ONE OR MORE CLASSES OF ITS
OUTSTANDING SHARES OF COMMON STOCK INTO A GREATER NUMBER OF SHARES, THE EXERCISE
PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH

9

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SUBDIVISION WILL BE PROPORTIONATELY REDUCED AND THE NUMBER OF WARRANT SHARES
WILL BE PROPORTIONATELY INCREASED.  IF THE COMPANY AT ANY TIME ON OR AFTER THE
SUBSCRIPTION DATE  COMBINES (BY COMBINATION, REVERSE STOCK SPLIT OR OTHERWISE)
ONE OR MORE CLASSES OF ITS OUTSTANDING SHARES OF COMMON STOCK INTO A SMALLER
NUMBER OF SHARES, THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH
COMBINATION WILL BE PROPORTIONATELY INCREASED AND THE NUMBER OF WARRANT SHARES
WILL BE PROPORTIONATELY DECREASED.  ANY ADJUSTMENT UNDER THIS SECTION 2(B) SHALL
BECOME EFFECTIVE AT THE CLOSE OF BUSINESS ON THE DATE THE SUBDIVISION OR
COMBINATION BECOMES EFFECTIVE.

(C)   OTHER EVENTS.  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 WILL MAKE AN APPROPRIATE ADJUSTMENT IN THE EXERCISE PRICE AND
THE NUMBER OF WARRANT SHARES SO AS TO PROTECT THE RIGHTS OF THE HOLDER; PROVIDED
THAT NO SUCH ADJUSTMENT PURSUANT TO THIS SECTION 2(C) WILL INCREASE THE EXERCISE
PRICE OR DECREASE THE NUMBER OF WARRANT SHARES AS OTHERWISE DETERMINED PURSUANT
TO THIS SECTION 2.

3.     RIGHTS UPON DISTRIBUTION OF ASSETS.  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 OR OPTIONS 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:

(A)   ANY EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON
THE RECORD DATE FIXED FOR THE DETERMINATION OF HOLDERS OF SHARES OF COMMON STOCK
ENTITLED TO RECEIVE THE DISTRIBUTION SHALL BE REDUCED, EFFECTIVE AS OF THE CLOSE
OF BUSINESS ON SUCH RECORD DATE, TO A PRICE DETERMINED BY MULTIPLYING SUCH
EXERCISE PRICE BY A FRACTION OF WHICH (I) THE NUMERATOR SHALL BE THE WEIGHTED
AVERAGE PRICE OF THE SHARES OF COMMON STOCK ON THE TRADING DAY IMMEDIATELY
PRECEDING SUCH RECORD DATE MINUS THE VALUE OF THE DISTRIBUTION (AS DETERMINED IN
GOOD FAITH BY THE COMPANY’S BOARD OF DIRECTORS) APPLICABLE TO ONE SHARE OF
SHARES OF COMMON STOCK, AND (II) THE DENOMINATOR SHALL BE THE WEIGHTED AVERAGE
PRICE OF THE SHARES OF COMMON STOCK ON THE TRADING DAY IMMEDIATELY PRECEDING
SUCH RECORD DATE; AND

(B)   THE NUMBER OF WARRANT SHARES SHALL BE INCREASED TO A NUMBER OF SHARES
EQUAL TO THE NUMBER OF SHARES OF COMMON STOCK OBTAINABLE IMMEDIATELY PRIOR TO
THE CLOSE OF BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF HOLDERS
OF SHARES OF COMMON STOCK ENTITLED TO RECEIVE THE DISTRIBUTION MULTIPLIED BY THE
RECIPROCAL OF THE FRACTION SET FORTH IN THE IMMEDIATELY PRECEDING PARAGRAPH (A);
PROVIDED THAT IN THE EVENT THAT THE DISTRIBUTION IS OF SHARES OF COMMON STOCK
(OR COMMON STOCK) (“OTHER SHARES OF COMMON STOCK”) OF A COMPANY WHOSE COMMON
SHARES ARE TRADED ON A NATIONAL SECURITIES EXCHANGE OR A NATIONAL AUTOMATED
QUOTATION SYSTEM, THEN THE HOLDER MAY ELECT TO RECEIVE A WARRANT TO PURCHASE
OTHER SHARES OF COMMON STOCK IN LIEU OF AN INCREASE IN THE NUMBER OF WARRANT
SHARES, THE TERMS OF WHICH SHALL BE IDENTICAL TO THOSE OF THIS WARRANT, EXCEPT
THAT SUCH WARRANT SHALL BE EXERCISABLE INTO THE NUMBER OF SHARES OF OTHER SHARES
OF COMMON STOCK THAT WOULD HAVE BEEN PAYABLE TO THE HOLDER

