Document:

EXHIBIT
        10.6

       

      EMPLOYMENT
        AGREEMENT

       

      EMPLOYMENT
        AGREEMENT
        (this
“Agreement”), dated as of March 6, 2008, by and between Par Pharmaceutical,
        Inc., a Delaware corporation (“Par” or “Employer”), and John MacPhee
        (“Executive”).

       

      RECITALS:

       

      A. WHEREAS,
        Executive is presently employed in the capacity of President, Branded Products
        Division; and

       

      B. WHEREAS,
        Employer and Executive desire to cancel and replace Executive’s existing
        Employment Agreement, dated January 9, 2006, and enter into this Agreement
        in
        order for Executive to continue to perform the duties associated with his
        position with Employer on the terms and conditions set forth
        herein.

       

      C. WHEREAS,
        Executive and Employer agree and acknowledge that the Agreement set forth
        herein
        supersedes any prior and contemporaneous written or oral agreements between
        the
        parties, and that upon execution the terms and conditions set forth in this
        Agreement govern Executive’s employment.

       

      In
        consideration of the mutual promises herein contained, the parties hereto
        hereby
        agree as follows:

       

      1. Employment.

       

      1.1. General.
        Employer hereby employs Executive in the capacity of President, Branded Products
        Division at the compensation rate and benefits set forth in Section 2 hereof
        for
        the Employment Term (as defined in Section 3.1 hereof). Executive hereby
        accepts
        such employment, subject to the terms and conditions herein contained. In
        all
        such capacity, Executive shall perform and carry out such duties and
        responsibilities as may be assigned to him from time to time by the Board
        and by
        the Chief Executive Officer of Par reasonably consistent with Executive’s
        position and this Agreement, and shall report to the Board and the Chief
        Executive Officer of Par. 

       

      1.2. Time
        Devoted to Position.
        Executive, during the Employment Term, shall devote substantially all of
        his
        business time, attention and skills to the business and affairs of
        Employer.

       

      1.3. Certifications.
        Whenever the Chief Executive Officer of Par is required by law, rule or
        regulation or requested by any governmental authority or by Par’s auditors to
        provide certifications with respect to Par’s financial statements or filings
        with the Securities and Exchange Commission or any other governmental authority,
        Executive shall sign such certifications as may be reasonably requested by
        the
        Chief Executive Officer of Par and/or the Board, with such exceptions as
        Executive deems necessary to make such certifications accurate and not
        misleading, and comply with applicable law.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2. Compensation
        and Benefits.

       

      2.1. Salary.
        At all
        times Executive is employed hereunder, Employer shall pay to Executive, and
        Executive shall accept, as full compensation for any and all services rendered
        and to be rendered by him during such period to Employer in all capacities,
        including, but not limited to, all services that may be rendered by him to
        any
        of Employer’s existing subsidiaries, entities and organizations hereafter
        formed, organized or acquired by Employer, directly or indirectly (each,
        a
“Subsidiary” and collectively, the “Subsidiaries”), the following: (i) a base
        salary at the annual rate of $325,000 (Three Hundred and Twenty-Five Thousand
        Dollars), or at such increased rate as the Board (through its Compensation
        and
        Equity Awards Committee), in its sole discretion, may hereafter from time
        to
        time grant to Executive (initially and as so increased the “Base Salary”); and
        (ii) any additional bonus and the benefits set forth in Sections 2.2, 2.3
        and
        2.4 hereof. The Base Salary shall be payable in accordance with the regular
        payroll practices of Employer applicable to senior executives, less such
        deductions as shall be required to be withheld by applicable law and regulations
        or otherwise.

       

      2.2. Bonus.
        Subject
        to Section 3.3 hereof, Executive shall be entitled to an annual bonus during
        the
        Employment Term in such amount (if any) as determined by the Board based
        on such
        performance criteria as it deems appropriate, including, without limitation,
        Executive’s performance and Employer’s earnings, financial condition, rate of
        return on equity and compliance with regulatory requirements. The target
        amount
        of Executive’s bonus shall be equal to 50% of his Base Salary. At the time the
        Board determines the Executive’s eligibility for a bonus, the Board shall set
        forth all material terms of the bonus arrangement in a written document.
        The
        Employer shall pay the bonus by March 1 following the end of the calendar
        year
        in which the bonus is earned.

       

      2.3. Equity
        Awards.
        Executive
        shall be entitled to participate in long-term incentive plans commensurate
        with
        his titles and positions, including, without limitation, stock option,
        restricted stock, and similar equity plans of Employer as may be offered
        from
        time to time.

       

      2.4. Executive
        Benefits.

       

      2.4.1. Expenses.
        Employer shall promptly reimburse Executive for expenses he reasonably incurs
        in
        connection with the performance of his duties (including business travel
        and
        entertainment expenses) hereunder, all in accordance with Employer’s policies
        with respect thereto as in effect from time to time.

       

      2.4.2. Employer
        Plans.
        Executive shall be entitled to participate in such employee benefit and welfare
        plans and programs as Employer may from time to time generally offer or provide
        to executive officers of Employer or its Subsidiaries, including, but not
        limited to, participation in life insurance, health and accident, medical
        plans
        and programs and profit sharing and retirement plans.

       

      2.4.3. Vacation.
        Executive shall be entitled to four (4) weeks of paid vacation per calendar
        year, prorated for any partial year.

       

      
        
           

        

        
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      2.4.4. Automobile.
        Employer shall provide Executive with an automobile cash allowance commensurate
        with his titles and positions.

       

      2.4.5. Life
        Insurance.
        Employer shall obtain (provided, that Executives qualifies on a non-rated
        basis)
        a term life insurance policy, the premiums of which shall be borne by Employer
        and the death benefits of which shall be payable to Executive’s estate, or as
        otherwise directed by Executive, in the amount of $1 million throughout the
        Employment Term.

       

      3. Employment
        Term; Termination.

       

      3.1. Employment
        Term.
        Executive’s employment hereunder shall commence on the date hereof and, except
        as otherwise provided in Section 3.2 hereof, shall continue until December
        31,
        2010 (the “Initial Term”). Thereafter, this Agreement shall automatically be
        renewed for successive one-year periods commencing on January 1, 2011 (the
        Initial Term, together with any such subsequent employment period(s), being
        referred to herein as the “Employment Term”), unless Executive or Employer shall
        have provided a Notice of Termination (as defined in Section 3.4.2 hereof)
        in
        respect of its or his election not to renew the Employment Term to the other
        party at least ninety (90) days prior to the end of the Employment Term.
        Upon
        nonrenewal of the Employment Term pursuant to this Section 3.1 or termination
        pursuant to Sections 3.2.1 through 3.2.6 hereof, inclusive, Executive shall
        be
        released from any duties hereunder (except as set forth in Section 4 hereof)
        and
        the obligations of Employer to Executive shall be as set forth in Section
        3.3
        hereof only.

       

      3.2. Events
        of Termination.
        The
        Employment Term shall terminate upon the occurrence of any one or more of
        the
        following events:

       

      3.2.1. Death.
        In the
        event of Executive’s death, the Employment Term shall terminate on the date of
        his death.

       

      3.2.2. Without
        Cause By Executive.
        Executive may terminate the Employment Term at any time during such Term
        for any
        reason whatsoever by giving a Notice of Termination to Employer. The Date
        of
        Termination pursuant to this Section 3.2.2 shall be thirty (30) days after
        the
        Notice of Termination is given.

       

      3.2.3. Disability.
        In the
        event of Executive’s Disability (as hereinafter defined), Employer may, at its
        option, terminate the Employment Term by giving a Notice of Termination to
        Executive. The Notice of Termination shall specify the Date of Termination,
        which date shall not be earlier than thirty (30) days after the Notice of
        Termination is given. For purposes of this Agreement, “Disability” means
        disability as defined in any long-term disability insurance policy provided
        by
        Employer and insuring Executive, or, in the absence of any such policy, the
        inability of Executive for 180 days in any consecutive twelve (12) month
        period
        to substantially perform his duties hereunder as a result of a physical or
        mental illness, all as determined in good faith by the Board.

       

      
        
           

        

        
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      3.2.4. For
        Cause By Employer.
        Employer may terminate the Employment Term for “Cause,” as determined in good
        faith by a majority of the Board as set forth in a Notice of Termination
        to
        Executive specifying the reasons for termination and the failure
        of the Executive to cure the same within ten (10) days after the Executive’s
        receipt of the Employer’s Notice of Termination; provided,
        however,
        that in
        the event the Board in good faith determines that the underlying reasons
        giving
        rise to such determination cannot be cured, then the ten (10) day period
        shall
        not apply and the Employment Term shall terminate on the date the Notice
        of
        Termination is given. For purposes of this Agreement, “Cause” shall mean (i)
        Executive’s conviction of, guilty or no contest plea to, or confession of guilt
        of, a felony, or other crime involving moral turpitude; (ii) an act or omission
        by Executive in connection with his employment that constitutes fraud, criminal
        misconduct, breach of fiduciary duty, dishonesty, gross negligence, malfeasance,
        or willful misconduct, regardless of harm to the Employer or any of its
        Subsidiaries or affiliates, or other conduct that is materially harmful or
        detrimental to Employer or any of its Subsidiaries or affiliates; (iii) a
        material breach by Executive of this Agreement; (iv) continuing failure to
        perform such duties as are assigned to Executive by Employer in accordance
        with
        this Agreement, other than a failure resulting from a Disability; (v)
        Executive’s knowingly taking any action on behalf of Employer or any of its
        Subsidiaries or its affiliates without appropriate authority to take such
        action; (vi) Executive’s knowingly taking any action in conflict of interest
        with Employer or any of its Subsidiaries or affiliates given Executive’s
        position with Employer; and/or (vii) the commission of an act of personal
        dishonesty by Executive that involves personal profit in connection with
        Employer or any of its Subsidiaries or affiliates.

       

      3.2.5. Without
        Cause By Employer.
        Employer may terminate the Employment Term for any reason or no reason
        whatsoever (other than for the reasons set forth elsewhere in this Section
        3.2)
        by giving a Notice of Termination to Executive. The Notice of Termination
        shall
        specify the Date of Termination, which date shall not be earlier than thirty
        (30) days after the Notice of Termination is given or such shorter period
        if
        Employer shall pay to Executive that amount of the Base Salary amount that
        would
        have been earned between the thirty (30) day period and such shorter period,
        in
        accordance with Employer’s regular payroll practices.

