exv4w02



 




Exhibit
4.02 


Execution Copy








 

 








ORBIMAGE HOLDINGS INC.




and




THE BANK OF NEW YORK, as Warrant Agent




 






WARRANT AGREEMENT



Dated as of January 10, 2006



 

 






 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1.

	 	APPOINTMENT OF WARRANT AGENT
	 	 	1	 
	 
	 	 	 	 	 	 
	SECTION 2.

	 	WARRANT CERTIFICATES
	 	 	1	 
	 
	 	 	 	 	 	 
	SECTION 3.

	 	EXECUTION OF WARRANT CERTIFICATES
	 	 	1	 
	 
	 	 	 	 	 	 
	SECTION 4.

	 	COUNTERSIGNATURE
	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 5.

	 	REGISTRATION OF TRANSFERS AND EXCHANGES
	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 6.

	 	TERMS OF WARRANTS; EXERCISE
	 	 	4	 
	 
	 	 	 	 	 	 
	SECTION 7.

	 	COVENANTS
	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 8.

	 	MUTILATED OR MISSING WARRANT CERTIFICATES
	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 9.

	 	RESERVATION OF WARRANT SHARES
	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 10.

	 	OBTAINING STOCK EXCHANGE LISTINGS
	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 11.

	 	ADJUSTMENT OF NUMBER OF WARRANT SHARES AND EXERCISE PRICE
	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 12.

	 	FRACTIONAL SHARES
	 	 	15	 
	 
	 	 	 	 	 	 
	SECTION 13.

	 	SPECIAL ARRANGEMENTS OF COMPANY
	 	 	15	 
	 
	 	 	 	 	 	 
	SECTION 14.

	 	REGISTRATION RIGHTS
	 	 	16	 
	 
	 	 	 	 	 	 
	SECTION 15.

	 	EXPENSES
	 	 	21	 
	 
	 	 	 	 	 	 
	SECTION 16.

	 	NOTICES TO WARRANT HOLDERS
	 	 	22	 
	 
	 	 	 	 	 	 
	SECTION 17.

	 	PUBLIC OFFERING; SALE OF COMPANY
	 	 	22	 
	 
	 	 	 	 	 	 
	SECTION 18.

	 	REPRESENTATIONS OF THE COMPANY
	 	 	22	 
	 
	 	 	 	 	 	 
	SECTION 19.

	 	MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT
	 	 	23	 
	 
	 	 	 	 	 	 
	SECTION 20.

	 	WARRANT AGENT
	 	 	23	 
	 
	 	 	 	 	 	 
	SECTION 21.

	 	CHANGE OF WARRANT AGENT
	 	 	27	 
	 
	 	 	 	 	 	 
	SECTION 22.

	 	NOTICES TO COMPANY AND WARRANT AGENT
	 	 	27	 
	 
	 	 	 	 	 	 
	SECTION 23.

	 	SUPPLEMENTS AND AMENDMENTS
	 	 	28	 
	 
	 	 	 	 	 	 
	SECTION 24.

	 	SUCCESSORS
	 	 	28	 
	 
	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 25.

	 	TERMINATION
	 	 	28	 
	 
	 	 	 	 	 	 
	SECTION 26.

	 	GOVERNING LAW
	 	 	29	 
	 
	 	 	 	 	 	 
	SECTION 27.

	 	BENEFITS OF THIS AGREEMENT
	 	 	29	 
	 
	 	 	 	 	 	 
	SECTION 28.

	 	COUNTERPARTS
	 	 	29	 
	 
	 	 	 	 	 	 
	SECTION 29.

	 	FORCE MAJEURE
	 	 	29	 
	 
	 	 	 	 	 	 
	SECTION 30.

	 	AVAILABILITY OF EQUITABLE REMEDIES
	 	 	29	 






ii









 





     WARRANT AGREEMENT dated as of January 10, 2006 between ORBIMAGE Holdings Inc., a
Delaware corporation (the “COMPANY”), and The Bank of New York, a New York banking corporation, as
Warrant Agent (the “WARRANT AGENT”).



     WHEREAS, the Company proposes to issue 500,000 Common Stock Purchase Warrants, as hereinafter
described, which in the aggregate initially entitle the holders thereof to purchase up to 500,000
shares of Common Stock of the Company (the “COMMON STOCK”) which constitute approximately 2.31% of
the Common Stock outstanding, after giving effect to the exercise of such Warrants and all options,
warrants and rights to acquire Common Stock and the conversion of all convertible securities for
the maximum number of shares of Common Stock obtainable whether or not such options, warrants or
rights are then exercisable or vested and whether or not such convertible securities are then
convertible (a “FULLY DILUTED BASIS”), on the date hereof, plus up to an additional 25,000 Common
Stock Purchase Warrants under certain circumstances described herein (all such Common Stock
Purchase Warrants being referred to herein as the “WARRANTS”, and the Common Stock issuable on
exercise of the Warrants being referred to herein as the “WARRANT SHARES”).



     WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange and
exercise of Warrants and other matters as provided herein;



     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto agree as follows:



     SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant Agent to act
as agent for the Company in accordance with the instructions set forth hereinafter in this
Agreement, and the Warrant Agent hereby accepts such appointment. The Company may from time to time
appoint such Co-Warrant Agents as is may deem necessary or desirable upon ten (10) days’ prior
written notice to the Warrant Agent. The Warrant Agent shall have no duty to supervise, and shall
in no event be liable for, the acts or omissions of any such Co-Warrant Agent.



     SECTION 2. WARRANT CERTIFICATES. The certificates evidencing the Warrants (the “WARRANT
CERTIFICATES”) to be delivered pursuant to this Agreement shall be in registered form only and
shall be substantially in the form set forth in Exhibit A attached hereto.



     SECTION 3. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates shall be signed on behalf
of the Company by its Chairman of the Board, its President, its Chief Financial Officer or a Vice
President and by its Secretary or an Assistant Secretary. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any future Chairman of
the Board, President, Vice President, Secretary or Assistant Secretary and may be imprinted or
otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use
the facsimile signature of any person who shall have been Chairman of the Board, President, Vice
President, Secretary or Assistant Secretary, notwithstanding the fact that at the time the Warrant Certificates shall
be countersigned and delivered or disposed of he or she shall have ceased to hold such office.



 









 





     In case any officer of the Company who shall have signed any of the Warrant Certificates shall
cease to be such officer before the Warrant Certificates so signed shall have been countersigned by
the Warrant Agent, or disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of
the Company to sign such Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.



     Warrant Certificates shall be dated the date of countersignature by the Warrant Agent.



     SECTION 4. COUNTERSIGNATURE. The Warrant Agent, on behalf of the Company, shall hold the
Warrant Certificates unnumbered and unregistered.



     Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be
valid for any purpose unless so countersigned. The Warrant Agent shall, upon written instructions
of the Chairman of the Board, the President, a Vice President, the Treasurer or the Chief Financial
Officer of the Company, initially countersign, issue and deliver Warrants collectively for all
Warrants outstanding entitling the holders thereof to purchase not more than the number of Warrant
Shares referred to above in the first recital hereof and shall countersign and deliver Warrants as
otherwise provided in this Agreement.



     The Company and the Warrant Agent may deem and treat the registered holder(s) of the Warrant
Certificates as the absolute owner(s) thereof (notwithstanding any notation of ownership or other
writing thereon made by anyone), for all purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.



     SECTION 5. REGISTRATION OF TRANSFERS AND EXCHANGES. The Warrant Agent shall from time to
time, subject to the limitations of this Section 5, register the transfer of any
outstanding Warrant Certificates upon the records to be maintained by it for that purpose, upon
surrender thereof duly endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent, duly executed by
the registered holder or holders thereof or by the duly appointed legal representative thereof or
by a duly authorized attorney. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee(s) and the surrendered Warrant Certificate shall be cancelled by
the Warrant Agent. Cancelled Warrant Certificates shall thereafter be disposed of by the Warrant
Agent in its customary manner.



     The Warrant holders agree that they shall give five days prior written notice of transfer to
the Company and that prior to any proposed transfer of the Warrants or of the Warrant Shares, if
such transfer is not made pursuant to an effective Registration Statement under the Securities Act
of 1933, as amended (the “ACT”) prior to (X) the date which is two years (or such shorter period
as may be prescribed by Rule 144(k) (or any successor provision thereto)) after the later of
the date of original issuance of the Warrants and the last date on which the Company or any
affiliate of the Company was the owner of such Warrants, or any predecessor thereto, and (Y) such
later date, if any, as may be required by any subsequent change in applicable law, the Warrant
holders shall deliver to the Company:



2









 





     (1) (a) an opinion of counsel reasonably acceptable to the Warrant Agent and the Company that
the Warrant or Warrant Shares may be transferred without registration under the Act or (b) in the
case of a transfer to a “qualified institutional buyer” (as defined in Rule 144A under the Act) in
a transaction complying with Rule 144A, to an institutional “accredited investor” (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Act) or outside the United States in compliance with Rule
904 under the Act, such certificates or letters, containing such representations and agreements, as
are reasonably requested by the Company and/or the Warrant Agent;



     (2) customary representations and warranties, and covenants, regarding the transferee and the
investment that are reasonably satisfactory to the Company signed by the proposed transferee;



     (3) an agreement by such transferee to the impression of the restrictive investment legend set
forth below on the Warrant or the Warrant Shares to the extent required; and



     (4) an agreement by such transferee to be bound by the provisions of this Agreement.



