Filed by Bowne Pure Compliance





EXHIBIT
4.13




Execution Copy




WARRANT

TO PURCHASE COMMON STOCK OF

PURE EARTH, INC.





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I


DEFINITIONS

	 
	 	 	 	 
	ARTICLE II


EXERCISE OF WARRANT

	 
	 	 	 	 
	2.1 Conditions of Exercise
	 	 	2	 
	2.2 Exercise Price Per Share
	 	 	2	 
	2.3 Manner of Exercise; Payment
	 	 	3	 
	2.4 Payment of Expenses and Taxes
	 	 	4	 
	2.5 Fractional Shares
	 	 	5	 
	2.6 Valid Issuance
	 	 	5	 
	2.7 Legends on Warrant Shares
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III


TRANSFER, DIVISION AND COMBINATION

	 
	 	 	 	 
	3.1 Transfer
	 	 	6	 
	3.2 Division or Combination of Warrants
	 	 	6	 
	3.3 Effect of Transfer or Exchange
	 	 	6	 
	3.4 Expenses
	 	 	7	 
	3.5 Maintenance of Books
	 	 	7	 
	 
	 	 	 	 
	ARTICLE IV


ANTI-DILUTION PROVISIONS; ADJUSTMENT IN WARRANT NUMBER AND 

EXERCISE PRICE; ADDITIONAL WARRANTS FOR
BREACH OF
 REPRESENTATION AND WARRANTY

	 
	 	 	 	 
	4.1 Dividends, Subdivisions and Combinations
	 	 	7	 
	4.2 Dividends Payable Other than in Common Stock or Common Stock Equivalents; Redemptions
	 	 	7	 
	4.3 Reorganization, Reclassification, Merger, Consolidation, or Disposition of Assets
	 	 	8	 
	4.4 Dissolution, Liquidation and Winding Up
	 	 	8	 
	4.5 Certain Acquisitions by the Company
	 	 	8	 
	4.6 Dilutive Issuances
	 	 	9	 
	4.7 Adjustment of Exercise Price
	 	 	10	 
	4.8 Determination of Adjustments
	 	 	10	 






 


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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE V


PREEMPTIVE RIGHTS

	 
	 	 	 	 
	5.1 Preemptive Rights
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI


CERTAIN COVENANTS OF THE COMPANY

	 
	 	 	 	 
	6.1 No Impairment
	 	 	13	 
	6.2 Reservation and Registration of Shares
	 	 	13	 
	6.3 Information Rights; Notice; Inspection
	 	 	14	 
	6.4 Transactions with Affiliates
	 	 	16	 
	6.5 Lapse of Certain Rights
	 	 	16	 
	 
	 	 	 	 
	ARTICLE VII


PUT OPTION

	 
	 	 	 	 
	7.1 Put Option
	 	 	17	 
	7.2 Payment Upon Exercise of Put Option
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VIII


MISCELLANEOUS

	 
	 	 	 	 
	8.1 Remedies
	 	 	20	 
	8.2 Limitation of Liability
	 	 	20	 
	8.3 Replacement of Warrants
	 	 	20	 
	8.4 Notices
	 	 	21	 
	8.5 Reliance Upon Copies
	 	 	21	 
	8.6 Successors and Assigns
	 	 	21	 
	8.7 Amendments, Waivers
	 	 	21	 
	8.8 Governing Law
	 	 	22	 
	8.9 Headings; Cross References
	 	 	22	 
	8.10 Severability
	 	 	22	 
	8.11 Survival of Warrant
	 	 	22	 
	8.12 No Effect on Other Relationships
	 	 	22	 
	8.13 Subordination; Payment Restrictions
	 	 	22	 
	 
	 	 	 	 





 


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THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION, AND
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.



THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF ARE SUBJECT TO TRANSFER
RESTRICTIONS AND OTHER PROVISIONS CONTAINED IN A SECURITYHOLDERS AGREEMENT BETWEEN THE COMPANY AND
CERTAIN SECURITYHOLDERS OF THE COMPANY. A COPY OF SUCH AGREEMENT SHALL BE FURNISHED BY THE COMPANY
TO THE HOLDER OF THIS WARRANT AND WARRANT SHARES WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY
AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.



WARRANT




TO PURCHASE COMMON STOCK OF




PURE EARTH, INC.




			
	 	 	 
	March 4, 2008
	 	Warrant No. W-1






THIS IS TO CERTIFY THAT, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Fidus Mezzanine Capital, L.P., a Delaware limited partnership (the
“Investor”), and its registered transferees, successors and assigns, is entitled to
purchase from Pure Earth, Inc., a Delaware corporation (the “Company”), as a whole at any
time or in part from time to time, at the Exercise Price Per Share (as hereinafter defined),
subject to adjustment as provided herein, the number of fully paid and nonassessable shares of
Common Stock of the Company set forth in the immediately succeeding sentence (as such number is
adjusted as provided herein), all on the terms and conditions and pursuant to the provisions
hereof. The shares of Common Stock into which this Warrant is exercisable (subject to adjustment
hereunder, the “Warrant Number”) shall be 4.2% of the sum of (i) the number of shares of
Outstanding Common Stock determined on a fully diluted basis as of the Original Issue Date,
assuming the exercise, conversion or exchange of all Common Stock Equivalents outstanding on such
date (including without limitation the Warrants, but excluding shares of Common Stock issuable (but
not


 


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issued) as of the Original Issue Date (a) in connection with commitments (such as earn outs and
other contingent purchase price obligations) to issue Common Stock or Common Stock Equivalents to
which the Company is party or subject as of
the Original Issue Date and (b) upon conversion of the Existing Preferred Stock) and (ii) the
number of shares of Common Stock issued and outstanding as of the time of exercise of this Warrant
as a result of (a) commitments (such as earn outs and other contingent purchase price obligations)
to issue Common Stock or Common Stock Equivalents to which the Company is party or subject as of
the Original Issue Date and (b) any conversion of the Existing Preferred Stock. Capitalized terms
used in this paragraph without definition have the meanings given to such terms in Appendix I.

ARTICLE I




DEFINITIONS




For purposes of this Warrant, except as the context may otherwise require and in addition to
other capitalized terms defined elsewhere herein, the following terms shall have the meanings set
forth in Appendix I.



ARTICLE II




EXERCISE OF WARRANT





2.1 Conditions of Exercise.



On any Business Day from and after the fourth anniversary of the Original Issue Date, this
Warrant may be exercised in accordance with Section 2.3(a), for all (but not less than all of) the
Warrant Shares for which this Warrant is then exercisable; provided, however, that
this Warrant may be exercised at any time (i) coinciding with or following the occurrence of a
Liquidation Event or (ii) to consummate any sales of Warrant Shares by the Holder in accordance
with and as permitted by the Securityholders Agreement; provided, further,
however, that less than all of this Warrant may be exercised to permit the payment of the
exercise price of this Warrant with such unexercised portion of the Warrant as permitted hereby and
to consummate any sales of the Warrant Shares in accordance with and as permitted by the
Securityholders Agreement.




2.2 Exercise Price Per Share.



(a) Subject to Section 2.2(b), at any time the Holder exercises this Warrant pursuant to
Section 2.1, the purchase price for each share of Common Stock (the “Exercise Price Per
Share”) shall be equal to $0.001 per share.



 


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(b) To the extent that this Warrant is exercised after the third anniversary of the Original
Issue Date, but only so long as none of the shares of the Preferred Stock issued on or about the
Original Issue Date have been redeemed or purchased by the Company or any of its Subsidiaries on or
prior to the third anniversary of the Original Issue Date, the Exercise Price Per Share shall be
determined based on the Fair Market Value Per Share in accordance with the following table:




	 	 	 	 	 
	Fair Market Value Per Share	 	Exercise Price Per Share	 
	 
	 	 	 	 
	Up to $9.00
	 	$	0.001	 
	$9.01 to $10.50
	 	$	0.50	 
	$10.51 to $13.50
	 	$	1.50	 
	$13.51 to $16.50
	 	$	3.00	 
	$16.51 to $20.00
	 	$	4.50	 
	Over $20.00
	 	$	6.00	 







2.3 Manner of Exercise; Payment.



(a) Exercise of this Warrant, in whole or in part, shall be effective as of the date the
Holder delivers to the Company at its principal office (i) a duly executed written notice in the
form of Exhibit A (an “Exercise Notice”), (ii) payment of the Exercise Price in the manner
provided in Section 2.3(d), and (iii) this Warrant; and as of such date, a stock certificate or
certificates shall be deemed to have been issued and the Holder, or any other Person so designated
by the Holder in the Exercise Notice to be named therein, shall be deemed to have become a holder
of record, for all purposes, of such number of Warrant Shares set forth in the Exercise Notice.
The Company shall, as promptly as practicable after receipt thereof and in any event within five
Business Days thereafter, execute and deliver or cause to be executed and delivered to the Holder
such certificate or certificates representing the aggregate number of Warrant Shares specified in
such Exercise Notice, together with any cash in lieu of the issuance of fractional shares, as
provided in Section 2.5. The stock certificate or certificates so delivered shall, to the extent
possible, be in such denomination or denominations as the Holder shall have requested in the
Exercise Notice and shall be registered in the name of the Holder or in such other name or names as
shall have been designated in the Exercise Notice.