       

      3.2.6. Employer’s
        Material Breach.
        Executive may terminate the Employment Term upon Employer’s material breach of
        this Agreement and the continuation of such breach so long as Executive has
        provided written notice to Employer of material breach (which notice shall
        identify the manner in which Employer has materially breached this Agreement)
        within ninety (90) days of the initial existence of the breach, and afforded
        Employer no less than thirty (30) days for cure of such breach. Employer
        is not
        required to pay severance under Section 3.2.2 when Employer cures the material
        breach identified in Executive’s notice within thirty (30) days of Employer’s
        receipt of notice. Employer’s material breach of this Agreement shall mean (i)
        the failure of Employer to make any payment that it is required to make
        hereunder to Executive when such payment is due; (ii) the assignment to
        Executive, without Executive’s express written consent, of duties inconsistent
        with his positions, responsibilities and status with Employer, or a change
        in
        Executive’s reporting responsibilities, titles or offices or any plan, act,
        scheme or design to constructively terminate the Executive, or any removal
        of
        Executive from his positions with Employer, except in connection with the
        termination of the Employment Term by Employer for Cause, without Cause or
        Disability or as a result of Executive’s death or voluntary resignation or by
        Executive other than pursuant to this Section 3.2.6; (iii) a reduction by
        Employer in Executive’s Base Salary; or (iv) a permanent reassignment of
        Executive’s primary work location, without the consent of Executive, to a
location
        more than thirty-five (35) miles from Employer’s executive offices in Woodcliff
        Lake, New Jersey.

       

      
        
           

        

        
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      3.3. Certain
        Obligations of Employer Following Termination of the Employment
        Term.
        Following termination of the Employment Term under the circumstances described
        below, Employer shall pay to Executive or his estate, as the case may be,
        the
        following compensation and provide the following benefits. All lump-sum payments
        owed by Employer shall be made to Executive within forty-five (45) days of
        the
        Date of Termination in accordance with Employer’s regular payroll practices. In
        connection with Executive’s receipt of any or all compensation and benefits to
        be received pursuant to this Section 3.3, Executive shall not have a duty
        to
        seek subsequent employment while he is receiving such monies and benefits
        payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall
        not
        be reduced solely as a result of Executive’s subsequent employment by an entity
        other than Employer. The Executive must execute within thirty (30) days after
        the Date of Termination Employer’s standard form of Release Agreement attached
        as Exhibit A hereto.

       

      3.3.1. For
        Cause.
        In the
        event that the Employment Term is terminated by Employer for Cause, Employer
        shall pay to Executive, in a single lump-sum within forty-five (45) days
        of the
        Date of Termination an amount equal to any unpaid but earned Base Salary
        through
        the Date of Termination in accordance with Employer’s regular payroll practices.
        The Employer shall also pay any annual bonus earned but unpaid as of the
        Date of
        Termination for any previously completed fiscal year in accordance with the
        terms of the bonus, and such employee benefits as to which Executive may
        be
        entitled under the employee benefit plans of Employer.

       

      3.3.2. Without
        Cause by Employer; Material Breach by Employer; Non-Renewal
        by Employer.
        In the
        event that the Employment Term is terminated by Employer pursuant to Section
        3.2.5 hereof or by Executive pursuant to Section 3.2.6 hereof, or is not
        renewed
        by Employer pursuant to Section 3.1 hereof, Employer shall pay to Executive
        severance in an amount equal to two (2) times his Base Amount. For purposes
        hereof, “Base Amount” shall mean the sum of Executive’s Base Salary in effect on
        the Date of Termination, and if Executive’s termination is not a result of, in
        whole or in part, Executive’s performance of his duties hereunder, the amount of
        Executive’s last annual cash bonus pursuant to Section 2.2 hereof (the
“Severance Amount”). The Employer shall pay the Severance Amount in
        installments, and shall first determine the amount of each installment if
        the
        Severance Amount were paid in equal semimonthly installments for two (2)
        years
        (the “Installment Payment”) commencing on the forty-fifth (45th) day after the
        Date of Termination. The Employer shall then withhold and accumulate the
        Installment Payments payable beginning on the forty-fifth (45th) day after
        the
        Date of Termination through the end of the sixth (6th) month after the Date
        of
        Termination (the time period, the “Severance Holdback Period”) (the withheld
        payments, the “Severance Holdback Amounts”). The Employer shall pay the
        Severance Holdback Amounts in a single lump sum on the first (1st) day of
        the
        seventh (7th) month after the Date of Termination (the “Severance Delayed
        Payment Date”). The Severance Holdback Amounts paid to the Executive on the
        Severance Delayed Payment Date are to accrue interest from the date each
        Severance Holdback Amount would have been paid during the Severance Holdback
        Period absent the holdback requirement until the Severance Delayed Payment
        Date.
        The interest rate is the prime rate as published in The
        Wall Street Journal
        seven
        (7) days prior to the Severance Delayed
        Payment Date. The Employer shall pay the accrued interest on the Severance
        Delayed Payment Date. From the Severance Delayed Payment Date through the
        end of
        two (2) years after the forty-fifth (45th) day after the Date of Termination,
        the Employer shall pay the Installment Payments semimonthly. Payment of the
        Severance Amount is subject to Executive’s continued compliance with the terms
        of Section 4. The Employer shall also pay any annual bonus earned but unpaid
        as
        of the Date of Termination for any previously completed fiscal year in
        accordance with the terms of the bonus, and such employee benefits as to
        which
        Executive may be entitled under the employee benefit plans of the
        Employer.

       

      
        
           

        

        
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      3.3.3. Without
        Cause By Executive; Election Not to Renew by Executive.
        In the
        event that the Employment Term is terminated by Executive pursuant to Section
        3.2.2 hereof or Executive elects not to renew this Agreement pursuant to
        Section
        3.1 hereof, Employer shall pay to Executive in a single lump-sum within thirty
        (30) days of the Date of Termination an amount equal to any unpaid but earned
        Base Salary through the Date of Termination in accordance with Employer’s
        regular payroll practices. The Employer shall also pay any annual bonus earned
        but unpaid as of the Date of Termination for any previously completed fiscal
        year in accordance with the terms of the bonus, and such employee benefits
        as to
        which Executive may be entitled under the employee benefit plans of the
        Employer.

       

      3.3.4. Without
        Cause by Executive During Window Period.
        If a
        Change of Control (as defined in Section 3.4.1 hereof) occurs, and the Executive
        continues employment for six (6) months after the date of the Change of Control
        (as defined in Section 3.4.1 hereof) (the “Stay Period”), the Executive may
        terminate the Employment Term (the “Resignation”) during the ninety (90) days
        following the Stay Period (the “Window Period”). The Executive must provide the
        Resignation in a Notice of Termination to the Employer during the Window
        Period.
        Upon the Resignation, the provisions of Sections 3.3.2 and 3.3.6 shall apply
        as
        if the Resignation were a termination of the Employment Term without Cause
        by
        the Employer under Section 3.2.5.

       

      3.3.5. Death,
        Disability.
        In the
        event that the Employment Term is terminated by reason of Executive’s death
        pursuant to Section 3.2.1 hereof or by Employer by reason of Executive’s
        Disability pursuant to Section 3.2.3 hereof, Employer shall pay to Executive,
        subject to, in the case of Disability, Executive’s continued compliance with
        Section 4 hereof, the Severance Amount, less any life insurance and/or
        disability insurance received by Executive or his estate pursuant to insurance
        policies provided by Employer (including without limitation pursuant to Section
        2.4.5 hereof). The Executive shall retain all vested benefits granted pursuant
        to Section 2.3 hereof. In the case of death, the Employer shall pay the
        Severance Amount commencing on the thirtieth (30th) day after the Executive’s
        date of death, and otherwise in accordance with the payment provisions of
        Section 3.3.2 hereof without the holdback requirement. In the case of
        Disability, the Employer shall pay the Severance Amount in accordance with
        the
        payment provisions of Section 3.3.2 hereof. The Employer shall also pay any
        annual bonus earned but unpaid as of the Date of Termination for any previously
        completed fiscal year in accordance with the terms of the bonus, and such
        employee benefits as to which Executive may be entitled under the employee
        benefit plans of the Employer.

       

      
        
           

        

        
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      3.3.6. Post-Employment
        Term Benefits.
        In the
        event Executive is terminated pursuant to Sections 3.2.1 through 3.2.6 hereof,
        inclusive, or either Employer or Executive
        elects not to renew this Agreement pursuant to Section 3.1 hereof, Employer
        shall reimburse Executive for any unpaid expenses pursuant to Section 2.4.1
        hereof, and Executive will have the opportunity and responsibility to elect
        COBRA continuation coverage pursuant to the terms of that law and will thus
        be
        responsible for the execution of the continuation of coverage forms upon
        termination of his insurance coverage. Except as provided immediately below,
        Executive will be responsible for all COBRA premiums. If Executive is terminated
        pursuant to Sections 3.2.3, 3.2.5, 3.2.6, or Employer elects not to renew
        this
        Agreement pursuant to Section 3.1 hereof, Executive shall be entitled to
        participate, at Employer’s expense, in all medical and health plans and programs
        of Employer in accordance with COBRA for a period of up to eighteen (18)
        months
        (the “Benefits Period”), subject to Executive’s continued compliance with the
        terms of Section 4 hereof; provided,
        however,
        that
        Executive’s continued participation is permissible under the terms and
        provisions of such plans and programs; and provided,
        further,
        that in
        the event Executive becomes entitled to equal or comparable benefits from
        a
        subsequent employer during the Benefits Period, Employer’s obligations under
        this Section 3.3.6 shall end as of such date. The Employer shall commence
        payment of COBRA premiums on the forty-fifth (45th) day after the Date of
        Termination.

