Document:

exv10w1

Exhibit 10.1

THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the “Amendment”) is made and entered into as of the
26th day of August, 2008, by and among APPROACH RESOURCES INC., a Delaware corporation
(“Borrower”), APPROACH OIL & GAS INC., a Delaware corporation, APPROACH OIL & GAS (CANADA) INC., an
Alberta, Canada corporation, and APPROACH RESOURCES I, LP (collectively, “Guarantors”), THE FROST
NATIONAL BANK, as Agent (“Agent”), and the Lenders that are signatory parties hereto (the
“Lenders”).

RECITALS.

     A. Borrower, Guarantors, Agent and Lenders have entered into that certain Credit Agreement,
dated as of January 18, 2008, as amended by letter amendment dated as of February 19, 2008, letter
amendment dated as of May 6, 2008 and this Amendment dated the date hereof (as amended thereby and
hereby, the “Loan Agreement”).

     B. Borrower, Guarantors and Lenders desire to amend the Loan Agreement as hereinafter set
forth.

     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, agree as follows:

ARTICLE I

Definitions

     Capitalized terms used in this Amendment are defined in the Loan Agreement, except as amended
herein.

ARTICLE II

Amendments

     2.01. Amendment to Section 1. Addition of Certain Defined Terms.

     Effective as of the date hereof, the following definitions are hereby added to the Loan
Agreement:

“Consolidated
EBITDAX” means, with respect to Borrower and Guarantors for any
period: (i) consolidated net income for such period determined according to Accounting
Principles, plus, to the extent deducted in the calculation of
consolidated net income, (ii)
the sum of (1) income or franchise taxes paid or accrued; (2) consolidated net interest
expense; (3) amortization, depletion and depreciation expense; (4) any non-cash losses or
charges on any Pre-Approved Contracts resulting from the requirements of SFSB 133 for that
period; (5) other non-cash charges (excluding accruals for cash expenses made in the
ordinary course of business), including, without limitation, non-cash employee

 

 

compensation;
and (6) costs and expenses associated with, and attributable to, oil and gas capital
expenditures that are expensed rather than capitalized; less, to the extent included
in the calculation of consolidated net income, (iii) the sum of (1) gains or losses from
sales or other dispositions of assets (other than hydrocarbons produced in the normal course
of business); (2) any non-cash gains on any Pre-Approved Contracts resulting from the
requirements of SFSB 133 for that period; and (3) extraordinary or non-recurring gains, but
not net of extraordinary or non-recurring “cash” losses. Notwithstanding anything to the
contrary contained herein, all calculations of Consolidated EBITDAX shall be (a) in all
respects, acceptable to, and approved by Agent, and (b) for any applicable period of
determination during which any Person has consummated an acquisition or disposition (to the
extent permitted hereunder) of properties or assets, calculated and determined on a pro
forma basis as if such acquisition or disposition was consummated on the first day of such
applicable period.”

“Consolidated Funded Debt” means, with respect to Borrower and Guarantors as of the
last day of any fiscal quarter, all funded Indebtedness under the Agreement.”

“SFSB 133” means Financial Accounting Standard No. 133.”

“Secured Parties” means the Lenders under the Credit Agreement and the Lenders and
their respective Subsidiaries and Affiliates that enter into Rate Management Transactions
with Borrower or its Subsidiaries.

     2.02 Amendment to Section 1. Amendment of definition of “Commitment Percentage.”

     Effective as of the date hereof the first sentence of the definition of “Commitment
Percentage” is hereby deleted in its entirety and the following substituted therefor:

     “Commitment Percentage means for each Lender the percentage set forth opposite
each Lender’s name on Schedule I hereto.”

     2.03 Amendment to Sections 6(a) and 6(c). Sections 6(a) and 6(c) of the Credit
Agreement are hereby deleted in their entirety and the following substituted therefor:

     “6. Collateral Security.

(a) To secure performance by Borrower of its obligations under this
Agreement
and the Notes, Borrower and Guarantors shall grant to Agent in its capacity as such
Agent under this Agreement for the ratable benefit of Secured Parties hereunder, a
first priority security interest in and Lien (and only Lien, except for Permitted
Liens) on certain of the Oil and Gas Properties of Borrower and Guarantors as may be
selected by Agent, in its capacity as such Agent under this Agreement, and the oil,
gas and mineral production therefrom or attributable
thereto, and in all operating agreements and oil or gas purchase contracts (now
existing or hereafter arising) relating to such Oil and Gas Properties and in
related

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personal properties, fixtures and other properties, as evidenced by
mortgages, deeds of trust, assignments of production, security agreements, general
security agreements, indentures, and other documents to be executed by Borrower and
Guarantors and delivered to or on behalf of Agent, in its capacity as such Agent
under this Agreement for the ratable benefit of Secured Parties. Obligations arising
from agreements arising from Rate Management Transactions between Borrower and one
or more of Secured Parties shall be secured by the Collateral covering the Oil and
Gas Properties on a pari passu basis with the indebtedness and obligations of
Borrower under the Loan Documents. Once agreements arising from Rate Management
Transactions involving one or more Secured Parties are entered into, and pursuant to
this provision become secured by the Collateral on a pari passu basis, said
Collateral shall continue to secure such obligations until such agreements are no
longer in force and effect irrespective of whether a Secured Party involved in such
agreement ceases to be a Lender under this Agreement. All Oil and Gas Properties
and other collateral in which Borrower and Guarantors grant or hereafter grant to
Agent for the ratable benefit of Secured Parties, a first and prior Lien (to the
satisfaction of Agent) in accordance with this Section 6, as such properties and
interests are from time to time constituted, are hereinafter collectively called the
“Collateral”.

“(c) Guarantors shall unconditionally guarantee the Notes executed by Borrower as
well as the Rate Management Transactions entered into between Borrower and the
Secured Parties, pursuant to a guaranty agreement in form and substance satisfactory
to Agent.”

