Document:

EXHIBIT 10.1

July 1, 2008

                              EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") made and entered into on this day of
July 1st, 2008 (the "Effective Date")

Between InkSure Technologies Inc, a Delaware corporation (the "Company"), with
offices at 1770 N.W. 64th Street, Suite 350, Fort Lauderdale, FL 33309
(hereinafter the "Company");

On the first part

And: Mr. Yaron Meerfeld, ID No. 05614338-1, a citizen of Israel, with an address
at 3 Yehezkel St. Ramat Gan, Israel (hereinafter the "Employee", and together
with the Company: the "Parties")

On the second part

WHEREAS     The Employee has been employed by the Company (and its
            subsidiaries) pursuant to employment agreements entered into between
            the Employee and the Company (and its subsidiaries) (Collectively:
            the "Previous Agreements"), and is currently employed as the
            Company's Chief Operation Officer ("COO"); and

WHEREAS     The Employee and the Company wish to amend the terms of their
            engagement with effect as of the Effective Date and onwards; and

WHEREAS     The Company is engaged in the development, production and marketing
            of (i) spectral analysis based machine readable anti-counterfeiting
            products and (i) synthetic aperture radar based chipless RFID
            technologies; and

WHEREAS     The Company has offered that the Employee shall serve, on a interim
            basis, also as the Company's Interim Chief Executive Officer
            ("CEO"), in addition to its position as COO, and the Employee agrees
            to be employed as such, all in accordance with the terms and
            conditions of this Agreement;

Now, therefore, in consideration of the mutual covenants and conditions
hereinafter set forth, it is agreed by the parties as follows:

1.    PREAMBLE

      The Preamble to this agreement forms an integral part thereof.

2.    POSITION

      2.1.  The Company shall continue to employ the Employee, and the Employee
            hereby agrees to continue to serve, as the COO of the Company, and,
            in addition, the Employee shall serve as the Company's Interim CEO
            until otherwise decided by the Company's board of directors, all
            effective as of the Effective Date.

<PAGE>

      2.2.  The Employee shall devote his full business time and efforts to the
            affairs of the Company, and shall have all the responsibilities and
            powers that usually apply to the positions held by the Employee,
            i.e.: as COO and, for the relevant period - also as CEO (in which
            period he shall also be considered a principal executive officer for
            purposes of SEC filings).

      2.3.  While serving as Interim CEO, the Employee shall report to the board
            of directors, and upon the termination of his office as Interim CEO
            the Employee shall report to the CEO of the Company.

      2.4.  The scope of the Employee's position in the Company shall include
            from time to time, at the Company's sole discretion, rendering the
            same services stipulated herein, in whole or in part, also to any of
            the Company's subsidiaries. For the avoidance of any doubt, the
            parties hereby stipulate that rendering such services as aforesaid
            shall constitute an integral part of the Employee's position in the
            Company and shall not entitle the Employee with any right to
            additional compensation, remuneration or fee whatsoever. It is
            further agreed, that should the Employee claim for or demand from
            the Company or any of its subsidiaries any compensation,
            remuneration or fee for services rendered by him to any of such
            subsidiaries, the Company shall set-off and reduce the Employee's
            remuneration under this Agreement with the same amount claimed by
            the Employee from the subsidiaries.

3.    SALARY

      3.1.  The Company shall pay the Employee a monthly salary of 45,000 IL
            gross (hereinafter the "Base Salary"), payable each month not later
            than the second day of the month.

            The Base Salary will be paid in NIS (New Israeli Shekel).

      3.2.  The Employee shall be entitled to reimbursement for all expenses
            incurred by him in the performance of his duties hereunder, pursuant
            to the Company's prevailing policy for such reimbursements, and in
            the absence of such established policy - as approved by the
            Company's board of directors (or its designees), provided that in
            any case the Employee shall provide the Company with all appropriate
            receipts.