10

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PURSUANT TO THE DISTRIBUTION HAD THE HOLDER EXERCISED THIS WARRANT IMMEDIATELY
PRIOR TO SUCH RECORD DATE AND WITH AN AGGREGATE EXERCISE PRICE EQUAL TO THE
PRODUCT OF THE AMOUNT BY WHICH THE EXERCISE PRICE OF THIS WARRANT WAS DECREASED
WITH RESPECT TO THE DISTRIBUTION PURSUANT TO THE TERMS OF THE IMMEDIATELY
PRECEDING PARAGRAPH (A) AND THE NUMBER OF WARRANT SHARES CALCULATED IN
ACCORDANCE WITH THE FIRST PART OF THIS PARAGRAPH (B).

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 SHARES OF COMMON
STOCK (THE “PURCHASE RIGHTS”), THEN THE HOLDER WILL BE ENTITLED TO ACQUIRE, UPON
THE TERMS APPLICABLE TO SUCH PURCHASE RIGHTS, THE AGGREGATE PURCHASE RIGHTS
WHICH THE HOLDER COULD HAVE ACQUIRED IF THE HOLDER HAD HELD THE NUMBER OF SHARES
OF COMMON STOCK ACQUIRABLE UPON COMPLETE EXERCISE OF THIS WARRANT (WITHOUT
REGARD TO ANY LIMITATIONS ON THE EXERCISE OF THIS WARRANT) IMMEDIATELY BEFORE
THE DATE ON WHICH A RECORD IS TAKEN FOR THE GRANT, ISSUANCE OR SALE OF SUCH
PURCHASE RIGHTS, OR, IF NO SUCH RECORD IS TAKEN, THE DATE AS OF WHICH THE RECORD
HOLDERS OF SHARES OF COMMON STOCK ARE TO BE DETERMINED FOR THE GRANT, ISSUE OR
SALE OF SUCH PURCHASE RIGHTS.