     2.04 Amendment to Section 8. Up-Front Fee.

     Effective as of the date hereof, Section 8 of the Loan Agreement is hereby amended by (i)
renaming Section 8 “Fees,” (ii) naming the first paragraph of Section 8 “(a) Unused Commitment
Fee” and adding the following Subsection 8(b) thereto:

“(b) Up-Front Fee. Upon execution of this Third Amendment, Borrower will
pay to Agent, for the benefit of Fortis Capital Corp. and KeyBank National
Association, an up-front fee in the amount of $50,000, one-half of which will be
paid by Agent to Fortis Capital Corp. and one-half of which will be paid by Agent to
KeyBank National Association, in consideration for their participation in the Loan
as Lenders.”

     2.05. Amendment to Section 12(u). Section 12(u) of the Agreement is hereby deleted in
its entirety and the following substituted therefor:

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     “12. Affirmative Covenants.

     (u) Additional Collateral. Borrower agrees to regularly monitor engineering
data covering all producing oil and gas properties and interests owned or acquired by
Borrower or Guarantors on or after the date hereof and to mortgage or cause to be mortgaged
such of the same to Agent for the ratable benefit of Secured Parties in substantially the
form of the Collateral Documents, as applicable, to the extent that Secured Parties shall at
all times during the existence of the Commitment be secured by perfected Liens and security
interests covering not less than eighty percent (80%) of the Engineered Value of the
Borrowing Base Properties of Borrower and Guarantors. In addition, Borrower agrees that in
connection with the mortgaging of such additional Borrowing Base Properties, it shall within
a reasonable time thereafter, deliver or cause to be delivered to Agent such mortgage and
title opinions and other title information with respect to the title and Lien status of such
Borrowing Base Properties as may be necessary to maintain at all times a level of such title
information (showing good and defensible title) of not less than seventy-five percent (75%)
of the Engineered Value of all Borrowing Base Properties mortgaged to Agent for the ratable
benefit of Secured Parties.

     2.06. Amendment to Section 13(b). Amendment to “Financial Covenants”. Effective as
of the date hereof, Subsection 13(b) of the Loan Agreement is renamed “Financial Covenants” and is
hereby amended in its entirety to read as follows:

     “(b) Financial Covenants.

(i) Current Ratio. Borrower will not allow the
Consolidated Current Ratio
of Borrower to at any time be less than 1.0 to 1.0.

(ii) Consolidated Funded Debt to Consolidated EBITDAX Ratio.
Commencing with the fiscal quarter ending June 30, 2008, Borrower and
Guarantors will not permit, as of the last day of any fiscal quarter, the
ratio of the sum of (A) the Consolidated Funded Debt to (B) the Consolidated
EBITDAX (in each case annualized for the fiscal quarter ending on such date
by multiplying such sum by 4), to be greater than 3.5 to 1.0.”

     2.07 Amendment to Section 24, “Amendments”. Section 24 of the Loan Agreement
is hereby amended by deleting subsection (e) in its entirety and substituting the following
therefor:

“(e) would release Borrower from its obligation to pay any Lender’s Note or Notes or release
any Guarantor from any of its obligations,”

     2.08 Schedule I is attached hereto and made a part hereof and of the Loan Agreement,
as amended hereby.

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ARTICLE III

Conditions Precedent

     The effectiveness of this Amendment is subject to the satisfaction of the following conditions
precedent, unless specifically waived in writing by Lenders:

     (a) The Amendment. Borrower, each Guarantor and each Lender shall have duly and
validly executed and delivered this Amendment to Agent.

     (b) The Assignment and Acceptance Agreements. Borrower and each Lender shall have
duly and validly executed and delivered the Assignment and Acceptance Agreements to Agent.

     (c) Replacement Notes. Borrower shall have duly and validly executed the Notes
payable to each of the Lender signatories hereto in replacement of the existing Notes.

     (d) Payment of Up-Front Fee. Borrower shall have paid to Agent the Up-Front Fee
described in Section 8(b) hereof.

     (e) Representations and Warranties. The representations and warranties contained
herein, in the Loan Agreement and in the other Loan Documents shall be true and correct as of the
date hereof, as if made on the date hereof.

     (f) No Default. No Default or Event of Default shall have occurred and be continuing.

     (g) Corporate/Partnership Proceedings. All corporate and/or partnership proceedings,
taken in connection with the transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be satisfactory to Agent, and its legal
counsel.

ARTICLE IV

Waiver

     The assignment fee required by Section 29 of the Loan Agreement is hereby waived with respect
to the Assignments and Acceptance Agreements entered into as of the date hereof between The Frost
National Bank and Fortis Capital Corp. and between JP Morgan Chase Bank, NA and KeyBank National
Association.

ARTICLE V

No Waiver

     Except as specifically provided in Article IV of this Amendment, nothing contained in this
Amendment shall be construed as a waiver by Lenders of any covenant or provision of the Loan
Agreement, the other Loan Documents, this Amendment, or of any other contract or
instrument between Borrower and Lenders, and the failure of Lenders at any time

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or times hereafter
to require strict performance by Borrower of any provision thereof shall not waive, affect or
diminish any right of Lenders to thereafter demand strict compliance therewith. Lenders hereby
reserve all rights granted under the Loan Agreement, the other Loan Documents, this Amendment and
any other contract or instrument between Borrower and Lenders.

ARTICLE VI

Ratifications, Representations and Warranties

     6.01. Ratifications. The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and the
other Loan Documents and, except as expressly modified and superseded by this Amendment, the terms
and provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. Borrower, Guarantors and Lenders agree that the Loan
Agreement and the other Loan Documents, as amended hereby, shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms.

