EX-10.53






Exhibit 10.53




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 SELECTED BY
THE HOLDER AND REASONABLY SATISFACTORY TO THE COMPANY (PROVIDED THAT SCHULTE ROTH & ZABEL LLP SHALL
BE DEEMED REASONABLY SATISFACTORY TO THE COMPANY), 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.



PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A PORTION OF THIS WARRANT MAY HAVE BEEN
EXERCISED, AND THEREFORE THE ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE
LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.



PURSUANT TO THE TERMS OF SECTION 2(E) OF THIS WARRANT AND THE FEE LETTER REFERENCED IN THE
FINANCING AGREEMENT (AS DEFINED HEREIN), THE ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS
WARRANT MAY BE REDUCED IN THE EVENT ALL OR ANY PORTION OF THE ADDITIONAL FEE PAYABLE UNDER THE FEE
LETTER HAS BEEN PAID AND THEREFORE MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.



METALICO, INC.

Warrant To Purchase Common Stock




Warrant No.: 2014-1


Number of Shares of Common Stock:      3,810,146_


Date of Issuance: October 21, 2014 (“Issuance Date”)



Metalico, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TPG SPECIALTY
LENDING, INC., 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, at any time or times on or after the date that is the earlier of (i)
the Stockholder Approval Date (as defined in the Subscription Agreement (as defined below)) and
(ii) the date that is seventy-five (75) days after the Subscription Date (as defined below) (the
"Initial Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date,
(as defined below), three million eight hundred ten thousand one hundred forty-six (3,810,146)
fully paid nonassessable shares of Common Stock, subject to adjustment as provided herein (the
"Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant to
Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer
or replacement hereof, this “Warrant”), shall have the meanings set forth in Section 17. This
Warrant is one of the Warrants to purchase Common Stock (the “Warrants”) issued pursuant to Section
1 of that certain Subscription Agreement, dated as of October 21, 2014 (the “Subscription Date”),
by and among the Company and the investors (the “Subscribers”) referred to therein (the
"Subscription Agreement”). Capitalized terms used herein and not otherwise defined shall have the
definitions ascribed to such terms in the Subscription 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 at any time or times on or after the Initial Exercisability Date, in whole
or in part, by (i) delivery of a written notice to the Company no later than 6:00 P.M., New York
time, on any Trading Day, 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 by wire transfer of immediately
available funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a
Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder unless after giving effect to such
issuance, no additional Warrant Shares shall be issuable hereunder. Notwithstanding the preceding
sentence, in the event that this Warrant has been exercised for less than all Warrant Shares
available hereunder and the original Warrant has not been delivered to the Company, the Company’s
records of Warrant exercises shall govern absent manifest error. 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. No later than 5:00 P.M., New York time, on the first
(1st) Trading Day following the date on which the Company has received the Exercise
Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the
Exercise Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). No later
than 3:00 P.M., New York time on the third (3rd) Trading Day following the date on which the
Company has received the Exercise Notice, so long as the Holder delivers the Aggregate Exercise
Price (or notice of a Cashless Exercise) on or prior to 6:00 P.M., New York time the second (2nd)
Trading Day following the date on which the Company has received the Exercise Notice (the “Share
Delivery Date”) (provided that if the Aggregate Exercise Price has not been delivered by such time,
the Share Delivery Date shall be one (1) Trading Day after the Aggregate Exercise Price (or notice
of a Cashless Exercise) is delivered in accordance with the terms hereof), the Company shall (X)
provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast
Automated Securities Transfer Program and the Warrant Shares are subject to an effective resale
registration statement in favor of the Holder or, if exercised with Cashless Exercise, at a time
when Rule 144 would be available for immediate resale of the Warrant Shares by the Holder, credit
the aggregate number of Warrant Shares 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 At
Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program or if the Warrant Shares are not subject to an effective resale
registration statement in favor of the Holder or, if exercised via Cashless Exercise, at a time
when Rule 144 would not be exercisable for immediate resale of the Warrant Shares by the Holder,
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 Warrant Shares to which the Holder is entitled pursuant to such exercise. The
Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and
expenses with respect to the issuance of Warrant Shares via DTC, if any. Upon delivery of the
Exercise Notice and so long as the Holder delivers the Aggregate Purchase Price, (unless exercised
via Cashless Exercise), 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 such Warrant Shares are credited to the Holder’s DTC account or the date
of delivery of the certificates evidencing such Warrant Shares, as the case may be. 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 (3) Trading Days after surrender by the Holder of this Warrant to the
Company 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 issuable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional Warrant Shares are to be issued upon the exercise of this Warrant, but
rather the number of Warrant Shares 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 except for any transfer taxes payable in
the event that the Warrant Shares are issued to any Person other than the Holder or its nominee,
which taxes shall be the responsibility of the Holder. The Company’s obligations to issue and
deliver Warrant Shares in accordance with the terms and subject to the conditions hereof 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.



