exv4w1






Exhibit 4.1



NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), 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
OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES 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.




ANTHERA PHARMACEUTICALS, INC.




WARRANT TO PURCHASE COMMON STOCK



			
	Warrant No. ____
	 	Original Issue Date: ___________





Anthera Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby certifies that, for
value received, ___________ or its successors or assigns (the “Holder”), is entitled to purchase
from the Company up to a total of __________ fully paid and non-assessable shares of common stock,
$0.001 par value per share (the “Common Stock”), of the Company (each such share, and any other
stock or class of securities in to which such currently authorized capital stock may hereafter be
converted or exchanged, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise
price per share equal to $3.30 per share (as adjusted from time to time as provided in Section
9 herein, the “Exercise Price”), at any time and from time to time on or after the date hereof
(the “Original Issue Date”) and through and including 5:30 P.M., New York City time, on September
___, 2015 (the “Expiration Date”), and subject to the following terms and conditions:



This Warrant (this “Warrant”) is one of a series of similar warrants issued pursuant to that
certain Securities Purchase Agreement, dated September 20, 2010, by and among the Company and the
Purchasers identified therein (the “Purchase Agreement”). All such Warrants, together with any New
Warrants (as defined below) or any other warrant issued in exchange, transfer or replacement hereof
are referred to herein, collectively, as the “Warrants.”



1. Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Purchase
Agreement.



2. Registration of Warrants. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder (which shall include the initial Holder or, as the case may be, any registered assignee to
which this Warrant is assigned hereunder) from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise
hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the
contrary.






 









 







3. Registration of Transfers. Subject to compliance with all applicable securities laws,
the Company shall register the transfer of all or any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, with the Form of Assignment attached as Schedule
2 hereto duly completed and signed, to the Company’s transfer agent or to the Company at its
address specified in the Purchase Agreement and (x) delivery, at the request of the Company, of an
opinion of counsel reasonably satisfactory to the Company to the effect that the transfer of such
portion of this Warrant may be made pursuant to an available exemption from the registration
requirements of the Securities Act and all applicable state securities or blue sky laws and (y)
delivery by the transferee of a written statement to the Company certifying that the transferee is
an “accredited investor” as defined in Rule 501(a) under the Securities Act and making the
representations and certifications set forth in Sections 3.2(b), (c) and (d) of the Purchase
Agreement, to the Company at its address specified in the Purchase Agreement. Notwithstanding the
foregoing, the Company hereby consents to and agrees to register on the books of the Company and
with its transfer agent, without any legal opinion, except to the extent required by the Company’s
transfer agent, any transfer of this Warrant by the Holder to an affiliate of such Holder;
provided, that the transferee certifies to the Company that it is an “accredited investor” as
defined in Rule 501(a) under the Securities Act. Upon any such registration or transfer, a new
warrant to purchase Common Stock in substantially the form of this Warrant (any such new warrant, a
“New Warrant”) evidencing the portion of this Warrant so transferred shall be issued to the
transferee, and a New Warrant evidencing the remaining portion of this Warrant not so transferred,
if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance by such transferee of all of the rights and
obligations in respect of the New Warrant that the Holder has in respect of this Warrant. The
Company shall prepare, issue and deliver at its own expense and without charge to the Holder or any
such transferee any New Warrant under this Section 3, and, subject to Section 6
below, shall pay any transfer tax imposed in connection with such limitation.



4. Exercise and Duration of Warrants.




     (a) All or any part of this Warrant shall be exercisable by the registered Holder in any
manner permitted by Section 10 of this Warrant at any time and from time to time on or
after the Original Issue Date and through and including 5:30 P.M. New York City time, on the
Expiration Date. At 5:30 P.M., New York City time, on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value and this Warrant shall
be terminated and no longer outstanding.



     (b) The Holder may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached as Schedule 1 hereto (the “Exercise Notice”), completed and duly
signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this
Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the
Exercise Notice and if a “cashless exercise” may occur at such time pursuant to Section 10
below), and the date on which the last of such items is delivered to the Company (as determined in
accordance with the notice provisions hereof) is an “Exercise Date.” The delivery by (or on behalf
of) the Holder of the Exercise Notice and the applicable Exercise Price as provided above shall
constitute the Holder’s certification to the Company that its representations contained in Sections
3.2(b), (c) and (d) of the Purchase Agreement are true and correct as of the Exercise Date as if
remade in their entirety (or, in the case of any transferee Holder that is not a party to the
Purchase Agreement, such transferee Holder’s certification to the Company that such representations
are true and correct as to such assignee Holder as of the Exercise Date). 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 shall have the same effect as



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cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase
the remaining number of Warrant Shares.



