Document:

nvstrr_ex4-1

 

Exhibit 4.1

WARRANT AGENT AGREEMENT

 

WARRANT
AGENT AGREEMENT (this “Warrant Agreement”) dated
as of _________, 2021 (the “Issuance Date”) between
Novusterra Inc., a Florida corporation (the “Company”), and
[__________] (the “Warrant
Agent”).

 

WHEREAS, pursuant
to the terms of that certain Underwriting Agreement
(“Underwriting
Agreement”), dated [______], 2021, by and between the
Company and EF Hutton, division of Benchmark Investments, LLC,
as representative of the underwriters set forth therein, the
Company is engaged in a public offering (the “Offering”) of up to
________ shares (the “Shares”) of common stock,
no par value per share (the “Common Stock”) of the
Company and up to _________ warrants (the “Warrants”) to purchase
shares of Common Stock (the “Warrant Shares”),
including Shares and Warrants issuable pursuant to the
underwriters’ over-allotment option;

 

WHEREAS, the
Company has filed with the Securities and Exchange Commission (the
“Commission”) a
Registration Statement, No. 377-04958, on Form S-1 (as
the same may be amended from time to time, the “Registration Statement”),
for the registration under the Securities Act of 1933, as amended
(the “Securities
Act”), of the Shares, Warrants and Warrant Shares, and
such Registration Statement was declared effective on _________,
2021;

 

WHEREAS, the
Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in accordance with the
terms set forth in this Warrant Agreement in connection with the
issuance, registration, transfer, exchange and exercise of the
Warrants;

 

WHEREAS, the
Company desires to provide for the provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the
Company, the Warrant Agent, and the holders of the Warrants;
and

 

WHEREAS, all acts
and things have been done and performed which are necessary to make
the Warrants the valid, binding and legal obligations of the
Company, and to authorize the execution and delivery of this
Warrant Agreement.

 

NOW,
THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:

 

1.             Appointment
of Warrant Agent. The Company hereby appoints the Warrant
Agent to act as agent for the Company with respect to the Warrants,
and the Warrant Agent hereby accepts such appointment and agrees to
perform the same in accordance with the express terms and
conditions set forth in this Warrant Agreement (and no implied
terms or conditions).

 

2.             Warrants.

 

2.1           Form of
Warrants. The Warrants shall be registered securities and
shall be initially evidenced by a global Warrant certificate
(“Global
Certificate”) in the form of Annex A to this Warrant
Agreement, which shall be deposited on behalf of the Company with a
custodian for The Depository Trust Company (“DTC”) and registered in
the name of Cede & Co., as nominee of DTC. The terms of
the Global Certificate are incorporated herein by reference. If DTC
subsequently ceases to make its settlement system available for the
Warrants, the Company may instruct the Warrant Agent regarding
making arrangements for book-entry settlement. In the event that
the Warrants are not eligible for, or it is no longer necessary to
have the Warrants available in, registration in the name of
Cede & Co., as nominee of DTC, the Company may instruct
the Warrant Agent to provide written instructions to DTC to deliver
to the Warrant Agent for cancellation the Global Certificate, and
the Company shall instruct the Warrant Agent to deliver to each
Holder (as defined below) separate certificates evidencing the
Warrants (“Definitive Certificates”
and, together with the Global Certificate, “Warrant Certificates”),
in the form of Annex
B to this Warrant Agreement. The Warrants represented by the
Global Certificate are referred to as “Global
Warrants”. 

 

2.2           Issuance
and Registration of Warrants.

 

2.2.1           Warrant
Register. The Warrant Agent shall maintain books
(“Warrant
Register”) for the registration of original issuance
and the registration of transfer of the Warrants. Any person in
whose name ownership of a beneficial interest in the Warrants
evidenced by a Global Certificate is recorded in the records
maintained by DTC or its nominee shall be deemed the
“beneficial owner” thereof, provided that all such
beneficial interests shall be held through a Participant (as
defined below), which shall be the registered holder of such
Warrants.

 

2.2.2           Issuance
of Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue the Global Certificate and deliver the
Warrants in the DTC settlement system in accordance with written
instructions delivered to the Warrant Agent by the Company.
Ownership of beneficial interests in the Warrants shall be shown
on, and the transfer of such ownership shall be effected through,
records maintained (i) by DTC and (ii) by institutions
that have accounts with DTC (each, a “Participant”), subject to
a Holder’s right to elect to receive a Definitive
Certificate. Any Holder desiring to elect to receive a Warrant in
certificated form shall make such request in writing delivered to
the Warrant Agent pursuant to Section 2.2.8, and shall
surrender to the Warrant Agent the interest of the Holder on the
books of the Participant evidencing the Warrants which are to be
represented by a Definitive Certificate through the DTC settlement
system. Thereupon, the Warrant Agent shall countersign and deliver
to the person entitled thereto a Definitive Certificate or
Definitive Certificates, as the case may be, as so requested.
Alternatively, non-certificated warrants may be issued and the
Warrant Agent will deliver a statement representing the book-entry
position to the Holder upon written instructions from the Company,
the Holder, or DTC.

 

 

 

 

2.2.3           Beneficial
Owner; Holder. Prior to due presentment for registration of
transfer of any Warrant, the Company and the Warrant Agent may deem
and treat the person in whose name that Warrant shall be registered
on the Warrant Register (the “Holder”) as the absolute
owner of such Warrant for purposes of any exercise thereof, and for
all other purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from
giving effect to any written certification, proxy or other
authorization furnished by DTC governing the exercise of the rights
of a holder of a beneficial interest in any Warrant. The rights of
beneficial owners in a Warrant evidenced by the Global Certificate
shall be exercised by the Holder or a Participant through the DTC
system, except to the extent set forth herein or in the Global
Certificate.

 

2.2.4           Execution.
The Warrant Certificates shall be executed on behalf of the Company
by any authorized officer of the Company (an “Authorized Officer”),
which need not be the same authorized signatory for all of the
Warrant Certificates, either manually or by facsimile signature.
The Warrant Certificates shall be countersigned by an authorized
signatory of the Warrant Agent, which need not be the same
signatory for all of the Warrant Certificates, and no Warrant
Certificate shall be valid for any purpose unless so countersigned.
In case any Authorized Officer of the Company that signed any of
the Warrant Certificates ceases to be an Authorized Officer of the
Company before countersignature by the Warrant Agent and issuance
and delivery by the Company, such Warrant Certificates,
nevertheless, may be countersigned by the Warrant Agent, issued and
delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf
of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be an Authorized
Officer of the Company authorized to sign such Warrant Certificate,
although at the date of the execution of this Warrant Agreement any
such person was not such an Authorized Officer.

 

2.2.5           Registration
of Transfer. At any time at or prior to the Expiration Date
(as defined below), a transfer of any Warrants may be registered
and any Warrant Certificate or Warrant Certificates may be split
up, combined or exchanged for another Warrant Certificate or
Warrant Certificates evidencing the same number of Warrants as the
Warrant Certificate or Warrant Certificates surrendered. Any Holder
desiring to register the transfer of Warrants or to split up,
combine or exchange any Warrant Certificate shall make such request
in writing delivered to the Warrant Agent, and shall surrender to
the Warrant Agent the Warrant Certificate or Warrant Certificates
evidencing the Warrants the transfer of which is to be registered
or that is or are to be split up, combined or exchanged. Thereupon,
the Warrant Agent shall countersign and deliver to the person
entitled thereto a Warrant Certificate or Warrant Certificates, as
the case may be, as so requested. The Warrant Agent may require
reasonable and customary payment, by the Holder requesting a
registration of transfer of Warrants or a split-up, combination or
exchange of a Warrant Certificate (but, for purposes of clarity,
not upon the exercise of the Warrants and issuance of Warrant
Shares to the Holder and not with respect to any Global Warrants),
of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with such registration of transfer,
split-up, combination or exchange, together with reimbursement to
the Warrant Agent of all reasonable expenses incidental
thereto. 

 

2.2.6           Loss,
Theft and Mutilation of Warrant Certificates. Upon receipt
by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation
of a Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security in customary form and amount,
and reimbursement to the Company and the Warrant Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Warrant Agent and cancellation of the Warrant Certificate if
mutilated, the Warrant Agent shall, on behalf of the Company,
countersign and deliver a new Warrant Certificate of like tenor to
the Holder in lieu of the Warrant Certificate so lost, stolen,
destroyed or mutilated. The Warrant Agent may charge the Holder an
administrative fee for processing the replacement of lost Warrant
Certificates, which shall be charged only once in instances where a
single surety bond obtained covers multiple certificates, provided
that no surety bond will be required in connection with Global
Warrants. The Warrant Agent may receive compensation from the
surety companies or surety bond agents for administrative services
provided to them.

