Document:

WWW.EXFILE.COM, INC. -- 14090 -- MATRITECH, INC. -- EXHIBIT 4.4 TO FORM 8-K

    EXHIBIT
      4.4

     

     

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND,
      ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED
      IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

     

    COMMON
      STOCK PURCHASE WARRANT

    

    

    To
      Purchase [60%
      of the number of shares of Common Stock that could be acquired by

    Purchaser
      at the Closing Date upon conversion of Notes]
      Shares of
      Common Stock of

     

    Matritech,
      Inc.

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      CERTIFIES that, for value received, _____________ (the “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the six month and
      one
      day anniversary of January 13, 2006 (the “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the fifth anniversary of the Closing Date
      (the “Termination
      Date”)
      but not
      thereafter, to subscribe for and purchase from Matritech, Inc., a corporation
      incorporated in the State of Delaware (the “Company”),
      up to
      [60%
      of the number of shares of Common Stock that could be acquired by Purchaser
      at
      the Closing Date upon conversion of Notes]
      shares
      (the “Warrant
      Shares”)
      of
      Common Stock, par value $0.01 per share, of the Company (the “Common
      Stock”),
      such
      number of Warrant Shares being subject to adjustments as provided herein.
      Additionally, the Holder of this Warrant may become entitled, upon the
      conditions and subject to the limitations on exercise and the conditions
      hereinafter set forth, to exercise the Warrant for the Additional
      Warrant Shares
      (as
      defined below) at the Additional
      Warrant Exercise Price
      (as
      defined below) and, in such event, this Warrant will be exericisable for the
      Additional Warrant Shares at any time prior to the close of business on the
      Termination Date. With respect to the Warrant Shares, the purchase price of
      one
      share of Common Stock under this Warrant shall be $0.67 (the “Warrant
      Share Exercise Price”,
      and
      together with the Additional Warrant Exercise Price, the “Exercise
      Price”),
      subject to adjustment hereunder. The Warrant Share Exercise Price and the number
      of Warrant Shares for which the 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Warrant
      is
      exercisable shall be subject to adjustment as provided herein. Capitalized
      terms
      used and not otherwise defined herein shall have the meanings set forth in
      that
      certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      January 13, 2006, among the Company and the purchasers signatory
      thereto.

     

    1.  Title
      to Warrant.
      Prior to
      the Termination Date and subject to compliance with applicable laws and Section
      7 of this Warrant, this Warrant and all rights hereunder are transferable,
      in
      whole or in part, at the office or agency of the Company by the Holder in person
      or by duly authorized attorney, upon surrender of this Warrant together with
      the
      Assignment Form annexed hereto properly endorsed; provided,
      however,
      during
      any 12 month period and except for transfers to an Affiliate of the Holder,
      the
      Holder, collectively with successor Holders, may not transfer this Warrant
      in
      more than two transactions to more than four assignees per transaction. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

     

    2.  Authorization
      of Shares.
      The
      Company covenants that all Warrant Shares and all Additional Warrant Shares
      which may be issued upon the exercise of the purchase rights represented by
      this
      Warrant will, upon exercise of the purchase rights represented by this Warrant
      and in accordance with the terms hereof, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof imposed by the Company other than restrictions
      on
      transfer provided for in the Transaction Documents.

     

    3.  Exercise
      of Warrant.
      

     

    (a)
      Except
      as provided in Section 4 herein, exercise of the purchase rights represented
      by
      this Warrant may be made at any time or times on or after the Initial Exercise
      Date and on or before the Termination Date by the surrender of this Warrant
      and
      the Notice of Exercise Form annexed hereto duly executed, at the office of
      the
      Company (or such other office or agency of the Company as it may designate
      by
      notice in writing to the registered Holder at the address of such Holder
      appearing on the books of the Company) and upon payment of the applicable
      Exercise Price of the shares thereby purchased by wire transfer or cashier’s
      check drawn on a United States bank or by means of a cashless exercise pursuant
      to Section 3(d), the Holder shall be entitled to receive a certificate for
      the
      number of Warrant Shares so purchased. Certificates for shares purchased
      hereunder shall be delivered to the Holder within five (5) trading days after
      the date on which this Warrant shall have been exercised as aforesaid. This
      Warrant shall be deemed to have been exercised and such certificate or
      certificates shall be deemed to have been issued, and Holder or any other person
      so designated to be named therein shall be deemed to have become a holder of
      record of such shares for all purposes, as of the date the Warrant has been
      exercised by payment to the Company of the applicable Exercise Price and all
      taxes required to be paid by the Holder, if any, pursuant to Section 5 prior
      to
      the issuance of such shares, have been paid. If the Company fails to deliver
      to
      the Holder a certificate or certificates representing the Warrant Shares
      pursuant to this Section 3(a) by the fifth trading day after the date of
      exercise, then the Holder will have the right to rescind such exercise. In
      addition to any other rights available to the Holder, if the Company fails
      to
      deliver to the Holder a certificate or certificates representing the

     

    
      
         

      

      
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    Warrant
      Shares pursuant to an exercise by the fifth trading day after the date of
      exercise and the Holder has not rescinded such exercise pursuant to this Section
      3(a), and if after such fifth trading day the Holder is required by its broker
      to purchase (in an open market transaction or otherwise) shares of Common Stock
      to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
      the Holder anticipated receiving upon such exercise (a "Buy-In"),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder's total purchase price (including brokerage commissions, if any) for
      the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares and Additional Warrant Shares
      that
      the Company was required to deliver to the Holder in connection with the
      exercise at issue times (B) the price at which the sell order giving rise to
      such purchase obligation was executed, and (2) at the option of the Holder,
      either reinstate the portion of the Warrant and equivalent number of Warrant
      Shares and Additional Warrant Shares for which such exercise was not honored
      or
      deliver to the Holder the number of shares of Common Stock that would have
      been
      issued had the Company timely complied with its exercise and delivery
      obligations hereunder. For example, if the Holder purchases Common Stock having
      a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
      exercise of shares of Common Stock with an aggregate sale price giving rise
      to
      such purchase obligation of $10,000, under clause (1) of the immediately
      preceding sentence the Company shall be required to pay the Holder $1,000.
      The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In, together with applicable confirmations
      and other evidence reasonably requested by the Company. Nothing herein shall
      limit a Holder's right to pursue any other remedies available to it hereunder,
      at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Company's failure
      to
      timely deliver certificates representing shares of Common Stock upon exercise
      of
      this Warrant as required pursuant to the terms hereof.

    

    (b)  If
      this
      Warrant shall have been exercised in part, the Company shall, at the time of
      delivery of the certificate or certificates representing Warrant Shares and
      Additional Warrant Shares, deliver to Holder a new Warrant evidencing the rights
      of Holder to purchase the unpurchased Warrant Shares and Additional Warrant
      Shares called for by this Warrant, which new Warrant shall in all other respects
      be identical with this Warrant. 

     

    (c)  The
      Company shall not effect any exercise of this Warrant, and the Holder shall
      not
      have the right to exercise any portion of this Warrant, pursuant to Section
      3(a)
      or otherwise, to the extent that after giving effect to such issuance after
      exercise, the Holder (together with the Holder’s affiliates), as set forth on
      the applicable Notice of Exercise, would beneficially own in excess of 9.99%
      of
      the number of shares of the Common Stock outstanding immediately after giving
      effect to such issuance.  For purposes of the foregoing sentence, the
      number of shares of Common Stock beneficially owned by the Holder 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 the number of shares of Common Stock
      which would be issuable upon (A) exercise of the remaining, nonexercised portion
      of this Warrant beneficially owned by the Holder or any of its affiliates and
      (B) exercise or 

     

    
      
         

      

      
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    conversion
      of the unexercised or nonconverted portion of any other securities of the
      Company (including, without limitation, any other Warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its affiliates.  Except
      as set forth in the preceding sentence, for purposes of this Section 3(c),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      1934 Act. To the extent that the limitation contained in this Section 3(c)
      applies, the determination of whether this Warrant is exercisable (in relation
      to other securities owned by the Holder) and of which a portion of this Warrant
      is exercisable shall be in the sole discretion of such Holder, and the
      submission of a Notice of Exercise shall be deemed to be such Holder’s
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by such Holder) and of which portion of this Warrant is
      exercisable, in each case subject to such aggregate percentage limitation,
      and
      the Company shall have no obligation to verify or confirm the accuracy of such
      determination. For purposes of this Section 3(c), in determining the number
      of
      outstanding shares of Common Stock, the Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (x) the Company’s most recent
      Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other notice by the Company or the
      Company’s Transfer Agent setting forth the number of shares of Common Stock
      outstanding.  Upon the written or oral request of the Holder, the Company
      shall within two trading 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 or its affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported. The provisions of this Section
      3(c) may be waived by the Holder upon, at the election of the Holder (other
      than
      SDS Capital Partners SPC, LTD. or its affiliates), not less than 61 days’ prior
      notice to the Company, and the provisions of this Section 3(c) shall continue
      to
      apply until such 61st
      day (or
      such later date, as determined by the Holder, as may be specified in such notice
      of waiver).

     

    (d)  If
      at any
      time on or after the Initial Exercise Date there is no effective Registration
      Statement registering the resale of the Warrant Shares by the Holder or the
      Common Stock is not listed or included for quotation on the Nasdaq Capital
      Market, the Nasdaq National Market, the New York Stock Exchange or the American
      Stock Exchange, this Warrant may also be exercised at such time by means of
      a
“cashless exercise” in which the Holder shall be entitled to receive a
      certificate for the number of Warrant Shares equal to the quotient obtained
      by
      dividing [(A-B) (X)] by (A), where:

     

    
      	
            	(A)=	
              the
                daily volume weighted average price of the Common Stock on the trading
                day
                immediately preceding the date of such
                election;

            

    

    

    
      	
            	(B)=	
              the
                Warrant Share Exercise Price of this Warrant, as adjusted; and
                

            

    

    

    
      	
            	(X)=	
              the
                number of Warrant Shares issuable upon exercise of this Warrant in
                accordance with the terms of this Warrant by means of a cash exercise
                rather than a cashless exercise.

            

    

    

    
      
         

      

      
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    4.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Warrant Share Exercise Price.