(B)   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 IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION (4)(B)
PURSUANT TO WRITTEN AGREEMENTS IN FORM AND SUBSTANCE SATISFACTORY TO THE
REQUIRED HOLDERS AND APPROVED BY THE REQUIRED HOLDERS PRIOR TO SUCH FUNDAMENTAL
TRANSACTION, INCLUDING AGREEMENTS TO DELIVER TO EACH HOLDER OF WARRANTS IN
EXCHANGE FOR SUCH WARRANTS A SECURITY OF THE SUCCESSOR ENTITY EVIDENCED BY A
WRITTEN INSTRUMENT SUBSTANTIALLY SIMILAR IN FORM AND SUBSTANCE TO THIS WARRANT,
INCLUDING, WITHOUT LIMITATION, AN ADJUSTED EXERCISE PRICE EQUAL TO THE VALUE FOR
THE SHARES OF COMMON STOCK REFLECTED BY THE TERMS OF SUCH FUNDAMENTAL
TRANSACTION, AND 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 SATISFACTORY TO THE
REQUIRED HOLDERS; PROVIDED, HOWEVER IN THE EVENT THE SUCCESSOR ENTITY IS NOT A
PUBLIC SUCCESSOR ENTITY (AS DEFINED BELOW) (A “PRIVATE SUCCESSOR ENTITY”) SUCH
FUNDAMENTAL TRANSACTION MUST BE CONSUMMATED FOR CONSIDERATION CONSISTING SOLELY
OF CASH.  UPON THE OCCURRENCE OF ANY FUNDAMENTAL TRANSACTION, THE SUCCESSOR
ENTITY SHALL SUCCEED TO, AND BE SUBSTITUTED FOR (SO THAT FROM AND AFTER THE DATE
OF SUCH FUNDAMENTAL TRANSACTION, THE PROVISIONS OF THIS WARRANT REFERRING TO THE
“COMPANY” SHALL REFER INSTEAD TO THE SUCCESSOR ENTITY), AND MAY EXERCISE EVERY
RIGHT AND POWER OF THE COMPANY AND SHALL ASSUME ALL OF THE OBLIGATIONS OF THE
COMPANY UNDER THIS WARRANT WITH THE SAME EFFECT AS IF SUCH SUCCESSOR ENTITY HAD
BEEN NAMED AS THE COMPANY HEREIN.  UPON CONSUMMATION OF THE 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 FUNDAMENTAL TRANSACTION, IN LIEU OF THE SHARES OF THE COMMON
STOCK (OR OTHER SECURITIES, CASH, ASSETS OR OTHER PROPERTY) PURCHASABLE UPON THE
EXERCISE OF THE WARRANT PRIOR TO SUCH FUNDAMENTAL TRANSACTION, (I) IF THE
SUCCESSOR ENTITY IS A PUBLICLY TRADED CORPORATION WHOSE STOCK IS TRADED ON AN
ELIGIBLE MARKET (A “PUBLIC SUCCESSOR ENTITY”), SUCH SHARES OF STOCK, SECURITIES,
CASH, ASSETS OR

11

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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 SUCH FUNDAMENTAL TRANSACTION HAD THIS WARRANT BEEN CONVERTED
IMMEDIATELY PRIOR TO SUCH FUNDAMENTAL TRANSACTION OR (II) IF THE SUCCESSOR
ENTITY IS A PRIVATE SUCCESSOR ENTITY, CASH IN AN AMOUNT EQUAL TO THE BLACK
SCHOLES VALUE OF THE REMAINING UNEXERCISED PORTION OF THIS WARRANT ON THE DATE
OF SUCH FUNDAMENTAL TRANSACTION, EACH AS ADJUSTED IN ACCORDANCE WITH THE
PROVISIONS OF THIS WARRANT.  IN ADDITION TO AND NOT IN SUBSTITUTION FOR ANY
OTHER RIGHTS HEREUNDER, PRIOR TO THE CONSUMMATION OF ANY 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 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) PURCHASABLE
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 SUCH FUNDAMENTAL
TRANSACTION HAD THE WARRANT BEEN EXERCISED IMMEDIATELY PRIOR TO SUCH FUNDAMENTAL
TRANSACTION.  PROVISION MADE PURSUANT TO THE PRECEDING SENTENCE SHALL BE IN A
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE REQUIRED HOLDERS.  THE
PROVISIONS OF THIS SECTION SHALL APPLY SIMILARLY AND EQUALLY TO SUCCESSIVE
FUNDAMENTAL TRANSACTIONS AND CORPORATE EVENTS AND SHALL BE APPLIED WITHOUT
REGARD TO ANY LIMITATIONS ON THE EXERCISE OF THIS WARRANT.

(C)   NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A FUNDAMENTAL TRANSACTION
WHERE THE SUCCESSOR ENTITY IS A PUBLIC SUCCESSOR ENTITY, AT THE REQUEST OF THE
HOLDER DELIVERED BEFORE THE 90TH DAY AFTER SUCH FUNDAMENTAL TRANSACTION, THE
COMPANY (OR THE SUCCESSOR ENTITY) SHALL PURCHASE THIS WARRANT FROM THE HOLDER BY
PAYING TO THE HOLDER, WITHIN FIVE BUSINESS DAYS AFTER SUCH REQUEST (OR, IF
LATER, ON THE EFFECTIVE DATE OF THE FUNDAMENTAL TRANSACTION), CASH IN AN AMOUNT
EQUAL TO THE BLACK SCHOLES VALUE OF THE REMAINING UNEXERCISED PORTION OF THIS
WARRANT ON THE DATE OF SUCH FUNDAMENTAL TRANSACTION.