       

      3.3.7. Equity
        Awards.

       

      (a) If,
        within twelve (12) months following a Change of Control (as defined in Section
        3.4.1 hereof) of Employer, the Employment Term is terminated other than for
        Cause, then Executive (or his estate) shall have twenty-four (24) months
        from
        the date of termination to exercise any vested equity awards; provided,
        however, that the relevant equity award plan remains in effect and such equity
        awards have not otherwise expired in accordance with the terms thereof. In
        connection therewith, Employer agrees to use commercially reasonable efforts
        to
        amend Executive’s Equity Award Agreements if necessary to effectuate the
        provisions of this Section 3.3.7(a).

       

      (b) In
        the
        event the Employment Term is terminated (i) by Employer pursuant to Section
        3.2.5 hereof and the reason for such termination, as set forth in the Notice
        of
        Termination, is not related to the performance of Executive in his duties
        with
        respect to Employer, or (ii) by Executive pursuant to Section 3.2.6 hereof,
        then
        all equity awards theretofore granted to Executive shall thereupon vest and
        Executive shall have twenty-four (24) months from such date to exercise such
        options; provided,
        however,
        that
        the relevant equity award plan remains in effect and such equity awards shall
        not have otherwise expired in accordance with the terms thereof. In connection
        therewith, Employer agrees to use commercially reasonable efforts to amend
        Executive’s Equity Award Agreements if necessary to effectuate the provisions of
        this Section 3.3.7(b).

       

      (c) For
        grants of time-based restricted stock made during calendar year 2008 (the
“2008
        Grants”) under the 2008 Long Term Incentive Program (the “2008 Program”), (i)
        (A) if after a Change of Control (as defined in Section 3.4.1 hereof) the
        Employer or its successor requires the Executive to remain employed for the
        Stay
        Period, (B) the Executive continues employment for the Stay Period, and (C)
        the
        Change of Control (as defined in Section 3.4.1 hereof) occurs within two
        (2)
        years after the date of grant of the 2008 Grants, all 2008 Grants shall vest
        on
        the last day of the Stay Period; or (ii) if there is a termination of the
        Employment Term under Section 3.2.5 or 3.2.6 after the date of a Change of
        Control (as defined in
        Section 3.4.1 hereof), all 2008 Grants shall vest on the Date of Termination;
        or
        (iii) if a Change of Control (as defined in Section 3.4.1 hereof) occurs
        two (2)
        or more years after the date of grant of the 2008 Grants, all 2008 Grants
        shall
        vest on the date of the Change of Control (as defined in Section 3.4.1 hereof);
        provided,
        however,
        that
        the 2008 Program remains in effect and the 2008 Grants shall not have otherwise
        expired in accordance with the terms thereof. In connection therewith, Employer
        agrees to use commercially reasonable efforts to amend Executive’s 2008 Grant
        Agreements if necessary to effectuate the provisions of this Section
        3.3.7(c).

       

      
        
           

        

        
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      (d) To
        the
        extent not determined by this Agreement, the terms and conditions of all
        equity
        awards, including without limitation awards of performance contingent restricted
        stock under the 2008 Program, shall be determined by the Executive’s Equity
        Award Agreements, Grant Agreements, Certificates of Performance Shares, and
        the
        terms of the plans and award documents pursuant to which the equity awards
        were
        made.

       

      3.4. Definitions.

       

      3.4.1. “Change
        of Control” Defined.
        A
“Change of Control” of the Employer means any of the following events, unless
        otherwise defined in an Award Agreement or Grant Agreement:

       

      (a) Any
        individual, firm, corporation or other entity, or any group (as defined in
        Section 13(d)(3) of Securities Exchange Act of 1934, as amended (the “Exchange
        Act”)) becomes, directly or indirectly, the beneficial owner (as defined in the
        General Rules and Regulations of the Securities and Exchange Commission with
        respect to Sections 13(d) and 13(g) of the Exchange Act) of more than twenty
        (20%) percent of the then outstanding shares entitled to vote generally in
        the
        election of directors of the Employer;

       

      (b) The
        commencement of, or the first public announcement of the intention of any
        individual, firm, corporation or other entity or of any group (as defined
        in
        Section 13(d)(3) of the Exchange Act) to commence, a tender or exchange offer
        subject to Section 14(d)(1) of the Exchange Act for any class of the Employer’s
        capital stock; or

       

      (c) The
        stockholders of the Employer approve (i) a definitive agreement for the merger
        or other business combination of the Employer with or into another corporation
        pursuant to which the stockholders of the Employer do not own, immediately
        after
        the transaction, more than fifty (50%) percent of the voting power of the
        corporation that survives and is a publicly owned corporation and not a
        subsidiary of another corporation, (ii) a definitive agreement for the sale,
        exchange or other disposition of all or substantially all of the assets of
        the
        Employer, or (iii) any plan or proposal for the liquidation or dissolution
        of
        the Employer.

       

      Provided,
        however, that a Change of Control shall not be deemed to have taken place
        if
        beneficial ownership is acquired by, or a tender or exchange offer is commenced
        or announced by, the Employer, any profit-sharing, employee ownership or
        other
        employee benefit plan of the Employer, any trustee of or fiduciary with respect
        to any such plan when acting in such capacity, or any group comprised solely
        of
        such capacity, or any group comprised solely of such entities

       

      
        
           

        

        
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      (d) In
        determining whether a Change of Control of the Employer has occurred, “Employer”
means Par Pharmaceutical, Inc. or Par Pharmaceutical Companies,
        Inc.

       

      3.4.2. “Notice
        of Termination” Defined.
“Notice
        of Termination” means a written notice that indicates the specific termination
        provision relied upon by Employer or Executive and, except in the case of
        termination pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 (other than as required
        under Sections 3.2.2, 3.2.6, and 3.3.7) that sets forth in reasonable detail
        the
        facts and circumstances claimed to provide a basis for termination of the
        Employment Term under the termination provision so indicated.

       

      3.4.3. “Date
        of Termination” Defined.
“Date
        of Termination” means such date as the Employment Term is expired if not renewed
        or terminated in accordance with Sections 3.1 or 3.2 hereof.

       

      4. Confidentiality/
        Non-Solicitation/Non-Compete.

       

      4.1. “Confidential
        Information” Defined.
        “Confidential Information” means any and all information (oral or written)
        relating to Employer or any Subsidiary or any person or entity controlling,
        controlled by, or under common control with Employer or any Subsidiary or
        any of
        their respective activities, including, but not limited to, information relating
        to: technology, research, test procedures and results, machinery and equipment;
        manufacturing processes; financial information; products; identity and
        description of materials and services used; purchasing; costs; pricing;
        customers and prospects; advertising, promotion and marketing; and selling,
        servicing and information pertaining to any governmental investigation, except
        such information which becomes public, other than as a result of a breach
        of the
        provisions of Section 4.2 hereof.

       

      4.2. Non-disclosure
        of Confidential Information.
        Executive shall not at any time (other than as may be required or appropriate
        in
        connection with the performance by him of his duties hereunder), directly
        or
        indirectly, use, communicate, disclose or disseminate any Confidential
        Information in any manner whatsoever for the benefit of any person or entity
        other than Employer (except as may be required under legal process by subpoena
        or other court order).

       

      4.3. Non-Solicitation.
        Executive shall not, while employed by Employer and for a period of one (1)
        year
        following the Date of Termination, directly or indirectly, hire, offer to
        hire,
        entice away or in any other manner persuade or attempt to persuade any officer,
        employee, agent, lessor, lessee, licensor, licensee, customer, prospective
        customer, or supplier of Employer or any of its Subsidiaries to discontinue
        or
        alter his or its relationship with Employer or any of its
        Subsidiaries.

       

      4.4. Non-Competition.
        Executive shall not, while employed by Employer and for a period of one (1)
        year
        following the Date of Termination, directly or indirectly provide any services
        (whether in the management, sales, marketing, public relations, finance,
        research, development, general office, administrative, or other areas) as
        an
        employee, agent, stockholder, officer, director, consultant, advisor, investor,
        or other representative of Employer's
        competitors in the branded or generic pharmaceutical industry in any state
        or
        country in which Employer does or seeks to do business. Employer's competitors
        include any entity, individual, or affiliate of such company or individual
        that
        develops, sells, markets, or distributes any products that compete with or
        are
        the same or similar to those of Employer. However, the restrictions of this
        paragraph 4.4 shall not apply if the Employment Term is terminated by Employer
        pursuant to Section 3.2.5 hereof or by Executive properly pursuant to Section
        3.2.6 hereof; nor shall this paragraph prohibit Executive from being a passive
        owner of not more than one percent (1%) of any publicly-traded class of capital
        stock of any entity engaged in a competing business.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      4.5. Injunctive
        Relief.
        The
        parties hereby acknowledge and agree that (a) the type, scope and periods
        of
        restrictions imposed in paragraph 4 are necessary, fair and reasonable to
        protect Employer’s legitimate business interests and to prevent the inevitable
        disclosure of Employer’s Confidential Information; (b) Employer will be
        irreparably injured in the event of a breach by Executive of any of his
        obligations under this Section 4; (c) monetary damages will not be an adequate
        remedy for any such breach; (d) Employer will be entitled to injunctive relief,
        in addition to any other remedy which it may have, in the event of any such
        breach; and (e) the existence of any claims that Executive may have against
        Employer, whether under this Agreement or otherwise, will not be a defense
        to
        the enforcement by Employer of any of its rights under this Section
        4.

       

      4.6. Non-exclusivity
        and Survival.
        The
        covenants of Executive contained in this Section 4 are in addition to, and
        not
        in lieu of, any obligations that Executive may have with respect to the subject
        matter hereof, whether by contract, as a matter of law or otherwise, and
        such
        covenants and their enforceability shall survive any termination of the
        Employment Term by either party and any investigation made with respect to
        the
        breach thereof by Employer at any time.

       

      5. Miscellaneous
        Provisions.

       

      5.1. Severability.
        If, in
        any jurisdiction, any term or provision hereof is determined to be invalid
        or
        unenforceable, (a) the remaining terms and provisions hereof shall be
        unimpaired; (b) any such invalidity or unenforceability in any jurisdiction
        shall not invalidate or render unenforceable such provision in any other
        jurisdiction; and (c) the invalid or unenforceable term or provision shall,
        for
        purposes of such jurisdiction, be deemed replaced by a term or provision
        that is
        valid and enforceable and that comes closest to expressing the intention
        of the
        invalid or unenforceable term or provision.

       

      5.2. Execution
        in Counterparts.
        This
        Agreement may be executed in one or more counterparts, and by the different
        parties hereto in separate counterparts, each of which shall be deemed to
        be an
        original but all of which taken together shall constitute one and the same
        agreement (and all signatures need not appear on any one counterpart), and
        this
        Agreement shall become effective when one or more counterparts has been signed
        by each of the parties hereto and delivered to each of the other parties
        hereto.

       

      5.3. Notices.
        All
        notices, requests, demands and other communications hereunder shall be in
        writing and shall be deemed duly given upon receipt when delivered
        by hand, overnight delivery or telecopy (with confirmed delivery), or three
        (3)
        business days after posting, when delivered by registered or certified mail
        or
        private courier service, postage prepaid, return receipt requested, as
        follows:

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      If
        to
        Employer, to:

       

      Par
        Pharmaceutical, Inc.

      300
        Tice
        Boulevard

      Woodcliff
        Lake, New Jersey 07677

      Attention: Chairman

      Telecopy
        No. 201-802-4620

       

      Copy
        to:

       

      Christine
        A. Amalfe, Esq.

      Gibbons,
        P.C.

      One
        Gateway Center

      Newark,
        New Jersey 07102-5310

      Telecopy
        No.: (973) 639-6230

       

      If
        to
        Executive, to:

       

      John
        MacPhee

      c/o
        Par
        Pharmaceutical, Inc.

      300
        Tice
        Boulevard

      Woodcliff
        Lake, New Jersey 07677

       

      And

      

      John
        MacPhee

      280
        Greenway Road

      Ridgewood,
        New Jersey 07450

       

      or
        to
        such other address(es) as a party hereto shall have designated by like notice
        to
        the other parties hereto.

       

      5.4. Amendment.
        No
        provision of this Agreement may be modified, amended, waived or discharged
        in
        any manner except by a written instrument executed by both Par and
        Executive.

       

      5.5. Entire
        Agreement.
        This
        Agreement and, with respect to Section 3.3.7 hereof, Executive’s Equity Award
        Agreements and governing equity award plans constitute the entire agreement
        of
        the parties hereto with respect to the subject matter hereof, and supersede
        all
        prior agreements and understandings of the parties hereto, oral or written,
        including, but not limited to, the parties’ Employment
        Agreement dated January
        9, 2006. Executive and Employer hereby agree that the Employment Agreement
        dated
        January 9, 2006, is hereby superseded and of no further force and effect,
        and
        that this Agreement shall be effective as of the date hereof. In the
        event
        of any conflict between Section 3.3.7 hereof and Executive’s Equity Award
        Agreements and the governing equity award plans, Section 3.3.7 shall
        govern.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      5.6. Applicable
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New Jersey applicable to contracts made and to be wholly performed
        therein.

       

      5.7. Headings.
        The
        headings contained herein are for the sole purpose of convenience of reference,
        and shall not in any way limit or affect the meaning or interpretation of
        any of
        the terms or provisions of this Agreement.

       

      5.8. Binding
        Effect; Successors and Assigns.
        Executive may not delegate any of his duties or assign his rights hereunder.
        This Agreement shall inure to the benefit of, and be binding upon, the parties
        hereto and their respective heirs, legal representatives, successors and
        permitted assigns. Employer shall require any successor (whether direct or
        indirect and whether by purchase, merger, consolidation or otherwise) to
        all or
        substantially all of the business and/or assets of Employer, by an agreement
        in
        form and substance reasonably satisfactory to Executive, to expressly assume
        and
        agree to perform this Agreement in the same manner and to the same extent
        that
        Employer would be required to perform if no such transaction had taken
        place.

       

      5.9. Waiver.
        The
        failure of either of the parties hereto to at any time enforce any of the
        provisions of this Agreement shall not be deemed or construed to be a waiver
        of
        any such provision, nor to in any way affect the validity of this Agreement
        or
        any provision hereof or the right of either of the parties hereto thereafter
        to
        enforce each and every provision of this Agreement. No waiver of any breach
        of
        any of the provisions of this Agreement shall be effective unless set forth
        in a
        written instrument executed by the party against whom or which enforcement
        of
        such waiver is sought, and no waiver of any such breach shall be construed
        or
        deemed to be a waiver of any other or subsequent breach.

       

      5.10. Capacity.
        Executive and Employer hereby represent and warrant to the other that, as
        the
        case may be: (a) he or it has full power, authority and capacity to execute
        and
        deliver this Agreement, and to perform his or its obligations hereunder;
        (b)
        such execution, delivery and performance shall not (and with the giving of
        notice or lapse of time or both would not) result in the breach of any
        agreements or other obligations to which he or it is a party or he or it
        is
        otherwise bound; and (c) this Agreement is his or its valid and binding
        obligation in accordance with its terms.

       

      5.11. Enforcement;
        Jurisdiction.
        If any
        party institutes legal action to enforce or interpret the terms and conditions
        of this Agreement, the applicable court shall award the prevailing party
        reasonable attorneys’ fees at all trial and appellate levels, and the expenses
        and costs incurred by such prevailing party in connection therewith, subject
        to
        the requirements of Treas. Reg. §1.409A-3(i)(1)(iv). Subject to Section 5.12,
        any legal action, suit or proceeding, in equity or at law, arising out of
        or
        relating to this Agreement shall be instituted exclusively in the State or
        Federal courts located in the State of New Jersey, and each party agrees
        not to
        assert, by way of motion, as a defense or otherwise, in any such action,
        suit or
        proceeding, any claim that such party is not subject personally to the
        jurisdiction of any such court, that the action, suit or
        proceeding is brought in an inconvenient forum, that the venue of the action,
        suit or proceeding is improper or should be transferred, or that this Agreement
        or the subject matter hereof may not be enforced in or by any such court.
        Each
        party further irrevocably submits to the jurisdiction of any such court in
        any
        such action, suit or proceeding. Any and all service of process and any other
        notice in any such action, suit or proceeding shall be effective against
        any
        party if given personally or by registered or certified mail, return receipt
        requested or by any other means of mail that requires a signed receipt, postage
        prepaid, mailed to such party as herein provided. Nothing herein contained
        shall
        be deemed to affect or limit the right of any party to serve process in any
        other manner permitted by applicable law.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      5.12. Arbitration.

       

      (a) Any
        dispute under Section 3 hereof, including, but not limited to, the determination
        by the Board of a termination for Cause pursuant to Section 3.2.4 hereof,
        or in
        respect of the breach thereof (other than a claim for equitable relief) shall
        be
        settled by arbitration in New Jersey. The arbitration shall be accomplished
        in
        the following manner. Either party may serve upon the other party written
        demand
        that the dispute, specifying the nature thereof, shall be submitted to
        arbitration. Within ten (10) days after such demand is given in accordance
        with
        Section 5.3 hereof, each of the parties shall designate an arbitrator and
        provide written notice of such appointment upon the other party. If either
        party
        fails within the specified time to appoint such arbitrator, the other party
        shall be entitled to appoint both arbitrators. The two (2) arbitrators so
        appointed shall appoint a third arbitrator. If the two arbitrators appointed
        fail to agree upon a third arbitrator within ten (10) days after their
        appointment, then an application may be made by either party hereto, upon
        written notice to the other party, to the American Arbitration Association
        (the
“AAA”), or any successor thereto, or if the AAA or its successor fails to
        appoint a third arbitrator within ten (10) days after such request, then
        either
        party may apply, with written notice to the other, to the Superior Court
        of New
        Jersey, Bergen County, for the appointment of a third arbitrator, and any
        such
        appointment so made shall be binding upon both parties hereto.

       

      (b) The
        decision of the arbitrators shall be final and binding upon the parties.
        The
        party against whom the award is rendered (the “non-prevailing party”) shall pay
        all fees and expenses incurred by the prevailing party in connection with
        the
        arbitration (including fees and disbursements of the prevailing party’s
        counsel), as well as the expenses of the arbitration proceeding. The arbitrators
        shall determine in their decision and award which of the parties is the
        prevailing party, which is the non-prevailing party, the amount of the fees
        and
        expenses of the prevailing party and the amount of the arbitration expenses.
        The
        arbitration shall be conducted, to the extent consistent with this Section
        5.12,
        in accordance with the then prevailing rules of commercial arbitration of
        the
        AAA or its successor. The arbitrators shall have the right to retain and
        consult
        experts and competent authorities skilled in the matters under arbitration,
        but
        all consultations shall be made in the presence of both parties, who shall
        have
        the full right to cross-examine the experts and authorities. The arbitrators
        shall render their award, upon the concurrence of at least two of their number,
        not later than thirty (30) days after the appointment of the third arbitrator.
        The decision and award shall be in writing, and counterpart copies shall
        be
        delivered to each of the parties. In rendering an award, the arbitrators
        shall
        have no power to modify any of the provisions of this Agreement, and the
        jurisdiction of the arbitrators
        is expressly limited accordingly. Judgment may be entered on the award of
        the
        arbitrators and may be enforced in any court having jurisdiction.

       

      5.13. Specified
        Employee.
        Notwithstanding any other provision of this Agreement, if the Executive is
        a
        specified employee under Treas. Reg. §1.409A-1
        as of the Date of Termination, all payments to which the Executive would
        otherwise be entitled during the first six months following the Date of
        Termination shall be accumulated and paid on the first day of the seventh
        month
        following the Date of Termination, or if earlier within thirty (30) days
        of the
        Executive’s date of death following the Date of Termination. This provision
        shall not apply to all payments on separation from service that satisfy the
        short-term deferral rule of Treas. Reg. §1.409A-1(b)(4),
        or to the portion of the payments on separation from service that satisfy
        the
        requirements for separation pay due to an involuntary separation from service
        under Treas. Reg. §1.409A-1(b)(9)(iii),
        or to any payments that are otherwise exempt from the six month delay
        requirement of the Treasury Regulations under Code Section 409A.

       

      [SIGNATURE
        PAGE FOLLOWS]

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF,
        this
        Agreement has been executed and delivered by the parties hereto as of the
        date
        first above written.

       

       

    

     

    
      	
              PAR
                PHARMACEUTICAL, INC.

            
	 
	 
	
              By:
                /s/ Stephen
                Montalto                         

            
	
              Name:
                Stephen Montalto

            
	
              Title:  
                Senior Vice President, 

            
	
              Human
                Resources

            
	 
	 
	 
	/s/ John
              MacPhee                                       
	
              John
                MacPhee

            

    

     

     

    
      
         

      

      
        14Unassociated Document

    

      [FORM
        OF
        WARRANT]

    

     

    THIS
      WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY
      STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE
      HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE
      SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS, IMMEDIATELY
      PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT
      VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND
      RULES.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES.

     

    ROO
      GROUP, INC.

     

    WARRANT

     

    
      	Warrant No. MCF 2008-0___	
              Dated:
                May 8,
                2008

            

    

     

    ROO
      Group, Inc. d/b/a KIT digital, a Delaware corporation (the “Company”),
      hereby certifies that, for value received, [Insert
      Purchaser Name]
      or its
      registered assigns (including permitted transferees, the “Holder”),
      is
      entitled to purchase from the Company up to a total of [·]
      shares
      (as adjusted from time to time as provided in Section
      9)
      of
      Common Stock (as defined below) (each such share, a “Warrant
      Share”
and
      all
      such shares, the “Warrant
      Shares”)
      at an
      exercise price equal to $0.34 per share (as adjusted from time to time as
      provided in Section 9,
      the
“Exercise
      Price”),
      at
      any time and from time to time from and after the date of this Warrant (the
      “Initial
      Exercise Date”)
      through and including May 8, 2013 (the “Expiration
      Date”),
      and
      subject to the following terms and conditions. This Warrant is one of a series
      of similar warrants (the “Warrants”)
      issued
      pursuant to that certain Securities Purchase Agreement, dated as of May 8,
      2008,
      by and among the Company, the Holder and certain other investors (the
“Purchase
      Agreement”),
      providing for the issuance and sale of Common Stock and Warrants by the Company
      to the Holder and such other investors. 

     

    1.  Definitions.
      The
      capitalized terms used herein and not otherwise defined shall have the meanings
      set forth below:

     

    “1934
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    

    “Affiliate”
of
      any
      specified Person means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      specified Person. For purposes of this definition, “control”
means
      the power to direct the management and policies of such Person or firm, directly
      or indirectly, whether through the ownership of voting securities, by contract
      or otherwise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Approved
      Stock Plan”
      means
      the Company’s 2004 Stock Option Plan and 2008 Incentive Stock Plan, as amended,
      and as may be amended or restated in accordance with its terms. 

     

    "Black
      Scholes Value"
      means
      the value of this Warrant based on the Black and Scholes Option Pricing Model
      obtained from the "OV" function on Bloomberg determined as of the day of closing
      of the applicable Fundamental Transaction for pricing purposes and reflecting
      (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a
      period equal to the remaining term of this Warrant as of such date of request,
      (ii) an expected volatility equal to the greater of 100% and the 100 day
      volatility obtained from the HVT function on Bloomberg as of the day immediately
      following the public announcement of the applicable Fundamental Transaction
      and
      (iii) the underlying price per share used in such calculation shall be the
      sum
      of the price per share being offered in cash, if any, plus the value of any
      non
      cash consideration, if any, being offered in the Fundamental
      Transaction.

     

    “Common
      Stock”
means
      the common stock of the Company, $0.0001 par value per share, as constituted
      on
      the Original Issue Date.

     

    “Company
      Offer”
means
      any tender offer (including exchange offer), as amended from time to time,
      made
      by the Company or any of its subsidiaries for the purchase (including the
      acquisition pursuant to an exchange offer) of all or any portion of the
      outstanding shares of Common Stock, except as permitted pursuant to Rule 10b-18
      promulgated under the 1934 Act.

     

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

     

    “Eligible
      Market”
means
      any of the New York Stock Exchange, the American Stock Exchange, Nasdaq Stock
      Market or the Over-the-Counter Bulletin Board (the "OTCBB").

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Market
      Price”
shall
      mean (i) if the principal trading market for such securities is an exchange,
      the
      average of the last reported sale prices per share for the last five previous
      Trading Days on the OTCBB or other Eligible Market, (ii) if clause (i) is not
      applicable, the average of the closing bid price per share for the last five
      previous Trading Days as set forth by Nasdaq or (iii) if clauses (i) and (ii)
      are not applicable, the average of the closing bid price per share for the
      last
      five previous Trading Days as set forth in the Pink Sheets®. Notwithstanding the
      foregoing, if there is no reported sales price or closing bid price, as the
      case
      may be, on any of the ten (10) Trading Days preceding the event requiring a
      determination of Market Price hereunder, then the Market Price shall be
      determined in good faith by resolution of the Board of Directors of the Company,
      based on the best information available to it.

     

    “Options”
      shall
      mean any rights, warrants or options to subscribe, directly or indirectly for
      or
      purchase of Common Stock or Convertible Securities. 

     

    “Original
      Issue Date”
means
      May 8, 2008.

     

    “Other
      Securities”
refers
      to any capital stock (other than Common Stock) and other securities of the
      Company or any other Person that the Holder of this Warrant at any time shall
      be
      entitled to receive, or shall have received, upon the exercise of this Warrant,
      in lieu of or in addition to Common Stock, or that at any time shall be issuable
      or shall have been issued in exchange for or in replacement of Common Stock
      or
      Other Securities pursuant to Section
      9
      hereof
      or otherwise. 

     

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

     

    “Person”
means
      any court or other federal, state, local or other governmental authority or
      other individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or other entity
      of any kind. 

     

    “Registration
      Statement”
shall
      have the meaning set forth in the Purchase Agreement. 

     

    "Required
      Holders"
      shall
      mean the holders of the then unexercised Warrants issued pursuant to the
      Purchase Agreement, which represent a majority of the Warrant Shares underlying
      such unexercised warrants.

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Trading
      Day”
means
      any day on which the Common Stock is listed or quoted on any Eligible
      Market.

     

    “Transfer
      Agent”
shall
      mean Continental Stock Transfer and Trust Company or such other Person as the
      Company may appoint from time to time. 

     

    “Warrant
      Shares”
shall
      initially mean shares of Common Stock and in addition may include Other
      Securities and Distributed Property (as defined in Section
      9(e))
      issued
      or issuable from time to time upon exercise of this Warrant.

     

    “Weighted
      Average Price”
means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the OTC Bulletin Board during the period beginning at 9:30:01
      a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
      reported by Bloomberg through its “Volume at Price” function or, if the
      foregoing does not apply, the dollar volume-weighted average price of such
      security in the over-the-counter market on the electronic bulletin board for
      such security during the period beginning at 9:30:01 a.m., New York City time,
      and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
      if
      no dollar volume-weighted average price is reported for such security by
      Bloomberg for such hours, the average of the highest closing bid price and
      the
      lowest closing ask price of any of the market makers for such security as
      reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
      for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Holder. If the Company and the Holder are
      unable to agree upon the fair market value of such security, then such dispute
      shall be resolved pursuant to Section 16 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall
      be appropriately adjusted for any share dividend, share split or other similar
      transaction during such period.

     

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

     

    3.  Registration
      of Transfers.
      The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto as Appendix
      A
      duly
      completed and signed, to the Company at its address specified herein. Upon
      any
      such registration and transfer, a new warrant in substantially the form of
      a
      Warrant (any such new warrant, a “New
      Warrant”),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant. 

     

    4.  Exercise
      and Duration of Warrant.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (a)  The
      Company shall not effect the exercise of this Warrant, and the Holder shall
      not
      have the right to exercise this Warrant, to the extent that after giving effect
      to such exercise, such Person (together with such Person's affiliates) would
      beneficially own in excess of 4.99% the "Maximum
      Percentage")
      of the
      shares of Common Stock outstanding immediately after giving effect to such
      exercise. For purposes of the foregoing sentence, the aggregate number of shares
      of Common Stock beneficially owned by such Person and its affiliates shall
      include the number of shares of Common Stock issuable upon exercise of this
      Warrant with respect to which the determination of such sentence is being made,
      but shall exclude shares of Common Stock which would be issuable upon (x)
      exercise of the remaining, unexercised portion of this Warrant beneficially
      owned by such Person and its affiliates and (y) exercise or conversion of the
      unexercised or unconverted portion of any other securities of the Company
      beneficially owned by such Person and its affiliates (including, without
      limitation, any convertible notes or convertible preferred stock or warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein. Except as set forth in the preceding sentence, for purposes
      of
      this paragraph, beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Exchange Act. For purposes of this Warrant, in determining
      the number of outstanding shares of Common Stock, the Holder may rely on the
      number of outstanding shares of Common Stock as reflected in (1) the Company's
      most recent Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, Current Report
      on
      Form 8-K or other public filing with the Securities and Exchange Commission
      ("SEC")
      as the
      case may be, (2) a more recent public announcement by the Company or (3) any
      other notice by the Company or the Transfer Agent setting forth the number
      of
      shares of Common Stock outstanding. For any reason at any time, upon the written
      or oral request of the Holder, the Company shall within two (2) Business Days
      confirm orally and in writing to the Holder the number of shares of Common
      Stock
      then outstanding. In any case, the number of outstanding shares of Common Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company by the Holder and its affiliates since the date as
      of
      which such number of outstanding shares of Common Stock was reported. By written
      notice to the Company, the Holder may from time to time increase or decrease
      the
      Maximum Percentage to any other percentage not in excess of 9.99% specified
      in
      such notice; provided that any such increase will not be effective until the
      sixty-first (61st)
      day
      after such notice is delivered to the Company. The provisions of this paragraph
      shall be construed and implemented in a manner otherwise than in strict
      conformity with the terms of this Section 4(a) to correct this paragraph (or
      any
      portion hereof) which may be defective or inconsistent with the intended
      beneficial ownership limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such
      limitation.

     

    (b)  This
      Warrant shall be exercisable by the registered Holder at any time and from
      time
      to time on and after the Initial Exercise Date to and including the Expiration
      Date. At 5:00 P.M. New York City time on the Expiration Date, the portion
      of this Warrant not exercised prior thereto shall be and become void and of
      no
      value. 

     

    (c)  A
      Holder
      may exercise this Warrant by delivering to the Company (i) an exercise notice,
      in the form attached hereto as Appendix
      B
      (the
“Exercise
      Notice”),
      appropriately completed and duly signed, and (ii) payment of the Exercise Price
      for the number of Warrant Shares as to which this Warrant is being exercised
      (as
      set forth in Section
      4(e) below),
      and the date such items are received by the Company is an “Exercise
      Date.”
      Execution and delivery of the Exercise Notice shall have the same effect as
      cancellation of the original Warrant (other than the right to receive the
      Warrant Shares specified in the Exercise Notice on the Exercise Date) and
      issuance of a New Warrant evidencing the right to purchase the remaining number
      of Warrant Shares.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)  The
      Holder shall pay the Exercise Price in cash, by certified bank check payable
      to
      the order of the Company or by wire transfer of immediately available funds
      in
      accordance with the Company’s instructions. Notwithstanding the foregoing, if,
      on or after the six (6) month anniversary of the Original Issue Date, there
      is
      no effective Registration Statement registering the resale of the Warrant Shares
      by the Holder, this Warrant may be exercised by means of a “cashless exercise;”
provided however,
      that if
      the failure to have an effective Registration Statement registering the resale
      of the Warrant Shares by the Holder is due to the SEC not permitting the Company
      to register the Warrant Shares because of its application of Rule 415, then
      and
      in such event the Company shall be granted a 90-day extension of the 6 month
      period above (provided the Company complies with its current public information
      requirement under Rule 144(c)(1)), in which to register the Warrant Shares
      in
      which case this Warrant may be exercised by means of “cashless exercise,”
without condition upon the expiration of 9 months after the Original Issue
      Date.
      Notwithstanding anything herein to the contrary, in no event shall this Warrant
      be exercised by means of a “cashless exercise” if there is an effective
      registration statement registering the resale of the Warrant Shares.

     

    Upon
      exercise of this Warrant the Holder shall present and surrender this Warrant
      to
      the Company. If this Warrant is exercised by means of “cash less exercise” the
      Company shall issue to the Holder the number of Warrant Shares determined as
      follows:

     

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

     

    where:

     

    
      	 	
              X
                =
                

            	
              the
                number of Warrant Shares to be issued to the Holder upon such cashless
                exercise;

            

    

     

    
      	 	
              Y
                =
                

            	
              the
                number of Warrant Shares with respect to which this Warrant is being
                exercised;

            

    

     

    
      	 	
              A
                =
                

            	
              the
                Market Price on the Exercise Date;
                and

            

    

     

    
      	 	
              B
                =
                

            	
              the
                Exercise Price.

            

    

    

     

    (e)  If
      an
      exercise of this Warrant is to be made in connection with a registered public
      offering or sale of the Company, such exercise may, at the election of the
      Holder, be conditioned on the consummation of the public offering or sale of
      the
      Company, in which case such exercise shall not be deemed effective until the
      consummation of such transaction.

     

    5.  Delivery
      of Warrant Shares.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (a)  Upon
      exercise of this Warrant, the Company shall promptly (but in no event later
      than
      three Trading Days after the Exercise Date) issue or cause to be issued and
      deliver or cause to be delivered to the Holder, in such name or names as the
      Holder may designate, a certificate for the Warrant Shares issuable upon such
      exercise, free of restrictive legends unless a registration statement covering
      the resale of the Warrant Shares and naming the Holder as a selling stockholder
      thereunder is not then effective. In the event that there shall be an effective
      registration statement covering the resale of the Warrant Shares, the Company
      shall cause a certificate for the Warrant Shares issuable upon exercise to
      be
      free of restrictive legends upon the Holder’s acknowledgement hereby that it
      will comply with the prospectus delivery requirements, to the extent required
      by
      Rule 172 of the Securities Act. The Holder, or any Person so designated by
      the
      Holder to receive the Warrant Shares, shall be deemed to have become holder
      of
      record of such Warrant Shares as of the Exercise Date. The Company shall, upon
      request of the Holder, use its best efforts to deliver Warrant Shares hereunder
      electronically through the Depository Trust Corporation or another established
      clearing corporation performing similar functions.

     

    (b)  This
      Warrant is exercisable, either in its entirety or, from time to time, for a
      portion of the number of Warrant Shares. Upon surrender of this Warrant
      following one or more partial exercises, the Company shall issue or cause to
      be
      issued, at its expense, a New Warrant evidencing the right to purchase the
      remaining number of Warrant Shares.

     

    (c)  In
      addition to any other rights available to a Holder, if the Company fails to
      deliver to the Holder a certificate representing Warrant Shares by the third
      Trading Day after the Exercise Date, and if after such third Trading Day the
      Holder purchases (in an open market transaction or otherwise) shares of Common
      Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
      that the Holder anticipated receiving from the Company (a “Buy-In”),
      then
      the Company shall, within three Trading Days after the Holder’s request and in
      the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
      the Holder’s total purchase price (including brokerage commissions, if any) for
      the shares of Common Stock so purchased (the “Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to the Holder a certificate or certificates representing such Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the closing price of the Common Stock on the OTCBB, other Eligible
      Market or Pink Sheets, as applicable, on the date of the event giving rise
      to
      the Company’s obligation to deliver such certificate.

     

    (d)  The
      Company’s obligations to issue and deliver Warrant Shares in accordance with the
      terms hereof are absolute and unconditional, irrespective of any action or
      inaction by the Holder to enforce the same, any waiver or consent with respect
      to any provision hereof, the recovery of any judgment against any Person or
      any
      action to enforce the same, or any setoff, counterclaim, recoupment, limitation
      or termination, or any breach or alleged breach by the Holder or any other
      Person of any obligation to the Company or any violation or alleged violation
      of
      law by the Holder or any other Person, and irrespective of any other
      circumstance which might otherwise limit such obligation of the Company to
      the
      Holder in connection with the issuance of Warrant Shares. 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
      the Warrant as required pursuant to the terms hereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    7.  Replacement
      of Warrant.
      If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and in substitution for this Warrant, a New Warrant,
      but
      only upon receipt of evidence reasonably satisfactory to the Company of such
      loss, theft or destruction and customary and reasonable indemnity, if
      requested.

     

    8.  Reservation
      of Warrant Shares.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      the aggregate of its authorized but unissued and otherwise unreserved Common
      Stock, solely for the purpose of enabling it to issue Warrant Shares upon
      exercise of this Warrant as herein provided, the number of Warrant Shares that
      are then issuable and deliverable upon the exercise of this entire Warrant,
      free
      from all taxes, liens, claims, encumbrances with respect to the issuance of
      such
      Warrant Shares and will not be subject to any pre-emptive rights or similar
      rights (taking into account the adjustments and restrictions of Section
      9 hereof).
      The Company covenants that all Warrant Shares so issuable and deliverable shall,
      upon issuance and the payment of the applicable Exercise Price in accordance
      with the terms hereof, be duly and validly authorized, issued, fully paid and
      nonassessable. The Company will take all such action as may be necessary to
      assure that such shares of Common Stock may be issued as provided herein without
      violation of any applicable law or regulation, or of any requirements of any
      securities exchange or automated quotation system upon which the Common Stock
      may be listed or quoted, as the case may be.

     

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

     

    (a)  Stock
      Dividends.
      If the
      Company, at any time while this Warrant is outstanding, pays a dividend on
      its
      Common Stock payable in additional shares of Common Stock or otherwise makes
      a
      distribution on any class of capital stock that is payable in shares of Common
      Stock, then in each such case the Exercise Price shall be multiplied by a
      fraction, (i) the numerator of which shall be the number of shares of Common
      Stock outstanding immediately prior to the opening of business on the day after
      the record date for the determination of stockholders entitle to receive such
      dividend or distribution and (ii) the denominator of which shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to this Section
      9(a)
      shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b)  Stock
      Splits.
      If the
      Company, at any time while this Warrant is outstanding, (i) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (ii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction,
      (A)
      the numerator of which shall be the number of shares of Common Stock outstanding
      immediately before such event and (B) the denominator of which shall be the
      number of shares of Common Stock outstanding immediately after such event.
      Any
      adjustment pursuant to this Section
      9(b) shall
      become effective immediately after the effective date of such subdivision or
      combination.

     

    (c)  Reclassifications.
      A
      reclassification of the Common Stock (other than any such reclassification
      in
      connection with a merger or consolidation to which Section
      9(g) applies)
      into shares of any other class of stock shall be deemed:

     

    (i)  a
      distribution by the Company to the holders of its Common Stock of such shares
      of
      such other class of stock for the purposes and within the meaning of this
Section
      9;
      and

     

    (ii)  if
      the
      outstanding shares of Common Stock shall be changed into a larger or smaller
      number of shares of Common Stock as part of such reclassification, such change
      shall be deemed a subdivision or combination, as the case may be, of the
      outstanding shares of Common Stock for the purposes and within the meaning
      of
Section
      9(b).

     

    (d)  Self-Tender
      Offers.
      In the
      event, at any time or from time to time after the Original Issue Date while
      the
      Warrants remain outstanding and unexpired, in whole or in part, a Company Offer
      shall be made and expire, then and in each such event the Exercise Price in
      effect immediately prior to close of business on the date of the last time
      (the
“Expiration
      Time”)
      tenders could have been made pursuant to such Company Offer shall be decreased
      by multiplying such Exercise Price by a fraction (not to be greater than
      1):

     

    (i)  the
      numerator of which shall be equal to (A) the product of (1) the Market Price
      per
      share of the Common Stock on the date of the Expiration Time and (2) the number
      of shares of Common Stock outstanding (including any tendered shares) at the
      Expiration Time less (B) the fair market value (as determined in good faith
      by
      the Board of Directors of the Company) of the aggregate consideration payable
      to
      stockholders based on the acceptance (up to any maximum specified in the terms
      of the Company Offer) of all shares validly tendered and not withdrawn as of
      the
      Expiration Time (the shares deemed so accepted, up to any maximum amount
      provided for in connection with such Company Offer, being referred to as the
      “Purchased
      Shares”);
      and

     

    (ii)  the
      denominator of which shall be equal to the product of (A) the Market Price
      per
      share of the Common Stock on the date of the Expiration Time and (B) the number
      of shares of Common Stock outstanding (including any tendered shares) on the
      Expiration Time less the number of Purchased Shares.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Any
      adjustment under this
      Section 9(d)
      shall
      become effective immediately prior to the opening of business on the day after
      the Expiration Time.

     

    (e)  Other
      Distributions.
      If the
      Company, at any time while this Warrant is outstanding, distributes to holders
      of Common Stock (i) evidences of its indebtedness, (ii) any security (other
      than
      a distribution of Common Stock covered by Section
      9(a)),
      (iii)
      rights or warrants to subscribe for or purchase any security or (iv) any other
      asset (in each case, “Distributed
      Property”),
      then
      in each such case the Exercise Price in effect immediately prior to the record
      date fixed for determination of stockholders entitled to receive such
      distribution (and the Exercise Price thereafter applicable) shall be adjusted
      (effective on and after such record date) to equal the product of such Exercise
      Price multiplied by a fraction, (A) the numerator of which shall be Market
      Price
      on such record date less the then fair market value per share of the Distributed
      Property distributed in respect of one outstanding share of Common Stock, which,
      if the Distributed Property is other than cash or marketable securities, shall
      be as determined in good faith by the Board of Directors of the Company, and
      (B)
      the denominator of which shall be the Market Price on such record
      date.

     

     (f)  Prorata
      Distributions.
      In
      addition to any adjustments hereunder, if at any time the Company grants, issues
      or sells any Options, Convertible Securities or rights to purchase stock,
      warrants, securities or other property pro rata to the record holders of any
      class of shares of Common Stock (the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant (without regard to any limitations on
      the
      exercise of this Warrant) immediately before the date on which a record is
      taken
      for the grant, issuance or sale of such Purchase Rights, or, if no such record
      is taken, the date as of which the record holders of shares of Common Stock
      are
      to be determined for the grant, issue or sale of such Purchase
      Rights.

    

    (g) Fundamental
      Transactions.
       (i)
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (A)  the Successor Entity assumes in writing all of the obligations of the
      Company under this Warrant and the other Transaction Documents in accordance
      with the provisions of this Section 9(g) pursuant to written agreements in
      form
      and substance satisfactory to the Required Holders and approved by the Required
      Holders prior to such Fundamental Transaction, including agreements to deliver
      to each holder of the Warrants in exchange for such Warrants a security of
      the
      Successor Entity evidenced by a written instrument substantially similar in
      form
      and substance to this Warrant, including, without limitation, an adjusted
      exercise price equal to the value for the shares of Common Stock reflected
      by
      the terms of such Fundamental Transaction, and exercisable for a corresponding
      number of shares of capital stock equivalent to the shares of Common Stock
      acquirable and receivable upon exercise of this Warrant (without regard to
      any
      limitations on the exercise of this Warrant) prior to such Fundamental
      Transaction, and satisfactory to the Required Holders and (B) the Successor
      Entity (including its Parent Entity) is a publicly traded corporation whose
      common stock is quoted on or listed for trading on an Eligible Market. Upon
      the
      occurrence of any Fundamental Transaction, the Successor Entity shall succeed
      to, and be substituted for (so that from and after the date of such Fundamental
      Transaction, the provisions of this Warrant referring to the "Company" shall
      refer instead to the Successor Entity), and may exercise every right and power
      of the Company and shall assume all of the obligations of the Company under
      this
      Warrant with the same effect as if such Successor Entity had been named as
      the
      Company herein. Upon consummation of the Fundamental Transaction, the Successor
      Entity shall deliver to the Holder confirmation that there shall be issued
      upon
      exercise of this Warrant at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      shares of the Common Stock (or
      other
      securities, cash, assets or other property) issuable
      upon the exercise of the Warrant
      prior
      to
      such Fundamental Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had this Warrant
      been
      converted immediately prior to such Fundamental Transaction, as adjusted in
      accordance with the provisions of this Warrant.
      In
      addition to and not in substitution for any other rights hereunder, prior to
      the
      consummation of any Fundamental Transaction pursuant to which holders of shares
      of Common Stock are entitled to receive securities or other assets with respect
      to or in exchange for shares of Common Stock (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant
at
      any
      time after the consummation of
      the
      Fundamental Transaction but
      prior
      to the Expiration Date,
      in lieu
      of the shares of the Common Stock (or
      other
      securities, cash, assets or other property) issuable
      upon the exercise of this Warrant prior to such Fundamental
      Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had this Warrant been exercised immediately prior to such
      Fundamental Transaction. Provision
      made pursuant to the preceding sentence shall be in a form and substance
      reasonably satisfactory to the Holder. The provisions of this Section shall
      apply similarly and equally to successive Fundamental Transactions and Corporate
      Events and shall be applied without regard to any limitations on the exercise
      of
      this Warrant.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (ii) Notwithstanding
      the foregoing and the provisions of Section 9(g)(i) above, in the event of
      a
      Fundamental Transaction, at the request of the Holder delivered before the
      ninetieth (90th)
      day
      after the consummation of such Fundamental Transaction, the Company (or the
      Successor Entity) shall purchase this Warrant from the Holder by paying to
      the
      Holder, within five (5) Business Days after such request (or, if later, on
      the
      effective date of the Fundamental Transaction), cash in an amount equal to
      the
      Black Scholes Value of the remaining unexercised portion of this Warrant on
      the
      date of such Fundamental Transaction.

    

    (h)  Issuance
      of Shares of Common Stock.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (i)  If
      and
      whenever on or after the Original Issue Date, the Company issues or sells,
      or in
      accordance with this Section 9 is deemed to have issued or sold, any shares
      of
      Common Stock (including the issuance or sale of shares of Common Stock owned
      or
      held by or for the account of the Company), but excluding shares of Common
      Stock
      deemed to have been issued by the Company in connection with any Excluded
      Securities) for a consideration per share (the “New
      Issuance Price”)
      less
      than a price (the “Applicable
      Price”)
      equal
      to the Exercise Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the
      New
      Issuance Price.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    For
      purposes of determining the adjusted Exercise Price under this Section 9(h),
      the
      following shall be applicable:

     

    (1) Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      share of Common Stock shall be deemed to be outstanding and to have been issued
      and sold by the Company at the time of the granting or sale of such Option
      for
      such price per share. For purposes of this Section 9(g)(i)(1), the “lowest price
      per share for which one share of Common Stock is issuable upon exercise of
      such
      Options or upon conversion, exercise or exchange of such Convertible Securities”
shall be equal to the sum of the lowest amounts of consideration (if any)
      received or receivable by the Company with respect to any one share of Common
      Stock upon the granting or sale of the Option, upon exercise of the Option
      and
      upon conversion, exercise or exchange of any Convertible Security issuable
      upon
      exercise of such Option. No further adjustment of the Exercise Price or number
      of Warrant Shares shall be made upon the actual issuance of such shares of
      Common Stock or of such Convertible Securities upon the exercise of such Options
      or upon the actual issuance of such shares of Common Stock upon conversion,
      exercise or exchange of such Convertible Securities. 

     

    (2) Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
      Section 9(g)(i)(2), the “lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange” shall be equal to
      the sum of the lowest amounts of consideration (if any) received or receivable
      by the Company with respect to one share of Common Stock upon the issuance
      or
      sale of the Convertible Security and upon conversion, exercise or exchange
      of
      such Convertible Security. No further adjustment of the Exercise Price or number
      of Warrant Shares shall be made upon the actual issuance of such shares of
      Common Stock upon conversion, exercise or exchange of such Convertible
      Securities, and if any such issue or sale of such Convertible Securities is
      made
      upon exercise of any Options for which adjustment of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 9(g), no further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      by
      reason of such issue or sale. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (3) Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exercise or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exercisable or exchangeable for shares of Common Stock increases or decreases
      at any time, the Exercise Price and the number of Warrant Shares in effect
      at
      the time of such increase or decrease shall be adjusted to the Exercise Price
      and the number of Warrant Shares which would have been in effect at such time
      had such Options or Convertible Securities provided for such increased or
      decreased purchase price, additional consideration or increased or decreased
      conversion rate, as the case may be, at the time initially granted, issued
      or
      sold. For purposes of this Section 9(h)(i)(3), if the terms of any Option or
      Convertible Security that was outstanding as of the date of issuance of this
      Warrant are increased or decreased in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the shares
      of
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such increase or decrease.
      No
      adjustment pursuant to this Section 9(h) shall be made if such adjustment would
      result in an increase of the Exercise Price then in effect or a decrease in
      the
      number of Warrant Shares.

     

    (4) Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $0.01. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold or deemed
      to have been issued or sold for cash, the consideration received therefor will
      be deemed to be the net amount received by the Company therefor. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold for a
      consideration other than cash, the amount of such consideration received by
      the
      Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company will be the Weighted Average Price of such security
      on
      the date of receipt. If any shares of Common Stock, Options or Convertible
      Securities are issued to the owners of the non-surviving entity in connection
      with any merger in which the Company is the surviving entity, the amount of
      consideration therefor will be deemed to be the fair value of such portion
      of
      the net assets and business of the non-surviving entity as is attributable
      to
      such shares of Common Stock, Options or Convertible Securities, as the case
      may
      be. The fair value of any consideration other than cash or securities will
      be
      determined jointly by the Company and the Required Holders. If such parties
      are
      unable to reach agreement within ten (10) days after the occurrence of an event
      requiring valuation (the “Valuation
      Event”),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be final and binding upon all parties absent manifest error
      and
      the fees and expenses of such appraiser shall be borne by the
      Company.

      
      

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

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

     

    (ii) For
      purposes of the Section 9(h)(i): “Excluded
      Securities”
means
      any Common Stock issued or issuable: (i) in connection with any Approved Stock
      Plan; (ii) upon the exercise of this Warrant; (iii) upon conversion, exercise
      or
      exchange of any Options or Convertible Securities which are outstanding on
      the
      day immediately preceding the Original Issue Date, provided that the terms
      of
      such Options or Convertible Securities are not amended, modified or changed
      on
      or after the Original Issue Date; or (iv) in connection with any acquisition
      by
      the Company, whether through an acquisition of stock or a merger of any
      business, assets or technologies or an investment made in the Company by an
      operating company in a business synergistic with the business of the Company
      and
      in which the Company receives benefits in addition to the investment of funds,
      in each case, the primary purpose of which is not to raise equity capital in
      an
      amount.