      3.3.  The Employee and the Company both acknowledge and agree, that upon
            the mutual written agreement of the Company and the Employee, the
            Employee's salary may be paid by either of the subsidiaries on
            behalf of the Company, but always subject to Section 2.4. The
            Company further acknowledges that this section 3.3 does not affect
            the Company's obligation to pay the Employee's Base Salary or
            benefits pursuant to this Agreement.

4.    BENEFITS

      4.1.  The Company shall pay every month, an amount of 15.83% of the Base
            Salary to an insurance policy (hereinafter "Bituach Menahalim") in
            the name of the Employee.

            The Employee shall pay to such insurance policy, every month, an
            amount equal to 5% of the Base Salary.

                                      - 2 -

<PAGE>

      4.2.  The Company shall pay every month, an amount equal to 7.5% of the
            Base Salary to an educational fund (hereinafter "Keren Hishtalmut")
            in the name of the Employee.

            The Employee shall pay to such fund, every month, an amount equal to
            2.5% of the Base Salary.

      4.3.  The Employee's payments pursuant to sections 4.1 and 4.2 above shall
            be deducted at source from the Base Salary.

      4.4.  All taxes due, if any pursuant to section 4.1 and 4.2 above shall be
            borne and paid by the company.

      4.5.  Not later than fourteen (14) days after the termination of this
            agreement, for any cause, the Company shall assign its rights to the
            Bituach Menahalim and the Keren Hishtalmut to the Employee.

      4.6.  The Parties hereby adopt the Israeli Labor Ministry warrant from
            30.6.98 and declare that the company's payment to the Bituach
            Menahalim (8.33% for the severance payment) shall constitute the
            company's whole obligation for severance payments according to
            section 14 of the severance payment law - 1963 (Israel).

      4.7.  The Employee shall be entitled to a vacation leave of twenty four
            (24) days per year, which may be carried forward from year to year.

      4.8.  The Company shall make available to the Employee a car for his
            exclusive use during the term of this Agreement. It is agreed that
            the car will be 2000cc or a car of a similar class.

      4.9.  The Company shall pay all costs associated with the car, whether
            fixed or variable, including without limitation, fuel, repairs and
            insurance including taxation. The Company shall gross all such
            payments up.

      4.10. The Employee shall be entitled to a complete medical checkup once a
            year.

      4.11. The Company shall cause the Employee to be included in its directors
            and officer's liability insurance, covering customary officers
            liabilities.

      4.12. The Company shall pay all bills for the use of one telephone line
            installed in the Employee's house, and one cellular telephone used
            exclusively by the Employee.

      4.13. The Employee shall be entitled to Dmey Havra'a as provided in a
            collective bargaining agreement to which the General Labor Union of
            the Workers in Israel is a party regarding the payment of Dmey
            Havra'a that is force and effect.

5.    NON DISCLOSURE, COMPETITIVE ACTIVITY AND OWNERSHIP OF INVENTIONS

      Simultaneously with the signing of this Agreement the Employee shall sign
      the Non-Disclosure, Unfair Competition and Ownership of Inventions
      undertaking in favor of the Company and any subsidiary and parent company
      of the Company, attached hereto as APPENDIX A, WHICH SHALL SURVIVE THE
      TERMINATION OF THIS AGREEMENT.

                                      - 3 -

<PAGE>

6.    TERM AND TERMINATION

      6.1.  The Employee may terminate this Agreement for any reason upon
            one hundred and eighty (180) days' prior written notice, and the
            Company may terminate this Agreement for any reason upon two hundred
            and seventy (270) days' prior written notice (each such period being
            a "Prior Notice Period"), provided, however, that the Company may
            terminate this Agreement for a "justifiable cause" (as hereinafter
            defined) without prior notice. During the Prior Notice Period the
            Employee shall be entitled to payment of the Base Salary and all
            benefits pursuant to this Agreement.

            In addition, any unvested options for Company's shares held by the
            Employee shall continue to vest during the Prior Notice Period.

