exv4w1



 








Exhibit 4.1



NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.




GLOBAL EMPLOYMENT HOLDINGS, INC.




Warrant To Purchase Common Stock




Warrant No.:

Number of Shares of Common Stock:

Date of Issuance: March 31, 2006 (“Issuance Date”)




          Global Employment Holdings, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, [NAME OF BUYER], the registered holder hereof or its permitted assigns (the
"Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement
hereof, the “Warrant”), at any time or times on or after the date hereof (the “Initial
Exercisability Date”), but not after 11:59 p.m., New York Time, on the Expiration Date (as defined
below), [ # OF SHARES] fully paid nonassessable shares of Common Stock (as defined below) (the
"Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall
have the meanings set forth in Section 15. This Warrant is one of the Warrants to purchase Common
Stock (the “SPA Warrants”) issued pursuant to Section 1 of the Notes Securities Purchase Agreement,
dated as of March 31, 2006 (the “Subscription Date”), by and among Global Employment Solutions,
Inc. and the investors (the “Buyers”) referred to therein (the “Securities Purchase Agreement”).




          1.     EXERCISE OF WARRANT.




               (a)     Mechanics of Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by
the Holder from time to time on or after the Initial Exercisability Date, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant and (ii) (A) payment to the Company of
an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of
immediately available funds or (B) by notifying the Company that this Warrant is being exercised
pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to
deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of
the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect
as cancellation of the original Warrant and issuance of a new



 









 







Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before
the first Business Day following the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the “Exercise Delivery
Documents”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or before the third Business Day following the date on which the Company has received
all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program and so long as the certificates therefor are not required to bear a
legend pursuant to Section 2(g) of the Securities Purchase Agreement, credit such aggregate number
of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission System,
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the Company’s share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such
exercise, which certificate shall not bear any restrictive legend so long as the certificate is not
required to bear such a legend pursuant to Section 2(g) of the Securities Purchase Agreement. Upon
delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A) above or
notification to the Company of a Cashless Exercise referred to in Section 1(d), the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with
respect to which this Warrant has been exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being acquired upon an
exercise, then the Company shall as soon as practicable and in no event later than three Business
Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section
7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of
this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to
the nearest whole number. The Company shall pay any and all taxes which may be payable with
respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.



               (b)     Exercise Price. For purposes of this Warrant, “Exercise Price” means $6.25,
subject to adjustment as provided herein.



               (c)     Company’s Failure to Timely Deliver Securities. If, at any time, the Holder
of this Warrant submits the Exercise Delivery Documents, and the Company fails for any reason or
for no reason to deliver, on or prior to the Share Delivery Date, the number of shares of Common
Stock to which the Holder is entitled upon such exercise (an “Exercise Default”), then the Company
shall pay to the Holder payments (“Exercise Default Payments”) for an Exercise Default in the
amount of (i) (N/365), multiplied by (ii) the amount that the Closing Sale Price of the Common
Stock on the date the Exercise Notice giving rise to the Exercise Default is transmitted in
accordance with this Section 1 (the “Exercise Default Date”) exceeds the Exercise Price in respect
of such Warrant Shares, multiplied by (iii) the number of shares of Common Stock the Company failed
to so deliver in such Exercise Default, multiplied by (iv) .18, where N equals the number of days
from the Exercise Default Date which gave rise to the Exercise Default to the date that the Company
effects the full exercise of this Warrant. The accrued Exercise Default Payment for each calendar
month shall be paid in cash to the Holder by the fifth day of the month following the month in
which it has accrued. In addition to the foregoing, if within three Trading Days after the
Company’s receipt of the facsimile copy of an Exercise Notice the Company shall fail to issue and
deliver a certificate to the Holder and register such shares of Common Stock on the



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Company’s share register or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder, and if
on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”),
then the Company shall, within three Business Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the
"Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to
the Holder a certificate or certificates representing such shares of Common Stock and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of shares of Common Stock, times (B) the Closing Sale Price on the date of exercise.
Nothing herein shall limit the Holder’s right to pursue actual damages for the Company’s failure to
maintain a sufficient number of authorized shares of Common Stock or to otherwise issue shares of
Common Stock upon exercise of this Warrant in accordance with the terms hereof, and the Holder
shall have the right to pursue all remedies available at law or in equity (including a decree of
specific performance and/or injunctive relief).



