Document:

United States Securites and Exchange Commission Edgar Filing

Exhibit 10.1

FINANCIAL ADVISORY SERVICES AGREEMENT

THIS AGREEMENT IS MADE EFFECTIVE as of the 1st day of March, 2009 (the “Effective Date”).

BETWEEN

DAHLMAN ROSE & COMPANY, LLC, a limited liability company formed pursuant to the laws of Delaware.  

(the “Financial Advisor”),

AND

PARAMOUNT GOLD & SILVER CORP., a corporation incorporated under the laws of Delaware.

(the “Company”);

WHEREAS:

A.

The Company and the Financial Advisor entered into a letter agreement dated November 14, 2008 (the “Engagement Letter”) pursuant to which the Company engaged the Financial Advisor as its financial advisor in connection with a possible Transaction (as defined in the Engagement Letter) involving the Company;

B.

The Engagement Letter contemplates that, in the event that, within 12 months of the date thereof and prior to the consummation of any Transaction, the Company determines to undertake any alternative investment banking transactions (other than a Transaction), then the Company shall offer the Financial Advisor the right to act as its financial advisor with respect to any such alternative investment banking transaction; 

C.

The Company anticipates completing a strategic private placement of equity securities (the “Private Placement”);

D.

The Financial Advisor has agreed to act as financial advisor to the Company with respect to the Private Placement; and 

E.

This Agreement is intended to set out the terms and conditions acceptable to the Company and the Financial Advisor in connection therewith and to supplement the terms and conditions of the Engagement Letter.

NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable consideration, the receipt and adequacy of which is hereby confirmed, the parties hereto do covenant and agree each with the other as follows:

1.

Role of Financial Advisor

(1)

The Financial Advisor shall act as financial advisor to the Company with respect to the Private Placement (the “Services”).

(2)

The Financial Advisor shall perform the Services using the degree of care and skill ordinarily exercised by diligent and reputable consultants in the corporate finance industry.

(3)

The Company acknowledges and confirms that the Services are provided as a financial advisor and facilitator only and not as the Company’s agent.

(4)

So far as it is not inconsistent nor in conflict with the terms of this Agreement or the Engagement Letter, the Financial Advisor is free to engage in any other remunerative contract, calling or occupation.

2.

Financial Advisory Fee

(1)

In consideration of the Services to be rendered by the Financial Advisor to the Company, the Company agrees to pay to the Financial Advisor a financial advisory fee in cash equal to 7% of the gross proceeds of the Private Placement (“Financial Advisory Fee”).

(2)

In further consideration of the Services to be rendered by the Financial Advisor to the Company, the Company agrees to issue to the Financial Advisor upon closing of the Private Placement that number of warrants to purchase shares of common stock of the Company equal to 7% of the units sold pursuant to the Private Placement (the “Financial Advisor’s Warrants”).  Each of the Financial Advisor’s Warrants will entitle the holder on the exercise thereof to purchase one share of common stock of the Company (each a “Financial Advisor’s Warrant Share”) at an exercise price of C$1.05 per Financial Advisor’s Warrant Share during a term commencing on the date that is 6 months following the closing date of the Private Placement and ending on the date that is 48 months following the closing date of the Private Placement.  It is anticipated that the Financial Advisor’s Warrants will be issued under the Company’s registration statement on Form S-3 (Registration No. 333-153104) as declared effective by the U.S. Securities and Exchange Commission on January 7, 2009, with such Warrants to be evidenced by a Warrant Agreement substantially in a form to be provided to the Financial Advisor on or about March 11, 2009.  In the event issuance of the Financial Advisor’s Warrants under the Company’s registration statement on Form S-3 as described above is deemed not practicable, the Company will grant to the Financial Advisor a Cashless Exercise Election (as defined below).  