      6.2.  "Justifiable Cause" shall mean: (a) conviction of the Employee of a
            felony which in the Company's view is injurious to the Company; (b)
            any willful breach by the Employee of his fiduciary duties as an
            officer of the Company pursuant to court decision; provided,
            however, that the Company may not terminate the Employee's
            employment agreement for justifiable cause unless it has given the
            Employee (i) written notice of the basis for the proposed
            termination and (ii) if possible, at least fifteen (15) days during
            which the Employee shall be entitled to cure such basis.

7.    MISCELLANEOUS

      7.1.  This Agreement constitutes the entire understanding between the
            Parties with respect to the subject matter hereof and with respect
            to the period as of the Effective Date. Any prior understandings,
            undertakings or representations with respect to the subject matter
            hereof, written or oral, shall be of no force or effect. It is
            hereby clarified that the Previous Agreements shall have no further
            force or effect for the period as of the Effective Date and onwards.

      7.2.  This Agreement may be amended only by a document signed by both
            Parties.

      7.3.  No rights of any Party shall be prejudiced or restricted by an
            indulgence or forbearance to any party, and no waiver by any party
            in respect of any breach shall operate as a waiver in respect to a
            subsequent breach.

      7.4.  Any notice, demand, call or request under this Agreement
            (hereinafter a "Communication") which a Party may desire to serve,
            or be required to serve upon the other Party, shall be in writing
            and shall be deemed sufficiently served if: (a) delivered by hand;
            or (b) if sent by courier that guarantees delivery of such
            Communication within seventy two (72) hours, addressed to the other
            Party's address as set forth in the preamble to this Agreement; or
            (c) sent by facsimile or email with confirmation of receipt.

      7.5.  The addresses of the Parties for the purpose of this Agreement are
            as set forth in the preamble to this Agreement.

IN WITNESS WHEREOF, The Parties hereunto cause this Agreement to be duly
executed.

                                     - 4 -

<PAGE>

INKSURE TECHNOLOGIES INC.

/s/ Phil Getter
-------------------

By: Philip Getter

Title: Chairman of the Board

YARON MEERFLED

/s/ Yaron Meerfeld
-------------------

                                     - 5 -

<PAGE>

                                   APPENDIX A

THIS UNDERTAKING ("Undertaking") is entered into as of the 1st day of July,
2008, by Mr. Yaron Meerfeld, ID No. 05614338-1, a citizen of Israel, with an
address at 3 Yehezkel St. Ramat Gan, Israel (the "Employee").

WHEREAS     Employee has been employed by the Company (and its subsidiaries)
            pursuant to employment agreements entered into between the Employee
            and the Company (and its subsidiaries); and

WHEREAS     the Company and Employee are entering into a new employment
            agreement as of the date hereof;

NOW, THEREFORE, the Employee undertakes and warrants towards the Company and any
            subsidiary and parent company of the Company as follows:

1.    Confidential Information.

      1.1.  The Employee acknowledges that he has, and will have, access to
            confidential and proprietary information, including information
            concerning activities of the Company and any of its parent,
            subsidiary and affiliated companies, and that he has, and will have,
            access to technology regarding the product research and development,
            patents, copyrights, customers (including customer lists), suppliers
            (including suppliers lists), marketing plans, strategies, forecasts,
            trade secrets, test results, formulae, processes, data, know-how,
            improvements, inventions, techniques and products (actual or
            planned) of the Company and any of its parent, subsidiary and
            affiliated companies. Such information in any form or media, whether
            documentary, written, oral or computer generated, shall be deemed to
            be and referred to herein as "PROPRIETARY INFORMATION".

      1.2.  During the term of his employment or at any time after termination
            thereof for any reason, the Employee shall not disclose to any
            person or entity without the prior consent of the Company any
            Proprietary Information, whether oral or in writing or in any other
            form, obtained by the Employee while in the employment of the
            Company (including, but not limited to, the processes and
            technologies utilized and to be utilized in the Company's business,
            the methods and results of the Company's research, technical or
            financial information, employment terms and conditions of the
            Employee and other Company employees or any other information or
            data relating to the business of the Company or any information with
            respect to any of the Company's customers).