5.     NONCIRCUMVENTION.  THE COMPANY HEREBY COVENANTS AND AGREES THAT THE
COMPANY WILL NOT, BY AMENDMENT OF ITS CERTIFICATE OF INCORPORATION, BYLAWS OR
THROUGH ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION, MERGER, SCHEME OF
ARRANGEMENT, DISSOLUTION, ISSUE OR SALE OF SECURITIES, OR ANY OTHER VOLUNTARY
ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS
OF THIS WARRANT, AND WILL AT ALL TIMES IN GOOD FAITH CARRY OUT ALL THE
PROVISIONS OF THIS WARRANT AND TAKE ALL ACTION AS MAY BE REQUIRED TO PROTECT THE
RIGHTS OF THE HOLDER.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
COMPANY (I) SHALL NOT INCREASE THE PAR VALUE OF ANY SHARES OF COMMON STOCK
RECEIVABLE UPON THE EXERCISE OF THIS WARRANT ABOVE THE EXERCISE PRICE THEN IN
EFFECT, (II) SHALL TAKE ALL SUCH ACTIONS AS MAY BE NECESSARY OR APPROPRIATE IN
ORDER THAT THE COMPANY MAY VALIDLY AND LEGALLY ISSUE FULLY PAID AND
NONASSESSABLE SHARES OF COMMON STOCK UPON THE EXERCISE OF THIS WARRANT, AND
(III) SHALL, SO LONG AS ANY OF THE SPA WARRANTS ARE OUTSTANDING, TAKE ALL ACTION
NECESSARY TO RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED AND UNISSUED
SHARES OF COMMON STOCK, SOLELY FOR THE PURPOSE OF EFFECTING THE EXERCISE OF THE
SPA WARRANTS, 130% OF THE NUMBER OF SHARES OF COMMON STOCK AS SHALL FROM TIME TO
TIME BE NECESSARY TO EFFECT THE EXERCISE OF THE SPA WARRANTS THEN OUTSTANDING
(WITHOUT REGARD TO ANY LIMITATIONS ON EXERCISE).

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6.     WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN, THE HOLDER, SOLELY IN SUCH PERSON’S 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 SUCH PERSON’S 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 SUCH
PERSON 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.  THE FILING OF ANY SUCH INFORMATION VIA EDGAR SHALL SATISFY THE
REQUIREMENTS OF THE PRECEDING SENTENCE.

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 THEN 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, AND, IN THE CASE OF LOSS, THEFT OR DESTRUCTION,
OF ANY INDEMNIFICATION UNDERTAKING BY THE HOLDER TO THE COMPANY IN CUSTOMARY
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, THAT 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

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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, INCLUDING IN REASONABLE DETAIL A DESCRIPTION OF SUCH ACTION AND THE
REASON THEREFORE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY
WILL GIVE WRITTEN NOTICE TO THE HOLDER (I) IMMEDIATELY UPON ANY ADJUSTMENT OF
THE EXERCISE PRICE, SETTING FORTH IN REASONABLE DETAIL, AND CERTIFYING, THE
CALCULATION OF SUCH ADJUSTMENT AND (II) AT LEAST FIFTEEN 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.

9.     AMENDMENT AND WAIVER.  EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
PROVISIONS OF THIS WARRANT 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 REQUIRED
HOLDERS; PROVIDED THAT NO SUCH ACTION MAY INCREASE THE EXERCISE PRICE OF ANY SPA
WARRANT OR DECREASE THE NUMBER OF SHARES OR CLASS OF STOCK OBTAINABLE UPON
EXERCISE OF ANY SPA WARRANT WITHOUT THE WRITTEN CONSENT OF THE HOLDER.  NO SUCH
AMENDMENT SHALL BE EFFECTIVE TO THE EXTENT THAT IT APPLIES TO LESS THAN ALL OF
THE HOLDERS OF THE SPA WARRANTS THEN OUTSTANDING.