(3)

The Cashless Exercise Election will give the Financial Advisor the ability to notify the Company that it is exercising the Financial Advisor’s Warrants (or a portion thereof) by authorizing the Company to withhold from issuance of a number of Financial Advisor’s Warrant Shares issuable upon such exercise of the Financial Advisor’s Warrants which, when multiplied by the Current Market Price (as defined in Section 5 of the Warrant Certificate pursuant to the Private Placement) on the exercise date, is equal to the aggregate exercise price of the number of Financial Advisor’s Warrant Shares for which the Financial 

Advisor’s Warrants are being exercised (and such number of Financial Advisor’s Warrant Shares shall no longer be issuable under the Financial Advisor’s Warrants).

3.

Expenses

The Company will reimburse the Financial Advisor for reasonable expenses incurred by the Financial Advisor expressly for the provision of the Services, including, but not limited to, reasonable fees and disbursements of legal counsel; provided, however, that in no event shall such reimbursement by the Company to the Financial Advisor as to such fees and disbursements of legal counsel exceed C$15,000.

4.

Covenants and Representations of the Financial Advisor

The Financial Advisor agrees to comply with all applicable rules, laws, regulations and policies of any kind whatsoever having application to the carrying out and performance of its obligations under this Agreement.  The Financial Advisor represents and warrants that it is (a) an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the United States Securities Act of 1933, as amended, and (b) duly registered and in good standing as an “international dealer” under the Securities Act (Ontario).

5.

Covenants of the Company

(1) 

The Company agrees to comply with all applicable rules, laws, regulations and policies of any kind whatsoever having application to (i) the Private Placement, or (ii) the carrying out and performance of its obligations under this Agreement, including, but not limited to, the issuance of the Financial Advisor’s Warrants and the Financial Advisor’s Warrant Shares.

(2)

The Company agrees to obtain all requisite regulatory approvals for the payment of the Financial Advisory Fee, the issuance of the Financial Advisor’s Warrants, and the issuance of the Financial Advisor’s Warrant Shares.

6.

Term and Termination

The term of this Agreement (the "Term") shall commence on the Effective Date and shall terminate on the earlier of:  (a) a date which is five (5)  days following delivery of written notice of termination by one party to the other; and (b) the date immediately following the closing date of the Private Placement.  The provisions of Sections 3, 8, 9, 10 and 17 of this Agreement shall survive the termination or expiration of this Agreement.

7.

Disclaimer of Liability

(1)

The Financial Advisor expressly disclaims any liability or responsibility to any and all persons (past, present or future) including, without limitation, the Company, its board of directors, any special committee of its board of directors and any stockholder or other stakeholder of the Company:

(a)

By reason of any unauthorized use, reliance, publication, distribution of or reference to the Financial Advisor or any unauthorized reference to the Financial Advisor or this engagement; or

(b)

By reason of or in connection with the performance by the Financial Advisor of its engagement hereunder, except to the extent that a court of competent jurisdiction in a final judgment shall determine that the loss, claim, damage or liability resulted from the negligence, fraud or wilful misconduct of the Financial Advisor.

(2)

The Company acknowledges and confirms that the Financial Advisor shall not bear any responsibility or assume any liability for any statements made by the Company in connection with the Private Placement, including, but not limited to, the accuracy of any representations made by the Company to any investors in the subscription agreements provided by the Company.

8.

Indemnification

The Company hereby agrees to indemnify the Financial Advisor in accordance with Exhibit “A” hereto, which Exhibit forms part of this Agreement and the consideration of which is the entering into of this Agreement.  Such indemnity (the “Indemnity”) shall be in addition to, and not in substitution for, any liability which the Company or any other person may have to the Financial Advisor or other persons indemnified pursuant to the Indemnity apart from such Indemnity.  The Indemnity shall apply to all services contemplated herein.

9.

Limitation of Liability

Neither party shall have any liability to the other, by reason of the termination of this Agreement or otherwise, for any special, incidental or consequential damages of any kind, such as compensation for loss of present or prospective profits or revenues or loss of actual or anticipated fees, whether or not the Financial Advisor was advised of the possibility of such damage.