(b) If this Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing the Warrant Shares being issued, execute
and deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other
respects be identical to this Warrant, or, at the request of the Holder, appropriate notation may
be made on this Warrant and the same returned to the Holder. If this Warrant shall have been
exercised in part, the Warrant Number covered by each partial exercise shall be calculated at the
time of each such exercise, with any changes in the capitalization of the Company after each such
exercise being reflected in the next subsequent exercise with respect to the portion of the
original Warrant being exercised.



(c) If this Warrant shall have been exercised in full, the Company shall cancel and dispose of
this Warrant. Notwithstanding any provision herein to the contrary, the delivery to the Company of
this Warrant and the Exercise Notice as provided in this Section 2.3(a) shall confer upon the
Holder immediate voting rights in respect of the Warrant Shares acquired in connection therewith.


 


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(d) Payment of the Exercise Price shall be made, at the option of the Holder, in accordance
with any of the following (or any combination thereof): (i) by the surrender of a portion of this
Warrant other than that portion then being exercised, or (ii) by the surrender of other securities
of the Company then held by the Holder, including shares of Preferred Stock. For purposes of
making payment of the Exercise Price, as of the date of such payment, (x) the portion of the
Warrant being surrendered shall be deemed to have a value equal to the product of Fair Market Value
Per Share multiplied by the number of shares of Common Stock underlying such portion of the
Warrant, less the Exercise Price for such portion of the Warrant, (y) any Preferred Stock being
surrendered shall have a value equal to the Liquidation Value (as defined in the Investment
Agreement), and (z) any other securities being surrendered shall have a value reasonably agreed
upon by the Company and the Holder as of such date; provided; however, that if a
security is publicly traded, its value for such purposes shall be deemed to be its Market Price.
If the Holder surrenders shares of Preferred Stock having a deemed value in excess of the Exercise
Price then payable by such Holder (such excess being referred to as the “Excess Amount”),
after such price is reduced by the amount, if any, paid by the surrender of any remaining Warrants
or other securities of the Company, such Preferred Stock shall be applied to the payment of the
Exercise Price that remains to be paid, and the Company shall issue to the Holder a new Preferred
Stock certificate bearing identical terms to the surrendered Preferred Stock certificate, except
that the value of the number of shares (including fractional shares) evidenced by such new
Preferred Stock Certificate shall be equal to the Excess Amount, and the Company shall pay to the
Holder an amount equal to the sum of all dividends with respect to the surrendered portion of such
Preferred Stock, accrued and unpaid as of the date of payment of the Exercise Price, on the next
regularly scheduled dividend payment date. If the Holder pays and surrenders any combination of
Preferred Stock, Warrants and other securities of the Company for payment of the Exercise Price,
the Holder shall specify the respective number of Warrant Shares to be purchased with each form of
consideration, and the foregoing provisions shall be applied to each form of consideration with the
same effect as if this Warrant were being separately exercised with respect to each form of
consideration. If this Warrant shall have been used in part to pay the Exercise Price, the Company
shall at the time of the issuance of the Warrant Shares execute and deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares, which new
Warrant shall in all other respects be identical to this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant and the same returned to the Holder.



2.4 Payment of Expenses and Taxes. The Company shall pay all expenses in connection with,
and all issuance, stamp, transfer and other similar taxes and fees that may be imposed by any
governmental entity with respect to the issue, delivery and transfer of the Warrant Shares and any
certificates therefor; provided, however, that the Company shall not be required to
pay any taxes or charges (i) measured by the income of any person or entity other than the Company
or (ii) imposed in connection with any transfer involved in the issue of any certificate for shares
of Common Stock in any name other than that of the registered holder of the Warrant surrendered in
connection with the purchase of such shares.


 


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2.5 Fractional Shares.



The Company shall not be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a Warrant Share. If any fraction of a share would, but for this
Section, be issuable upon final exercise of this Warrant (and after aggregating all Warrants
presented for exercise by the same Holder), in lieu of such fractional share, the Company shall
purchase from the Holder any fractional shares created as a result of such final exercise by cash
payment to the Holder in an amount equal to the same fraction of its Fair Market Value Per Share as
of the date of exercise.




2.6 Valid Issuance.



All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof
shall be validly issued, fully paid and nonassessable, shall be issued without violation of any
preemptive or similar rights of any third parties, and shall be free and clear of any and all
liens, encumbrances, claims and restrictions whatsoever, other than restrictions on transfer
pursuant to applicable federal and state securities laws.




2.7 Legends on Warrant Shares.



Each certificate for the Warrant Shares issued upon exercise of this Warrant and each
certificate issued to any subsequent transferee, unless at the time of exercise such Warrant Shares
are registered under the Securities Act or the applicable holding period and other conditions
permitting transfer without such legend under Rule 144 under the Securities Act have been met,
shall bear a legend substantially in the following form (and any additional legend or legends
required by any securities exchange or market upon which shares of Common Stock may, at the time of
such exercise, be listed) on the face thereof:




“The shares represented by this certificate have not been registered under the
Securities Act of 1933 or qualified under the securities laws of any state. Such
 shares have been acquired for investment purposes and not with a view to
distribution and may not be sold or offered for sale in the absence of an effective
registration statement under the Securities Act of 1933 and registration or
qualification under applicable state securities laws or an opinion of counsel
reasonably satisfactory to the Company that such registration and qualification are
not required under applicable federal and state securities laws.”


 


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ARTICLE III


TRANSFER, DIVISION AND COMBINATION




3.1 Transfer.



(a) In addition to the Holder’s rights hereunder, each Holder shall have the rights applicable
to it in the Securityholders Agreement. Any transfer not in accordance with this Section 3.1
shall be null and void and have no effect.



(b) Any transfer of this Warrant shall be registered on the books of the Company maintained
for such purpose, upon surrender of this Warrant at the principal office of the Company together
with a written assignment of this Warrant in the form of Exhibit B duly executed by the Holder or
the Holder’s duly authorized agent or attorney. Upon such surrender and delivery and any required
payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of assignment, and
shall issue to the Holder a new Warrant evidencing the portion of this Warrant not so assigned, if
any, and this Warrant shall promptly be cancelled. Until due presentment for registration of
transfer on such books, the Company may treat the registered Holder hereof as the owner for all
purposes, and the Company shall not be affected by notice to the contrary.



(c) Notwithstanding anything to the contrary contained herein or in the Securityholders
Agreement, subject to the Investor’s certification to the Company in each instance that any such
proposed transfer is in compliance with the Securities Act, applicable state securities law and the
respective rules and regulations under each such law, the Holder shall be permitted to (i) transfer
this Warrant (or any portion thereof) and any Warrant Shares without restriction to any Person,
provided that with respect to transfers to any Person other than Affiliates of the Holder,
such transfer shall be conditioned upon and subject to the consent of the Company (which consent
shall not be unreasonably withheld) other than upon and during the continuance of any Event of
Noncompliance and (ii) transfer a pro rata portion, based on the aggregate number of shares of
Preferred Stock originally issued, of this Warrant and any Warrant Shares in connection with a
transfer of any shares of Preferred Stock; provided, however, that no transfers of
the Warrant or any Warrant Shares shall be made to a direct competitor of the Company;
provided, further, however, that neither the consent of the Company
required by clause (i) above nor the prohibition on transfers to direct competitors of the Company
set forth in the immediately preceding proviso shall apply to sales of the Warrant Shares on an
open public market.




3.2 Division or Combination of Warrants.



Subject to compliance with the other provisions of this Article III, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the principal office of the
Company, together with a written notice specifying the denominations in which new Warrants are to
be issued, signed by the Holder or its duly authorized agent or attorney. Upon any such proper
division or combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.




3.3 Effect of Transfer or Exchange.



All Warrants issued upon any registration of transfer or exchange of this Warrant shall be the
valid, binding and enforceable obligations of the Company.


 


6









 






3.4 Expenses.



The Company shall prepare, issue and deliver at its own expense any new Warrant or Warrants
required to be issued hereunder.




3.5 Maintenance of Books.



The Company agrees to maintain at its principal office books for the registration and transfer
of the Warrants.



ARTICLE IV




ANTI-DILUTION PROVISIONS; ADJUSTMENT IN

WARRANT NUMBER AND EXERCISE PRICE; ADDITIONAL

WARRANTS FOR BREACH OF REPRESENTATION AND WARRANTY




The Exercise Price and the Warrant Number shall be subject to adjustment from time to time as
provided in this Article IV.



4.1 Dividends, Subdivisions and Combinations. If the Company, at any time and from
time to time, (i) declares or distributes, a dividend payable in, or other distribution of,
additional shares of Common Stock or Common Stock Equivalents, (ii) splits or subdivides its
outstanding shares of Common Stock into a greater number of shares of Common Stock or Common Stock
Equivalents, or (iii) combines its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or Common Stock Equivalents, then, in each such case, the Warrant Number
shall be adjusted to equal the product of the Warrant Number in effect immediately prior to the
adjustment multiplied by a fraction the numerator of which is equal to the number of shares of
Common Stock outstanding immediately after such adjustment and the denominator of which is equal to
the number of shares of Common Stock outstanding immediately prior to the adjustment, and the
Exercise Price shall be adjusted pursuant to Section 4.7.