(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means
$0.9186, subject to adjustment as provided herein.



(c) Company’s Failure to Timely Deliver Securities. If the Company shall
fail for any reason or for no reason to comply with the delivery requirements of Section 1(a),
then, in addition to all other remedies available to the Holder, (X) the Company shall pay in cash
to the Holder on each day after the Share Delivery Date and until delivery of such shares an amount
equal to 1.5% of the product of (A) the sum of the number of shares of Common Stock not issued to
the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, and (B) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible
date on which the Company could have issued such shares of Common stock to the Holder without
violating Section 1(a), and (Y) the Holder, upon written notice to the Company, may void its
Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of
this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the
Company shall have no obligation to make any payment set forth this Section 1(c) with respect to
such voided Exercise Notice. In addition to the foregoing, if on or after such failure the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the
Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three
(3) Trading Days after the Holder’s request which shall be made no later than 6:00 P.M., New York
time, on the date on which the Buy-In occurs 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
and other reasonable out of pocket expenses, 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) or credit such Holder’s balance account with DTC for 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 or credit such Holder’s
balance account with DTC, as applicable, 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 Bid Price of the Common Stock on the date of exercise. Nothing shall limit
the Holder’s right to pursue any equitable remedies available to it hereunder, 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 (or to electronically
deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant to the
terms hereof.



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




Net Number = (A x B) — (A x C)

B



For purposes of the foregoing formula:




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






	 	 	 	B= the arithmetic average of the Closing Sale Prices
of the Common Stock for the five (5) consecutive Trading Days
ending on the date immediately preceding the date on which the
Exercise Notice is deemed to be given hereunder.	 






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





For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the date hereof,
it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued to the Holder pursuant to the
Subscription Agreement.



(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 Exercise.




(i) Beneficial Ownership. Notwithstanding anything to the contrary contained
herein, the Company shall not effect the exercise of any portion of this Warrant, and the
Holder shall not have the right to exercise any portion of this Warrant, pursuant to the
terms and conditions of this Warrant and any such exercise shall be null and void and
treated as if never made, to the extent that after giving effect to such exercise, the
Holder together with the other Attribution Parties collectively would beneficially own in
excess of 9.99% (the “Maximum Percentage”) of the number of 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 the Holder
and the other Attribution Parties shall include the number of shares of Common Stock held by
the Holder and all other Attribution Parties plus the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock which would
be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or convertible preferred stock or
warrants, including the other Warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise analogous to the
limitation contained in this Section 1(f)(i). For purposes of this Section 1(f)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the Company’s most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K
or other public filing with the Securities and Exchange Commission (the “SEC”), as the case
may be, (y) a more recent public announcement by the Company or (z) any other written notice
by the Company or the Transfer Agent setting forth the number of shares of Common Stock
outstanding (as determined pursuant to either clause (x), (y) or (z), the “Reported
Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a
time when the actual number of outstanding shares of Common Stock is less than the Reported
Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number
of shares of Common Stock then outstanding and, to the extent that such Exercise Notice
would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this
Section 1(f)(i), to exceed the Maximum Percentage, the Holder must notify the Company of a
reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the
number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon
as reasonably practicable, the Company shall return to the Holder any exercise price paid by
the Holder for the Reduction Shares. For any reason at any time, upon the written or oral
request of the Holder given on or prior to 6:00 P.M., New York time, the Company shall
within one (1) Business Day thereafter confirm orally and in writing or by electronic mail
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 this Warrant, by the Holder
and any other Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of Common Stock to the Holder
upon exercise of this Warrant results in the Holder and the other Attribution Parties being
deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number
of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act),
the number of shares so issued by which the Holder’s and the other Attribution Parties’
aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be
deemed null and void and shall be cancelled ab initio, and the Holder shall not have the
power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the
issuance of the Excess Shares has been deemed null and void, the Company shall return to the
Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a
written notice to the Company, the Holder may from time to time increase (with such increase
not effective until the sixty-first (61st) day after delivery of such notice) or
decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified
in such notice; provided that (i) any such increase in the Maximum Percentage will not be
effective until the sixty-first (61st) day after such notice is delivered to the
Company and (ii) any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is not an Attribution Party
of the Holder. For purposes of clarity, the Company and the Holder intend that the purpose
of this Section 1(f) is that the shares of Common Stock issuable pursuant to the terms of
this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially
owned by the Holder for any purpose including for purposes of Section 13(d) or Rule
16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this
paragraph shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of exercisability. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 1(f)(i) to the extent necessary to correct this paragraph or
any portion of this paragraph which may be defective or inconsistent with the intended
beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The
limitation contained in this paragraph may not be waived and shall apply to a successor
holder of this Warrant.