10.

Notices

(1)

All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or if sent by facsimile or e-mail transmission to the party to whom such notice is intended to be given and any notice so delivered or sent shall be deemed to have been duly given on the next succeeding business day following the day on which it was so delivered or sent.

(2)

Until changed by notice in writing as aforesaid, the addresses of the parties are:

Financial Advisor:

Dahlman Rose & Company LLC

142 West 57th Street, 18th Floor

New York, New York  10019

Attention:  

Mr. Robert Brinberg

Chief Operating Officer

Telephone:  

(212) 920-2955

Fax:  

(212) 920-2952

Company:

Paramount Gold & Silver Corp.

346 Waverly Street, Suite 110

Ottawa, Ontario  K2P 0W5

Attention:  

Mr. Christopher Crupi

President and Chief Executive Office

Telephone:  

(613) 226-9881

Fax:  

(613) 226-5106

11.

Successor and Assigns

The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. Neither the Financial Advisor nor the Company may assign their rights or delegate their obligations under this Agreement without the prior written consent of the other party.

12.

Invalid Provisions

If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws by any court of competent jurisdiction, such illegality, invalidity or unenforceability shall not affect the legality, enforceability or validity of any other provisions or of the same provision as applied to any other fact or circumstance and such illegal, unenforceable or invalid provision shall be modified to the minimum extent necessary to make such provision legal, valid or enforceable, as the case may be.

13.

Further Assurances

Each party shall promptly do, execute, deliver or cause to be done, executed and delivered all further acts, documents and things in connection with this Agreement that the other party may reasonably require, for the purposes of giving effect to this Agreement.

14.

Time of Essence

Time shall be of the essence of this Agreement in all respects.

15.

Entire Agreement

This Agreement and the Engagement Letter constitute the entire agreement between the parties pertaining to the subject matter of this Agreement and the Engagement Letter and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written.  There are no conditions, warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement and the Engagement Letter (whether oral or written, express or implied, statutory or otherwise) except as specifically set out in this Agreement and the Engagement Letter.  If any provision contained in this Agreement is inconsistent or conflicts with any provision contained in the Engagement Letter, the applicable provision in this Agreement shall govern.

16.

Waiver

A waiver of any default, breach or non-compliance under this Agreement is not effective unless in writing and signed by the party to be bound by the waiver.  No waiver shall be inferred from or implied by any failure to act or delay in acting by a party in respect of any default, breach or non-observance or by anything done or omitted to be done by the other party.  The waiver by a party of any default, breach or non-compliance under this Agreement shall not operate as a waiver of that party’s rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance (whether of the same or any other nature).

17.

Governing Law

This Agreement is governed by the laws of the State of Delaware, without regard to conflict of law principles, and will be binding upon and inure to the benefit of the Company and the Financial Advisor and their respective successors and assigns.  The Company and the Financial Advisor agree to waive trial by jury in any action, proceeding or counterclaim brought by or on behalf of either party with respect to any matter whatsoever relating to or arising out of any actual or proposed transaction or engagement of or performance by the Financial Advisor hereunder.  The Company also hereby submits to the jurisdiction of the federal or state courts located in the State of Delaware in any proceeding arising out of relating to this Agreement, agrees not to commence any suit, action or proceeding relating thereto except in such courts, and waives, to the fullest extent permitted by law, the right to move to dismiss or transfer any action brought in such court on the basis of any objection to personal jurisdiction, venue or inconvenient forum.

18.

Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument.  Counterparts may be executed either in original or faxed form and the parties adopt any signatures received by a receiving fax machine as original signatures of the parties; provided, however, that any party providing its signature in such manner shall promptly forward to the other party an original of the signed copy of this Agreement which was so faxed.

19.