 

2.2.7           Proxies.
The Holder of a Warrant may grant proxies or otherwise authorize
any person, including the Participants and beneficial holders that
may own interests through the Participants, to take any action that
a Holder is entitled to take under this Agreement or the Warrants;
provided, however, that at all times that Warrants are evidenced by
a Global Certificate, exercise of those Warrants shall be effected
on their behalf by Participants through DTC in accordance the
procedures administered by DTC.

 

2.2.8           Warrant
Certificate Request. A Holder has the right to elect at any
time or from time to time a Warrant Exchange (as defined below)
pursuant to a Warrant Certificate Request Notice (as defined
below). Upon written notice by a Holder to the Warrant Agent for
the exchange of some or all of such Holder’s Global Warrants
for a Definitive Certificate evidencing the same number of
Warrants, which request shall be in the form attached hereto as
Exhibit A (a
“Warrant Certificate
Request Notice” and the date of delivery of such
Warrant Certificate Request Notice by the Holder, the
“Warrant Certificate
Request Notice Date” and the deemed surrender upon
delivery by the Holder of a number of Global Warrants for the same
number of Warrants evidenced by a Definitive Certificate, a
“Warrant
Exchange”), the Warrant Agent shall promptly effect
the Warrant Exchange and shall promptly issue and deliver to the
Holder a Definitive Certificate for such number of Warrants in the
name set forth in the Warrant Certificate Request Notice. Such
Definitive Certificate shall be dated the original issue date of
the Warrants, shall be manually executed by an authorized signatory
of the Company, shall be in the form attached hereto as
Annex B, and shall
be reasonably acceptable in all respects to such Holder. In
connection with a Warrant Exchange, the Company agrees to deliver,
or to direct the Warrant Agent to deliver, the Definitive
Certificate to the Holder within the earlier of (i) two
(2) Trading Days and (ii) the number of Trading Days
comprising the Standard Settlement Period of the Warrant
Certificate Request Notice pursuant to the delivery instructions in
the Warrant Certificate Request Notice (“Warrant Certificate Delivery
Date”). If the Company fails for any reason to deliver
to the Holder the Definitive Certificate subject to the Warrant
Certificate Request Notice by the Warrant Certificate 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
evidenced by such Definitive Certificate (based on the VWAP (as
defined in the Warrants) of the Common Stock on the Warrant
Certificate Request Notice Date), $10 per Business Day for each
Business Day after such Warrant Certificate Delivery Date until
such Definitive Certificate is delivered or, prior to delivery of
such Warrant Certificate, the Holder rescinds such Warrant
Exchange. The Company covenants and agrees that, upon the date of
delivery of the Warrant Certificate Request Notice, the Holder
shall be deemed to be the holder of the Definitive Certificate and,
notwithstanding anything to the contrary set forth herein, the
Definitive Certificate shall be deemed for all purposes to contain
all of the terms and conditions of the Warrants evidenced by such
Warrant Certificate and the terms of this Warrant
Agreement.

 

2.2.9           For
purposes of clarity, if there is a conflict between the express
terms of this Warrant Agreement and the Warrant certificate in the
form of Annex B
hereto with respect to terms of the Warrants, the terms of the
Warrant certificate shall govern and control.

 

 

 

 

3.             Terms
and Exercise of Warrants.

 

3.1           Exercise
Price. Each Warrant shall entitle the Holder, subject to the
provisions of the applicable Warrant Certificate and of this
Warrant Agreement, to purchase from the Company the number of
shares of Common Stock stated therein, at the price of $____ per
whole share, subject to the subsequent adjustments provided in
Section 4 hereof. The term “Exercise Price” as
used in this Warrant Agreement refers to the price per share at
which shares of Common Stock may be purchased at the time a Warrant
is exercised. 

 

3.2          Duration
of Warrants. Warrants may be exercised only during the
period (“Exercise
Period”) commencing on the Issuance Date and
terminating at 11:59 P.M., New York City time (the “close of
business”) on _________, 2026 (“Expiration Date”). Each
Warrant not exercised on or before the Expiration Date shall become
void, and all rights thereunder and all rights in respect thereof
under this Warrant Agreement shall cease at the close of business
on the Expiration Date.

 

3.3          Exercise
of Warrants.

 

3.3.1        Exercise
and Payment.

 

(a)            Exercise
of the purchase rights represented by a Warrant may be made, in
whole or in part, at any time or times during the Exercise Period
by delivery to the Warrant Agent (with a copy to the Company) of
the Notice of Exercise in the form attached as Exhibit A to the
Definitive Certificate attached hereto as Annex B (the
“Notice of
Exercise”). Within the earlier of (i) two
(2) Trading Days and (ii) the number of Trading Days
comprising the Standard Settlement Period following the date the
Holder delivers the Notice of Exercise as aforesaid, the Holder
shall deliver the aggregate Exercise Price for the shares specified
in the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 3.3.6 below
is specified in the applicable Notice of Exercise. No ink-original
Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise form be required. Notwithstanding anything
herein to the contrary, the Holder shall surrender such Warrant to
the Warrant Agent for cancellation within three (3) Trading
Days of the date the Notice of Exercise is delivered to the Warrant
Agent. Partial exercises of a Warrant resulting in purchases of a
portion of the total number of Warrant Shares available thereunder
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 Warrant
Agent shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Warrant Agent shall
deliver any objection to any Notice of Exercise within one
(1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of a
Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following the purchase of a portion of the Warrant
Shares under a Warrant, the number of Warrant Shares available for
purchase thereunder at any given time may be less than the amount
stated on the face thereof.

 

(b)            Notwithstanding
the foregoing in this Section 3.3.1, a holder whose interest
in a Warrant is a beneficial interest in
certificate(s) representing such Warrant held in registered
form through DTC (or another established clearing corporation
performing similar functions), shall effect exercises made pursuant
to this Section 3.3.1 by delivering to DTC (or such other
clearing corporation, as applicable) the appropriate instruction
form for exercise, complying with the procedures to effect exercise
that are required by DTC (or such other clearing corporation, as
applicable), subject to a holder’s right to elect to receive
a Definitive Warrant pursuant to the terms of this Warrant
Agreement, in which case this sentence shall not apply. Upon giving
irrevocable instructions to its Participant to exercise Warrants,
solely for purposes of Regulation SHO, the holder whose interest in
the Warrant is a beneficial interest shall be deemed to have
exercised such Warrant, regardless of when the applicable Warrant
Shares are delivered to such holder.

 

3.3.2        Issuance
of Warrant Shares.

 

(a)            The
Warrant Agent shall, on the Trading Day following the date it
receives a Notice of Exercise, advise the Company and the transfer
agent and registrar for the Company’s Common Stock (if the
Warrant Agent is not the transfer agent), in respect of
(i) the number of Warrant Shares indicated on the Notice of
Exercise as issuable upon such exercise with respect to such
exercised Warrants, (ii) the instructions of the Holder or
Participant, as the case may be, provided to the Warrant Agent with
respect to the delivery of the Warrant Shares and the number of
Warrants that remain outstanding after such exercise and
(iii) such other information as the Company or such transfer
agent and registrar shall reasonably request. 

 

(b)            The
Company shall cause the Warrant Shares purchased hereunder to be
transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s or its designee’s balance
account with DTC through its Deposit or Withdrawal at Custodian
system (“DWAC”) 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 the Holder or
(B) the Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earlier of
(i) two (2) Trading Days and (ii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the
“Warrant Share
Delivery Date”). Upon delivery of the Notice of
Exercise (or, if earlier, upon giving irrevocable instructions to
its Participant to exercise Warrants, solely for purposes of
Regulation SHO), the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares
with respect to which a Warrant has been exercised, irrespective of
the date of delivery of the Warrant Shares, provided that payment
of the aggregate Exercise Price (other than in the case of a
cashless exercise) is received within the earlier of (i) two
(2) Trading Days of and (ii) the number of Trading Days
comprising the Standard Settlement Period following delivery of the
Notice of Exercise. If the Company fails for any reason to deliver
to the Holder 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 Warrant Shares are delivered or Holder rescinds such
exercise. The Company agrees to maintain a transfer agent that is a
participant in the FAST program so long as the Warrants remain
outstanding and exercisable. As used herein, “Standard
Settlement Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of Exercise.
Notwithstanding the foregoing, with respect to any Notice(s) of
Exercise delivered on or prior to 12:00 p.m. (New York City time)
on the Issuance Date, which may be delivered at any time after the
time of execution of the Underwriting Agreement, the Company agrees
to deliver the Warrant Shares subject to such notice(s) by 4:00
p.m. (New York City time) on the Issuance Date and the Issuance
Date shall be the Warrant Share Delivery Date for purposes
hereunder, provided that payment of the aggregate Exercise Price
(other than in the case of a cashless exercise) is received by such
Warrant Share Delivery Date.