     

    5.  Charges,
      Taxes and Expenses.
      Issuance
      of certificates for Warrant Shares and Additional Warrant Shares shall be made
      without charge to the Holder for any issue or transfer tax or other incidental
      expense in respect of the issuance of such certificate, all of which taxes
      and
      expenses shall be paid by the Company, and such certificates shall be issued
      in
      the name of the Holder or in such name or names as may be directed by the
      Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    6.  Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    7.  Transfer,
      Division and Combination.
      

     

    (a)  Subject
      to
      compliance with any applicable securities laws and the conditions set forth
      in
      Sections 1 and 7(e) hereof and to the provisions of Section 3(a) of the Purchase
      Agreement, this Warrant and all rights hereunder are transferable, in whole
      or
      in part, upon surrender of this Warrant at the principal office of the Company,
      together with a written assignment of this Warrant substantially in the form
      attached hereto duly executed by the Holder or its agent or attorney and funds
      sufficient to pay any transfer taxes payable upon the making of such transfer.
      Upon such surrender and, if required, such payment, the Company shall execute
      and deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination or denominations specified in such instrument of
      assignment, and shall issue to the assignor a new Warrant evidencing the portion
      of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
      A
      Warrant, if properly assigned, may be exercised by a new holder for the purchase
      of Warrant Shares without having a new Warrant issued. 

     

    (b)  This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 7(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

    

    (c)  The
      Company shall prepare, issue and deliver at its own expense (other than transfer
      taxes) the new Warrant or Warrants under this Section 7.

    

    
      
         

      

      
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    (d)  The
      Company agrees to maintain, at its aforesaid office, books for the registration
      and the registration of transfer of the Warrants.

     

    (e)  If,
      at the
      time of the surrender of this Warrant in connection with any transfer of this
      Warrant, the transfer of this Warrant shall not be registered pursuant to an
      effective registration statement under the 1933 Act and under applicable state
      securities or blue sky laws, the Company may require, unless waived in its
      reasonable discretion, as a condition of allowing such transfer (i) that the
      Holder or transferee of this Warrant, as the case may be, furnish to the Company
      a written opinion of counsel (which opinion shall be in form, substance and
      scope customary for opinions of counsel in comparable transactions) to the
      effect that such transfer may be made without registration under the 1933 Act
      and under applicable state securities or blue sky laws, (ii) that the holder
      or
      transferee execute and deliver to the Company an investment letter in form
      and
      substance acceptable to the Company and (iii) that the transferee be an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or
      (a)(8) promulgated under the 1933 Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the 1933 Act.

     

    8.  No
      Rights as Shareholder until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price (or by means of
      a
      cashless exercise pursuant to Section 3(d) hereof), the Warrant Shares and
      Additional Warrant Shares so purchased shall be and be deemed to be issued
      to
      such Holder as the record owner of such shares as of the close of business
      on
      the later of the date of such surrender or payment. 

     

    9.  Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares or Additional Warrant
      Shares, and in case of loss, theft or destruction, of indemnity or security
      reasonably satisfactory to it (which, in the case of the Warrant, shall not
      include the posting of any bond), and upon surrender and cancellation of such
      Warrant or stock certificate, if mutilated, the Company will make and deliver
      a
      new Warrant or stock certificate of like tenor and dated as of such
      cancellation, in lieu of such Warrant or stock certificate.

     

    10.  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

     

    11.  Adjustments
      of Exercise Price and Number of Warrant Shares.
      

     

    (a) Dilutive
      Issuances.
      If the
      Company shall issue or sell, or is, in accordance with subsections (b)(i)
      through (viii) below, deemed to have issued or sold (each, a “Dilutive
      Issuance”),
      any
      additional shares of Common Stock, other than Excluded Stock (the “New
      Issuance Shares”),
      without consideration or for a consideration per share less than the Exercise
      Price in effect immediately prior to the time of such issue or sale (the

     

    
      
         

      

      
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    lowest
      price at which such shares of Common Stock are issued or deemed to be issued
      hereunder is hereinafter referred to as the “New
      Issuance Price”),
      then
      and in each such case (a “Trigger
      Issuance”)
      the
      then-existing Warrant Share Exercise Price, shall be reduced, as of the close
      of
      business on the effective date of the Trigger Issuance, to a price determined
      in
      accordance with the immediately succeeding paragraphs.

    

    Prior
      to
      stockholder approval of the Stockholder Proposals, the Warrant Share Exercise
      Price shall be reduced to the higher of (i) the New Issuance Price or (ii)
      $0.61
      (appropriately adjusted for any stock split, reverse stock split, stock dividend
      or other reclassification or combination of the Common Stock occurring after
      the
      date hereof) (the “Full-Ratchet
      Floor Price”).
      From
      and after the date of stockholder approval of the Stockholder Proposals, if
      any,
      the Warrant Share Exercise Price shall be reduced to the New Issuance Price.
      In
      the event that in the time period prior to such stockholder approval a Dilutive
      Issuance is made and the Warrant Share Exercise Price is adjusted to the
      Full-Ratchet Floor Price instead of the New Issuance Price, then immediately
      following such stockholder approval, the Warrant Share Exercise Price shall
      be
      adjusted to such New Issuance Price if such New Issuance Price is lower than
      the
      then current Warrant Share Exercise Price.

    

    For
      purposes of this subsection (a), “Excluded
      Stock”
means
      (1) shares of Common Stock issued pursuant to the terms thereof upon the
      exercise or conversion of the Company’s options, warrants or convertible
      securities outstanding as of the Closing Date in accordance with the terms
      of
      such options, warrants or other securities as in effect on the Closing Date
      and
      provided that such securities have not been amended since the Closing Date
      to
      increase the number of shares of Common Stock issuable thereunder or to lower
      the exercise or conversion price thereof; (2) stock, stock options or other
      stock rights issued pursuant to any stock or option plan duly adopted by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose; (3) securities issued pursuant to a bona fide underwritten
      public offering with gross proceeds of at least $25,000,000; (4) the Notes,
      the
      Warrants and the shares of Common Stock issuable pursuant to the terms thereof;
      (5) securities issued in a bona fide business acquisition the primary purpose
      of
      which, as determined in good faith by a majority of the members of the Board
      of
      Directors of the Company, is not raising capital; (6) capital stock or
      convertible securities issued in a joint venture, strategic partnership or
      licensing arrangement, the primary purpose of which, as determined in good
      faith
      by a majority of the members of the Board of Directors of the Company, is not
      raising capital; and (7) shares of common stock issued or issuable by reason
      of
      a dividend, stock split or other distribution on shares of common stock (but
      only to the extent that such a dividend, split or distribution results in an
      adjustment in the Exercise Price pursuant to the other provisions herein).
      

    

    Additionally,
      for purposes of this subsection (a), the following subsections (b)(i) to (viii)
      shall also be applicable:

    

    (b)
       (i)
      Issuance
      of Rights or Options.
      In case
      at any time the Company shall in any manner grant (directly and not by
      assumption in a merger or otherwise) any warrants or other rights to subscribe
      for or to purchase, or any options for the purchase of, Common Stock or any
      stock or security convertible into or exchangeable for Common 

     

    
      
         

      

      
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    Stock
      (such warrants, rights or options being called “Options” and such convertible or
      exchangeable stock or securities being called “Convertible Securities”) whether
      or not such Options or the right to convert or exchange any such Convertible
      Securities are immediately exercisable, and the price per share for which Common
      Stock is issuable upon the exercise of such Options or upon the conversion
      or
      exchange of such Convertible Securities (determined by dividing (i) the sum
      (which sum shall constitute the applicable consideration) of (x) the total
      amount, if any, received or receivable by the Company as consideration for
      the
      granting of such Options, plus (y) the aggregate amount of additional
      consideration payable to the Company upon the exercise of all such Options,
      plus
      (z), in the case of such Options which relate to Convertible Securities, the
      aggregate amount of additional consideration, if any, payable upon the issue
      or
      sale of such Convertible Securities and upon the conversion or exchange thereof,
      by (ii) the total maximum number of shares of Common Stock issuable upon the
      exercise of such Options or upon the conversion or exchange of all such
      Convertible Securities issuable upon the exercise of such Options) shall be
      less
      than the Warrant Share Exercise Price in effect immediately prior to the time
      of
      the granting of such Options, then the total number of shares of Common Stock
      issuable upon the exercise of such Options or upon conversion or exchange of
      the
      total amount of such Convertible Securities issuable upon the exercise of such
      Options shall be deemed to have been issued for such price per share as of
      the
      date of granting of such Options or the issuance of such Convertible Securities
      and thereafter shall be deemed to be outstanding for purposes of adjusting
      the
      Warrant Share Exercise Price. Except as otherwise provided in subsection
      (b)(iii) of this Section 11, no adjustment of the Warrant Share Exercise Price
      shall be made upon the actual issue of such Common Stock or of such Convertible
      Securities upon exercise of such Options or upon the actual issue of such Common
      Stock upon conversion or exchange of such Convertible Securities.

    

    (ii)
      Issuance
      of Convertible Securities.
      In case
      the Company shall in any manner issue (directly and not by assumption in a
      merger or otherwise) or sell any Convertible Securities, whether or not the
      rights to exchange or convert any such Convertible Securities are immediately
      exercisable, and the price per share for which Common Stock is issuable upon
      such conversion or exchange (determined by dividing (i) the sum (which sum
      shall
      constitute the applicable consideration) of (x) the total amount received or
      receivable by the Company as consideration for the issue or sale of such
      Convertible Securities, plus (y) the aggregate amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      thereof, by (ii) the total number of shares of Common Stock issuable upon the
      conversion or exchange of all such Convertible Securities) shall be less than
      the Warrant Share Exercise Price in effect immediately prior to the time of
      such
      issue or sale, then the total maximum number of shares of Common Stock issuable
      upon conversion or exchange of all such Convertible Securities shall be deemed
      to have been issued for such price per share as of the date of the issue or
      sale
      of such Convertible Securities and thereafter shall be deemed to be outstanding
      for purposes of adjusting the Warrant Share Exercise Price, provided that (a)
      except as otherwise provided in subsection (b)(iii) of this Section 11, no
      adjustment of the Warrant Share Exercise Price shall be made upon the actual
      issuance of such Common Stock upon conversion or exchange of such Convertible
      Securities and (b) no 

     

    
      
         

      

      
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    further
      adjustment of the Warrant Share Exercise Price shall be made by reason of the
      issue or sale of Convertible Securities upon exercise of any Options to purchase
      any such Convertible Securities for which adjustments of the Warrant Share
      Exercise Price have been made pursuant to the other provisions of Section
      11.