5. Delivery of Warrant Shares.




     (a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than
three (3) Trading Days after the Exercise Date) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names as the Holder may
designate (provided that, if the Registration Statement is not effective and the Holder directs the
Company to deliver a certificate for the Warrant Shares in a name other than that of the Holder or
an Affiliate of the Holder, it shall deliver to the Company on the Exercise Date an opinion of
counsel reasonably satisfactory to the Company to the effect that the issuance of such Warrant
Shares in such other name may be made pursuant to an available exemption from the registration
requirements of the Securities Act and all applicable state securities or blue sky laws), (i) a
certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends, or
(ii) an electronic delivery of the Warrant Shares to the Holder’s account at the Depository Trust
Company (“DTC”) or a similar organization, unless in the case of clause (i) and (ii) a registration
statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder
thereunder is not then effective or the Warrant Shares are not freely transferable without volume
and manner of sale restrictions pursuant to Rule 144 under the Securities Act, in which case such
Holder shall receive a certificate for the Warrant Shares issuable upon such exercise with
appropriate restrictive legends. The Holder, or any Person permissibly so designated by the Holder
to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant
Shares as of the Exercise Date. If the Warrant Shares are to be issued free of all restrictive
legends, the Company shall, upon the written request of the Holder, use its reasonable best efforts
to deliver, or cause to be delivered, Warrant Shares hereunder electronically through DTC or
another established clearing corporation performing similar functions, if available; provided,
that, the Company may, but will not be required to, change its transfer agent if its current
transfer agent cannot deliver Warrant Shares electronically through such a clearing corporation.



     (b) If by the close of the third (3rd) Trading Day after delivery of an Exercise
Notice and the payment of the aggregate exercise price in any manner permitted by Section
10 of this Warrant, the Company fails to deliver to the Holder a certificate representing the
required number of Warrant Shares in the manner required pursuant to Section 5(a), and if
after such third (3rd) Trading Day and prior to the receipt of such Warrant Shares, 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 the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company shall, within three (3) Trading Days after the
Holder’s request and in the Holder’s sole discretion, either (1) pay in cash to the Holder an
amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased, at which point the Company’s obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate or (2) promptly honor its obligation
to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay
cash to the Holder in an amount equal to the excess (if any) of Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so purchased in the Buy-In
over the product of (A) the number of shares of Common Stock purchased in the Buy-In, times (B) the
closing bid price of a share of Common Stock on the Exercise Date.



     (c) To the extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with and subject to the terms hereof (including the limitations set



3









 




forth in
Section 11 below) are absolute and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder
or any other Person of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the issuance of Warrant
Shares. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.



6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or
transfer tax, transfer agent fee or other incidental tax or expense in respect of the issuance of
such certificates, all of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax that may be payable in respect of any
transfer involved in the registration of any certificates for Warrant Shares or the Warrants in a
name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.



7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity and surety bond, if requested by the
Company; provided that in the case of the initial Holder its unsecured, unbonded agreement of
indemnity and affidavit of loss shall be sufficient. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and procedures and pay such
other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a
result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the
Company as a condition precedent to the Company’s obligation to issue the New Warrant.



8. Reservation of Warrant Shares. The Company represents and warrants that on the Original
Issue Date, it has duly authorized and reserved, and covenants that it will at all times reserve
and keep available out of the aggregate of its authorized but unissued and otherwise unreserved
Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this
Warrant as herein provided, the number of Warrant Shares that are issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other contingent purchase
rights of persons other than the Holder (taking into account the adjustments and restrictions of
Section 9). The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company
represents and warrants that the Warrant Shares, when issued and paid for in accordance with the
terms of the Transaction Documents and the Warrants, will be issued free and clear of all security
interests, claims, liens and other encumbrances other than restrictions
imposed by applicable securities laws. The Company will take all such action as may be reasonably
necessary to assure that such shares of Common Stock may be issued as provided





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herein without
violation of any applicable law or regulation, or of any requirements of any securities exchange or
automated quotation system upon which the Common Stock may be listed.



9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this
Section 9.




     (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii) subdivides its outstanding
shares of Common Stock into a larger number of shares, (iii) combines its outstanding shares of
Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of Common
Stock any shares of capital stock of the Company, then in each such case the Exercise Price shall
be adjusted to a price determined by multiplying the Exercise Price in effect immediately prior to
the effective date of such event by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such effective date immediately before giving effect to such
event and the denominator of which shall be the number of shares of Common Stock outstanding
immediately after giving effect to such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to
clause (ii), (iii) or (iv) of this paragraph shall become effective immediately after the effective
date of such subdivision, combination or reclassification.



     (b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding
paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other
asset, including cash (in each case, “Distributed Property”), then, upon any exercise of this
Warrant that occurs after the record date fixed for determination of stockholders entitled to
receive such distribution, the Holder shall be entitled to receive, in addition to the Warrant
Shares otherwise issuable upon such exercise (if applicable), the Distributed Property that such
Holder would have been entitled to receive in respect of such number of Warrant Shares had the
Holder been the record holder of such Warrant Shares immediately prior to such record date without
regard to any limitation on exercise contained therein. The Company will at all times set aside in
escrow and keep available for distribution to such holder upon exercise of this Warrant a portion
of the Distributed Property to satisfy the distribution to which such Holder is entitled pursuant
to this paragraph (b).