 

 

 

 

3.3.3        Valid
Issuance. All Warrant Shares issued by the Company upon the
proper exercise of a Warrant in conformity with this Warrant
Agreement shall be validly issued, fully paid and
non-assessable.

 

3.3.4        No
Fractional Exercise. No fractional Warrant Shares will be
issued upon the exercise of the Warrant. If, by reason of any
adjustment made pursuant to Section 4, a Holder would be
entitled, upon the exercise of such Warrant, to receive a
fractional interest in a share, the Company shall, upon such
exercise, round up to the nearest whole number the number of
Warrant Shares to be issued to such Holder.

 

3.3.5        No
Transfer Taxes. Issuance of 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 Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares 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 Warrant Shares are to be issued in a name other than the
name of the Holder, the Warrant when surrendered for exercise shall
be accompanied by the Assignment Form attached hereto as
Exhibit B 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. The Company shall pay all Transfer
Agent fees required for same-day processing of any Notice of
Exercise and all fees to the DTC (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.

 

3.3.6        Restrictive
Legend Events; Cashless Exercise Under Certain
Circumstances.

 

(i)            The
Company shall use its reasonable best efforts to maintain the
effectiveness of the Registration Statement and the current status
of the prospectus included therein or to file and maintain the
effectiveness of another registration statement and another current
prospectus covering the Warrants and the Warrant Shares at any time
that the Warrants are exercisable. The Company shall provide to the
Warrant Agent and each Holder prompt written notice of any time
that the Company is unable to deliver the Warrant Shares via DTC
transfer or otherwise without restrictive legend because
(A) the Commission has issued a stop order with respect to the
Registration Statement, (B) the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, (C) the Company
has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, (D) the
prospectus contained in the Registration Statement is not available
for the issuance of the Warrant Shares to the Holder or
(E) otherwise (each a “Restrictive Legend
Event”). To the extent that the Warrants cannot be
exercised as a result of a Restrictive Legend Event or a
Restrictive Legend Event occurs after a Holder has exercised
Warrants in accordance with the terms of the Warrants but prior to
the delivery of the Warrant Shares, the Company shall, at the
election of the Holder, which shall be given within five
(5) days of receipt of such notice of the Restrictive Legend
Event, either (A) rescind the previously submitted Notice of
Exercise and the Company shall return all consideration paid by
registered holder for such shares upon such rescission or
(B) treat the attempted exercise as a cashless exercise as
described in paragraph (ii) below and refund the cash portion
of the exercise price to the Holder. 

 

(ii)            If
a Restrictive Legend Event has occurred and is continuing, the
Warrants may also be exercisable on a cashless basis.
Notwithstanding anything herein to the contrary, the Company shall
not be required to make any cash payments or net cash settlement to
the Holder in lieu of delivery of the Warrant Shares. Upon a
“cashless exercise”, the Holder shall be entitled to
receive the number of Warrant Shares equal to the quotient (if such
quotient would be a positive number) obtained by dividing (A-B)
(X) by (A), where:

 

(A)
= 

As applicable:
(i) the VWAP on the Trading Day immediately preceding the date
of the applicable Notice of Exercise if such Notice of Exercise is
(1) both executed and delivered pursuant to
Section 3.3.1(a) hereof on a day that is not a Trading
Day or (2) both executed and delivered pursuant to
Section 3.3.1(a) hereof on a Trading Day prior to the
opening of “regular trading hours” (as defined in
Rule 600(b)(68) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the
option of the Holder, either (y) the VWAP on the Trading Day
immediately preceding the date of the applicable Notice of Exercise
or (z) the Bid Price of the Common Stock on the principal
Trading Market as reported by Bloomberg L.P. as of the time of the
Holder’s execution of the applicable Notice of Exercise if
such Notice of Exercise is executed during “regular trading
hours” on a Trading Day and is delivered within two
(2) hours thereafter (including until two (2) hours after
the close of “regular trading hours” on a Trading Day)
pursuant to Section 3.3.1(a) hereof, or (iii) the
VWAP on the date of the applicable Notice of Exercise if the date
of such Notice of Exercise is a Trading Day and such Notice of
Exercise is both executed and delivered pursuant to
Section 3.3.1(a) hereof after the close of “regular
trading hours” on such Trading Day.

 

(B)
= 

The Exercise Price
then in effect for the applicable Warrant Shares at the time of
such exercise.

 

(X)
= 

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

 

If the
Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that, in accordance with
Section 3(a)(9) of the Securities Act, the Warrant Shares
shall take on the registered characteristics of the Warrants being
exercised and the holding period of the Warrants being exercised
may be tacked to the holding period of the Warrant Shares, and the
Company agrees not to take any position contrary thereto. Upon
receipt of a Notice of Exercise for a cashless exercise, the
Warrant Agent will promptly deliver a copy of the Notice of
Exercise to the Company to confirm the number of Warrant Shares
issuable in connection with the cashless exercise. The Company
shall calculate and transmit to the Warrant Agent in a written
notice, and the Warrant Agent shall have no duty, responsibility or
obligation under this section to calculate, the number of Warrant
Shares issuable in connection with any cashless exercise. The
Warrant Agent shall be entitled to rely conclusively on any such
written notice provided by the Company, and the Warrant Agent shall
not be liable for any action taken, suffered or omitted to be taken
by it in accordance with such written instructions or pursuant to
this Warrant Agreement.  Notwithstanding anything herein to
the contrary, on the Expiration Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this
Section 3.3.6(ii).

 

 

 

 

3.3.7           Disputes.
In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the number of Warrant Shares
issuable in connection with any exercise, the Company shall
promptly deliver to the Holder the number of Warrant Shares that
are not disputed.

 

3.3.8           Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares 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 the Warrant Shares in accordance with the
provisions of Section 3.3.2(b) above 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
(the “Buy-In Payment
Amount”), by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (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 shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

 

3.3.9           Beneficial
Ownership Limitation. The Company shall not be required to
effect any exercise of a Warrant, and a Holder shall not have the
right to exercise any portion of a Warrant, pursuant to
Section 3 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 (as defined below), and any other persons acting as a
group together with the Holder or any of the Holder’s
Affiliates (such persons, “Attribution Parties”)),
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 and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of such 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,
non-exercised portion of such Warrant beneficially owned by the
Holder or any of its Affiliates or Attribution Parties and
(ii) exercise or conversion of the unexercised or
non-converted portion of any other securities of the Company
(including, without limitation, any other securities of the Company
which would entitle the holder thereof to acquire at any time
shares of Common Stock, including, without limitation, any debt,
preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, shares of Common
Stock (“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 or
Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 3.3.9, beneficial ownership shall
be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (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 3.3.9 applies, the determination of
whether a Warrant is exercisable (in relation to other securities
owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of a 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 a Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of a 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 3.3.9, 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 one Trading
Day 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 such Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% (or, upon
election by a Holder prior to the issuance of any Warrants, 9.99%)
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 a Warrant. The Holder, upon written
notice to the Company and the Warrant Agent, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 3.3.9, 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 a Warrant held
by the Holder and the provisions of this Section 3.3.9 shall
continue to apply. Any increase in the Beneficial Ownership
Limitation 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 3.3.9
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 a Warrant. 