     

    (iii)
      Change
      in Option Price or Conversion Rate.
      Upon the
      happening of any of the following events, namely, if the purchase price provided
      for in any Option referred to in subsection (b)(i) hereof, the additional
      consideration, if any, payable upon the conversion or exchange of any
      Convertible Securities referred to in subsections (b)(i) or (b)(ii), or the
      rate
      at which Convertible Securities referred to in subsections (b)(i) or (b)(ii)
      are
      convertible into or exchangeable for Common Stock shall change at any time
      (including, but not limited to, changes under or by reason of provisions
      designed to protect against dilution), the Warrant Share Exercise Price in
      effect at the time of such event shall forthwith be readjusted to the Warrant
      Share Exercise Price which would have been in effect at such time had such
      Options or Convertible Securities still outstanding provided for such changed
      purchase price, additional consideration or conversion rate, as the case may
      be,
      at the time initially granted, issued or sold. On the termination of any Option
      for which any adjustment was made pursuant to subsections (a) and (b) hereof
      or
      any right to convert or exchange Convertible Securities for which any adjustment
      was made pursuant to this subsection (b) (including without limitation upon
      the
      redemption or purchase for consideration of such Convertible Securities by
      the
      Company), the Warrant Share Exercise Price then in effect hereunder shall
      forthwith be changed to the Warrant Share Exercise Price which would have been
      in effect at the time of such termination had such Option or Convertible
      Securities, to the extent outstanding immediately prior to such termination,
      never been issued.

    

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

    

    (v)
      Consideration
      for Stock.
      In case
      any shares of Common Stock, Options or Convertible Securities shall be issued
      or
      sold for cash, the consideration received therefor shall be deemed to be the
      amount received by the Company therefor. In case any shares of Common Stock,
      Options or Convertible Securities shall be issued or sold for a consideration
      other than cash, the amount of the consideration other than cash received by
      the
      Company shall be deemed to be the fair value of such consideration as determined
      in good faith by the Board of Directors of the Company using standard commercial
      valuation methods appropriate for valuing such assets; provided, however, that
      if the Required Holders (as defined in the Securities Purchase Agreement) do
      not
      agree to such fair value calculation within three business days after receipt
      thereof from the Company, then such fair value shall be determined in good
      faith
      by an investment banker or other appropriate expert of national reputation
      selected by the Company and reasonably acceptable to the Required Holders,
      with
      the costs of such appraisal to be borne 50% equally by the Company and 50%
      by
      the Holders (ratably on the basis of the 

     

    
      
         

      

      
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    respective
      number of Warrant Shares outstanding). In case any Options shall be issued
      in
      connection with the issue and sale of other securities of the Company, together
      comprising one integral transaction in which no specific consideration is
      allocated to such Options by the parties thereto, such Options shall be deemed
      to have been issued for nominal consideration. If Common Stock, Options or
      Convertible Securities shall be issued or sold by the Company and, in connection
      therewith, other Options or Convertible Securities (the “Additional Rights”) are
      issued without any specific consideration allocated to such Additional Rights,
      then the consideration received or deemed to be received by the Company for
      such
      Additional Rights shall be deemed to be nominal.

    

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

    

    (vii)
      Treasury
      Shares.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company or any of its
      wholly-owned subsidiaries, and the disposition of any such shares (other than
      the cancellation or retirement thereof) shall be considered an issue or sale
      of
      Common Stock for the purpose of this Section 11.

    

    (c) Stock
      Splits and Dividends.
      If the
      Company shall, at any time or from time to time while Warrants are outstanding,
      pay a dividend or make a distribution on its Common Stock in shares of Common
      Stock, subdivide its outstanding shares of Common Stock into a greater number
      of
      shares or combine its outstanding shares of Common Stock into a smaller number
      of shares or issue by reclassification of its outstanding shares of Common
      Stock
      any shares of its capital stock (including any such reclassification in
      connection with a consolidation or merger in which the Company is the continuing
      corporation), then the Warrant Share Exercise Price and the number of Warrant
      Shares in effect immediately prior to the date upon which such change shall
      become effective shall be adjusted by the Company so that the Holder shall
      be
      entitled to receive the number of shares of Common Stock or other capital stock
      which such Holder would have received immediately following such event had
      this
      Warrant been exercised immediately prior to such event. Such adjustments shall
      be made successively whenever any event listed above shall occur.

    

    (d) Reorganization
      or Reclassification.
      If any
      capital reorganization or reclassification of the capital stock of the Company
      shall be effected in such a way (including, without limitation, by way of
      consolidation or merger) that holders of Common Stock but not holders of Company
      Warrants shall be entitled to receive stock, securities or assets with respect
      to or in exchange for Common Stock then, as a condition 

     

    
      
         

      

      
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    of
      such
      reorganization or reclassification, lawful and adequate provision shall be
      made
      whereby the Holder shall thereafter have the right to receive, upon the basis
      and upon the terms and conditions specified herein and in lieu of the shares
      of
      Common Stock of the Company immediately theretofore receivable upon the exercise
      of this Warrant, such shares of stock, securities or assets as may be issued
      or
      payable with respect to or in exchange for a number of outstanding shares of
      Common Stock equal to the number of shares of such stock immediately theretofore
      so receivable had such reorganization or reclassification not taken place and
      in
      any such case appropriate provision shall be made with respect to the rights
      and
      interests of such Holder to the end that the provisions hereof (including
      without limitation provisions for adjustments of the Warrant Share Exercise
      Price) shall thereafter be applicable, as nearly as may be, in relation to
      any
      shares of stock, securities or assets thereafter deliverable upon the exercise
      of such rights (including an immediate adjustment, by reason of such
      reorganization or reclassification, of the Exercise Price to the value for
      the
      Common Stock reflected by the terms of such reorganization or reclassification
      if the value so reflected is less than the Warrant Share Exercise Price in
      effect immediately prior to such reorganization or reclassification). In the
      event of a merger or consolidation of the Company as a result of which a greater
      or lesser number of shares of common stock of the surviving corporation are
      issuable to holders of the Common Stock of the Company outstanding immediately
      prior to such merger or consolidation, the Warrant Share Exercise Price in
      effect immediately prior to such merger or consolidation shall be adjusted
      in
      the same manner as though there were a subdivision or combination of the
      outstanding shares of Common Stock of the Company.

    

    (e) Distributions.
      In case
      the Company shall fix a payment date for the making of a distribution to all
      holders of Common Stock (including any such distribution made in connection
      with
      a consolidation or merger in which the Company is the continuing corporation)
      of
      evidences of indebtedness or assets (other than cash dividends or cash
      distributions payable out of consolidated earnings or earned surplus or
      dividends or distributions referred to in subsection (c) of this Section 11),
      or
      subscription rights or warrants, the Warrant Share Exercise Price to be in
      effect after such payment date shall be determined by multiplying the Warrant
      Share Exercise Price in effect immediately prior to such payment date by a
      fraction, the numerator of which shall be the total number of shares of Common
      Stock outstanding multiplied by the Market Price (as defined below) per share
      of
      Common Stock immediately prior to such payment date, less the fair market value
      (as determined by the Company’s Board of Directors in good faith) of said assets
      or evidences of indebtedness so distributed, or of such subscription rights
      or
      warrants, and the denominator of which shall be the total number of shares
      of
      Common Stock outstanding multiplied by such Market Price per share of Common
      Stock immediately prior to such payment date. “Market
      Price”
means,
      for any security as of any date, the last sales price of such security on the
      principal trading market where such security is listed or traded as reported
      by
      Bloomberg Financial Markets (or a comparable reporting service of national
      reputation selected by the Company and reasonably acceptable to the holder
      hereof if Bloomberg Financial Markets is not then reporting closing sales prices
      of such security) (in any case, “Bloomberg”),
      or if
      the foregoing does not apply, the last reported sales price of such security
      on
      a national exchange or in the over-the-counter market on the electronic bulletin
      board for such security as reported by 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Bloomberg,
      or, if no such price is reported for such security by Bloomberg, the average
      of
      the bid prices of all market makers for such security as reported in the “pink
      sheets” by Pink Sheets LLC, in each case for such date or, if such date was not
      a trading day for such security, on the next preceding date which was a trading
      day. If the Market Price cannot be calculated for such security as of such
      date
      on any of the foregoing bases, the Market Price of such security on such date
      shall be the fair market value as reasonably determined by an investment banking
      firm selected by the Company and reasonably acceptable to the holder hereof,
      with the costs of such appraisal to be borne by the Company. Such adjustment
      shall be made successively whenever such a payment date is fixed.

    

    (f) Effective
      Date of Adjustment.
      An
      adjustment to the Warrant Share Exercise Price shall become effective
      immediately after the payment date in the case of each dividend or distribution
      and immediately after the effective date of each other event which requires
      an
      adjustment.

    

    (g) Subsequent
      Adjustments.
      In the
      event that, as a result of an adjustment made pursuant to subsections (a)
      through (e), the Holder shall become entitled to receive any shares of capital
      stock of the Company other than shares of Common Stock, the number of such
      other
      shares so receivable upon the exercise of this Warrant shall be subject
      thereafter to adjustment from time to time in a manner and on terms as nearly
      equivalent as practicable to the provisions contained herein.

    

    (h) Other
      Action Affecting Exercise Price.
      If, at
      any time during the Exercise Period, the Company takes any action affecting
      the
      Common Stock that would be covered by Section 11, but for the manner in which
      such action is taken or structured, which would in any way diminish the value
      of
      this Warrant, then the Warrant Share Exercise Price shall be adjusted in such
      manner as the Board of Directors of the Company shall in good faith determine
      to
      be equitable under the circumstances.