     (c) Fundamental Transactions. If, at any time while this Warrant is outstanding any
(i) capital reorganization; (ii) reclassification of the capital stock of the Company or compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property; (other than as a result of a subdivision or combination of
shares of Common Stock covered by Section 9(a) above), (iii) merger, consolidation,
reorganization or other similar transaction or series of related transactions which results in the
Common Stock of the Company outstanding immediately prior thereto representing immediately
thereafter (either by remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 50% of the combined voting power and economic interests in
the Company or such surviving or acquiring entity outstanding immediately after such transaction;
(iv) sale, lease, license, transfer, conveyance or other disposition of all or
substantially all of the assets of the Company and its subsidiaries taken as a whole; (v) sale of
shares of capital stock of the Company, in a single transaction or series of related transactions,



5









 




representing at least 50% of the voting power or economic interests in the Company; (vi)
acquisition by any “person” (together with his, her or its Affiliates) or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) , directly or indirectly, of the beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of outstanding
shares of Common Stock and/or other equity securities of the Company, in a single transaction or
series of related transactions (including, without limitation, one or more tender offers or
exchange offers), representing 50% or more of the voting power of or economic interests in the then
outstanding shares of capital stock of the Company, (vii) tender offer or exchange offer (whether
by the Company or another Person) pursuant to which all or substantially all of the holders of
Common Stock are permitted to tender or exchange their shares for other securities, cash or
property, or (viii) a liquidation, bankruptcy, insolvency, dissolution or winding-up of the Company
(each of (i)-(viii) above being referred to herein as a “Fundamental Transaction”), shall be
effected, then the Holder shall have the right thereafter to receive, upon the basis and upon the
terms and conditions herein specified and in lieu of the number of Warrant Shares then issuable
upon exercise in full of this Warrant, voting securities (the “Alternate Shares”) in such
successor entity, surviving entity or the corporation purchasing or otherwise acquiring such
assets in a Fundamental Transaction (the “Successor Entity”), as the case may be, such that the
aggregate value of the Holder’s warrants to purchase such number of Alternate Shares in the
Successor Entity (where the value of warrant to purchase one Alternate Share in the Successor
Entity is determined in accordance with the Black-Scholes Option Pricing formula set forth in
Appendix A hereto), is at least equivalent to the aggregate value of this Warrant
immediately prior to the consummation of such Fundamental Transaction (where the value of each
Warrant to purchase one Warrant Share is determined in accordance with the Black-Scholes Option
Pricing formula set forth in Appendix B hereto) assuming this Warrant were then exercisable
in full without regard to any limitations on exercise contained herein. The new warrants to
purchase Alternate Shares in the Successor Entity shall have the same expiration date as this
Warrant, and shall have a strike price, KAcq, that is calculated in accordance with
Appendix A hereto. For the avoidance of doubt, if the Successor Entity, is a member of a
consolidated group for financial reporting purposes, the “Successor Entity” shall be deemed to be
the parent of such consolidated group for purposes of this Section 9(c) and Appendix A
hereto. Appropriate provision shall be made with respect to the rights and interests of each
Holder to the end that the provisions hereof (including, without limitation, provision for
adjustment of the Exercise Price) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any Alternate Shares thereafter deliverable upon the exercise thereof.




          The Company shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, the Successor Entity shall assume the obligation to
deliver to the Holder, such Alternate Shares as, in accordance with the foregoing provisions, the
Holder may be entitled to receive, and the other obligations under this Warrant. The Company shall
cause the Successor Entity to assume in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 9(c). Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of this Warrant referring
to the “Company” shall refer instead to the Successor Entity), and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein. The provisions of this paragraph (c) shall similarly apply to
subsequent transactions of an analogous type to any Fundamental Transaction.




          Notwithstanding the foregoing, in the event that the Company, in spite of using its best
efforts, is unable to cause these Warrants to continue in full force and effect until the
Expiration Date in connection with any Fundamental Transaction or if the Fundamental











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Transaction is
(i) a transaction where the consideration paid to the holders of the Common Stock consists of cash,
(ii) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
as amended, or (iii) a Fundamental Transaction involving a person or entity not traded on the New
York Stock Exchange, the NYSE Alternext (formerly the American Stock Exchange), the NASDAQ Global
Select Market, the NASDAQ Global Market or the NASDAQ Capital Market, at the request of the Holder
delivered before the ninetieth (90th) day after such Fundamental Transaction, the Company (or the
successor entity to the Company) shall purchase this Warrant from the Holder by paying to the
Holder, within five (5) Trading Days after such request (or, if later, on the effective date of the
Fundamental Transaction), cash in an amount equal to the aggregate value of this Warrant
immediately prior to such Fundamental Transaction (where the value of each Warrant to purchase one
share of Common Stock (“Ccorp”) is determined in accordance with the Black-Scholes
Option Pricing formula set forth in Appendix B hereto; provided that in calculating
Ccorp, the amount payable in respect of the “time value” shall not exceed the Exercise
Price, where “time value” equals Ccorp minus (Scorp minus Kcorp)
determined in accordance with Appendix B).