               (d)     Cashless Exercise. Notwithstanding anything contained herein to the contrary,
the Holder may, in its sole discretion, exercise this Warrant in whole or from time to time in part
and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise
the “Net Number” of shares of Common Stock determined according to the following formula (a
"Cashless Exercise”):



Net Number = (A x B) — (A x C)

                        B




               For purposes of the foregoing formula:



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




          B= the Closing Sale Price of the shares of Common Stock (as reported by Bloomberg)
on the date immediately preceding the date of the Exercise Notice.




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




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



               (f)     Limitations on Exercises; Beneficial Ownership. The Company shall not effect
the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to
the extent that after giving effect to such exercise, such Holder (together with such Holder’s
affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of
Common Stock outstanding immediately after giving effect to such exercise. For purposes of the
foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such
Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to



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which the determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this
Warrant beneficially owned by such Holder and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company beneficially owned by
such Holder and its affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence, for purposes of this
paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Form
10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the
Company shall within one Business Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including the SPA Securities and the SPA Warrants, by the Holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was reported. By written
notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage
to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such
increase will not be effective until the 61st day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other
holder of SPA Warrants. Notwithstanding anything to the contrary set forth herein, the provisions
of this Section 1(f) shall not be implemented in strict conformity with the terms of this Section
1(f) if necessary to correct any portion of this Section 1(f) which may be defective or
inconsistent with the intended beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this Section 1(f) shall apply to a successor Holder of this Warrant.



               (g)     Insufficient Authorized Shares. If at any time while any of the Warrants
remain outstanding the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the
Warrants at least a number of shares of Common Stock equal to 130% of the number of shares of
Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants
then outstanding (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common
Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the
Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as
practicable after the date of the occurrence of an Authorized Share Failure, but in no event later
than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its stockholders for the approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall provide each stockholder with a
proxy statement and shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of directors to recommend to
the stockholders that they approve such proposal. If the Company fails to remedy any Authorized
Share Failure within 60 days after the date on which such Authorized Share Failure occurs, then the
Company shall immediately notify the holders of the Warrants of such occurrence and each holder of
Warrants shall thereafter have the option, exercisable in whole or in part at any time and from
time to time, by delivery of a Redemption Notice (as defined in Section 4(c) below) to the Company,
to require the Company to redeem for cash, at an amount per share equal to the Redemption Price (as
defined in Section 4(c)), a portion of this Warrant such that, after giving effect to



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such redemption, the then unissued portion of the holder’s Reserved Amount (as defined below)
allocable to the Warrants then held by such holder is at least equal to the Required Reserved
Amount with respect to the remaining Warrants held by such holder. If the Company fails to redeem
such portion of this Warrant within five business days after its receipt of such Redemption Notice,
then the holder hereof shall be entitled to interest on the Redemption Price at a per annum rate
equal to 12% from the date on which such Redemption Price is required to be paid hereunder until
the actual date of payment of the Redemption Price hereunder. The initial number of shares of
Common Stock reserved for issuance upon exercise of the SPA Warrants (the “Reserved Amount”) shall
be allocated pro rata among the holders of the SPA Warrants based on the number of shares of Common
Stock issuable upon exercise of the SPA Warrants. Each increase to the Reserved Amount shall be
allocated pro rata among the holders of the SPA Warrants based on the number of shares of Common
Stock issuable upon exercise of the SPA Warrants at the time of such increase. In the event any
holder shall sell or otherwise transfer any of the holder’s SPA Warrants or any such other
securities, each transferee shall be allocated a pro rata portion of such transferor’s Reserved
Amount. Any portion of the Reserved Amount that remains allocated to any person or entity which
does not hold any SPA Warrants shall be allocated to the remaining holders of the SPA Warrants pro
rata based on the number of shares of Common Stock issuable upon exercise of the SPA Warrants then
held by such holders.



               (h)     Listing. The Company shall promptly secure the listing or quotation of the
shares of Common Stock issuable upon the exercise of this Warrant upon the Principal Market or upon
such other Eligible Market, if any, upon which shares of Common Stock are then listed or quoted
(subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long
as any other shares of Common Stock shall be so listed or quoted, such listing or quotation of all
shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list or apply for quotation on each Eligible Market, and shall maintain such
listing or quotation of, any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall be listed or quoted
on such Eligible Market. In the event that the Common Stock is suspended from trading on, or is
not listed (and authorized) for trading on, any Eligible Market for an aggregate of 10 or
more Trading Days in any 12 month period after the date on which the Common Stock is first approved
for trading on such Eligible Market, the holder of this Warrant shall have the right to deliver a
Redemption Notice (as defined in Section 4(c) below) and require the Company to pay such holder in
cash an amount equal to the Redemption Price (as defined in Section 4(c) below), plus any interest
or penalties accruing thereon, all pursuant to the procedures set forth in Section 4(c) below.