(ii) Principal Market Regulation. The Company shall not be obligated to issue
any shares of Common Stock upon exercise of this Warrant and the Holder shall not have the
right to receive upon exercise of this Warrant any shares of Common Stock if the issuance of
such shares of Common Stock combined with the issuance of such shares of Common Stock
issuable pursuant to the Exchange Agreement dated as of the date hereof by and among the
Company and the investors named therein (the “Exchange Agreement”) and the New Series Notes
(as defined in the Exchange Agreement and together with the shares issuable under the
Exchange Agreement, the “Other Securities”) would exceed 9,645,043 shares of Common Stock
(which is less than 20% of 48,225,219 shares of Common Stock outstanding on the date hereof)
(the “Exchange Cap”), except that such limitation shall not apply in the event that the
Company obtains the approval of its stockholders as required by the applicable rules of the
Eligible Market for issuances of shares of Common Stock in excess of such amount. Until
such approval is obtained, (x) at any time during the Additional Common Shares Measurement
Period (as defined in the Exchange Agreement), the Company shall not be obligated to issue
any shares of Common Stock upon exercise of this Warrant and the Holder shall not have the
right to receive upon exercise of this Warrant any shares of Commons Stock and (y) at any
time after the Additional Common Shares Measurement Period, no Holder shall be issued in the
aggregate, upon exercise of any Warrants, shares of Common Stock in an amount greater than
the product of (A) 20% of the Remaining Exchange Cap (as defined in the Exchange Agreement)
multiplied by (B) a fraction, the numerator of which is the total number of shares of Common
Stock underlying the Warrants issued to such Holder pursuant to the Subscription Agreement
on the Issuance Date and the denominator of which is the aggregate number of shares of
Common Stock underlying the Warrants issued to the Subscribers pursuant to the Subscription
Agreement on the Issuance Date, taking into account, for purposes of recalculating such pro
rata portion, all other shares of Common Stock issuable pursuant to the Other Securities
(with respect to each Holder, the “Exchange Cap Allocation”). In the event that any Holder
shall sell or otherwise transfer any of such Holder’s Warrants, the transferee shall be
allocated a pro rata portion of such Holder’s Exchange Cap Allocation, and the restrictions
of the prior sentence shall apply to such transferee with respect to the portion of the
Exchange Cap Allocation allocated to such transferee. In the event that any holder of
Warrants shall exercise all of such holder’s Warrants into a number of shares of Common
Stock which, in the aggregate, is less than such holder’s Exchange Cap Allocation, then the
difference between such holder’s Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such holder shall be allocated to the respective Exchange Cap
Allocations of the remaining holders of Warrants on a pro rata basis in proportion to the
            shares of Common Stock underlying the Warrants then held by each such holder. In the event
that the Company is prohibited on or after the Shareholder Meeting Deadline (as defined in
the Subscription Agreement) from issuing any Warrant Shares for which an Exercise Notice has
been received as a result of the operation of this Section 1(f)(ii), then unless the Holder
elects to void such exercise, the Holder may require the Company to pay to the Holder within
three (3) Trading Days of the applicable attempted exercise, cash in an amount equal to the
product of (i) the quotient determined by dividing (x) the number of Warrant Shares that the
Company is unable to deliver pursuant to this Section 1(f)(ii), by (y) the total number of
Warrant Shares issuable upon exercise of this Warrant (without regard to any limitations or
restrictions on exercise of this Warrant) and (ii) the Black Scholes Value; provided, that
(x) references to “the day immediately following the public announcement of the applicable
Fundamental Transaction” in the definition of “Black Scholes Value” shall instead refer to
“the date the Holder exercises this Warrant and the Company cannot deliver the required
number of Warrant Shares because of the Exchange Cap” and (y) clause (iii) of the definition
of “Black Scholes Value” shall instead refer to “the underlying price per share used in such
calculation shall be the highest Weighted Average Price during the period beginning on the
date of the applicable date of the exercise and the date that the Company makes the
applicable cash payment.”