     6.02. Representations, Warranties and Agreements. Borrower and Guarantors hereby
represent and warrant to Lenders that (a) the execution, delivery and performance of this Amendment
and any and all other Loan Documents executed and/or delivered in connection herewith have been
authorized by all requisite corporate and/or partnership action on the part of Borrower and
Guarantors and will not violate the organizational documents of any Guarantor that is a corporation
or partnership; (b) the representations and warranties contained in the Loan Agreement, as amended
hereby, and any other Loan Documents are true and correct on and as of the date hereof and on and
as of the date of execution hereof as though made on and as of each such date; (c) no Default or
Event of Default under the Loan Agreement, as amended hereby, has occurred and is continuing; and
(d) Borrower is in full compliance with all covenants and agreements contained in the Loan
Agreement and the other Loan Documents, as amended hereby.

ARTICLE VII

Ratifications by Guarantor 

     Guarantors hereby acknowledge and agree to the terms hereof and hereby ratify and reaffirm all
of their respective obligations under the Guaranty Agreements. Guarantors also hereby agree that
nothing in this Amendment shall adversely affect any right or remedy of Agent or Lenders under the
Guaranty Agreements and that the execution and delivery of this Amendment shall in no way change or
modify their respective obligations as guarantors under the Guaranty Agreement. Although
Guarantors have been informed by Borrower of the matters set forth in this Amendment and Guarantors
have acknowledged and agreed to the same, Guarantors understand that Lenders have no duty to notify
Guarantors or to seek Guarantors’ acknowledgment or agreement, and nothing contained herein shall
create such a duty as to any transaction hereafter.

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ARTICLE VIII

Additional Lenders

     Pursuant to Sections 3(b) and 15(b) of the Loan Agreement, as of the date hereof, Fortis
Capital Corp. and KeyBank National Association will become Lenders under the Loan Agreement, and
Borrower will execute new Notes to each Lender that reflect each Lender’s commitment under the Loan
Agreement as set out on Schedule I hereto.

ARTICLE IX

Miscellaneous Provisions

     9.01. Survival of Representations and Warranties. All representations and warranties
made in the Loan Agreement or any other Loan Documents, including, without limitation, any document
furnished in connection with this Amendment, shall survive the execution and delivery of this
Amendment and the other Loan Documents, and no investigation by Agent, or any Lenders or any
closing shall affect the representations and warranties or the right of Agent, or any Lenders to
rely upon them.

     9.02. Reference to Loan Agreement. Each of the Loan Agreement and the other Loan
Documents, and any and all other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement, as amended
hereby, are hereby amended so that any reference in the Loan Agreement and such other Loan
Documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.

     9.03. Expenses of Agent. As provided in the Loan Agreement, Borrower agrees to pay on
demand all reasonable costs and expenses incurred by Agent in connection with the preparation,
negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto
and any and all amendments, modifications, and supplements thereto, including, without limitation,
the costs and fees of Agent’s legal counsel, and all reasonable costs and expenses incurred by
Lenders in connection with the enforcement or preservation of any rights under the Loan Agreement,
as amended hereby, or any other Loan Documents, including, without, limitation, the reasonable
costs and fees of Agent’s legal counsel.

     9.04. Severability. Any provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the provision so held to be invalid or
unenforceable.

     9.05. Successors and Assigns. This Amendment is binding upon and shall inure to the
benefit of Lenders and Borrower and their respective successors and assigns, except that Borrower
may not assign or transfer any of its rights or obligations hereunder without the prior written
consent of Lenders.

     9.06. Counterparts. This Amendment may be executed in one or more counterparts, each
of which when so executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same instrument.

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     9.07. Effect of Waiver. No consent or waiver, express or implied, by Agent, or any
Lender to or for any breach of or deviation from any covenant or condition by Borrower shall be
deemed a consent to or waiver of any other breach of the same or any other covenant, condition or
duty.

     9.08. Headings. The headings, captions, and arrangements used in this Amendment are
for convenience only and shall not affect the interpretation of this Amendment.

     9.09. Applicable Law. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT
HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY CONFLICT
OF LAWS PROVISIONS.

     9.10. Final Agreement. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH AS
AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
AMENDED HEREBY, MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE
MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER, GUARANTOR AND LENDERS.

     IN WITNESS WHEREOF, this Amendment has been executed in multiple originals and is effective as
of the date first above-written.

[Signature Pages to Follow]

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	 	 	BORROWER:
	 
	 	 	 	 
	 	 	APPROACH RESOURCES INC.,

a Delaware corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft
	 

	 	 	 	 
	 

	 	 	 	J. Ross Craft, President and Chief Executive
Officer
	 
	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 
	 	 	APPROACH OIL & GAS INC.,

a Delaware corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft
	 

	 	 	 	 
	 

	 	 	 	J. Ross Craft, President and Chief Executive
Officer
	 
	 	 	 	 
	 	 	APPROACH OIL & GAS (CANADA) INC.,

an Alberta, Canada corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft
	 

	 	 	 	 
	 

	 	 	 	J. Ross Craft, President and Chief Executive
Officer
	 
	 	 	 	 
	 	 	APPROACH RESOURCES I, LP,

a Texas limited partnership
	 
	 	 	 	 
	 

	 	By:
	 	Approach Operating, LLC,

a Delaware limited liability company,

its general partner
	 
	 	 	 	 
	 

	 	By:
	 	Approach Resources Inc.,

a Delaware corporation,

its sole member
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft
	 

	 	 	 	 
	 

	 	 	 	J. Ross Craft, President and Chief Executive

Officer

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ACCEPTED AND AGREED TO

effective as of the date and year

first above written:

AGENT:

THE FROST NATIONAL BANK

	 	 	 	 	 
	By:

	 	/s/ John S. Warren
	 	 
	 

	 	 	 	 
	 

	 	John S. Warren, Senior Vice President	 	 

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LENDERS:

THE FROST NATIONAL BANK

	 	 	 	 	 
	By:

	 	/s/ John S. Warren
	 	 
	 

	 	 	 	 
	 

	 	John S. Warren, Senior Vice President	 	 

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LENDERS:

JPMORGAN CHASE BANK, NA

	 	 	 	 	 
	By:

	 	/s/ Elizabeth Johnson
	 	 
	 

	 	 	 	 
	Name:

	 	Elizabeth Johnson	 	 
	Title:

	 	Vice President	 	 

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LENDERS:

FORTIS CAPITAL CORP.,

a Connecticut corporation

	 	 	 	 	 
	By:

	 	/s/ Michele Jones
	 	 
	 

	 	 	 	 
	Name:

	 	Michele Jones	 	 
	Title:

	 	Director	 	 
	 
	 	 	 	 
	By:

	 	/s/ Darrell Holley	 	 
	 

	 	 	 	 
	Name:

	 	Darrell Holley	 	 
	Title:

	 	Managing Director	 	 

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LENDERS:

KEYBANK NATIONAL ASSOCIATION

	 	 	 	 	 
	By:

	 	/s/ Thomas Rajan
	 	 
	 

	 	 	 	 
	Name:

	 	Thomas Rajan	 	 
	Title:

	 	Managing Director	 	 

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SCHEDULE I

$200,000,000 Loan

	 	 	 	 	 	 	 	 	 
	 	 	Commitment Amount	 	Percentage Commitment
	The Frost National Bank
	 	$	30,000,000	 	 	 	30	%
	 
	JP Morgan Chase Bank, NA
	 	$	30,000,000	 	 	 	30	%
	 
	Fortis Capital Corp.
	 	$	20,000,000	 	 	 	20	%
	 
	KeyBank National Association
	 	$	20,000,000	 	 	 	20	%

15exv4w1

Exhibit 4.1

     THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN
REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE
SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

     SUBJECT TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M.
EASTERN TIME ON AUGUST 24, 2013 (the “EXPIRATION DATE”).

No. 2008W-Den-Mat

REMEDENT, INC.

WARRANT TO PURCHASE 3,378,379 SHARES OF

COMMON STOCK, PAR VALUE $0.001 PER SHARE

     For VALUE RECEIVED, Den-Mat Holdings, LLC (the “Warrantholder”), is entitled to purchase,
subject to the provisions of this Warrant, from Remedent, Inc., a Nevada corporation (the
“Company”), at any time not later than 5:00 P.M., Eastern time, on the Expiration Date (as defined
above), at an exercise price per share equal to $1.48 (the exercise price in effect being herein
called the “Warrant Price”), 3,378,379 shares (the “Warrant Shares”) of the Company’s Common Stock,
par value $0.001 per share (the “Common Stock”). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as
described herein.

     Section 1. Registration. The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and
register the Warrant in the name of the Warrantholder.

     Section 2. Transfers. As provided herein, this Warrant may be transferred only
pursuant to a registration statement filed under the Securities Act of 1933, as amended (the
“Securities Act”) and the applicable state securities laws or an exemption from such registrations.
Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the
books to be maintained by the Company for that purpose, upon surrender hereof for transfer properly
endorsed or accompanied by appropriate instructions for transfer and such other documents as may be
reasonably required by the Company, including, if required by the Company, an opinion of its
counsel to the effect that such transfer is exempt from the registration requirements of the
Securities Act, to establish that such transfer is being made in accordance with the terms hereof,
and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled
by the Company.

     Section 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder
may exercise this Warrant in whole or in part at any time prior to its expiration upon surrender of
this Warrant, together with delivery of the duly executed Warrant exercise form attached hereto as
Appendix A (the “Exercise Agreement”) and payment by cash, certified check or wire transfer of
funds (or, in certain circumstances, by cash-less exercise as provided below) for the aggregate
Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal
business hours on any business day at the Company’s principal executive offices (or such other
office or agency of the Company as it may designate by notice to the Warrantholder). The Warrant
Shares so purchased shall be deemed to be issued to the Warrantholder or the Warrantholder’s
designee, as the record owner of such shares, as of the close of business on the date on which this
Warrant shall have been surrendered (or evidence of loss, theft

 

 

or destruction thereof and security or indemnity satisfactory to the Company), the Warrant
Price shall have been paid and the completed Exercise Agreement shall have been delivered.
Certificates for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the Warrantholder within a reasonable
time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by the Warrantholder
and shall be registered in the name of the Warrantholder or such other name as shall be designated
by the Warrantholder. If this Warrant shall have been exercised only in part, then, unless this
Warrant has expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Warrantholder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised. As used herein, “business day”
means a day, other than a Saturday or Sunday, on which banks in New York City are open for the
general transaction of business.

     If (1) a certificate representing the Warrant Shares is not delivered to the Warrantholder
within three (3) Business Days of the due exercise of this Warrant by the Warrantholder and (2)
prior to the time such certificate is received by the Warrantholder, the Warrantholder, or any
third party on behalf of the Warrantholder or for the Warrantholder’s account, purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by the Warrantholder of shares represented by such certificate (a “Buy-In”), then the Company shall
pay in cash to the Warrantholder (for costs incurred either directly by such Warrantholder or on
behalf of a third party) the amount by which the total purchase price paid for Common Stock as a
result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by
such Warrantholder as a result of the sale to which such Buy-In relates. The Warrantholder shall
provide the Company written notice indicating the amounts payable to the Warrantholder in respect
of the Buy-In.

     Section 4. Compliance with the Securities Act of 1933. The Company may cause the
legend set forth on the first page of this Warrant to be set forth on each Warrant or similar
legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the
Company is of the opinion as to any such security that such legend is unnecessary.

     Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any certificates for
Warrant Shares in a name other than that of the Warrantholder in respect of which such shares are
issued, and in such case, the Company shall not be required to issue or deliver any certificate for
Warrant Shares or any Warrant until the person requesting the same has paid to the Company the
amount of such tax or has established to the Company’s reasonable satisfaction that such tax has
been paid. The Warrantholder shall be responsible for income taxes due under federal, state or
other law, if any such tax is due.

     Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable
indemnity or bond with respect thereto, if requested by the Company.

     Section 7. Reservation of Common Stock. The Company hereby represents and warrants
that there have been reserved, and the Company shall at all applicable times keep reserved until
issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares
of Common

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Stock, sufficient shares to provide for the exercise of the rights of purchase represented by
this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant
shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock.

     Section 8 Adjustments. Subject and pursuant to the provisions of this Section 8, the
Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment
from time to time as set forth hereinafter.

               (a) If the Company shall, at any time or from time to time while this Warrant is outstanding,
pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its
outstanding shares of Common Stock into a greater number of shares or combine its outstanding
shares of Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the
continuing corporation), then (i) the Warrant Price in effect immediately prior to the date on
which such change shall become effective shall be adjusted by multiplying such Warrant Price by a
fraction, the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such change and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after giving effect to such change and (ii) the number of
Warrant Shares purchasable upon exercise of this Warrant shall be adjusted by multiplying the
number of Warrant Shares purchasable upon exercise of this Warrant immediately prior to the date on
which such change shall become effective by a fraction, the numerator of which is shall be the
Warrant Price in effect immediately prior to the date on which such change shall become effective
and the denominator of which shall be the Warrant Price in effect immediately after giving effect
to such change, calculated in accordance with clause (i) above. Such adjustments shall be made
successively whenever any event listed above shall occur.

               (b) If any capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation in which the Company is not the
survivor, reverse triangular merger in which the Company is the surviving entity but the shares of
the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or otherwise, or sale,
transfer or other disposition of all or substantially all of the Company’s assets to another
corporation shall be effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be
made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for a number of
Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise
of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition not taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each Warrantholder to the end that the provisions hereof
(including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring
such assets or other appropriate corporation or entity shall assume the obligation to deliver to
the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company,
such shares of stock, securities or assets as, in accordance with the foregoing provisions, the
Warrantholder may be entitled to purchase, and

3

 

the other obligations under this Warrant. Such adjustments shall be made successively
whenever any event listed above shall occur.

               (c) In case the Company shall fix a payment date for the making of a distribution to all
holders of Common Stock (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of evidences of indebtedness or assets
(other than dividends or distributions referred to in Section 8(a)), or subscription rights or
warrants, the Warrant Price to be in effect after such payment date shall be determined by
multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the
numerator of which shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior to such payment
date, less the fair market value (as determined by the Company’s Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such subscription rights or
warrants, and the denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such Market Price per share of Common Stock immediately prior to such
payment date. “Market Price” as of a particular date (the “Valuation Date”) shall mean the
following: (a) if the subject security is then listed on the Nasdaq Global Market or the Nasdaq
Capital Market (“Nasdaq”) or any other national stock exchange, the closing sale price of such
security on such exchange on the last trading day prior to the Valuation Date; (b) if the subject
security is then quoted on the National Association of Securities Dealers, Inc. OTC Bulletin Board
(the “Bulletin Board”) or such similar quotation system or association, the closing sale price of
one share of such security on the Bulletin Board or such other quotation system or association on
the last trading day prior to the Valuation Date or, if no such closing sale price is available,
the average of the high bid and the low asked price quoted thereon on the last trading day prior to
the Valuation Date; or (c) if the subject security or subject asset is not then listed on a
national stock exchange or quoted on the Bulletin Board or such other quotation system or
association, the fair market value of such security or asset as of the Valuation Date, as
determined in good faith by the Board of Directors of the Company and the Warrantholder. If a
subject security or subject asset is not then listed on a national securities exchange, the
Bulletin Board or such other quotation system or association, the Board of Directors of the Company
shall respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise
hereunder as to the fair market value of such security or asset as determined by the Board of
Directors of the Company. In the event that the Warrantholder does not agree with the Board of
Directors’ determination of the fair market value of any assets in respect of subpart (c) of this
paragraph, the Company and the Warrantholder shall jointly select an appraiser, who is experienced
in such matters to determine the value of such assets. The decision of such appraiser shall be
final and conclusive, and the cost of such appraiser shall be borne equally by the Company and the
Warrantholder. Such adjustment shall be made successively whenever such a payment date is fixed.

               (d) Except as provided in subsection (g) hereof, if and whenever the Company shall issue or
sell, or is, in accordance with any of subsections (d)(l) through (d)(7) hereof, deemed to have
issued or sold, any shares of Common Stock for no consideration or for a consideration per share
less than the Warrant Price in effect immediately prior to the time of such issue or sale (other
than in Excluded Issuances, as defined in subsection (g)), then and in each such case (a “Trigger
Issuance”) the then-existing Warrant Price, shall be reduced, as of the close of business on the
effective date of the Trigger Issuance, to an adjusted Warrant Price determined as follows:

          

4

 

          where:

	 	o	 	“A” equals the number of shares of Common Stock outstanding
(calculated on a diluted basis to include Additional Shares of Common Stock (as
defined below) deemed to be issued hereunder immediately preceding such Trigger
Issuance (but not including the Additional Shares giving rise to the adjustment
to the Warrant Price);
	 
	 	o	 	“B” equals the Warrant Price in effect immediately preceding
such Trigger Issuance;
	 
	 	o	 	“C” equals the number of Additional Shares of Common Stock
issued or deemed issued hereunder as a result of the Trigger Issuance; and
	 
	 	o	 	“D” equals the aggregate consideration, if any, received or
deemed to be received by the Company upon such Trigger Issuance;

provided, however, that in no event shall the Warrant Price after giving effect to
such Trigger Issuance be greater than the Warrant Price in effect prior to such Trigger Issuance.