     (d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraph (a) and (e) of this Section 9, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for
the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise
Price in effect immediately prior to such adjustment.



     (e) Subsequent Equity Sales.



          (i) Except as provided in paragraph (e)(iii) of this Section 9, if and whenever the
Company shall issue or sell, or is, in accordance with any of paragraphs (e)(ii)(l) through
(e)(ii)(7) of this Section 9, deemed to have issued or sold, any shares of Common Stock for
no consideration or for a consideration per share less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then and in each such case (a “Trigger
Issuance”) the then-existing Exercise Price shall be reduced as of the close of business on the
effective date of the Trigger Issuance, to a price determined as follows:




	 	 	 	 	 	 	 

	Adjusted Exercise Price

	 	=
	 	(A x B) + D	 	 
	 

	 	 	 	 

A+C
	 	 






                    where



                    “A” equals the number of shares of Common Stock outstanding, including Additional Shares of
Common Stock (as defined below) deemed to be issued under such definition below, immediately
preceding such Trigger Issuance;



                    “B” equals the Exercise Price in effect immediately preceding such Trigger Issuance;



                    “C” equals the number of Additional Shares of Common Stock issued or deemed issued hereunder
as a result of the Trigger Issuance; and



                    “D” equals the aggregate consideration, if any, received or deemed to be received by the
Company upon such Trigger Issuance;



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provided, however, that in no event shall the Exercise Price after giving effect to such Trigger
Issuance be greater than the Exercise Price immediately prior to such Trigger Issuance.



For purposes of this paragraph (e), “Additional Shares of Common Stock” shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this paragraph (e), other
than Excluded Issuances (as defined in paragraph (e)(iii) of this Section 9).




          (ii) For purposes of this paragraph (e), the following paragraphs
(e)(ii)(l) to (e)(ii)(7) shall also be applicable:




               (1) Issuance of Rights or Options. In case at any
time the Company shall in any manner issue, sell, distribute or otherwise grant (directly and not
by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or security convertible
into or exchangeable for Common Stock (such warrants, rights or options being called “Options” and
such convertible or exchangeable stock or securities being called “Convertible Securities”),
whether or not such Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, or exercisable prior to or after the Expiration Date, and the price per
share for which Common Stock is issuable upon the exercise of such Options or upon the conversion
or exchange of such Convertible Securities (determined by dividing (i) the sum (which sum shall
constitute the applicable consideration) of (x) the total amount, if any, received or receivable by
the Company as consideration for the granting of such Options, plus (y) the aggregate amount of
additional consideration payable to the Company upon the exercise of all such Options, plus (z), in
the case of such Options that relate to Convertible Securities, the aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the Exercise Price in
effect immediately prior to the time of the granting of such Options, then the total number of
shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of
the total amount of such Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of granting of such Options or
the issuance of such Convertible Securities and thereafter shall be deemed to be outstanding for
purposes of adjusting the Exercise Price. Except as otherwise provided in paragraph (e)(ii)(3), no
adjustment of the Exercise Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities.



               (2) Issuance of Convertible Securities. In case the
Company shall in any manner issue, sell, distribute or otherwise grant (directly and not by
assumption in a merger or otherwise) any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable, or exercisable
prior to or after the Expiration Date, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) the sum (which sum shall constitute
the applicable consideration) of (x) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus (y) the aggregate amount
of additional consideration, if any, payable to the Company upon the conversion or exchange thereof,
by (ii) the total number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Exercise Price in effect



8









 




immediately prior to
the time of such issue or sale, then the total maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued
for such price per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price, provided
that (a) except as otherwise provided in paragraph (e)(ii)(3), no adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) no further adjustment of the Exercise Price shall be made by reason
of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the
other provisions of paragraph (e). No adjustment pursuant to this Section 9 shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.




               (3) Change in Option Price or Conversion Rate. Upon
the happening of any of the following events, namely, if the purchase price provided for in any
Option referred to in paragraph (e)(ii)(l) of this Section 9, the additional consideration,
if any, payable upon the conversion or exchange of any Convertible Securities referred to in
paragraphs (e)(ii)(l) or (e)(ii)(2), or the rate at which Convertible Securities referred to in
paragraphs (e)(ii)(l) or (e)(ii)(2) are convertible into or exchangeable for Common Stock shall
change at any time (including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the time of such event shall
forthwith be readjusted to the Exercise Price that would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time initially granted,
issued or sold.



               (4) Stock Dividends. Subject to the provisions of
this paragraph (e), in case the Company shall declare a dividend or make any other distribution
upon any stock of the Company (other than the Common Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be deemed to have been issued or
sold without consideration.