    

    (i) Additional
      Warrant Shares.
      If after
      the Registration Statement registering the Warrant Shares required by Section
      2(a) of the Registration Rights Agreement has been declared effective by the
      Securities and Exchange Commission, (i)(A) sales of Warrant Shares can no longer
      be made pursuant to such Registration Statement, (B) such Registration Statement
      is no longer effective, or (C) the Common Stock is not listed or included for
      quotation on the Nasdaq Capital Market, the Nasdaq National Market, the New
      York
      Stock Exchange or the American Stock Exchange and (ii) the Holder no longer
      holds any portion of the Notes (or Conversion Shares into which they have been
      converted) (each of such events, a “Default
      Event”)
      and
      such Default Event exists without interruption for more than five (5) business
      days, then this Warrant will become exercisable for an additional number of
      shares of Common Stock (the “Additional
      Warrant Shares”)
      equal
      to (s) the number of Warrant Shares then issuable upon exercise of the Warrant
      assuming a cashless exercise pursuant to Section 3(d) of this Warrant,
      multiplied by (t) ten hundredths (.10). If the Default Event continues without
      interruption for more than sixty (60) days, then this Warrant will become
      exercisable for a further amount of Additional Warrant Shares equal to (u)
      the
      number of Warrant Shares then 

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    issuable
      upon exercise of the Warrant assuming a cashless exercise pursuant to Section
      3(d) of this Warrant, multiplied by (v) five hundredths (.05). If the Default
      Event continues without interruption for more than one hundred twenty (120)
      days, then this Warrant will become exercisable (in part or in whole) for a
      further amount of Additional Warrant Shares equal to (w) the number of Warrant
      Shares then issuable upon exercise of the Warrant assuming a cashless exercise
      pursuant to Section 3(d) of this Warrant, multiplied by (x) five hundredths
      (.05). Thereafter, for each additional sixty (60) day period after the one
      hundred and twentieth (120th)
      day
      following the commencement of a Default Event during which such Default Event
      continues without interruption, but limited to a period of three hundred sixty
      (360) days of existence of a continuous Default Event, this Warrant will become
      exercisable for a further amount of Additional Warrant Shares equal to (y)
      the
      number of Warrant Shares then issuable upon exercise of the Warrant assuming
      a
      cashless exercise pursuant to Section 3(d) of this Warrant, multiplied by (z)
      five hundredths (.05). After the three hundred and sixtieth (360th)
      day of
      existence of a continuous Default Event, the Holder will accrue no further
      rights to Additional Warrant Shares. The exercise price for such Additional
      Warrant Shares (the “Additional
      Share Exercise Price”)
      shall
      be $.01 per share. 

    

    12.  Voluntary
      Adjustment by the Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Warrant Share Exercise Price to any amount and for any period of time deemed
      appropriate by the Board of Directors of the Company provided that such
      reduction shall apply on a pro
      rata
      basis to
      all of the Warrants.

     

    13.  Notice
      of Adjustment.
      Whenever
      the number of Warrant Shares or number or kind of securities or other property
      purchasable upon the exercise of this Warrant or the Warrant Share Exercise
      Price is adjusted, as herein provided, the Company shall give notice thereof
      to
      the Holder, which notice shall state the number of Warrant Shares (and other
      securities or property) purchasable upon the exercise of this Warrant and the
      Warrant Share Exercise Price for such Warrant Shares (and other securities
      or
      property) after such adjustment, setting forth a brief statement of the facts
      requiring such adjustment and setting forth the computation by which such
      adjustment was made.

     

    14.  Call
      Provision.
      Unless
      and to the extent Holder is prohibited from exercising under Section 3(c),
      notwithstanding any other provision contained herein to the contrary, in the
      event that the closing bid price of a share of Common Stock as traded on the
      American Stock Exchange, Inc. (or such other exchange or stock market on which
      the Common Stock may then be listed or quoted) equals or exceeds $2.68
      (appropriately adjusted for any stock split, reverse stock split, stock dividend
      or other reclassification or combination of the Common Stock occurring after
      the
      date hereof) for twenty (20) consecutive trading days commencing after the
      Registration Statement (as defined in the Registration Rights Agreement) has
      been declared effective, the Company, upon thirty (30) days prior written notice
      (the “Notice
      Period”)
      given
      to the Holder within one business day immediately following the end of such
      twenty (20) trading day period, may call this Warrant, in whole or in part,
      at a
      redemption price equal to $0.67 per
      share
      of Common Stock then purchasable pursuant to this Warrant; provided that (i)
      all
      of Warrant Shares issuable upon the exercise of this Warrant either (A) are
      registered pursuant to an effective Registration Statement (as defined in the
      Registration Rights Agreement) which has not been suspended and for which no
      stop order is in effect, and pursuant to which the Holder is able 

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    to
      sell
      such shares of Common Stock at all times during the Notice Period or (B) no
      longer constitute Registrable Securities (as defined in the Registration Rights
      Agreement): (ii) the number of shares of Common Stock issuable upon the exercise
      of Warrants included in such notice of redemption does not exceed the cumulative
      trading volume of the Common Stock on any stock exchange or market on which
      the
      Common Stock may then be traded for the thirty (30) consecutive trading days
      prior to the first day of the Notice Period; (iii) the Company has not issued
      a
      warrant redemption notice on any other series of warrants within 60 days of
      the
      first day of the Notice Period; and (iv) the first day of such Notice Period
      is
      not within 365 days of the Closing Date or within 90 days of the Termination
      Date. In the event that less than all of the Company Warrants (as defined below)
      are called pursuant to this Section 14, any call of less than all the Company
      Warrants shall be on a pro rata basis for each holder of Company Warrants.
      Notwithstanding any such notice by the Company, the Holder shall have the right
      to exercise this Warrant prior to the end of the Notice Period. The term
“Company
      Warrants”
means
      a
      series of Warrants of like tenor issued by the Company pursuant to the Purchase
      Agreement.

     

    15.  Notice
      of Corporate Action.
      If at
      any time:

     

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right,
      or

    

    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation or,

    

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

    

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      10
      days’ prior written notice of the date on which a record date shall be selected
      for such dividend, distribution or right or for determining rights to vote
      in
      respect of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, liquidation or winding up, and (ii) in the case
      of
      any such reorganization, reclassification, merger, consolidation, sale,
      transfer, disposition, dissolution, liquidation or winding up, at least 10
      days’
prior written notice of the date when the same shall take place. Such notice
      in
      accordance with the foregoing clause also shall specify (i) the date on which
      any such record is to be taken for the purpose of such dividend, distribution
      or
      right, the date on which the holders of Common Stock shall be entitled to any
      such dividend, distribution or right, and the amount and character thereof,
      and
      (ii) the date on which any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up is to take place and the time, if any such time is to be fixed, as of which
      the holders of Common Stock shall be entitled to exchange their Warrant Shares
      for securities or other property deliverable upon such disposition, dissolution,
      liquidation or winding up. Each such written notice shall be sufficiently given
      if addressed to 

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Holder
      at
      the last address of Holder appearing on the books of the Company and delivered
      in accordance with Section 17(d).

     

    16.  Authorized
      Shares.
      The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      

     

    Except
      and
      to the extent as waived or consented to by the Holder, the Company shall not
      by
      any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares or Additional Warrant
      Shares above the amount payable therefor upon such exercise immediately prior
      to
      such increase in par value, (b) take all such action as may be necessary or
      appropriate in order that the Company may validly and legally issue fully paid
      and nonassessable Warrant Shares or Additional Warrant Shares upon the exercise
      of this Warrant, and (c) use commercially reasonable efforts to obtain all
      such
      authorizations, exemptions or consents from any public regulatory body having
      jurisdiction thereof as may be necessary to enable the Company to perform its
      obligations under this Warrant.

    

    17.  Miscellaneous.

     

    (a)  Jurisdiction.
      This
      Warrant shall constitute a contract under the laws of Delaware, without regard
      to its conflict of law, principles or rules.

     

    (b)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares and Additional Warrant Shares
      acquired upon the exercise of this Warrant, if not registered, will have
      restrictions upon resale imposed by state and federal securities
      laws.

     

    (c)  Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding all rights hereunder
      terminate on the Termination Date. If the Company willfully and knowingly fails
      to comply with any provision of this Warrant, which results in any material
      damages to the Holder, the Company shall pay to Holder such amounts as shall
      be
      sufficient to cover any costs and expenses including, but not limited to,
      reasonable attorneys’ fees, including those of appellate proceedings,

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    incurred
      by Holder in collecting any amounts due pursuant hereto or in otherwise
      enforcing any of its rights, powers or remedies hereunder.

     

    (d)  Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    (e)  Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares or Additional Warrant Shares, and no
      enumeration herein of the rights or privileges of Holder, shall give rise to
      any
      liability of Holder for the purchase price of any Common Stock or as a
      stockholder of the Company, whether such liability is asserted by the Company
      or
      by creditors of the Company.

     

    (f)  Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive the defense in any action
      for specific performance that a remedy at law would be adequate.

     

    (g)  Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares or Additional Warrant Shares.

     

    (h)  Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    (i)  Severability.
      Wherever
      possible, each provision of this Warrant shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Warrant shall be prohibited by or invalid under applicable law, such provision
      shall be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provisions or the remaining provisions of
      this Warrant.

     

    (j)  Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    ********************

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    IN
      WITNESS
      WHEREOF, the Company has caused this Warrant to be executed by its officer
      thereunto duly authorized.

     

    

    Dated:
      January 13, 2006

    
      	 	 	 
	 	
              MATRITECH,
                INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
                Stephen D. Chubb

              Title:
                Chief Executive Officer 

            
	 	 

    

    
 

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
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    NOTICE
      OF EXERCISE

    

    To: Matritech,
      Inc.

    

    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of Matritech,
      Inc.
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2)  Payment
      shall take the form of (check applicable box):

     

    o
      in lawful money of the
      United States; or

     

    o
      the cancellation of such number of Warrant Shares as is
      necessary, in accordance with the formula set forth in subsection 3(d), to
      exercise this Warrant with respect to the maximum number of Warrant Shares
      purchasable pursuant to the cashless exercise provision set forth in subsection
      3(d).

     

    (3)  Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor/Qualified Institutional Buyer.
      The
      undersigned is either: (i) an “accredited investor” as defined in Rule
      501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933,
      as
      amended (the “Securities Act”) or (ii) a qualified institutional buyer as
      defined in Rule 144(A)(a) under the Securities Act. 