For purposes of this subsection (d), “Additional Shares of Common Stock” shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this subsection (d), other
than Excluded Issuances (as defined in subsection (g)).

          For purposes of this Section 8(d), a Trigger Issuance shall be deemed to occur upon the
earliest of (i) the date the Company enters into a firm contract for the issuance or sale of the
Common Stock, (ii) the record date for the determination of stockholders entitled to receive any
such Common Stock or (iii) the date of actual issuance or sale of such Common Stock.

          For purposes of this subsection (d), the following subsections (d)(l) to (d)(7) shall also be
applicable:

     (d)(1) Issuance of Rights or Options. In case at any time the Company
shall in any manner grant (directly and not by assumption in a merger or otherwise)
any warrants or other rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called “Options” and such
convertible or exchangeable stock or securities being called “Convertible
Securities”) whether or not such Options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing (i)
the sum (which sum shall constitute the applicable consideration) of (x) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such Options, plus (y) the aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus (z), in the case
of such Options which relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or upon
the conversion or exchange of all such Convertible Securities issuable

5

 

upon the exercise of such Options) shall be less than the Warrant Price in
effect immediately prior to the time of the granting of such Options, then the total
number of shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to have been issued for such price
per share as of the date of granting of such Options or the issuance of such
Convertible Securities and thereafter shall be deemed to be outstanding for purposes
of adjusting the Warrant Price. Except as otherwise provided in subsection 8(d)(3),
no adjustment of the Warrant Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of such Options or upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.

     (d)(2) Issuance of Convertible Securities. In case the Company shall in
any manner issue (directly and not by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the sum (which sum shall constitute the applicable consideration) of
(x) the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus (y) the aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (ii) the total number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities) shall be less than
the Warrant Price in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been issued for
such price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding for purposes of
adjusting the Warrant Price, provided that (a) except as otherwise provided in
subsection 8(d)(3), no adjustment of the Warrant Price shall be made upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities and (b) no further adjustment of the Warrant Price shall be made by
reason of the issue or sale of Convertible Securities upon exercise of any Options
to purchase any such Convertible Securities for which adjustments of the Warrant
Price have been made pursuant to the other provisions of subsection 8(d).

     (d)(3) Change in Option Price or Conversion Rate. Upon the happening of
any of the following events, namely, if the purchase price provided for in any
Option referred to in subsection 8(d)(l) hereof, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities referred
to in subsections 8(d)(l) or 8(d)(2), or the rate at which Convertible Securities
referred to in subsections 8(d)(l) or 8(d)(2) are convertible into or exchangeable
for Common Stock shall change at any time (including, but not limited to, changes
under or by reason of provisions designed to protect against dilution), the Warrant
Price in effect at the time of such event shall forthwith be readjusted to the
Warrant Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the termination of any Option for which any
adjustment was made pursuant to this subsection 8(d) or any right to convert or
exchange Convertible Securities for which any adjustment was made pursuant to this
subsection 8(d) (including without limitation upon the redemption or purchase for
consideration of such Convertible Securities by the Company), the Warrant Price then
in effect hereunder

6

 

shall forthwith be changed to the Warrant Price which would have been in effect
at the time of such termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such termination, never been issued.

     (d)(4) Stock Dividends. Subject to the provisions of this Section 8(d),
in case the Company shall declare a dividend or make any other distribution upon any
stock of the Company (other than the Common Stock) payable in Common Stock, Options
or Convertible Securities, then any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.

     (d)(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount received by the
Company therefor, after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed to be the fair
value of such consideration as determined in good faith by the Board of Directors of
the Company, after deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection therewith.
In case any Options shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued for such consideration as determined in
good faith by the Board of Directors of the Company. If Common Stock, Options or
Convertible Securities shall be issued or sold by the Company and, in connection
therewith, other Options or Convertible Securities (the “Additional Rights”) are
issued, then the consideration received or deemed to be received by the Company
shall be reduced by the fair market value of the Additional Rights (as determined
using the Black-Scholes option pricing model or another method mutually agreed to by
the Company and the Warrantholder). The Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Warrantholder as to the fair
market value of the Additional Rights. In the event that the Board of Directors of
the Company and the Warrantholder are unable to agree upon the fair market value of
the Additional Rights, the Company and the Warrantholder shall jointly select an
appraiser, who is experienced in such matters. The decision of such appraiser shall
be final and conclusive, and the cost of such appraiser shall be borne evenly by the
Company and the Warrantholder.

     (d)(6) Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the date of
the granting of such right of subscription or purchase, as the case may be.

     (d)(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for the
account of the Company or any of its wholly-owned subsidiaries, and the disposition
of any such shares

7

 

(other than the cancellation or retirement thereof) shall be considered an
issue or sale of Common Stock for the purpose of this subsection (f).

               (e) An adjustment to the Warrant Price shall become effective immediately after the payment
date in the case of each dividend or distribution and immediately after the effective date of each
other event which requires an adjustment. This Section 8(e) shall be applied after giving effect
to Section 8(d)(6).

               (f) In the event that, as a result of an adjustment made pursuant to this Section 8, the
Warrantholder shall become entitled to receive any shares of capital stock of the Company other
than shares of Common Stock, the number of such other shares so receivable upon exercise of this
Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in
this Warrant.