      1.3.  Proprietary Information shall be deemed to include any and all
            proprietary information disclosed by or on behalf of the Company
            irrespective of form, but excluding information that has become a
            part of the public domain not as a result of a breach of this
            Undertaking by the Employee.

      1.4.  The Employee agrees that all memoranda, books, notes, records
            (contained on any media whatsoever), charts, formulae,
            specifications, lists and other documents made, compiled, received,
            held or used by the Employee while in the employment of the
            Company, concerning the Company or its business (including its trade
            secrets) (the "MATERIALS"), shall be the Company's sole property and
            all originals or copies thereof shall be delivered by the Employee
            to the Company upon termination of the Employee's employment or at
            any earlier or other time at the request of the Company, without the
            Employee retaining any copies thereof.

                                      - 6 -

<PAGE>

2.    UNFAIR COMPETITION AND SOLICITATION.

      The Employee acknowledges that the provisions of this Undertaking are
      reasonable and necessary to legitimately protect the Company's Proprietary
      Information, its property (including intellectual property) and its
      goodwill (the "COMPANY'S MAJOR ASSETS"). The Employee further acknowledges
      that he has carefully reviewed the provisions of this Undertaking, he
      fully understands the consequences thereof and he has assessed the
      respective advantages and disadvantages to him of entering into this
      Undertaking.

      In light of the above provisions, the Employee represents and undertakes:

      2.1.  That during the term of his employment in the Company and for a
            period of twelve (12) months thereafter, he shall not engage,
            establish, open or in any manner whatsoever become involved,
            directly or indirectly, either as an employee, owner, partner,
            agent, shareholder, director, consultant or otherwise, in any
            business, occupation, work or any other activity which is reasonably
            likely to involve or require the use of any of the Company's Major
            Assets.

      2.2.  That during the term of his employment in the Company and for a
            period of twelve (12) months thereafter, he shall not render
            services similar to his duties as COO or interim CEO of the Company,
            to any entity or business which competes with the Company or its
            parent, subsidiary or affiliated companies directly or indirectly.

      2.3.  That during the term of his employment in the Company and for twelve
            (12) months thereafter, not to induce any employee of the Company or
            of any of its parent, subsidiary or affiliated companies to
            terminate such employee's employment therewith, and that he has not
            engaged in such solicitation activities since the beginning of his
            employment in the Company (and any of its parent, subsidiary and
            affiliated companies).

3.    OWNERSHIP OF INVENTIONS.

      The Employee will notify and disclose to the Company, or any persons
      designated by it, all information, improvements, inventions, formulae,
      processes, techniques, know-how and data, whether or not patentable, made
      or conceived or reduced to practice or learned by the Employee, either
      alone or jointly with others, since the beginning of his employment in the
      Company (and any of its parent, subsidiary and affiliated companies) and
      anytime thereafter (including after hours, on weekends or during vacation
      time) (all such information, improvements, inventions, formulae,
      processes, techniques, know-how, and data are hereinafter referred to as
      the: "INVENTIONS" or "INVENTION") immediately upon discovery, receipt or
      invention as applicable. In the event that the Employee, for any reason,
      refrains from delivering the Invention upon grant of notice regarding the
      Invention, as described above, the Employee shall notify the Company of
      the Invention and specify in such notice the date in which the Invention
      shall be delivered to the Company and the reason for delay in such
      delivery. The Invention shall be delivered as soon as possible
      thereinafter.

      Delivery of the notice and the Invention shall be in writing, supplemented
      with a detailed description of the Invention and the relevant
      documentation. The Employee agrees that all the Inventions shall be the
      sole property of the Company, and the Company shall be the sole owner of
      all patents and other rights in connection with such Inventions. The
      Employee hereby assigns to the Company any rights the Employee may have or
      acquire in such Inventions. In order to avoid any doubt, it is hereby
      clarified that a lack of response from the Company with respect to the
      notice of the Invention or of its delivery, shall not be considered a
      waiver of ownership of the Invention, and in any event the Invention shall
      remain the sole property of the Company.