Amendments

This Agreement may only be amended, supplemented or otherwise modified by written agreement signed by both parties.

By signature below, the parties are bound to the terms and conditions of this Agreement:

			
	 
	DAHLMAN ROSE & COMPANY, LLC

	 
	Per:

	 

	 
	Name:

	 

	 
	Title:

	 

	 
	I have authority to bind the corporation.

			
	 
	PARAMOUNT GOLD & SILVER CORP.

	 
	Per:

	 

	 
	Name:

	 

	 
	Title:

	 

	 
	I have authority to bind the corporation.

EXHIBIT “A”

INDEMNITY

In connection with the engagement of Dahlman Rose to assist the Company as described in the attached engagement letter, including modifications or future additions to such engagement and related activities prior to the date of the engagement letter (the “Engagement”), the Company agrees that it will indemnify and hold harmless Dahlman Rose and its affiliates and their respective directors, officers, agents, representatives and employees and each other person controlling Dahlman Rose or any of its affiliates (each of the foregoing, including DRC, being an “Indemnified Person”) to the full extent lawful, from and against any losses, expenses (including legal fees and expenses), assessments, claims, damages, judgments, liabilities or proceedings (hereinafter collectively referred to as “losses”) to which any Indemnified Person may become subject under any applicable federal or state law, or otherwise, as such losses are incurred by a Indemnified Person, and are (i) caused by, or arising out of or in connection with, any untrue statement or alleged untrue statement of a material fact contained in the transaction documents or any offering materials used in connection with the Placement (including any amendments or supplements thereto) or by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (other than any untrue offering statements or alleged untrue statements in, or omissions or alleged omissions from, information relating to a Indemnified Person furnished in writing by or on behalf of such Indemnified Person expressly for use in such materials), (ii) related to or otherwise arising out of the Engagement and such Indemnified Person’s performance of the services contemplated thereby, or (iii) related to the Company’s breach of any representation, warranty or covenant in the Agreement or any other agreement entered into in connection with the Transaction, whether or not any pending or threatened action, claim or proceeding giving rise to such losses is initiated or brought by or against the Company or on the Company’s behalf and whether or not in connection with any action, proceeding or investigation in which the Company or such Indemnified Persons are a party or parties, except to the extent that any losses solely with respect to the foregoing clause (ii) are found in a final judgment by a court of competent jurisdiction to have resulted solely from such Indemnified Person’s bad faith or willful misconduct. The Company will promptly reimburse each Indemnified Person for its costs of defense (including reasonable legal fees and expenses and the cost of any investigation and preparation) when and as they are incurred. The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or its security holders or creditors related to or arising out of the Engagement or such Indemnified Person’s performance of services in connection with the Engagement except to the extent that any losses are found in a final judgment by a court of competent jurisdiction to have resulted solely from such Indemnified Person’s bad faith or willful misconduct.

If for any reason the foregoing indemnification is unavailable in whole or in part to a Indemnified Person, then the Company shall contribute to any losses for which such indemnification is unavailable (i) in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by the Company on the one hand and the Indemnified Person on the other hand from the matters contemplated by the Engagement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Indemnified Person with respect to such losses and any other relevant equitable considerations. The parties agree that for the purposes hereof, the relative benefits received (or anticipated to be received) by DRC and by the Company shall be deemed to be in the same proportion as (i) the total value received (or proposed to be received) by the Company, 

pursuant to the matters (whether or not consummated) for which DRC has been engaged bears to (ii) the cash fees actually paid to DRC (excluding payments or reimbursement of expenses) in connection with the Engagement less any amounts paid or payable or other liabilities incurred by the Indemnified Person in connection with the Engagement; provided, however, that, to the extent permitted by applicable law, in no event shall DRC or any Indemnified Person be required to contribute an aggregate amount in excess of the aggregate cash fees actually paid to DRC under the Agreement less any amounts paid or payable or other liabilities incurred by Indemnified Person in connection with the Engagement. The Company agrees that it would not be just and equitable if contribution pursuant to this paragraph were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above.