               (5) Consideration for Stock. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for cash, the consideration received therefor shall
be deemed to be the gross amount received by the Company therefor. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company shall be deemed to be
the fair value of such consideration as determined in good faith by the Board of Directors of the
Company. In case any Options shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined in good faith by the Board of Directors of
the Company. If Common Stock, Options or Convertible Securities shall be issued or sold by the
Company and, in connection therewith, other Options or Convertible Securities (the “Additional
Rights”) are issued, then the consideration received or deemed to be received by the Company shall
be reduced by the fair market value of the Additional Rights (as determined using the Black Scholes
Option Pricing Model or another
method mutually agreed to by the Company and the Holder). The Board of Directors of the Company
shall respond promptly, in writing, to an inquiry by the Holder as to the fair market value of the
Additional Rights. In the event that the Board of Directors of the Company and the



9









 




Holder are
unable to agree upon the fair market value of the Additional Rights, the Company and the Holder
shall jointly select an appraiser who is experienced in such matters. The decision of such
appraiser shall be final and conclusive, and the cost of such appraiser shall be borne evenly by
the Company and the Holder.




               (6) Record Date. In case the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in
Common Stock, Options or Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall 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.



               (7) Treasury Shares. The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the Company or any of its
wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or
retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this
paragraph (e).



          (iii) Notwithstanding the foregoing, no adjustment will be made
under this paragraph (e) in respect of: (i) the issuance of securities upon the exercise or
conversion of any Common Stock or Common Stock Equivalents issued by the Company prior to the date
hereof, (ii) the issuance of Warrant Shares upon exercise of the Warrants, (iii) the grant of
options, warrants, Common Stock or other Common Stock Equivalents (but not including any amendments
to such instruments) under any duly authorized employee stock option, restricted stock plan or
stock purchase plan of the Company whether now existing or hereafter approved by the Company and
its stockholders in the future, and the issuance of Common Stock in respect thereof, (iv) the
issuance of securities in connection with a Strategic Transaction, or (v) the issuance of
securities in a transaction described in paragraph (a) or (b) of this Section 9
(collectively, “Excluded Issuances”). For purposes of this paragraph, a “Strategic Transaction”
means a transaction or relationship in which (1) the Company issues shares of Common Stock to a
Person that the Board of Directors of the Company determined in good faith is, itself or through
its Subsidiaries, an operating company in a business synergistic with the business of the Company
(or a shareholder thereof) and (2) the Company expects to receive benefits in addition to the
investment of funds, but shall not include (x) a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to a Person whose primary business is
investing in securities or (y) issuances to lenders. Upon any adjustment of the Exercise Price
other than pursuant to Section 9(a), such Exercise Price shall not be reduced to less than
$2.90, the closing consolidated bid price of the Company’s common stock on Principal Trading Market
as of the date of the Purchase Agreement, prior to the receipt of any shareholder approval required
under any applicable law or pursuant to the rules of the Principal Trading Market.




          (iv) Trading Market Limitation. Upon any adjustment to the Exercise Price pursuant to
paragraph (e)(i) above, the number of Warrant Shares purchasable hereunder shall be adjusted by
multiplying such number by a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the Exercise Price in
effect immediately thereafter. Notwithstanding any other provisions in this
Section 9 to the contrary, if a reduction in the Exercise Price pursuant to paragraph
(e)(i) of this Section 9 would require the Company to obtain stockholder approval of the
transactions contemplated by the Purchase Agreement pursuant to the applicable rules of the
Company’s





10









 







Principal Trading Market and such stockholder approval has not been obtained, (i) the
Exercise Price shall be reduced to the maximum extent that would not require stockholder approval
under such Rule, and (ii) the Company shall use its commercially reasonable efforts to obtain such
stockholder approval as soon as reasonably practicable, including by calling a special meeting of
stockholders to vote on such Exercise Price adjustment.




     (f) Calculations. All calculations under this Section 9 shall be made to the
nearest one-thousandth of a cent or the nearest one thousandth of a share, as applicable.



     (g) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly compute such adjustment, in good faith,
in accordance with the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and showing in detail the facts upon
which such adjustment is based. The Company will promptly deliver a copy of each such certificate
to the Holder and to the Company’s transfer agent.



     (h) Notice of Corporate Events. If, while this Warrant is outstanding, the Company (i)
declares a dividend or any other distribution of cash, securities or other property in respect of
its Common Stock, including, without limitation, any granting of rights or warrants to subscribe
for or purchase any capital stock of the Company or any subsidiary, (ii) authorizes or approves,
enters into any agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then, except if such notice and the contents thereof shall be deemed to constitute
material non-public information, the Company shall deliver to the Holder a notice of such
transaction at least ten (10) Trading Days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to participate in or vote with respect to
such transaction; provided, however, that the failure to deliver such notice or any defect therein
shall not affect the validity of the corporate action required to be described in such notice. To
the extent that any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of its subsidiaries, the Company shall simultaneously file
such notice with the Commission (as defined in the Purchase Agreement) pursuant to a Current Report
on Form 8-K.