 

3.3.10           Required
Reserve Amount.

 

(i)            So
long as any Warrants remains outstanding, the Company shall at all
times keep reserved for issuance under the Warrants a number of
shares of Common Stock at least equal to 100% of the maximum number
of shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock under
the Warrants then outstanding (without regard to any limitations on
exercise) (the “Required Reserve
Amount”); provided that at no time shall the number of
shares of Common Stock reserved pursuant to this
Section 3.3.10(i) be reduced other than proportionally in
connection with any exercise or redemption of Warrants or such
other event covered by Section 4 below. The Required Reserve
Amount (including, without limitation, each increase in the number
of shares so reserved) shall be allocated pro rata among the
Holders of the Warrants based on number of shares of Common Stock
issuable upon exercise of Warrants held by each Holder on the
Issuance Date (without regard to any limitations on exercise) or
increase in the number of reserved shares, as the case may be (the
“Authorized Share
Allocation”). In the event that a Holder shall sell or
otherwise transfer any of such Holder’s Warrants, each
transferee shall be allocated a pro rata portion of such
Holder’s Authorized Share Allocation. Any shares of Common
Stock reserved and allocated to any person which ceases to hold any
Warrants shall be allocated to the remaining Holders of Registered
Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Warrants then held by such Holders
(without regard to any limitations on exercise). 

 

 

 

 

(ii)  If,
notwithstanding Section 3.3.10(i) above, and not in
limitation thereof, at any time while any of the Warrants remain
outstanding, the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve the Required Reserve Amount (an
“Authorized Share
Failure”), then the Company shall immediately take all
action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to
reserve the Required Reserve Amount for all the Warrants then
outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its shareholders for the
approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall
provide each shareholder with a proxy statement and shall use its
best efforts to solicit its shareholders’ approval of such
increase in authorized Common Stock and to cause its board of
directors to recommend to the shareholders that they approve such
proposal. In the event that the Company is prohibited from issuing
shares of Common Stock upon an exercise of a Warrant due to the
failure by the Company to have sufficient shares of Common Stock
available out of the authorized but unissued Common Stock (such
unavailable number of shares of Common Stock, the
“Authorization
Failure Shares”), in lieu of delivering such
Authorization Failure Shares to a Holder, the Company shall pay
cash in exchange for the cancellation of such portion of the
applicable Warrant exercisable into such Authorization Failure
Shares at a price equal to the sum of (i) the product of
(x) such number of Authorization Failure Shares and
(y) the greatest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date the Holder
delivers the applicable Exercise Notice with respect to such
Authorization Failure Shares to the Company and ending on the date
of such issuance and payment under this Section 1(f); and
(ii) to the extent the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Authorization Failure
Shares, any Buy-In Payment Amount, brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

 

4.           Adjustments.

 

4.1           Adjustment
upon Subdivisions or Combinations. If the Company, at any
time while the Warrants are 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 the Warrants), (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 (excluding treasury shares, if any) outstanding
immediately after such event, and the number of shares issuable
upon exercise of each Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of such Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 4.1
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.

 

4.2           Adjustment
for Other Distributions.

 

(a)            Subsequent
Rights Offerings. In addition to any adjustments pursuant to
Section 4.1 above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete exercise of a Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights (provided, however, to
the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial
ownership of such shares of Common Stock as a result of such
Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation). 

 

(b)     Distributions.
In addition to any adjustment under Section 4.1, during such time
as the Warrants are outstanding, if the Company shall declare or
make any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of shares of Common Stock, by way of
return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any
time after the issuance of the Warrants, then, in each such case,
each Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein
if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of the Holder’s Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, that, to the extent
that the Holder’s right to participate in any such
Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of
such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation).

 

(c)
     Other Events. In the event that
the Company (or any Subsidiary (as defined in the Underwriting
Agreement)) shall take any action to which the provisions hereof
are not strictly applicable, or, if applicable, would not operate
to protect the Holders from dilution or if any event occurs of the
type contemplated by the provisions of this Section 4.2 but
not expressly provided for by such provisions (including, without
limitation, the granting of share appreciation rights, phantom
share rights or other rights with equity features), then the
Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Exercise Price and
the number of Warrant Shares (if applicable) so as to protect the
rights of the Holders, provided that no such adjustment pursuant to
this Section 4.2(c) will increase the Exercise Price or
decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 4.2, provided further that if a
Holder does not accept such adjustments as appropriately protecting
its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in
good faith, upon an independent investment bank of nationally
recognized standing to make such appropriate adjustments, whose
determination shall be final and binding absent manifest error and
whose fees and expenses shall be borne by the Company.

 

 

 

 

4.3           Fundamental
Transaction. If, at any time while the Warrants are
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 all 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 all outstanding shares of Common Stock
are effectively converted into or exchanged for other securities,
cash or property, or (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 or group of persons
whereby such other person or group 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 a
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
(without regard to any limitation in Section 3.3.9 on the
exercise of a 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 such amount of cash or any other
consideration (collectively, the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 3.3.9 on the
exercise of a 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 a Warrant following such Fundamental
Transaction. 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 the Warrants in accordance with the provisions
of this Section 4.3 pursuant to written agreements prior to or
during such Fundamental Transaction and shall, at the option of
each Holder, deliver to the Holder in exchange for the
Holder’s Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance
to the Holder’s 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 the Holder’s
Warrant (without regard to any limitations on the exercise of the
Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price thereunder 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 the Holder’s
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 the Warrants 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 the
Warrants with the same effect as if such Successor Entity had been
named as the Company therein.

 

Notwithstanding the
foregoing and the provisions of Section 4.3, at the request of a
Holder delivered at any time commencing on the earliest to occur of
(x) the public disclosure of any Fundamental Transaction,
(y) the consummation of any Fundamental Transaction and
(z) the Holder first becoming aware of any Fundamental
Transaction through the date that is thirty (30) days after the
public disclosure of the consummation of such Fundamental
Transaction by the Company pursuant to a Current Report on
Form 8-K filed with the United States Securities and Exchange
Commission, the Company or the Successor Entity (as the case may
be) shall purchase the Warrant from the Holder on the date of such
request by paying to the Holder cash in an amount equal to the
Black Scholes Value (as defined below). Payment of such amounts
shall be made by the Company (or at the Company’s direction)
to the Holder on or prior to the later of (x) the second (2nd)
Trading Day after the date of such request and (y) the date of
consummation of such Fundamental Transaction; provided, however, if the Fundamental
Transaction is not within the Company’s control, including
not approved by the Company’s board of directors or the
consideration is not in all shares of the Successor Entity, the
Holders shall only be entitled to receive from the Company or any
Successor Entity, as of the date of consummation of such
Fundamental Transaction, the same type or form of consideration
(and in the same proportion), at the Black Scholes Value of the
unexercised portion of the Warrants, that is being offered and paid
to the holders of shares of Common Stock of the Company in
connection with the Fundamental Transaction, whether that
consideration be in the form of cash, shares or any combination
thereof, or whether the holders of Common Stock are given the
choice to receive from among alternative forms of consideration in
connection with the Fundamental Transaction. “Black Scholes Value”
means the value of the unexercised portion of a Warrant remaining
on the date of the Holder’s request, which value is
calculated using the greater of the Black Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, as
a put option or a call option, utilizing (i) an underlying price
per share equal to, at the Holder’s election, either, (1) the
highest or lowest (at the Holder’s election) Closing Sale
Price of the Common Stock during the period beginning on the
Trading Day immediately preceding the announcement of the
applicable Fundamental Transaction (or the consummation of the
applicable Fundamental Transaction, if earlier) and ending on the
Trading Day of the Holder’s request or (2) the sum of the
price per share being offered in cash in the applicable Fundamental
Transaction (if any) plus the value of the non-cash consideration
being offered in the applicable Fundamental Transaction (if any),
(ii) (1) if calculating as a call option, a strike price equal to
the Exercise Price in effect on the date of the Holder’s
request, or (2) if calculating as a put option, a strike price
equal to $[ ] (as adjusted for share splits, share dividends, share
combinations, recapitalizations or other similar events), (iii) a
risk-free interest rate corresponding to the U.S. Treasury rate for
a period equal to the greater of (1) the remaining term of the
Warrant as of the date of consummation of the applicable
Fundamental Transaction or as of the date of the Holder’s
request if such request is prior to the date of the consummation of
the applicable Fundamental Transaction, (iv) a zero cost of borrow,
(v) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the “HVT” function on
Bloomberg (determined utilizing a 365 day annualization factor) as
of the Trading Day immediately following the earliest to occur of
(A) the public disclosure of the applicable Fundamental
Transaction, (B) the consummation of the applicable Fundamental
Transaction and (C) the date on which the Holder first became aware
of the applicable Fundamental Transaction, and (vi) a remaining
option time equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the
Expiration Date.