               (i)     Blue Sky Laws. The Company shall, on or before the date of issuance of any
Warrant Shares, take such actions as the Company shall reasonably determine are necessary to
qualify the Warrant Shares for, or obtain exemption for the Warrant Shares for, sale to the holder
of this Warrant upon the exercise hereof under applicable securities or “blue sky” laws of the
states of the United States, and shall provide evidence of any such action so taken to the holder
of this Warrant prior to such date; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 1(i), (ii) subject itself
to general taxation in any such jurisdiction or (iii) file a general consent to service of process
in any such jurisdiction.



          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and the number of Warrant Shares shall be adjusted from time to time as follows:




               (a)     Adjustment upon Issuance of shares of Common Stock. If and whenever on or
after the Subscription Date the Company issues or sells, or in accordance with this Section 2 is
deemed to have issued or sold, any shares of Common Stock (including, without limitation, the
issuance



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or sale of shares of Common Stock owned or held by or for the account of the Company and the
issuance of any shares of Common Stock, Options or Convertible Securities in exchange for any
non-convertible security such as a non-convertible note, but excluding shares of Common Stock
deemed to have been issued by the Company in connection with any Excluded Securities (as defined in
the SPA Securities)), for a consideration per share (the “New Issuance Price”) less than a price
(the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or
sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such
Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the
product of (A) the Exercise Price in effect immediately prior to such Dilutive Issuance and (B) the
quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise
Price in effect immediately prior to such Dilutive Issuance and the number of shares of Common
Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the consideration,
if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by
multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II)
the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance.
Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares shall be
adjusted to the number of shares of Common Stock determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon
exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment. For purposes of determining the adjusted
Exercise Price under this Section 2(a), the following shall be applicable:




(i) Issuance of Options. If the Company in any manner grants
any Options, whether or not immediately exercisable, and the lowest price
per share for which one share of Common Stock is issuable upon the exercise
of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is less
than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share. For
purposes of this Section 2(a)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or
upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable (but excluding any
contingent amounts) by the Company with respect to any one share of Common
Stock upon the granting or sale of the Option, upon exercise of the Option
and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible Securities
upon the exercise of such Options or upon the actual issuance of such shares
of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.




(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities, whether or not
immediately convertible, and the lowest price per share for which one share
of Common Stock is issuable upon the conversion, exercise or exchange
thereof is less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 2(a)(ii), the
“lowest price per share for which one share of Common Stock is



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issuable upon the conversion, exercise or exchange” shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable
(but excluding any contingent amounts) by the Company with respect to one
share of Common Stock upon the issuance or sale of the Convertible Security
and upon conversion, exercise or exchange of such Convertible Security. No
further adjustment of the Exercise Price or number of Warrant Shares shall
be made upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 2(a), no further adjustment of
the Exercise Price or number of Warrant Shares shall be made by reason of
such issue or sale.




(iii) Change in Option Price or Rate of Conversion. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for shares of Common Stock
increases or decreases at any time, the Exercise Price and the number of
Warrant Shares in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price and the number of Warrant Shares which would
have been in effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be,
at the time initially granted, issued or sold. For purposes of this Section
2(a)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are increased or
decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock
deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 2(a) shall be made if such adjustment
would result in an increase of the Exercise Price then in effect or a
decrease in the number of Warrant Shares.




(iv) Calculation of Consideration Received. In case any Option
is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for no consideration. If any
shares of Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company
therefor, after deduction of all underwriting discounts or allowances in
connection with such issuance or sale. If any shares of Common Stock,
Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company
will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Closing Sale Price of such
security on the date of receipt. If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving entity,
the amount of consideration therefor will be deemed to be the fair value of
such portion of the