(g) Insufficient Authorized Shares. If at any time while this Warrant
remains 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 this
Warrant at least a number of shares of Common Stock equal to 110% of the number of shares of Common
Stock as shall from time to time be necessary to effect the exercise of all of this Warrant then
outstanding (the “Required Reserve Amount” and the failure to have such sufficient number of
authorized and unreserved shares of Common Stock, an “Authorized Share Failure”), then the Company
shall immediately use its reasonable best efforts 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 this Warrant 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 seventy five (75) 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 reasonable 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. Notwithstanding the
foregoing, if any such time of an Authorized Share Failure, the Company is authorized to and is
able to obtain the written consent of a majority of the shares of its issued and outstanding Common
Stock to approve the increase in the number of authorized shares of Common Stock, the Company may
satisfy this obligation by obtaining such consent and submitting for filing with the SEC an
Information Statement on Schedule 14C. In the event that upon any exercise of this Warrant, the
Company does not have sufficient authorized shares to deliver in satisfaction of such exercise,
then unless the Holder elects to void such attempted exercise, in lieu of such issuances and in
full satisfaction of its obligations to issue Common Stock upon such exercise, the Holder may
require the Company to pay to the Holder within three (3) Trading Days of the applicable attempted
exercise, cash in an amount equal to the product of (i) the quotient determined by dividing (x) the
number of Warrant Shares that the Company is unable to deliver pursuant to this Section 1(g), by
(y) the total number of Warrant Shares issuable upon exercise of this Warrant (without regard to
any limitations or restrictions on exercise of this Warrant) and (ii) the Black Scholes Value;
provided, that (x) references to “the day immediately following the public announcement of the
applicable Fundamental Transaction” in the definition of “Black Scholes Value” shall instead refer
to “the date the Holder exercises this Warrant and the Company cannot deliver the required number
of Warrant Shares because of an Authorized Share Failure” and (y) clause (iii) of the definition of
“Black Scholes Value” shall instead refer to “the underlying price per share used in such
calculation shall be the highest Weighted Average Price during the period beginning on the date of
the applicable date of exercise and the date that the Company makes the applicable cash payment.”



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



(a) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on
or after the Subscription Date, the Company issues or sells, or in accordance with this Section 2
is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the Company, but excluding shares of
Common Stock deemed to have been issued or sold by the Company in connection with any Excluded
Securities) for a consideration per share (the “New Issuance Price”) less than a price (the
"Applicable Price”) equal to either:




(I) $1.00 (as adjusted for any stock dividend, stock split,
stock consolidation, reclassification or similar transaction
occurring after the Subscription Date); or




(II) the price at which Common Stock is issued or sold or
deemed sold or issued if such issuance or sale or deemed
issuance or sale is not an arms’ length transaction,
including any issuance or sale or deemed issuance or sale to
any officer, director or Affiliate of the Company (each of
the foregoing, a “Dilutive Issuance”),




then immediately after such Dilutive Issuance, the Exercise Price then in
effect shall be reduced (but in no event increased) to an amount equal to
the product of (A) the Exercise Price and (B) a fraction, (1) the numerator
of which shall be the sum of (x) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale or deemed issuance or
sale and (y) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such shares of
Common Stock so issued or sold or deemed issued or sold would purchase at
the greatest of (i) the Exercise Price, (ii) $1.00 (as adjusted for any
stock dividend, stock split, stock consolidation, reclassification or
similar transaction occurring after the Subscription Date) or (iii) the
arithmetic average of the Weighted Average Price of the Common Stock for the
five (5) consecutive Trading Days immediately preceding the applicable
Dilutive Issuance (the “Market Price”) and (2) the denominator of which
shall be the number of shares of Common Stock outstanding immediately after
such issuance or sale or deemed issuance or sale, provided that, for the
purposes of this Section 2(a), (x) immediately after such issuance or sale
or deemed issuance or sale, such shares of Common Stock shall be deemed to
be outstanding, and (y) treasury shares shall not be deemed to be
outstanding.



Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares
issuable immediately prior to the applicable Dilutive Issuance shall be adjusted to the number of
shares of Common Stock determined by multiplying the Exercise Price then in effect immediately
prior to such adjustment by the number of Warrant Shares issuable 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 or sells any
Options and the lowest price per share for which one share of Common Stock is issuable upon
the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the granting or sale of such Option for such price per
share. For purposes of this Section 2(a)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options 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 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 less any consideration
paid or payable by the Company with respect to such one share of Common Stock upon the
granting or sale of such Option, upon exercise of such 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 other than an issuance or sale covered in clause (i)
above 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 issuable upon the conversion, exercise or exchange
thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received
or receivable by the Company with respect to any one share of Common Stock upon the issuance
or sale of the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security less any consideration paid or payable by the Company with respect to
such one share of Common Stock upon the issuance or sale of such 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 price of any Option or Convertible Security that was outstanding as of the
Subscription Date are increased or decreased in the manner described in the immediately
preceding sentence (other than as a result of stock splits, reverse stock splits, stock
dividends , 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, (x) the Options will be deemed to have been issued for the
Option Value of such Options and (y) the other securities issued or sold in such integrated
transaction shall be deemed to have been issued or sold for the difference of (I) the
aggregate consideration received by the Company (before discounts, commissions and offering
expenses) less any consideration paid or payable by the Company pursuant to the terms of
such other securities of the Company, less (II) the Option Value. 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 other than cash received therefor will be deemed to be the
net amount received by the Company therefor (before discounts, commissions and offering
expenses). 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 (as determined in good faith by the
Board of Directors of the Company), except where such consideration consists of publicly
traded securities, in which case the amount of consideration received by the Company will be
the Closing Sale Price of such publicly traded securities on the date of receipt by the
Company. If any shares of Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash or publicly traded securities
will be determined in good faith jointly by the Company and the Required Holders. If such
parties are unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such consideration will be
determined within five (5) Business Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly selected by the Company and
the Required Holders. The determination of such appraiser shall be final and binding upon
all parties absent manifest error and the fees and expenses of such appraiser shall be borne
by the Company




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




(vi) Readjustments. In the event the Exercise Price has been adjusted pursuant
to this Section 2(a) and the Dilutive Issuance that triggered such adjustment does not
occur, is not consummated, is unwound or is cancelled after the facts for any reason
whatsoever, the Exercise Price shall be readjusted to the Exercise Price that would have
been in effect if such Dilutive Issuance had not occurred or been consummated.



(b) Adjustment Upon Subdivision or Combination of Shares 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 Company at any time on or after the Subscription Date combines
(by combination, reclassification, recapitalization, 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 or other event will be proportionately
increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 2(b) shall become effective at the close of business on the date the subdivision or
combination becomes effective.



(c) Other Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then the Company’s Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of Warrant Shares, as mutually determined by the Company’s Board of
Directors and the Required Holders, 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) Voluntary Adjustment By Company. The Company may at any time during the
term of this Warrant, with the prior written consent of the Required Holders, reduce the then
current Exercise Price to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.



(e) Adjustment for Payment of Additional Fee. If at any time the Company
pays in cash any portion of the Additional Fee to the Holder (or its Affiliate) pursuant to the Fee
Letter (as defined in the Financing Agreement), then the number of Warrant Shares shall
automatically as of the date of such payment be reduced (but not below zero) by a number of shares
equal to the quotient determined by dividing the (i) amount of the Additional Fee paid by the
Company in cash, by (ii) the initial Exercise Price.



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, options, evidence of indebtedness or
any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme
of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of
this Warrant, then, in each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date of which a record is taken for such
Distribution, 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 participation in such Distribution (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such Distribution to such extent (and shall not
be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution
(and beneficial ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which
time or times the Holder shall be granted such Distribution (and any Distributions declared or made
on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the
same extent as if there had been no such limitation).



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 Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of
this Warrant, including without limitation, the Maximum Percentage) 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 (provided, however,
that to the extent that the Holder’s right to participate in any such Purchase Right would result
in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (and shall not be
entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in
abeyance for the benefit of the Holder until the earlier of (i) the expiration of such Purchase
Rights and (ii) such time or times as its right thereto would not result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall
be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase
Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if
there had been no such limitation).