     (i) Structural Dilution. So long as this Warrant remains outstanding, the Company
shall not permit any of its Subsidiaries to issue, sell, distribute or otherwise grant (directly
and not by assumption in a merger or otherwise) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of any equity securities of such Subsidiary or any securities
convertible into or exchangeable for such equity securities (or any rights to subscribe for or to
purchase, or any warrants or options for the purchase of any such convertible or exchangeable
securities), whether or not immediately exercisable or exercisable prior to or after the Expiration
Date.


10. Payment of Exercise Price. The Holder shall pay the Exercise Price in immediately
available funds; provided, however, that if, on any Exercise Date there is not an effective
Registration Statement (as defined in that certain Registration Rights Agreement, of even date
herewith, by and among the Company and the several Purchasers signatory thereto) registering,
or no current prospectus available for, the resale of the Warrant Shares by the Holder, then the
Holder may, in its sole discretion, satisfy its obligation to pay the Exercise Price through a






11









 







“cashless exercise”, in which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:




          X = Y [(A-B)/A]




               where:



               “X” equals the number of Warrant Shares to be issued to the Holder;



               “Y” equals the total number of Warrant Shares with respect to which this Warrant is being
exercised;



               “A” equals the average of the Closing Sale Prices of the shares of Common Stock (as reported
by Bloomberg Financial Markets) for the five (5) consecutive Trading Days ending on the date
immediately preceding the Exercise Date; and



               “B” equals the Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.


For purposes of this Warrant, “Closing Sale Price” means, for any security as of any date, the last
trade price for such security on the Principal Trading Market for such security, as reported by
Bloomberg Financial Markets, or, if such Principal Trading Market begins to operate on an extended
hours basis and does not designate the last trade price, then the last trade price of such security
prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if the
foregoing do not apply, the last trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg Financial Markets, or, if no
last trade price is reported for such security by Bloomberg Financial Markets, 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. If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale Price 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 the Board of Directors of the Company shall use its good faith judgment to determine
the fair market value. The Board of Directors’ determination shall be binding upon all parties
absent demonstrable error. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.



For purposes of Rule 144 promulgated under the Securities Act, the Company acknowledges that the
provisions above permitting “cashless exercise” are intended, in part, to ensure that a full or
partial exchange of this Warrant pursuant to such provisions will qualify as a conversion, within
the meaning of paragraph (d)(3)(iii) of Rule 144 under the Securities Act, and the holding period
for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally
issued pursuant to the Purchase Agreement.



11. Limitations on Exercise. Notwithstanding anything to the contrary contained herein, the
number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following
such exercise (or other issuance), the total number of shares of Common Stock then beneficially
owned by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the





12









 







Exchange Act, does
not exceed 4.999% of the total number of then issued and outstanding shares of Common Stock
(including for such purpose the shares of Common Stock issuable upon such exercise), it being
acknowledged by the Holder that the Company is not representing to such Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely
responsible for any schedules required to be filed in accordance therewith. To the extent that the
limitation contained in this Section 11 applies, the determination of whether this Warrant
is exercisable (in relation to other securities owned by such Holder) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a
Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder) and of which portion of this
Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the
Company shall have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 11, 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 (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding. Upon the written request of
the Holder, the Company shall within three (3) Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding. This provision shall not restrict
the number of shares of Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may receive in the event
of a Fundamental Transaction as contemplated in Section 9 of this Warrant. By written
notice to the Company, which will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company, the Holder may waive the provisions of this
Section 11 (but such waiver will not affect any other holder) to change the beneficial
ownership limitation to 9.999% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant, and
the provisions of this Section 11 shall continue to apply. Upon such a change by a Holder
of the beneficial ownership limitation from such 4.999% limitation to such 9.999% limitation, the
beneficial ownership limitation may not be further waived by such Holder.



12. No Fractional Shares. No fractional Warrant Shares will be issued in connection with
any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable,
the number of Warrant Shares to be issued shall be rounded down to the next whole number and the
Company shall pay the Holder in cash the fair market value (based on the Closing Sale Price) for
any such fractional shares.



13. Notices. Any and all notices or other communications or deliveries hereunder
(including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 5:30
P.M., New York City time, on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
specified in the Purchase Agreement on a day that is not a Trading Day or later than 5:30 P.M., New
York City time, on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service specifying next business day delivery, or
(iv) upon actual receipt by the Person to whom such notice is required to be given, if by hand
delivery. The address and facsimile number of a Person for such notices or communications shall





13









 







be
as set forth in the Purchase Agreement unless changed by such Person by two (2) Trading Days’ prior
notice to the other Persons in accordance with this Section 13.



14. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon thirty
(30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.



15. Miscellaneous.




     (a) No Rights as a Stockholder. The Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, amalgamation,
conveyance or otherwise), prior to the issuance to the Holder of the Warrant Shares which such
Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase
any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the Company.



     (b) Authorized Shares. (i) The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges created by the Company in respect of
the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with
such issue).



          (ii) Except and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate or articles of incorporation
or bylaws or through any reorganization, transfer of assets, consolidation, merger, 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, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (a) not increase
the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may be necessary or





14









 







appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to
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 in order that the Company may thereafter validly and legally issue as fully paid and
nonassessable all Warrant Shares which the Warrant Holder is entitled to receive upon exercise of
any Warrant pursuant to the terms thereof.