4.2 Dividends Payable Other than in Common Stock or Common Stock Equivalents;
Redemptions. If the Company declares or pays any dividend or makes any distribution with
respect to shares of its Common Stock other than any dividend or distribution paid or payable in
shares of Common Stock or Common Stock Equivalents or if the Company or any Affiliate thereof makes
any redemptions, purchases or other acquisitions of Common Stock or Common Stock equivalents, the
Holder shall promptly receive the cash, stock, securities or property to which the Holder would
have been entitled by way of (i) dividends and distributions if the Holder had exercised this
Warrant in full immediately prior to the declaration of such dividend or the making of such
distribution so as to be entitled thereto and (ii) redemption, purchase or other acquisition if the
Holder had exercised this Warrant in full immediately prior to the such redemption, purchase or
other acquisition and such redemption, purchase or other acquisition had been consummated on a pro
rata basis among all holders of Common Stock (after giving effect to such exercise of the Warrant).


 


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4.3 Reorganization, Reclassification, Merger, Consolidation, or Disposition of Assets.



If the Company reorganizes its capital, reclassifies its capital stock, merges or consolidates
with or into another Person (where the Company is not the surviving Person or where there is any
change whatsoever in, or distribution with respect to, the outstanding Common Stock of the
Company), or sells, transfers or otherwise disposes of all or substantially all of the assets of
the Company and its Subsidiaries, on a consolidated basis, to another Person and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation, or disposition of assets,
cash, securities or property are to be received by or distributed to the holders of Common Stock of
the Company who are holders immediately prior to such transaction, then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the cash, securities or property
receivable by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In the case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, any successor or acquiring Person
(other than the Company) shall expressly assume the due and punctual observance and performance of
each and every covenant and condition of this Warrant to be performed and observed by the Company
and all the obligations and liabilities of the Company hereunder and, upon the Holder tendering
this Warrant for cancellation, shall issue a replacement Warrant containing substantially the same
provisions as this Warrant, but containing appropriate changes due to such event (such as changes
to the name of the issuing company and equitable changes to the Warrant Number due to the
occurrence of such event). The foregoing provisions of this Section 4.3 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or dispositions of assets.




4.4 Dissolution, Liquidation and Winding Up.



In case the Company, at any time prior to the exercise in full of this Warrant, dissolves,
liquidates or winds up its affairs, the Holder shall have the right to receive upon exercise of
this Warrant, in lieu of the shares of Common Stock that such Holder would have been entitled to
receive, the same kind and amount of assets as would have been issued, distributed or paid to such
Holder upon any such dissolution, liquidation or winding up with respect to such shares of Common
Stock had such Holder been the holder of record of such shares of Common Stock receivable upon the
exercise of this Warrant on the record date for the determination of those Persons entitled to
receive any such liquidating distribution, provided, however, that the Holder shall
not in any case be required to assume or be obligated in respect of any liabilities of the Company.




4.5 Certain Acquisitions by the Company.



(a) In the event that the Required Investors (as defined under the Investment Agreement) fail
to give their consent or approval of an Acquisition by any Company Party for which their consent or
approval is necessary under the Investment Agreement, then at the written election of the Company
delivered to the Holder at or prior to the time of consummation of the Acquisition, the Warrant
Number (less the number of shares of Common Stock with respect to which the Warrant has been
exercised) shall be reduced at (and only at) the time of
consummation of such Acquisition to a number equal to (i) the Warrant Number immediately
before consummation of such Acquisition, multiplied by (ii) 0.40, and the Holder’s rights
corresponding to such shares of Common Stock shall be cancelled in full.


 


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4.6 Dilutive Issuances.



(a) If at any time the Company issues or sells any shares of Common Stock in a Subsequent
Issuance to Brent Kopenhaver or Mark Alsentzer (other than (i) an Exempt Issuance or (ii) any
portion of such Subsequent Issuance with respect to which the Holder has purchased Common Stock
upon exercise of its preemptive rights pursuant to Section 5.1 (clauses (i) and (ii) collectively,
the “Excluded Portion”)) for consideration per share less than the Fair Market Value Per
Share (determined pursuant to the procedures set forth in Section 7.2(e)) immediately prior to the
time of such Subsequent Issuance, then the Warrant Number shall be adjusted by multiplying the
Warrant Number immediately prior thereto by a fraction, the numerator of which shall be the total
number of shares of Outstanding Common Stock immediately after such Subsequent Issuance (other than
the Excluded Portion) and the denominator of which shall be the sum of the number of shares of
Outstanding Common Stock immediately prior to such Subsequent Issuance plus the number of shares of
Common Stock that the aggregate consideration received for such Subsequent Issuance (other than the
Excluded Portion) would purchase at the Fair Market Value Per Share (determined pursuant to the
procedures set forth in Section 7.2(e)) in effect immediately prior to the time of such Subsequent
Issuance.



(b) In the event that the Company at any time issues, sells or grants any Common Stock
Equivalents in a Subsequent Issuance to Brent Kopenhaver or Mark Alsentzer (other than (i) an
Exempt Issuance or (ii) any portion of the Subsequent Issuance with respect to which the Holder has
purchased Common Stock Equivalents upon exercise of its preemptive rights pursuant to Section 5.1
corresponding to the proportionate amount of the preemptive right in respect of which such purchase
is made), then, for purposes of this Section 4.6, the Company shall be deemed to have issued at
that time, pursuant to Section 4.6(a), a number of shares of Common Stock equal to the maximum
number of shares of Common Stock that are or shall become issuable upon the exercise of the
purchase, conversion or exchange rights associated with such Common Stock Equivalents for
consideration per share equal to (i) the sum of the aggregate consideration per share received by
the Company in connection with the issuance, sale or grant of such Common Stock Equivalents,
plus (ii) the minimum amount of consideration per share receivable by the Company in
connection with the exercise of such Common Stock Equivalents. If, at any time after any
adjustment of the Warrant Number shall have been made pursuant to Section 4.6(a) as the result of
any issuance, sale or grant of any Common Stock Equivalents, any of such Common Stock Equivalents
or the rights of purchase, conversion or exchange associated therewith shall expire, the Warrant
Number then in effect shall be decreased to the Warrant Number that would have been in effect if
such expiring Common Stock Equivalents or rights of purchase, conversion or exchange had never been
issued. Similarly, if, at any time after any such adjustment of the Warrant Number shall have been
made pursuant to Section 4.6(a), there is a change in (x) the consideration received or to be
received by the Company in connection with the issuance or exercise of such Common Stock
Equivalents, or (y) the conversion ratio applicable to such Common Stock Equivalents so that a
different number shares of Common Stock shall be issuable upon the conversion or exchange thereof,
the Warrant Number then in effect shall be readjusted to the Warrant Number that would have been in
effect
had such changes taken place at the time that such Common Stock Equivalents were initially
issued, granted or sold. In no event shall any readjustment under this Section 4.6(a) affect the
validity of any Warrant Shares issued upon any exercise of this Warrant prior to such readjustment.
To the extent that an adjustment to the Warrant Number is made pursuant to Section 4.6(a), upon
the issuance of Common Stock Equivalents, no further adjustment shall be made pursuant to
Section 4.6(a) upon the issuance of Common Stock upon exercise or conversion of such Common Stock
Equivalents.


 


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4.7 Adjustment of Exercise Price.



Upon any adjustment of the Warrant Number as provided in Sections 4.1 or 4.6, the Exercise
Price Per Share shall be adjusted to be equal to the product of (i) the Exercise Price in effect
immediately prior to such adjustment multiplied by (ii) the quotient of the Warrant Number in
effect immediately prior to such adjustment divided by the Warrant Number in effect immediately
after such adjustment.




4.8 Determination of Adjustments.



(a) Upon any event that shall require an adjustment pursuant to this Article IV, the Company
shall promptly calculate such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth, in reasonable detail, such adjustment, the method of calculation thereof
and the facts upon which such adjustment is based, including a statement of (i) the number of
shares of Common Stock then outstanding and (ii) the Warrant Number, both as in effect immediately
prior to such adjustment and as adjusted on account thereof. The Company shall promptly mail a
copy of each such certificate to the Holder. In the event that the Holder objects to the
computation of such adjustment prepared by the Company within 20 Business Days after receipt
thereof, the Company shall promptly cause a firm of independent certified public accountants of
regionally or nationally recognized standing reasonably acceptable to the Holder to calculate such
adjustment and mail a copy of such calculation to the Holder. Such calculation by such accountant
shall be conclusive and binding upon all parties. The Company shall keep at its principal office
copies of all such certificates and cause the same to be available for inspection at such office
during normal business hours by the Holder or any prospective transferee hereof designated by the
Holder.



(b) For purposes of this Article IV, the consideration received or receivable by the Company
in connection with the issuance, sale, grant or exercise of additional shares of Common Stock or
Common Stock Equivalents, irrespective of the accounting treatment of such consideration, shall be
valued as follows:




(1) Cash Payment. In the case of cash, the amount received by the Company for
such issuance, sale, grant or exercise.




(2) Securities or Other Property. In the case of securities or other property,
the fair market value thereof as of the date immediately preceding such issuance, sale,
grant or exercise as reasonably determined in good faith by the board of directors of the
Company.


 


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(3) Allocation Related to Common Stock. In the event shares of Common Stock
are issued or sold together with other securities or other assets of the Company for a
consideration that covers both, the consideration received (calculated as provided in (1)
and (2) above) shall be allocable to such shares of Common Stock as reasonably determined in
good faith by the board of directors of the Company.




(4) Allocation Related to Common Stock Equivalents. In case any Common Stock
Equivalents shall be issued or sold together with other securities or other assets of the
Company, together constituting one integral transaction in which no specific consideration
is allocated to the Common Stock Equivalents, the consideration allocable to such Common
Stock Equivalents shall be determined in good faith by the board of directors of the
Company.