     The Warrant holders agree that each certificate representing Warrant Shares shall bear a
legend in substantially the following form (and any legend required by (i) any applicable state
securities laws and (ii) any securities exchange upon which such Warrant Shares may, at the time of
such exercise, be listed) on the face thereof unless at the time of exercise such Warrant Shares
shall be registered under the Act:




“The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be sold or transferred unless pursuant to a registration statement
or in a transaction exempt from or not subject to registration under
the Securities Act.”



     Any certificate issued at any time in exchange or substitution for any certificate bearing
such legend (except a new certificate issued upon completion of a public distribution under a
registration statement of the securities represented thereby) shall also bear such legend unless,
in the opinion of counsel for the holder of such certificate (which counsel shall be reasonably
satisfactory to the Company) the securities represented thereby are not, at such time, required by
law to bear such legend.



     Subject to the terms of this Agreement, Warrant Certificates may be exchanged at the option of
the holder(s) thereof, when surrendered to the Warrant Agent at its principal stock transfer
office, which is currently located at the address listed in Section 22 hereof, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing in the aggregate a
like number of Warrants. Any holder desiring to exchange a Warrant Certificate shall deliver a
written request to the Warrant Agent, and shall surrender, duly endorsed or accompanied (if so
required by the Warrant Agent) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, the Warrant Certificate or Certificates to be so exchanged.
Warrant Certificates surrendered for exchange shall be cancelled by the Warrant Agent. Such



3









 




cancelled Warrant Certificates shall then be disposed of by such Warrant Agent in its customary
manner.




     The Warrant Agent is hereby authorized to countersign, in accordance with the provisions of
this Section 5 and of Section 4 hereof, the new Warrant Certificates required
pursuant to the provisions of this Section 5.



     SECTION 6. TERMS OF WARRANTS; EXERCISE. The initial exercise price per share at which Warrant
Shares shall be purchasable upon the exercise of Warrants (the “EXERCISE PRICE”) shall be $15.00
per share. The Warrants (excluding Default Warrants that may be issued pursuant to Section
14(a)(C)) shall be initially exercisable in the aggregate for that number of shares of Common
Stock equal to approximately 2.31% of the Common Stock outstanding on the date hereof on a Fully
Diluted Basis.



     Subject to the terms of this Agreement, each Warrant holder shall have the right, which may be
exercised in whole or in part at any time or from time to time until 5:00 p.m., New York City time,
on the Expiration Date (as defined below) to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to receive on exercise of
such Warrants and payment of the Exercise Price then in effect for such Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., New York City time, on the Expiration Date shall become
void and all rights thereunder and all rights in respect thereof under this Agreement shall cease
as of such time. No adjustments as to dividends will be made upon exercise of the Warrants. For
purposes hereof, the “EXPIRATION DATE” shall mean the later of (a) January 10, 2009 and (b) the six
month anniversary of the earlier of (x) the payment in full of all Senior Credit Obligations (as
defined) under that certain Credit Agreement, dated as of January 10, 2006, between the Company,
ORBIMAGE SI Opco Inc., a Delaware corporation, ORBIMAGE SI Holdco Inc., a Delaware corporation, the
lenders from time to time parties thereto, the guarantors from time to time parties thereto, Credit
Suisse First Boston, LLC, as Lead Arranger and Bookrunner, Credit Suisse, Cayman Islands Branch, as
Administrative Agent, and The Bank of New York, as Collateral Agent, and (y) the redemption of all
outstanding shares of Series A Preferred Stock, par value $0.01 per share, of the Company.



     A Warrant may be exercised upon surrender to the Company at the principal stock transfer
office of the Warrant Agent, which is currently located at the address listed in Section 22
hereof, of the certificate or certificates evidencing the Warrants to be exercised with the form of
election to purchase on the reverse thereof duly filled in and signed and such other documentation
as the Warrant Agent may reasonably request, and upon payment to the Warrant Agent for the account
of the Company of the Exercise Price which is set forth in the form of Warrant Certificate attached
hereto as Exhibit A as adjusted as herein provided, for the number of Warrant Shares in
respect of which such Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made (i) in cash or by certified or official bank check payable
to the order of the Company in New York Clearing House Funds, or the equivalent thereof or
(ii) in the manner provided in this Section 6.



     In lieu of payment of the Exercise Price pursuant to the preceding paragraph, the Warrant
holder shall have the right to require the Company to convert the Warrants, in whole or in part and
at any time or times (the “EXCHANGE RIGHT”), into Warrant Shares by surrendering to



4









 




the Company at
the principal stock transfer office of the Warrant Agent of the certificate or certificates
evidencing the number of Warrants to be exchanged, together with the form of notice of exchange on
the reverse thereof duly filled in and signed and such other documentation as the Warrant Agent may
reasonably request. The number of Warrant Shares which shall be issuable upon such exchange shall
be equal to the quotient obtained by dividing (x) the value of the number of Warrants being
exchanged at the time the Warrants are exchanged (determined by subtracting the aggregate Exercise
Price for all such Warrants immediately prior to the exchange of the Warrants from the aggregate
Current Market Price of that number of Warrant Shares purchasable upon exercise of such Warrants
immediately prior to the exchange of the Warrants (taking into account all applicable adjustments
pursuant to Section 11) by (y) the Current Market Price of one share of Common Stock immediately
prior to the exchange of the Warrants.




     Subject to the provisions of Section 7 hereof, upon such surrender of Warrants and
payment of the Exercise Price, if applicable, the Company shall issue and cause to be delivered
with all reasonable dispatch to and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable or other securities or
property, including cash as provided in Section 12 hereof, to which such holder is entitled
hereunder upon the exercise of such Warrants. Such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the surrender of such Warrants and
payment of the Exercise Price.



     The Warrants shall be exercisable, at the election of the holders thereof, either in full or
from time to time in part and, in the event that a certificate evidencing Warrants is exercised in
respect of fewer than all of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new certificate evidencing the remaining Warrant or Warrants
will be issued, and the Warrant Agent is hereby irrevocably authorized to countersign and to
deliver the required new Warrant Certificate or Certificates pursuant to the provisions of this
Section 6 and of Section 4 hereof, and the Company, whenever required by the
Warrant Agent, shall supply the Warrant Agent with Warrant Certificates duly executed on behalf of
the Company for such purpose. The Warrant Agent may assume that any Warrant presented for exercise
is permitted to be so exercised under applicable law and shall have no liability for acting in
reliance on such assumption.



     All Warrant Certificates surrendered upon exercise of Warrants shall be canceled by the
Warrant Agent. Such canceled Warrant Certificates shall then be disposed of by the Warrant Agent in
its customary manner. The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all monies received by the Warrant Agent for
the purchase of the Warrant Shares through the exercise of such Warrants.



     The Warrant Agent shall keep copies of this Agreement and any notices given or received
hereunder available for inspection by the holders with reasonable prior written notice during
normal business hours at its office set forth in Section 22 hereof or otherwise notified to
the Company and the holders in writing. The Company shall supply the Warrant Agent from time to
time with such numbers of copies of this Agreement as the Warrant Agent may request.



5









 





     SECTION 7. COVENANTS.



          (a) The Company covenants and agrees that it shall pay when due and payable any and all
federal and state documentary or stamp taxes (other than federal or state income taxes or similar
laws) or other costs which may be payable in respect of the issue of the Warrants or any Common
Stock or certificates therefor issuable upon the exercise of the Warrants (provided, however, the
Company’s obligations to any holder in this regard will in all events be conditioned upon such
holder cooperating with the Company in any reasonable arrangement designed to minimize or eliminate
any such taxes), except that, if Warrant Shares or new Warrants shall be registered in a name or
names other than the name of any holder, funds sufficient to pay all transfer taxes payable as a
result of such transfer shall be paid by such holder at the time of delivery of the election to
purchase.




          (b) The Company covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the Securities and
Exchange Commission thereunder in a timely manner in accordance with the requirements of the
Securities Act and the Exchange Act and, if at any time the Company is not required to file such
reports, it will, upon the request of any holder or beneficial owner of Warrants, make available
such information necessary to permit sales of the Warrants pursuant to Rule 144A under the
Securities Act.




     SECTION 8. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of the Warrant Certificates
shall be mutilated, lost, stolen or destroyed, the Company shall issue and the Warrant Agent shall
countersign, in exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed,
a new Warrant Certificate of like tenor and representing an equivalent number of Warrants, but only
upon receipt of evidence satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity, also satisfactory to the Company and the
Warrant Agent. Except as otherwise provided herein, in the case of the loss, theft, or destruction
of a Warrant Certificate, Company shall pay all expenses, taxes and other charges payable in
connection with any replacement of such Warrant Certificate.