          (iii) Before taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all
such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.




     (c) Successors and Assigns. Subject to the compliance with applicable
securities laws, this Warrant may be assigned by the Holder. This Warrant may not be assigned by
the Company without the written consent of the Holder except to a successor in the event of a
Fundamental Transaction subject to the terms and conditions of this Warrant. This Warrant shall be
binding on and inure to the benefit of the Company and the Holder and their respective successors
and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give
to any Person other than the Company and the Holder any legal or equitable right, remedy or cause
of action under this Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder, or their successors and assigns.



     (d) Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants 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 Holders of Warrants representing no less than seventy-five percent (75%) of
the Warrant Shares obtainable upon exercise of the Warrants then outstanding. Notwithstanding the
foregoing, (i) this Warrant may be amended and the observance of any term hereunder may be waived
without the written consent of the Holder only in a manner which applies to all Warrants in the
same fashion and (ii) the number of Warrant Shares subject to this Warrant and the Exercise Price
of this Warrant may not be amended, and the right to exercise this Warrant may not be waived,
without the written consent of the Holder. The Company shall give prompt written notice to the
Holder of any amendment hereof or waiver hereunder that was effected without the Holder’s written
consent.



     (e) Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.



     (f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF
MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF
ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT



15









 




PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH
OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA
REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT
THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE PURCHASE AGREEMENT AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.




     (g) Equitable Remedies. Without limiting the rights of the Holder to pursue all other
legal and equitable rights available to the Holder for the Company’s failure to perform its
obligations hereunder, the Company acknowledges and agrees that the remedy at law for any failure
to perform any obligations hereunder would be inadequate and that the Holder shall be entitled to
specific performance, injunctive relief or other equitable remedies in the event of any such
failure.



     (h) Headings. The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.



     (i) Severability. In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and
provisions of this Warrant shall not in any way be affected or impaired thereby, and the Company
and the Holder will attempt in good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Warrant.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]











16









 







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




	 	 	 	 	 
	 	ANTHERA PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 











 





SCHEDULE 1




FORM OF EXERCISE NOTICE



[To be executed by the Holder to purchase shares of Common Stock under the Warrant]


Ladies and Gentlemen:



(1) The undersigned is the Holder of Warrant No.                      (the “Warrant”) issued by Anthera
Pharmaceuticals, Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and
not otherwise defined herein have the respective meanings set forth in the Warrant.



(2) The undersigned hereby exercises its right to purchase                      Warrant Shares pursuant to
the Warrant.



(3) The Holder intends that payment of the Exercise Price shall be made as (check one):





	 	 	 	o Cash Exercise
	 
	 	 	 	o “Cashless Exercise” under Section 10 of the Warrant







 (4)

If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $        
             in
immediately available funds to the Company in accordance with the
terms of the Warrant.


 
(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares
determined in accordance with the terms of the Warrant.

 (6) By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company
that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in
excess of the number of shares of Common Stock (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934) permitted to be owned under Section 11 of the Warrant
to which this notice relates.






Dated:            
                     
        



Name of Holder:          
                     
                     
         




					
	 	
 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)











 









 








SCHEDULE 2




FORM OF ASSIGNMENT



[To be completed and executed by the Holder only upon transfer of the Warrant]


FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
    
                
(the “Transferee”) the right represented by the within Warrant to purchase        
             
shares of Common Stock of Anthera Pharmaceuticals, Inc., a Delaware corporation (the
“Company”) to which the within Warrant relates and appoints        
             
attorney to transfer said right on the books of the Company with full power of substitution in the
premises. In connection therewith, the undersigned represents, warrants, covenants and agrees to
and with the Company that:





	(a)	 	the offer and sale of the Warrant contemplated hereby is being made in compliance with
Section 4(1) of the United States Securities Act of 1933, as amended (the “Securities Act”) or
another valid exemption from the registration requirements of Section 5 of the Securities Act
and in compliance with all applicable securities laws of the states of the United States;
	 
	(b)	 	the undersigned has not offered to sell the Warrant by any form of general solicitation or
general advertising, including, but not limited to, any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or broadcast over
television or radio, and any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising; and
	 
	(c)	 	the undersigned has read the Transferee’s investment letter included herewith, and to its
actual knowledge, the statements made therein are true and correct.