     

    
      	 	 	 
	 	[PURCHASER]
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

              Title:

            
	 	
               

              Dated:
                ________________________ 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign
      the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not use
      this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    Holder's
      Signature: _____________________________

    

    Holder's
      Address: _____________________________

     

                                 
      _____________________________

    

    

    

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.WWW.EXFILE.COM, INC. -- 14090 -- MATRITECH, INC. -- EXHIBIT 4.5 TO FORM 8-K

    EXHIBIT
      4.5

     

    

     

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND,
      ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED
      IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

     

    COMMON
      STOCK PURCHASE WARRANT

    

    

    To
      Purchase _______ Shares of Common Stock of

     

    Matritech,
      Inc.

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      CERTIFIES that, for value received, ______________ (the “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the six month and
      one
      day anniversary of January 13, 2006 (the “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the fifth anniversary of the Closing Date
      (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Matritech, Inc., a
      corporation incorporated in the State of Delaware (the “Company”),
      up to
      ________ shares (the “Warrant
      Shares”)
      of
      Common Stock, par value $0.01 per share, of the Company (the “Common
      Stock”),
      such
      number of Warrant Shares being subject to adjustments as provided herein.
      Additionally, the Holder of this Warrant may become entitled, upon the
      conditions and subject to the limitations on exercise and the conditions
      hereinafter set forth, to exercise the Warrant for the Additional
      Warrant Shares
      (as defined below) at the Additional
      Warrant Exercise Price
      (as
      defined below) and, in such event, this Warrant will be exericisable for the
      Additional Warrant Shares at any time prior to the close of business on the
      Termination Date. With respect to the Warrant Shares, the purchase price of
      one
      share of Common Stock under this Warrant shall be $0.65 (the “Warrant
      Share Exercise Price”,
      and
      together with the Additional Warrant Exercise Price, the “Exercise
      Price”),
      subject to adjustment hereunder. The Warrant Share Exercise Price and the number
      of Warrant Shares for which the Warrant is exercisable shall be subject to
      adjustment as provided herein. Capitalized terms used and not otherwise defined
      herein shall 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    have
      the
      meanings set forth in that certain Securities Purchase Agreement (the
“Purchase
      Agreement”),
      dated
      January __, 2006, among the Company and the purchasers signatory
      thereto.

     

    1.  Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 7 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed; provided,
      however,
      during
      any 12 month period and except for transfers to an Affiliate of the Holder,
      the
      Holder, collectively with successor Holders, may not transfer this Warrant
      in
      more than two transactions to more than four assignees per transaction. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

     

    2.  Authorization
      of Shares.
      The
      Company covenants that all Warrant Shares and all Additional Warrant Shares
      which may be issued upon the exercise of the purchase rights represented by
      this
      Warrant will, upon exercise of the purchase rights represented by this Warrant
      and in accordance with the terms hereof, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof imposed by the Company other than restrictions
      on
      transfer provided for in the Transaction Documents.

     

    3.  Exercise
      of Warrant. 

     

    (a)
      Except as provided in Section 4 herein, exercise of the purchase rights
      represented by this Warrant may be made at any time or times on or after the
      Initial Exercise Date and on or before the Termination Date by the surrender
      of
      this Warrant and the Notice of Exercise Form annexed hereto duly executed,
      at
      the office of the Company (or such other office or agency of the Company as
      it
      may designate by notice in writing to the registered Holder at the address
      of
      such Holder appearing on the books of the Company) and upon payment of the
      applicable Exercise Price of the shares thereby purchased by wire transfer
      or
      cashier’s check drawn on a United States bank or by means of a cashless exercise
      pursuant to Section 3(d), the Holder shall be entitled to receive a certificate
      for the number of Warrant Shares so purchased. Certificates for shares purchased
      hereunder shall be delivered to the Holder within five (5) trading days after
      the date on which this Warrant shall have been exercised as aforesaid. This
      Warrant shall be deemed to have been exercised and such certificate or
      certificates shall be deemed to have been issued, and Holder or any other person
      so designated to be named therein shall be deemed to have become a holder of
      record of such shares for all purposes, as of the date the Warrant has been
      exercised by payment to the Company of the applicable Exercise Price and all
      taxes required to be paid by the Holder, if any, pursuant to Section 5 prior
      to
      the issuance of such shares, have been paid. If the Company fails to deliver
      to
      the Holder a certificate or certificates representing the Warrant Shares
      pursuant to this Section 3(a) by the fifth trading day after the date of
      exercise, then the Holder will have the right to rescind such exercise. In
      addition to any other rights available to the Holder, if the Company fails
      to
      deliver to the Holder a certificate or certificates representing the Warrant
      Shares pursuant to an exercise by the fifth trading day after the date of
      exercise and the Holder has not rescinded such exercise pursuant to this Section
      3(a), and if after 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    such
      fifth trading day the Holder is required by its broker to purchase (in an open
      market transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by the Holder of the Warrant Shares which the Holder
      anticipated receiving upon such exercise (a “Buy-In”),
      then the
      Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's
      total purchase price (including brokerage commissions, if any) for the shares
      of
      Common Stock so purchased exceeds (y) the amount obtained by multiplying (A)
      the
      number of Warrant Shares and Additional Warrant Shares that the Company was
      required to deliver to the Holder in connection with the exercise at issue
      times
      (B) the price at which the sell order giving rise to such purchase obligation
      was executed, and (2) at the option of the Holder, either reinstate the portion
      of the Warrant and equivalent number of Warrant Shares and Additional Warrant
      Shares for which such exercise was not honored or deliver to the Holder the
      number of shares of Common Stock that would have been issued had the Company
      timely complied with its exercise and delivery obligations hereunder. For
      example, if the Holder purchases Common Stock having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
      Common Stock with an aggregate sale price giving rise to such purchase
      obligation of $10,000, under clause (1) of the immediately preceding sentence
      the Company shall be required to pay the Holder $1,000. The Holder shall provide
      the Company written notice indicating the amounts payable to the Holder in
      respect of the Buy-In, together with applicable confirmations and other evidence
      reasonably requested by the Company. Nothing herein shall limit a Holder's
      right
      to pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company's failure to timely deliver
      certificates representing shares of Common Stock upon exercise of this Warrant
      as required pursuant to the terms hereof.

    

    (b)  If
      this
      Warrant shall have been exercised in part, the Company shall, at the time of
      delivery of the certificate or certificates representing Warrant Shares and
      Additional Warrant Shares, deliver to Holder a new Warrant evidencing the rights
      of Holder to purchase the unpurchased Warrant Shares and Additional Warrant
      Shares called for by this Warrant, which new Warrant shall in all other respects
      be identical with this Warrant. 

     

    (c)  The
      Company shall not effect any exercise of this Warrant, and the Holder shall
      not
      have the right to exercise any portion of this Warrant, pursuant to Section
      3(a)
      or otherwise, to the extent that after giving effect to such issuance after
      exercise, the Holder (together with the Holder’s affiliates), as set forth on
      the applicable Notice of Exercise, would beneficially own in excess of 9.99%
      of
      the number of shares of the Common Stock outstanding immediately after giving
      effect to such issuance.  For purposes of the foregoing sentence, the
      number of shares of Common Stock beneficially owned by the Holder 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 the number of shares of Common Stock
      which would be issuable upon (A) exercise of the remaining, nonexercised portion
      of this Warrant beneficially owned by the Holder or any of its affiliates and
      (B) exercise or conversion of the unexercised or nonconverted portion of any
      other securities of the Company (including, without limitation, any other
      Warrants) subject to a limitation on 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    conversion
      or exercise analogous to the limitation contained herein beneficially owned
      by
      the Holder or any of its affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 3(c), beneficial ownership shall be
      calculated in accordance with Section 13(d) of the 1934 Act. To the extent
      that
      the limitation contained in this Section 3(c) applies, the determination of
      whether this Warrant is exercisable (in relation to other securities owned
      by
      the Holder) and of which a portion of this Warrant is exercisable shall be
      in
      the sole discretion of such Holder, and the submission of a Notice of Exercise
      shall be deemed to be such Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by such Holder) and of which
      portion of this Warrant is exercisable, in each case subject to such aggregate
      percentage limitation, and the Company shall have no obligation to verify or
      confirm the accuracy of such determination. For purposes of this Section 3(c),
      in determining the number of outstanding shares of Common Stock, the Holder
      may
      rely on the number of outstanding shares of Common Stock as reflected in (x)
      the
      Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
      recent public announcement by the Company or (z) any other notice by the Company
      or the Company’s Transfer Agent setting forth the number of shares of Common
      Stock outstanding.  Upon the written or oral request of the Holder, the
      Company shall within two trading 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 or its affiliates since the date as of
      which such number of outstanding shares of Common Stock was reported. The
      provisions of this Section 3(c) may be waived by the Holder upon, at the
      election of the Holder (other than SDS Capital Partners SPC, LTD. or its
      affiliates), not less than 61 days’ prior notice to the Company, and the
      provisions of this Section 3(c) shall continue to apply until such
      61st
      day (or
      such later date, as determined by the Holder, as may be specified in such notice
      of waiver).

     

    (d)  This
      Warrant may also be exercised at any time by means of a “cashless exercise” in
      which the Holder shall be entitled to receive a certificate for the number
      of
      Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
      where:

     

    
      	
            	(A)=	
              the
                daily volume weighted average price of the Common Stock on the trading
                day
                immediately preceding the date of such
                election;

            

    

    

    
      	
            	(B)=	
              the
                Warrant Share Exercise Price of this Warrant, as adjusted; and
                

            

    

    

    
      	
            	(X)=	
              the
                number of Warrant Shares issuable upon exercise of this Warrant in
                accordance with the terms of this Warrant by means of a cash exercise
                rather than a cashless exercise.

            

    

    

    4.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Warrant Share Exercise Price.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.  Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares and Additional Warrant Shares shall
      be made without charge to the Holder for any issue or transfer tax or other
      incidental expense in respect of the issuance of such certificate, all of which
      taxes and expenses shall be paid by the Company, and such certificates shall
      be
      issued in the name of the Holder or in such name or names as may be directed
      by
      the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    6.  Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    7.  Transfer,
      Division and Combination. 