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.

11.   CONSTRUCTION; HEADINGS.  THIS WARRANT SHALL BE DEEMED TO BE JOINTLY
DRAFTED BY THE COMPANY AND ALL THE BUYERS 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.

12.   DISPUTE RESOLUTION.  IN THE CASE OF A DISPUTE AS TO THE DETERMINATION OF
THE EXERCISE PRICE OR THE ARITHMETIC CALCULATION OF THE WARRANT SHARES, THE
COMPANY SHALL SUBMIT

14

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THE DISPUTED DETERMINATIONS OR ARITHMETIC CALCULATIONS VIA FACSIMILE WITHIN TWO
BUSINESS DAYS OF RECEIPT OF THE EXERCISE NOTICE GIVING RISE TO SUCH DISPUTE, AS
THE CASE MAY BE, TO THE HOLDER.  IF THE HOLDER AND THE COMPANY ARE UNABLE TO
AGREE UPON SUCH DETERMINATION OR CALCULATION OF THE EXERCISE PRICE OR THE
WARRANT SHARES WITHIN THREE BUSINESS DAYS OF SUCH DISPUTED DETERMINATION OR
ARITHMETIC CALCULATION BEING SUBMITTED TO THE HOLDER, THEN THE COMPANY SHALL,
WITHIN TWO BUSINESS DAYS SUBMIT VIA FACSIMILE (A) THE DISPUTED DETERMINATION OF
THE EXERCISE PRICE TO AN INDEPENDENT, REPUTABLE INVESTMENT BANK SELECTED BY THE
COMPANY AND APPROVED BY THE HOLDER  OR (B) THE DISPUTED ARITHMETIC CALCULATION
OF THE WARRANT SHARES TO THE COMPANY’S INDEPENDENT, OUTSIDE ACCOUNTANT.  THE
COMPANY SHALL CAUSE AT ITS EXPENSE THE INVESTMENT BANK OR THE ACCOUNTANT, AS THE
CASE MAY BE, TO PERFORM THE DETERMINATIONS OR CALCULATIONS AND NOTIFY THE
COMPANY AND THE HOLDER OF THE RESULTS NO LATER THAN TEN BUSINESS DAYS FROM THE
TIME IT RECEIVES THE DISPUTED DETERMINATIONS OR CALCULATIONS.  SUCH INVESTMENT
BANK’S OR ACCOUNTANT’S DETERMINATION OR CALCULATION, AS THE CASE MAY BE, SHALL
BE BINDING UPON ALL PARTIES ABSENT DEMONSTRABLE ERROR.

13.   REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  THE REMEDIES
PROVIDED IN THIS WARRANT SHALL BE CUMULATIVE AND IN ADDITION TO ALL OTHER
REMEDIES AVAILABLE UNDER THIS WARRANT AND THE OTHER TRANSACTION DOCUMENTS, AT
LAW OR IN EQUITY (INCLUDING A DECREE OF SPECIFIC PERFORMANCE AND/OR OTHER
INJUNCTIVE RELIEF), AND NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE HOLDER RIGHT
TO PURSUE ACTUAL DAMAGES FOR ANY FAILURE BY THE COMPANY TO COMPLY WITH THE TERMS
OF THIS WARRANT.  THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT OF ITS
OBLIGATIONS HEREUNDER 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
AN INJUNCTION RESTRAINING ANY BREACH, WITHOUT THE NECESSITY OF SHOWING ECONOMIC
LOSS AND WITHOUT ANY BOND OR OTHER SECURITY BEING REQUIRED.

14.   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(F) OF THE SECURITIES PURCHASE AGREEMENT.