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net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash or securities
will be determined jointly by the Company and the Required Holders. If such
parties are unable to reach agreement within 10 days after the occurrence of
an event requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five Business Days after the tenth
day following the Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Required Holders. The determination
of such appraiser shall be final and binding upon all parties absent
manifest error and the fees and expenses of such appraiser shall be borne by
the Company. If the Company issues (or becomes obligated to issue) shares
of Common Stock pursuant to any antidilution or similar adjustments (other
than as a result of stock splits, stock dividends and the like) contained in
any Convertible Securities or Options outstanding as of the Subscription
Date but not included in Schedule 3(n) to the Securities Purchase
Agreement, then all shares of Common Stock so issued shall be deemed to have
been issued for no consideration. If the Company issues (or becomes
obligated to issue) shares of Common Stock pursuant to any antidilution or
similar adjustments contained in any Convertible Securities or Options
included in Schedule 3(n) to the Securities Purchase Agreement as a
result of the issuance of the SPA Securities, the SPA Warrants or any
securities issued as part of the Junior Financing (as defined in the
Securities Purchase Agreement) and the number of shares that the Company
issues (or is obligated to issue) as a result of such issuance exceeds the
amount specified in Schedule 3(n) to the Securities Purchase
Agreement, such excess shares shall be deemed to have been issued for no
consideration. Notwithstanding anything else herein to the contrary, if
Common Stock, Options or Convertible Securities are issued or sold in
conjunction with each other as part of a single transaction or in a series
of related transactions, the holder hereof may elect to determine the amount
of consideration deemed to be received by the Company therefor by deducting
the fair value of any type of securities (the “Disregarded Securities”)
issued or sold in such transaction or series of transactions. If the holder
makes an election pursuant to the immediately preceding sentence, no
adjustment to the Exercise Price shall be made pursuant to this Section 2(a)
for the issuance of the Disregarded Securities or upon any conversion,
exercise or exchange thereof.




(v) Record Date. If the Company takes a record of the holders
of shares of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock, Options or
in Convertible Securities or (B) to subscribe for or purchase shares of
Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.



               (b)     Adjustment upon Subdivision or Combination of Common Stock. If the Company at
any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be proportionately increased. If
the



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Company at any time on or after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be proportionately decreased. Any
adjustment under this Section 2(b) shall become effective at the close of business on the date the
subdivision or combination becomes effective.



               (c)     Other Events. If any event occurs of the type contemplated by the provisions
of this Section 2 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with equity
features), then the Company’s Board of Directors will make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or
decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.



               (d)     Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment or readjustment of the Exercise Price or change in number or type of stock, securities
and/or other property issuable upon exercise of this Warrant, then, and in each such case, the
Company shall promptly make a public announcement of such adjustment or readjustment and give
notice thereof to the holder hereof, which notice shall state the Exercise Price resulting from
such adjustment or readjustment and any change in the number or type of stock, securities and/or
other property issuable upon exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Such calculation shall
be certified by the chief financial officer of the Company.



          3.     RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction), other than the Special Dividend (as defined in the Securities Purchase Agreement) (a
"Distribution”), at any time after the issuance of this Warrant, then, in each such case:




               (a)     any Exercise Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding
such record date minus the value of the Distribution (as determined in good faith by the Company’s
Board of Directors) applicable to one share of Common Stock, and (ii) the denominator shall be the
Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such
record date; and



               (b)     the number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock entitled to receive
the Distribution multiplied by the reciprocal of the fraction set forth in the immediately
preceding paragraph (a); provided that in the event that the Distribution is of shares of Common
Stock (or common equity) (“Other Shares of Common Equity”) of a company whose shares of common
equity are traded on a national securities exchange or a national automated quotation system, then
the Holder may elect to receive a warrant to purchase Other Shares of Common Equity in lieu of an
increase in the number of Warrant Shares, the terms of which shall be identical to those of this
Warrant, except that such warrant



- 9 -









 







shall be exercisable into the number of shares of Other Shares of Common Equity that would
have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price equal to the product of
the amount by which the exercise price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding paragraph (a) and the number of
Warrant Shares calculated in accordance with the first part of this paragraph (b).



          4.     PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.




               (a)     Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record holders of any class
of shares of Common Stock (collectively, “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on the exercise of this
Warrant, but after the calculation of such number of shares, the provisions of Section 1(f) shall
continue to apply) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights. If the right to exercise or convert any such Purchase Rights would expire in
accordance with their terms prior to the exercise of this Warrant, then the terms of such Purchase
Rights shall provide that such exercise or convertibility right shall remain in effect until 30
days after the date the holder receives such Purchase Rights pursuant to the exercise hereof.