(5) Merger or Consolidation. In case any shares of Common Stock or Common
Stock Equivalents shall be issued or granted in connection with any merger or combination in
which the Company is the surviving corporation, the amount of consideration therefor shall
be deemed to be the fair value of such portion of the assets and business of the
nonsurviving corporation attributable to such Common Stock or Common Stock Equivalents, as
reasonably determined in good faith by the Company’s board of directors.



(c) The following additional provisions shall be applicable to the adjustments provided for
pursuant to this Article IV:




(1) When Adjustments to be Made. The adjustments required by this Article IV
shall be made whenever and as often as any specified event requiring such an adjustment
shall occur and shall be effective (A) in the case of any dividend or distribution of Common
Stock to the holders of Common Stock, immediately after the close of business on the date
such dividend or distribution is actually made by the Company, and (B) in the case of any
other specified event, at the close of business on the date of such specified event.




(2) Fractional Interests. In computing adjustments under this Article IV,
fractional interests in Common Stock shall be taken into account to five decimal places.




(3) Maximum Exercise Price. At no time shall the Exercise Price Per Share of
Common Stock exceed the amount set forth in the introductory paragraph of this Warrant
except as the proper result of an adjustment pursuant to this Article IV.




(4) Certain Limitations. Notwithstanding anything herein to the contrary, the
Company agrees not to adjust upward the par value per share of its Common Stock and not to
enter into any transaction that, by reason of any adjustment hereunder, would cause the
Exercise Price Per Share to be less than the par value per share of its Common Stock.




(5) Independent Application. Except as otherwise provided herein, all sections
and subsections of this Article IV are intended to operate independently of one another (but
without duplication). If an event occurs that requires the application of more
than one section or subsection, all applicable sections and subsections shall be given
independent effect.


 


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ARTICLE V




PREEMPTIVE RIGHTS




5.1 Preemptive Rights. The Company shall not issue, sell or exchange, or agree to
issue, sell or exchange, any shares of Common Stock or Common Stock Equivalents (other than with
respect to Exempt Issuances) unless, in each case, the Company shall have first given written
notice to the Holder (i) stating the Company’s intention to make such issuance, sale or exchange,
the amount to be issued, sold or exchanged, the purchase price, and a summary of the other material
terms of the proposed issuance, sale or exchange, and (ii) offering to issue to the Holder its pro
rata share of the Common Stock or Common Stock Equivalents being issued on the terms set forth in
such notice. In determining the Holder’s pro rata share of Common Stock or Common Stock
Equivalents being issued for purposes of this Section 5.1, all Common Stock Equivalents (including
without limitation all Warrants) shall be deemed to have been exercised or converted into Common
Stock. Such preemptive offer by its terms shall remain open and irrevocable for a period of at
least 20 days from the date it is delivered by the Company to the Holder. Notice of the Holder’s
intention to accept a preemptive offer, in whole or in part, shall be evidenced by a writing signed
by the Holder and delivered to the Company prior to the end of the offer period, setting forth the
amount of Common Stock or Common Stock Equivalents that the Holder elects to make subject to such
warrant. In the event that the Holder does not deliver such a notice of acceptance, or elects in
such notice not to accept all of its pro rata share of the Common Stock or Common Stock Equivalents
subject to the preemptive offer, the Company shall have 20 Business Days following the last date on
which such a notice of acceptance can be validly delivered to issue, sell or exchange all or any
part of such remaining offered Common Stock or Common Stock Equivalents not covered by the notice
of acceptance to any other Person or Persons, but only upon terms and conditions in all respects
that are no more favorable to such other Person or Persons, or less favorable to the Company, than
those set forth in the preemptive offer. If the Company does not consummate the issuance of all or
part of the remaining Common Stock or Common Stock Equivalents subject to the preemptive offer to
such other Person or Persons within such period, the right provided hereunder shall be deemed to be
revived and such Common Stock or Common Stock Equivalents shall not be offered unless first
reoffered to the Holder in accordance with this Article VI. Upon the issuance, sale or exchange to
or with such other Person or Persons of all or part of the remaining Common Stock or Common Stock
Equivalents covered by the preemptive offer, the Company shall issue to the
Holder the Common Stock or Common Stock Equivalents covered by the notice of acceptance
delivered to the Company by the Holder, on the terms specified in the preemptive offer.


 


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ARTICLE VI




CERTAIN COVENANTS OF THE COMPANY





6.1 No Impairment.



The Company shall not seek to avoid the observance or performance of any of the terms of this
Warrant, but shall at all times in good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate to protect the rights of the
Holder consistent with the terms of this Warrant. Without limiting the generality of the
foregoing, and notwithstanding any other provision of this Warrant, the Company (i) shall take all
such action as may be necessary or appropriate so that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares upon the exercise of this Warrant from time to time
(including any changes to the par value per share of the Common Stock in the event that the
Exercise Price Per Share is less than the par value per share of Common Stock), (ii) shall not
effect a Fundamental Asset Transaction with, or consolidate with or merge into any other Person or
permit any Person to consolidate with or merge into the Company (if the Company is not the
surviving corporation), unless such other Person shall expressly assume in writing and agree to be
bound by all the terms of this Warrant as provided herein, and (iii) shall use its reasonable
efforts to obtain or cooperate with the Holder to obtain all such authorizations, exemptions or
consents from any governmental or regulatory authority having jurisdiction as may be necessary to
enable the Company to perform, and the Holder to receive the benefits of, the Company’s obligations
under this Warrant (including without limitation any filings, approval or consent required under
the Hart-Scott-Rodino Act of 1976, as amended), and the Company shall pay all filing fees
associated with obtaining such authorizations, exemptions or consents.




6.2 Reservation and Registration of Shares.



The Company shall reserve and set apart and have at all times, free from preemptive rights, a
number of shares of authorized but unissued Common Stock or other securities or property
deliverable upon the exercise of this Warrant sufficient to permit the exercise in full of this
Warrant. The Company shall obtain all authorizations, exemptions and consents applicable to the
Company as may be necessary from any governmental or regulatory authority to give effect to any
adjustment to the Warrant Number or Exercise Price hereunder. If any shares of Common Stock
required to be reserved for the purposes of exercise of this Warrant require registration with or
approval of any governmental authority applicable to the Company under any federal or state law
(other than federal and state securities laws) before such shares may be issued upon exercise of
this Warrant, the Company shall, at its expense and as expeditiously as possible, cause such shares
to be duly registered or approved, as the case may be. The Company shall not at any time, except
upon dissolution, liquidation or winding up of the Company in compliance with Section 4.4, close
its stock transfer books or warrant transfer books so as to result in preventing or delaying the
exercise or transfer of this Warrant.


 


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6.3 Information Rights; Notice; Inspection.



(a) Except while the Company is a Reporting Company (but subject to the requirements of the
Holder under the Small Business Investment Act of 1957, as amended, and the rules and regulations
promulgated thereunder), so long as any of the Warrants or Warrant Shares are outstanding (except
as set forth in Section 6.5 below), the Company shall furnish to the Holder:




(1) As soon as available and in any event within 30 days after the end of each fiscal
month, beginning with the first month for which such financial statements were not delivered
as of the Original Issue Date, unaudited consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such fiscal month and unaudited
consolidated and consolidating statements of income, cash flows for the Company and its
Subsidiaries for the fiscal month then ended and for that portion of the fiscal year then
ended, in each case setting forth comparative consolidated and consolidating figures as of
the end of and for the corresponding period in the preceding fiscal year together with
comparative budgeted figures for the fiscal period then ended, all in reasonable detail and
all certified on behalf of the Company by an appropriate Responsible Officer as being
prepared in accordance with GAAP (subject to the absence of notes required by GAAP and
subject to normal year-end adjustments) applied on a basis consistent with that of the
preceding month or containing disclosure of the effect on the financial condition or results
of operations of any change in the application of accounting principles and practices during
such month;




(2) As soon as available and in any event within 45 days after the end of each fiscal
quarter of each fiscal year, beginning with the first fiscal quarter for which such
financial statements were not delivered as of the Original Issue Date, unaudited
consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the
end of such fiscal quarter and unaudited consolidated and consolidating statements of
income, cash flows and stockholders’ equity for the Company and its Subsidiaries for the
fiscal quarter then ended and for that portion of the fiscal year then ended, in each case
setting forth comparative consolidated and consolidating figures as of the end of and for
the corresponding period in the preceding fiscal year together with comparative budgeted
figures for the fiscal period then ended, all in reasonable detail and all certified on
behalf of the Company by an appropriate Responsible Officer as being prepared in accordance
with GAAP (subject to the absence of notes required by GAAP and subject to normal year-end
adjustments) applied on a basis consistent with that of the preceding quarter or containing
disclosure of the effect on the financial condition or results of operations of any change
in the application of accounting principles and practices during such quarter;



 


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(3) As soon as available and in any event within 90 days after the end of each fiscal
year, beginning with fiscal year 2007, an audited consolidated and unaudited consolidating
balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the
related audited consolidated and unaudited consolidating statements of income, cash flows
and stockholders’ equity for the Company and its Subsidiaries for the fiscal year then
ended, including the notes thereto, in each case setting forth comparative consolidated and
unaudited consolidating figures as of the end of and for the preceding fiscal year for the fiscal year then ended, all in reasonable detail and, with respect
to the audited statements, certified by the independent certified public accounting firm
regularly retained by the Company or another independent certified public accounting firm of
recognized standing reasonably acceptable to the holders of at least a majority of the
Warrant Shares (assuming full exercise thereof), together with (y) a report thereon by such
accountants that is not qualified as to going concern or scope of audit and to the effect
that such financial statements present fairly in all material respects the consolidated and
unaudited consolidating financial condition and results of operations of the Company and its
Subsidiaries as of the dates and for the periods indicated in accordance with GAAP applied
on a basis consistent with that of the preceding year or containing disclosure of the effect
on the financial condition or results of operations of any change in the application of
accounting principles and practices during such year and (z) a letter from such accountants
to the effect that, based on and in connection with their examination of the financial
statements of the Company and its Subsidiaries, they obtained no knowledge of the occurrence
or existence of any Event of Noncompliance relating to accounting or financial reporting
matters (which certificate may be limited to the extent required by accounting rules or
guidelines), or a statement specifying the nature and period of existence of any such Event
of Noncompliance disclosed by their audit; and




(4) Concurrently with each delivery of the financial statements described in the
foregoing clauses (1), (2) and (3), a management’s discussion and analysis report in such
form as may be acceptable to the Holder, regarding such topics as the Company’s financial
condition and results of operations; financial projections; acquisitions, expansions and
capital expenditures; regulatory and legal updates; industry changes and updates; and
management. Following the delivery of such report, the Company shall promptly provide such
additional information regarding such report and the items contained or described therein as
may be reasonably requested by the Holder, including without limitation the information
contemplated by Section 5.1(e) and Section 5.2 of the Investment Agreement.