6









 





     SECTION 9. RESERVATION OF WARRANT SHARES. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock (or out of shares of Common Stock held in
its treasury) solely for the purpose of issuance upon the exercise of the Warrants, the maximum
number of Warrant Shares issuable upon the exercise of the Warrants. The Warrant Agent shall have
no duty to verify availability of such shares set aside by the Company. The Company or, if appointed, the
transfer agent for the Common Stock (the “TRANSFER AGENT”) and every subsequent transfer agent for
any shares of the Company’s Common Stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to reserve such number
of authorized shares as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer agent for any shares
of the Company’s Common Stock issuable upon the exercise of the rights of purchase represented by
the Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent the stock certificates required to honor outstanding Warrants upon
exercise thereof in accordance with the terms of this Agreement. The Company will supply such
Transfer Agent with duly executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 12 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto
transmitted to each holder pursuant to Section 11 hereof.



     The Company covenants and agrees that all shares of Common Stock that may be issued upon the
exercise of the rights represented by the Warrants shall, upon issuance, be validly issued, fully
paid and nonassessable, and free from all taxes, liens, preemptive rights and charges with respect
to the issue thereof. The Company shall take all such actions as may be necessary to ensure that
all such Warrant Shares may be so issued without violation by the Company of any applicable law or
governmental regulation or any requirements of any domestic securities exchange or quotation system
upon which shares of Common Stock or other securities constituting Warrant Shares may be listed or
quoted (except for official notice of issuance which shall be immediately delivered by the Company
upon each such issuance).



     SECTION 10. OBTAINING STOCK EXCHANGE LISTINGS. The Company will use its best efforts to cause
the Warrant Shares, immediately upon their issuance upon the exercise of Warrants, to be listed on
any domestic national securities exchange or quotation system upon which shares of Common Stock or
other securities constituting Warrant Shares are listed or quoted at the time of such exercise.



     SECTION 11. ADJUSTMENT OF NUMBER OF WARRANT SHARES AND EXERCISE PRICE. Each Warrant will
initially be exercisable by the holder thereof into one share of Common Stock. The number of
Warrant Shares that may be purchased upon the exercise of each Warrant (the “EXERCISE RATE”) will
be subject to adjustment from time to time upon the occurrence of the events enumerated in this
Section 11. For purposes of this Section 11, the Common Stock shall mean shares
now or hereafter authorized of any class of common stock of the Company, however designated, that
has the right (subject to any prior rights of any class or series of preferred stock) to
participate in any distribution of the assets or earnings of the Company without limit as to per
share amount.



7









 





          (a) Adjustments for Change in Common Stock. If at any time after the date of this Agreement
the Company:




               (i) pays a dividend or makes a distribution on its Common Stock exclusively in shares of its
Common Stock;



               (ii) subdivides its outstanding shares of Common Stock into a greater number of shares;



               (iii) combines its outstanding shares of Common Stock into a smaller number of shares;



               (iv) issues by reclassification of its Common Stock any Capital Stock of the Company; or



               (v) pays a dividend or makes a distribution on its Common Stock, in each case, in shares of
its Capital Stock other than Common Stock;


then the Exercise Rate in effect immediately prior to such action shall be proportionately adjusted
upon occurrence of such event so that the holder of any Warrant thereafter exercised may receive
the aggregate number and kind of shares of Capital Stock of the Company which such holder would
have owned immediately following such action if such Warrant had been exercised immediately prior
to such action (or, in the case of a dividend paid in, or a distribution of, Common Stock,
immediately prior to the record date therefor). An adjustment made pursuant to this Section
11(a) shall become effective immediately after the distribution date, retroactive to the record
date therefor in the case of a dividend paid in, or distribution of, shares of Common Stock or
other shares of its Capital Stock, and shall become effective immediately after the effective date
in the case of a subdivision, combination or reclassification. If upon exercise of a Warrant after
an adjustment to the Exercise Rate pursuant to clauses (iv) or (v) of this Section 11(a),
the holder of such Warrant may receive shares of two or more classes or series of equity of the
Company, the exercise rights and the Exercise Rate of each class of equity shall thereafter be
subject to further adjustment on terms comparable to those applicable to the Common Stock in this
Section 11. The adjustment pursuant to this Section 11(a) shall be made
successively each time that any event listed in this Section 11(a) above shall occur.




8









 








          (b) Adjustment for Rights Issue. In case the Company shall issue to all holders of Common
Stock (other than a distribution covered by any of paragraphs (a) or (c) of this Section
11), or shall make a dividend or other distribution on the Common Stock consisting exclusively
of, (i) rights, options or warrants entitling the holders thereof to subscribe for or purchase
Common Stock (provided, however, that no adjustment shall be made under Section 11(b) or
(c) upon the exercise of such rights, options or warrants) or (ii) securities convertible
into or exchangeable for Common Stock (including, without limitation, any rights issuance
concurrent with the issuance of Warrants) (provided, however, that no adjustment shall be made
under Section 11(b) or (c) upon the conversion or exchange of such securities
(other than issuances specified in (i) or (ii) which are made as the result of anti-dilution
adjustments in such securities)) at a price per share (determined in the case of such rights,
options, warrants or convertible or exchangeable securities, by dividing (x) the total
consideration payable to the Company upon exercise, conversion or exchange of such rights, options,
warrants or convertible or exchangeable
securities, by (y) the total number of shares of such class or series of Common Stock covered
by such rights, options, warrants or convertible or exchangeable securities) less than the Current
Market Price on the date fixed for the determination of shareholders entitled to receive such
rights, options, or warrants or convertible or exchangeable securities, then the number of Warrant
Shares for which each Warrant may be exercised shall be determined (and the Exercise Rate shall be
appropriately adjusted) by multiplying the number of Warrant Shares issuable upon exercise of such
Warrant immediately prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such rights, options or warrants, or convertible or exchangeable
securities, by a fraction (not less than one), the numerator of which shall be the number of fully
diluted shares of Common Stock outstanding immediately after giving effect to such dividend or
other distribution (and assuming that such rights, options, warrants or convertible or exchangeable
securities had been fully exercised or converted or exchanged, as the case may be) and the
denominator of which shall be the number of fully diluted shares of Common Stock outstanding at the
close of business on the date fixed for the determination of shareholders entitled to receive such
rights, options, or warrants or convertible or exchangeable securities plus the number of shares of
Common Stock which the aggregate consideration (as determined in good faith by the Board) that
would be received by the Company for the additional shares of Common Stock to be issued, purchased
or subscribed for upon exercise of such rights, options or warrants or upon conversion or exchange
of such convertible or exchangeable securities would purchase at the Current Market Price on the
date fixed for the determination of shareholders entitled to receive such rights, options or
warrants, or convertible or exchangeable securities. For the purposes of this Section
11(b), the number of shares of Common Stock at any time outstanding shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of Common Stock.




9









 








          (c) Adjustments for Issuances. In case the Company shall issue (and no prior adjustments for
such issuance has been made under Section 11(a) or Section 11(b)) Common Stock or
rights, options or warrants entitling the holders thereof to subscribe for or purchase Common Stock
or securities convertible into or exchangeable for Common Stock for a consideration per share of
Common Stock (determined in the case of such rights, options, warrants or convertible or
exchangeable securities, by dividing (x) the total amount receivable by the Company in
consideration of the sale and issuance of such rights, options, warrants or convertible or
exchangeable securities, plus the total consideration payable to the Company upon exercise,
conversion or exchange thereof, by (y) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible or exchangeable securities) less than the Current Market
Price on the date on which the Company fixes the offering or exercise price or conversion or
exchange rate, as the case may be, of such shares of Common Stock or rights, options, warrants or
securities, then the number of Warrant Shares for which each Warrant may be exercised shall be
determined (and the Exercise Rate shall be appropriately adjusted) by multiplying the number of
Warrant Shares issuable upon exercise of such Warrant immediately prior to the close of business on
the date on which the Company fixes the offering or exercise price or conversion or exchange rate,
as the case may be, of such shares of Common Stock or rights, options, warrants or securities, by a
fraction (not less than one), the numerator of which shall be the number of fully diluted shares of
Common Stock outstanding immediately after giving effect to such issuance (and assuming, in the
case of rights, options, warrants or convertible or exchangeable securities that such rights,
options, warrants or convertible or exchangeable securities had been fully exercised or converted or exchanged, as
the case may be) and the denominator of which shall be the number of fully diluted shares of Common
Stock outstanding at the close of business on the date on which the Company fixes the offering
price of such additional shares plus a number of shares of Common Stock which the aggregate
consideration (as determined in good faith by the Board) that would be received by or payable to
the Company for the additional shares of Common Stock so issued or sold or to be issued, purchased
or subscribed for upon exercise of such rights, options or warrants or upon conversion or exchange
of such convertible or exchangeable securities would purchase at the Current Market Price on the
date on which the Company fixes the offering price of such additional shares; provided that, in the
event that the Company issues equity securities as part of a share with debt securities, the
allocation of the purchase price shall be determined in good faith by the Board. The increase in
the number of Warrant Shares provided for in the preceding sentence shall not apply upon (i) the
issuance of securities in transactions described in paragraphs (a), (b) or (h) of this Section
11 or pursuant to the exercise, exchange or conversion of any such securities issued under this
paragraph (c); (ii) the issuance of Common Stock or other equity securities of the Company in any
merger or other acquisition of a business approved by the Board; (iii) the issuance of Common Stock
in a bona fide underwritten public offering; (iv) the issuance of Common Stock upon the exercise of
the Warrants or the warrants issued prior to the date hereof (or warrants issued in exchange,
replacement or substitution therefor), including without limitation, the Stock Subscription
Warrants dated December 31, 2003 and the warrants issued under the Warrant Agreement dated as of