      The Employee further agrees as to all such Inventions to assist the
      Company, or any persons designated by it, in every proper way to obtain
      and from lime to time enforce such Inventions in any way including by way
      of patents over such Inventions in any and ail countries, and to that
      effect the Employee will execute all documents for use in applying for and
      obtaining patents over and enforcing such Inventions, as the Company may
      desire, together with any assignments of such Inventions to the Company or
      persons or entities designated by it.

                                      - 7 -
<PAGE>

      The Employee shall not be entitled, with respect to all of the above, to
      any monetary consideration or any other consideration except as explicitly
      set forth in its employment agreement, or in any other written agreement
      or arrangement signed by the Company. With respect to all of the above
      any, oral understanding, communication or agreement not duly signed by the
      Company shall be void.

4.    GENERAL.

      4.1.  The Employee acknowledges that the provisions of this Undertaking
            serve as an integral part of the terms of his employment and reflect
            the reasonable requirements of the Company in order to protect its
            legitimate interests with respect to the subject matter hereof. If
            any provision of this Undertaking (including any sentence, clause or
            part thereof) shall be adjudicated to be invalid or unenforceable,
            such provision shall be deemed amended to delete there from the
            portion thus adjudicated to be invalid or unenforceable, such
            deletion to apply only with respect to the operation of such
            provision in the particular jurisdiction in which such adjudication
            is made. In addition, if any particular provision contained in this
            undertaking shall for any reason be held to be excessively broad as
            to duration, geographical scope, activity or subject, it shall be
            construed by limiting and reducing the scope of such provision so
            that the provision is enforceable to the fullest extent compatible
            with applicable law.

      4.2.  The provisions of this Undertaking shall continue and remain in full
            force and effect from the beginning of the employment of the
            Employee in the Company and following the termination such
            employment relationship for whatever reason. This Undertaking shall
            not serve in any manner as to derogate from any of the Employee's
            obligations and liabilities under any applicable law or agreement.

                                                         Yaron Meerfeld
                                                    ----------------------------
                                                         Name of Employee

                                                         /s/ Yaron Meerfeld
                                                    ----------------------------
                                                             Signature

                                      - 8 -THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNLESS REGISTERED

 

 

QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, Inc.

Warrant To Purchase Common Stock

Warrant No.: 

Number of Shares of Common Stock: 13,500,000

Date of Issuance: August [___], 2008 ("Issuance Date")

Quantum Fuel Systems Technologies Worldwide, Inc., a Delaware corporation (the "Company"), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, __________________, the registered holder hereof or its permitted assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the "Warrant"), at any time or times on or after the date hereof (the "Exercisability Date"), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), Thirteen Million Five Hundred Thousand (13,500,000) fully paid nonassessable shares of Common Stock (as defined below) (the "Warrant Shares").  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.  This Warrant is the Warrant to purchase Common Stock (this "Warrant") issued pursuant to (i) Section 2 of that certain Subscription Agreement (the "Subscription Agreement"), dated as of August  19, 2008 (the "Subscription Date"), by and between the Company and the Holder (the "Subscription Agreement") and (ii) the Company's Registration Statement on Form S-3 (File number 333-152133) (the "Registration Statement").

	EXERCISE OF WARRANT.

	Mechanics of Exercise.  Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the Exercisability Date, in whole or in part, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the "Exercise Notice"), of the Holder's election to exercise this Warrant and (ii) (A) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "Aggregate Exercise Price") in cash or by wire transfer of immediately available funds or (B) provided the conditions for cashless exercise set forth in Section 1(d) are satisfied, by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)).  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.  On or before the first (1st) Business Day following the date on which the Company has received each of the Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the "Exercise Delivery Documents"), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company's transfer agent (the "Transfer Agent").  On or before the third (3rd) Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the "Share Delivery Date"), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer Program, upon the request of the Holder, credit such 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 Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company's share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, 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 Business Days after any exercise, the surrender of the original Warrant and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.  No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.  The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.  

	Exercise Price.  For purposes of this Warrant, "Exercise Price" means $4.00, subject to adjustment as provided herein.