(b) Fundamental Transactions. The Company shall not enter into or be party
to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations
of the Company under this Warrant and, in the event of a Fundamental Transaction is one in which
the Successor Entity is a publicly traded corporation whose stock is quoted or listed on an
Eligible Market such that the Warrant shall be exercisable for the publicly traded stock of such
Successor Entity, the other Transaction Documents in accordance with the provisions of this Section
4(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required
Holders and agrees to issue to each holder of the Warrants in exchange for such Warrants a security
of the Successor Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant, including, without limitation, an adjusted exercise price equal to the
value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and
exercisable for a corresponding number of shares of capital stock equivalent to the shares of
Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such adjustments to the number of shares
of capital stock and such exercise price being for the purpose of protecting the economic value of
this Warrant immediately prior to the occurrence or consummation of such Fundamental Transaction).
Any security issuable or potentially issuable to the Holder pursuant to the terms of this Warrant
on the consummation of a Fundamental Transaction shall be registered and freely tradable by the
Holder without any restriction or limitation or the requirement to be subject to any holding period
pursuant to any applicable securities laws if any securities issued to any other equity holder of
the Company are registered on Form S-4 or any successor form. In addition to and not in
substitution for any other rights hereunder, prior to the occurrence or consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive
securities, cash, assets or other property with respect to or in exchange for shares of Common
Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that, and any
applicable Successor Entity or Successor Entities shall ensure that, and it shall be a required
condition to the occurrence or consummation of such Corporate Event that, the Holder will
thereafter have the right to receive upon exercise of this Warrant at any time after the occurrence
or consummation of the Corporate Event, shares of Common Stock or Successor Capital Stock or, if so
elected by the Holder, in lieu of the shares of Common Stock (or other securities, cash, assets or
other property) purchasable upon the exercise of this Warrant prior to such Corporate Event (but
not in lieu of such items still issuable under Sections 3 and 4(a), which shall continue to be
receivable on the Common Stock or on the such shares of stock, securities, cash, assets or any
other property otherwise receivable with respect to or in exchange for shares of Common Stock),
such shares of stock, securities, cash, assets or any other property whatsoever (including warrants
or other purchase or subscription rights and any shares of Common Stock) which the Holder would
have been entitled to receive upon the occurrence or consummation of such Corporate Event or the
record, eligibility or other determination date for the event resulting in such Corporate Event,
had this Warrant been exercised immediately prior to such Corporate Event or the record,
eligibility or other determination date for the event resulting in such Corporate Event (without
regard to any limitations on exercise of this Warrant). Provision made pursuant to the preceding
sentence shall be in a form and substance reasonably satisfactory to the Holder. The provisions of
this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and
Corporate Events.



(c) Notwithstanding the foregoing, in the event of Fundamental Transaction, other
than one in which the Successor Entity is a publicly traded corporation whose stock is quoted or
listed on an Eligible Market assumes this Warrant such that the Warrant shall be exercisable for
the publicly traded stock of such Successor Entity, at the request of the Holder delivered before
the ninetieth (90th) day after the occurrence or consummation of such Fundamental
Transaction, the Company (or the Successor Entity) shall purchase this Warrant from the Holder by
paying to the Holder, within five (5) Business Days after such request (or, if later, on the
effective date of the Fundamental Transaction), cash in an amount equal to the Black Scholes Value
of the remaining unexercised portion of this Warrant on the date of such Fundamental Transaction.



5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation or 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 of the provisions of this Warrant. 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 use its reasonable
best efforts to assure 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, comply with the
requirements of Section 1(g).



6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this
Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share
capital of the Company for any purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of
the rights of a stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which
such Person is then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, to the extent not available on the SEC’s EDGAR System
contemporaneously with the information give to the Company or stockholder, the Company shall
provide the Holder with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the stockholders.



7. REISSUANCE OF WARRANTS.



(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder
shall give written notice to the Company and surrender this Warrant and the payment of any required
transfer taxes 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 than 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 issuable
pursuant to 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 issuable pursuant to 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
Warrant Shares 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 Warrant Shares then issuable pursuant to 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 issuable pursuant to 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 6.3 of the
Subscription Agreement. Without limiting the generality of the foregoing, the Company will give
written notice to the Holder (i) immediately upon any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least
fifteen (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 or waived 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.