(b) Except while the Company is a Reporting Company (but subject to the requirements of the
Holder under the Small Business Investment Act of 1957, as amended, and the rules and regulations
promulgated thereunder), so long as any of the Warrants or Warrant Shares are outstanding (except
as set forth in Section 6.5 below), the Company shall deliver to the Holder such information,
reports and documents as are delivered to the stockholders of the Company or its Subsidiaries.



(c) So long as any of the Warrants or Warrant Shares are outstanding (except as set forth in
Section 6.5 below), the Company shall give prior written notice to the Holder of any amendment to
or modification of the Company’s articles or certificate of incorporation or by-laws, its issuance
of any Common Stock or Common Stock Equivalents (other than an Exempt Issuance), redemption of any
equity securities, its payment of any cash dividends, any transaction involving the sale of all or
substantially all of the Company’s assets, any Fundamental Asset Transaction, any merger,
consolidation or combination transaction involving the Company, any material transactions with
affiliates of the Company, and any bankruptcy proceeding involving the Company or its subsidiaries.


 


15









 





(d) So long as any of the Warrants or Warrant Shares are outstanding (except as set forth in
Section 6.5 below), the Company shall permit officers and designated representatives of the Holder
to visit and discuss the affairs, finances and accounts of the Company and of any of its
Subsidiaries, all at such reasonable times and intervals and to such reasonable extent as the
Holder may request.




6.4 Transactions with Affiliates.



Except while the Company is a Qualified Public Company, for so long as this Warrant and any
Warrant Shares remain outstanding (except as set forth in Section 6.5 below), the Company shall
not, and shall not permit or cause any of its Subsidiaries to, enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of property, issuance of
Common Stock or Common Stock Equivalents, or the rendering of any service) with or involving any
officer, director, stockholder or Affiliate of the Company or any of its Subsidiaries, except in
the ordinary course of its business and upon fair and reasonable terms that are no less favorable
to it than it would be obtained in a comparable arm’s length transaction with a Person other than
an Affiliate of the Company or any of its Subsidiaries; provided, however, that
nothing contained in this Section 6.4 shall prohibit:




(1) transactions, if any, described on Schedule 7.6 of the Investment Agreement as in
effect on the Original Issue Date (and any renewals or replacements thereof on terms not in
the aggregate materially more disadvantageous to the Company and its Subsidiaries) or
otherwise expressly permitted under this Warrant;




(2) issuance of Reserved Compensation Securities; and




(3) the payment by the Borrower of reasonable compensation and benefits to its
directors, officers and employees (provided that directors’ fees and expenses paid
in cash shall not exceed, in any event, $25,000 in aggregate during any fiscal year).




6.5 Lapse of Certain Rights.



Notwithstanding anything to the contrary contained herein, the provisions of Section 6.3
(Information Rights; Notice; Inspection) and Section 6.4 (Transactions with Affiliates) shall cease
to be applicable to (i) any and all Warrant Shares that are transferred by the Investor or any
subsequent holder thereof to any other Person in a sale on the open public market and (ii) all
Warrants and Warrant Shares upon the occurrence of the Private Investor Group (as defined below)
holding less than 10% of the Warrant Shares (assuming complete exercise of the Warrant) into which
the original Warrant is exercisable on the Original Issue Date, subject to equitable adjustment for
stock splits, stock dividends and similar events. “Private Investor Group” shall mean the Investor
and any and all Persons to which the Warrant and/or Warrant Shares are transferred from time to
time in transactions other than sales on the open public market, provided that after a
Warrant Share is transferred in a sale on the open public market by the Investor or any subsequent
holder thereof, such Warrant Share shall never again be deemed held by the Private Investor Group
even if subsequently reacquired by the Investor or any other Person that is or was included within
the Private Investor Group.


 


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ARTICLE VII




PUT OPTION





7.1 Put Option.



From and after the occurrence of a Triggering Event (except while the Company is a Qualified
Public Company), at the election of the Majority Holders, the Holders shall have the right to sell
to the Company, and the Company shall purchase from the Holder, all (but not less than all) of this
Warrant and any Warrant Shares at an amount equal to the product of the Purchase Price, determined
as of the date of the Put Notice (as defined below), multiplied by the number of Warrant Shares for
which this Warrant may be exercised (such right, a “Put Right”). The Company shall be
required to purchase the Warrant and Warrant Shares upon the delivery by the Holder of written
notice (each such notice, a “Put Notice”) evidencing the Holder’s desire to exercise the
foregoing put right and setting forth the Warrant and Warrant Shares subject to the Put Notice, and
the Company shall deliver to such Holder payment for the Warrant and Warrant Shares being sold.
The Company shall give a copy of each such Put Notice to all other Holders of the Warrants and
Warrant Shares and shall give notice to each such other Holder that such other Holder has the right
to exercise its put right by giving written notice of exercise to the Company within 30 days of its
receipt of such Put Notice. In the event that any such other Holder does not elect to exercise its
Put Right, such other Holder shall not have any subsequent right to exercise the Put Right..




7.2 Payment Upon Exercise of Put Option.



(a) Payment shall be made at a closing in cash or in immediately available funds. The closing
(other than a delayed closing as set forth in Section 7.2(c)) shall take place on a date mutually
agreed upon by the Holder and the Company, not more than 30 days after the final determination of
Fair Market Value Per Share under such Section). Delayed closings, if any, shall take place on
such dates as specified in Section 7.2(c).



(b) At any closing, the Holder shall deliver the Warrant and Warrant Shares, properly assigned
or endorsed, to the Company. If the Warrant or any Warrant Shares shall be purchased only in part,
the Company shall then deliver to the Holder a new Warrant evidencing the right to purchase the
remaining Warrant Shares called for by such Warrant or stock certificate representing the remaining
Warrant Shares held by the Holder of this Warrant. Any such new Warrant or stock certificate shall
in all other respects be identical to the Warrant or stock certificate replaced; or, at the request
of the Holder, appropriate notation may be made on such Warrant or stock certificate and the same
returned to the Holder.



(c) If the Company is unable to pay for all of the Warrant or Warrant Shares that it is
required to purchase following a Put Notice (taken together with all other Warrants and Warrant
Shares subject to a similar put notice), the Company shall, not later than five Business Days after
its receipt of each such Put Notice, notify the Holder in writing of such fact, such notice to
include an explanation in reasonable detail of the basis for such inability to purchase and a
statement of the portion of the Warrants (expressed in terms of underlying Warrant Shares) and
Warrant Shares that it may pay for at such time. The Holder may elect at any time thereafter
to withdraw such exercise in part or in whole (provided, that such election to
withdraw in full shall be deemed to have preserved the Holder’s Put Right for exercise at a later
time).



 


17









 






In the event no such withdrawal is made, the Company shall pay for as much of the Warrant
and Warrant Shares subject to the Put Notice for which the Company is able to pay. Any limited
payment made in connection with an exercise by the Holder of the Put Right and in connection with
the contemporaneous exercise of similar rights in the other Warrants shall be made on a pro rata
basis among the Warrants and Warrant Shares subject to the Put Notice and similar notices. The
closing for any such limited purchase shall take place as set forth in Section 7.2(a). The
Company’s chief financial officer or chief executive officer shall certify to the Holder on a
quarterly basis the status of the Company’s inability to complete the purchase of any Warrants and
Warrant Shares with respect to which a Put Right has been exercised and the measures the Company
has theretofore taken or attempted to avoid or cure such violation, breach, default or event of
default.



(d) Until the Company has paid for all of this Warrant and Warrant Shares subject to a Put
Notice, the Company shall thereafter pay for such of the remaining unpurchased Warrant and Warrant
Shares as it is able to pay for from time to time. On the first date on which the Company is able
to pay for at least 10% of such remaining unpurchased Warrants and Warrant Shares, the Company
shall deliver written notice to the Holder of the Company’s ability to pay for such remaining
unpurchased portion of the Warrant and Warrant Shares, which notice shall specify the portion or
amount of remaining unpurchased Warrants and Warrant Shares for which the Company is then able to
pay and shall state a closing date for such purchase (which shall be no later than 30 days after
the date of such notice or, in the case of a determination of Fair Market Value Per Share that is
challenged pursuant to Section 8.1, within 30 days of the final determination of Fair Market Value
Per Share under such Section). The applicable Purchase Price shall be the Purchase Price
determined as of the date of the initial Put Notice, plus interest from such date to the date of
actual purchase, at a rate per annum equal to the floating rate which shall change, from time to
time, as published as the average prime rate charged by money center banks in the Wall Street
Journal, Eastern Edition, compounded on a quarterly basis.