               (b)     Fundamental Transactions. The Company shall not enter into or be party to a
Fundamental Transaction unless (i) the Successor Entity and, if an entity other than the Successor
Entity is the entity whose capital stock or assets the holders of the Common Stock are entitled to
receive as a result of such Fundamental Transaction, such other entity (the “Other Entity”),
assumes in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section (4)(b) pursuant to written
agreements in form and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of
Warrants in exchange for such Warrants a security of the Successor Entity or the Other Entity, as
applicable, evidenced by a written instrument substantially similar in form and substance to this
Warrant and with appropriate provisions such that the rights and interests of the Holder and the
economic value of this Warrant are in no way diminished by such Fundamental Transaction (including,
without limitation, in the case of any such Fundamental Transaction in which the Successor Entity
or Other Entity, as applicable, is not the Company, an immediate adjustment of the Exercise Price
and Warrant Shares so that the Exercise Price and Warrant Shares immediately after the Fundamental
Transaction reflect the same relative value as compared to the value of the surviving entity’s
common stock that existed between the Exercise Price and the Warrant Shares and the value of the
Company’s Common Stock immediately prior to such Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant, but after the calculation of such number of shares,
the provisions of Section 1(f) shall continue to apply)), which instrument shall be satisfactory to
the Required Holders, and (ii) the Successor Entity or the Other Entity, if applicable, is a
publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible
Market (a “Public Successor”). Upon the occurrence of any Fundamental Transaction, the Successor
Entity or the Other Entity, as applicable, shall succeed to, and be substituted for (so that from
and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the
“Company” shall refer instead to the Successor Entity or the Other Entity, as applicable), and may
exercise every right and power of the Company and shall assume all of the obligations of the
Company



- 10 -









 







under this Warrant with the same effect as if such Successor Entity or such Other Entity, as
applicable, had been named as the Company herein. Upon consummation of the Fundamental
Transaction, the Successor Entity or the Other Entity, as applicable, shall deliver to the Holder
confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the Fundamental Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of publicly traded common stock (or their equivalent) of
the Successor Entity or the Other Entity, as applicable, as adjusted in accordance with the
provisions of this Warrant. In addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant
at any time after the consummation of the Fundamental Transaction but prior to the Expiration Date,
in lieu of the shares of the Common Stock (or other securities, cash, assets or other property)
purchasable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of
stock, securities, cash, assets or any other property whatsoever (including warrants or other
purchase or subscription rights) which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had the Warrant been exercised immediately prior to such
Fundamental Transaction. Provision made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Required Holders. The provisions of this Section shall
apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall
be applied without regard to any limitations on the exercise of this Warrant.



               (c)     Notwithstanding the provisions of Section 4(b) above, at least 45 days before the
consummation of a Change of Control (as defined herein), but in no event later than 15 days prior
to the record date for the determination of stockholders entitled to vote with respect thereto (or,
with respect to a tender offer, or a change in the Board of Directors, if the Company is unable to
comply with this time requirement because of the nature of the Change of Control, as soon as the
Company reasonably believes that the Change of Control is to be consummated), but not prior to the
public announcement of such Change of Control, the Company shall deliver written notice thereof via
facsimile and overnight courier to the Holder (a “Change of Control Notice”). If the terms of a
Change of Control change materially from those set forth in a Change of Control Notice, the Company
shall deliver a new Change of Control Notice and the time periods in this clause (b) shall be
calculated based upon the Holder’s receipt of the later Change of Control Notice. At any time
during the period (the “Change of Control Period”) beginning after the Holder’s receipt of a Change
of Control Notice and ending on the date that is 15 Trading Days after the later of the
consummation of such Change of Control or delivery of the Change of Control Notice, the Holder may
require the Company to purchase all or any portion of this Warrant by delivering written notice
thereof (“Redemption Notice”) to the Company, which Redemption Notice shall indicate the portion of
this Warrant that the Holder is electing to have the Company purchase. The portion of this Warrant
to be purchased pursuant to this Section 4(c) (the “Redemption Portion”) shall be purchased by the
Company for cash at a price equal to the value of the Redemption Portion on the date of such
purchase, which value shall be determined by use of the Black Scholes Option Pricing Model
utilizing (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the remaining term of this Warrant as of such date of request and (ii) an expected volatility
equal to the greater of (A) 60% and (B) the 100 day volatility for the Company obtained from the
HVT function on Bloomberg (the “Redemption Price”). Notwithstanding anything to the contrary in
this Section 4(c), until the Redemption Price (together with any interest thereon) is paid in full,
the unexercised portion of the Warrant submitted for purchase under this Section 4(c) (together
with any interest thereon) may be exercised, in whole or in part, by the Holder for Common Stock,
or in the event the exercise date is after the consummation of the Change of Control, shares of
stock or equity interests of the Successor Entity or Other Entity, as applicable, substantially
equivalent to the Company’s Common Stock pursuant to Section



- 11 -









 







4(b). Any amount due under this Warrant that is not paid when due shall result in a late
charge being incurred and payable by the Company in an amount equal to interest on such amount at
the rate of 12% per annum from the date such amount was due until the same is paid in full.