March 14, 2005; (v) (A) the issuance of Common Stock or options or rights to acquire Common Stock
or Common Stock equivalents to employees, officers and directors





10









 







of the Company or its subsidiaries
pursuant to any option or other equity plan or agreement and (B) the issuance of Common Stock or
Common Stock equivalents pursuant to the exercise of such options or rights to employees, officers
and directors of the Company or its subsidiaries pursuant to any option or other equity plan or
agreement; or (vi) Common Stock issued in a bona fide private placement to a non-affiliate through
a placement agent which is a member firm of the National Association of Securities, Inc. (except to
the extent that any discount from the current market price attributable to restrictions on
transferability of Common Stock, as reasonably determined in good faith by the Board and described
in a Board resolution which shall be filed with the Warrant Agent, shall exceed 20% of the then
current market price).




          (d) Superseding Adjustment. If, at any time (x) after any adjustment in the number of shares
issuable upon exercise of the Warrants shall have been made pursuant to Section 11(b) or
(c) on the basis of the issuance of rights, options or warrants entitling the holders
thereof to subscribe for or purchase Common Stock or securities convertible into or exchangeable
for Common Stock, or (y) after new adjustments in the number of shares issuable upon exercise of
the Warrants shall have been made pursuant to this Section 11(d),




                    (A) the right of conversion, exercise or exchange in such rights, options or warrants, or
convertible or exchangeable securities shall expire, and the right of conversion, exercise or
exchange in respect of any or all of such rights, options or warrants, or convertible or
exchangeable securities shall not have been exercised, and/or



                    (B) the consideration per share for which shares of Common Stock are issuable pursuant to the
terms of such rights, options or warrants, or convertible or exchangeable securities shall be
increased or decreased by virtue of provisions therein or by virtue of the conversion rate or
exchange rate of such security being changed contained for an automatic increase or decrease in
such consideration per share upon the arrival of a specified date or the happening of a specified
event or by agreement between the Company and the holders of such securities,


such previous adjustment shall be rescinded and annulled. Thereupon, a recomputation shall be made
of the effect of such rights, options or warrants, or convertible or exchangeable securities on the
basis of




                    (C) treating the number of shares of Common Stock, if any, theretofore actually issued or
issuable pursuant to the previous exercise of such right of conversion, exercise or exchange as
having been issued on the date or dates of such exercise and for the consideration actually
received or receivable therefor, and treating the rights, options or warrants, or convertible or
exchangeable securities which have expired and shall not have been exercised as if such securities
had not been issued, and



                    (D) with respect to securities as to which the consideration per share of Common Stock has
been changed, treating any such rights, options or warrants or convertible or exchangeable
securities which then remain outstanding as having been granted or issued immediately after the
time of such increase or decrease for the consideration per share for which shares of Common Stock
are issuable under such rights, options or warrants or convertible or exchangeable securities, and



11









 




in each such case, a new adjustment in the number of shares issuable upon exercise of the Warrants
shall be made, which new adjustment shall supersede the previous adjustment so rescinded and
annulled. No adjustment in the number of shares issuable upon exercise of the Warrants pursuant to
this Section 11(d) shall change the number of or otherwise affect any shares of Common
Stock issued prior to such adjustment upon exercise of the Warrants.




          (e) Current Market Price. For the purpose of any computation under Section 6, this
Section 11 or Section 12, the current market price (the “CURRENT MARKET PRICE”) per
share of Common Stock of the Company or any other security (the “APPLICABLE SHARE”) on any date
shall be deemed to be the average of the daily closing prices of such Applicable Share on the
principal national securities exchange on which the Applicable Shares are listed or admitted to
trading or, if the Applicable Shares are not so listed, the average of the daily last reported
sales prices of such Applicable Shares on the Nasdaq National Market System if the Applicable
Shares are quoted thereon, in any such case, for the twenty (20) consecutive trading days ending on
the day before the date in question (or, if the Common Stock has been listed or quoted, as
applicable, for less than twenty (20) consecutive trading days immediately preceding such date, for
such shorter period ending on the day before the date in question during which the Common Stock has
been so listed or quoted, as applicable). If, on any date on which computation of the Current
Market Price is to be made hereunder, the Applicable Shares are not so listed or quoted on a
national securities exchange or the Nasdaq National Market System, the Current Market Price (except as
otherwise provided herein) shall be determined by the Board on the basis of such quotations as it
in good faith considers appropriate; provided, that, in connection with a determination of
the Current Market Price pursuant to Section 6 or this Section 11, if the Current
Market Price is determined by the Board as set forth in this sentence, (x) the Company shall give
written notice of such determination to the Warrant holder exchanging Warrants pursuant to
Section 6 or to Warrant holders in connection with an adjustment pursuant to this
Section 11, as the case may be, and (y) if (i) in connection with a computation pursuant to
Section 6, the holder of Warrants exchanging Certificates shall promptly reasonably object
to such valuation (provided that no objection shall be made unless such holder reasonably believes
that such holder is entitled to receive at least 20% more shares in such exchange than the number
of shares that it would receive on the basis of such valuation), or (ii) in connection with an
adjustment pursuant to this Section 11, the holders of the majority of the Warrants shall
promptly reasonably object to such valuation (provided that no objection shall be made unless such
holders reasonably believe that the number of shares that should be issuable upon exercise of the
Warrants after giving effect to such adjustment is at least 20% greater than the number of shares
that would be issuable upon exercise of the Warrants after giving effect to such adjustment on the
basis of such valuation), then the Current Market Price shall be determined at the expense of the
Company by an appraiser chosen by the Company and reasonably satisfactory to the objecting holder
or by the holders of a majority of the warrants, as the case may be.




12









 








          (f) Voluntary Increases. The Company may, but shall not be obligated to, make such increases
in the number of Warrant Shares, in addition to those required by paragraphs (a) through (c) of
this Section 11, as it considers to be advisable in order that any event treated for United
States federal income tax purposes as a dividend of stock or stock rights shall not be taxable to
the recipients, or if that is not possible, to diminish any income taxes that are otherwise payable
because of such event; provided that no such adjustment shall be made without the consent of the
holders of the Warrants if such adjustment would result in the increase of income tax liabilities
of such holders.




          (g) When De Minimis Adjustment May Be Deferred. No adjustment in the number of Warrant Shares
shall be required unless such adjustment (plus any other adjustments not previously made by reason
of this paragraph (g)) would require an increase or decrease of at least 1.0% in the number of
Warrant Shares; provided, however, that any adjustments which by reason of this paragraph (g) are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment.




          (h) Merger, Consolidation, Sales. In the case of any proposed consolidation or merger of the
Company with another entity, or the proposed sale of all or substantially all of its assets to
another person or entity, or any proposed reorganization, recapitalization, reclassification of the
capital stock of the Company or other transaction, then, as a condition of such consolidation,
merger, sale, reorganization, recapitalization, reclassification or other transaction (not subject
to adjustment under paragraphs (a) through (g) of this Section 11), the Company shall give
30 days’ prior written notice thereof to Warrant holders and lawful and adequate provision shall be made
whereby holders shall thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein, in lieu of the shares of the Common Stock of Company immediately
theretofore purchasable hereunder, such shares of stock, securities or assets as may (by virtue of
such consolidation, merger, sale, reorganization, recapitalization, reclassification or other
transaction) be issued or payable with respect to or in exchange for the number of shares of such
Common Stock purchasable hereunder immediately before such consolidation, merger, sale,
reorganization, recapitalization, reclassification or other transaction. In any such case
appropriate provision shall be made with respect to the rights and interests of the holders to the
end that the provisions hereof shall thereafter be applicable as nearly as may be practicable, in
relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of
the Warrants. The Company shall not effect any such consolidation, merger, sale, reorganization,
recapitalization, reclassification or other transaction unless, prior to the consummation thereof,
the successor entity (if other than the Company) resulting from such consolidation, merger, sale,
reorganization, recapitalization, reclassification or other transaction (including a purchaser of
all or substantially all the Company’s assets) assumes by written instrument the obligation to
deliver to each holder of Warrants such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire upon exercise of Warrants.