(e) The Purchase Price for the sale of Warrants and Warrant Shares pursuant to this ARTICLE
VII shall be determined, as of any date of determination, as follows:




(1) The Company (with the approval of its board of directors), shall propose an
estimate of the Purchase Price in the Company’s response to the Put Notice.




(2) Unless within 20 days after the date of delivery of the Estimate to the Holder, the
Holder shall have notified the Company in writing (a “Notice of Disagreement”) that
the Holder disagrees with the estimate of the Purchase Price, such estimate shall constitute
the Purchase Price for the Warrant and Warrant Shares being sold.


 


18









 






(3) In the event the Holder timely delivers a Notice of Disagreement, the Holder and
the Company shall, during the 30-day period following the date of the Notice of
Disagreement, negotiate in good faith in an effort to agree on the Purchase Price. If at
the end of this 30-day period such negotiating parties shall have been unable to reach
agreement, then, within 45 days of the date of the Notice of Disagreement, both the
Holder and the Company shall engage an unaffiliated investment banking or other
appraisal firm with regional or national recognition for and experience in performing
valuations of ongoing businesses within the Company’s industry (each, an “Advocate
Appraiser”) and shall notify the other party in writing of the name and address of its
Advocate Appraiser. Each Advocate Appraiser shall prepare its own determination of the
Purchase Price as of the date of determination and shall communicate such determination to
each of such parties in writing, together with a report (the “Advocate Appraiser
Report”) describing in reasonable detail the procedures used and assumptions relied upon
in making such determination. The Advocate Appraisers shall deliver their Advocate
Appraiser Reports as soon as reasonably possible, but in any event within 60 days of the
date of the Notice of Disagreement. In the event either such party fails to appoint its
advocate and notify the other party in writing of the name and address of its Advocate
Appraiser within 45 days of the Notice of Disagreement, then the determination of the
Purchase Price provided in the other party’s Advocate Appraiser Report shall constitute the
Purchase Price and the party failing so to appoint its Advocate Appraiser (or provide such
notice) shall be deemed to have accepted such Purchase Price determination.




(4) Within 30 days following delivery of the Advocate Appraiser Reports, the Advocate
Appraisers shall jointly select a third appraiser (the “Neutral Appraiser”), notify
such parties in writing of the name and address of such Neutral Appraiser, and provide to
such Neutral Appraiser copies of the Advocate Appraiser Reports. The Neutral Appraiser
shall be a reputable investment banking firm or other valuation firm and shall have national
recognition for and experience in performing valuations of ongoing businesses. If the
Advocate Appraisers fail to select a Neutral Appraiser by such date, then either such party
may initiate an arbitration proceeding with a single arbitrator in accordance with the rules
of the American Arbitration Association, and the arbitrator in such proceeding shall appoint
the Neutral Appraiser. Within 30 days following the appointment of the Neutral Appraiser
shall prepare its determination of the Purchase Price as of the date of determination and
shall communicate such determination to each of the parties in writing, together with a
report describing in reasonable detail the procedures used and assumptions relied upon in
making such determination. The final Purchase Price shall be the arithmetic average of the
two valuations thus delivered that are closest to each other; provided,
however, that in the event one of the three (3) valuations is the arithmetic average
of the other two valuations, then the final Purchase Price shall be such arithmetic
valuation.




(5) The Holder and the Company shall each be responsible for the engagement of its
designated Advocate Appraiser, and for the payment of all fees, expenses, reimbursements and
indemnification of such Advocate Appraiser. The Holder and the Company jointly shall be
responsible for the engagement of the Neutral Appraiser by the Advocate Appraisers and agree
to authorize and use their reasonable best efforts to cause the engagement of any Neutral
Appraiser designated pursuant to this Agreement or any similar agreement. The foregoing
costs of the Neutral Appraiser shall be paid one-half by the Company and one-half by the
Holder.


 


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(6) The Company and the Holder shall promptly provide such financial and other
information about the Company and it subsidiaries as is reasonably requested by the
appraisers referenced above for the purposes of conducting their appraisals.



ARTICLE VIII




MISCELLANEOUS





8.1 Remedies.



The Holder, in addition to being entitled to exercise all rights granted by law, including
recovery of damages, shall be entitled to specific performance of its rights provided under this
Warrant. The Company agrees that monetary damages may not be adequate compensation for any loss
incurred by reason of a breach by the Company of the provisions of this Warrant and hereby agrees,
in an action for specific performance, to waive the defense that a remedy at law would be adequate.
No remedy conferred in this Warrant upon any such Holder is intended to be exclusive of any other
remedy available to such Holder, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at law or in equity or
by statute or otherwise. No course of dealing or any delay or failure to exercise any right
hereunder on the part of any such Holder shall operate as a waiver of such right or otherwise
prejudice the rights, powers or remedies of such Holder.




8.2 Limitation of Liability.



No provision of this Warrant shall be construed as conferring upon the Holder the right to
vote, consent, receive dividends or receive notice or any other rights of a stockholder of the
Company other than as herein expressly provided. No provision hereof and no enumeration herein of
the rights or privileges of the Holder shall give rise to (i) any liability of such Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, except upon proper
exercise of the Warrant by the Holder, or (ii) any other liability of the Holder, whether such
liability is asserted by the Company or by creditors of the Company.




8.3 Replacement of Warrants.



Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction,
upon delivery of a bond of indemnity (or, in the case of the original Holder hereof or any
financial institution to which this Warrant or any portion hereof may be transferred, an unsecured
indemnity agreement) in such form and amount as shall be reasonably satisfactory to the Company,
or, in the case of any such mutilation, upon surrender for cancellation of this Warrant, the
Company at its expense shall make and deliver a new Warrant of like tenor in lieu hereof.


 


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8.4 Notices.



All notices, demands or other communications to be given or delivered under or by reason of
the provisions of this Warrant shall be in writing and shall be deemed to have been given when
delivered personally or by facsimile transmission, overnight delivery service, or
certified or registered mail, return receipt requested and postage prepaid, to the recipient.
Such notices, demands and other communications shall be sent to the Holder and the Company, as
applicable, at its address indicated below or to such other address or to the attention of such
other Person as may be substituted by notice given as herein provided:




Holder:




190 S. LaSalle Street

Suite 2140

Chicago, IL 60603

Attention : Fidus Capital

Fax: (312) 284-5212




Company:




Pure Earth, Inc.

One Neshaminy Interplex

Suite 201

Trevose, PA 19053

Attn: Brent Kopenhaver

Fax: (215) 639-8756




8.5 Reliance Upon Copies.



Other than for purposes of exercising this Warrant for the issuance of shares of Common Stock
of the Company, the Holder and the Company may rely upon a copy of this document for the
enforcement of all rights granted hereunder.




8.6 Successors and Assigns.



Subject to the provisions of Section 3.1, this Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and the permitted
successors, assigns and transferees of the Holder. The provisions of this Warrant are intended to
be for the benefit of each Holder from time to time of this Warrant and, to the extent applicable,
all Holders of Warrant Shares issued upon the exercise hereof (including transferees), and shall be
enforceable by any such Holder.




8.7 Amendments, Waivers.



Neither this Warrant nor any term or provision hereof may be amended, modified, waived or
terminated except by a written instrument signed by the Company and the Holder.


 


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8.8 Governing Law.



This Warrant shall be governed by and construed in accordance with the internal laws and
judicial decisions of the State of New York, without giving effect to the conflict of laws
provisions thereof.




8.9 Headings; Cross References.



The headings of the various sections and subsections of this Warrant have been inserted for
convenience only and shall not in any way affect the meaning or construction of any of the
provisions hereof. Unless otherwise specified or unless the context otherwise requires, all
references herein to sections, articles, annexes, schedules and exhibits are references to
sections, articles, annexes, schedules and exhibits in and to this Warrant.




8.10 Severability.



To the extent any provision of this Warrant is prohibited by or invalid under the applicable
law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition
or invalidity and only in any such jurisdiction, without prohibiting or invalidating such provision
in any other jurisdiction or the remaining provisions of this Warrant in any jurisdiction.




8.11 Survival of Warrant.



Notwithstanding anything else to the contrary contained in this Warrant, the provisions hereof
applicable to Warrant Shares shall survive and be applicable to such Warrant Shares from and after
any exercise of the Warrant.




8.12 No Effect on Other Relationships.



Notwithstanding anything herein to the contrary, nothing contained in this Warrant shall
affect, limit or impair the rights and remedies of the Holder in its capacity as a investor in the
Company or any of its subsidiaries pursuant to any agreement under which the Company or any of its
subsidiaries has borrowed money or purchased capital stock of the Company. Without limiting the
generality of the foregoing, the Holder, in exercising its rights as an investor shall have no duty
to consider its status as a direct or indirect equity holder of the Company, the interests of the
Company, or any duty it may have to any other direct or indirect stockholder of the Company, except
as may be required under the applicable investment documents or applicable law.