     

    (a)  Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 1 and 7(e) hereof and to the provisions of Section 3(a) of the
      Purchase Agreement, this Warrant and all rights hereunder are transferable,
      in
      whole or in part, upon surrender of this Warrant at the principal office of
      the
      Company, together with a written assignment of this Warrant substantially in
      the
      form attached hereto duly executed by the Holder or its agent or attorney and
      funds sufficient to pay any transfer taxes payable upon the making of such
      transfer. Upon such surrender and, if required, such payment, the Company shall
      execute and deliver a new Warrant or Warrants in the name of the assignee or
      assignees and in the denomination or denominations specified in such instrument
      of assignment, and shall issue to the assignor a new Warrant evidencing the
      portion of this Warrant not so assigned, and this Warrant shall promptly be
      cancelled. A Warrant, if properly assigned, may be exercised by a new holder
      for
      the purchase of Warrant Shares without having a new Warrant issued.

     

    (b)  This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 7(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

    

    (c)  The
      Company shall prepare, issue and deliver at its own expense (other than transfer
      taxes) the new Warrant or Warrants under this Section 7.

    

    (d)  The
      Company agrees to maintain, at its aforesaid office, books for the registration
      and the registration of transfer of the Warrants.

     

    (e)  If,
      at
      the time of the surrender of this Warrant in connection with any transfer of
      this Warrant, the transfer of this Warrant shall not be registered pursuant
      to
      an 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    effective
      registration statement under the 1933 Act and under applicable state securities
      or blue sky laws, the Company may require, unless waived in its reasonable
      discretion, as a condition of allowing such transfer (i) that the Holder or
      transferee of this Warrant, as the case may be, furnish to the Company a written
      opinion of counsel (which opinion shall be in form, substance and scope
      customary for opinions of counsel in comparable transactions) to the effect
      that
      such transfer may be made without registration under the 1933 Act and under
      applicable state securities or blue sky laws, (ii) that the holder or transferee
      execute and deliver to the Company an investment letter in form and substance
      acceptable to the Company and (iii) that the transferee be an “accredited
      investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the 1933 Act or a qualified institutional buyer as defined
      in
      Rule 144A(a) under the 1933 Act.

     

    8.  No
      Rights as Shareholder until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price (or by means of
      a
      cashless exercise pursuant to Section 3(d) hereof), the Warrant Shares and
      Additional Warrant Shares so purchased shall be and be deemed to be issued
      to
      such Holder as the record owner of such shares as of the close of business
      on
      the later of the date of such surrender or payment. 

     

    9.  Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares or Additional Warrant
      Shares, and in case of loss, theft or destruction, of indemnity or security
      reasonably satisfactory to it (which, in the case of the Warrant, shall not
      include the posting of any bond), and upon surrender and cancellation of such
      Warrant or stock certificate, if mutilated, the Company will make and deliver
      a
      new Warrant or stock certificate of like tenor and dated as of such
      cancellation, in lieu of such Warrant or stock certificate.

     

    10.  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

     

    11.  Adjustments
      of Exercise Price and Number of Warrant Shares. 

     

    (a) Dilutive
      Issuances.
      If the
      Company shall issue or sell, or is, in accordance with subsections (b)(i)
      through (viii) below, deemed to have issued or sold (each, a “Dilutive
      Issuance”),
      any
      additional shares of Common Stock, other than Excluded Stock (the “New
      Issuance Shares”),
      without consideration or for a consideration per share less than the Exercise
      Price in effect immediately prior to the time of such issue or sale (the lowest
      price at which such shares of Common Stock are issued or deemed to be issued
      hereunder is hereinafter referred to as the “New
      Issuance Price”),
      then
      and in each such case (a “Trigger
      Issuance”)
      the
      then-existing Warrant Share Exercise Price, shall be reduced, as of the close
      of
      business on the effective date of the Trigger Issuance, to a price determined
      in
      accordance with the immediately succeeding paragraphs.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Prior
      to
      stockholder approval of the Stockholder Proposals, the Warrant Share Exercise
      Price shall be reduced to the higher of (i) the New Issuance Price or (ii)
      $0.61
      (appropriately adjusted for any stock split, reverse stock split, stock dividend
      or other reclassification or combination of the Common Stock occurring after
      the
      date hereof) (the “Full-Ratchet
      Floor Price”).
      From
      and after the date of stockholder approval of the Stockholder Proposals, if
      any,
      the Warrant Share Exercise Price shall be reduced to the New Issuance Price.
      In
      the event that in the time period prior to such stockholder approval a Dilutive
      Issuance is made and the Warrant Share Exercise Price is adjusted to the
      Full-Ratchet Floor Price instead of the New Issuance Price, then immediately
      following such stockholder approval, the Warrant Share Exercise Price shall
      be
      adjusted to such New Issuance Price if such New Issuance Price is lower than
      the
      then current Warrant Share Exercise Price.

    

    For
      purposes of this subsection (a), “Excluded
      Stock”
means
      (1) shares of Common Stock issued pursuant to the terms thereof upon the
      exercise or conversion of the Company’s options, warrants or convertible
      securities outstanding as of the Closing Date in accordance with the terms
      of
      such options, warrants or other securities as in effect on the Closing Date
      and
      provided that such securities have not been amended since the Closing Date
      to
      increase the number of shares of Common Stock issuable thereunder or to lower
      the exercise or conversion price thereof; (2) stock, stock options or other
      stock rights issued pursuant to any stock or option plan duly adopted by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose; (3) securities issued pursuant to a bona fide underwritten
      public offering with gross proceeds of at least $25,000,000; (4) the Notes,
      the
      Warrants and the shares of Common Stock issuable pursuant to the terms thereof;
      (5) securities issued in a bona fide business acquisition the primary purpose
      of
      which, as determined in good faith by a majority of the members of the Board
      of
      Directors of the Company, is not raising capital; (6) capital stock or
      convertible securities issued in a joint venture, strategic partnership or
      licensing arrangement, the primary purpose of which, as determined in good
      faith
      by a majority of the members of the Board of Directors of the Company, is not
      raising capital; and (7) shares of common stock issued or issuable by reason
      of
      a dividend, stock split or other distribution on shares of common stock (but
      only to the extent that such a dividend, split or distribution results in an
      adjustment in the Exercise Price pursuant to the other provisions herein).
      

    

    Additionally,
      for purposes of this subsection (a), the following subsections (b)(i) to (viii)
      shall also be applicable:

    

    (b)
       (i)
      Issuance
      of Rights or Options.
      In case
      at any time the Company shall in any manner grant (directly and not by
      assumption in a merger or otherwise) any warrants or other rights to subscribe
      for or to purchase, or any options for the purchase of, Common Stock or any
      stock or security convertible into or exchangeable for Common Stock (such
      warrants, rights or options being called “Options” and such convertible or
      exchangeable stock or securities being called “Convertible Securities”) whether
      or not such Options or the right to convert or exchange any such Convertible
      Securities are immediately exercisable, and the price per share for which Common
      Stock is issuable upon the exercise of such Options or upon the conversion
      or
      exchange of such Convertible Securities (determined by dividing (i) the sum
      (which sum shall constitute 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    the
      applicable consideration) of (x) the total amount, if any, received or
      receivable by the Company as consideration for the granting of such Options,
      plus (y) the aggregate amount of additional consideration payable to the Company
      upon the exercise of all such Options, plus (z), in the case of such Options
      which relate to Convertible Securities, the aggregate amount of additional
      consideration, if any, payable upon the issue or sale of such Convertible
      Securities and upon the conversion or exchange thereof, by (ii) the total
      maximum number of shares of Common Stock issuable upon the exercise of such
      Options or upon the conversion or exchange of all such Convertible Securities
      issuable upon the exercise of such Options) shall be less than the Warrant
      Share
      Exercise Price in effect immediately prior to the time of the granting of such
      Options, then the total number of shares of Common Stock issuable upon the
      exercise of such Options or upon conversion or exchange of the total amount
      of
      such Convertible Securities issuable upon the exercise of such Options shall
      be
      deemed to have been issued for such price per share as of the date of granting
      of such Options or the issuance of such Convertible Securities and thereafter
      shall be deemed to be outstanding for purposes of adjusting the Warrant Share
      Exercise Price. Except as otherwise provided in subsection (b)(iii) of this
      Section 11, no adjustment of the Warrant Share Exercise Price shall be made
      upon
      the actual issue of such Common Stock or of such Convertible Securities upon
      exercise of such Options or upon the actual issue of such Common Stock upon
      conversion or exchange of such Convertible Securities.

    

    (ii)
      Issuance
      of Convertible Securities.
      In case
      the Company shall in any manner issue (directly and not by assumption in a
      merger or otherwise) or sell any Convertible Securities, whether or not the
      rights to exchange or convert any such Convertible Securities are immediately
      exercisable, and the price per share for which Common Stock is issuable upon
      such conversion or exchange (determined by dividing (i) the sum (which sum
      shall
      constitute the applicable consideration) of (x) the total amount received or
      receivable by the Company as consideration for the issue or sale of such
      Convertible Securities, plus (y) the aggregate amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      thereof, by (ii) the total number of shares of Common Stock issuable upon the
      conversion or exchange of all such Convertible Securities) shall be less than
      the Warrant Share Exercise Price in effect immediately prior to the time of
      such
      issue or sale, then the total maximum number of shares of Common Stock issuable
      upon conversion or exchange of all such Convertible Securities shall be deemed
      to have been issued for such price per share as of the date of the issue or
      sale
      of such Convertible Securities and thereafter shall be deemed to be outstanding
      for purposes of adjusting the Warrant Share Exercise Price, provided that (a)
      except as otherwise provided in subsection (b)(iii) of this Section 11, no
      adjustment of the Warrant Share Exercise Price shall be made upon the actual
      issuance of such Common Stock upon conversion or exchange of such Convertible
      Securities and (b) no further adjustment of the Warrant Share Exercise Price
      shall be made by reason of the issue or sale of Convertible Securities upon
      exercise of any Options to purchase any such Convertible Securities for which
      adjustments of the Warrant Share Exercise Price have been made pursuant to
      the
      other provisions of Section 11.