          (i) Consideration Received. For purposes of any computation respecting consideration received
pursuant to this Section 11, the following shall apply:




               (i) in the case of the issuance of shares of Common Stock for cash, the consideration shall be
the amount of such cash, provided that in no case shall any deduction be



13









 




made for any commissions,
discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise
in connection therewith;




               (ii) in the case of the issuance of shares of Common Stock for a consideration in whole or in
part other than cash, the consideration other than cash shall be deemed to be the fair market value
thereof (as determined in good faith by the Board); and



               (iii) in the case of the issuance of securities convertible into or exchangeable for shares,
the aggregate consideration received therefor shall be deemed to be the consideration received by
the Company for the issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses (i) and (ii) of this paragraph
(i)).



          (j) When Issuance or Payment May Be Deferred. In any case in which this Section 11
shall require that an adjustment in the Exercise Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares and other equity of
the Company, if any, issuable upon such exercise over and above the Warrant Shares and other equity
of the Company, if any, issuable
upon such exercise on the basis of the Exercise Rate and (ii) paying to such holder any amount
in cash in lieu of a fractional share pursuant to Section 12; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument evidencing such
holder’s right to receive such additional Warrant Shares, other equity and cash upon the occurrence
of the event requiring such adjustment.




          (k) Adjustment in Exercise Price. Upon each adjustment in the number of Warrant Shares for
which a Warrant is exercisable pursuant to this Section 11, the Exercise Price for such
Warrant shall be adjusted to equal an amount per share of Common Stock equal to the Exercise Price
immediately before such adjustment multiplied by a fraction, of which the numerator is the number
of Warrant Shares for which a Warrant is exercisable immediately before giving effect to such
adjustment and the denominator of which is the number of Warrant Shares for which a Warrant is
exercisable immediately after giving effect to such adjustment (without giving effect to the
Exchange Right); provided, however, that in no event shall the Exercise Price be reduced below the
par value of the Common Stock for which the Warrant is exercisable.




          (l) Warrant Agent’s Disclaimer. The Warrant Agent has no duty to determine when an adjustment
under this Section 11 should be made, how it should be made or what it should be. The
Warrant Agent makes no representation as to the validity or value of any securities or assets
issued upon exercise of Warrants. The Warrant Agent shall not be responsible for the Company’s
failure to comply with this Section 11.




          (m) Form of Warrants. Irrespective of any adjustments in the number or kind of shares
issuable upon the exercise of the Warrants or the Exercise Price, Warrants theretofore or
thereafter issued may continue to express the same number and kind of shares and Exercise Price as
are stated in the Warrants initially issuable pursuant to this Agreement.




14









 








     SECTION 12. FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of any
Warrant but in any case where a holder would, except for the provisions of this Section 12,
be entitled under the terms hereof to receive a fractional share upon the complete exercise of such
Warrant, Company shall, upon the exercise of such Warrant for the largest number of whole shares
then called for, pay a sum in cash equal to the excess of the Current Market Price of such
fractional share over the Warrant Price for such fractional share.



     SECTION 13. SPECIAL ARRANGEMENTS OF COMPANY. Company covenants and agrees with each holder of
a Warrant that during the Term of such Warrant, unless otherwise approved by such holder:



          (a) CERTAIN ACTIONS The Company shall not amend its certificate or articles, as the case may be, of
incorporation to eliminate as an authorized class of capital stock that class denominated as
“Common Stock” on the date hereof. The Company shall not, and shall not permit its subsidiaries to,
directly or indirectly, by any action (including, without limitation, reincorporation in a
jurisdiction other than Delaware, amending its Certificate of Incorporation (as may be amended
and/or restated from time to time) or through any merger, sale, consolidation, reorganization,
reclassification, issuance or sale of securities or any other action) avoid or seek to avoid the
observance or performance of any terms of this Warrant Agreement or the Warrants or impair or
diminish the value of the Warrants, but shall at all times in good faith assist in the carrying out
of all such terms of this Warrant Agreement and the Warrants. Without limiting the generality of
the foregoing, the Company shall (a) obtain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant Agreement and the Warrants and (b) not undertake any
reverse stock split, combination, reorganization or other reclassification of its capital stock
which would have the effect of making the Warrants exercisable for less than one share of Common
Stock (except as permitted under Section 11 hereof).




          (b) SHALL BIND SUCCESSORS(c) . This Warrant Agreement, the Warrants and the rights evidenced
hereby and thereby shall be binding upon the successors of the Company.




          (d) NO EXERCISE INTERFERENCE; PAR VALUE(e) . The Company shall not close its books against
the transfer of any Warrant or of any Warrant Shares issued or issuable upon the exercise of any
Warrant in any manner which interferes with the timely exercise of any Warrant. The Company shall
from time to time take all such action as may be necessary to assure that the par value per share
of the unissued Warrant Shares acquirable upon exercise of the Warrants is at all times equal to or
less than the Warrant Price then in effect.




          (f) GOVERNMENTAL FILINGS(g) . The Company shall assist and cooperate with any reasonable
request by any holder of any Warrant which is required to make any governmental filings or obtain
any governmental approvals prior to or in connection with any exercise of any Warrant.





15









 






          (h) NOTICES OF CERTAIN ACTIONS. The Company shall give written notice to the holders at
least 30 days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock, or (C) for determining rights to vote with respect
to any recapitalization, reorganization, reclassification, consolidation, merger, dissolution,
liquidation or sale of all or substantially all of the Company’s assets or other transaction which
is effected in such a way that holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common
Stock.



     SECTION 14. REGISTRATION RIGHTS



          (a) Demand Registrations.



                    (A) The holders of Warrants holding not less than 40% of the Warrant Shares (including
Warrants exercisable therefor) not (i) theretofore effectively registered under the Act and
disposed of in accordance with the Registration Statement covering any such Warrants and Warrant
Shares or (ii) then saleable by the holder thereof pursuant to Rule 144(k) under the Act shall be
entitled to make up to two (2) written requests (each, a “DEMAND”) of the Company to register all
or part of their Warrant Shares (including Warrant Shares issuable upon exercise of their
Warrants), having an estimated market value of not less than $2 million, under the Act (a “DEMAND
REGISTRATION”), provided, however, that no Demand may be made until at least 180 calendar days
after the effective date of the immediately preceding Demand Registration.



          Within five calendar days after receipt of such Demand Notice, the Company will serve written
notice thereof (the “COMPANY NOTICE”) to all other holders of Warrants and Warrant Shares. Subject
to the provisions of the next succeeding paragraph, the Company shall include in such Demand
Registration all Warrant Shares with respect to which the Company receives written requests for
inclusion within 20 calendar days after the delivery of the Company Notice.



          If any of the Warrant Shares registered pursuant to a Demand Registration are to be sold in
one or more firm commitment underwritten offerings, the Company may also provide written notice to
holders of securities of the Company other than the holders of the Warrants and the Warrant Shares,
if any, who have piggyback registration rights with respect thereto and will permit all such
holders who request to be included in the Demand Registration to include any or all securities of
the Company held by such holders in such Demand Registration on the same terms and conditions as
the Warrant Shares. Notwithstanding the foregoing, if the managing underwriter or underwriters of
the offering to which such Demand Registration relates advises the Company that the total amount of
Warrant Shares and securities that such holders of securities of the Company (other than holders of
the Warrant Shares) intend to include in such Demand Registration is in the aggregate such as to
materially and adversely affect the success of such offering, then (i) first, the amount of
securities to be offered for the account of the holders of such other securities of the Company
will be reduced, to zero if necessary (pro rata among such holders on the basis of the amount of
such other securities to be included therein by each such holder), and (ii) second, the number of
Warrant Shares included in such Demand



16









 




Registration will, if necessary, be reduced and there will be included in such firm commitment
underwritten offering only the number of Warrant Shares that, in the opinion of such managing
underwriter or underwriters, can be sold without materially and adversely affecting the success of
such offering, allocated pro rata among the holders of the Warrants and Warrant Shares on the basis
of the number of Warrants or Warrant Shares held by each such holder.




                    (B) Selection of Underwriter. Any Demand Registration hereunder shall be on any
appropriate form under the Act permitting registration of such Warrant Shares for resale by the
holders thereof in the manner or manners designated by them (including, without limitation,
pursuant to one or more underwritten offerings). The determination of whether the offering will
involve an underwritten offering, and the selection of investment bankers and managers, if any, and
counsel for the holders, shall be made by a majority of the holders making such Demand; provided,
however, that the selection of investment bankers and managers, if any, and such counsel so
selected shall be reasonably satisfactory to the Company. If requested by such holders, the
Company shall enter into an underwriting or purchase agreement with an investment banking firm in
connection with a Demand Registration, containing representations, warranties, indemnities and
agreements then customarily included in underwriting or purchase agreements with respect to
secondary distributions of securities.