          5.     NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon
the exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued shares
of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, 130% of the
number of shares of Common Stock as shall from time to time be necessary to effect the exercise of
the SPA Warrants then outstanding (without regard to any limitations on exercise), including,
without limitation, those actions called for by Section 1(g) hereof.




          6.     WARRANT HOLDER NOT DEEMED A STOCKHOLDER; NOTICES OF CORPORATE ACTION.




               (a)     Except as otherwise specifically provided herein, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder
of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a shareholder of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company.



               (b)     Notwithstanding this Section 6, the Company shall provide the Holder with copies of
the same notices and other information given to the shareholders of the Company generally,
contemporaneously with the giving thereof to the shareholders. In addition, in case at any time:



                    (i) the Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (other than dividends or
distributions payable in cash out of retained earnings consistent with the Company’s past
practices with respect to declaring dividends and making distributions) to the holders of
the Common Stock;



                    (ii) the Company shall offer for subscription pro rata to the holders of the
Common Stock any additional shares of stock of any class or other rights;



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                    (iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company with or
into, or sale of all or substantially all of its assets to, another corporation or entity;
or



                    (iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;


then, in each such case, the Company shall give to the Holder (A) notice of the date or estimated
date on which the books of the Company shall close or a record shall be taken for determining the
holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights
or for determining the holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be
given at least 30 days prior to the record date or the date on which the Company’s books are closed
in respect thereto. Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company shall publicly disclose the substance of any notice
delivered hereunder prior to delivery of such notice to the Holder.




          7.     REISSUANCE OF WARRANTS.




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



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



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



               (d)     Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with
this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the



- 13 -









 







Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.



          8.     NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the
Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of
all actions taken pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the foregoing, the Company
will give written notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at
least 15 days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any
grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.




          9.     AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written
consent of the Required Holders; provided that no such action may, without the written consent of
the Holder (i) increase the exercise price of any SPA Warrants or decrease the number of shares or
class of stock obtainable upon exercise of any SPA Warrants or (ii) amend Section 1(f) or the
application of Section 1(f) to any provision of this Warrant. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the SPA Warrants then outstanding.




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




          11.     CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by
the Company and all the Buyers and shall not be construed against any person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant.




          12.     DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within one Business Day of
receipt, or deemed receipt, of the Exercise Notice giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within one Business Day of such disputed
determination or arithmetic calculation being submitted to the Holder, then the Company shall,
within one Business Day submit via facsimile (a) the disputed determination of the Exercise Price
to an independent, reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of


- 14 -









 







the Warrant Shares to the Company’s independent, outside accountant. The Company, at the
Company’s expense, shall cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Holder of the results no
later than five Business Days from the time it receives the disputed determinations or
calculations. Such investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.




          13.     REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant and the other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall limit the right of
the Holder to pursue actual damages for any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or
other security being required.




          14.     TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company, except as may otherwise be required by Section 2(f) of the
Securities Purchase Agreement.




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




               (a)     “Bloomberg” means Bloomberg Financial Markets.



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



               (c)     “Change of Control” means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such reorganization, recapitalization or
reclassification continue after such reorganization, recapitalization or reclassification to hold
publicly traded securities and, directly or indirectly, the voting power of the surviving entity or
entities necessary to elect a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities, or (ii) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of incorporation of the
Company.



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



- 15 -









 







Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated
for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 12. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.



               (e)     “Common Stock” means (i) the Company’s shares of Common Stock, par value $.0001 per
share, and (ii) any share capital into which such Common Stock shall have been changed or any share
capital resulting from a reclassification of such Common Stock.