     

    (iii)
      Change
      in Option Price or Conversion Rate.
      Upon
      the happening of any of the following events, namely, if the purchase price
      provided for in any Option 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    referred
      to in subsection (b)(i) hereof, the additional consideration, if any, payable
      upon the conversion or exchange of any Convertible Securities referred to in
      subsections (b)(i) or (b)(ii), or the rate at which Convertible Securities
      referred to in subsections (b)(i) or (b)(ii) are convertible into or
      exchangeable for Common Stock shall change at any time (including, but not
      limited to, changes under or by reason of provisions designed to protect against
      dilution), the Warrant Share Exercise Price in effect at the time of such event
      shall forthwith be readjusted to the Warrant Share Exercise Price which would
      have been in effect at such time had such Options or Convertible Securities
      still outstanding provided for such changed purchase price, additional
      consideration or conversion rate, as the case may be, at the time initially
      granted, issued or sold. On the termination of any Option for which any
      adjustment was made pursuant to subsections (a) and (b) hereof or any right
      to
      convert or exchange Convertible Securities for which any adjustment was made
      pursuant to this subsection (b) (including without limitation upon the
      redemption or purchase for consideration of such Convertible Securities by
      the
      Company), the Warrant Share Exercise Price then in effect hereunder shall
      forthwith be changed to the Warrant Share Exercise Price which would have been
      in effect at the time of such termination had such Option or Convertible
      Securities, to the extent outstanding immediately prior to such termination,
      never been issued.

    

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

    

    (v)
      Consideration
      for Stock.
      In case
      any shares of Common Stock, Options or Convertible Securities shall be issued
      or
      sold for cash, the consideration received therefor shall be deemed to be the
      amount received by the Company therefor. In case any shares of Common Stock,
      Options or Convertible Securities shall be issued or sold for a consideration
      other than cash, the amount of the consideration other than cash received by
      the
      Company shall be deemed to be the fair value of such consideration as determined
      in good faith by the Board of Directors of the Company using standard commercial
      valuation methods appropriate for valuing such assets; provided, however, that
      if the Required Holders (as defined in the Securities Purchase Agreement) do
      not
      agree to such fair value calculation within three business days after receipt
      thereof from the Company, then such fair value shall be determined in good
      faith
      by an investment banker or other appropriate expert of national reputation
      selected by the Company and reasonably acceptable to the Required Holders,
      with
      the costs of such appraisal to be borne 50% equally by the Company and 50%
      by
      the Holders (ratably on the basis of the respective number of Warrant Shares
      outstanding). In case any Options shall be issued in connection with the issue
      and sale of other securities of the Company, together comprising one integral
      transaction in which no specific consideration is allocated to such Options
      by
      the parties thereto, such Options shall be deemed to have been issued for
      nominal consideration. If Common Stock, Options or Convertible Securities shall
      be issued or sold by the Company and, in connection therewith, other Options
      or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Convertible
      Securities (the “Additional Rights”) are issued without any specific
      consideration allocated to such Additional Rights, then the consideration
      received or deemed to be received by the Company for such Additional Rights
      shall be deemed to be nominal.

    

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

    

    (vii)
      Treasury
      Shares.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company or any of its
      wholly-owned subsidiaries, and the disposition of any such shares (other than
      the cancellation or retirement thereof) shall be considered an issue or sale
      of
      Common Stock for the purpose of this Section 11.

    

    (c) Stock
      Splits and Dividends.
      If the
      Company shall, at any time or from time to time while Warrants are outstanding,
      pay a dividend or make a distribution on its Common Stock in shares of Common
      Stock, subdivide its outstanding shares of Common Stock into a greater number
      of
      shares or combine its outstanding shares of Common Stock into a smaller number
      of shares or issue by reclassification of its outstanding shares of Common
      Stock
      any shares of its capital stock (including any such reclassification in
      connection with a consolidation or merger in which the Company is the continuing
      corporation), then the Warrant Share Exercise Price and the number of Warrant
      Shares in effect immediately prior to the date upon which such change shall
      become effective shall be adjusted by the Company so that the Holder shall
      be
      entitled to receive the number of shares of Common Stock or other capital stock
      which such Holder would have received immediately following such event had
      this
      Warrant been exercised immediately prior to such event. Such adjustments shall
      be made successively whenever any event listed above shall occur.

    

    (d) Reorganization
      or Reclassification.
      If any
      capital reorganization or reclassification of the capital stock of the Company
      shall be effected in such a way (including, without limitation, by way of
      consolidation or merger) that holders of Common Stock but not holders of Company
      Warrants shall be entitled to receive stock, securities or assets with respect
      to or in exchange for Common Stock then, as a condition of such reorganization
      or reclassification, lawful and adequate provision shall be made whereby the
      Holder shall thereafter have the right to receive, upon the basis and upon
      the
      terms and conditions specified herein and in lieu of the shares of Common Stock
      of the Company immediately theretofore receivable upon the exercise of this
      Warrant, such shares of stock, securities or assets as may be issued or payable
      with respect to or in exchange for a number of outstanding shares of Common
      Stock equal to the number of 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    shares
      of
      such stock immediately theretofore so receivable had such reorganization or
      reclassification not taken place and in any such case appropriate provision
      shall be made with respect to the rights and interests of such Holder to the
      end
      that the provisions hereof (including without limitation provisions for
      adjustments of the Warrant Share Exercise Price) shall thereafter be applicable,
      as nearly as may be, in relation to any shares of stock, securities or assets
      thereafter deliverable upon the exercise of such rights (including an immediate
      adjustment, by reason of such reorganization or reclassification, of the
      Exercise Price to the value for the Common Stock reflected by the terms of
      such
      reorganization or reclassification if the value so reflected is less than the
      Warrant Share Exercise Price in effect immediately prior to such reorganization
      or reclassification). In the event of a merger or consolidation of the Company
      as a result of which a greater or lesser number of shares of common stock of
      the
      surviving corporation are issuable to holders of the Common Stock of the Company
      outstanding immediately prior to such merger or consolidation, the Warrant
      Share
      Exercise Price in effect immediately prior to such merger or consolidation
      shall
      be adjusted in the same manner as though there were a subdivision or combination
      of the outstanding shares of Common Stock of the Company.

    

    (e) Distributions.
      In case
      the Company shall fix a payment date for the making of a distribution to all
      holders of Common Stock (including any such distribution made in connection
      with
      a consolidation or merger in which the Company is the continuing corporation)
      of
      evidences of indebtedness or assets (other than cash dividends or cash
      distributions payable out of consolidated earnings or earned surplus or
      dividends or distributions referred to in subsection (c) of this Section 11),
      or
      subscription rights or warrants, the Warrant Share Exercise Price to be in
      effect after such payment date shall be determined by multiplying the Warrant
      Share Exercise Price in effect immediately prior to such payment date by a
      fraction, the numerator of which shall be the total number of shares of Common
      Stock outstanding multiplied by the Market Price (as defined below) per share
      of
      Common Stock immediately prior to such payment date, less the fair market value
      (as determined by the Company’s Board of Directors in good faith) of said assets
      or evidences of indebtedness so distributed, or of such subscription rights
      or
      warrants, and the denominator of which shall be the total number of shares
      of
      Common Stock outstanding multiplied by such Market Price per share of Common
      Stock immediately prior to such payment date. “Market
      Price”
means,
      for any security as of any date, the last sales price of such security on the
      principal trading market where such security is listed or traded as reported
      by
      Bloomberg Financial Markets (or a comparable reporting service of national
      reputation selected by the Company and reasonably acceptable to the holder
      hereof if Bloomberg Financial Markets is not then reporting closing sales prices
      of such security) (in any case, “Bloomberg”),
      or if
      the foregoing does not apply, the last reported sales price of such security
      on
      a national exchange or in the over-the-counter market on the electronic bulletin
      board for such security as reported by Bloomberg, or, if no such price is
      reported for such security by Bloomberg, the average of the bid prices of all
      market makers for such security as reported in the “pink sheets” by Pink Sheets
      LLC, in each case for such date or, if such date was not a trading day for
      such
      security, on the next preceding date which was a trading day. If the Market
      Price cannot be calculated for such security as of such date on any of the
      foregoing bases, the Market Price of such security on such date shall be the
      fair market value as reasonably 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    determined
      by an investment banking firm selected by the Company and reasonably acceptable
      to the holder hereof, with the costs of such appraisal to be borne by the
      Company. Such adjustment shall be made successively whenever such a payment
      date
      is fixed.

    

    (f) Effective
      Date of Adjustment.
      An
      adjustment to the Warrant Share Exercise Price shall become effective
      immediately after the payment date in the case of each dividend or distribution
      and immediately after the effective date of each other event which requires
      an
      adjustment.

    

    (g) Subsequent
      Adjustments.
      In the
      event that, as a result of an adjustment made pursuant to subsections (a)
      through (e), the Holder shall become entitled to receive any shares of capital
      stock of the Company other than shares of Common Stock, the number of such
      other
      shares so receivable upon the exercise of this Warrant shall be subject
      thereafter to adjustment from time to time in a manner and on terms as nearly
      equivalent as practicable to the provisions contained herein.

    

    (h) Other
      Action Affecting Exercise Price.
      If, at
      any time during the Exercise Period, the Company takes any action affecting
      the
      Common Stock that would be covered by Section 11, but for the manner in which
      such action is taken or structured, which would in any way diminish the value
      of
      this Warrant, then the Warrant Share Exercise Price shall be adjusted in such
      manner as the Board of Directors of the Company shall in good faith determine
      to
      be equitable under the circumstances.