Promptly after receipt by an Indemnified Person of written notice of the existence or commencement of any action, proceeding or investigation for which such Indemnified Person may seek reimbursement or indemnification or the assertion in writing (and reasonable detail) of any claim for which an Indemnified Person may seek reimbursement or indemnification, such Indemnified Person shall notify the Company in writing thereof; provided, however, that the failure of such Indemnified Person to so notify the Company (i) shall in no event affect the reimbursement or indemnification rights and obligations hereunder with respect to any other Indemnified Person and (ii) shall not affect the reimbursement or indemnification rights or obligations hereunder with respect to such Indemnified Person except to the extent that the failure to so provide such notice shall actually and materially damage the Company.

The Company will not, without the Indemnified Persons’ prior written consent, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification could be sought hereunder (whether or not any Indemnified Persons are actual or potential parties to such claim, action or proceeding), unless such settlement, compromise or consent (i) includes a provision unconditionally and completely releasing each Indemnified Person from all liability arising out of such claim, action or proceeding, (ii) does not include any statement of fault or culpability with respect to any Indemnified Person and (iii) does not involve any payment of money or other value by any Indemnified Person or any injunctive relief or factual findings or stipulations binding on any Indemnified Person.

No waiver, amendment or other modification of this Agreement shall be effective unless in writing and signed by each person or entity to be bound thereby. The foregoing shall be in addition to any rights that the parties may have at common law or otherwise. For purposes of enforcing this Exhibit A, the parties hereby consent to personal jurisdiction, service and venue in any court in which any claim or proceeding which is subject to this Exhibit A is brought against any Indemnified Person and waive any defense of lack of personal jurisdiction and irrevocably agree that all changes in respect of any suit, action or proceeding may be heard or determined in any such court.

BOTH THE COMPANY (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) AND DRC HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS EXHIBIT A, THE ENGAGEMENT, OR DRC’S PERFORMANCE OF THE SERVICES REFERRED TO THEREIN.

This Exhibit A shall remain in full force and effect indefinitely, notwithstanding the completion or termination of the Engagement. If any term, provision, covenant or restriction contained in this Exhibit A is held by a court of competent jurisdiction or other applicable authority to be invalid, void, unenforceable or against relevant policy, the remainder of the terms, provisions, covenants and 

restrictions contained in this Exhibit A shall remain in full force and effect and shall in no way be impaired, invalidated or affected.

This Exhibit A and the representations and warranties of the parties contained in the Agreement or any other agreement entered into in connection with the Transaction shall remain in full force and effect regardless of any investigation made by or on behalf of the respective parties, and shall survive any termination of such Agreement or other agreement, as the case may be, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, DRC and other Indemnified Persons.Unassociated Document

    Exhibit
4.3

     

    SERIES
G COMMON STOCK PURCHASE WARRANT

    

     AKEENA
SOLAR, INC.

     

    
      	
              Warrant
      Shares: _______

            	
              Initial
      Exercise Date: April 20, 2009

            
	 
      	
              Issue
      Date: April 20, 2009

            

    

     

    THIS
SERIES G COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, _____________ (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after April 20, 2009 (the “Initial Exercise
Date”) and on or prior to the close of business on August 10, 2009 (the
“Termination
Date”) but not thereafter, to subscribe for and purchase from Akeena
Solar, Inc., a Delaware corporation (the “Company”), up to
______ shares (the “Warrant Shares”) of
Common Stock.  The purchase
price of one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).

     

    Section
1.  Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated February 26, 2009, among the Company and the purchasers signatory
thereto.

     

    Section
2.  Exercise.