 

The
Company shall instruct the Warrant Agent in writing to mail by
first class mail, postage prepaid, to each Holder, written notice
of the execution of any such amendment, supplement or agreement
with the Successor Entity. Any supplemented or amended agreement
entered into by the successor corporation or transferee shall
provide for adjustments, which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section 4.3. The Warrant Agent shall have no duty,
responsibility or obligation to determine the correctness of any
provisions contained in such agreement or such notice, including
but not limited to any provisions relating either to the kind or
amount of securities or other property receivable upon exercise of
warrants or with respect to the method employed and provided
therein for any adjustments, and shall be entitled to rely
conclusively for all purposes upon the provisions contained in any
such agreement. The provisions of this Section 4.3 shall
similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and conveyances of the kind
described above.

 

 

 

 

4.4           Notices
to Holder.

 

(a)            Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 4, the Company shall
promptly deliver to the Holder by facsimile or email a notice
setting forth the Exercise Price after such adjustment and any
resulting adjustment to the number of Warrant Shares and setting
forth a brief statement of the facts requiring such
adjustment.

 

(b)            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
delivered by facsimile or email to the Holder at its last facsimile
number or email 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 deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice required by this Warrant
Agreement constitutes, or contains, material, non-public
information regarding the Company or any of its Subsidiaries, the
Company shall simultaneously file such notice with the Commission
pursuant to a Current Report on Form 8-K. Provided such notice
occurs within the Exercise Period, the Holder shall remain entitled
to exercise a 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.

 

4.5           Other
Events. If any event occurs of the type contemplated by the
provisions of Section 4.1 or 4.2 but not expressly provided
for by such provisions (including, without limitation, the granting
of stock appreciation rights, Adjustment Rights, phantom stock
rights or other rights with equity features to all holders of
Common Stock for no consideration), then the Company’s board
of directors will, at its discretion and in good faith, make an
adjustment in the Exercise Price and the number of Warrant Shares
or designate such additional consideration to be deemed issuable
upon exercise of a Warrant, so as to protect the rights of the
registered Holder. No adjustment to the Exercise Price will be made
pursuant to more than one sub-section of this Section 4 in
connection with a single issuance. 

 

4.6           Notices
of Changes in Warrant. Upon every adjustment of the Exercise
Price or the number of Warrant Shares issuable upon exercise of a
Warrant, the Company shall give written notice thereof to the
Warrant Agent, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease, if
any, in the number of Warrant Shares purchasable at such price upon
the exercise of a Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based. Upon the occurrence of any event specified in Sections 4.1
or 4.2, then, in any such event, the Company shall give written
notice to each Holder, at the last address set forth for such
holder in the Warrant Register, as of the record date or the
effective date of the event. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such
event. The Warrant Agent shall be entitled to rely conclusively on,
and shall be fully protected in relying on, any certificate, notice
or instructions provided by the Company with respect to any
adjustment of the Exercise Price or the number of shares issuable
upon exercise of a Warrant, or any related matter, and the Warrant
Agent shall not be liable for any action taken, suffered or omitted
to be taken by it in accordance with any such certificate, notice
or instructions or pursuant to this Warrant Agreement. The Warrant
Agent shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received written notice thereof from
the Company.

 

4.7           Voluntary
Adjustment By Company. The Company may at any time the
Warrants are outstanding, subject to the prior consent of the
Principal Market if less than $[ ] (as adjusted for share splits,
share dividends, share combinations, recapitalizations or other
similar transactions), with the prior written consent of the
Holders of a majority of the Warrants then outstanding, reduce the
then current Exercise Price to any amount and for any period of
time deemed appropriate by the board of directors of the
Company.

 

4.8           Noncircumvention.
The Company hereby covenants and agrees that the Company will not,
by amendment of its certificate of incorporation or other
organizational documents or through any reorganization, transfer of
assets, consolidation, merger, amalgamation, plan of arrangement,
dissolution, issuance 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 Agreement or the Warrants, and will at all
times in good faith carry out all the provisions of this Agreement
and the Warrants and take all action as may be required to protect
the rights of the Holders. Without limiting the generality of the
foregoing, the Company (a) shall not increase the par value of
any Common Stock receivable upon the exercise of the Warrants above
the Exercise Price then in effect, and (b) shall take all such
actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the exercise of the Warrants, which
shares of Common Stock shall be freely tradeable pursuant to all
applicable securities laws. Notwithstanding anything herein to the
contrary, if after the sixty (60) calendar day anniversary of the
Issuance Date, a Holder is not permitted to exercise the
Holder’s Warrant in full for any reason (other than pursuant
to restrictions set forth in Section 3.3.9 hereof), the
Company shall use its best efforts to promptly remedy such failure,
including, without limitation, obtaining such consents or approvals
as necessary to permit such exercise into shares of Common
Stock.

 

5.           Restrictive
Legends; Fractional Warrants. In the event that a Warrant
Certificate surrendered for transfer bears a restrictive legend,
the Warrant Agent shall not register that transfer until the
Warrant Agent has received an opinion of counsel for the Company
stating that such transfer may be made and indicating whether the
Warrants must also bear a restrictive legend upon that transfer.
The Warrant Agent shall not be required to effect any registration
of transfer or exchange which will result in the transfer of or
delivery of a Warrant Certificate for a fraction of a
Warrant.

 

 

 

 

6.           Other
Provisions Relating to Rights of Holders of
Warrants.

 

6.1           No
Rights as Stockholder. Except as otherwise specifically
provided herein, a Holder, solely in its capacity as a holder of
Warrants, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose,
nor shall anything contained in this Warrant Agreement be construed
to confer upon a Holder, solely in its capacity as the registered
holder of Warrants, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of share capital, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights or rights to participate in new
issues of shares, or otherwise, prior to the issuance to the Holder
of the Warrant Shares which it is then entitled to receive upon the
due exercise of Warrants.

 

6.2           Reservation
of Common Stock. The Company shall at all times reserve and
keep available a number of its authorized but unissued shares of
Common Stock that will be sufficient to permit the exercise in full
of all outstanding Warrants issued pursuant to this Warrant
Agreement.

 

7.             Concerning
the Warrant Agent and Other Matters.

 

7.1           Any
instructions given to the Warrant Agent orally, as permitted by any
provision of this Warrant Agreement, shall be confirmed in writing
by the Company as soon as practicable. The Warrant Agent shall not
be liable or responsible and shall be fully authorized and
protected for acting, or failing to act, in accordance with any
oral instructions which do not conform with the written
confirmation received in accordance with this
Section 7.1.

 

7.2                      (a)           Whether
or not any Warrants are exercised, for the Warrant Agent’s
services as agent for the Company hereunder, the Company shall pay
to the Warrant Agent such fees as may be separately agreed between
the Company and Warrant Agent and the Warrant Agent’s out of
pocket expenses in connection with this Warrant Agreement,
including, without limitation, the reasonable fees and expenses of
the Warrant Agent’s counsel. While the Warrant Agent
endeavors to maintain out-of-pocket charges (both internal and
external) at competitive rates, these charges may not reflect
actual out-of-pocket costs, and may include handling charges to
cover internal processing and use of the Warrant Agent’s
billing systems.

 

(b)            All
amounts owed by the Company to the Warrant Agent under this Warrant
Agreement are due within 30 days of the Company’s receipt of
an invoice. 

 

(c)            No
provision of this Warrant Agreement shall require Warrant Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under this
Warrant Agreement or in the exercise of its rights.