Dated:         
                   
             




	 	 	 	 
				
	 

	 	 	
	 

	 	(Signature must conform in all respects to name of	
	 

	 	holder as specified on the face of the Warrant)	
	 
	 	 	
	 
	 	 	
	 

	 	 	
	 

	 	Address of Transferee	
	 
	 	 	
	 
	 	 	
	 

	 	 	
	 
	 	 	
	 

	 	 	
	In the presence of:
	 	 	
	 
	 	 	
	 
	 	 	
	 


	 	 	






 









 






APPENDIX A



Black Scholes Option Pricing formula to be used when calculating the value of each new warrant to
purchase one share in the Successor Entity shall be:



C
Acq = SAcqe
-λ(TAcq-tAcq)N(d
1) — K
Acqe
-r(TAcq-tAcq)N(d
2), where



CAcq = value of each warrant to purchase one share in the Successor Entity



SAcq = price of Successor Entity’s stock as determined by reference to the average of
the closing prices on the securities exchange or Nasdaq Global Market over the 20-day period ending
three trading days prior to the closing of the Fundamental Transaction if the Successor Entity’s
stock is then traded on such exchange or system, or the average of the closing bid or sale prices
(whichever is applicable) in the over-the-counter market over the 20-day period ending three
trading days prior to the closing of the Fundamental Transaction if the Successor Entity’s stock is
then actively traded in the over-the-counter market, or the then most recently completed financing
if the Successor Entity’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.



TAcq = expiration date of new warrants to purchase shares in the Successor Entity =
TCorp



tAcq = date of issue of new warrants to purchase shares in the Successor Entity



TAcq-tAcq = time until warrant expiration, expressed in years



σ = volatility = annualized standard deviation of daily log-returns (using a 262-day annualization
factor) of the Successor Entity’s stock price on the securities exchange or Nasdaq Global Market
over a 20-day trading period, determined by the Warrant Holders, that is within the 100-day trading
period ending on the trading day immediately after the public announcement of the Fundamental
Transaction if the Successor Entity’s stock is then traded on such exchange or system, or the
annualized standard deviation of daily-log returns (using a 262-day annualization factor) of the
closing bid or sale prices (whichever is applicable) in the over-the-counter market over a 20-day
trading period, determined by the Warrant Holder, that is within the 100-day trading period ending
on the trading day immediately after the public announcement of the Fundamental Transaction if the
Successor Entity’s stock is then actively traded in the over-the-counter market, or 0.6 (or 60%) if
the Successor Entity’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.



N = cumulative normal distribution function



d1 = (ln(SAcq/KAcq) +
(r-λ+σ2/2)(TAcq-tAcq)) ÷ (σ√(TAcq-tAcq))



ln = natural logarithm



λ = dividend rate of the Successor Entity for the most recent 12-month period at the time of
closing of the Fundamental Transaction.



KAcq = strike price of new warrants to purchase shares in the Successor Entity =
KCorp * (SAcq / SCorp)



r = annual yield, as reported by Bloomberg at time tAcq, of the United States Treasury
security measuring the nearest time TAcq



d2 = d1-

σ√(TAcq-tAcq)












 









 








APPENDIX B



Black Scholes Option Pricing formula to be used when calculating the value of each Warrant to
purchase one share in the Company shall be:



CCorp = SCorpe-λ(TCorp-tCorp)N(d1) —
KCorpe-r(TCorp-tCorp)N(d2), where



CCorp = value of each Warrant to purchase one share in the Company



SCorp = price of Company stock as determined by reference to the average of the closing
prices on the securities exchange or Nasdaq Global Market over the 20-day period ending three
trading days prior to the closing of the Fundamental Transaction described in if the Company’s
stock is then traded on such exchange or system, or the average of the closing bid or sale prices
(whichever is applicable) in the over-the-counter market over the 20-day period ending three
trading days prior to the closing of the Fundamental Transaction if the Company’s stock is then
actively traded in the over-the-counter market, or the then most recently completed financing if
the Company’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.



TCorp = expiration date of Warrants to purchase shares in the Company



tCorp = date of public announcement of transaction



TCorp-tCorp = time until Warrant expiration, expressed in years



σ = volatility = the annualized standard deviation of daily log-returns (using a 262-day
annualization factor) of the Company’s stock price on the securities exchange or Nasdaq Global
Market over a 20-day trading period, determined by the Warrant Holders, that is within the 100-day
trading period ending on the trading day immediately after the public announcement of the
Fundamental Transaction if the Company’s stock is then traded on such exchange or system, or the
annualized standard deviation of daily-log returns (using a 262-day annualization factor) of the
closing bid or sale prices (whichever is applicable) in the over-the-counter market over a 20-day
trading period, determined by the Warrant Holder, that is within the 100-day trading period ending
on the trading day immediately after the public announcement of the Fundamental Transaction if the
Company’s stock is then actively traded in the over-the-counter market, or 0.6 (or 60%) if the
Company’s stock is not then traded on a securities exchange or system or in the over-the-counter
market.



N = cumulative normal distribution function



d1 = (ln(SCorp/KCorp) +
(r-λ+σ2/2)(TCorp-tCorp)) ÷ (σ√(TCorp-tCorp))



ln = natural logarithm



λ = dividend rate of the Company for the most recent 12-month period at the time of closing of the
Fundamental Transaction.



KCorp = strike price of warrant



r = annual yield, as reported by Bloomberg at time tCorp, of the United States Treasury
security measuring the nearest time TCorp



d2 = d1- σ√(TCorp-tCorp)