     

    a)  Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Trading Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank or,
if available, pursuant to the cashless exercise procedure specified in Section
2(c) below.  Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date the final Notice of Exercise is delivered to the
Company.  Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased.  The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases.  The Company shall deliver any objection to any Notice of
Exercise Form within 1 Business Day of receipt of such notice. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face
hereof.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    b)  Exercise
Price.  The exercise price per share of the Common Stock under
this Warrant shall be $1.12, subject to adjustment
hereunder (the “Exercise
Price”).

     

    c)  Cashless
Exercise.  If at the time of exercise hereof there is no
effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder
and all of the Warrant Shares are not then registered for resale by Holder into
the market at market prices from time to time on an effective registration
statement for use on a continuous basis (or the prospectus contained therein is
not available for use), then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a certificate for the number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A), where:

     

    
      	
            	
              (A)=

            	
              the
      VWAP on the Trading Day immediately preceding the date on which Holder
      elects to exercise this Warrant by means of a “cashless exercise,” as set
      forth in the applicable Notice of
Exercise;

            

    

    

    
      
        	
              	
                (B)=

              	
                the
      Exercise Price of this Warrant, as adjusted hereunder;
  and

              

      

    

    

    
      
        	
              	
                (X)=

              	
                the
      number of Warrant Shares that would be issuable upon exercise of this
      Warrant in accordance with the terms of this Warrant if such exercise were
      by means of a cash exercise rather than a cashless
    exercise.

              

      

    

    

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time), (b)  if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    d)  Mechanics of
Exercise.

     

    i.  Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is then a participant in such system and either (A) there is an
effective Registration Statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by Holder or (B) this Warrant is being
exercised via cashless exercise, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise by the date that is
three (3) Trading Days after the latest of (A) the delivery to the Company of
the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C)
payment of the aggregate Exercise Price as set forth above (including by
cashless exercise, if permitted) (such date, the “Warrant Share Delivery
Date”).  This Warrant shall be deemed to have been exercised on
the first date on which all of the foregoing have been delivered to the
Company.  The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of
such shares, having been paid. If the Company fails for any reason to deliver to
the Holder certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such certificates are delivered or Holder rescinds
such exercise.

     

    ii.  Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

     

    iii.  Rescission
Rights.  If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date,
then, the Holder will have the right to rescind such exercise.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    iv.  Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, 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 (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.  Notwithstanding anything
contained herein to the contrary, if the Company is required to make payment in
respect of a Buy-In for the failure to timely deliver certificates hereunder
and, if the Company has previously paid such Holder liquidated damages under
Section 2(d)(i) in respect of the certificates resulting in such Buy-In prior to
such Buy-In, such amounts paid under Section 2(d)(i) shall be deducted from the
amount to be paid in respect of such certificates pursuant to this
Section 2(d)(iv)).