               (f)     “Common Stock Deemed Outstanding” means, at any given time, the number of shares of
Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to
be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the Options
or Convertible Securities are actually exercisable at such time, but excluding any shares of Common
Stock owned or held by or for the account of the Company or issuable upon conversion and exercise,
as applicable, of the SPA Securities, the SPA Warrants and the securities issued as part of the
Junior Financing (as defined in the Securities Purchase Agreement).



               (g)     “Convertible Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.



               (h)     “Eligible Market” means the Principal Market, The Nasdaq National Market, The Nasdaq
Capital Market, The New York Stock Exchange, Inc. or the American Stock Exchange.



               (i)     “Expiration Date” means the date 60 months after the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take place on the Principal
Market (a “Holiday”), the next date that is not a Holiday.



               (j)     “Fundamental Transaction” means: (i) a transaction or series of related transactions
pursuant to which the Company: (A) sells, conveys or disposes of all or substantially all of its
assets determined on either a quantitative or qualitative basis (the presentation of any such
transaction for stockholder approval being conclusive evidence that such transaction involves the
sale of all or substantially all of the assets of the Company); (B) merges or consolidates with or
into, or engages in any other business combination with, any other person or entity, in any case
that results in the holders of the voting securities of the Company immediately prior to such
transaction holding or having the right to direct the voting of 50% or less of the total
outstanding voting securities of the Company or such other surviving or acquiring person or entity
immediately following such transaction; or (C) sells or issues, or any of its stockholders sells or
transfers, any securities to any person or entity, or the acquisition or right to acquire
securities by any person or entity, in either case acting individually or in concert with others,
such that, following the consummation of such transaction(s), such person(s) or entity(ies)
(together with their respective affiliates, as such term is used under Section 13(d) of the
Exchange Act) would own or have the right to acquire greater than 50% of the outstanding shares of
Common Stock (on a fully-diluted basis, assuming the full conversion, exercise or exchange of all
Purchase Rights then outstanding); (ii) any reclassification or change of the outstanding shares of
Common Stock (other than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision



- 16 -









 







or combination); or (iii) any event, transaction or series of related transactions that
results in individuals serving on the Board of Directors on the date hereof (the “Incumbent Board”)
ceasing for any reason to constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the date hereof whose appointment,
election, or nomination for election by the Company’s stockholders was approved by a vote of at
least a two-thirds of the directors then comprising the Incumbent Board (other than an appointment,
election, or nomination of an individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of the directors of the Company)
shall be considered as though such person were a member of the Incumbent Board.



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



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



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



               (n)     “Principal Market” means the National Association of Securities Dealers, Inc.’s OTC
Bulletin Board.



               (o)     “Registration Rights Agreement” means the registration rights agreement by and among
the Company and the Buyers.



               (p)     “Required Holders” means the holders of the SPA Warrants representing at least 66-2/3%
of the shares of Common Stock underlying the SPA Warrants then outstanding.



               (q)     “SPA Securities” means the Notes issued pursuant to the Securities Purchase Agreement.



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



               (s)     “Trading Day” means any day on which trading the Common Stock is reported on the
Principal Market, or, if the Principal Market is not the principal trading market for the Common
Stock, then on the Eligible Market that is the principal securities exchange or securities market
on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on
which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or
any day that the Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).



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               (t)     “Transaction Documents” is defined in the Securities Purchase Agreement.



[Signature Page Follows]




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



	 	 	 	 	 	 	 
	 	 	GLOBAL EMPLOYMENT HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: Howard Brill
	 	 
	 

	 	 	 	Title: President and Chief Executive Officer	 	 






- 19 -









 








EXHIBIT A




EXERCISE NOTICE



TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK




GLOBAL EMPLOYMENT HOLDINGS, INC.




     The undersigned holder hereby exercises the right to purchase                                                             of the shares
of Common Stock (“Warrant Shares”) of Global Employment Holdings, Inc., a Delaware corporation (the
"Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.



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



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




                                                                       a “Cashless Exercise” with respect to                                                              Warrant Shares.




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



     3. Delivery of Warrant Shares. The Company shall deliver to the holder                                                             Warrant
Shares in accordance with the terms of the Warrant.



Date: _______________ __, ______




	 	 	 
	 

 Name of Registered Holder

	 	 






	 	 	 	 
	By:
	 	 	 
	 

	 	 	 
	 

	 	Name:	 
	 

	 	Title:	 






 









 





ACKNOWLEDGMENT




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



	 	 	 	 	 	 	 
	 	 	GLOBAL EMPLOYMENT HOLDINGS, INC.	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title: