Document:

ex41.htm

    
       

      DelawarePAGE
        1

      ________________________________

      The
        First State

       

       

      I,
        HARRIET SMITH WINDSOR, SECRETARY
        OF STATE OF THE STATE OF DELAWARE,
        DO HEREBY CERTIFY THE
        ATTACHED IS A TRUE AND CORRECT COPY OF
        THE CERTIFICATE OF
        DESIGNATION OF "URIGEN PHARMACEUTICALS,
        INC.", FILED IN
        THIS OFFICE ON THE THIRTY—FIRST DAY OF JULY,
        A.D. 2007,
        AT
5:19
        O'CLOCK P.M.

      A
        FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY
        RECORDER OF DEEDS.

    

     

     

     

    
      	2784403
              8100	 	 /s/
              Harriet
              Smith Windsor
	070874997	 	 Harriet
              Smith Windsor, Secretary of State
	 	 	
              
                AUTHENTICATION:
                  5891093

              

              DATE:
                07-31-07

            

    

     

     

     

     

     

    
       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    AMENDED
      AND RESTATED CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND
      PREFERENCES

    OF
      THE

    SERIES
      B CONVERTIBLE PREFERRED STOCK

    OF

    URIGEN
      PHARMACEUTICALS, INC.

    

    The
      undersigned, the Chief Financial Officer of Urigen Pharmaceuticals, Inc., a
      Delaware corporation (the “Company”), in accordance with the provisions of the
      Delaware General Corporation Law, does hereby certify that, pursuant to the
      authority conferred upon the Board of Directors by the Amended and Restated
      Certificate of Incorporation of the Company, the following resolution creating
      a
      series of Series B Convertible Preferred Stock, was duly adopted on July 31,
      2007:

    

    RESOLVED,
      that the Board of Directors of the Company, pursuant to the authority expressly
      granted to and vested in the Board of Directors of the Company by provisions
      of
      the Certificate of Incorporation of the Company (the “Certificate of
      Incorporation”), created out of the shares of Preferred Stock, par value $.001
      per share, of the Company authorized in Article IV of the Certificate of
      Incorporation (the “Preferred Stock”), a series of Preferred Stock designated
“Series B Convertible Preferred Stock,” consisting of two hundred and ten (210)
      shares;

    

    RESOLVED,
      that designations, powers, preferences and relative and other special rights
      and
      the following qualifications, limitations and restrictions were set forth in
      a
      Certificate of Designation of the Relative Rights and Preferences of the Series
      B Convertible Preferred Stock of Urigen Pharmaceuticals, Inc., duly adopted
      by
      the Board of Directors on July 26, 2007 and filed with the Secretary of State
      of
      the State of Delaware on July 27, 2007 (the “Original
      Certificate”);

    

    RESOLVED,
      the Board of Directors hereby amends and restated the Original Certificate
      to
      provide for designations, powers, preferences and relative and other special
      rights and the following qualifications, limitations and restrictions with
      respect to the Series B Preferred Stock as follows:

    

    1.  ­Designation
      and Rank.

    

    (a)  Designation.  The
      designation of such series of the Preferred Stock shall be the Series B
      Convertible Preferred Stock, par value $.001 per share (the “Series B Preferred
      Stock”).  The maximum number of shares of Series B Preferred Stock
      shall be two hundred and ten (210) Shares.

    

    (b)  Rank.  The
      Series B Preferred Stock shall rank prior to the common stock, par value $.001
      per share (the “Common Stock”), and to all other classes and series of equity
      securities of the Company which by its terms does not rank on a parity with
      or
      senior to the Series B Preferred Stock (“Junior Stock”).  The Series B
      Preferred Stock shall be subordinate to and rank junior to all indebtedness
      of
      the Company now or hereafter outstanding.

    

    
      
        
        

      

      
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    2.  Dividends.

    

    (a)  Quarterly
      Dividends.  The holders of shares of the Series B Preferred Stock
      shall be entitled to receive, out of funds legally available therefor, dividends
      at an annual rate equal to 5% of the Liquidation Preference Amount, calculated
      on the basis of a 360 day year, consisting of twelve 30-day months, and shall
      accrue on a daily basis from the date of issuance thereof, whether or not
      declared.  Accrued and unpaid dividends shall compound on a quarterly
      basis, and shall be, except as set forth in Section 2(b) below, payable in
      cash.  The Board of Directors may fix a record date for the
      determination of holders of shares of Series B Preferred Stock entitled to
      receive payment of such dividends, which record date shall not be more than
      sixty (60) days prior to the applicable dividend payment date.  The
      first such dividend payment shall be due and payable on October 31, 2007, with
      subsequent payments due and payable on January 31, April 30, July 31, and
      October 31 of each year.   All accrued and unpaid dividends, if
      any, shall be mandatorily paid immediately prior to the earlier to occur of
      (i)
      a liquidation, dissolution or winding up (or deemed liquidation, dissolution
      or
      winding up under Section 4(b) hereof) of the Company (a “Liquidation”), (ii) a
      Voluntary Conversion pursuant to Section 5 hereof or (iii) a Mandatory
      Conversion pursuant to Section 5(c) hereof (the “Mandatory Dividend Payment
      Date”).

    

    (b)  Payment
      of Dividends.  At the option of the Company in compliance with
      this Section 2(b), the Company may pay dividends on the Series B Preferred
      Stock
      in shares of Common Stock, with each share of Common Stock being valued for
      this
      purpose at the Conversion Price in effect on the date of
      payment.  Notwithstanding the above, no dividend shall be paid in
      Common Stock (i) in connection with a Liquidation, (ii) if such payment would
      cause the limitations on beneficial ownership set forth in Section 7 hereof
      to
      be exceeded or (iii) unless the shares of Common Stock received upon such
      payment shall be freely salable by the recipient pursuant to a then effective
      Registration Statement meeting the requirements of the Registration Rights
      Agreement, dated on or about the date hereof, by and between the Company and
      the
      investors named therein.

     

     

    
      
        
        

      

      
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    (c)  Junior
      Stock Dividends.  The Company shall not declare or pay any cash
      dividends on, or make any other distributions with respect to or redeem,
      purchase or otherwise acquire for consideration, any shares of Junior Stock
      unless and until all accrued and unpaid dividends on the Series B Preferred
      Stock have been paid in full.    In all events, Junior Stock
      dividends shall be subject to the restrictions set forth in Section 3(a)
      below.

    

    3.  ­Voting
      Rights.

    

    (a)  ­Class
      Voting Rights.  The Series B Preferred Stock shall have the
      following class voting rights (in addition to the voting rights set forth in
      Section 3(b) hereof).  So long as any shares of the Series B Preferred
      Stock remain outstanding, the Company shall not, and shall not permit any
      subsidiary to, without the affirmative vote or consent of the holders of at
      least a majority of the shares of the Series B Preferred Stock outstanding
      at
      the time, given in person or by proxy, either in writing or at a meeting, in
      which the holders of the Series B Preferred Stock vote separately as a class:
      (i) incur Indebtedness or authorize, create, issue or increase the authorized
      or
      issued amount of any class or series of stock, including but not limited to
      the
      issuance of any more shares of previously authorized Preferred Stock, ranking
      prior to the Series B Preferred Stock, with respect to the distribution of
      assets on liquidation, dissolution or winding up; (ii) amend, alter or repeal
      the provisions of the Series B Preferred Stock, whether by merger, consolidation
      or otherwise, so as to adversely affect any right, preference, privilege or
      voting power of the Series B Preferred Stock; (iii) repurchase, redeem or pay
      dividends on (whether in cash, in kind, or otherwise), shares of the Company's
      Junior Stock; (iv) amend the Certificate of Incorporation or By-Laws of the
      Company so as to affect materially and adversely any right, preference,
      privilege or voting power of the Series B Preferred Stock; (v) effect any
      distribution with respect to Junior Stock or parity stock; or (vi) reclassify
      the Company's outstanding securities.  “Indebtedness” means (a) all
      obligations for borrowed money, (b) all obligations evidenced by bonds,
      debentures, notes, or other similar instruments and all reimbursement or other
      obligations in respect of letters of credit, bankers acceptance, current swap
      agreements, interest rate swaps, or other financial products, (c) all capital
      lease obligations (to the extent the same exceed $100,000 in any fiscal year),
      (d) all obligations for the deferred purchase price of assets (to the extent
      the
      same exceed $100,000 in any fiscal year), (e) all synthetic leases, and (f)
      any
      obligation guaranteeing or intended to guarantee (whether directly or indirectly
      guaranteed, endorsed, co-made, discounted or sold with recourse) any of the
      foregoing obligations of any other person; provided, however, Indebtedness
      shall
      not include (a) a working capital line of credit, containing typical and
      customary terms and conditions, of up to $1,000,000 issued by a bank, credit
      union, governmental agency or similar unaffiliated corporate or institutional
      lender, (b) usual and customary trade debt incurred in the ordinary course
      of
      business and (c) endorsements for collection or deposit in the ordinary course
      of business.

    

    
      
        
        

      

      
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    (b)  ­General
      Voting Rights.  Except with respect to
      transactions upon which the Series B Preferred Stock shall be entitled to vote
      separately as a class pursuant to Section 3(a) above and except as otherwise
      required by Delaware law, the Series B Preferred Stock shall have no voting
      rights.  The Common Stock into which the Series B Preferred Stock is
      convertible shall, upon issuance, have all of the same voting rights as other
      issued and outstanding Common Stock of the Company.

    

    4.  ­Liquidation
      Preference.

    

    (a)  In
      the
      event of the liquidation, dissolution or winding up of the affairs of the
      Company, whether voluntary or involuntary, the holders of shares of the Series
      B
      Preferred Stock then outstanding shall be entitled to receive, out of the assets
      of the Company whether such assets are capital or surplus of any nature, an
      amount equal to $10,000 per share (the “Liquidation Preference Amount”) of the
      Series B Preferred Stock, on a pro rata and pari passu basis with any parity
      stock, before any payment shall be made or any assets distributed to the holders
      of the Common Stock or any other Junior Stock.  If the assets of the
      Company are not sufficient to pay in full the Liquidation Preference Amount
      payable to the holders of outstanding shares of the Series B Preferred Stock
      and
      any series of preferred stock or any other class of stock on a parity as to
      rights on liquidation, dissolution or winding up, with the Series B Preferred
      Stock, then all of said assets will be distributed among the holders of the
      Series B Preferred Stock, the Pari Passu Preferred Stock and the other classes
      of stock on a parity with the Series B Preferred Stock, if any, ratably in
      accordance with the respective amounts that would be payable on such shares
      if
      all amounts payable thereon were paid in full.  The liquidation
      payment with respect to each outstanding fractional share of Series B Preferred
      Stock shall be equal to a ratably proportionate amount of the liquidation
      payment with respect to each outstanding share of Series B Preferred
      Stock.  All payments for which this Section 4(a) provides shall be in
      cash, property (valued at its fair market value as determined by an independent
      appraiser reasonably acceptable to the holders of a majority of the Series
      B
      Preferred Stock) or a combination thereof; provided, however, that
      no cash shall be paid to holders of Junior Stock unless each holder of the
      outstanding shares of Series B Preferred Stock has been paid in cash the full
      Liquidation Preference Amount to which such holder is entitled as provided
      herein.  After payment of the full Liquidation Preference Amount to
      which each holder is entitled, such holders of shares of Series B Preferred
      Stock will not be entitled to any further participation as such in any
      distribution of the assets of the Company.

    

    
      
        
        

      

      
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    (b)  A
      consolidation or merger of the Company with or into any other corporation or
      corporations, or a sale of all or substantially all of the assets of the
      Company, or the effectuation by the Company of a transaction or series of
      transactions in which more than 50% of the voting shares of the Company is
      disposed of or conveyed, shall be, at the election of the holders of a majority
      of the Series B Preferred Stock, deemed to be a liquidation, dissolution, or
      winding up within the meaning of this Section 4.  In the event of the
      merger or consolidation of the Company with or into another corporation that
      is
      not treated as a liquidation pursuant to this Section 4(b), the Series B
      Preferred Stock shall maintain its relative powers, designations and preferences
      provided for herein and no merger shall result inconsistent
      therewith.

    

    (c)  Written
      notice of any voluntary or involuntary liquidation, dissolution or winding
      up of
      the affairs of the Company, stating a payment date and the place where the
      distributable amounts shall be payable, shall be given by mail, postage prepaid,
      no less than forty-five (45) days prior to the payment date stated therein,
      to
      the holders of record of the Series B Preferred Stock at their respective
      addresses as the same shall appear on the books of the Company.

    

    5.  ­Conversion.  The
      holder of Series B Preferred Stock shall have the following conversion rights
      (the “Conversion Rights”):

    

    (a)  ­Right
      to Convert.  At any time on or after the Issuance Date, the holder
      of any such shares of Series B Preferred Stock may, at such holder's option,
      subject to the limitations set forth in Section 7 herein, elect to convert
      (a
“Voluntary Conversion”) all or any portion of the shares of Series B Preferred
      Stock held by such person into a number of fully paid and nonassessable shares
      of Common Stock equal to the quotient of (i) the Liquidation Preference Amount
      of the shares of Series B Preferred Stock being converted thereon divided by
      (ii) the Conversion Price (as defined in Section 5(d) below) then in effect
      as
      of the date of the delivery by such holder of its notice of election to
      convert.  The Company shall keep written records of the conversion of
      the shares of Series B Preferred Stock converted by each holder.  A
      holder shall be required to deliver the original certificates representing
      the
      shares of Series B Preferred Stock upon complete conversion of the Series B
      Preferred Stock.

    

    (b)  ­Mechanics
      of Voluntary Conversion.  The Voluntary Conversion of Series B
      Preferred Stock shall be conducted in the following manner:

    

    
      
        
        

      

      
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    (i)  ­Holder's
      Delivery Requirements.  To convert Series B Preferred Stock into
      full shares of Common Stock on any date (the “Voluntary Conversion Date”), the
      holder thereof shall (A) transmit by facsimile (or otherwise deliver), for
      receipt on or prior to 5:00 p.m., New York time on such date, a copy of a fully
      executed notice of conversion in the form attached hereto as Exhibit I
      (the “Conversion Notice”), to the Company, and (B) with respect to the final
      conversion of shares of Series B Preferred Stock held by any holder, such holder
      shall surrender to a common carrier for delivery to the Company as soon as
      practicable following such Conversion Date but in no event later than six (6)
      business days after such date the original certificates representing the shares
      of Series B Preferred Stock being converted (or an indemnification undertaking
      with respect to such shares in the case of their loss, theft or destruction)
      (the “Preferred Stock Certificates”).

    

    (ii)  ­Company's
      Response.  Upon receipt by the Company of a facsimile copy of a
      Conversion Notice, the Company shall immediately send, via facsimile, a
      confirmation of receipt of such Conversion Notice to such holder and the Company
      or its designated transfer agent (the “Transfer Agent”), as applicable, shall,
      within three (3) business days following the date of receipt by the Company
      of
      the executed Conversion Notice, issue and deliver to the Depository Trust
      Company (“DTC”) account on the holder’s behalf via the Deposit Withdrawal
      Agent Commission System (“DWAC”) as specified in the Conversion Notice,
      registered in the name of the holder or its designee, for the number of shares
      of Common Stock to which the holder shall be entitled.

    

    (iii)  ­Dispute
      Resolution.  In the case of a dispute as to the arithmetic
      calculation of the number of shares of Common Stock to be issued upon
      conversion, the Company shall promptly issue to the holder the number of shares
      of Common Stock that is not disputed and shall submit the arithmetic
      calculations to the holder via facsimile as soon as possible, but in no event
      later than two (2) business days after receipt of such holder's Conversion
      Notice.  If such holder and the Company are unable to agree upon the
      arithmetic calculation of the number of shares of Common Stock to be issued
      upon
      such conversion within one (1) business day of such disputed arithmetic
      calculation being submitted to the holder, then the Company shall within one
      (1)
      business day submit via facsimile the disputed arithmetic calculation of the
      number of shares of Common Stock to be issued upon such conversion to the
      Company’s independent, outside accountant.  The
      Company shall cause the accountant to perform the calculations and notify the
      Company and the holder of the results no later than seventy-two (72) hours
      from
      the time it receives the disputed calculations.  Such accountant's
      calculation shall be binding upon all parties absent manifest
      error.  The reasonable expenses of such accountant in making such
      determination shall be paid by the Company, in the event the holder's
      calculation was correct, or by the holder, in the event the Company's
      calculation was correct, or equally by the Company and the holder in the event
      that neither the Company's or the holder's calculation was
      correct.  The period of time in which the Company is required to
      effect conversions or redemptions under this Amended and Restated Certificate
      of
      Designation shall be tolled with respect to the subject conversion or redemption
      pending resolution of any dispute by the Company made in good faith and in
      accordance with this Section 5(b)(iii).

    

    
      
        
        

      

      
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    (iv)  ­Record
      Holder.  The person or persons entitled to receive the shares of
      Common Stock issuable upon a conversion of the Series B Preferred Stock shall
      be
      treated for all purposes as the record holder or holders of such shares of
      Common Stock on the Conversion Date.

    

    (v)  ­Company's
      Failure to Timely Convert.  If within five (5) business days of
      the Company's receipt of the Conversion Notice (the “Share Delivery Period”) the
      Company shall fail to issue and deliver to a holder the number of shares of
      Common Stock to which such holder is entitled upon such holder's conversion
      of
      the Series B Preferred Stock (a “Conversion Failure”), in addition to all other
      available remedies which such holder may pursue hereunder and under the Series
      B
      Convertible Preferred Stock Purchase Agreement among the Company and the
      purchasers listed therein (the “Purchase Agreement”) between the Company and the
      initial holders of the Series B Preferred Stock (including indemnification
      pursuant to Section 6 thereof), the Company shall pay additional damages to
      such
      holder on each business day after such third (3rd) business
      day that
      such conversion is not timely effected in an amount equal 0.5% of the product
      of
      (A) the sum of the number of shares of Common Stock not issued to the holder
      on
      a timely basis pursuant to Section 5(b)(ii) and to which such holder is entitled
      and (B) the Closing Bid Price (as defined in Section 5(d)(ii) hereof) of the
      Common Stock on the last possible date which the Company could have issued
      such
      Common Stock to such holder without violating Section 5(b)(ii).  If
      the Company fails to pay the additional damages set forth in this Section
      5(b)(v) within five (5) business days of the date incurred, then such payment
      shall bear interest at the rate of 2% per month (pro rated for partial months)
      until such payments are made.

    

    (c)  Mandatory
      Conversion.

    

    (i)  Subject
      to the provisions set forth below, the shares of Series B Preferred Stock
      outstanding on the Mandatory Conversion Date shall, depending on the Closing
      Bid
      Price on such Mandatory Conversion Date, automatically and without any action
      on
      the part of the holder thereof, convert into a number of fully paid and
      nonassessable shares of Common Stock equal to the quotient of (i) the
      Liquidation Preference Amount of the shares of Series B Preferred Stock
      outstanding on the Mandatory Conversion Date divided by (ii) the Conversion
      Price in effect on the Mandatory Conversion Date (a “Mandatory
      Conversion”).  If the Closing Bid Price of the Common Stock on the
      Mandatory Conversion Date is equal to or greater than $1.50 (as appropriately
      adjusted for splits and combinations occurring after the Issue Date), all of
      the
      shares of Series B Preferred Stock outstanding shall automatically convert
      into
      shares of Common Stock in accordance with this Section 5(c)(i).

    

    
      
        
        

      

      
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    (ii)  As
      used
      herein, a “Mandatory Conversion Date” shall be the date which is at least one
      (1) day after the Effectiveness Date (as defined in the Registration Rights
      Agreement), provided, that the Closing Bid Price of the Common Stock must have
      exceeded $1.50 for a period of twenty (20) consecutive trading days immediately
      preceding such date; provided, further, that the Registration
      Statement (as defined in the Registration Rights Agreement) is effective with
      respect to all shares of Common Stock issuable upon such mandatory conversion
      or
      the shares of Common Stock into which the Series B Preferred Stock can be
      converted may be offered for sale to the public pursuant to Rule 144(k) (“Rule
      144(k)”) under the Securities Act of 1933, as
      amended.  Notwithstanding the foregoing, no mandatory conversion shall
      be effected if, on the Mandatory Conversion Date the conversion of such share
      of
      Preferred Stock would violate Section 7.  In no event shall any shares
      of Series B Preferred Stock be converted pursuant to this Section 5(c) unless
      the Common Stock issuable upon such conversion has been registered under the
      Securities Act of 1933, as amended, and may be resold pursuant to a
      then-effective registration statement meeting the requirements of the
      Registration Rights Agreement or such shares of Common Stock may be resold
      pursuant to Rule 144(k).  The Mandatory Conversion Date and the
      Voluntary Conversion Date collectively are referred to in this Amended and
      Restated Certificate of Designation as the “Conversion Date.”

    

    (iii)  On
      the
      Mandatory Conversion Date, the outstanding shares of Series B Preferred Stock
      shall be converted automatically without any further action by the holders
      of
      such shares and whether or not the Preferred Stock Certificates are surrendered
      to the Company or its transfer agent; provided, however, that the
      Company shall not be obligated to issue the shares of Common Stock issuable
      upon
      conversion of any shares of Series B Preferred Stock unless the Preferred Stock
      Certificates evidencing such shares of Series B Preferred Stock are either
      delivered to the Company or the holder notifies the Company that such Preferred
      Stock Certificates have been lost, stolen, or destroyed, and executes an
      agreement satisfactory to the Company to indemnify the Company from any loss
      incurred by it in connection therewith.  Upon the occurrence of the
      automatic conversion of the Series B Preferred Stock pursuant to this Section
      5,
      the holders of the Series B Preferred Stock shall surrender the Preferred Stock
      Certificates representing the Series B Preferred Stock for which the Mandatory
      Conversion Date has occurred to the Company and the Company shall deliver the
      shares of Common Stock issuable upon such conversion (in the same manner set
      forth in Section 5(b)(ii)) to the holder within five (5) business days of the
      holder's delivery of the applicable Preferred Stock Certificates.

    

    (d)  ­Conversion
      Price.

    

    (i)  The
      term
“Conversion Price” shall mean $0.15 per share, subject to adjustment under
      Section 5(e) hereof.  Notwithstanding any adjustment hereunder, at no
      time shall the Conversion Price be greater than $0.15 per share other than
      pursuant to the second sentence of Section 5(e)(i) in connection with a reverse
      stock split effected by the Company.

    

    
      
        
        

      

      
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    (ii)  The
      term
“Closing Bid Price” shall mean, for any security as of any date, the last
      closing bid price of such security on the OTC Bulletin Board or other applicable
      principal trading market for such security as reported by Bloomberg, or, if
      no
      closing bid price is reported for such security by Bloomberg, the last closing
      trade price of such security as reported by Bloomberg, or, if no last closing
      trade price is reported for such security by Bloomberg, the average of the
      bid
      prices of any market makers for such security as reported in the “pink sheets”
by the National Quotation Bureau, Inc.  If the Closing Bid Price
      cannot be calculated for such security on such date on any of the foregoing
      bases, the Closing Bid Price of such security on such date shall be the fair
      market value as mutually determined by the Company and the holders of a majority
      of the outstanding shares of Series B Preferred Stock.

    

    (e)  ­Adjustments
      of Conversion Price.

    

    (i)  ­Adjustments
      for Stock Splits and Combinations.  If the Company shall at any
      time or from time to time after the Issuance Date, effect a stock split of
      the
      outstanding Common Stock, the Conversion Price shall be proportionately
      decreased.  If the Company shall at any time or from time to time
      after the Issuance Date, combine the outstanding shares of Common Stock, the
      Conversion Price shall be proportionately increased.  Any adjustments
      under this Section 5(e)(i) shall be effective at the close of business on the
      date the stock split or combination occurs.

    

    (ii)  ­Adjustments
      for Certain Dividends and Distributions.  If the Company shall at
      any time or from time to time after the Issuance Date, make or issue or set
      a
      record date for the determination of holders of Common Stock entitled to receive
      a dividend or other distribution payable in shares of Common Stock, then, and
      in
      each event, the Conversion Price shall be decreased as of the time of such
      issuance or, in the event such record date shall have been fixed, as of the
      close of business on such record date, by multiplying, as applicable, the
      Conversion Price then in effect by a fraction:

    

    (1)  the
      numerator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date; and

    

    (2)  the
      denominator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date plus the number of shares of Common Stock issuable
      in payment of such dividend or distribution.

    

    (iii)  ­Adjustment
      for Other Dividends and Distributions.  If the Company shall at
      any time or from time to time after the Issuance Date, make or issue or set
      a
      record date for the determination of holders of Common Stock entitled to receive
      a dividend or other distribution payable in securities of the Company other
      than
      shares of Common Stock, then, and in each event, an appropriate revision to
      the
      applicable Conversion Price shall be made and provision shall be made (by
      adjustments of the Conversion Price or otherwise) so that the holders of Series
      B Preferred Stock shall receive upon conversions thereof, in addition to the
      number of shares of Common Stock receivable thereon, the number of securities
      of
      the Company which they would have received had their Series B Preferred Stock
      been converted into Common Stock immediately prior to such event (or the record
      date for such event, if applicable) and had thereafter, during the period from
      the date of such event to and including the Conversion Date, retained such
      securities (together with any distributions payable thereon during such period),
      giving application to all adjustments called for during such period under this
      Section 5(e)(iii) with respect to the rights of the holders of the Series B
      Preferred Stock.

    

    
      
        
        

      

      
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    (iv)  ­Adjustments
      for Reclassification, Exchange or Substitution.  If the Common
      Stock issuable upon conversion of the Series B Preferred Stock at any time
      or
      from time to time after the Issuance Date shall be changed to the same or
      different number of shares of any class or classes of stock, whether by
      reclassification, exchange, substitution or otherwise (other than by way of
      a
      stock split or combination of shares or stock dividends provided for in Sections
      5(e)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale
      of
      assets provided for in Section 5(e)(v)), then, and in each event, an appropriate
      revision to the Conversion Price shall be made and provisions shall be made
      (by
      adjustments of the Conversion Price or otherwise) so that the holder of each
      share of Series B Preferred Stock shall have the right thereafter to convert
      such share of Series B Preferred Stock into the kind and amount of shares of
      stock and other securities receivable upon reclassification, exchange,
      substitution or other change, by holders of the number of shares of Common
      Stock
      into which such share of Series B Preferred Stock might have been converted
      immediately prior to such reclassification, exchange, substitution or other
      change, all subject to further adjustment as provided herein.

    

    (v)  ­Adjustments
      for Reorganization, Merger, Consolidation or Sales
      ofAssets.  If at any time or from time to time after the
      Issuance Date there shall be a capital reorganization of the Company (other
      than
      by way of a stock split or combination of shares or stock dividends or
      distributions provided for in Section 5(e)(i), (ii) and (iii), or a
      reclassification, exchange or substitution of shares provided for in Section
      5(e)(iv)), or a merger or consolidation of the Company with or into another
      corporation, or the sale of all or substantially all of the Company's properties
      or assets to any other person that is not deemed a liquidation pursuant to
      Section 4(b) (an “Organic Change”), then as a part of such Organic Change an
      appropriate revision to the Conversion Price shall be made and provision shall
      be made (by adjustments of the Conversion Price or otherwise) so that the holder
      of each share of Series B Preferred Stock shall have the right thereafter to
      convert such share of Series B Preferred Stock into the kind and amount of
      shares of stock and other securities or property of the Company or any successor
      corporation resulting from the Organic Change as the holder would have received
      as a result of the Organic Change and if the holder had converted its Series
      B
      Preferred Stock into the Company’s Common Stock prior to the Organic
      Change.  In any such case, appropriate adjustment shall be made in the
      application of the provisions of this Section 5(e)(v) with respect to the rights
      of the holders of the Series B Preferred Stock after the Organic Change to
      the
      end that the provisions of this Section 5(e)(v) (including any adjustment in
      the
      Conversion Price then in effect and the number of shares of stock or other
      securities deliverable upon conversion of the Series B Preferred Stock) shall
      be
      applied after that event in as nearly an equivalent manner as may be
      practicable.

    

    
      
        
        

      

      
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    (vi)  Adjustments
      for Issuance of Additional Shares of Common Stock.

    

    (A)           In
      the event the Company, shall, at any time, from time to time, issue or sell
      any
      additional shares of Common Stock (otherwise than as provided in the foregoing
      subsections (i) through (v) of this Section 5(e) or upon exercise or conversion
      of Common Stock Equivalents (hereafter defined) granted or issued prior to
      the
      Issuance Date at the conversion price applicable to such Common Stock
      Equivalents in effect on the Issuance Date) (the “Additional Shares of Common
      Stock”), at a price per share less than the Conversion Price, or without
      consideration, the Conversion Price then in effect upon each such issuance
      shall
      be adjusted to a price equal to the consideration per share paid for such
      Additional Shares of Common Stock.

    

    No
      adjustment of the number of shares of Common Stock shall be made under paragraph
      (A) of Section 5(e)(vi) upon the issuance of any Additional Shares of Common
      Stock which are issued pursuant to the exercise of any warrants or other
      subscription or purchase rights or pursuant to the exercise of any conversion
      or
      exchange rights in any Common Stock Equivalents (as defined below), if any
      such
      adjustment shall previously have been made upon the issuance of such warrants
      or
      other rights or upon the issuance of such Common Stock Equivalents (or upon
      the
      issuance of any warrant or other rights therefor) pursuant to Section
      5(e)(vii).

    

    (vii)  Issuance
      of Common Stock Equivalents.  If the Company, at any time after
      the Issuance Date, shall issue any securities convertible into or exchangeable
      for, directly or indirectly, Common Stock (“Convertible Securities”), other than
      the Series B Preferred Stock or warrants issued to the holders of the Series
      B
      Preferred Stock, or any rights or warrants or options to purchase any such
      Common Stock or Convertible Securities, shall be issued or sold (collectively,
      the “Common Stock Equivalents”) and the aggregate of the price per share for
      which Additional Shares of Common Stock may be issuable thereafter pursuant
      to
      such Common Stock Equivalent, plus the consideration received by the Company
      for
      issuance of such Common Stock Equivalent, divided by the number of shares of
      Common Stock issuable pursuant to such Common Stock Equivalent (the “Aggregate
      Per Common Share Price”), shall be less than the Conversion Price, or if, after
      any such issuance of Common Stock Equivalents, the price per share for which
      Additional Shares of Common Stock may be issuable thereafter is amended or
      adjusted, and such price as so amended shall make the Aggregate Per Common
      Share
      Price be less than Conversion Price in effect at the time of such amendment,
      then the Conversion Price then in effect shall upon each such issuance be
      adjusted to a price equal to the Aggregate Per Common Share
      Price.   No adjustment of the Conversion Price shall be made
      under this subsection (vii) upon the issuance of any Convertible Security which
      is issued pursuant to the exercise of any warrants or other subscription or
      purchase rights therefor, if any adjustment shall previously have been made
      to
      the exercise price of such warrants then in effect upon the issuance of such
      warrants or other rights pursuant to this subsection (vii).

    

    
      
        
        

      

      
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    (viii)  ­Consideration
      for Stock.  In case any shares of Common Stock or Convertible
      Securities other than the Series B Preferred Stock, or any rights or warrants
      or
      options to purchase any such Common Stock or Convertible Securities, shall
      be
      issued or sold in connection with any merger or consolidation in which the
      Company is the surviving corporation (other than any consolidation or merger
      in
      which the previously outstanding shares of Common Stock of the Company shall
      be
      changed to or exchanged for the stock or other securities of another
      corporation), the amount of consideration therefor shall be deemed to be the
      fair value, as determined reasonably and in good faith by the Board of Directors
      of the Company, of such portion of the assets and business of the nonsurviving
      corporation as such Board may determine to be attributable to such shares of
      Common Stock, Convertible Securities, rights or warrants or options, as the
      case
      may be.

    

    (ix)  ­Record
      Date.  In case the Company shall take record of the holders of its
      Common Stock or any other Preferred Stock for the purpose of entitling them
      to
      subscribe for or purchase Common Stock or Convertible Securities, then the
      date
      of the issue or sale of the shares of Common Stock shall be deemed to be such
      record date.

    

    (x)  ­Certain
      Issues Excepted.  Anything herein to the contrary notwithstanding,
      the Company shall not be required to make any adjustment of the Conversion
      Price
      of shares of Common Stock issuable upon conversion of the Series B Preferred
      Stock upon the issuance of (a) shares of Common Stock or options to employees,
      officers or directors of the Company pursuant to any stock or option plan duly
      adopted by a majority of the non-employee members of the Board of Directors
      of
      the Company or a majority of the members of a committee of non-employee
      directors established for such purpose, (b) securities upon the exercise or
      exchange of or conversion of any securities issued hereunder and/or securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the Issue Date, provided that such securities have
      not
      been amended since the Issue Date to increase the number of such securities
      or
      to decrease the exercise, exchange or conversion price of any such securities,
      (c) securities issued pursuant to acquisitions or strategic transactions
      (including license agreements), provided any such issuance shall only be to
      a
      Person which is, itself or through its subsidiaries, 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, but shall not include
      a transaction in which the Company is issuing securities primarily for the
      purpose of raising capital or to an entity whose primary business is investing
      in securities and (d) securities issued to the Holder pursuant to the Purchase
      Agreement (or securities issued on conversion or exercise of such
      securities).

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (f)  ­No
      Impairment.  The Company shall not, by amendment of its
      Certificate of Incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issue or sale of securities or any other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms to be observed or performed hereunder by the Company, but will at
      all
      times in good faith, assist in the carrying out of all the provisions of this
      Section 5 and in the taking of all such action as may be necessary or
      appropriate in order to protect the Conversion Rights of the holders of the
      Series B Preferred Stock against impairment.  In the event a holder
      shall elect to convert any shares of Series B Preferred Stock as provided
      herein, the Company cannot refuse conversion based on any claim that such holder
      or any one associated or affiliated with such holder has been engaged in any
      violation of law, unless, an injunction from a court, on notice, restraining
      and/or enjoining conversion of all or of said shares of Series B Preferred
      Stock
      shall have been issued and the Company posts a surety bond for the benefit
      of
      such holder in an amount equal to 130% of the Liquidation Preference Amount
      of
      the Series B Preferred Stock such holder has elected to convert, which bond
      shall remain in effect until the completion of arbitration/litigation of the
      dispute and the proceeds of which shall be payable to such holder in the event
      it obtains judgment.

    

    (g)  ­Certificates
      as to Adjustments.  Upon occurrence of each adjustment or
      readjustment of the Conversion Price or number of shares of Common Stock
      issuable upon conversion of the Series B Preferred Stock pursuant to this
      Section 5, the Company at its expense shall promptly compute such adjustment
      or
      readjustment in accordance with the terms hereof and furnish to each holder
      of
      such Series B Preferred Stock a certificate setting forth such adjustment and
      readjustment, showing in detail the facts upon which such adjustment or
      readjustment is based.  The Company shall, upon written request of the
      holder of such affected Series B Preferred Stock, at any time, furnish or cause
      to be furnished to such holder a like certificate setting forth such adjustments
      and readjustments, the Conversion Price in effect at the time, and the number
      of
      shares of Common Stock and the amount, if any, of other securities or property
      which at the time would be received upon the conversion of a share of such
      Series B Preferred Stock.  Notwithstanding the foregoing, the Company
      shall not be obligated to deliver a certificate unless such certificate would
      reflect an increase or decrease of at least one percent of such adjusted
      amount.

    

    (h)  ­Issue
      Taxes.  The Company shall pay any and all issue and other taxes,
      excluding federal, state or local income taxes, that may be payable in respect
      of any issue or delivery of shares of Common Stock on conversion of shares
      of
      Series B Preferred Stock pursuant thereto; provided, however, that
      the Company shall not be obligated to pay any transfer taxes resulting from
      any
      transfer requested by any holder in connection with any such
      conversion.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (i)  ­Notices.  All
      notices and other communications hereunder shall be in writing and shall be
      deemed given if delivered personally or by facsimile or three (3) business
      days
      following being mailed by certified or registered mail, postage prepaid,
      return-receipt requested, addressed to the holder of record at its address
      appearing on the books of the Company.  The Company will give written
      notice to each holder of Series B Preferred Stock at least twenty (20) days
      prior to the date on which the Company closes its books or takes a record (I)
      with respect to any dividend or distribution upon the Common Stock, (II) with
      respect to any pro rata subscription offer to holders of Common Stock or (III)
      for determining rights to vote with respect to any Organic Change, dissolution,
      liquidation or winding-up and in no event shall such notice be provided to
      such
      holder prior to such information being made known to the public.  The
      Company will also give written notice to each holder of Series B Preferred
      Stock
      at least twenty (20) days prior to the date on which any Organic Change,
      dissolution, liquidation or winding-up will take place and in no event shall
      such notice be provided to such holder prior to such information being made
      known to the public.

    

    (j)  ­Fractional
      Shares.  No fractional shares of Common Stock shall be issued upon
      conversion of the Series B Preferred Stock.  In lieu of any fractional
      shares to which the holder would otherwise be entitled, the Company shall at
      its
      option either (i) pay cash equal to the product of such fraction multiplied
      by
      the average of the Closing Bid Prices of the Common Stock for the five (5)
      consecutive trading days immediately preceding the Voluntary Conversion Date
      or
      Mandatory Conversion Date, as applicable, or (ii) in lieu of issuing such
      fractional shares issue one additional whole share to the holder.

    

    (k)  ­Reservation
      of Common Stock.  The Company shall, so long as any shares of
      Series B Preferred Stock are outstanding, reserve and keep available out of
      its
      authorized and unissued Common Stock, solely for the purpose of effecting the
      conversion of the Series B Preferred Stock, such number of shares of Common
      Stock as shall from time to time be sufficient to effect the conversion of
      all
      of the Series B Preferred Stock then outstanding; provided that the
      number of shares of Common Stock so reserved shall at no time be less than
      120%
      of the number of shares of Common Stock for which the shares of Series B
      Preferred Stock are at any time convertible (without regard to the limitations
      on conversion set forth in Section 7 hereof).  The initial number of
      shares of Common Stock reserved for conversions of the Series B Preferred Stock
      and each increase in the number of shares so reserved shall be allocated pro
      rata among the holders of the Series B Preferred Stock based on the number
      of
      shares of Series B Preferred Stock held by each holder at the time of issuance
      of the Series B Preferred Stock or increase in the number of reserved shares,
      as
      the case may be.  In the event a holder shall sell or otherwise
      transfer any of such holder's shares of Series B Preferred Stock, each
      transferee shall be allocated a pro rata portion of the number of reserved
      shares of Common Stock reserved for such transferor.  Any shares of
      Common Stock reserved and which remain allocated to any person or entity which
      does not hold any shares of Series B Preferred Stock shall be allocated to
      the
      remaining holders of Series B Preferred Stock, pro rata based on the number
      of
      shares of Series B Preferred Stock then held by such holder.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (l)  ­Retirement
      of Series B Preferred Stock.  Conversion of Series B Preferred
      Stock shall be deemed to have been effected on the applicable Voluntary
      Conversion Date or Mandatory Conversion Date.  The Company shall keep
      written records of the conversion of the shares of Series B Preferred Stock
      converted by each holder.  A holder shall be required to deliver the
      original certificates representing the shares of Series B Preferred Stock upon
      complete conversion of the Series B Preferred Stock.

    

    (m)  ­Regulatory
      Compliance.  If any shares of Common Stock to be reserved for the
      purpose of conversion of Series B Preferred Stock require registration or
      listing with or approval of any governmental authority, stock exchange or other
      regulatory body under any federal or state law or regulation or otherwise before
      such shares may be validly issued or delivered upon conversion, the Company
      shall, at its sole cost and expense, in good faith and as expeditiously as
      possible, endeavor to secure such registration, listing or approval, as the
      case
      may be.

    

    6.  ­No
      Preemptive Rights.  Except as provided in Section 5 hereof and in
      the Purchase Agreement, no holder of the Series B Preferred Stock shall be
      entitled to rights to subscribe for, purchase or receive any part of any new
      or
      additional shares of any class, whether now or hereinafter authorized, or of
      bonds or debentures, or other evidences of indebtedness convertible into or
      exchangeable for shares of any class, but all such new or additional shares
      of
      any class, or any bond, debentures or other evidences of indebtedness
      convertible into or exchangeable for shares, may be issued and disposed of
      by
      the Board of Directors on such terms and for such consideration (to the extent
      permitted by law), and to such person or persons as the Board of Directors
      in
      their absolute discretion may deem advisable.

    

    7.  ­Conversion
      Restriction.

     

    (a)  Notwithstanding
      anything to the contrary set forth in Section 5 of this Amended and Restated
      Certificate of Designation, at no time may a holder of shares of Series B
      Preferred Stock convert shares of the Series B Preferred Stock if the number
      of
      shares of Common Stock to be issued pursuant to such conversion would exceed,
      when aggregated with all other shares of Common Stock owned by such holder
      at
      such time, the number of shares of Common Stock which would result in such
      holder owning more than 4.99% of all of the Common Stock outstanding at such
      time; provided, however, that upon a holder of Series B Preferred
      Stock  providing the Company with sixty-one (61) days notice (pursuant
      to Section 5(i) hereof) (the “Waiver Notice”) that such holder would like to
      waive Section 7(a) of this Amended and Restated Certificate of Designation
      with
      regard to any or all shares of Common Stock issuable upon conversion of Series
      B
      Preferred Stock, this Section 7(a) shall be of no force or effect with regard
      to
      those shares of Series B Preferred Stock referenced in the Waiver
      Notice.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (b)  Notwithstanding
      anything to the contrary set forth in Section 5 of this Amended and Restated
      Certificate of Designation, at no time may a holder of shares of Series B
      Preferred Stock convert shares of the Series B Preferred Stock if the number
      of
      shares of Common Stock to be issued pursuant to such conversion would exceed,
      when aggregated with all other shares of Common Stock owned by such holder
      at
      such time, the number of shares of Common Stock which would result in such
      holder beneficially owning (as determined in accordance with Section 13(d)
      of
      the Securities Exchange Act of 1934, as amended, and the rules thereunder)
      in
      excess of 9.99% of all of the Common Stock outstanding at such time;
provided, however, that upon a holder of Series B Preferred
      Stock  providing the Company with sixty-one (61) days notice (pursuant
      to Section 5(i) hereof) (the “Waiver Notice”) that such holder would like to
      waive Section 7 of this Amended and Restated Certificate of Designation with
      regard to any or all shares of Common Stock issuable upon conversion of Series
      B
      Preferred Stock, this Section 7 shall be of no force or effect with regard
      to
      those shares of Series B Preferred Stock referenced in the Waiver
      Notice.

    

    8.  Most
      Favored Nations Right.  For a period of three (3) years from the
      date of issuance of the Series B Preferred Stock, if the Company enters into
      any
      equity or equity linked financing (“Subsequent Financing”) on terms more
      favorable than the terms governing the Series B Preferred Stock, then each
      holder of the Series B Preferred Stock in its sole discretion may exchange
      all
      or a portion of its Series B Preferred Stock, valued at its Liquidation
      Preference Amount, plus accrued and unpaid dividends thereon, for the securities
      issued or to be issued in the Subsequent Financing.

    

    9.  ­Inability
      to Fully Convert.

    

    (a)  ­Holder's
      Option if Company Cannot Fully Convert.  If, upon the Company's
      receipt of a Conversion Notice or on the Mandatory Conversion Date, the Company
      cannot issue shares of Common Stock registered for resale (to the extent the
      Company was obligated to register such shares under the Registration Rights
      Agreement) for any reason, including, without limitation, because the Company
      (x) does not have a sufficient number of shares of Common Stock authorized
      and
      available, (y) is otherwise prohibited by applicable law or by the rules or
      regulations of any stock exchange, interdealer quotation system or other
      self-regulatory organization with jurisdiction over the Company or its
      securities from issuing all of the Common Stock which is to be issued to a
      holder of Series B Preferred Stock pursuant to a Conversion Notice or (z) fails
      to have a sufficient number of shares of Common Stock registered for resale
      required under the Registration Statement (subject to the limitations set forth
      in the Registration Rights Agreement relating to Rule 415 under the Securities
      Act), then the Company shall issue as many shares of Common Stock as it is
      able
      to issue in accordance with such holder's Conversion Notice and pursuant to
      Section 5(b)(ii) above and, with respect to the unconverted Series B Preferred
      Stock, the holder, solely at such holder's option, can elect, in addition to
      other remedies available to such holder, within five (5) business days after
      receipt of notice from the Company thereof to:

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (i)  require
      the Company to redeem from such holder those Series B Preferred Stock for which
      the Company is unable to issue Common Stock in accordance with such holder's
      Conversion Notice (“Mandatory Redemption”) at a price per share equal to 120% of
      the Liquidation Preference Amount as of such Conversion Date (the “Mandatory
      Redemption Price”);

    

    (ii)  if
      the
      Company's inability to fully convert Series B Preferred Stock is pursuant to
      Section 9(a)(z) above, require the Company to issue restricted shares of Common
      Stock in accordance with such holder's Conversion Notice and pursuant to Section
      5(b)(ii) above;

    

    (iii)  void
      its
      Conversion Notice and retain or have returned, as the case may be, the shares
      of
      Series B Preferred Stock that were to be converted pursuant to such holder's
      Conversion Notice (provided that a holder's voiding its Conversion Notice shall
      not effect the Company's obligations to make any payments which have accrued
      prior to the date of such notice).

    

    In
      the
      event a Holder shall elect to convert any shares of Series B Preferred Stock
      as
      provided herein, the Company cannot refuse conversion based on any claim that
      such Holder or any one associated or affiliated with such Holder has been
      engaged in any violation of law, violation of an agreement to which such Holder
      is a party or for any reason whatsoever, unless, an injunction from a court,
      on
      notice, restraining and or enjoining conversion of all or of said shares of
      Series B Preferred Stock shall have issued and the Company posts a surety bond
      for the benefit of such Holder in an amount equal to 130% of the amount of
      shares of Series B Preferred Stock the Holder has elected to convert, which
      bond
      shall remain in effect until the completion of arbitration/litigation of the
      dispute and the proceeds of which shall be payable to such Holder in the event
      it obtains judgment.

    

    (b)  ­Mechanics
      of Fulfilling Holder's Election.  The Company shall immediately
      send via facsimile to a holder of Series B Preferred Stock, upon receipt of
      a
      facsimile copy of a Conversion Notice from such holder which cannot be fully
      satisfied as described in Section 9(a) above, a notice of the Company's
      inability to fully satisfy such holder's Conversion Notice (the “Inability to
      Fully Convert Notice”).  Such Inability to Fully Convert Notice shall
      indicate (i) the reason why the Company is unable to fully satisfy such holder's
      Conversion Notice, (ii) the number of Series B Preferred Stock which cannot
      be
      converted and (iii) the applicable Mandatory Redemption Price.  Such
      holder shall notify the Company of its election pursuant to Section 9(a) above
      by delivering written notice via facsimile to the Company (“Notice in Response
      to Inability to Convert”).

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (c)  ­Payment
      of Redemption Price.  If such holder shall elect to have its
      shares redeemed pursuant to Section 9(a)(i) above, the Company shall pay the
      Mandatory Redemption Price to such holder within thirty (30) days of the
      Company's receipt of the holder's Notice in Response to Inability to Convert,
      provided that prior to the Company's receipt of the holder's Notice in
      Response to Inability to Convert the Company has not delivered a notice to
      such
      holder stating, to the satisfaction of the holder, that the event or condition
      resulting in the Mandatory Redemption has been cured and all Conversion Shares
      issuable to such holder can and will be delivered to the holder in accordance
      with the terms of Section 2(g).  If the Company shall fail to pay the
      applicable Mandatory Redemption Price to such holder on a timely basis as
      described in this Section 9(c) (other than pursuant to a dispute as to the
      determination of the arithmetic calculation of the Redemption Price), in
      addition to any remedy such holder of Series B Preferred Stock may have under
      this Amended and Restated Certificate of Designation and the Purchase Agreement,
      such unpaid amount shall bear interest at the rate of 1.5% per month (prorated
      for partial months) until paid in full.  Until the full Mandatory
      Redemption Price is paid in full to such holder, such holder may (i) void the
      Mandatory Redemption with respect to those Series B Preferred Stock for which
      the full Mandatory Redemption Price has not been paid, (ii) receive back such
      Series B Preferred Stock, and (iii) require that the Conversion Price of such
      returned Series B Preferred Stock be adjusted to the lesser of (A) the
      Conversion Price and (B) the lowest Closing Bid Price during the period
      beginning on the Conversion Date and ending on the date the holder voided the
      Mandatory Redemption.

    

    (d)  ­Pro-rata
      Conversion and Redemption.  In the event the Company receives a
      Conversion Notice from more than one holder of Series B Preferred Stock on
      the
      same day and the Company can convert and redeem some, but not all, of the Series
      B Preferred Stock pursuant to this Section 9, the Company shall convert and
      redeem from each holder of Series B Preferred Stock electing to have Series
      B
      Preferred Stock converted and redeemed at such time an amount equal to such
      holder's pro-rata amount (based on the number shares of Series B Preferred
      Stock
      held by such holder relative to the number shares of Series B Preferred Stock
      outstanding) of all shares of Series B Preferred Stock being converted and
      redeemed at such time.

    

    10.  ­Vote
      to Change the Terms of or Issue Preferred Stock.  The affirmative
      vote at a meeting duly called for such purpose or the written consent without
      a
      meeting, of the holders of not less than a majority of the then outstanding
      shares of Series B Preferred Stock, shall be required (a) for any change to
      this
      Amended and Restated Certificate of Designation or the Company's Certificate
      of
      Incorporation which would amend, alter, change or repeal any of the powers,
      designations, preferences and rights of the Series B Preferred Stock or (b)
      for
      the issuance of shares of Series B Preferred Stock other than pursuant to the
      Purchase Agreement.  The provisions hereof may be waived on behalf of
      all the Holders if in writing and signed by the Holders of not less than a
      majority of the then outstanding shares of Series B Preferred
      Stock.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    11.  ­Lost
      or Stolen Certificates.  Upon receipt by the Company of evidence
      satisfactory to the Company of the loss, theft, destruction or mutilation of
      any
      Preferred Stock Certificates representing the shares of Series B Preferred
      Stock, and, in the case of loss, theft or destruction, of any indemnification
      undertaking by the holder to the Company and, in the case of mutilation, upon
      surrender and cancellation of the Preferred Stock Certificate(s), the Company
      shall execute and deliver new preferred stock certificate(s) of like tenor
      and
      date.

    

    12.  ­Remedies,
      Characterizations, Other Obligations, Breaches and
      InjunctiveRelief.  The remedies provided in this Amended
      and Restated Certificate of Designation shall be cumulative and in addition
      to
      all other remedies available under this Amended and Restated Certificate of
      Designation, at law or in equity (including a decree of specific performance
      and/or other injunctive relief), no remedy contained herein shall be deemed
      a
      waiver of compliance with the provisions giving rise to such remedy and nothing
      herein shall limit a holder's right to pursue actual damages for any failure
      by
      the Company to comply with the terms of this Amended and Restated Certificate
      of
      Designation.  Amounts set forth or provided for herein with respect to
      payments, conversion and the like (and the computation thereof) shall be the
      amounts to be received by the holder thereof and shall not, except as expressly
      provided herein, be subject to any other obligation of the Company (or the
      performance thereof).  The Company acknowledges that a breach by it of
      its obligations hereunder will cause irreparable harm to the holders of the
      Series B Preferred Stock and that the remedy at law for any such breach may
      be
      inadequate.  The Company therefore agrees that, in the event of any
      such breach or threatened breach, the holders of the Series B Preferred Stock
      shall be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

    

    13.  ­Specific
      Shall Not Limit General; Construction.  No specific provision
      contained in this Amended and Restated Certificate of Designation shall limit
      or
      modify any more general provision contained herein.  This Amended and
      Restated Certificate of Designation shall be deemed to be jointly drafted by
      the
      Company and all initial purchasers of the Series B Preferred Stock and shall
      not
      be construed against any person as the drafter hereof.

    

    14.  ­Failure
      or Indulgence Not Waiver.  No failure or delay on the part of a
      holder of Series B Preferred Stock in the exercise of any power, right or
      privilege hereunder shall operate as a waiver thereof, nor shall any single
      or
      partial exercise of any such power, right or privilege preclude other or further
      exercise thereof or of any other right, power or privilege.

    

    15.           Bylaw
      Limitation.  Notwithstanding anything to the contrary contained
      herein, no adjustment shall be made to the Conversion Price or the number of
      shares of Common Stock issuable upon conversion of the Series B Preferred Stock
      to the extent such adjustment would violate Section 48 of the Bylaws of the
      Company in effect on the date hereof.  Upon and after the amendment or
      repeal of said Section 48 of the Bylaws in accordance with the terms of the
      Purchase Agreement, this Section 15 shall be of no further force and
      effect.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned has executed and subscribed this Amended
      Certificate and does affirm the foregoing as true this 31st day of July,
      2007.

     

    
      	 	
              URIGEN
                PHARMACEUTICALS, INC.

            	 
	 	 	 	 
	
              Date

            	
              By:
                

            	/s/ Martin
              E.
              Shmagin                                                                      	 
	 	 	Name:
              Martin E. Shmagin	 
	 	 	Title: 
Chief
              Financial
              Officer	 
	 	 	 	 

    

     

    EXHIBIT
      I

    URIGEN
      PHARMACEUTICALS, INC.

    CONVERSION
      NOTICE

    

    Reference
      is made to the Amended and Restated Certificate of Designation of the Relative
      Rights and Preferences of the Series B Preferred Stock of Urigen
      Pharmaceuticals, Inc. (the “Certificate of Designation”).  In
      accordance with and pursuant to the Certificate of Designation, the undersigned
      hereby elects to convert the number of shares of Series B Preferred Stock,
      par
      value $.001 per share (the “Preferred Shares”), of Urigen Pharmaceuticals, Inc.,
      a Delaware corporation (the “Company”), indicated below into shares of Common
      Stock, par value $.001 per share (the “Common Stock”), of the Company, by
      tendering the stock certificate(s) representing the share(s) of Preferred Shares
      specified below as of the date specified below.

    

    Date
      of
      Conversion:                                                                

    

    Number
      of
      Preferred Shares to be
      converted:                                                                                                                                

    

    Stock
      certificate no(s). of Preferred Shares to be
      converted:                                                                                                                                

    

    The
      Common Stock have been sold pursuant to the Registration Statement (as defined
      in the Registration Rights Agreement): YES ____NO____

    

    Please
      confirm the following information:

    

    Conversion
      Price:                                                                

    

    Number
      of
      shares of Common Stock

    to
      be
      issued:                                                                

    

    Number
      of shares of Common Stock
      beneficially owned or deemed beneficially ownedby the Holder on the Date of
      Conversion determined in accordance with Section 16 of theSecurities Exchange
      Act of 1934, as amended: _________________________

    

    Please
      issue the Common Stock into which the Preferred Shares are being converted
      and,
      if applicable, any check drawn on an account of the Company in the following
      name and to the following address:

    

    
      	 	 Issue
              to:   	 	 
	 	 Facsimile
              Number: 	 	 
	 	 Authorization:       	 	 
	 	 	By:     	 
	 	 	Title: 	 
	 	Dated:	 	 

    

                                                                 

    

    

                                                                   

    

                                                             

                                                               

                                                                   

     

    

    PRICES
      ATTACHED

     

     

     

     

     

    21ex42.htm

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR URIGEN PHARMACEUTICALS, INC. SHALL HAVE RECEIVED AN
      OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
      ACT
      AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED.

    

    SERIES
      A
      WARRANT TO PURCHASE

    

    SHARES
      OF
      COMMON STOCK

    

    OF

    

    URIGEN
      PHARMACEUTICALS, INC.

    

    

    Expires
      August 1, 2012

    

    
      	 No.:
              W-A -001 	
              Number
                of Shares:  14,000,000

            
	 Date
              of Issuance: August 1, 2007	 

    

    

    

    FOR
      VALUE
      RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
      Urigen Pharmaceuticals, Inc., a Delaware corporation (together with its
      successors and assigns, the “Issuer”), hereby certifies that
      Platinum-Montaur Life Sciences, LLC or its registered assigns is entitled to
      subscribe for and purchase, during the period specified in this Warrant, up
      to
      Fourteen Million (14,000,000) shares (subject to adjustment as hereinafter
      provided) of the duly authorized, validly issued, fully paid and non-assessable
      Common Stock of the Issuer, at an exercise price per share equal to the Warrant
      Price then in effect, subject, however, to the provisions and upon the terms
      and
      conditions hereinafter set forth.  Capitalized terms used in this
      Warrant and not otherwise defined herein shall have the respective meanings
      specified in Section 9 hereof.

    

    1.           Term.  The
      right to subscribe for and purchase shares of Warrant Stock represented hereby
      shall commence on August 1, 2007 and shall expire at 5:00 p.m., eastern time,
      on
      August 1, 2012 (such period being the “Term”).

    

    2.           Method
      of Exercise Payment; Issuance of New Warrant; Transfer and
      Exchange.

    

    (a)           Time
      of Exercise.  The purchase rights represented by this Warrant may
      be exercised in whole or in part at any time and from time to time during the
      Term commencing on August 1, 2007.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Method
      of Exercise.  The Holder hereof may exercise this Warrant, in
      whole or in part, by the surrender of this Warrant (with the exercise form
      attached hereto duly executed) at the principal office of the Issuer, and by
      the
      payment to the Issuer of an amount of consideration therefor equal to the
      Warrant Price in effect on the date of such exercise multiplied by the number
      of
      shares of Warrant Stock with respect to which this Warrant is then being
      exercised, payable at such Holder’s election (i) by certified or official bank
      check or by wire transfer to an account designated by the Issuer, (ii) by
“cashless exercise” in accordance with the provisions of subsection (c) of this
      Section 2, but only when a registration statement under the Securities Act
      providing for resale of all of the Warrant Stock is not then in effect, or
      (iii)
      by a combination of the foregoing methods of payment selected by the Holder
      of
      this Warrant.

    

    (c)           Cashless
      Exercise.  Notwithstanding any provisions herein to the contrary
      and commencing one (1) year following the Original Issue Date, if (i) the Per
      Share Market Value of one share of Common Stock is greater than the Warrant
      Price (at the date of calculation as set forth below) and (ii) a registration
      statement under the Securities Act providing for the resale of all of the
      Warrant Stock is not then in effect, in lieu of exercising this Warrant by
      payment of cash, the Holder may exercise this Warrant by a cashless exercise
      and
      shall receive the number of shares of Common Stock equal to an amount (as
      determined below) by surrender of this Warrant at the principal office of the
      Issuer together with the properly endorsed Notice of Exercise in which event
      the
      Issuer shall issue to the Holder a number of shares of Common Stock computed
      using the following formula:

    

    X
      = Y - (A)(Y)

                     B

    

    
      	
              Where

            	
              X
                =

            	
              the
                number of shares of Common Stock to be issued to the
                Holder.

            

    

    

    
      	
               

            	
              Y
                =

            	
              the
                number of shares of Common Stock purchasable upon exercise of all
                of the
                Warrant or, if only a portion of the Warrant is being exercised,
                the
                portion of the Warrant being
                exercised.

            

    

    

    
      	
               

            	
              A
                =

            	
              the
                Warrant Price.

            

    

    

    B
      =           the Per Share
      Market Value of one share of Common Stock.

    

    (d)           Issuance
      of Stock Certificates.  In the event of any exercise of the rights
      represented by this Warrant in accordance with and subject to the terms and
      conditions hereof, (i) certificates for the shares of Warrant Stock so purchased
      shall be dated the date of such exercise and delivered to the Holder hereof
      within a reasonable time, not exceeding three (3) Trading Days after such
      exercise (the “Delivery Date”) or, at the request of the Holder, issued
      and delivered to the Depository Trust Company (“DTC”) account on the
      Holder’s behalf via the Deposit Withdrawal Agent Commission System
      (“DWAC”) within a reasonable time, not exceeding three (3) Trading Days
      after such exercise, and the Holder hereof shall be deemed for all purposes
      to
      be the Holder of the shares of Warrant Stock so purchased as of the date of
      such
      exercise and (ii) unless this Warrant has expired, a new Warrant representing
      the number of shares of Warrant Stock, if any, with respect to which this
      Warrant shall not then have been exercised (less any amount thereof which shall
      have been canceled in payment or partial payment of the Warrant Price as
      hereinabove provided) shall also be issued to the Holder hereof at the Issuer’s
      expense within such time.

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (e)           Transferability
      of Warrant.  Subject to Section 2(g), this Warrant may be
      transferred by a Holder without the consent of the Issuer.  If
      transferred pursuant to this paragraph, this Warrant may be transferred on
      the
      books of the Issuer by the Holder hereof in person or by the Holder’s duly
      authorized attorney, upon surrender of this Warrant at the principal office
      of
      the Issuer, properly endorsed (by the Holder executing an assignment in the
      form
      attached hereto) and upon payment of any necessary transfer tax or other
      governmental charge imposed upon such transfer.  This Warrant is
      exchangeable at the principal office of the Issuer for Warrants for the purchase
      of the same aggregate number of shares of Warrant Stock, each new Warrant to
      represent the right to purchase such number of shares of Warrant Stock as the
      Holder hereof shall designate at the time of such exchange.  All
      Warrants issued on transfers or exchanges shall be dated the Original Issue
      Date
      and shall be identical with this Warrant except as to the number of shares
      of
      Warrant Stock issuable pursuant hereto.

    

    (f)           Continuing
      Rights of Holder.  The Issuer will, at the time of or at any time
      after each exercise of this Warrant, upon the request of the Holder hereof,
      acknowledge in writing the extent, if any, of its continuing obligation to
      afford to such Holder all rights to which such Holder shall continue to be
      entitled after such exercise in accordance with the terms of this Warrant,
      provided that if any such Holder shall fail to make any such request, the
      failure shall not affect the continuing obligation of the Issuer to afford
      such
      rights to such Holder.

    

    (g)           Compliance
      with Securities Laws.

    

    (i)           The
      Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
      and
      the shares of Warrant Stock to be issued upon exercise hereof are being acquired
      solely for the Holder’s own account and not as a nominee for any other party,
      and for investment, and that the Holder will not offer, sell or otherwise
      dispose of this Warrant or any shares of Warrant Stock to be issued upon
      exercise hereof except pursuant to an effective registration statement, or
      an
      exemption from registration, under the Securities Act and any applicable state
      securities laws.

    

    (ii)           Except
      as provided in paragraph (iii) below, this Warrant and all certificates
      representing shares of Warrant Stock issued upon exercise hereof shall be
      stamped or imprinted with a legend in substantially the following
      form:

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR URIGEN PHARMACEUTICALS, INC. SHALL HAVE RECEIVED AN
      OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
      ACT
      AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED.

    

    (iii)           The
      restrictions imposed by this subsection (g) upon the transfer of this Warrant
      or
      the shares of Warrant Stock to be purchased upon exercise hereof shall terminate
      (A) when such securities shall have been resold pursuant to an effective
      registration statement under the Securities Act, (B) upon the Issuer’s receipt
      of an opinion of counsel, in form and substance reasonably satisfactory to
      the
      Issuer, addressed to the Issuer to the effect that such restrictions are no
      longer required to ensure compliance with the Securities Act and state
      securities laws or (C) upon the Issuer’s receipt of other evidence reasonably
      satisfactory to the Issuer that such registration and qualification under the
      Securities Act and state securities laws are not required.  Whenever
      such restrictions shall cease and terminate as to any such securities, the
      Holder thereof shall be entitled to receive from the Issuer (or its transfer
      agent and registrar), without expense (other than applicable transfer taxes,
      if
      any), new Warrants (or, in the case of shares of Warrant Stock, new stock
      certificates) of like tenor not bearing the applicable legend required by
      paragraph (ii) above relating to the Securities Act and state securities
      laws.

    

    (h)           Buy
      In.

    

    In
      addition to any other rights
      available to the Holder, if the Issuer fails to cause its transfer agent to
      transmit to the Holder  a certificate or certificates representing the
      Warrant Stock pursuant to an exercise on or before the Delivery Date, and if
      after such date the Holder is required by its broker to purchase (in an open
      market transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by the Holder of the Warrant Stock which the Holder
      anticipated receiving upon such exercise (a “Buy-In”), then the Issuer
      shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total
      purchase price (including brokerage commissions, if any) for the shares of
      Common Stock so purchased exceeds (y) the amount obtained by multiplying (A)
      the
      number of shares of Warrant Stock that the Issuer was required to deliver to
      the
      Holder in connection with the exercise at issue times, (B) the price at which
      the sell order giving rise to such purchase obligation was executed, and (2)
      at
      the option of the Holder, either reinstate the portion of the Warrant and
      equivalent number of shares of Warrant Stock for which such exercise was not
      honored or deliver to the Holder the number of shares of Common Stock that
      would
      have been issued had the Issuer timely complied with its exercise and delivery
      obligations hereunder.  For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Issuer shall be required to pay the Holder
      $1,000.  The Holder shall provide the Issuer written notice indicating
      the amounts payable to the Holder in respect of the Buy-In, together with
      applicable confirmations and other evidence reasonably requested by the
      Issuer.  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 Issuer’s failure to timely deliver certificates representing
      shares of Common Stock upon exercise of this Warrant as required pursuant to
      the
      terms hereof.

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    3.           Stock
      Fully Paid; Reservation and Listing of Shares; Covenants.

    

    (a)           Stock
      Fully Paid.  The Issuer represents, warrants, covenants and agrees
      that all shares of Warrant Stock which may be issued upon the exercise of this
      Warrant or otherwise hereunder will, upon issuance, be duly authorized, validly
      issued, fully paid and non-assessable and free from all taxes, liens and charges
      created by or through Issuer.  The Issuer further covenants and agrees
      that during the period within which this Warrant may be exercised, the Issuer
      will at all times have authorized and reserved for the purpose of the issue
      upon
      exercise of this Warrant a number of shares of Common Stock equal to at least
      120% of the aggregate number of shares of Common Stock exercisable hereunder
      to
      provide for the exercise of this Warrant (without regard to limitations on
      exercisability set forth in Section 8).

    

    (b)           Reservation.  If
      any shares of Common Stock required to be reserved for issuance upon exercise
      of
      this Warrant or as otherwise provided hereunder require registration or
      qualification with any governmental authority under any federal or state law
      before such shares may be so issued, the Issuer will in good faith use its
      best
      efforts as expeditiously as possible at its expense to cause such shares to
      be
      duly registered or qualified.  If the Issuer shall list any shares of
      Common Stock on any securities exchange or market it will, at its expense,
      list
      thereon, maintain and increase when necessary such listing, of, all shares
      of
      Warrant Stock from time to time issued upon exercise of this Warrant or as
      otherwise provided hereunder, and, to the extent permissible under the
      applicable securities exchange’s rules, all unissued shares of Warrant Stock
      which are at any time issuable hereunder, so long as any shares of Common Stock
      shall be so listed.  The Issuer will also so list on each securities
      exchange or market, and will maintain such listing of, any other securities
      which the Holder of this Warrant shall be entitled to receive upon the exercise
      of this Warrant if at the time any securities of the same class shall be listed
      on such securities exchange or market by the Issuer.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (c)           Covenants.  The
      Issuer shall not by any action including, without limitation, amending the
      Certificate of Incorporation or the by-laws of the Issuer, or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other action, avoid or seek to avoid the observance
      or
      performance of any of the terms of this Warrant, but will at all times in good
      faith assist in the carrying out of all such terms and in the taking of all
      such
      actions as may be necessary or appropriate to protect the rights of the Holder
      hereof against dilution (to the extent specifically provided herein) or
      impairment.  Without limiting the generality of the foregoing, the
      Issuer will (i) not permit the par value, if any, of its Common Stock to exceed
      the then effective Warrant Price, (ii) not amend or modify any provision of
      the
      Certificate of Incorporation or by-laws of the Issuer in any manner that would
      adversely affect the rights of the Holders of the Warrants, (iii) take all
      such
      action as may be reasonably necessary in order that the Issuer may validly
      and
      legally issue fully paid and nonassessable shares of Common Stock, free and
      clear of any liens, claims, encumbrances and restrictions (other than as
      provided herein) upon the exercise of this Warrant, and (iv) use its best
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be reasonably
      necessary to enable the Issuer to perform its obligations under this
      Warrant.

    

    (d)           Loss,
      Theft, Destruction of Warrants.  Upon receipt of evidence
      satisfactory to the Issuer of the ownership of and the loss, theft, destruction
      or mutilation of any Warrant and, in the case of any such loss, theft or
      destruction, upon receipt of indemnity or security satisfactory to the Issuer
      or, in the case of any such mutilation, upon surrender and cancellation of
      such
      Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
      destroyed or mutilated Warrant, a new Warrant of like tenor and representing
      the
      right to purchase the same number of shares of Common Stock.

    

    4.           Adjustment
      of Warrant Price and Warrant Share Number.  The number of shares
      of Common Stock for which this Warrant is exercisable, and the price at which
      such shares may be purchased upon exercise of this Warrant, shall be subject
      to
      adjustment from time to time as set forth in this Section 4. The Issuer shall
      give the Holder notice of any event described below which requires an adjustment
      pursuant to this Section 4 in accordance with Section
      5.  Notwithstanding any adjustment hereunder, at no time shall the
      Warrant Price be greater than $0.18 per share, except if it is adjusted pursuant
      to Section 4(b)(iii).

    

    (a)           Recapitalization,
      Reorganization, Reclassification, Consolidation, Merger or
      Sale.

    

    (i)           In
      case the Issuer after the Original Issue Date shall do any of the following
      (each, a “Triggering Event”): (a) consolidate with or merge into any
      other Person and the Issuer shall not be the continuing or surviving corporation
      of such consolidation or merger, or (b) permit any other Person to consolidate
      with or merge into the Issuer and the Issuer shall be the continuing or
      surviving Person but, in connection with such consolidation or merger, any
      Capital Stock of the Issuer shall be changed into or exchanged for Securities
      of
      any other Person or cash or any other property, or (c) transfer all or
      substantially all of its properties or assets to any other Person, or (d) effect
      a capital reorganization or reclassification of its Capital Stock, then, and
      in
      the case of each such Triggering Event, proper provision shall be made so that,
      upon the basis and the terms and in the manner provided in this Warrant, the
      Holder of this Warrant shall be entitled upon the exercise hereof at any time
      after the consummation of such Triggering Event, to the extent this Warrant
      is
      not exercised prior to such Triggering Event, to receive at the Warrant Price
      in
      effect at the time immediately prior to the consummation of such Triggering
      Event in lieu of the Common Stock issuable upon such exercise of this Warrant
      prior to such Triggering Event, the Securities, cash and property to which
      such
      Holder would have been entitled upon the consummation of such Triggering Event
      if such Holder had exercised the rights represented by this Warrant immediately
      prior thereto (including the right to elect the type of consideration, if
      applicable), subject to adjustments (subsequent to such corporate action) as
      nearly equivalent as possible to the adjustments provided for elsewhere in
      this
      Section 4.  Unless the surviving entity in any such Triggering Event
      is a public company under the Securities Exchange Act of 1934, the common equity
      securities of which are traded or quoted on a national securities exchange
      or
      the OTC Bulletin Board (a “Qualifying Entity”), the Holder, at its
      option, shall be permitted to require that the Company pay to the Holder an
      amount equal to the Black-Scholes value of this Warrant.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (ii)           Notwithstanding
      anything contained in this Warrant to the contrary and so long as the surviving
      entity is a Qualifying Entity, the Issuer will not be deemed to have
      effected  any Triggering Event if, prior to the consummation thereof,
      each Person (other than the Issuer) which may be required to deliver any
      Securities, cash or property upon the exercise of this Warrant as provided
      herein shall assume, by written instrument delivered to the Holder of this
      Warrant and reasonably satisfactory to the Holder, (A) the obligations of the
      Issuer under this Warrant (and if the Issuer shall survive the consummation
      of
      such Triggering Event, such assumption shall be in addition to, and shall not
      release the Issuer from, any continuing obligations of the Issuer under this
      Warrant) and (B) the obligation to deliver to such Holder such shares of
      Securities, cash or property as, in accordance with the foregoing provisions
      of
      this subsection (a), such Holder shall be entitled to receive, and such Person
      shall have similarly delivered to such Holder, an opinion of counsel for such
      Person, which shall be reasonably satisfactory to the Holder, stating that
      this
      Warrant shall thereafter continue in full force and effect and the terms hereof
      (including, without limitation, all of the provisions of this subsection (a))
      shall be applicable to the Securities, cash or property which such Person may
      be
      required to deliver upon any exercise of this Warrant or the exercise of any
      rights pursuant hereto.

    

    (b)           Stock
      Dividends, Subdivisions and Combinations.  If at any time the
      Issuer shall:

    

    (i)           set
      a record date or take a record of the holders of its Common Stock for the
      purpose of entitling them to receive a dividend payable in, or other
      distribution of, shares of Common Stock,

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (ii)           subdivide
      its outstanding shares of Common Stock into a larger number of shares of Common
      Stock, or

    

    (iii)           combine
      its outstanding shares of Common Stock into a smaller number of shares of Common
      Stock,

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event would own or be entitled to receive after the
      happening of such event, and (2) the Warrant Price then in effect shall be
      adjusted to equal (A) the Warrant Price then in effect multiplied by the number
      of shares of Common Stock for which this Warrant is exercisable immediately
      prior to the adjustment divided by (B) the number of shares of Common Stock
      for
      which this Warrant is exercisable immediately after such
      adjustment.

    

    (c)           Certain
      Other Distributions.  If at any time the Issuer shall set a record
      date or take a record of the holders of its Common Stock for the purpose of
      entitling them to receive any divi­dend or other distribution
      of:

    

    (i)           cash
      (other than a cash dividend payable out of earnings or earned surplus legally
      available for the payment of dividends under the laws of the jurisdiction of
      incorporation of the Issuer),

    

    (ii)           any
      evidences of its indebtedness, any shares of stock of any class or any other
      securities or property of any nature whatsoever (other than cash, Common Stock
      Equivalents, Additional Shares of Common Stock or Permitted Issuances),
      or

    

    (iii)           any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of stock of any class or any other securities or
      property of any nature whatsoever (other than cash, Common Stock Equivalents,
      Additional Shares of Common Stock or Permitted Issuances),

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      shall
      be adjusted to equal the product of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such adjustment
      multiplied by a fraction (A) the numerator of which shall be the Per Share
      Market Value of Common Stock at the date of taking such record and (B) the
      denominator of which shall be such Per Share Market Value minus the amount
      allocable to one share of Common Stock of any such cash so distributable and
      of
      the fair value (as determined in good faith by the Board of Directors of the
      Issuer and supported by an opinion from an investment banking firm reasonably
      acceptable to the Holder) of any and all such evidences of indebtedness, shares
      of stock, other securities or property or warrants or other subscription or
      purchase rights so distributable, and (2) the Warrant Price then in effect
      shall
      be adjusted to equal (A) the Warrant Price then in effect multiplied by the
      number of shares of Common Stock for which this Warrant is exercisable
      immediately prior to the adjustment divided by (B) the number of shares of
      Common Stock for which this Warrant is exercisable immediately after such
      adjustment.  A reclassification of the Common Stock (other than a
      change in par value, or from par value to no par value or from no par value
      to
      par value) into shares of Common Stock and shares of any other class of stock
      shall be deemed a distribution by the Issuer to the holders of its Common Stock
      of such shares of such other class of stock within the meaning of this Section
      4(c) and, if the outstanding shares of Common Stock shall be changed into a
      larger or smaller number of shares of Common Stock as a 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 within the meaning
      of
      Section 4(b).

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (d)           Issuance
      of Additional Shares of Common Stock.

    

     

    (i)           In
      the event the Issuer shall at any time following the Original Issue Date issue
      any Additional Shares of Common Stock (otherwise than as provided in the
      foregoing subsections (a) through (c) of this Section 4), at a price per share
      less than the Warrant Price then in effect or without consideration, then the
      Warrant Price upon each such issuance shall be adjusted to the price equal
      to
      the consideration per share paid for such Additional Shares of Common
      Stock.

    

    (ii)           No
      adjustment of the Warrant Price shall be made under paragraph (i) of
      Section 4(d) upon the issuance of any Additional Shares of Common Stock
      which are issued pursuant to the exercise or conversion of any Common Stock
      Equivalents if any such adjustment shall previously have been made upon the
      issuance of such Common Stock Equivalents, or upon the issuance of any warrant
      or other rights therefor pursuant to Sections 4(e) or 4(f), or in connection
      with any Permitted Issuances.

    

    (e)           Issuance
      of Warrants or Other Rights.  If at any time the Issuer shall take
      a record of the Holders of its Common Stock for the purpose of entitling them
      to
      receive a distribution of, or shall in any manner (whether directly or by
      assumption in a merger in which the Issuer is the surviving corporation) issue
      or sell any warrants or options, whether or not immediately exercisable, and
      the
      Warrant Consideration (hereafter defined) per share for which Common Stock
      is
      issuable upon the exercise of such warrant or option shall be less than the
      Warrant Price in effect immediately prior to the time of such issue or sale,
      then the Warrant Price then in effect immediately prior to the time of such
      issue or sale, shall be adjusted to the price equal to the Warrant Consideration
      per share for which Common Stock is issuable upon the exercise of such warrant
      or option.    No adjustments of the Warrant Price then in
      effect shall be made upon the actual issue of such Common Stock or of such
      Common Stock Equivalents upon exercise of such warrants or other rights or
      upon
      the actual issue of such Common Stock upon such conversion or exchange of such
      Common Stock Equivalents if adjustment has been previously made pursuant to
      this
      section.  No adjustments of the Warrant Price shall be made under this
      Section 4(e) in connection with any Permitted Issuances.

    

    
      
        
        

      

      
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    (f)           Issuance
      of Common Stock Equivalents.  If at any time prior the Issuer
      shall take a record of the Holders of its Common Stock for the purpose of
      entitling them to receive a distribution of, or shall in any manner (whether
      directly or by assumption in a merger in which the Issuer is the surviving
      corporation) issue or sell, any Common Stock Equivalents, whether or not the
      rights to exchange or convert thereunder are immediately exercisable, and the
      Common Stock Equivalent Consideration (hereafter defined) per share for which
      Common Stock is issuable upon such conversion or exchange shall be less than
      the
      Warrant Price in effect immediately prior to the time of such issue or sale,
      or
      if, after any such issuance of Common Stock Equivalents, the price per share
      for
      which Additional Shares of Common Stock may be issuable thereafter is amended
      or
      adjusted, and such price as so amended shall be less than the applicable
      Conversion Price in effect at the time of such amendment or adjustment, then
      the
      Warrant Price then in effect immediately prior to the time of such issue or
      sale, shall upon each such issuance or sale be adjusted to the price equal
      to
      the Common Stock Equivalent Consideration per share paid for such Common Share
      Equivalents.  No further adjustment of the Warrant Price then in
      effect shall be made under this Section 4(f) upon the issuance of any Common
      Stock Equivalents which are issued pursuant to the exercise of any warrants
      or
      other subscription or purchase rights therefor, if any such adjustment shall
      previously have been made upon the issuance of such warrants or other rights
      pursuant to Section 4(e).  No further adjustments of the Warrant Price
      then in effect shall be made upon the actual issue of such Common Stock upon
      conversion or exchange of such Common Stock Equivalents if adjustment shall
      have
      previously been made pursuant to this section.  No adjustments of the
      Warrant Price shall be made under this Section 4(f) in connection with any
      Permitted Issuances.

    

    (g)           Superseding
      Adjustment.  If, at any time after any adjustment of the Warrant
      Price then in effect shall have been made pursuant to Section 4(e) or Section
      4(f) as the result of any issuance of warrants, other rights or Common Stock
      Equivalents, and (i) such warrants or other rights, or the right of conversion
      or exchange in such other Common Stock Equivalents, shall expire, and all or
      a
      portion of such warrants or other rights, or the right of conversion or exchange
      with respect to all or a portion of such other Common Stock Equivalents, as
      the
      case may be shall not have been exercised, or (ii) the consideration per share
      for which shares of Common Stock are issuable pursuant to such Common Stock
      Equivalents, shall be increased solely by virtue of provisions therein contained
      for an automatic increase in such consideration per share upon the occurrence
      of
      a specified date or event, then for each outstanding Warrant such previous
      adjustment shall be rescinded and annulled and the Additional Shares of Common
      Stock which were deemed to have been issued by virtue of the computation made
      in
      connection with the adjustment so rescinded and annulled shall no longer be
      deemed to have been issued by virtue of such computation.  Upon the
      occurrence of an event set forth in this Section 4(g) above, there shall be
      a recomputation made of the effect of such Common Stock Equivalents on the
      basis
      of: (i) treating the number of Additional Shares of Common Stock or other
      property, if any, theretofore actually issued or issuable pursuant to the
      previous exercise of any such warrants or other rights or any such right of
      conversion or exchange, as having been issued on the date or dates of any such
      exercise and for the consideration actually received and receivable therefor,
      and (ii) treating any such Common Stock Equivalents which then remain
      outstanding as having been granted or issued immediately after the time of
      such
      increase of the consideration per share for which shares of Common Stock or
      other property are issuable under such Common Stock Equivalents; whereupon
      a new
      adjustment of the Warrant Price then in effect shall be made, which new
      adjustment shall supersede the previous adjustment so rescinded and
      annulled.

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (h)           Purchase
      of Common Stock by the Issuer.  If the Issuer at any time while
      this Warrant is outstanding shall, directly or indirectly through a Subsidiary
      or otherwise, purchase, redeem or otherwise acquire any shares of Common Stock
      at a price per share greater than the Per Share Market Value, then the Warrant
      Price upon each such purchase, redemption or acquisition shall be adjusted
      to
      that price determined by multiplying such Warrant Price by a fraction (i) the
      numerator of which shall be the number of shares of Common Stock outstanding
      immediately prior to such purchase, redemption or acquisition minus the number
      of shares of Common Stock which the aggregate consideration for the total number
      of such shares of Common Stock so purchased, redeemed or acquired would purchase
      at the Per Share Market Value; and (ii) the denominator of which shall be the
      number of shares of Common Stock outstanding immediately after such purchase,
      redemption or acquisition.  For the purposes of this subsection (h),
      the date as of which the Per Share Market Price shall be computed shall be
      the
      earlier of (x) the date on which the Issuer shall enter into a firm contract
      for
      the purchase, redemption or acquisition of such Common Stock, or (y) the date
      of
      actual purchase, redemption or acquisition of such Common Stock.  For
      the purposes of this subsection (h), a purchase, redemption or acquisition
      of a
      Common Stock Equivalent shall be deemed to be a purchase of the underlying
      Common Stock, and the computation herein required shall be made on the basis
      of
      the full exercise, conversion or exchange of such Common Stock Equivalent on
      the
      date as of which such computation is required hereby to be made, whether or
      not
      such Common Stock Equivalent is actually exercisable, convertible or
      exchangeable on such date.

    

    (i)           Other
      Provisions applicable to Adjustments under this Section.  The
      following provisions shall be applicable to the making of adjustments of the
      number of shares of Common Stock for which this Warrant is exercisable and
      the
      Warrant Price then in effect provided for in this Section 4:

    

    (i)           Computation
      of Consideration.  To the extent that any Additional Shares of
      Common Stock or any Common Stock Equivalents (or any warrants or other rights
      therefor) shall be issued for cash consideration, the consideration received
      by
      the Issuer therefor shall be the amount of the cash received by the Issuer
      therefor, or, if such Additional Shares of Common Stock or Common Stock
      Equivalents are offered by the Issuer for subscription, the subscription price,
      or, if such Additional Shares of Common Stock or Common Stock Equivalents are
      sold to underwriters or dealers for public offering without a subscription
      offering, the initial public offering price (in any such case subtracting any
      amounts paid or receivable for accrued interest or accrued dividends and without
      taking into account any compensation, discounts or expenses paid or incurred
      by
      the Issuer for and in the underwriting of, or otherwise in connection with,
      the
      issuance thereof).  To the extent that such issuance shall be for a
      consideration other than cash, then, except as herein otherwise expressly
      provided, the amount of such consideration shall be deemed to be the fair value
      of such consideration at the time of such issuance as mutually de­termined
      in good faith by the Board of Directors of the Issuer and the Majority
      Holders.  The consideration for any Additional Shares of Common Stock
      issuable pursuant to any warrants or other rights to subscribe for or purchase
      the same shall be the consideration received by the Issuer for issuing such
      warrants or other rights divided by the number of shares of Common Stock
      issuable upon the exercise of such warrant or right plus the additional
      con­sideration payable to the Issuer upon exercise of such warrant or other
      right for one share of Common Stock (together the “Warrant
      Consideration”).  The consideration for any Additional Shares of
      Common Stock issuable pursuant to the terms of any Common Stock Equivalents
      shall be the consideration received by the Issuer for issuing such Common Stock
      Equivalent, divided by the number of shares of Common Stock issuable upon the
      conversion or other exercise of such Common Stock Equivalent, plus the
      additional consideration, if any, payable to the Issuer upon the exercise of
      the
      right of conversion or exchange in such Common Stock Equivalent for one share
      of
      Common Stock (together the “Common Stock Equivalent
      Consideration”).  In case of the issuance at any time of any
      Additional Shares of Common Stock or Common Stock Equivalents in payment or
      satisfaction of any dividends upon any class of stock other than Common Stock,
      the Issuer shall be deemed to have received for such Additional Shares of Common
      Stock or Common Stock Equivalents a consideration equal to the amount of such
      dividend so paid or satisfied.

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (ii)           Adjustments
      of Number of Shares.  In connection with an adjustment of the
      Warrant Price pursuant to Sections (d), (e), (f), (g) and (h) of this
      Section 4, the number of shares of Common Stock issuable hereunder shall be
      increased such that the aggregate Warrant Price payable hereunder, after taking
      into account the decrease in the Exercise Price, shall be equal to the aggregate
      Warrant Price prior to such adjustment.

    

    (iii)           Fractional
      Interests.  In computing adjustments under this Section 4,
      fractional interests in Common Stock shall be taken into account to the nearest
      one one-hundredth (1/100th) of a
      share.

    

    (iv)           When
      Adjustment Not Required.  If the Issuer shall take a record of the
      holders of its Common Stock for the purpose of entitling them to receive a
      dividend or distribution or subscription or purchase rights and shall,
      thereafter and before the distribution to stockholders thereof, legally abandon
      its plan to pay or deliver such dividend, distribution, subscription or purchase
      rights, then thereafter no adjustment shall be required by reason of the taking
      of such record and any such adjustment previously made in respect thereof shall
      be rescinded and annulled.

    

    (j)           Form
      of Warrant after Adjustments.  The form of this Warrant need not
      be changed because of any adjustments in the Warrant Price or the number and
      kind of securities purchasable upon exercise of this Warrant.

    

    
      
        
        

      

      
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    (k)           Escrow
      of Property.  If after any property becomes distributable pursuant
      to this Section 4 by reason of the taking of any record of the holders of Common
      Stock, but prior to the occurrence of the event for which such record is taken,
      and the Holder exercises this Warrant, such property shall be held in escrow
      for
      the Holder by the Issuer to be distributed to the Holder upon and to the extent
      that the event actually takes place, upon payment of the then current Warrant
      Price.  Notwithstanding any other provision to the contrary herein, if
      the event for which such record was taken fails to occur or is rescinded, then
      such escrowed property shall be returned to the Issuer.

    

    5.           Notice
      of Adjustments.  Whenever the Warrant Price or Warrant Share
      Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
      Section 5, each an “adjustment”), the Issuer shall cause its Chief
      Financial Officer to prepare and execute a certificate setting forth, in
      reasonable detail, the event requiring the adjustment, the amount of the
      adjustment, the method by which such adjustment was calculated (including a
      description of the basis on which the Board made any determination hereunder),
      and the Warrant Price and Warrant Share Number after giving effect to such
      adjustment, and shall cause copies of such certificate to be delivered to the
      Holder of this Warrant promptly after each adjustment.  Any dispute
      between the Issuer and the Holder of this Warrant with respect to the matters
      set forth in such certificate may at the option of the Holder of this Warrant
      be
      submitted to one of the national accounting firms currently known as the “big
      four” selected by the Holder, provided that the Issuer shall have ten
      (10) days after receipt of notice from such Holder of its selection of such
      firm
      to object thereto, in which case such Holder shall select another such firm
      and
      the Issuer shall have no such right of objection.  The firm selected
      by the Holder of this Warrant as provided in the preceding sentence shall be
      instructed to deliver a written opinion as to such matters to the Issuer and
      such Holder within thirty (30) days after submission to it of such
      dispute.  Such opinion shall be final and binding on the parties
      hereto.

    

    6.           Fractional
      Shares.  No fractional shares of Warrant Stock will be issued in
      connection with any exercise hereof, but in lieu of such fractional shares,
      the
      Issuer shall at its option either (a) make a cash payment therefor equal in
      amount to the product of the applicable fraction multiplied by the Per Share
      Market Value then in effect or (b) issue one whole share in lieu of such
      fractional share.

    

    7.           Bylaw
      Limitations.  Notwithstanding anything to the contrary contained
      herein, no adjustment shall be made to the Warrant Price or the number of
      Warrant Shares to the extent such adjustment would violate Section 48 of the
      Bylaws of the Company in effect on the date hereof.  Upon and after
      the amendment or repeal of said Section 48 of the Bylaws in accordance with
      the
      terms of the Purchase Agreement, this Section 7 shall be of no further force
      and
      effect.

    

    
      
        
        

      

      
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    8.  Certain
      Exercise Restrictions.

     

    (a)           Notwithstanding
      anything to the contrary set forth in this Warrant, at no time may a holder
      of
      this Warrant exercise this Warrant if the number of shares of Common Stock
      to be
      issued pursuant to such exercise would exceed, when aggregated with all other
      shares of Common Stock owned by such holder at such time, the number of shares
      of Common Stock which would result in such holder beneficially owning (as
      determined in accordance with Section 13(d) of the Securities Exchange Act
      of 1934, as amended, and the rules thereunder) in excess of 4.999% of all of
      the
      Common Stock outstanding at such time; provided, however, that
      upon a holder of this Warrant providing the Issuer with sixty-one (61) days
      notice (pursuant to Section 13 hereof) (the "Waiver Notice") that such holder
      would like to waive this Section 7(a) with regard to any or all shares of
      Common Stock issuable upon exercise of this Warrant, this Section 7(a) will
      be
      of no force or effect with regard to all or a portion of the Warrant referenced
      in the Waiver Notice; provided, further, that this provision shall be of no
      further force or effect during the sixty-one (61) days immediately preceding
      the
      expiration of the term of this Warrant.

     

    (b)           Notwithstanding
      anything to the contrary set forth in this Warrant, at no time may a holder
      of
      this Warrant exercise this Warrant if the number of shares of Common Stock
      to be
      issued pursuant to such exercise would exceed, when aggregated with all other
      shares of Common Stock owned by such holder at such time, the number of shares
      of Common Stock which would result in such holder beneficially owning (as
      determined in accordance with Section 13(d) of the Securities Exchange Act
      of 1934, as amended, and the rules thereunder) in excess of 9.999% of all of
      the
      Common Stock outstanding at such time; provided, however, that upon a holder
      of
      this Warrant providing the Issuer with sixty-one (61) days notice (pursuant
      to
      Section 13 hereof) (the “Waiver Notice”) that such holder would like to
      waive this Section 8 with regard to any or all shares of Common Stock
      issuable upon exercise of this Warrant, this Section 8 will be of no force
      or effect with regard to all or a portion of the Warrant referenced in the
      Waiver Notice; provided, further, that this provision shall be of no further
      force or effect during the sixty-one (61) days immediately preceding the
      expiration of the term of this Warrant.

    

    9.           Definitions.  For
      the purposes of this Warrant, the following terms have the following
      meanings:

    

    “Additional
      Shares of Common Stock” means all shares of Common Stock issued by the
      Issuer after the Original Issue Date, and all shares of Other Common, if any,
      issued by the Issuer after the Original Issue Date, except for Permitted
      Issuances.

    

    “Board”
      shall mean the Board of Directors of the Issuer.

    

    “Capital
      Stock” means and includes (i) any and all shares, interests, participations
      or other equivalents of or interests in (however designated) corporate stock,
      including, without limitation, shares of preferred or preference stock, (ii)
      all
      partnership interests (whether general or limited) in any Person which is a
      partnership, (iii) all membership interests or limited liability company
      interests in any limited liability company, and (iv) all equity or ownership
      interests in any Person of any other type.

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    “Certificate
      of Incorporation” means the Amended and Restated Certificate of
      Incorporation of the Issuer as in effect on the Original Issue Date, and as
      hereafter from time to time amended, modified, supplemented or restated in
      accordance with the terms hereof and thereof and pursuant to applicable
      law.

    

    “Common
      Stock” means the Common Stock, par value $.001 per share, of the Issuer and
      any other Capital Stock into which such stock may hereafter be
      changed.

    

    “Common
      Stock Equivalent” means any Convertible Security or warrant, option or other
      right to subscribe for or purchase any Additional Shares of Common Stock or
      any
      Convertible Security.

    

    “Common
      Stock Equivalent Consideration” has the meaning specified in Section 4
      (i) (i) hereof.

    

    “Convertible
      Securities” means evidences of Indebtedness, shares of Capital Stock or
      other Securities which are or may be at any time convertible into or
      exchangeable for Additional Shares of Common Stock.  The term
“Convertible Security” means one of the Convertible Securities.

    

    “Governmental
      Authority” means any governmental, regulatory or self-regulatory entity,
      department, body, official, authority, commission, board, agency or
      instrumentality, whether federal, state or local, and whether domestic or
      foreign.

    

    “Holders”
      mean the Persons who shall from time to time own any Warrant.  The
      term “Holder” means one of the Holders.

    

    “Independent
      Appraiser” means a nationally recognized or major regional investment
      banking firm or firm of independent certified public accountants of recognized
      standing (which may be the firm that regularly examines the financial statements
      of the Issuer) that is regularly engaged in the business of appraising the
      Capital Stock or assets of corporations or other entities as going concerns,
      and
      which is not affiliated with either the Issuer or the Holder of any
      Warrant.

    

    “Issuer”
      means Urigen Pharmaceuticals, Inc., a Delaware corporation, and its
      successors.

    

    “Majority
      Holders” means at any time the Holders of Warrants exercisable for a
      majority of the shares of Warrant Stock issuable under the Warrants at the
      time
      outstanding.

    

    
      
        
        

      

      
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    “Original
      Issue Date” means August 1, 2007.

    

    “OTC
      Bulletin Board” means the
      over-the-counter electronic bulletin board.

    

    “Other
      Common” means any other Capital Stock of the Issuer of any class which shall
      be authorized at any time after the date of this Warrant (other than Common
      Stock) and which shall have the right to participate in the distribution of
      earnings and assets of the Issuer without limitation as to amount.

    

    “Outstanding
      Common Stock”
means, at any given time, the aggregate amount of outstanding shares of
      Common
      Stock, assuming full exercise, conversion or exchange (as applicable) of all
      options, warrants and other Securities which are convertible into or exercisable
      or exchangeable for, and any right to subscribe for, shares of Common Stock
      that
      are outstanding at such time.

    

    “Permitted
      Issuances” means (a) shares of Common Stock or options to employees,
      officers or directors of the Issuer pursuant to any stock or option plan duly
      adopted by a majority of the non-employee members of the Board of Directors
      of
      the Issuer or a majority of the members of a committee of non-employee directors
      established for such purpose, (b) securities upon the exercise or exchange
      of or
      conversion of any securities issued hereunder and/or securities exercisable
      or
      exchangeable for or convertible into shares of Common Stock issued and
      outstanding on the Original Issue Date, provided that such securities have
      not
      been amended since the Original Issue Date to increase the number of such
      securities or to decrease the exercise, exchange or conversion price of any
      such
      securities, (c) securities issued pursuant to acquisitions or strategic
      transactions (including license agreements), provided any such issuance shall
      only be to a Person which is, itself or through its subsidiaries, an operating
      company in a business synergistic with the business of the Issuer and in which
      the Issuer receives benefits in addition to the investment of funds, but shall
      not include a transaction in which the Issuer is issuing securities primarily
      for the purpose of raising capital or to an entity whose primary business is
      investing in securities and (d) securities issued to the Holder pursuant to
      the
      Purchase Agreement (or securities issued on conversion or exercise of such
      securities).

    

    “Person”
      means an individual, corporation, limited liability company, partnership, joint
      stock company, trust, unincorporated organization, joint venture, Governmental
      Authority or other entity of whatever nature.

    

    “Per
      Share Market Value” means on any particular date (a) the last trading price
      on any national securities exchange on which the Common Stock is listed, or,
      if
      there is no such price, the closing bid price for a share of Common Stock in
      the
      over-the-counter market, as reported by the OTC Bulletin Board or in the
      National Quotation Bureau Incorporated or similar organization or agency
      succeeding to its functions of reporting prices) at the close of business on
      such date, or (b) if the Common Stock is not then reported by the OTC Bulletin
      Board or the National Quotation Bureau Incorporated (or similar organization
      or
      agency succeeding to its functions of reporting prices), then the average of
      the
“Pink Sheet” quotes for the Common Stock on such date, or (c) if the Common
      Stock is not then publicly traded the fair market value of a share of Common
      Stock on such date as determined by the Board in good faith; provided,
however, that the Majority Holders, after receipt of the determination
      by
      the Board, shall have the right to select, jointly with the Issuer, an
      Independent Appraiser, in which case, the fair market value shall be the
      determination by such Independent Appraiser; and provided, further
      that all determinations of the Per Share Market Value shall be appropriately
      adjusted for any stock dividends, stock splits or other similar transactions
      during the period between the date as of which such market value was required
      to
      be determined and the date it is finally determined.  The
      determination of fair market value shall be based upon the fair market value
      of
      the Issuer determined on a going concern basis as between a willing buyer and
      a
      willing seller and taking into account all relevant factors determinative of
      value, and shall be final and binding on all parties.  In determining
      the fair market value of any shares of Common Stock, no consideration shall
      be
      given to any restrictions on transfer of the Common Stock imposed by agreement
      or by federal or state securities laws, or to the existence or absence of,
      or
      any limitations on, voting rights.

    

    
      
        
        

      

      
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    “Purchase
      Agreement” means the Series B Convertible Preferred Stock Purchase Agreement
      dated as of July 31, 2007 among the Issuer and the investors a party
      thereto.

    

    “Securities”
      means any debt or equity securities of the Issuer, whether now or hereafter
      authorized, any instrument convertible into or exchangeable for Securities
      or a
      Security, and any option, warrant or other right to purchase or acquire any
      Security.  “Security” means one of the Securities.

    

    “Securities
      Act” means the Securities Act of 1933, as amended, or any similar federal
      statute then in effect.

    

    “Subsidiary”
      means any corporation at least 50% of whose outstanding Voting Stock, and a
      limited liability company at least 50% of whose membership interests, shall
      at
      the time be owned directly or indirectly by the Issuer or by one or more of
      its
      Subsidiaries.

    

    “Term”
      has the meaning specified in Section 1 hereof.

    

    “Trading
      Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin
      Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board,
      a day
      on which the Common Stock is quoted in the over-the-counter market as reported
      by the National Quotation Bureau Incorporated (or any similar organization
      or
      agency succeeding its functions of reporting prices); provided,
however, that in the event that the Common Stock is not listed or
      quoted
      as set forth in (a) or (b) hereof, then Trading Day shall mean any day except
      Saturday, Sunday and any day which shall be a legal holiday or a day on which
      banking institutions in the State of New York are authorized or required by
      law
      or other government action to close.

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    “Voting
      Stock” means, as applied to the Capital Stock of any corporation, Capital
      Stock of any class or classes (however designated) having ordinary voting power
      for the election of a majority of the members of the Board of Directors (or
      other governing body) of such corporation, other than Capital Stock having
      such
      power only by reason of the happening of a contingency.

    

    “Warrants”
      means the Warrants issued and sold pursuant to the Purchase Agreement,
      including, without limitation, this Warrant, and any other warrants of like
      tenor issued in substitution or exchange for any thereof pursuant to the
      provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other
      Warrants.

    

    “Warrant
      Consideration” has the
      meaning specified in Section 4(i)(i) hereof.

    

    “Warrant
      Price” initially means U.S. $0.18, as such price may be adjusted from time
      to time as shall result from the adjustments specified in this Warrant,
      including Section 4 hereto.

    

    “Warrant
      Share Number” means at any time the aggregate number of shares of Warrant
      Stock which may at such time be purchased upon exercise of this Warrant, after
      giving effect to all prior adjustments and increases to such number made or
      required to be made under the terms hereof.

    

    “Warrant
      Stock” means Common Stock issuable upon exercise of any Warrant or Warrants
      or otherwise issuable pursuant to any Warrant or Warrants.

    

    10.           Other
      Notices.  In case at any time:

    

    
      	
               

            	
              (A)

            	
              the
                Issuer shall make any distributions to the holders of Common Stock;
                or

            

    

    

    
      	
               

            	
              (B)

            	
              the
                Issuer shall authorize the granting to all holders of its Common
                Stock of
                rights to subscribe for or purchase any shares of Capital Stock of
                any
                class or of any Common Stock Equivalents or other rights;
                or

            

    

    

    
      	
               

            	
              (C)

            	
              there
                shall be any reclassification of the Capital Stock of the Issuer;
                or

            

    

     

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    
 

    
      	
               

            	
              (D)

            	
              there
                shall be any capital reorganization by the Issuer;
                or

            

    

    

    
      	
               

            	
              (E)

            	
              there
                shall be any (i) consolidation or merger involving the Issuer or
                (ii)
                sale, transfer or other disposition of all or substantially all of
                the
                Issuer’s property, assets or business (except a merger or other
                reorganization in which the Issuer shall be the surviving corporation
                and
                its shares of Capital Stock shall continue to be outstanding and
                unchanged
                and except a consolidation, merger, sale, transfer or other disposition
                involving a wholly-owned Subsidiary);
                or

            

    

    

    
      	
               

            	
              (F)

            	
              there
                shall be a voluntary or involuntary dissolution, liquidation or winding-up
                of the Issuer or any partial liquidation of the Issuer or distribution
                to
                holders of Common Stock;

            

    

    

    then,
      in
      each of such cases, the Issuer shall give written notice to the Holder of the
      date on which (i) the books of the Issuer shall close or a record shall be
      taken
      for such dividend, distribution or subscription rights or (ii) such
      reorganization, reclassification, consolidation, merger, disposition,
      dissolution, liquidation or winding-up, as the case may be, shall take
      place.  Such notice also shall specify the date as of which the
      holders of Common Stock of record shall participate in such dividend,
      distribution or subscription rights, or shall be entitled to exchange their
      certificates for Common Stock for securities or other property deliverable
      upon
      such reorganization, reclassification, consolidation, merger, disposition,
      dissolution, liquidation or winding-up, as the case may be.  Such
      notice shall be given at least twenty (20) days prior to the action in question
      and not less than twenty (20) days prior to the record date or the date on
      which
      the Issuer’s transfer books are closed in respect thereto.  The Holder
      shall have the right to send two (2) representatives selected by it to each
      meeting, who shall be permitted to attend, but not vote at, such meeting and
      any
      adjournments thereof.  This Warrant entitles the Holder to receive
      copies of all financial and other information distributed or required to be
      distributed to the holders of the Common Stock.

    

    11.           Amendment
      and Waiver.  Any term, covenant, agreement or condition in this
      Warrant may be amended, or compliance therewith may be waived (either generally
      or in a particular instance and either retroactively or prospectively), by
      a
      written instrument or written instruments executed by the Issuer and the
      Majority Holders; provided, however, that no such amendment or
      waiver shall reduce the Warrant Share Number, increase the Warrant Price,
      shorten the period during which this Warrant may be exercised or modify any
      provision of this Section 11 without the consent of the Holder of this
      Warrant.

    

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    12.           Governing
      Law.  THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
      ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
      PRINCIPLES OF CONFLICTS OF LAW.

    

    13.           Notices.  Any
      and all notices or other communications or deliveries required or permitted
      to
      be provided hereunder shall be in writing and shall be deemed given and
      effective on the earlier of (i) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile telephone number
      specified for notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii)
      the Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile telephone number specified for
      notice later than 5:00 p.m., eastern time, on any date and earlier than 11:59
      p.m., eastern time, on such date, (iii) the Trading Day following the date
      of
      mailing, if sent by nationally recognized overnight courier service or (iv)
      actual receipt by the party to whom such notice is required to be
      given.  The addresses for such communications shall be with respect to
      the Holder of this Warrant or of Warrant Stock issued pursuant hereto, addressed
      to such Holder at its last known address or facsimile number appearing on the
      books of the Issuer maintained for such purposes, or with respect to the Issuer,
      addressed to:

    

    Urigen
      Pharmaceuticals,
      Inc.

    875
      Mahler Road, Suite
      235

    Burlingame,
      California
      94010

    Attention:
      William J.
      Garner

    Tel.
      No.: (650) 259-0239

    Fax
      No.:  (650) 259-0901 and
      (866) 816-1107

    

    with
      a
      copy to:

    

    Sichenzia
      Ross Friedman Ference
      LLP

    61
      Broadway, 32nd Floor

    New
      York,
      NY 10006

    Attention:
      Thomas Rose,
      Esq.

    Tel.
      No.:  (212)
      930-9700

    Fax
      No.:  (212) 930-9725

    

    Copies
      of
      notices to the Holder shall be sent to Burak Anderson & Melloni, 30 Main
      Street, Burlington, Vermont 05402, Attention: Shane W. McCormack, Tel No.:
      (802)
      862-0500, Fax No.: (802) 862-8176.  Any party hereto may from time to
      time change its address for notices by giving at least ten (10) days written
      notice of such changed address to the other party hereto.

    

    14.           Warrant
      Agent.  The Issuer may, by written notice to each Holder of this
      Warrant, appoint an agent having an office in New York, New York for the purpose
      of issuing shares of Warrant Stock on the exercise of this Warrant pursuant
      to
      subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to
      subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
      subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter
      any
      such issuance, exchange or replacement, as the case may be, shall be made at
      such office by such agent.

    

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    15.           Remedies.  The
      Issuer stipulates that the remedies at law of the Holder of this Warrant in
      the
      event of any default or threatened default by the Issuer in the performance
      of
      or compliance with any of the terms of this Warrant are not and will not be
      adequate and that, to the fullest extent permitted by law, 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.

    

    16.           Successors
      and Assigns.  This Warrant and the rights evidenced hereby shall
      inure to the benefit of and be binding upon the successors and assigns of the
      Issuer, the Holder hereof and (to the extent provided herein) the Holders of
      Warrant Stock issued pursuant hereto, and shall be enforceable by any such
      Holder or Holder of Warrant Stock.

    

    17.           Modification
      and Severability.  If, in any action before any court or agency
      legally empowered to enforce any provision contained herein, any provision
      hereof is found to be unenforceable, then such provision shall be deemed
      modified to the extent necessary to make it enforceable by such court or
      agency.  If any such provision is not enforceable as set forth in the
      preceding sentence, the unenforceability of such provision shall not affect
      the
      other provisions of this Warrant, but this Warrant shall be construed as if
      such
      unenforceable provision had never been contained herein.

    

    18.           Headings.  The
      headings of the Sections of this Series A Warrant are for convenience of
      reference only and shall not, for any purpose, be deemed a part of this
      Warrant.

    

    IN
      WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
      first above written.

    

    
      	 	
              URIGEN
                PHARMACEUTICALS, INC.

            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Martin
              E.
              Shmagin	 
	 	 	Name:  Martin
              E.
              Shmagin	 
	 	 	Title:
              Chief Financial
              Officer	 
	 	 	 	 

    

     

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    SERIES
      A
      WARRANT

    EXERCISE
      FORM

    

    URIGEN
      PHARMACEUTICALS, INC.

    

    

    The
      undersigned _______________, pursuant to the provisions of the within Warrant,
      hereby elects to purchase _____ shares of Common Stock of Urigen
      Pharmaceuticals, Inc. covered by the within Warrant.

    

    
      	 Dated:
              _________________                                                                	 Signature                    ___________________________
	 	 Address                      ___________________________
	 	
               
                ___________________________

            

    

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of Exercise: _________________________

    

    The
      undersigned is an “accredited investor” as defined in Regulation D under the
      Securities Act of 1933, as amended.

     

    
      	
               

            	
              The
                undersigned intends that payment of the Warrant Price shall be made
                as
                (check one):

            

    

     

    Cash
      Exercise         
_______

     

    Cashless
      Exercise  _______

     

    If
      the
      Holder has elected a Cash Exercise, the Holder shall pay the sum of $________
      by
      certified or official bank check (or via wire transfer) to the Issuer in
      accordance with the terms of the Warrant.

     

    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 ___________.

     

    X
      = Y -
(A)(Y)

                 
      B

    

    Where:

    

    The
      number of shares of Common Stock to be issued to the Holder
      __________________(“X”).

    

    The
      number of shares of Common Stock purchasable upon exercise of all of the Warrant
      or, if only a portion of the Warrant is being exercised, the portion of the
      Warrant being exercised ___________________________ (“Y”).

    

    The
      Warrant Price ______________ (“A”).

    

    The
      Per
      Share Market Value of one share of Common
      Stock  _______________________ (“B”).

    

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    

    ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the within Warrant and all rights evidenced thereby and
      does
      irrevocably constitute and appoint _____________, attorney, to transfer the
      said
      Warrant on the books of the within named corporation.

     

    
      
        	
                Dated:
                  _________________

              	
                Signature
                  ___________________________

              
	 	
                Address
                  ___________________________

              
	 	
                ___________________________

              

      

       

      PARTIAL
        ASSIGNMENT

    

    

    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the right to purchase _________ shares of Warrant Stock
      evidenced by the within Warrant together with all rights therein, and does
      irrevocably constitute and appoint ___________________, attorney, to transfer
      that part of the said Warrant on the books of the within named
      corporation.

     

    
      
        	
                Dated:
                  _________________

              	
                Signature
                  ___________________________

              
	 	
                Address
                  ___________________________

              
	 	
                ___________________________

              

      

    

    

    FOR
      USE
      BY THE ISSUER ONLY:

    

    This
      Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
      ___________, _____, shares of Common Stock issued therefor in the name of
      _______________, Warrant No. W-_____ issued for ____ shares of Common Stock
      in
      the name of _______________.

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