     

    (i)  Calculations.
      All
      calculations under this Section
      9
      shall be
      made to the nearest cent or the nearest 1/100th of a share, as applicable.
      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, and the disposition
      of any such shares shall be considered an issue or sale of Common Stock.

     

    (j)  Adjustments.
      Notwithstanding any provision of this
      Section 9,
      no
      adjustment of the Exercise Price shall be required if such adjustment is less
      than $0.01; provided,
      however,
      that
      any adjustments that by reason of this
      Section 9(j)
      are not
      required to be made shall be carried forward and taken into account for purposes
      of any subsequent adjustment. 

     

    (k)   Adjustment
      of Number of Shares.
      Upon
      each adjustment in the Exercise Price pursuant to this Section
      9,
      the
      number of Warrant Shares purchasable hereunder shall be adjusted, to the nearest
      whole share, to the product obtained by multiplying the number of Warrant Shares
      purchasable immediately prior to such adjustment by a fraction, (i) the
      numerator of which shall be the Exercise Price immediately prior to such
      adjustment, and (ii) the denominator of which shall be the Exercise Price
      immediately thereafter.

     

    (l)  Notice
      of Adjustments.
      Upon the
      occurrence of each adjustment pursuant to this Section
      9,
      the
      Company will promptly deliver to the Holder a certificate executed by the
      Company’s Chief Financial Officer setting forth, in reasonable detail, the event
      requiring such adjustment and the method by which such adjustment was
      calculated, the adjusted Exercise Price and the adjusted number or type of
      Warrant Shares or other securities issuable upon exercise of this Warrant (as
      applicable). The Company will retain at its office copies of all such
      certificates and cause the same to be available for inspection at said office
      during normal business hours by the Holder or any prospective purchaser of
      the
      Warrant designated by the Holder. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (m)   Notice
      of Corporate Events. If
      the
      Company (i) declares a dividend or any other distribution of cash, securities
      or
      other property in respect of its Common Stock, including, without limitation,
      any granting of rights or warrants to subscribe for or purchase any capital
      stock of the Company or any subsidiary of the Company, (ii) authorizes,
      approves, enters into any agreement contemplating, or solicits stockholder
      approval for, any Fundamental Transaction or (iii) authorizes the voluntary
      dissolution, liquidation or winding up of the affairs of the Company, then
      the
      Company shall deliver to the Holder a notice describing the material terms
      and
      conditions of such transaction at least 15 calendar days prior to the applicable
      record or effective date on which a Person would need to hold Common Stock
      in
      order to participate in or vote with respect to such transaction, and the
      Company will take all steps reasonably necessary in order to ensure that the
      Holder is given the practical opportunity to exercise this Warrant prior to
      such
      time so as to participate in or vote with respect to such transaction; provided,
      however, that the failure to deliver such notice or any defect therein shall
      not
      affect the validity of the corporate action required to be described in such
      notice. 

     

    10.  Fractional
      Shares.
      The
      Company shall not be required to issue or cause to be issued fractional Warrant
      Shares on the exercise of this Warrant. If any fraction of a Warrant Share
      would, except for the provisions of this Section, be issuable upon exercise
      of
      this Warrant, the Company shall make a cash payment to the Holder equal to
      (a)
      such fraction multiplied by (b) the Market Price on the Exercise Date of one
      full Warrant Share. 

     

    11.  Listing
      on Securities Exchanges.
      In
      furtherance and not in limitation of any other provision of this Warrant, if
      the
      Company at any time shall list any Common Stock on any Eligible Market, the
      Company will, at its expense, simultaneously list the Warrant Shares (and
      maintain such listing) on such Eligible Market, upon official notice of issuance
      following the exercise of this Warrant; and the Company will so list, register
      and maintain such listing on any Eligible Market any Other Securities, if and
      at
      the time that any securities of like class or similar type shall be listed
      on
      such Eligible Market by the Company.

     

    12.  Remedies.
      The
      Company stipulates that the remedies at law of the Holder of this Warrant in
      the
      event of any default or threatened default by the Company in the performance
      of
      or compliance with any of the terms of this Warrant are not and will not be
      adequate, and that such terms may be specifically enforced by a decree for
      the
      specific performance of any agreement contained herein or by an injunction
      against a violation of any of the terms hereof or otherwise.

     

    13.  Notices.
      Any and
      all notices or other communications or deliveries hereunder (including without
      limitation any Exercise Notice) shall be in writing and shall be mailed by
      certified mail, return receipt requested, or by a nationally recognized courier
      service or delivered (in person or by facsimile), against receipt to the party
      to whom such notice or other communication is to be given. The address for
      such
      notices or communications shall be as set forth in the Purchase Agreement
      entered into by the Holder and the Company. Any notice or other communication
      given by means permitted by this Section
      13 shall
      be
      deemed given at the time of receipt thereof. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    15.  Miscellaneous.
      (a)
      This
      Warrant may be assigned by the Holder. This Warrant may not be assigned by
      the
      Company, except to a successor in the event of a Fundamental Transaction. This
      Warrant shall be binding on and inure to the benefit of the parties hereto
      and
      their respective successors and assigns. Subject to the preceding sentence,
      nothing in this Warrant shall be construed to give to any Person other than
      the
      Company and the Holder any legal or equitable right, remedy or cause of action
      under this Warrant. This Warrant may be amended only in writing signed by the
      Company and the Holder and their successors and assigns.

     

    (b)  The
      Company will not, by amendment of its governing documents 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 action as may be necessary or appropriate in order to protect
      the rights of the Holder against impairment. Without limiting the generality
      of
      the foregoing, the Company (i) will not increase the par value of any Warrant
      Shares above the amount payable therefor upon exercise thereof, (ii) will take
      all such action as may be reasonably necessary or appropriate in order that
      the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares on the exercise of this Warrant, free from all taxes, liens, claims
      and
      encumbrances and (iii) will not close its shareholder books or records in any
      manner that interferes with the timely exercise of this Warrant.

     

    (c)  This
      Warrant shall be governed by and construed and enforced in accordance with
      the
      laws of the State of New York without regard to conflicts of laws principles
      thereof. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and Federal courts sitting in the City of New York, Borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein
      (including with respect to the enforcement of the Securities Purchase
      Agreement), and hereby irrevocably waives, and agrees not to assert any suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Warrant and agrees that such service shall constitute good
      and
      sufficient service of process and notice thereof. Nothing contained herein
      shall
      be deemed to limit in any way any right to serve process in any manner permitted
      by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (d)  Neither
      party shall be deemed in default of any provision of this Warrant, to the extent
      that performance of its obligations or attempts to cure a breach hereof are
      delayed or prevented by any event reasonably beyond the control of such party,
      including, without limitation, war, hostilities, acts of terrorism, revolution,
      riot, civil commotion, national emergency, strike, lockout, unavailability
      of
      supplies, epidemic, fire, flood, earthquake, force of nature, explosion,
      embargo, or any other Act of God, or any law, proclamation, regulation,
      ordinance, or other act or order of any court, government or governmental
      agency, provided that such party gives the other party written notice thereof
      promptly upon discovery thereof and uses reasonable best efforts to cure or
      mitigate the delay or failure to perform.

     

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

     

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

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK,

    SIGNATURE
      PAGE FOLLOWS]

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

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

    
      	 	 	 
	 	Roo
              Group,
              Inc. 
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Kaleil Isaza Tuzman
	 	Title:
              Chief Executive Officer

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
      A

     

    Form
      of Assignment

     

    (to
      be
      completed and signed only upon transfer of Warrant)

     

    For
      Value Received,
      the
      undersigned hereby sells, assigns and transfers unto
      ________________________________________ the right represented by the within
      Warrant to purchase _____________ shares of Common Stock of ROO Group, Inc.
      to
      which the within warrant relates and appoints __________________________
      attorney to transfer said right on the books of ROO Group, Inc. with full power
      of substitution in the premises. 

     

    
      	Dated:	 	 	 
	 	 	 	(Signature must conform in all respects
              to
              name of Holder as specified on face of the Warrant) 
	 	 	 	 
	 	 	 	 
	 	 	 	Address of Transferee: 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
      B

     

    Form
      of Exercise Notice

     

    (To
      be
      executed by the Holder to exercise the right to purchase shares of Common Stock
      under the foregoing Warrant) 

     

    To: Roo
      Group, Inc.

     

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

     

    
      	1.  	
              The
                Warrant is currently exercisable to purchase a total of _________
                Warrant
                Shares. 

            

    

     

    
      	2.  	
              The
                undersigned Holder hereby exercises its right to purchase __________
                Warrant Shares pursuant to the
                Warrant

            

    

     

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

            

    

     

    Cash
      Exercise _______ 

     

    Cashless
      Exercise _______

     

    
      	4.  	
              If
                the Holder has elected a Cash Exercise, the Holder shall pay the
                sum of
                $________ to the Company in accordance with the terms of the Warrant.
                

            

    

     

    
      	5.  	
              If
                the Holder has elected a Cashless Exercise, a certificate shall be
                issued
                to the Holder for the number of shares equal to the whole number
                portion
                of the product of the calculation set forth below, which is ________.
                The
                Company shall pay a cash adjustment in respect of the fractional
                portion
                of the product of the calculation set forth below in an amount equal
                to
                the product of the fractional portion of such product and the Market
                Price
                on the Exercise Day, which product is
                __________.

            

    

     

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

     

    X
      = the
      number of Warrant Shares to be issued to the Holder. 

     

    Number
      of
      Warrant Shares being exercised: _____________ (“Y”).

     

    Market
      Price on the Exercise Day: _________________ (“A”).
      

     

    Exercise
      Price: ____________ (“B”)

     

    
      	6.  	
              Pursuant
                to this exercise, the Company shall deliver to the Holder Warrant
                Shares
                in accordance with the terms of the
                Warrant.

            

    

     

    
      
        
        

      

      
        1.

        
          

        

      

      
        
        

      

    

     

    
      	7.  	
              Following
                this exercise, the Warrant shall be exercisable to purchase a total
                of
                __________ Warrant Shares.

            

    

     

     

    
       

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

              

      

       

    

    

    
      
        
        

      

      
        2.

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