               (g) Anything herein to the contrary notwithstanding, the Company shall not be required to make
any adjustment of the Warrant Price in the case of the issuance of (A) capital stock, Options or
Convertible Securities issued to directors, officers, employees or consultants of the Company in
connection with their service as directors of the Company, their employment by the Company or their
retention as consultants by the Company pursuant to an equity compensation program approved by the
Board of Directors of the Company or the compensation committee of the Board of Directors of the
Company, (B) shares of Common Stock issued upon the conversion or exercise of Options or
Convertible Securities issued prior to the date hereof, provided such securities are not amended
after the date hereof to increase the number of shares of Common Stock issuable thereunder or to
lower the exercise or conversion price thereof, (C) securities issued pursuant to this Warrant, (D)
securities issued to Doug Cox and Kourosh Tahmasebi in connection with the Stock Purchase
Agreements between the Company and each of Doug Cox and Kourosh Tahmasebi, and (E) shares of Common
Stock issued or issuable by reason of a dividend, stock split or other distribution on shares of
Common Stock (but only to the extent that such a dividend, split or distribution results in an
adjustment in the Warrant Price pursuant to the other provisions of this Warrant) (collectively,
“Excluded Issuances”).

               (h) Upon any adjustment to the Warrant Price pursuant to Section 8(d) above, the number of
Warrant Shares purchasable hereunder shall be adjusted by multiplying such number by a fraction,
the numerator of which shall be the Warrant Price in effect immediately prior to such adjustment
and the denominator of which shall be the Warrant Price in effect immediately thereafter.

               (i) No adjustment of the Warrant Price shall be made in an amount of less than $0.01, but any
such lesser adjustment shall be carried forward and shall be made at the time and together with the
next subsequent adjustment which, together with the adjustments so carried forward, shall amount to
not less than $0.01.

               (j) In case any event shall occur as to which the other provisions of this Section 8 are not
strictly applicable but as to which failure to make any adjustment would not fairly protect the
exercise rights represented by this Section 8 in accordance with the essential intent and
principles hereof then, in each such case, the Investor may appoint a firm of independent public
accountants of recognized national standing reasonably acceptable to the Company, which shall give
their opinion as to the adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the exercise rights represented herein. Upon
receipt of such opinion, the Company will promptly mail a copy thereof to the Investor and shall
make the adjustments described therein. The fees and expenses of such independent public
accountants shall be borne by the Company.

8

 

     Section 9. Fractional Interest. The Company shall not be required to issue fractions
of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this Section 9, be deliverable upon such
exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising
Warrantholder an amount in cash equal to the Market Price of such fractional share of Common Stock
on the date of exercise.

     Section 10. Extension of Expiration Date. If the Company fails to cause any
Registration Statement covering Registrable Securities (as defined in the Registration Rights
Agreement) to be declared effective prior to the applicable dates set forth therein, or if any of
the events specified in Section 2(c)(ii) of the Registration Rights Agreement occurs, and the
Blackout Period (as defined in the Registration Rights Agreement dated August ___, 2008, between the
Company and the Warrantholder (the “Registration Rights Agreement”)) (whether alone, or in
combination with any other Blackout Period) continues for more than 60 days in any 12 month period,
or for more than a total of 90 days, then the Expiration Date of this Warrant shall be extended one
day for each day beyond the 60-day or 90-day limits, as the case may be, that the Blackout Period
continues.

     Section 11 Benefits. Nothing in this Warrant shall be construed to give any person or
entity (other than the Company and the Warrantholder) any legal or equitable right, remedy or
claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company
and the Warrantholder.

     Section 12 Notices to Warrantholder. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the
Warrantholder stating the adjusted Warrant Price and the adjusted number of Warrant Shares
resulting from such event and setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject adjustment.

     Section 13 Identity of Transfer Agent. The Transfer Agent for the Common Stock is
Interwest Transfer Co., Inc. Upon the appointment of any subsequent transfer agent for the Common
Stock or other shares of the Company’s capital stock issuable upon the exercise of the rights of
purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting
forth the name and address of such transfer agent.

     Section 14 Notices. Unless otherwise provided, any notice required or permitted under
this Warrant shall be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed given upon such
delivery, (ii) if given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient or (B) three days after such notice is deposited in first
class mail, postage prepaid, and (iii) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one business day after delivery to such carrier.
All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in
the Company’s books and records and, if to the Company, at the address as follows, or at such other
address as the Warrantholder or the Company may designate by notice to the other given in
accordance with this Section 14:

9

 

If to the Company:

Remedent, Inc.

Xavier de Cocklaan 42

9831, Deurle, Belgium

Attention: Robin List, Chief Executive Officer

     Section 15. Registration Rights. The initial Warrantholder is entitled to the benefit
of certain registration rights with respect to the shares of Common Stock issuable upon the
exercise of this Warrant as provided in the Registration Rights Agreement, and any subsequent
Warrantholder may be entitled to such rights subject to the terms of the Registration Rights
Agreement.

     Section 16. Successors. All the covenants and provisions hereof by or for the benefit
of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns
hereunder.

     Section 17. Governing Law. THIS WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY
AND THE WARRANTHOLDER SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW RULE THAT WOULD CAUSE
THE APPLICATION OR THE LAWS OF ANY JURISDICTION OTHER THAN THE INTERNAL LAWS OF THE STATE OF NEW
YORK TO THE RIGHTS AND DUTIES OF THE COMPANY AND THE WARRANTHOLDER.

     Section 18 Consent to Jurisdiction.

               EACH OF THE COMPANY, AND BY ACCEPTING THIS WARRANT, THE WARRANTHOLDER, IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTIES AND ASSETS, TO THE EXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATED OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT THEREFROM (COLLECTIVELY, THE “NEW YORK
COURTS”), IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RELATING THERETO, AND EACH OF
THE COMPANY, AND BY ACCEPTING THIS WARRANT, THE WARRANTHOLDER, IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH PROCEEDING SHALL BE HEARD AND DETERMINED IN THE NEW
YORK COURTS. EACH OF THE COMPANY, AND BY ACCEPTING THIS WARRANT, THE WARRANTHOLDER, AGREES THAT A
FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

               EACH OF THE COMPANY, AND BY ACCEPTING THIS WARRANT, THE WARRANTHOLDER, IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT OF OR
RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OF THE NEW YORK COURTS.
EACH OF THE COMPANY, AND BY ACCEPTING THIS WARRANT, THE WARRANTHOLDER, IRREVOCABLY WAIVES, TO THE

10

 

FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH PROCEEDING IN ANY OF THE NEW YORK COURTS.