 

7.3           As
agent for the Company hereunder, the Warrant Agent:

 

(a)            shall
have no duties or obligations other than those specifically set
forth herein or as may subsequently be agreed to in writing by the
Warrant Agent and the Company;

 

(b)           shall
be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value, or
genuineness of the Warrants or any Warrant Shares;

 

(c)            shall
not be obligated to take any legal action hereunder; if, however,
the Warrant Agent determines to take any legal action hereunder,
and where the taking of such action might, in its judgment, subject
or expose it to any expense or liability it shall not be required
to act unless it has been furnished with an indemnity reasonably
satisfactory to it;

 

(d)            may
rely on and shall be fully authorized and protected in acting or
failing to act upon any certificate, instrument, opinion, notice,
letter, telegram, telex, facsimile transmission or other document
or security delivered to the Warrant Agent and believed by it to be
genuine and to have been signed by the proper party or
parties;

 

(e)            shall
not be liable or responsible for any recital or statement contained
in the Registration Statement or any other documents relating
thereto;

 

(f)             shall
not be liable or responsible for any failure on the part of the
Company to comply with any of its covenants and obligations
relating to the Warrants, including without limitation obligations
under applicable securities laws;

 

 

 

 

(g)            may
rely on and shall be fully authorized and protected in acting or
failing to act upon the written, telephonic or oral instructions
with respect to any matter relating to its duties as Warrant Agent
covered by this Warrant Agreement (or supplementing or qualifying
any such actions) of officers of the Company, and is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the Company or counsel to
the Company, and may apply to the Company, for advice or
instructions in connection with the Warrant Agent’s duties
hereunder, and the Warrant Agent shall not be liable for any delay
in acting while waiting for those instructions; any applications by
the Warrant Agent for written instructions from the Company may, at
the option of the Warrant Agent, set forth in writing any action
proposed to be taken or omitted by the Warrant Agent under this
Warrant Agreement and the date on or after which such action shall
be taken or such omission shall be effective; the Warrant Agent
shall not be liable for any action taken by, or omission of, the
Warrant Agent in accordance with a proposal included in such
application on or after the date specified in such application
(which date shall not be less than five business days after the
date such application is sent to the Company, unless the Company
shall have consented in writing to any earlier date) unless prior
to taking any such action, the Warrant Agent shall have received
written instructions in response to such application specifying the
action to be taken or omitted;

 

(h)            may
consult with counsel satisfactory to the Warrant Agent, including
its in-house counsel, and the advice of such counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered, or omitted by it hereunder in good faith and in
accordance with the advice of such counsel;

 

(i)             may
perform any of its duties hereunder either directly or by or
through nominees, correspondents, designees, or subagents, and it
shall not be liable or responsible for any misconduct or negligence
on the part of any nominee, correspondent, designee, or subagent
appointed with reasonable care by it in connection with this
Warrant Agreement; 

 

(j)             is
not authorized, and shall have no obligation, to pay any brokers,
dealers, or soliciting fees to any person; and

 

(k)           shall
not be required hereunder to comply with the laws or regulations of
any country other than the United States of America or any
political subdivision thereof.

 

7.4                      (a)           In
the absence of gross negligence or willful or illegal misconduct on
its part, the Warrant Agent shall not be liable for any action
taken, suffered, or omitted by it or for any error of judgment made
by it in the performance of its duties under this Warrant
Agreement. Anything in this Warrant Agreement to the contrary
notwithstanding, in no event shall Warrant Agent be liable for
special, indirect, incidental, consequential or punitive losses or
damages of any kind whatsoever (including but not limited to lost
profits), even if the Warrant Agent has been advised of the
possibility of such losses or damages and regardless of the form of
action. Any liability of the Warrant Agent will be limited in the
aggregate to the amount of fees paid by the Company hereunder. The
Warrant Agent shall not be liable for any failures, delays or
losses, arising directly or indirectly out of conditions beyond its
reasonable control including, but not limited to, acts of
government, exchange or market ruling, suspension of trading, work
stoppages or labor disputes, fires, civil disobedience, riots,
rebellions, storms, electrical or mechanical failure, computer
hardware or software failure, communications facilities failures
including telephone failure, war, terrorism, insurrection,
earthquakes, floods, acts of God or similar occurrences, provided
that such events shall not affect in any way the Company’s
obligations to the Holders under the Warrant
Certificates.

 

(b)            In
the event any question or dispute arises with respect to the proper
interpretation of the Warrants or the Warrant Agent’s duties
under this Warrant Agreement or the rights of the Company or of any
Holder, the Warrant Agent shall not be required to act and shall
not be held liable or responsible for its refusal to act until the
question or dispute has been judicially settled (and, if
appropriate, it may file a suit in interpleader or for a
declaratory judgment for such purpose) by final judgment rendered
by a court of competent jurisdiction, binding on all persons
interested in the matter which is no longer subject to review or
appeal, or settled by a written document in form and substance
satisfactory to Warrant Agent and executed by the Company and each
such Holder. In addition, the Warrant Agent may require for such
purpose, but shall not be obligated to require, the execution of
such written settlement by all the Holders and all other persons
that may have an interest in the settlement.

 

7.5           The
Company covenants to indemnify the Warrant Agent and hold it
harmless from and against any loss, liability, claim or expense
(“Loss”) arising out of or
in connection with the Warrant Agent’s duties under this
Warrant Agreement, including the costs and expenses of defending
itself against any Loss, unless such Loss shall have been
determined by a court of competent jurisdiction to be a result of
the Warrant Agent’s gross negligence or willful
misconduct.

 

7.6           Unless
terminated earlier by the parties hereto, this Warrant Agreement
shall terminate 90 days after the earlier of the Expiration Date
and the date on which no Warrants remain outstanding (the
“Termination
Date”). On the business day following the Termination
Date, the Warrant Agent shall deliver to the Company any
entitlements, if any, held by the Warrant Agent under this Warrant
Agreement. The Warrant Agent’s right to be reimbursed for
fees, charges and out-of-pocket expenses as provided in this
Section 7 shall survive the termination of this Warrant
Agreement.

 

7.7           If
any provision of this Warrant Agreement shall be held illegal,
invalid, or unenforceable by any court, this Warrant Agreement
shall be construed and enforced as if such provision had not been
contained herein and shall be deemed an agreement among the parties
to it to the full extent permitted by applicable law.

 

7.8           The
Company represents and warrants that (a) it is duly
incorporated and validly existing under the laws of its
jurisdiction of incorporation, (b) the offer and sale of the
Warrants and the execution, delivery and performance of all
transactions contemplated thereby (including this Warrant
Agreement) have been duly authorized by all necessary corporate
action and will not result in a breach of or constitute a default
under the articles of association, bylaws or any similar document
of the Company or any indenture, agreement or instrument to which
it is a party or is bound, (c) this Warrant Agreement has been
duly executed and delivered by the Company and constitutes the
legal, valid, binding and enforceable obligation of the Company,
(d) the Warrants will comply in all material respects with all
applicable requirements of law and (e) to the best of its
knowledge, there is no litigation pending or threatened as of the
date hereof in connection with the offering of the
Warrants. 

 

7.9           In
the event of inconsistency between this Warrant Agreement and the
descriptions in the Registration Statement, as they may from time
to time be amended, the terms of this Warrant Agreement shall
control.

 

 

 

 

7.10         Any
notice, statement or demand authorized by this Warrant Agreement to
be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company, including, without limitation, the
copy of any Notice of Exercise, shall be in writing and delivered
by e-mail, hand or sent by a nationally recognized overnight
courier service, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as set forth below
and if to any holder any notice, statement or demand shall be given
to the last address set forth for such holder (if any) in the
Warrant Register:

 

Novusterra
Inc.

561 NE
79th
Street, Suite 325

Miami,
FL 33138

Attn:
Chief Executive Officer

Phone:
(786) 473-6233

Email:
andwe@bellsouth.net

 

with a
copy (which shall not constitute notice) to:

 

Clifford J.
Hunt

Law
Office of Clifford J. Hunt, P.A.

8200
Seminole Boulevard

Seminole, FL
33772

Phone:
(727) 471-0444

Email:
cjh@huntlawgrp.com

 

Any
notice, statement or demand authorized by this Warrant Agreement to
be given or made by the holder of any Warrant or by the Company to
or on the Warrant Agent, including, without limitation, any Notice
of Exercise, shall be in writing and delivered by facsimile, hand
or sent by a nationally recognized overnight courier service,
addressed (until another address is filed in writing by the Warrant
Agent with the Company), as follows:

 

[__________]

[__________]

[__________]

Fax No:
[ ]

Email:
[ ]

 

Any
notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the time of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or e-mail at the e-mail address
set forth above in this Section 7.11 prior to 5:30
p.m. (New York City time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
e-mail at the e-mail address set forth in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.
Notwithstanding any other provision of this Warrant Agreement,
where this Warrant Agreement provides for notice of any event to
the Holder, if a Warrant is held in global form by DTC (or any
successor depositary), such notice shall be sufficiently given if
given to DTC (or any successor depositary) pursuant to the
procedures of DTC (or such successor depositary).

 

 

 

 

7.11                              (a)           This
Warrant Agreement shall be governed by and construed in accordance
with the laws of the State of New York. All actions and proceedings
relating to or arising from, directly or indirectly, this Warrant
Agreement may be litigated in courts located within the Borough of
Manhattan in the City and State of New York. The Company hereby
submits to the personal jurisdiction of such courts and consents
that any service of process may be made by certified or registered
mail, return receipt requested, directed to the Company at its
address last specified for notices hereunder. 