8.13 Subordination; Payment Restrictions.



(a) Any payment to holders of the Warrants and Warrant Shares from the Company or any of its
Subsidiaries on account of obligations under this Warrant (the “Subordinated Obligations”)
is hereby expressly subordinated to the extent and in the manner set forth in this Section 8.13 to
the payment in full of the indebtedness (the “Indebtedness”) of the Company to Wells Fargo
Bank, National Association (“Wells Fargo”), under a Credit and Security Agreement dated as
of October 24, 2006, as amended, by and between the Company, Wells Fargo, as agent, and the lenders
thereunder from time to time and (such lenders collectively, the “Senior Lenders”) as the
same may hereafter be further amended, supplemented or restated from
time to time (the “Credit Agreement”).  The payment rights of each Investor shall
continue to be subordinated to the Indebtedness on the terms set forth in this Agreement even if
the Indebtedness is deemed unsecured, under-secured, subordinated, avoided or disallowed under the
United States Bankruptcy Code or other applicable law.


 


22









 





(b) Until all of the Indebtedness has been paid in full, no Investor shall, without the prior
written consent of the Senior Lenders holding a majority of the Indebtedness, receive or accept any
payment from the Company under or on account of the obligations under the Investment Documents, or
exercise any right of or permit any setoff with respect to the Subordinated Obligations, except
that the Investors may accept (i) scheduled quarterly dividends (but not prepayments) to be paid
under the Certificate of Designations, Preferences and Rights of Series B Preferred Stock of Pure
Earth, Inc. of even date herewith, except upon the occurrence and during the continuance of an
event of default under the Credit Agreement either immediately before or following any such payment
and (ii) any payment made out of funds held in any New Equity Account (as defined in the Credit
Agreement as in effect on the date hereof).



(c) If any Investor receives any payment that the Investor is not entitled to receive under
the provisions of this Agreement, the Investor will hold the amount so received in trust for the
Senior Lenders and will forthwith turn over such payment to the Senior Lenders in the form received
(except for the endorsement of the Investor where necessary) for application to the Indebtedness
(whether or not due), in such manner of application as the Senior Lenders may deem appropriate. If
an Investor exercises any right of setoff which the Investor is not permitted to exercise under the
provisions of this Agreement, the Investor will promptly pay over to the Senior Lenders, in
immediately available funds, an amount equal to the amount of the claims or obligations offset.



(d) Each Senior Lender shall be a third party beneficiary entitled to enforce the provisions
of this Section 8.13.



(e) Upon the Company’s entry into any other secured credit facility in replacement of or in
addition to the Indebtedness, whether with the Senior Lenders or one or more substitute lenders,
each Investor agrees to enter into documentation with the Company and such lenders providing the
lenders with substantially the same subordination and other rights as are held by the Senior
Lenders pursuant to this Section 8.13.


 


23









 





IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized
officers as of the date first above written.



	 	 	 	 	 
	 	PURE EARTH, INC.

 	 
	 	By:  	/s/  Mark Alsentzer
 	 
	 	 	Name:  	Mark Alsentzer 	 
	 	 	Title:  	President & CEO 	 
	 



 












 





EXHIBIT A


Form of Election to Purchase Shares of Common Stock




The undersigned hereby irrevocably elects to exercise the Warrant to purchase
 _____ 

shares
of Common Stock (the “Common Stock”) of Pure Earth, Inc. and hereby [makes payment
therefor by the surrender pursuant to Section 2.3(d) of the Warrant of a portion of the Warrant
other than that portion being exercised] [makes payment therefor by application pursuant to
Section 2.3(d) of the Warrant of $                     of                      [describe securities of the Company
being surrendered]]. The undersigned hereby requests that certificates for such shares be issued
and delivered as follows:



	 	 	 
	ISSUED TO:
	 	 
	 

	 	 
	(NAME)
	 	 
	 
	 	 
	 
	(ADDRESS, INCLUDING ZIP CODE)
	 
	 	 
	DELIVER TO:
	 	 
	 

	 	 
	(NAME)
	 	 
	 
	 	 
	 
	(ADDRESS, INCLUDING ZIP CODE)






If the number of shares of Common Stock purchased hereby is less than the number of shares of
Common Stock covered by the Warrant, the undersigned requests that a new Warrant representing the
number of shares of Common Stock not purchased be issued and delivered as follows:



	 	 	 
	ISSUED TO:
	 	 
	 

	 	 
	(NAME)
	 	 
	 
	 	 
	 
	(ADDRESS, INCLUDING ZIP CODE)
	 
	 	 
	DELIVER TO:
	 	 
	 

	 	 
	(NAME)
	 	 
	 
	 	 
	 
	(ADDRESS, INCLUDING ZIP CODE)






	 	 	 	 	 	 	 
	Dated:                      __, _____.	 	[NAME OF HOLDER1]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 
	 	 
Name:
	 	 
	 

	 	 	 	Title:	 	 






 






	 	 	 
	1	 	Name of Holder must conform in all respects to name of
holder as specified on the face of the Warrant.



 


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EXHIBIT B


Form of Assignment




FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned to purchase shares of Common Stock of Pure Earth,
Inc. represented by the Warrant, with respect to the number of shares of such Common Stock set
forth below:



	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Shares
	 	 	 	 	 






and does hereby irrevocably constitute and appoint
 _____ 

attorney-in-fact to make such
transfer on the books of Pure Earth, Inc. maintained for that purpose, with full power of
substitution in the premises.



	 	 	 	 	 	 	 
	Dated:                      __, _____.	 	[NAME OF HOLDER1]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 
	 	 
Name:
	 	 
	 

	 	 	 	Title:	 	 






 






	 	 	 
	1	 	Name of Holder must conform in all respects to name of
holder as specified on the face of the Warrant.



 


B-1









 









Appendix I




“Acquisition” means any transaction or series of related transactions, consummated on
or after the date hereof, by which any one or more of the Company and any Subsidiaries of the
Company acquire (i) any parcel or group of related parcels of real property, (ii) a fixed asset or
group of related fixed assets, (iii) the assets of any Person or any going business, division
thereof or line of business, or (iv) the Capital Stock, by direct purchase, combination, merger or
otherwise, of any Person.



“Affiliate” means, as to any Person, any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, such Person. For purposes of
this definition, a Person shall be deemed to be “in control of,” “controlled by” and “under common
control with” a Person if such Person possesses, directly or indirectly, power either (i) to vote
10% or more of the securities having ordinary voting power for the election of directors (or if not
a corporation, a similar governing body or Persons) of such Person or (ii) to direct or cause the
direction of the management and policies of such Person whether by contract or otherwise.
Notwithstanding the foregoing, for all purposes of this Warrant, under no circumstances shall any
Holder, or any Holder’s Affiliate, be deemed an Affiliate of the Company.




“Appraiser” has the meaning given to it in Section 8.1.



“Business Day” means any day other than a Saturday or Sunday, a legal holiday or a day
on which commercial banks in Chicago, Illinois or Philadelphia, Pennsylvania are authorized or
required by law to be closed.



“Capital Stock” means (i) with respect to any Person that is a corporation, any and
all shares, interests or equivalents in capital stock (whether voting or nonvoting, and whether
common or preferred) of such corporation, and (ii) with respect to any Person that is not a
corporation, any and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or options to purchase any
of the foregoing.



“Common Stock” means the capital stock of the Company, however designated, that is not
limited as to the amount of dividends, or that is not limited as to the amount of distributions
upon liquidation or dissolution of the Company.



“Common Stock Equivalents” means any evidences of indebtedness, shares of stock or
other securities (including without limitation the Warrants) that are convertible into or
exchangeable for, with or without payment of additional consideration in cash or property, shares
of Common Stock, and any options, warrants or other securities or rights to subscribe for, purchase
or otherwise acquire shares of Common Stock or any of the foregoing, in each case whether or not
immediately exercisable.




“Company” has the meaning given to such term in the introductory paragraph hereof.



“Company Parties” means the Company, the Company’s Subsidiaries from time to time, and
their respective successors.


 


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“Compensation Securities” means, as of the time of any determination, shares of Common
Stock or Common Stock Equivalents issued to employees, officers, directors, consultants or
contractors of the Company or its Subsidiaries, whether or not vested or subject to forfeiture.



“Control” means, with respect to any Person, the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the terms “Controlled”
and “Controlling” have correlative meanings.



“Controlled Investment Affiliate” means, with respect to any Person, any other Person
(including, without limitation, any fund or investment vehicle) that (i) directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under common Control with
the Person specified and (ii) is organized primarily for the purpose of making equity or debt
investments in one or more companies.




“Excess Amount” has the meaning given to such term in Section 2.3(d).



“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time.




“Event of Noncompliance” has the meaning given to it in the Investment Agreement.



“Exempt Issuance” means (i) any issuance of Common Stock for which an adjustment to
the Warrant Number has been made under Sections 4.1, 4.2 or 4.3, (ii) the issuance of any Common
Stock upon the exercise of Common Stock Equivalents (including without limitation the issuance of
Warrant Shares upon exercise of any Warrant) and (iii) the issuance of Reserved Compensation
Securities.




“Exercise Notice” has the meaning given to such term in Section 2.3(a).



“Exercise Price” means, with respect to any exercise of this Warrant, an amount equal
to the product of (i) the number of Warrant Shares being purchased upon such exercise multiplied by
(ii) the Exercise Price Per Share.



“Exercise Price Per Share” means the purchase price per share set forth in Section
2.2, as adjusted pursuant to the provisions hereof as of the time of such exercise or any other
date of determination.