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    e)  Holder’s Exercise
Limitations.  The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below).  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other  Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
Affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith.   To the extent
that the limitation contained in this Section 2(e) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.   In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported.  The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant.  The Holder, upon not
less than 61 days’ prior written notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 2(e), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply.  Any such increase or decrease will not be effective until the
61st
day after such notice is delivered to the Company.  The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(e) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Warrant.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    f)  Put
Provision.  Subject to the provisions of Section 2(e) and this
Section 2(f), if, during the period commencing on the 31st Trading
Day following the Issue Date and ending on August 10, 2009 (i) the VWAP for each
of at least 4 out of 5 consecutive Trading Days during such period (such 5
Trading Day period, the “Measurement Period”)
exceeds $1.30 (subject to adjustment for forward and reverse stock splits,
recapitalizations, stock dividends and the like after the Initial Exercise
Date), (ii) the daily volume for each Trading Day during such Measurement Period
exceeds $175,000 and (iii) the Holder is not in possession of any information
that constitutes, or might constitute, material non-public information which was
provided by the Company, then the Company may, within 1 Trading Day of the end
of such Measurement Period, call for the mandatory exercise of up to ______1 Warrant Shares for which a Notice of Exercise
has not yet been delivered (such right, a “Put”).  To
exercise this right, the Company must deliver to the Holder an irrevocable
written notice (a “Put
Notice”), indicating therein the portion of unexercised portion of this
Warrant to which such notice applies.  If the conditions set forth
below for such Put are satisfied from the period from the date of the Put Notice
through and including the Put Date (as defined below), then any portion of this
Warrant subject to such Put Notice for which a Notice of Exercise shall not have
been received by the Put Date must be exercised by the Holder on or before 6:30
p.m. (New York City time) on the fifth Trading Day after the date the Put Notice
is received by the Holder (such date and time, the “Put
Date”).  Any unexercised portion of this Warrant to which the
Put Notice does not pertain will be unaffected by such Put Notice.  In
furtherance thereof, the Company covenants and agrees that it will honor all
Notices of Exercise with respect to Warrant Shares subject to a Put Notice that
are tendered through 6:30 p.m. (New York City time) on the Put
Date.  The parties agree that any Notice of Exercise delivered
following a Put Notice which calls less than all the Warrants shall first reduce
to zero the number of Warrant Shares subject to such Put Notice prior to
reducing the remaining Warrant Shares available for purchase under this
Warrant.  For example, if (A) this Warrant then permits the Holder to
acquire 100 Warrant Shares, (B) a Put Notice pertains to 75 Warrant Shares, and
(C) prior to 6:30 p.m. (New York City time) on the Put Date the Holder tenders a
Notice of Exercise in respect of 50 Warrant Shares, then (x) on the Put Date the
right under this Warrant to acquire 25 Warrant Shares will be mandatorily
exercised, (y) the Company, in the time and manner required under this Warrant,
will have issued and delivered to the Holder 50 Warrant Shares in respect of the
exercises following receipt of the Put Notice, and (z) the Holder may, until the
Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
adjustment as herein provided and subject to subsequent Put
Notices).  Subject again to the provisions of this Section 2(f), the
Company may deliver subsequent Put Notices for any portion of this Warrant for
which the Holder shall not have delivered a Notice of
Exercise.  Notwithstanding anything to the contrary set forth in this
Warrant, the Company may not deliver a Put Notice or require the exercise of
this Warrant (and any such Put Notice shall be void), unless, from the beginning
of the Measurement Period through the Put Date and delivery of Warrant Shares,
(1) the Company shall have honored in accordance with the terms of this Warrant
all Notices of Exercise delivered by  6:30 p.m. (New York City time)
on the Put Date, (2) the Registration Statement shall be effective as to all
Warrant Shares and the prospectus thereunder available for use for the resale of
all such Warrant Shares, (3) the Common Stock shall be listed or quoted for
trading on the Trading Market, (4) there is a sufficient number of authorized
shares of Common Stock for issuance of all Securities under the Transaction
Documents, (5) the Holder has not exercised this Warrant within 2 Trading Days
of the date of the applicable Put Notice, (6) the VWAP on the date of the Put
Notice is not less than $1.30, subject to adjustment for reverse and forward
stock splits and the like, (7) the date the Put Notice is delivered is not a
Friday, (8) at least 4 Trading Days shall have elapsed since delivery of the
last Put Notice and (9) the issuance of the shares shall not cause a breach of
any provision of Section 2(e) herein.  The Company’s right to call for
exercise of the Warrants under this Section 2(f) shall be exercised ratably
among the Holders based on each Holder’s initial purchase of
Warrants.

     

      
        

      

    

    
      
        	
                1

              	
                One-third
      of the original number of warrant shares issuable
    hereunder.

              

      

    

     

    
      
        
        

      

      
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    Section
3.  Certain
Adjustments.

     

    a)  Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.

     

    b)  INTENTIONALLY
OMITTED.