15.   CERTAIN DEFINITIONS.  FOR PURPOSES OF THIS WARRANT, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:

(A)   “BLACK SCHOLES VALUE” MEANS THE VALUE OF THIS WARRANT BASED ON THE BLACK
AND SCHOLES OPTION PRICING MODEL OBTAINED FROM THE “OV” FUNCTION ON BLOOMBERG
DETERMINED AS OF THE DAY IMMEDIATELY FOLLOWING THE PUBLIC ANNOUNCEMENT OF THE
APPLICABLE FUNDAMENTAL TRANSACTION AND REFLECTING (I) A RISK-FREE INTEREST RATE
CORRESPONDING TO THE U.S. TREASURY RATE FOR A PERIOD EQUAL TO THE REMAINING TERM
OF THIS WARRANT AS OF SUCH DATE OF REQUEST AND (II) AN EXPECTED VOLATILITY EQUAL
TO THE GREATER OF (I) 70% AND (II) THE 100 DAY VOLATILITY OBTAINED FROM THE HVT
FUNCTION ON BLOOMBERG, BUT IN NO EVENT SHALL SUCH EXPECTED VOLATILITY EXCEED
100%.

(B)   “BLOOMBERG” MEANS BLOOMBERG FINANCIAL MARKETS.

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(C)   “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.

(D)   “COMMON STOCK” MEANS (I) THE COMPANY’S SHARES OF COMMON STOCK, PAR VALUE
$0.001 PER SHARE, AND (II) ANY SHARE CAPITAL INTO WHICH SUCH COMMON STOCK SHALL
HAVE BEEN CHANGED OR ANY SHARE CAPITAL RESULTING FROM A RECLASSIFICATION OF SUCH
COMMON STOCK.

(E)   “COMMON STOCK DEEMED OUTSTANDING” MEANS, AT ANY GIVEN TIME, THE NUMBER OF
SHARES OF COMMON STOCK ACTUALLY OUTSTANDING AT SUCH TIME, PLUS THE NUMBER OF
SHARES OF COMMON STOCK DEEMED TO BE OUTSTANDING PURSUANT TO SECTIONS 2(A)(I) AND
2(A)(II) HEREOF REGARDLESS OF WHETHER THE OPTIONS OR CONVERTIBLE SECURITIES ARE
ACTUALLY EXERCISABLE AT SUCH TIME, BUT EXCLUDING ANY SHARES OF COMMON STOCK
OWNED OR HELD BY OR FOR THE ACCOUNT OF THE COMPANY OR ISSUABLE UPON EXERCISE OF
THE SPA WARRANTS.

(F)    “CONVERTIBLE SECURITIES” MEANS ANY STOCK OR SECURITIES (OTHER THAN
OPTIONS) DIRECTLY OR INDIRECTLY CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE
FOR SHARES OF COMMON STOCK.

(G)   “ELIGIBLE MARKET” MEANS THE PRINCIPAL MARKET, THE NEW YORK STOCK EXCHANGE,
INC., THE AMERICAN STOCK EXCHANGE, THE NASDAQ GLOBAL MARKET, THE NASDAQ GLOBAL
SELECT MARKET OR THE NASDAQ CAPITAL MARKET.

(H)   “EXPIRATION DATE” MEANS THE DATE SIXTY (60) MONTHS AFTER THE ISSUANCE DATE
OR, IF SUCH DATE FALLS ON A DAY OTHER THAN A BUSINESS DAY OR ON WHICH TRADING
DOES NOT TAKE PLACE ON THE PRINCIPAL MARKET (A “HOLIDAY”), THE NEXT DATE THAT IS
NOT A HOLIDAY.