                    (C) The Company shall file a registration statement with respect to each Demand Registration
within 90 days of receipt of each Demand and use its best efforts to cause the same to be declared
effective as promptly as practicable following such Demand, but not later than one hundred eighty
(180) days thereafter. Unless all of the Warrant Shares covered by the registration statement have
earlier been sold or withdrawn from sale, the Company shall keep any such Registration Statement
effective for a period of up to three hundred sixty-five (365) days after such registration
statement is first declared effective plus a period equal to (y) any period during which the
holders are prohibited from making sales because of any stop order, injunction or other order or
requirement of the U.S. Securities and Exchange Commission (the “COMMISSION”) or any other
governmental agency or court plus (z) any period during which the right of holders to make sales
pursuant to a Demand Registration is suspended pursuant to paragraph (g) of this Section 14
(the “DEMAND PERIOD”).



          If (i) the Registration Statement covering the Warrants and Warrant Shares required to be
filed by the Company pursuant to this Section 14(a)(C) is not filed on or prior to the
required date or not declared effective by the SEC on or prior to the required date, or (ii) after
the Registration Statement has been declared effective by the SEC, the Registration Statement
ceases for any reason to remain continuously effective as to all securities for which it is
required to be effective, or the holders are not permitted to resell their Warrants and Warrant
Shares for more than 15 consecutive calendar days, but not for more than an aggregate of 30
calendar days during any 12-month period (which need not be consecutive calendar days, provided
that such number of days shall not include the 15 calendar days following the filing of any Form
8-K, Form 10-Q, or Form 10-K, or other comparable form, for purposes of filing a post-effective
amendment to the Registration Statement), in each case, other than (x) in connection with a delay
or suspension pursuant to paragraph (g) of this Section 14 or (y) after such time as all
Warrants or Warrant Shares, as the case may be, have been disposed of thereunder or all Warrants
and Warrant Shares are eligible to be sold pursuant to Rule 144(k), then, in addition to any rights
that a holder may have as a holder of a Warrant, the Company will issue additional Warrants to the



17









 







holders in such amounts and at such time as shall be determined pursuant to the immediately
following paragraph.



          Upon and after any failure by the Company described in the immediately preceding paragraph (a
“Default”), the Company shall be required to issue to the holders additional Warrants (“Default
Warrants”), at a rate of 2,500 Default Warrants per month (based on twelve 30-day months), for each
day during which one or more Defaults continues, provided, that the Company shall not be
required to issue in the aggregate more than 25,000 Default Warrants. The Default Warrants shall
be in the form of Exhibit A hereto and shall be governed by this Warrant Agreement. Within
five (5) Business Days after the end of each month during which a Default occurred or was
continuing, each holder shall be issued Default Warrants equal to the total number of Default
Warrants to be issued for such month, multiplied by a fraction, the numerator of which is the
number of Warrants owned by such holder and the denominator of which is the total number of
Warrants then outstanding, which shall be rounded up to the next whole share.



                    (D) For purposes of determining whether the holders have made a Demand pursuant to Section
14(a), a registration will not count as a Demand Registration unless it is declared effective
by the Commission and remains effective until the earlier of such time as all of the Warrant Shares
included in such registration have been sold or disposed of or withdrawn from sale by the holders
or the expiration of the Demand Period. In addition, a request for registration shall not be
deemed to constitute a Demand Registration if: (i) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with such Demand
Registration are not satisfied other than by reason of some act or omission by the holders; (ii)
the Company voluntarily takes any action (other than as permitted under paragraph (g) of this
Section 14) that would result in the holders not being able to sell such Warrant Shares
covered thereby during the Demand Period; (iii) after it has become effective, such Demand
Registration becomes subject to any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court and such order, injunction or requirement is not
withdrawn or lifted within 45 days, and such Demand Registration has not otherwise remained
effective for the Demand Period (including effective periods both before and after the order,
injunction or requirement is made or imposed); or (iv) such Demand Registration does not involve an
underwritten offering and the holders shall have notified the Company in writing within ten (10)
days following any delay of a Demand Registration imposed under paragraph (g) of this Section
14 by the Company that such holders have determined not to proceed; provided, however, that
prior to such a delay under this clause (iv), the holders have not sold all of the Warrant Shares
included in such Demand Registration.



                    (E) The Company further agrees to supplement or amend the registration statement with respect
to such Demand Registration, as required by the registration form utilized by the Company or by the
Act or as reasonably requested (which request shall result in the filing of a supplement or
amendment subject to approval thereof by the Company, which approval shall not be unreasonably
withheld) by the holders or any managing underwriter of Warrant Shares to which such Demand
Registration relates, and the Company agrees to furnish to the holders (and any managing
underwriter) copies, in substantially the form proposed to be used and/or filed, of any such
supplement or amendment prior to its being used and/or filed with the Commission.



18









 





          (b) Holdback Agreements; Restrictions on Public Sale by Holders of Warrant Shares. Each
holder of Warrant Shares and the Company agrees, if timely requested in writing by the managing
underwriter or underwriters in an underwritten offering, not to effect any public sale or
distribution of any of the Company’s equity securities, including a sale pursuant to Rule 144
(except as part of such underwritten offering), during the period beginning ten (10) days prior to,
and ending ninety (90) days after, the closing date of the underwritten offering made pursuant to
such Registration Statement.



          (c) Piggyback rights. If at any time the Company proposes to file a Registration Statement
with the Commission respecting an underwritten offering of any shares of any class of its equity
securities for its own account or for the account of a holder of securities of the Company, the
Company shall give written notice to all the holders at least ten (10) days prior to the initial
filing of the registration statement relating to such offering (the “REGISTRATION STATEMENT”).
Each holder shall have the right, within five days after delivery of such notice, to request in
writing that the Company include all or a portion of the Warrant Shares issued or issuable upon
exercise of such holder’s Warrants in such Registration Statement (“PIGGY-BACK REGISTRATION
RIGHTS”). The Company shall include in such Underwritten Offering all of the Warrant Shares that a
holder has requested be included. The underwriting agreement for such Underwritten Offering shall
provide that each requesting holder shall have the right to sell its Warrant Shares to the
underwriters and that the underwriters shall purchase the Warrant Shares at the price paid by the
underwriters for the Common Shares sold by the Company and/or selling stockholders, as the case may
be.



     Notwithstanding the foregoing, if the managing underwriter or underwriters of such offering
advises the Company to the effect that the total amount of securities which such holders, the
Company and any other Persons having rights to participate in such registration propose to include
in such offering is such as to materially and adversely affect the success of such offering, then:



               (i) if such registration is a primary registration on behalf of the Company, the Company will
include therein: (x) first, up to the full amount of securities to be included therein for the
account of the Company that, in the opinion of such managing underwriter or underwriters, can be
sold, (y) second, all securities proposed to be sold by any other persons having “piggyback”
registration rights pursuant to an agreement with the Company in existence on the date hereof that
are required by such agreement to be included therein prior to the Warrant Shares that, in the
opinion of such managing underwriter or underwriters, can be sold, and (z) third, up to the full
amount of the Warrant Shares which such holders propose to include in such registration that, in
the opinion of such managing underwriter or underwriters, can be sold without adversely affecting
the success of the offering (allocated pro rata in proportion to the number of Warrant Shares held
by such holders to the extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or underwriters); and



               (ii) if such registration is an underwritten secondary registration on behalf of holders of
securities of the Company other than the Warrant Shares, the Company will include therein: (w)
first, up to the full number of securities of such persons exercising “demand” registration rights
that, in the opinion of such managing underwriter or underwriters, can be sold,



19









 







(x) second, all
securities proposed to be sold by any other persons having “piggyback” registration rights pursuant
to an agreement with the Company in existence on the date hereof that are required by such
agreement to be included therein prior to the Warrant Shares that, in the opinion of such managing
underwriter or underwriters, can be sold, (y) third, up to the full amount of the Warrant Shares
which such holders propose to include in such registration that, in the opinion of such managing
underwriter or underwriters, can be sold (allocated pro rata in proportion to the number of Warrant
Shares held by such holders to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing underwriter or underwriters)
and (z) fourth, all other securities proposed to be sold by any other persons that, in the opinion
of such managing underwriter or underwriters can be sold without adversely affecting the success of
the offering (allocated pro rata among such persons in proportion to the number of securities held
by such persons, or as the Company may otherwise determine).



               (iii) If any holder advises the book-runner(s) of any underwritten offering that the Warrant
Shares covered by the Registration Statement cannot be sold in such offering within a price range
acceptable to such holder, then such holder shall have the right to exclude its Warrant Shares from
registration.



          (d) No Special Audit. The Company shall not be obligated to cause any special audit to be
undertaken in connection with any registration pursuant to this Agreement unless such audit is
required by the Commission or requested by the underwriters in connection with an Underwritten
Offering with respect to such registration.



          (e) Registration Expenses. The costs and expenses (other than underwriting discount or
commission, fees and disbursements of holders’ counsel and such fees for printing, registration and
other fees as state securities officials may require any holder pay) of all registrations and
qualifications under the Act, and of all other actions that the Company is required to take or
effect, shall be paid by the Company (including, without limitation, all registration and filing
fees, printing expenses, costs of special audits incident to or required by any such registration
(subject to paragraph (d) of this Section 14), and fees and disbursements of counsel for
the Company).