	Company's Failure to Timely Deliver Securities.  If within three (3) Business Days of receipt of the Exercise Delivery Documents in compliance with the terms of this Section 1, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company's share register or to credit the Holder's balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder's exercise of this Warrant, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate, or (ii) 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 the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.  The Company hereby covenants and agrees that it will cause its transfer agent to deliver unlegended and freely tradable shares of Common Stock to the Holder in connection with any exercise hereunder and will at its sole cost and expense pay all transfer agent fees and provide any required legal opinions in connection with the foregoing.

	Cashless Exercise.  Notwithstanding anything contained herein to the contrary, if a registration statement covering the Warrant Shares that are the subject of the Exercise Notice (the "Unavailable Warrant Shares"), or an exemption from registration, is not available for the resale of such Unavailable Warrant Shares, 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 shares of Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.

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

Notwithstanding anything contained herein to the contrary, under no circumstances (including, but not limited to, in the event that either this Section 1(d) of this Warrant or Section 1(e) of this Warrant, or both such Sections together, shall apply) shall the Company have any obligation to redeem or otherwise to purchase the Warrant and the Warrant Shares from the Holder.

 

	Rule 144.  For purposes of Rule 144(d) promulgated under the Securities 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 pursuant to the Subscription Agreement.

	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.

	 Beneficial Ownership.  The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person's affiliates) would beneficially own in excess of 9.99% (the "Maximum Percentage") of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include 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 shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.  For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the 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.  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(h) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

	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:

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

	(i)Issuance of Options.  If the Company in any manner grants any Options 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 exercise of such Options or upon conversion, exercise or exchange of such 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.  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 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 one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security.  No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(a), no further adjustment of the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale. 

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

	(iv)Calculation of Consideration Received.  In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Options will be deemed to have been issued for the Black Scholes Value (the "Option Value") and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued for the difference of (I) the aggregate consideration received by 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 received therefor will be deemed to be the net amount received by the Company therefor.  If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Weighted Average Price of such security on the date of receipt.  If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder.  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 Holder.  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.

	(vi)Voluntary Adjustment By Company.  The Company may at any time during the term of this Warrant 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.

	(vii)Floor Price.  Notwithstanding any provision of this Warrant to the contrary, no adjustment pursuant to Section 2(a) shall cause the Exercise Price to be less than $1.93, as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction.

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

	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 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.

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

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

	the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding paragraph (a); provided that in the event that the Distribution is of shares of Common Stock (or common stock) ("Other Shares of Common Stock") of a company whose common shares are traded on a national securities exchange or a national automated quotation system, then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding paragraph (a) and the number of Warrant Shares calculated in accordance with the first part of this paragraph (b).

	PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

	Purchase Rights.  In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (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 on the exercise of this Warrant) 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.

	Fundamental Transactions.  In connection with any Fundamental Transaction, the Successor Entity shall assume this Warrant in accordance with the provisions of this Section (4)(b), including agreements to deliver to each holder of 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 satisfactory to the Holder.  Upon the occurrence of any 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 may exercise every right and power of the Company 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.   In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had the Warrant been exercised immediately prior to such Fundamental Transaction.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.   The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.  Notwithstanding the foregoing, in the event of a Fundamental Transaction, at the request of the Holder delivered before the 90th day after such Fundamental Transaction, the Company (or the Successor Entity) shall purchase this Warrant from the Holder by paying to the Holder, within five 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.

	NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this Warrant is outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of shares of Common Stock issuable upon exercise of this Warrant then outstanding (without regard to any limitations on exercise).

	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.  

	REISSUANCE OF WARRANTS.

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

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

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

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

	NOTICES.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 7 of Annex I to the Subscription Agreement.  The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefore.  

	AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

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

	CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and the Holder 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.

	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 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 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.

	REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.  