     Section 19 Waiver of Jury Trial. EACH OF THE COMPANY, AND BY ACCEPTING THIS WARRANT,
THE WARRANTHOLDER, ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS WARRANT
IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

     Section 20 Cashless Exercise. Notwithstanding any other provision contained herein to
the contrary, from and after the first anniversary of the Closing Date and so long as the Company
is required under the Registration Rights Agreement to have effected the registration of the
Warrant Shares for sale to the public pursuant to a Registration Statement (as such term is defined
in the Registration Rights Agreement), if the Warrant Shares may not be freely sold to the public
for any reason (including, but not limited to, the failure of the Company to have effected the
registration of the Warrant Shares or to have a current prospectus available for delivery or
otherwise, but excluding the period of any Allowed Delay (as defined in the Registration Rights
Agreement), the Warrantholder may elect to receive, without the payment by the Warrantholder of the
aggregate Warrant Price in respect of the shares of Common Stock to be acquired, shares of Common
Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant (or
such portion of this Warrant being so exercised) together with the Net Issue Election Notice
annexed hereto as Appendix B duly executed, at the office of the Company. Thereupon, the Company
shall issue to the Warrantholder such number of fully paid, validly issued and nonassessable shares
of Common Stock as is computed using the following formula:

where

               X = the number of shares of Common Stock which the Warrantholder has then requested be issued
to the Warrantholder;

               Y = the total number of shares of Common Stock covered by this Warrant which the Warrantholder
has surrendered at such time for cash-less exercise (including both shares to be issued to the
Warrantholder and shares to be canceled as payment therefor);

               A = the “Market Price” of one share of Common Stock as at the time the net issue election is
made; and

               B = the Warrant Price in effect under this Warrant at the time the net issue election is made.

     Section 21 No Rights as Stockholder. Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of
its ownership of this Warrant.

     Section 22 No Impairment. The Company shall not, by amendment of its charter
documents or through any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of

11

 

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 under this Warrant by the Company but will at all
times in good faith assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect the exercise
rights of the Holder against dilution or other impairment, including without limitation taking all
such action from time to time as may be necessary or appropriate to ensure that the par value per
share of the Common Stock is at all times equal to or less than the Current Market Price in effect
at such time.

     Section 23 Validity of Warrant Certificate. Irrespective of any adjustments or
changes in the Current Market Price or the amount of Warrant Shares purchasable upon exercise of
this Warrant, this Warrant certificate may continue to express the Current Market Price per share
and the amount of Warrant Shares purchasable hereunder as of the date this Warrant was originally
issued; provided, the Holder shall be entitled to exercise this Warrant after giving effect to each
such adjustment and change, and this Warrant shall be deemed to incorporate each such adjustment
and change as if a new Warrant reflecting each such adjustment and change had been issued to the
Warrantholder.

     Section 24 Amendment; Waiver. Any term of this Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon the written
consent of the Company and the Warrantholder.

     Section 25 Section Headings. The section headings in this Warrant are for the
convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or
restrict the provisions hereof.

     Section 26 Severability. Any provision of this Warrant that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof but shall
be interpreted as if it were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Company and, by accepting this Warrant, the Warrantholder each
hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable
in any respect.

     Section 27 Further Assurances. The Company and the Warrantholder shall each execute
and deliver all such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

[remainder of page intentionally left blank]

12

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the
24th day of August, 2008.

	 	 	 
	 

	 	REMEDENT, INC.
	 
	 	 
	 

	 	By:
	 

	 	Name: Guy De Vreese
	 

	 	Title: Chairman of the Board

13

 

APPENDIX A

REMEDENT, INC.

WARRANT EXERCISE FORM

To Remedent, Inc.:

     The undersigned hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and
surrender of the Warrant, ___ shares of Common Stock (“Warrant Shares”) provided for
therein, and requests that certificates for the Warrant Shares be issued as follows:

	 	 	 	 	 
	 

	 	 

Name
	 	 
	 
	 	 	 	 
	 

	 	 

Address
	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

Federal Tax ID or Social Security No.
	 	 

	 	 	 	 	 
	 

	 	and delivered by
	 	(certified mail to the above address, or
	 

	 	 	 	(electronically (provide DWAC Instructions:                    ), or
	 

	 	 	 	(other (specify):                                                             ).

and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise
of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise
of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s
Assignee as below indicated and delivered to the address stated below.

Dated:                                         ,                     

Note: The signature must correspond with the name of the Warrantholder as
written on the first page of the Warrant in every particular, without alteration or enlargement
or any change whatever, unless the Warrant has been assigned.

	 	 	 	 	 	 	 
	Signature:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Name (please print)	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Address
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Federal Identification or
Social Security No.	 	 	 	 
	 
	 	 	 	 	 	 
	Assignee:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

14

 

APPENDIX B

REMEDENT, INC.

NET ISSUE ELECTION NOTICE

To: Remedent, Inc.

Date:[                                        ]

     The undersigned hereby elects under Section 20 of this Warrant to surrender the right
to purchase [                    ] shares of Common Stock pursuant to this Warrant and hereby requests the
issuance of [                    ] shares of Common Stock. The certificate(s) for the shares issuable upon
such net issue election shall be issued in the name of the undersigned or as otherwise indicated
below.

	 	 	 
	 

Signature

	 	 
	 
	 	 
	 

Name for Registration

	 	 
	 
	 	 
	 

Mailing Address

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]