    

    (i) Additional
      Warrant Shares.
      If
      after the Registration Statement registering the Warrant Shares required by
      Section 2(a) of the Registration Rights Agreement has been declared effective
      by
      the Securities and Exchange Commission, (i)(A) sales of Warrant Shares can
      no
      longer be made pursuant to such Registration Statement, (B) such Registration
      Statement is no longer effective, or (C) the Common Stock is not listed or
      included for quotation on the Nasdaq Capital Market, the Nasdaq National Market,
      the New York Stock Exchange or the American Stock Exchange and (ii) the Holder
      no longer holds any portion of the Notes (or Conversion Shares into which they
      have been converted) (each of such events, a “Default
      Event”)
      and
      such Default Event exists without interruption for more than five (5) business
      days, then this Warrant will become exercisable for an additional number of
      shares of Common Stock (the “Additional
      Warrant Shares”)
      equal
      to (s) the number of Warrant Shares then issuable upon exercise of the Warrant
      assuming a cashless exercise pursuant to Section 3(d) of this Warrant,
      multiplied by (t) ten hundredths (.10). If the Default Event continues without
      interruption for more than sixty (60) days, then this Warrant will become
      exercisable for a further amount of Additional Warrant Shares equal to (u)
      the
      number of Warrant Shares then issuable upon exercise of the Warrant assuming
      a
      cashless exercise pursuant to Section 3(d) of this Warrant, multiplied by (v)
      five hundredths (.05). If the Default Event continues without interruption
      for
      more than one hundred twenty (120) days, then this Warrant will become
      exercisable (in part or in whole) for a further amount of Additional Warrant
      Shares equal to (w) the number of Warrant Shares then issuable upon exercise
      of
      the Warrant assuming a cashless exercise pursuant to Section 3(d) of this
      Warrant, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    multiplied
      by (x) five hundredths (.05). Thereafter, for each additional sixty (60) day
      period after the one hundred and twentieth (120th)
      day
      following the commencement of a Default Event during which such Default Event
      continues without interruption, but limited to a period of three hundred sixty
      (360) days of existence of a continuous Default Event, this Warrant will become
      exercisable for a further amount of Additional Warrant Shares equal to (y)
      the
      number of Warrant Shares then issuable upon exercise of the Warrant assuming
      a
      cashless exercise pursuant to Section 3(d) of this Warrant, multiplied by (z)
      five hundredths (.05). After the three hundred and sixtieth (360th)
      day of
      existence of a continuous Default Event, the Holder will accrue no further
      rights to Additional Warrant Shares. The exercise price for such Additional
      Warrant Shares (the “Additional
      Share Exercise Price”)
      shall
      be $.01 per share. 

    

    12.  Voluntary
      Adjustment by the Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Warrant Share Exercise Price to any amount and for any period of time deemed
      appropriate by the Board of Directors of the Company provided that such
      reduction shall apply on a pro
      rata
      basis to
      all of the Warrants.

     

    13.  Notice
      of Adjustment.
      Whenever the number of Warrant Shares or number or kind of securities or other
      property purchasable upon the exercise of this Warrant or the Warrant Share
      Exercise Price is adjusted, as herein provided, the Company shall give notice
      thereof to the Holder, which notice shall state the number of Warrant Shares
      (and other securities or property) purchasable upon the exercise of this Warrant
      and the Warrant Share Exercise Price for such Warrant Shares (and other
      securities or property) after such adjustment, setting forth a brief statement
      of the facts requiring such adjustment and setting forth the computation by
      which such adjustment was made.

     

    14.  Call
      Provision.
      Unless
      and to the extent Holder is prohibited from exercising under Section 3(c),
      notwithstanding any other provision contained herein to the contrary, in the
      event that the closing bid price of a share of Common Stock as traded on the
      American Stock Exchange, Inc. (or such other exchange or stock market on which
      the Common Stock may then be listed or quoted) equals or exceeds $2.60
      (appropriately adjusted for any stock split, reverse stock split, stock dividend
      or other reclassification or combination of the Common Stock occurring after
      the
      date hereof) for twenty (20) consecutive trading days commencing after the
      Registration Statement (as defined in the Registration Rights Agreement) has
      been declared effective, the Company, upon thirty (30) days prior written notice
      (the “Notice
      Period”)
      given
      to the Holder within one business day immediately following the end of such
      twenty (20) trading day period, may call this Warrant, in whole or in part,
      at a
      redemption price equal to $0.65 per
      share
      of Common Stock then purchasable pursuant to this Warrant; provided that (i)
      all
      of Warrant Shares issuable upon the exercise of this Warrant either (A) are
      registered pursuant to an effective Registration Statement (as defined in the
      Registration Rights Agreement) which has not been suspended and for which no
      stop order is in effect, and pursuant to which the Holder is able to sell such
      shares of Common Stock at all times during the Notice Period or (B) no longer
      constitute Registrable Securities (as defined in the Registration Rights
      Agreement): (ii) the number of shares of Common Stock issuable upon the exercise
      of Warrants included in such notice of redemption does not exceed the cumulative
      trading volume of the Common Stock on any stock exchange or market on which
      the
      Common Stock may then be traded for the thirty (30) consecutive trading days
      prior to the first day of the Notice Period; (iii) the Company has not

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    issued
      a
      warrant redemption notice on any other series of warrants within 60 days of
      the
      first day of the Notice Period; and (iv) the first day of such Notice Period
      is
      not within 365 days of the Closing Date or within 90 days of the Termination
      Date. In the event that less than all of the Company Warrants (as defined below)
      are called pursuant to this Section 14, any call of less than all the Company
      Warrants shall be on a pro rata basis for each holder of Company Warrants.
      Notwithstanding any such notice by the Company, the Holder shall have the right
      to exercise this Warrant prior to the end of the Notice Period. The term
“Company
      Warrants”
means
      a
      series of Warrants of like tenor issued by the Company pursuant to the Purchase
      Agreement.

     

    15.  Notice
      of
      Corporate Action. If at any time:

     

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right,
      or

    

    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation or,

    

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

    

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      10
      days’ prior written notice of the date on which a record date shall be selected
      for such dividend, distribution or right or for determining rights to vote
      in
      respect of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, liquidation or winding up, and (ii) in the case
      of
      any such reorganization, reclassification, merger, consolidation, sale,
      transfer, disposition, dissolution, liquidation or winding up, at least 10
      days’
prior written notice of the date when the same shall take place. Such notice
      in
      accordance with the foregoing clause also shall specify (i) the date on which
      any such record is to be taken for the purpose of such dividend, distribution
      or
      right, the date on which the holders of Common Stock shall be entitled to any
      such dividend, distribution or right, and the amount and character thereof,
      and
      (ii) the date on which any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up is to take place and the time, if any such time is to be fixed, as of which
      the holders of Common Stock shall be entitled to exchange their Warrant Shares
      for securities or other property deliverable upon such disposition, dissolution,
      liquidation or winding up. Each such written notice shall be sufficiently given
      if addressed to Holder at the last address of Holder appearing on the books
      of
      the Company and delivered in accordance with Section 17(d).

     

    16.  Authorized
      Shares.
      The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    this
      Warrant shall constitute full authority to its officers who are charged with
      the
      duty of executing stock certificates to execute and issue the necessary
      certificates for the Warrant Shares upon the exercise of the purchase rights
      under this Warrant. The Company will take all such reasonable action as may
      be
      necessary to assure that such Warrant Shares may be issued as provided herein
      without violation of any applicable law or regulation, or of any requirements
      of
      the Trading Market upon which the Common Stock may be listed. 

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares or Additional Warrant
      Shares above the amount payable therefor upon such exercise immediately prior
      to
      such increase in par value, (b) take all such action as may be necessary or
      appropriate in order that the Company may validly and legally issue fully paid
      and nonassessable Warrant Shares or Additional Warrant Shares upon the exercise
      of this Warrant, and (c) use commercially reasonable efforts to obtain all
      such
      authorizations, exemptions or consents from any public regulatory body having
      jurisdiction thereof as may be necessary to enable the Company to perform its
      obligations under this Warrant.

    

    17.  Miscellaneous.

     

    (a)  Jurisdiction.
      This
      Warrant shall constitute a contract under the laws of Delaware, without regard
      to its conflict of law, principles or rules.

     

    (b)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares and Additional Warrant Shares
      acquired upon the exercise of this Warrant, if not registered, will have
      restrictions upon resale imposed by state and federal securities
      laws.

     

    (c)  Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding all rights hereunder
      terminate on the Termination Date. If the Company willfully and knowingly fails
      to comply with any provision of this Warrant, which results in any material
      damages to the Holder, the Company shall pay to Holder such amounts as shall
      be
      sufficient to cover any costs and expenses including, but not limited to,
      reasonable attorneys’ fees, including those of appellate proceedings, incurred
      by Holder in collecting any amounts due pursuant hereto or in otherwise
      enforcing any of its rights, powers or remedies hereunder.

     

    (d)  Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)  Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares or Additional Warrant Shares, and no
      enumeration herein of the rights or privileges of Holder, shall give rise to
      any
      liability of Holder for the purchase price of any Common Stock or as a
      stockholder of the Company, whether such liability is asserted by the Company
      or
      by creditors of the Company.

     

    (f)  Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive the defense in any action
      for specific performance that a remedy at law would be adequate.

     

    (g)  Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares or Additional Warrant Shares.

     

    (h)  Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    (i)  Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    (j)  Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    ********************

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

    

    Dated:
      January 13, 2006

    
      	 	 	 
	 	
              MATRITECH,
                INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
                Stephen D. Chubb

              Title:
                Chief Executive Officer

            
	 	 

    

     

     

     

     

     

     

     

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    NOTICE
      OF EXERCISE

    

    To: Matritech,
      Inc.

    

    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of Matritech,
      Inc.
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2)  Payment
      shall take the form of (check applicable box):

     

    o
      in lawful money of the
      United States; or

     

    o
      the cancellation of such number of
      Warrant Shares as is necessary, in accordance with the formula set forth in
      subsection 3(d), to exercise this Warrant with respect to the maximum number
      of
      Warrant Shares purchasable pursuant to the cashless exercise provision set
      forth
      in subsection 3(d).

     

    (3)  Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

    _______________________________

    _______________________________

    

    (4)
      Accredited
      Investor/Qualified Institutional Buyer.
      The
      undersigned is either: (i) an “accredited investor” as defined in Rule
      501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933,
      as
      amended (the “Securities Act”) or (ii) a qualified institutional buyer as
      defined in Rule 144(A)(a) under the Securities Act. 

    

    [PURCHASER]

    

    

    By:
      ______________________________

    Name:

    Title:

    

    Dated:
      ________________________

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    Holder's
      Signature: ____________________________

    

    Holder's
      Address: _____________________________

     

    _____________________________

    

    

    

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]