“Existing Preferred Stock” means the Company’s Series A Preferred Stock issued for an
aggregate purchase price not to exceed $1,000,000 having the terms, rights and preferences in
effect under its certificate of incorporation as of the date hereof, as such may be amended,
changed, supplemented, restated or otherwise modified in accordance with the terms, rights and
preferences applicable to the Preferred Stock.



 


I-2









 




 “Fair Market Value Per Share” means, as of any date of determination:



(a) If the Company is not a Qualified Public Company, (i) the purchase price at which a
willing buyer would purchase, and a willing seller would sell, the entire Common Stock of the
Company, taken as a whole, with reference to, among other things, the following: (w) the prices at
which recent transactions involving companies that would be considered by investment bankers to be
comparable to the Company for valuation purposes have been consummated (such transactions to
include, but not be limited to, mergers, consolidations, leveraged buyouts, leveraged
recapitalizations and other similar transactions), (x) the trading price of the Common Stock and
the common equity shares of publicly traded companies (but only to the extent that such companies
would be considered by investment bankers to be comparable to the Company for valuation purposes),
(y) the historical and projected revenues and net income of the Company, and (z) any particular
values, economies, synergies and other factors that investment bankers would customarily take into
account in valuing businesses, divided by (ii) the total number of shares of Common Stock
outstanding on a fully diluted basis assuming the exercise, conversion or exchange of all Common
Stock Equivalents (but excluding Common Stock Equivalents that are not vested or subject to
forfeiture); or



(b) If the Company is a Qualified Public Company, the immediately preceding subsection (a)
shall not apply; rather, the Fair Market Value Per Share of the Common Stock shall be the Market
Price.



With respect to paragraph (a) of this definition, the Fair Market Value Per Share shall be
determined without regard to (x) any discount for the lack of marketability or liquidity on the
basis of minority interest, (y) any restrictions on transfer of the Common Stock under applicable
securities laws or otherwise, and (z) any agreement or document prohibiting or restricting the
payment of dividends or stock or option repurchases. If on the date of determination there is then
pending a sale of all or substantially all of the Common Stock or assets of the Company, or a
merger or similar transaction constituting a Sale of the Company, then notwithstanding the
foregoing, the Fair Market Value Per Share shall be the value per share of Common Stock to be
realized in such pending transaction.



“Fundamental Asset Transaction” means any sale, assignment, lease, conveyance,
exchange, transfer, sale-leaseback or other disposition of more than 50% of the assets, business or
properties of the Company and its Subsidiaries, on a consolidated basis, whether in one or a series
of related transactions, whether or not in the ordinary course of business and whether or not
directly or indirectly or through the sale or other disposition of equity securities of any of the
Subsidiaries of the Company.



“GAAP” means generally accepted accounting principles, as set forth in the statements,
opinions and pronouncements of the Accounting Principles Board, the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board, consistently applied and
maintained as in effect from time to time.



“Holder” means, with respect to any of the Warrants or Warrant Shares, the Person or
Persons in whose name any of such Warrants or Warrant Shares is registered on the books of the
Company maintained for such purpose.


 


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“Investment Agreement” means the Investment Agreement, dated as of the Original Issue
Date, between the Company and the Investor pursuant to which the Company issued the Preferred
Stock, as modified from time to time in accordance with the provisions thereof.




“Investor” has the meaning given to it in the introductory paragraph hereof.



“Key Person Event” means the failure of (i) Brent Kopenhaver to serve as Chief
Financial Officer of the Company with at least the duties and responsibilities in all material
respects as customarily associated with such position, (ii) Mark Alsentzer to serve as Chief
Executive Officer of the Company with at least the duties and responsibilities in all material
respects as customarily associated with such position, (iii) each of Brent Kopenhaver and Mark
Alsentzer to serve as a director on the board of directors of each of the Company and its
Subsidiaries, (iv) Brent Kopenhaver ceasing to beneficially own at least 134,000 shares of Common
Stock (subject to equitable adjustment for stock splits, stock dividends and similar events) or (v)
Mark Alsentzer ceasing to beneficially own 1,919,000 shares of Common Stock (subject to equitable
adjustment for stock splits, stock dividends and similar events).



“Liquidation Event” means the occurrence of a Sale of the Company, a Key Person Event
or a Qualified Public Offering.



“Majority Holders” means the Holders of more than 50% of the Warrant Shares
(determined as if all outstanding Warrants have been exercised). References herein to the Majority
Holders shall mean the Majority Holders at the time of the action or event with respect to which
such reference is made.



“Market Price” means, on any date of determination, the average of the closing price
of a share of Common Stock on the principal exchange or market on which such share is then trading,
if any, or as reported on any composite index that includes such principal exchange, over the 20
trading days prior to the date of such determination on which trading of the Common Stock occurred.




“Original Issue Date” means March 4, 2008.



“Original Warrant” means the Warrant to Purchase Common Stock, Number W-1, issued by
the Company to the Investor, exercisable in the aggregate for the number of shares of the Common
Stock of the Company indicated on the first page of the Original Warrant.



“Outstanding Common Stock” means, at any date of determination, the sum of all shares
of Common Stock issued and outstanding at such date plus all Warrant Shares issuable upon
exercise of the Warrants outstanding at such date.



“Person” means any corporation, association, joint venture, partnership, limited
liability company, organization, business, individual, trust, government or agency or political
subdivision thereof or any other legal entity.



“Preferred Stock” means the Company’s Series B Preferred Stock issued pursuant to that
certain Investment Agreement dated as of the Original Issue Date between the Company and Fidus
Mezzanine Capital, L.P.


 


I-4









 





“Purchase Price” means, as of any date of determination, an amount per Warrant Share
equal to the excess of the Fair Market Value Per Share over the Exercise Price Per Share.



“Put Notice” has the meaning given to it in Section 7.1.



“Put Right” has the meaning given to it in Section 7.1.



“Qualified Public Company” means the Company after the consummation of a Qualified
Public Offering and so long as it (i) is listed on the NASDAQ or New York Stock Exchange or
comparable national securities market, (ii) is covered by a market maker or market specialist and
(iii) is registered as a reporting company under the Securities Exchange Act of 1934, as amended,
and (iv) current with all public reporting required under such Act.



“Qualified Public Offering” means the consummation of one or more public offerings of
Common Stock or Common Stock Equivalents of the Company pursuant to an effective registration
statement (other than on Form S-4 or Form S-8) under the Securities Act, (i) in each case
underwritten by a regionally or nationally recognized investment bank pursuant to which the Company
receives gross cash proceeds (before reduction for underwriting commissions, registration fees and
expense and other costs and expenses relating to the offering) of at least $20,000,000 and (ii)
that alone or in the aggregate for all such offerings described in the immediately preceding clause
(i) have gross cash proceeds (before reduction for underwriting commissions, registration fees and
expenses and other costs and expenses relating to such offerings) of at least $50,000,000.



“Reporting Company” means the Company while it is (i) registered as a reporting
company under the Securities Exchange Act of 1934, as amended, and (ii) current with all public
reporting required under such Act.



“Reserved Compensation Securities” means Compensation Securities representing up to
10% of the issued and outstanding Common Stock (i.e., not calculated on a fully diluted basis
assuming the exercise, conversion or exchange of all Common Stock Equivalents) immediately prior to
giving effect to this Warrant; provided, however, that no Compensation Securities
issued or granted to Brent Kopenhaver and Mark Alsentzer (or their affiliates or related parties)
shall constitute Reserved Compensation Securities.



“Sale of the Company” means (i) any Person or group of Persons acting in concert as a
partnership or other group becoming, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, the beneficial owner of outstanding Capital
Stock of the Company having more than 50% of the Total Voting Power of the Company or (ii) the
consummation of a Fundamental Asset Transaction.




“Securities Act” means the Securities Act of 1933, as amended.



“Securityholders Agreement” means that certain Securityholders Agreement, dated as of
the Original Issue Date, between the Company and certain of its securityholders, as may be amended,
modified, supplemented or restated from time to time.


 


I-5









 





“Subsequent Issuance” means any sale or issuance by the Company of Common Stock or
Common Stock Equivalents after the Original Issue Date.



“Subsidiary” means, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by
such Person.



“Total Voting Power” means, with respect to any Person, the total number of votes
which may be cast in the election of directors of such Person at any meeting of stockholders of
such Person if all securities entitled to vote in the election of directors of such Person (on a
fully diluted basis, assuming the exercise, conversion or exchange of all rights, warrants, options
and securities exercisable for, exchangeable for or convertible into, such voting securities) were
present and voted at such meeting (other than votes that may be cast only upon the happening of a
contingency).



“Triggering Event” means the (i) the redemption or purchase by the Company or any of
its Affiliates of all of the outstanding Preferred Stock, (ii) the occurrence of an event that
requires the Company to redeem all of the outstanding Preferred Stock or (iii) an Event of
Noncompliance.




“Warrant” means this Warrant to Purchase Common Stock of the Company.




“Warrant Number” has the meaning set forth in the preamble.



“Warrant Shares” means all shares of Common Stock issued or issuable upon exercise of
the Warrants and any other or additional shares or securities that may hereafter be issued or
issuable upon exercise of the Warrants. For purposes of the Warrants, Warrant Shares shall be
deemed issued and outstanding on any date of determination of ownership of Warrant Shares
hereunder.



“Warrants” means the Original Warrant and all warrants issued upon transfer, division
or combination of, or in substitution for, such Original Warrant or any other such warrant.




 


I-6