20









 





          (f) Indemnification by the Company. In the event of any registration under the Act of any
Warrant Shares, the Company hereby agrees to indemnify and hold harmless all holders of Warrants
against any losses, claims, damages or liabilities, joint or several, to which any holder of
Warrants may become subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any registration
statement under which Warrant Shares were registered under the Act, or in any preliminary
prospectus or final prospectus contained therein or any amendment or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any failure or alleged failure of
the Company to comply with any applicable statute, rule or regulation in connection with the
registration statement or the offering, and will reimburse any holder of Warrants for any legal or
other expenses reasonably incurred by any such holder of Warrants in connection with investigating
or defending any such loss, claim, damage, liability or proceeding; provided that the Company will
not be liable in any such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, or in said preliminary or final prospectus or said
amendment or supplement, in reliance upon and in conformity with written information furnished by
such holder for use in the preparation thereof.



          (g) Postponement or Suspension of Registration. Subject to the next sentence of this
paragraph, the Company shall be entitled to postpone, for a reasonable period of time, the filing
or effectiveness of, or suspend the rights of any holders to make sales pursuant to, any
Registration Statement otherwise required to be prepared, filed and made and kept effective by it
pursuant to Section 14(a) or (c) hereunder; in the event that, and for a period of
time not to exceed an aggregate of 90 days in any twelve-month period, (i) the Board of Directors
of the Issuer determines in good faith that the premature disclosure of a material event at such
time would have a material adverse effect on the business, operations or prospects of the Company
or any Subsidiary or (ii) the disclosure otherwise relates to a material business transaction which
has not been publicly disclosed and the Board of Directors of the Company determines in good faith
that any such disclosure would jeopardize the success of such transaction. If the Company shall
postpone the filing of a Registration Statement as set forth above, it shall, as promptly as
possible, deliver a certificate signed by an officer of the Company to the selling holders as to
such determination, and the Selling Holders shall (y) have the right, in the case of a postponement
of the filing or effectiveness of a Registration Statement, upon the affirmative vote of the
holders of not less than a majority of the Warrant Shares (or Warrants exercisable for such Warrant
Shares) to be included in such Registration Statement, to withdraw the request for registration by
giving written notice to the Company within 10 days after receipt of such notice or (z) in the case
of a suspension of the right to make sales, receive an extension of the registration period equal
to the number of days of the suspension.



     SECTION 15. EXPENSES. The Company agrees to pay for or reimburse the Warrant holders for all
reasonable out-of-pocket costs and expenses of the Warrant holders (including reasonable legal fees
and disbursements of counsel), in connection with the negotiation, preparation, execution and
delivery of this Agreement and the issuance of Warrants hereunder on the date hereof.



21









 





     SECTION 16. NOTICES TO WARRANT HOLDERS. Any notice or other document required or permitted to be given or delivered to holders
shall be delivered at, or sent by certified or registered mail to, each holder at its, his or her
address appearing on the Warrant register. Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed. Any notice so addressed and otherwise
delivered shall be deemed to be given when actually received by the addressee.



     Nothing contained in this Agreement or in any of the Warrant Certificates shall be construed
as conferring upon the holders thereof the right to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of Directors of the Company
or any other matter, or any rights whatsoever as shareholders of the Company.



     SECTION 17. PUBLIC OFFERING; SALE OF COMPANY. Notwithstanding any other provision hereof, if
an exercise of any portion of any Warrant is to be made in connection with a public offering or a
sale of the Company (pursuant to a merger, sale of stock or otherwise), such exercise may at the
election of the Holder of such Warrant be conditioned upon the consummation of such transaction, in
which case such exercise shall not be deemed to be effective until consummation of such
transaction.



     SECTION 18. REPRESENTATIONS OF THE COMPANY. The Company has all requisite corporate power and
authority to enter into and perform its obligations under this Warrant Agreement and the Warrants,
to deliver the Warrant Agreement to the Warrant Agent, to issue and deliver the Warrants to the
holders and to issue the Warrant shares upon exercise of each Warrant. The execution, delivery,
and performance by the Company of its obligations under this Warrant Agreement and the Warrants,
including the issuance and delivery of the Warrants to the holders and the issuance of the Warrant
Shares upon exercise of the Warrants, have been duly authorized by all necessary corporate action
on the part of the Company. This Warrant Agreement and the Warrants issued on the date hereof have
been duly executed and delivered by the Company and are the legal, valid, and binding obligation of
the Company and are enforceable against the Company in accordance with their terms, and do not
violate, or result in a breach of, or constitute a default under, or require any consent under, or
result in the creation of any lien, charge or security interest upon the assets of the Company
pursuant to, any requirement of law or any provision of any security issued by the Company or of
any agreement, instrument or other undertaking to which the Company is a party or by which it or
any of its property is bound.



     The Warrant Shares, when issued and paid for upon exercise of each Warrant (or issued pursuant
to the Exchange Right) in accordance with the terms hereof, will be duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock with no personal liability attaching to
the ownership thereof.



22









 





     SECTION 19. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to all or substantially all the
corporate trust or agency business of the Warrant Agent, shall be the successor to the Warrant
Agent hereunder without the execution or filing of any paper or any further act on the part of any
of the parties hereto, provided that such corporation would be eligible for appointment as a
successor warrant agent under the provisions of Section 21. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this Agreement, and in case
at that time any of the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent;
and in case at that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrant Agent or in the name of the successor to the Warrant Agent; and in all such
cases such Warrant Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.



     In case at any time the name of the Warrant Agent shall be changed and at such time any of the
Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent whose name
has been changed may adopt the countersignature under its prior name, and in case at that time any
of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign
such Warrant Certificates either in its prior name or in its changed name, and in all such cases
such Warrant Certificates shall have the full force and effect provided in the Warrant Certificates
and in this Agreement.



     SECTION 20. WARRANT AGENT. The Warrant Agent undertakes the duties and obligations imposed by
this Agreement (and no implied duties or obligations shall be read into this Agreement against the
Warrant Agent) upon the following terms and conditions, by all of which the Company and the holders
of Warrants, by their acceptance thereof, shall be bound:



          (a) The statements contained herein and in the Warrant Certificates shall be taken as
statements of the Company and the Warrant Agent assumes no responsibility for the correctness of
any of the same except such as describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.



          (b) The Warrant Agent shall not be responsible for any failure of the Company to comply with
any of the covenants contained in this Agreement or in the Warrant Certificates to be complied with
by the Company.



23









 





          (c) The Warrant Agent may consult at any time with counsel of its own selection (who may be
counsel for the Company) at the expense of the Company, which counsel shall be generally recognized
as having competence in the subject matter under consideration, and the Warrant Agent shall incur
no liability or responsibility to the Company or to any holder of any Warrant Certificate in
respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance
with the opinion or the advice of such counsel. The Warrant Agent may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or through agents or
attorneys and the Warrant Agent shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.



          (d) The Warrant Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions furnished to the
Warrant Agent and conforming to the requirements of this Agreement. The Warrant Agent shall incur
no liability or responsibility to the Company or to any holder of any Warrant Certificate for any
action taken in reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument (whether in its
original or facsimile form) believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.



          (e) The Company agrees to pay to the Warrant Agent such compensation for all services rendered
by the Warrant Agent in the administration and execution of this Agreement as the Company and the
Warrant Agent shall agree in writing to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the Warrant Agent in the
administration and execution of this Agreement (including fees and expenses of its counsel) and to
indemnify the Warrant Agent (and any predecessor Warrant Agent) and save it harmless against any
and all claims (whether asserted by the Company, a holder or any other person), damages, losses,
expenses (including taxes other than taxes based on the income of the Warrant Agent), liabilities,
including judgments, costs and counsel fees and expenses, for anything done or omitted by the
Warrant Agent in the execution of this Agreement except as a result of its gross negligence or
willful misconduct. The provisions of this Section 20(e) shall survive the expiration of
the Warrants and the termination of this Agreement.



          (f) The Warrant Agent shall be under no obligation to institute any action, suit or legal
proceeding or to take any other action likely to involve expense unless the Company or one or more
registered holders of Warrant Certificates shall furnish the Warrant Agent with security and
indemnity satisfactory to it for any costs and expenses which may be incurred, but this provision
shall not affect the power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action under this Agreement
or under any of the Warrants may be enforced by the Warrant Agent without the possession of any of
the Warrant Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent and any recovery of judgment shall be for the ratable benefit of the
registered holders of the Warrants, as their respective rights or interests may appear.



24









 





          (g) The Warrant Agent, and any stockholder, director, officer or employee of it, may buy, sell
or deal in any of the Warrants or other securities of the Company or become pecuniarily interested
in any transaction in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.