10. GOVERNING LAW; JURISDICTION; JURY TRIAL. 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. Each of the Company and, by its
acceptance of this Warrant, 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, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each of the Company and, by its
acceptance of this Warrant, 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
to the Company or the Holder at the address set forth in Section 6.3 of the Subscription 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, BY ITS ACCEPTANCE OF THIS WARRANT, THE
HOLDER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR
THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.



11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and all the Subscribers 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 two (2) Business Days
of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.
If the Holder and the Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three (3) Business Days of such disputed determination
or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2)
Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by the Holder or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the Company and the Holder of
the results no later than ten (10) 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. To the
extent permitted by applicable law. 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, except as otherwise explicitly provided, 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 seek 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 and the Warrant Shares may be offered for sale,
sold, transferred, pledged or assigned without the consent of the Company subject to compliance
with applicable securities laws.



15. SEVERABILITY. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the
provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the remaining provisions of
this Warrant so long as this Warrant as so modified continues to express, without material change,
the original intentions of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or the practical realization of
the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).



16. DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Warrant, unless the Company has in good faith determined that the
matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries (as defined in the Subscription Agreement), the Company shall indicate
to such Holder contemporaneously with delivery of such notice whether such notice constitutes
material nonpublic information relating to the Company or its Subsidiaries, and in the absence of
any such indication, the Holder shall be allowed to presume that all matters relating to such
notice do not constitute material, nonpublic information relating to the Company or its
Subsidiaries.



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



(a) "1933 Act” means the Securities Act of 1933, as amended.



(b) "Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such Person, it being
understood for purposes of this definition that “control” of a Person means the power directly or
indirectly either to vote 10% or more of the stock having ordinary voting power for the election of
directors of such Person or direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.



(c) "Attribution Parties” means, collectively, the following Persons and entities:
(i) any investment vehicle, including any funds, feeder funds or managed accounts, currently, or
from time to time after the Issuance Date, directly or indirectly managed or advised by the
Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to
be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons
whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the
Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For
clarity, the purpose of the foregoing is to subject collectively the Holder and all other
Attribution Parties to the Maximum Percentage.



(d) "Approved Stock Plan” means any employee benefit plan which has been approved by
the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to
any employee, officer, director or consultant for services provided to the Company; provided that
issuances to consultants shall be in an immaterial amount in the aggregate.



(e) "Black Scholes Value” means the value of this Warrant based on the Black-Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day
immediately following the public announcement of the applicable Fundamental Transaction, or, if the
Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is
consummated, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the remaining term of this Warrant as of such date of
request, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg as of the day immediately following the public
announcement of the applicable Fundamental Transaction, or, if the Fundamental Transaction is not
publicly announced, the date the Fundamental Transaction is consummated, (iii) the underlying price
per share used in such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in the Fundamental
Transaction, (iv) a zero cost of borrow and (v) a 360 day annualization factor.



(f) "Bloomberg” means Bloomberg Financial Markets.



(g) "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.



(h) "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 the 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 Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the OTC Link or “pink sheets” by OTC Markets Group
Inc. (formerly Pink OTC Markets 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, reclassification or other similar transaction
during the applicable calculation period.



(i) "Common Stock” means (i) the Company’s shares of Common Stock, par value $0.001
per share, and (ii) any share capital into which such Common Stock shall have been changed or any
share capital resulting from a reclassification of such Common Stock.



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



(k) "Eligible Market” means the Principal Market, The New York Stock Exchange, The
NASDAQ Global Market, The NASDAQ Global Select Market or The NASDAQ Capital Market.



(l) "Excluded Securities” means any Common Stock issued or issuable: (i) in
connection with any Approved Stock Plan, (ii) upon exercise of the Warrants, (iii) in connection
with the shares of Common Stock issued to the holders of the Existing Convertible Notes (as defined
in the Financing Agreement) on the Subscription Date and (iv) upon exercise of any Options or
Convertible Securities which are outstanding as of the Subscription Date, including the Convertible
Notes issued to the Existing Convertible Holders on the Subscription Date but excluding any Common
Stock issuable in connection with an “Alternate Conversion” under the Convertible Notes issued to
the Existing Convertible Noteholders; provided, that the terms of such Options or
Convertible Securities are not amended, modified or changed on or after the Subscription Date to
decrease the exercise, exchange or conversion price therefor or the number of shares of Common
Stock issuable upon exercise, conversion or exchange thereof or to extend their respective terms.