     

    c)  Subsequent Rights
Offerings.  If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to the Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the VWAP on the record
date mentioned below in this paragraph, then, the Exercise Price shall be
multiplied by a fraction, of which the denominator shall be the number of shares
of the Common Stock outstanding on the date of issuance of such rights, options
or warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights,
options or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered (assuming receipt by the Company in
full of all consideration payable upon exercise of such rights, options or
warrants) would purchase at such VWAP.  Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants.

     

    d)  Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith.  In either case
the adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock.  Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.

     

    
      
        
        

      

      
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    e)  Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant).  For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  Notwithstanding anything to the contrary, in the event
of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, including, but not limited to, the Nasdaq Global Select
Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or
any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction, purchase this Warrant from the Holder by
paying to the Holder an amount of cash equal to the Black Scholes Value
of the remaining unexercised portion of this Warrant on the date of the
consummation of such Fundamental Transaction.  “Black Scholes Value”
means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date, (B) an expected volatility equal to the greater of
100% and the 100 day volatility obtained from the HVT function on Bloomberg as
of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date.  The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents in accordance with the provisions of this
Section 3(e) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the
holder of this Warrant, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.

     

    
      
        
        

      

      
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    f)  Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

     

    g)  Notice to
Holder.

     

    i.  Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. If the Company enters into a
Variable Rate Transaction, despite the prohibition thereon in the Purchase
Agreement, the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or exercise price at which
such securities may be converted or exercised.

     

    ii.  Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  The Holder shall
remain entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.

     

    
      
        
        

      

      
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    Section
4.  Transfer of
Warrant.

     

    a)  Transferability.  This
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer;
provided that upon transfer the transferee is reasonably acceptable to the
Company and agrees to be bound by the terms of this Warrant.  Upon
such surrender and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled.  The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.

     

    b)  New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the initial issuance date set forth on the first page of this Warrant and shall
be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.

     

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

     

    
      
        
        

      

      
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    d)  Representation by the
Holder.  The Holder, by the acceptance hereof, represents and
warrants that it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own account and
not with a view to or for distributing or reselling such Warrant Shares or any
part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act.

     

    Section
5.  Miscellaneous.

     

    a)  No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 2(d)(i).

     

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

     

    c)  Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    d)  Authorized
Shares.

     

    The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    e)  Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

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

     

    g)  Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or
remedies.  Without limiting any other provision of this Warrant or the
Purchase Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    l)  Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and Holders holding Warrants at least equal to
67% of the Warrant Shares issuable upon exercise of all then outstanding
Warrants.

     

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

     

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

     

    

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

    

    (Signature
Pages Follow)

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.

     

    
      	 	AKEENA SOLAR,
      INC.	 
	 	 	 
	 	
              By:
      

            	 
	 	 	Name 
	 	 	Title 
	 	 	 

    

     

    
      
        	 	HOLDER:	 
	 	 	 
	
                 

              	
                Name
      of Holder: 

              	 
	 	Signature
      of Holder: 	 
	 	Name
      of Authorized Signatory: 	 
	 	Title
      of Authorized Signatory: 	 

      

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    NOTICE
OF EXERCISE

    

    TO:           AKEENA
SOLAR, INC.

    

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

     

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

     

    [  ]
in lawful money of the United States; or

     

    [  ]
[if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

     

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

     

    _______________________________

    

    

    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    

    [SIGNATURE
OF HOLDER]

     

    
    

     

    
      	Name of Investing
      Entity: 	 
	Signature of Authorized
      Signatory of Investing Entity: 	 
	Name of Authorized
      Signatory: 	  
	Title of Authorized
      Signatory: 	 
	Date: 	  

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

    

    

    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

    

    _______________________________________________
whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:  ______________,
_______

    

    

    
      	
            	
              Holder’s
      Signature: 

            	
              _____________________________

            

    

    

    
      	
            	
              Holder’s
      Address:   

            	
              _____________________________

            

    

     

    _____________________________

    

    

    

    Signature
Guaranteed:  ___________________________________________

    

    

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

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