          (h) The Warrant Agent shall act hereunder solely as agent for the Company, and its duties
shall be determined solely by the provisions hereof. The Warrant Agent shall not be liable for
anything which it may do or refrain from doing in connection with this Agreement except for its own
gross negligence or willful misconduct. The Warrant Agent shall not be liable for any error of
judgment made in good faith by it, unless it shall be proved that the Warrant Agent was grossly
negligent in ascertaining the pertinent facts. Notwithstanding anything in this Agreement to the
contrary, in no event shall the Warrant Agent be liable for special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Warrant Agent has been advised of the likelihood of the loss or damage and regardless
of the form of the action.



          (i) The Warrant Agent shall not at any time be under any duty or responsibility to any holder
of any Warrant Certificate to make or cause to be made any adjustment of the Exercise Price or
number of the Warrant Shares or other securities or property deliverable as provided in this
Agreement, or to determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with respect to the
method employed in making the same. The Warrant Agent shall not be accountable with respect to the
validity or value or the kind or amount of any Warrant Shares or of any securities or property
which may at any time be issued or delivered upon the exercise of any Warrant or with respect to
whether any such Warrant Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.



          (j) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Warrant Agent shall have any liability to any holder of a Warrant Certificate or other Person as a
result of its inability to perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation; provided that the Company must
use its reasonable best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.



25









 





          (k) Any application by the Warrant Agent for written instructions from the Company may, at the
option of the Warrant Agent, set forth in writing any action proposed to be taken or omitted by the
Warrant Agent under this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Warrant Agent shall not be liable for any action taken by, or
omission of, the Warrant Agent in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than three Business Days
after the date any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Warrant Agent shall have received written
instructions in response to such application specifying the action to be taken or omitted.



          (l) No provision of this Agreement shall require the Warrant Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights.



          (m) In addition to the foregoing, the Warrant Agent shall be protected and shall incur no
liability for, or in respect of, any action taken or omitted by it in connection with its
administration of this Agreement if such acts or omissions are in reliance upon the proper
execution of the certification concerning beneficial ownership appended to the form of assignment
and the form of the election attached hereto unless the Warrant Agent shall have actual knowledge
that, as executed, such certification is untrue, or the non-execution of such certification
including, without limitation, any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution.



          (n) Holders (for purposes of this paragraph (n) only, “CUSTOMERS” and each a “CUSTOMER”)
acknowledge that the Bank is subject to the customer identification program requirements under the
USA PATRIOT Act and its implementing regulations, and that the Bank must obtain, verify and record
information that allows the Bank to identify each Customer. Accordingly, prior to opening an
Account hereunder the Bank may request information (including but not limited to the Customer’s
name, physical address, tax identification number and other information) that will help the Bank to
identify the organization such as organizational documents, certificate of good standing, license
to do business, or any other information that will allow the Bank to identify Customer. Each
Customer agrees that the Bank cannot open an Account hereunder unless and until the Bank verifies
Customer’s identity in accordance with its Customer Identification Program.



26









 





     SECTION 21. CHANGE OF WARRANT AGENT. The Warrant Agent may at any time resign as Warrant
Agent upon written notice to the Company. If the Warrant Agent shall become incapable of acting as
Warrant Agent, the Company shall appoint a successor to such Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been notified in writing of
such resignation or of such incapacity by the Warrant Agent or by the registered holder of a
Warrant Certificate, then the registered holder of any Warrant Certificate or the Warrant Agent may
apply, at the expense of the Company, to any court of competent jurisdiction for the appointment of
a successor to the Warrant Agent. Pending appointment of a successor to such Warrant Agent,
either by the Company or by such a court, the duties of the Warrant Agent shall be carried out
by the Company. The holders of a majority of the unexercised Warrants shall be entitled at any time
to remove the Warrant Agent and appoint a successor to such Warrant Agent. If a Successor Warrant
Agent shall not have been appointed within 30 days of such removal, the Warrant Agent may apply, at
the expense of the Company, to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Such successor to the Warrant Agent need not be approved by the
Company or the former Warrant Agent. After appointment the successor to the Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had been originally named
as Warrant Agent without further act or deed; but the former Warrant Agent upon payment of all fees
and expenses due it and its agents and counsel shall deliver and transfer to the successor to the
Warrant Agent any property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to give any notice provided
for in this Section 21, however, or any defect therein, shall not affect the legality or
validity of the appointment of a successor to the Warrant Agent.



     SECTION 22. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or demand authorized by this
Agreement to be given or made by the Warrant Agent or by the registered holder of any Warrant
Certificate to or on the Company shall be sufficiently given or made when and if delivered by hand
or by courier, or deposited in the mail, first class or registered, postage prepaid, or by telecopy
confirmed in writing, and addressed (until another address is filed in writing by the Company with
the Warrant Agent), as follows:


ORBIMAGE Holdings Inc.

21700 Atlantic Blvd.

Dulles, VA 20166

Attention: General Counsel




     In case the Company shall fail to maintain such office or agency or shall fail to give such
notice of the location or of any change in the location thereof, presentations may be made and
notices and demands may be served at the principal corporate trust office of the Warrant Agent.



     Any notice pursuant to this Agreement to be given by the Company or by the registered
holder(s) of any Warrant Certificate to the Warrant Agent shall be sufficiently given when and if
delivered by hand or by courier, or deposited in the mail, first class or registered, postage
prepaid, or by telecopy confirmed in writing, and addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent as follows:



27









 




The Bank of New York

101 Barclay Street, Floor 11E

New York, New York 10286

Attention: Stock Transfer Administration




     SECTION 23. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent may from time to
time supplement or amend this Agreement without the approval of any holders of Warrant Certificates
in order to cure any
ambiguity or to correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Warrant Agent may deem necessary or
desirable and which shall not in any way adversely affect the interests of the holders of Warrants.
Upon the delivery of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this Section 23,
the Warrant Agent shall execute such supplement or amendment. Notwithstanding anything in this
Agreement to the contrary, the prior written consent of the Warrant Agent must be obtained in
connection with any supplement or amendment which alters the rights or duties of the Warrant Agent.
The Company and the Warrant Agent may amend any provision herein with the prior written consent of
the holders of Warrants exercisable for a majority of the Warrant Shares issuable on exercise of
all outstanding Warrants; provided, however, that no such modification that
increases the Exercise Price or decreases the Exercise Rate (in each case other than pursuant to
adjustments provided in this Agreement) or makes any change to any of the adjustment provisions
hereof that would have such an effect, makes any change to the number or type of security to be
issued in exchange for the Warrants, reduces the period of time during which the Warrants are
exercisable hereunder, or effects any change to this Section 23 may be made with respect to
any Warrant without the consent of the holder of such Warrant. For purposes of any amendment,
modification or waiver hereunder, Warrants held by the Company shall be disregarded.



     SECTION 24. SUCCESSORS. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.



     SECTION 25. TERMINATION. This Agreement will terminate on the earlier of the date on which
all Warrants have been exercised or the date on which all Warrants have expired without exercise.
The provisions of Sections 14(e), 14(f), and 26 hereof shall survive such
termination.



28









 





     SECTION 26. GOVERNING LAW. This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of Delaware, and the validity,
interpretation, and enforcement of this Agreement and each Warrant Certificate shall be governed by
and construed in accordance with the internal laws of said State without giving effect to the
conflict of law principles thereof. The parties agree that, all actions and proceedings arising out
of this Agreement or any of the transactions contemplated hereby, shall be brought in the United
States District Court for the Southern District of New York or in a New York State Court in the
County of New York and that, in connection with any such action or proceeding, submit to the
jurisdiction of, and venue in, such court. Each of the parties hereto also irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim arising out of this Agreement or
the transactions contemplated hereby.



     SECTION 27. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be construed to give
to any person or corporation other than the Company, the Warrant Agent and the registered holders
of the Warrant Certificates any legal or equitable right, remedy or claim under this Agreement, and
this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and
the registered holders of the Warrant Certificates.



     SECTION 28. COUNTERPARTS. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.



     SECTION 29. FORCE MAJEURE. In no event shall the Warrant Agent be responsible or liable for
any failure or delay in the performance of its obligations under this Agreement arising out of or
caused by, directly or indirectly, forces beyond its reasonable control, including without
limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software or hardware) services.



     SECTION 30. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the provisions of this
Agreement could not adequately be compensated by money damages, holders of Warrants shall be
entitled, in addition to any other right or remedy available to them, to an injunction restraining
such breach or a threatened breach and to specific performance of any such provision of this
Agreement, and in either case no bond or other security shall be required in connection therewith,
and the parties hereby consent to such injunction and to the ordering of specific performance.



29









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of
the day and year first above written.



	 	 	 
	 

	 	ORBIMAGE HOLDING INC.
	 
	 	 
	 

	 	 
	 

	 	By:
	 

	 	Title
	 
	 	 
	 

	 	THE BANK OF NEW YORK, as
	 

	 	Warrant Agent
	 
	 	 
	 

	 	 
	 

	 	By:
	 

	 	Title






30









 






EXHIBIT A




FORM OF WARRANT CERTIFICATE





31