	TRANSFER.This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

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

	"Approved Stock Plan" means any employee benefit plan, stock option agreement, stock option plan or equity incentive plan that has been approved by the Board of Directors of the Company, including, without limitation, the Company's deferred compensation arrangements, pursuant to which the Company's securities, including, without limitation, restricted stock, restricted stock units or shares of Common Stock issuable upon the exercise of options or warrants issued pursuant to such agreement or plan, may be issued to any employee, officer or director for services provided to the Company, and including exchange or repricing of such options approved by the stockholders of the Company.

	"Black Scholes Value" means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the "OV" function on Bloomberg using (i) a price per share of Common Stock equal to the Weighted Average Price of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable  Fundamental Transaction, (ii) 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 the date of consummation of the applicable Fundamental Transaction and (iii) an expected volatility equal to the 30-day volatility obtained from the HVT function on Bloomberg determined as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction.

	 "Bloomberg" means Bloomberg Financial Markets.

	"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.

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

	"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 "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

	"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.

	 "Common Stock Deemed Outstanding" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon exercise of this Warrant.

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

	"Excluded Securities" means any Common Stock issued or issuable: (i) in connection with any Approved Stock Plan, (ii) upon exercise of the Warrants, (iii) upon conversion of any Options or Convertible Securities (including in payment of the Make Whole Amount) that are outstanding on the day immediately preceding the date of this Warrant; provided that the terms related to the issuance of securities under such agreements are not amended, modified or changed on or after the date hereof in a manner that would have a dilutive effect on the Company or otherwise increase the value for the holder thereof, (iv) in payment of the Company's obligations under the term notes issued under its credit facility and outstanding as of the date of this Warrant, provided that the terms related to the issuance of securities under such agreements are not amended, modified or changed on or after the date hereof in a manner that would have a dilutive effect on the Company or otherwise increase the value of such securities for the holder thereof, (v) upon the exercise of any warrants outstanding as of the date of this Warrant, provided that the terms of such warrants are not amended, modified or changed on or after the date hereof in a manner that would have a dilutive effect on the Company or otherwise increase the value of such securities for the holder thereof , (vi) as payment-in-kind for professional services rendered to the Company, (vii) upon the exercise or exchange of or conversion of any securities issued pursuant to the Purchase Agreement or in connection with the transaction contemplated thereby, (viii) in connection with any strategic acquisition or strategic transaction by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies the primary purpose of which is not to raise equity capital, (ix) in connection with any stock split, stock dividend or recapitalization of the Company and (x) pursuant to a bona fide firm commitment underwritten public offering with a nationally recognized underwriter which generates gross proceeds to the Company in excess of $25,000,000.  

	"Eligible Market" means the Principal Market, The New York Stock Exchange, Inc., The American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Capital Market.

	"Expiration Date" means the date eighty-four (84) months after the Exercisability Date or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a "Holiday"), the next date that is not a Holiday.

	"Fundamental Transaction" means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, but excluding a sale of any equity securities of a subsidiary or affiliate of the Company which under state law could constitute a sale of all or substantially all of the assets unless such sale is being done by the Company as part of a plan to circumvent the provisions contained in Section 4(b) of this Warrant, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

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

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

	"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.

	"Principal Market" means The NASDAQ Global Market.

	RESERVED

	RESERVED

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

	"Trading Day" means any day on which the Common Stock are 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 are then traded; provided that "Trading Day" shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are 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).

	"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 City time, and ending at 4:00:00 p.m., New York City time, 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 City time, and ending at 4:00:00 p.m., New York City time, 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 "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted Average Price cannot be calculated for such security on such 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 share dividend, share split or other similar transaction during such 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.

 
QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.

 

By:

Name:

Title:

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock ("Warrant Shares") of QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, 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.

4.  Representations and Warranties.  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 (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under Section 1(d) of this Warrant to which this notice relates.

 

Date: _______________ __, ______

 

   Name of Registered Holder

By:

Name:

Title:

 

 ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs [INSERT NAME OF TRANSFER AGENT] to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated August ____, 2008 from the Company and acknowledged and agreed to by [INSERT NAME OF TRANSFER AGENT].

QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC

 

 

By:

Name:

Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}]]