(I)    “FUNDAMENTAL TRANSACTION” MEANS THAT THE COMPANY SHALL, DIRECTLY OR
INDIRECTLY, IN ONE OR MORE RELATED TRANSACTIONS, (I) CONSOLIDATE OR MERGE WITH
OR INTO (WHETHER OR NOT THE COMPANY IS THE SURVIVING CORPORATION) ANOTHER
PERSON, OR (II) SELL, ASSIGN, TRANSFER, CONVEY OR OTHERWISE DISPOSE OF ALL OR
SUBSTANTIALLY ALL OF THE PROPERTIES OR ASSETS OF THE COMPANY TO ANOTHER PERSON,
OR (III) ALLOW ANOTHER PERSON TO MAKE A PURCHASE, TENDER OR EXCHANGE OFFER THAT
IS ACCEPTED BY THE HOLDERS OF MORE THAN THE 50% OF THE OUTSTANDING SHARES OF
COMMON STOCK (NOT INCLUDING ANY SHARES OF COMMON STOCK HELD BY THE PERSON OR
PERSONS MAKING OR PARTY TO, OR ASSOCIATED OR AFFILIATED WITH THE PERSONS MAKING
OR PARTY TO, SUCH PURCHASE, TENDER OR EXCHANGE OFFER), OR (IV) CONSUMMATE A
STOCK PURCHASE AGREEMENT OR OTHER BUSINESS COMBINATION (INCLUDING, WITHOUT
LIMITATION, A REORGANIZATION, RECAPITALIZATION, SPIN-OFF OR SCHEME OF
ARRANGEMENT) WITH ANOTHER PERSON WHEREBY SUCH OTHER PERSON ACQUIRES MORE THAN
THE 50% OF THE OUTSTANDING SHARES OF COMMON STOCK (NOT INCLUDING ANY SHARES OF
COMMON STOCK HELD BY THE OTHER PERSON OR OTHER PERSONS MAKING OR PARTY TO, OR
ASSOCIATED OR AFFILIATED WITH THE OTHER PERSONS MAKING OR PARTY TO, SUCH STOCK
PURCHASE AGREEMENT OR OTHER BUSINESS COMBINATION), (V) REORGANIZE, RECAPITALIZE
OR RECLASSIFY ITS COMMON STOCK, OR (VI) ANY “PERSON” OR “GROUP” (AS THESE TERMS
ARE USED FOR PURPOSES OF SECTIONS 13(D) AND 14(D) OF THE EXCHANGE ACT) IS OR
SHALL BECOME THE “BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 UNDER THE EXCHANGE
ACT), DIRECTLY OR INDIRECTLY, OF 50% OF THE AGGREGATE ORDINARY VOTING POWER
REPRESENTED BY ISSUED AND OUTSTANDING COMMON STOCK.

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(J)    “OPTIONS” MEANS ANY RIGHTS, WARRANTS OR OPTIONS TO SUBSCRIBE FOR OR
PURCHASE SHARES OF COMMON STOCK OR CONVERTIBLE SECURITIES.

(K)   “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.

(L)    “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A PARTNERSHIP,
A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED ORGANIZATION, ANY
OTHER ENTITY AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY THEREOF.

(M)  “PRINCIPAL MARKET” MEANS THE NASD OTC BULLETIN BOARD.

(N)   “REGISTRATION RIGHTS AGREEMENT” MEANS THAT CERTAIN REGISTRATION RIGHTS
AGREEMENT BY AND AMONG THE COMPANY AND THE BUYERS.

(O)   “REQUIRED HOLDERS” MEANS THE HOLDERS OF THE SPA WARRANTS REPRESENTING AT
LEAST A MAJORITY OF SHARES OF COMMON STOCK UNDERLYING THE SPA WARRANTS THEN
OUTSTANDING.

(P)   “SPA SECURITIES” MEANS THE NOTES ISSUED PURSUANT TO THE SECURITIES
PURCHASE AGREEMENT.

(Q)   “SUCCESSOR ENTITY” MEANS THE PERSON (OR, IF SO ELECTED BY THE REQUIRED
HOLDERS, THE PARENT ENTITY) FORMED BY, RESULTING FROM OR SURVIVING ANY
FUNDAMENTAL TRANSACTION OR THE PERSON (OR, IF SO ELECTED BY THE REQUIRED
HOLDERS, THE PARENT ENTITY) WITH WHICH SUCH FUNDAMENTAL TRANSACTION SHALL HAVE
BEEN ENTERED INTO.