 

(b)            This
Warrant Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the parties hereto. This Warrant
Agreement may not be assigned, or otherwise transferred, in whole
or in part, by either party without the prior written consent of
the other party, which the other party will not unreasonably
withhold, condition or delay; except that (i) consent is not
required for an assignment or delegation of duties by Warrant Agent
to any Affiliate of Warrant Agent and (ii) any reorganization,
merger, consolidation, sale of assets or other form of business
combination by Warrant Agent or the Company shall not be deemed to
constitute an assignment of this Warrant Agreement.

 

(c)            No
provision of this Warrant Agreement may be amended, modified or
waived, except in a written document signed by both parties. The
Company and the Warrant Agent may amend or supplement this Warrant
Agreement without the consent of any Holder for the purpose of
curing any ambiguity, or curing, correcting or supplementing any
defective provision contained herein or adding or changing any
other provisions with respect to matters or questions arising under
this Warrant Agreement as the parties may deem necessary or
desirable and that the parties determine, in good faith, shall not
adversely affect the interest of the Holders, provided, however,
that no modification of the terms upon which the Warrants are
exercisable or the rights of the Holders to receive payments in
cash from the Company or to require a Holder of Warrants to deliver
any ink-original Notice of Exercise or any medallion guarantee (or
other type of guarantee or notarization) of a Notice of Exercise or
to the beneficial ownership limitation.

 

7.12      Payment
of Taxes. The Company will from time to time promptly pay
all taxes and charges that may be imposed upon the Company or the
Warrant Agent in respect of the issuance or delivery of Warrant
Shares upon the exercise of Warrants, but the Company may require
the Holders to pay any transfer taxes in respect of the Warrants or
such shares. The Warrant Agent may refrain from registering any
transfer of Warrants or any delivery of any Warrant Shares unless
or until the persons requesting the registration or issuance shall
have paid to the Warrant Agent for the account of the Company the
amount of such tax or charge, if any, or shall have established to
the reasonable satisfaction of the Company and the Warrant Agent
that such tax or charge, if any, has been paid.

 

7.13       Resignation
of Warrant Agent.

 

7.13.1         Appointment
of Successor Warrant Agent. The Warrant Agent, or any
successor to it hereafter appointed, may resign its duties and be
discharged from all further duties and liabilities hereunder after
giving thirty (30) days’ notice in writing to the Company, or
such shorter period of time agreed to by the Company. The Company
may terminate the services of the Warrant Agent, or any successor
Warrant Agent, after giving thirty (30) days’ notice in
writing to the Warrant Agent or successor Warrant Agent, or such
shorter period of time as agreed. If the office of the Warrant
Agent becomes vacant by resignation, termination or incapacity to
act or otherwise, the Company shall appoint in writing a successor
Warrant Agent in place of the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after it
has been notified in writing of such resignation or incapacity by
the Warrant Agent, then the Warrant Agent or any Holder may apply
to any court of competent jurisdiction for the appointment of a
successor Warrant Agent at the Company’s cost. Pending
appointment of a successor to such Warrant Agent, either by the
Company or by such a court, the duties of the Warrant Agent shall
be carried out by the Company. Any successor Warrant Agent (but not
including the initial Warrant Agent), whether appointed by the
Company or by such court, shall be a person organized and existing
under the laws of any state of the United States of America, in
good standing, and authorized under such laws to exercise corporate
trust powers and subject to supervision or examination by federal
or state authority. After appointment, any successor Warrant Agent
shall be vested with all the authority, powers, rights, immunities,
duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without
any further act or deed, and except for executing and delivering
documents as provided in the sentence that follows, the predecessor
Warrant Agent shall have no further duties, obligations,
responsibilities or liabilities hereunder, but shall be entitled to
all rights that survive the termination of this Warrant Agreement
and the resignation or removal of the Warrant Agent, including but
not limited to its right to indemnity hereunder. If for any reason
it becomes necessary or appropriate or at the request of the
Company, the predecessor Warrant Agent shall execute and deliver,
at the expense of the Company, an instrument transferring to such
successor Warrant Agent all the authority, powers, and rights of
such predecessor Warrant Agent hereunder; and upon request of any
successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for
more fully and effectually vesting in and confirming to such
successor Warrant Agent all such authority, powers, rights,
immunities, duties, and obligations.

 

7.13.2            Notice
of Successor Warrant Agent. In the event a successor Warrant
Agent shall be appointed, the Company shall give notice thereof to
the predecessor Warrant Agent and the transfer agent for the Common
Stock not later than the effective date of any such
appointment. 

 

7.13.3            Merger
or Consolidation of Warrant Agent. Any person into which the
Warrant Agent may be merged or converted or with which it may be
consolidated or any person resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party or any
person succeeding to the shareowner services business of the
Warrant Agent or any successor Warrant Agent shall be the successor
Warrant Agent under this Warrant Agreement, without any further act
or deed.

 

8.             Miscellaneous
Provisions.

 

8.1           Persons
Having Rights under this Warrant Agreement. Nothing in this
Warrant Agreement expressed and nothing that may be implied from
any of the provisions hereof is intended, or shall be construed, to
confer upon, or give to, any person or corporation other than the
parties hereto and the Holders any right, remedy, or claim under or
by reason of this Warrant Agreement or of any covenant, condition,
stipulation, promise, or agreement hereof.

 

8.2           Examination
of the Warrant Agreement. A copy of this Warrant Agreement
shall be available at all reasonable times at the office of the
Warrant Agent designated for such purpose for inspection by any
Holder. Prior to such inspection, the Warrant Agent may require any
such holder to provide reasonable evidence of its interest in the
Warrants.

 

 

 

 

8.3           Counterparts.
This Warrant Agreement may be executed in any number of original,
facsimile or electronic counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

 

8.4           Effect
of Headings. The Section headings herein are for
convenience only and are not part of this Warrant Agreement and
shall not affect the interpretation thereof.

 

9.             Certain
Definitions. As used herein, the following terms shall have
the following meanings:

 

(i)           “Adjustment
Right” means any right granted with respect to any
securities issued in connection with, or with respect to, any
issuance, sale or delivery (or deemed issuance, sale or delivery in
accordance with Section 4) of Common Stock (other than rights
of the type described in Section 4.2 and 4.3 hereof) that
could result in a decrease in the net consideration received by the
Company in connection with, or with respect to, such securities
(including, without limitation, any cash settlement rights, cash
adjustment or other similar rights) but excluding anti-dilution and
other similar rights (including pursuant to Section 4.4 of
this Agreement).

 

(ii)           “Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.

 

(iii)           “Closing
Sale Price” means, for any security as of any date,
the last closing trade price for such security on the Principal
Market, as reported by Bloomberg, or, if the Principal Market
begins to operate on an extended hours basis and does not designate
the closing trade price, then the last trade price of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or,
if the Principal Market is not the principal securities exchange or
trading market for such security, the last trade price of such
security on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg,
or if the foregoing does not apply, the last trade price of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last
trade price is reported for such security by Bloomberg, the average
of the ask prices of any market makers for such security as
reported in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC). If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Sale Price of such security on such
date shall be the fair market value as mutually determined by the
Company and the applicable Holder. All such determinations shall be
appropriately adjusted for any share dividend, share split, share
combination or other similar transaction during such
period.

 

(iv)           “person”
shall mean any individual, firm, corporation, partnership, limited
liability company, joint venture, association, trust or other
entity, and shall include any successor (by merger or otherwise)
thereof or thereto.

 

(v)           “Principal
Market” means the [______].

 

(vi)           “Trading
Day” means any day on which the Common Stock is traded
on the Trading Market, or, if the Trading Market is not the
principal trading market for the Common Stock, then on the
principal securities exchange or securities market in the United
States on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for
less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during
the hour ending at 4:00 P.M., New York City time)

 

(vii)           “Trading
Market” means the NYSE American, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market
or the New York Stock Exchange (or any successors to any of the
foregoing). 

 

(viii)           “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 OTCQB or OTCQX is not
a Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on OTCQB or
OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for
the Common Stock are then reported in the “Pink Open
Market” published by OTC Markets Group, 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 Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

 

 

IN
WITNESS WHEREOF, this Warrant Agreement has been duly executed by
the parties hereto as of the day and year first above
written.

 

	
 

	

NOVUSTERRA
INC.

