Conversion Price for the next 40,000 shares acquired hereunder; and
(iii)
a price of $1.40 [120% of the Fixed
Conversion Price for any additional shares acquired hereunder.
1.
EXERCISE OF WARRANT.
1.1
NUMBER OF SHARES ISSUABLE UPON EXERCISE.
FROM AND AFTER THE DATE HEREOF THROUGH AND INCLUDING THE EXPIRATION DATE, THE
HOLDER SHALL BE ENTITLED TO RECEIVE, UPON EXERCISE OF THIS WARRANT IN WHOLE OR
IN PART, BY DELIVERY OF AN ORIGINAL OR FAX COPY OF AN EXERCISE NOTICE IN THE
FORM ATTACHED HERETO AS EXHIBIT A (THE "EXERCISE NOTICE"), SHARES OF COMMON
STOCK OF THE COMPANY, SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 4.
1.2
FAIR MARKET VALUE.
FOR PURPOSES HEREOF, THE
"FAIR MARKET VALUE" OF A SHARE OF COMMON STOCK AS OF A PARTICULAR DATE (THE
"DETERMINATION DATE") SHALL MEAN:
(A)
IF THE COMPANY'S COMMON STOCK IS TRADED ON
THE AMERICAN STOCK EXCHANGE OR
ANOTHER NATIONAL EXCHANGE OR IS QUOTED ON THE
NATIONAL OR SMALLCAP MARKET OF THE NASDAQ STOCK MARKET, INC.("NASDAQ"), THEN THE
CLOSING OR LAST SALE PRICE, RESPECTIVELY, REPORTED FOR THE LAST BUSINESS DAY
IMMEDIATELY PRECEDING THE DETERMINATION DATE.
(B)
IF THE COMPANY'S COMMON STOCK IS NOT TRADED
ON THE AMERICAN STOCK EXCHANGE OR ANOTHER NATIONAL EXCHANGE OR ON THE NASDAQ BUT
IS TRADED ON THE NASD OTC BULLETIN BOARD, THEN THE MEAN OF THE AVERAGE OF THE
CLOSING BID AND ASKED PRICES REPORTED FOR THE LAST BUSINESS DAY IMMEDIATELY
PRECEDING THE DETERMINATION DATE.
(C)
EXCEPT AS PROVIDED IN CLAUSE (D) BELOW, IF
THE COMPANY'S COMMON STOCK IS NOT PUBLICLY TRADED, THEN AS THE HOLDER AND THE
COMPANY AGREE OR IN THE ABSENCE OF AGREEMENT BY ARBITRATION IN ACCORDANCE WITH
THE RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION, BEFORE A
SINGLE ARBITRATOR TO BE CHOSEN FROM A PANEL OF PERSONS QUALIFIED BY EDUCATION
AND TRAINING TO PASS ON THE MATTER TO BE DECIDED.
(D)
IF THE DETERMINATION DATE IS THE DATE OF A
LIQUIDATION, DISSOLUTION OR WINDING UP, OR ANY EVENT DEEMED TO BE A LIQUIDATION,
DISSOLUTION OR WINDING UP PURSUANT TO THE COMPANY'S CHARTER, THEN ALL AMOUNTS TO
BE PAYABLE PER SHARE TO HOLDERS OF THE COMMON STOCK PURSUANT TO THE CHARTER IN
THE EVENT OF SUCH LIQUIDATION, DISSOLUTION OR WINDING UP, PLUS ALL OTHER AMOUNTS
TO BE PAYABLE PER SHARE IN RESPECT OF THE COMMON
2
STOCK IN LIQUIDATION UNDER THE CHARTER, ASSUMING FOR THE PURPOSES OF THIS CLAUSE
(D) THAT ALL OF THE SHARES OF COMMON STOCK THEN ISSUABLE UPON EXERCISE OF THE
WARRANT ARE OUTSTANDING AT THE DETERMINATION DATE.
1.3
COMPANY ACKNOWLEDGMENT.
THE COMPANY WILL,
AT THE TIME OF THE EXERCISE OF THE WARRANT, UPON THE REQUEST OF THE HOLDER
HEREOF ACKNOWLEDGE IN WRITING ITS CONTINUING OBLIGATION TO AFFORD TO SUCH HOLDER
ANY RIGHTS TO WHICH SUCH HOLDER SHALL CONTINUE TO BE ENTITLED AFTER SUCH
EXERCISE IN ACCORDANCE WITH THE PROVISIONS OF THIS WARRANT. IF THE HOLDER SHALL
FAIL TO MAKE ANY SUCH REQUEST, SUCH FAILURE SHALL NOT AFFECT THE CONTINUING
OBLIGATION OF THE COMPANY TO AFFORD TO SUCH HOLDER