(R)    “TRADING DAY” MEANS ANY DAY ON WHICH THE COMMON STOCK ARE 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 ARE THEN TRADED; PROVIDED THAT
“TRADING DAY” SHALL NOT INCLUDE ANY DAY ON WHICH THE COMMON STOCK ARE SCHEDULED
TO TRADE ON SUCH EXCHANGE OR MARKET FOR LESS THAN 4.5 HOURS OR ANY DAY THAT THE
COMMON STOCK ARE 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).

(S)   “WEIGHTED AVERAGE PRICE” MEANS, FOR ANY SECURITY AS OF ANY DATE, THE
DOLLAR VOLUME-WEIGHTED AVERAGE PRICE FOR SUCH SECURITY ON THE PRINCIPAL MARKET
DURING THE PERIOD BEGINNING AT 9:30:01 A.M., NEW YORK CITY TIME, AND ENDING AT
4:00:00 P.M., NEW YORK CITY TIME, AS REPORTED BY BLOOMBERG THROUGH ITS “VOLUME
AT PRICE” FUNCTION 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 CITY TIME, AND ENDING AT 4:00:00 P.M., NEW YORK CITY
TIME, AS REPORTED BY BLOOMBERG, OR, IF NO DOLLAR VOLUME-WEIGHTED AVERAGE PRICE
IS REPORTED FOR SUCH SECURITY BY

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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 PINK SHEETS LLC (FORMERLY THE NATIONAL
QUOTATION BUREAU, INC.).  IF THE WEIGHTED AVERAGE PRICE CANNOT BE CALCULATED FOR
SUCH SECURITY ON SUCH DATE ON ANY OF THE FOREGOING BASES, THE WEIGHTED AVERAGE
PRICE OF SUCH SECURITY ON SUCH DATE SHALL BE THE FAIR MARKET VALUE AS MUTUALLY
DETERMINED BY THE COMPANY AND THE REQUIRED HOLDERS.  IF THE COMPANY AND THE
REQUIRED HOLDERS ARE UNABLE TO AGREE UPON THE FAIR MARKET VALUE OF THE SUCH
SECURITY, THEN SUCH DISPUTE SHALL BE RESOLVED PURSUANT TO SECTION 12 WITH THE
TERM “WEIGHTED AVERAGE PRICE” BEING SUBSTITUTED FOR THE TERM “EXERCISE PRICE.”
ALL SUCH DETERMINATIONS SHALL BE APPROPRIATELY ADJUSTED FOR ANY SHARE DIVIDEND,
SHARE SPLIT OR OTHER SIMILAR TRANSACTION DURING SUCH PERIOD.

[Signature Page Follows]

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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.

 

JAVO BEVERAGE COMPANY, INC.

 

 

 

 

 

 

 

By:

/s/ Cody C. Ashwell

 

 

Name: Cody C. Ashwell

 

Title:

Chairman and Chief Executive

 

 

Officer

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EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK

JAVO BEVERAGE COMPANY

The undersigned holder hereby exercises the right to purchase
                                of the shares of Common Stock (“Warrant Shares”)
of Javo Beverage Company, a Delaware corporation (the “Company”), evidenced by
the attached Warrant to Purchase Common Stock (the “Warrant”).  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 Exercise
Price shall be made as:

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

                             a “Cashless Exercise” with respect to 
                            Warrant Shares.

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 the holder
                            Warrant Shares in accordance with the terms of the
Warrant.

4.  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 shares of Common Stock which exceeds the Maximum
Percentage of the total outstanding shares of Company Common Stock as determined
pursuant to the provisions of Section 1(f) of the Warrant.

Date:

 

 

 

,

 

 

 

 

 

 

 

 

 

Name of Registered Holder

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

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

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs
[Transfer Agent] to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated December [    ], 2006
from the Company and acknowledged and agreed to by [Transfer Agent].

JAVO BEVERAGE COMPANY

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

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