(m) "Expiration Date” means the 10-year anniversary of 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 day that is not a Holiday.



(n) "Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company or any of its “significant
subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii)
make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have
its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender
or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding
shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any
Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or
other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject
Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding
shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if
any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with
any Subject Entity making or party to, such stock purchase agreement or other business combination
were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities
become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its
Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually
or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase,
assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common
Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any
manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by
issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock not held by all such Subject Entities as of the
date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities
were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by
issued and outstanding shares of Common Stock or other equity securities of the Company sufficient
to allow such Subject Entities to effect a statutory short form merger or other transaction
requiring other stockholders of the Company to surrender their shares of Common Stock without
approval of the stockholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the
entering into any other instrument or transaction structured in a manner to circumvent, or that
circumvents, the intent of this definition in which case this definition shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this definition to
the extent necessary to correct this definition or any portion of this definition which may be
defective or inconsistent with the intended treatment of such instrument or transaction.



(o) "Group” means a “group” as that term is used in Section 13(d) of the 1934 Act
and as defined in Rule 13d-5 thereunder.



(p) "Option Value” means the value of an Option based on the Black and Scholes
Option Pricing model obtained from the “OV” function on Bloomberg determined as of (A) the Trading
Day prior to the public announcement of the issuance of the applicable Option, if the issuance of
such Option is publicly announced or (B) the Trading Day immediately following the issuance of the
applicable Option if the issuance of such Option is not publicly announced, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of the applicable Option as of the applicable date of determination,
(ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from
the HVT function on Bloomberg as of (A) the Trading Day immediately following the public
announcement of the applicable Option if the issuance of such Option is publicly announced or (B)
the Trading Day immediately following the issuance of the applicable Option if the issuance of such
Option is not publicly announced, (iii) the underlying price per share used in such calculation
shall be the highest Weighted Average Price of the Common Stock during the period beginning on the
Trading Day prior to the execution of definitive documentation relating to the issuance of the
applicable Option and ending on (A) the Trading Day immediately following the public announcement
of such issuance, if the issuance of such Option is publicly announced or (B) the Trading Day
immediately following the issuance of the applicable Option if the issuance of such Option is not
publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.



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



(r) "Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common shares or common stock or
equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the
Required Holders, any other market, exchange or quotation system), or, if there is more than one
such Person or such entity, the Person or such entity designated by the Required Holders or in the
absence of such designation, such Person or entity with the largest public market capitalization as
of the date of consummation of the Fundamental Transaction.



(s) "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.



(t) "Principal Market” means the NYSE MKT LLC.



(u) "Registration Rights Agreement” means that certain Registration Rights Agreement
dated as of the Subscription Date by and among the Company and the Subscribers.



(v) "Required Holders” means the holders of the Warrants representing at least a
majority of the shares of Common Stock underlying the Warrants then outstanding.



(w) "Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.



(x) "Successor Entity” means one or more Person or Persons (or, if so elected by the
Holder, the Company or Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or one or more Person or Persons (or, if so elected by the Holder, the Company or the
Parent Entity) with which such Fundamental Transaction shall have been entered into.



(y) "Trading Day” means any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading market for the Common Stock, then
on the principal securities exchange or securities market on which the Common Stock 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).



(z) "Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during the period beginning
at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is
the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the
Principal Market publicly announces is the official close of trading), as reported by Bloomberg
through its “Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or
such other time as such market publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as such market publicly announces is the official
close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such security as reported in
the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the
Weighted Average Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Weighted Average Price of such security on such date shall be the fair market
value as mutually determined by the Company and the 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 with the term “Weighted Average Price” being substituted for the term
“Exercise Price.” All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or other similar transaction during the applicable
calculation period.



[Signature Page Follows]




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.




	 	 	 	METALICO, INC.





	 	 	 
	By:      Carlos E. Aguero      

	 

	Name:

Title:

	 	Carlos E. Aguero

President






EXHIBIT A



EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK




METALICO, INC.




The undersigned holder hereby exercises the right to purchase        of the shares
of Common Stock (“Warrant Shares”) of Metalico, 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:




1



ACKNOWLEDGMENT




The Company hereby acknowledges this Exercise Notice and hereby directs Corporate Stock
Transfer, Inc. to issue the above indicated number of shares of Common Stock in accordance with the
terms of the Warrant.




	 	 	 	METALICO, INC.





By:      

Name:

Title:





2