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	

Name:
I. Andrew Weeraratne

	
 

	
 

	

Title:
Chief Executive Officer

	
 

	
 

	
 

	

[_________],

	
 

	

as
Warrant Agent

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	

Name:

	
 

	
 

	

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Warrant Agent Agreement]

 

 

 

	

Annex
A

	

Form of
Global Certificate

	

Annex
B

	

Form of
Certificated Warrant

	

Exhibit
A

	

Warrant
Certificate Request Notice

	

Exhibit
B

	

Assignment
Form 

 

 

 

 

 

ANNEX A

 

[FORM OF GLOBAL CERTIFICATE]

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

 

NOVUSTERRA
INC.

WARRANT
CERTIFICATE

NOT
EXERCISABLE AFTER _______, 2026

 

This
certifies that the person whose name and address appears below, or
registered assigns, is the registered owner of the number of
Warrants set forth below. Each Warrant entitles its registered
holder to purchase from Novusterra Inc., a company incorporated
under the laws of the State of Florida (the “Company”), at any time prior to
5:00 P.M. (New York City time) on _________, 2026, one share
of common stock, no par value per share, of the Company (each, a
“Warrant Share”
and collectively, the “Warrant Shares”), at an exercise
price of $___ per share, subject to possible adjustments as
provided in the Warrant Agreement (as defined below).

 

This
Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the designated office of the Warrant Agent, may
be exchanged for another Warrant Certificate or Warrant
Certificates evidencing the same number of Warrants as the Warrant
Certificate or Warrant Certificates surrendered. A transfer of the
Warrants evidenced hereby may be registered upon surrender of this
Warrant Certificate at the designated office of the Warrant Agent
by the registered holder in person or by a duly authorized
attorney, properly endorsed or accompanied by proper instruments of
transfer, a signature guarantee, and such other and further
documentation as the Warrant Agent may reasonably request and duly
stamped as may be required by the laws of the State of New York and
of the United States of America.

 

The
terms and conditions of the Warrants and the rights and obligations
of the holder of this Warrant Certificate are set forth in the
Warrant Agent Agreement dated as of [______], 2021 (the
“Warrant
Agreement”) between the Company and [__________], as
Warrant Agent (the “Warrant
Agent”). A copy of the Warrant Agreement is available
for inspection during business hours at the office of the Warrant
Agent.

 

This
Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized
signatory of the Warrant Agent.

 

A-1

 

 

 

WITNESS
the facsimile signature of a proper officer of the
Company.

 

	
 

	

NOVUSTERRA
INC.

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	

Name:
I. Andrew Weeraratne

	
 

	
 

	

Title:
Chief Executive Officer

 

	
 

	
 

	

Dated:
[____], 2021

	
 

	

Countersigned:

	
 

	

[__________],

	
 

	

as
Warrant Agent

	
 

 

	

By:

	
 

	
 

	

Name:

	
 

	

Title:

	
 

 

 

A-2

 

 

 

PLEASE DETACH HERE

——————————————————————————————————————

Certificate
No.:_________ Number of Warrants:_ __

 

WARRANT
CUSIP NO.: ___________

	
 

	

NOVUSTERRA
INC.

	

[Name &
Address of Holder]

	

[__________],
Warrant Agent

	
 

	

By
Mail:

	
 

	

By hand
or overnight courier:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-3

 

 

 

ANNEX
B

 

[FORM OF CERTIFICATED WARRANT]

 

B-1nvstrr_ex4-2

 

  Exhibit
4.2

COMMON STOCK PURCHASE WARRANT

 

 __________, 2021

 

	Warrant Shares:
_______	
Initial Exercise
Date: _______, 2021

THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, _____________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial
Exercise Date”) and on or prior to 5:00 p.m. (New York
City time) on ______________1 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Novusterra Inc.,
a Florida corporation (the “Company”), up to ______
shares (as subject to adjustment hereunder, 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 Warrant Agent Agreement (the
“Warrant
Agreement”), dated __________, 2021, among the Company
and [ ], as warrant agent.

 

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 of a duly executed facsimile copy or PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise in the
form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as
defined in Section 2(d)(i) herein) following the date of exercise
as aforesaid, the Holder shall deliver the aggregate Exercise Price
for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States
bank unless the cashless exercise procedure specified in Section
2(c) below is specified in the applicable Notice of
Exercise. No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. 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 on which 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
within one (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.

 

b) Exercise Price. The exercise
price per share of Common Stock under this Warrant shall be
$_____, subject to
adjustment hereunder (the “Exercise Price”). The
Holder shall not be entitled to the return or refund of all, or any
portion, of such pre-paid aggregate exercise price under any
circumstance or for any reason whatsoever, including in the event
this Warrant shall not have been exercised prior to the Termination
Date.

 

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,
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 number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:

 

(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(68) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock on the principal Trading Market as
reported by Bloomberg L.P. (“Bloomberg”) as of the
time of the Holder’s execution of the applicable Notice of
Exercise if such Notice of Exercise is executed during
“regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter (including until two (2)
hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on
the date of the applicable Notice of Exercise if the date of such
Notice of Exercise is a Trading Day and such Notice of Exercise is
both executed and delivered pursuant to Section 2(a) hereof after
the close of “regular trading hours” on such Trading
Day;

 

(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.

 

 

 

 

If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
registered characteristics of the Warrants being
exercised.  The Company agrees not to take any position
contrary to this Section 2(c).

 

“Bid Price” 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 bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg (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 OTCQB or
OTCQX is not a Trading Market, the volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on
OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for
the Common Stock are then reported on The Pink Open Market (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 Purchasers 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.

 

“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 (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 OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest
preceding date) on OTCQB or OTCQX as applicable, (c) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX
and if prices for the Common Stock are then reported on The Pink
Open Market (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 Purchasers
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.

 

Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).

 

d)

Mechanics of
Exercise.

 

i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) 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 of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of
the Notice of Exercise, (ii) one (1) Trading Day after delivery of
the aggregate Exercise Price to the Company and (iii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the
“Warrant Share
Delivery Date”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise.
If the
Company fails for any reason to deliver to the Holder 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 Warrant
Shares are delivered or Holder rescinds such exercise. The Company
agrees to maintain a transfer agent that is a participant in the
FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of Exercise.
Notwithstanding the foregoing, with respect to any Notice(s) of
Exercise delivered on or prior to 12:00 p.m. (New York City time)
on the Initial Exercise Date, which may be delivered at any time
after the time of execution of the Warrant Agreement, the Company
agrees to deliver the Warrant Shares subject to such notice(s) by
4:00 p.m. (New York City time) on the Initial Exercise Date and the
Initial Exercise Date shall be the Warrant Share Delivery Date for
purposes hereunder, provided that payment of the aggregate Exercise
Price (other than in the case of a cashless exercise) is received
by such Warrant Share Delivery Date.

 

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 Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of the 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 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.

 

iv. Compensation for Buy-In on Failure to
Timely Deliver Warrant Shares 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 the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above
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 shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.

 

 

 

 

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.

 

vi. Charges, Taxes and Expenses.
Issuance of 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 Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares
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
that 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. The Company shall pay all Transfer Agent fees
required for same-day processing of any Notice of Exercise and all
fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for
same-day electronic delivery of the Warrant Shares.

 

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 (such Persons, “Attribution Parties”)),
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 and Attribution Parties 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 or Attribution Parties 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 or Attribution
Parties.  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 Attribution Parties) 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 Attribution Parties) 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 one Trading Day
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 or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be [9.99/4.99%] 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 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 increase in the
Beneficial Ownership Limitation 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.

 

 

 

 

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) Subsequent Equity Sales. If the
Company or any Subsidiary thereof, as applicable, at any time while
this Warrant is outstanding, shall sell, enter into an agreement to
sell or grant any option to purchase, or sell or grant any right to
reprice, or otherwise dispose of or issue (or announce any offer,
sale, grant or any option to purchase or other disposition) any
Common Stock or Common Stock Equivalents, at an effective price per
share less than the Exercise Price then in effect (such lower
price, the “Base
Share Price” and such issuances collectively, a
“Dilutive
Issuance”) (it being understood and agreed that if the
holder of the Common Stock or Common Stock Equivalents so issued
shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be
entitled to receive shares of Common Stock at an effective price
per share that is less than the Exercise Price, such issuance shall
be deemed to have occurred for less than the Exercise Price on such
date of the Dilutive Issuance at such effective price), then
simultaneously with the consummation (or, if earlier, the
announcement) of each Dilutive Issuance the Exercise Price shall be
reduced and only reduced to equal the Base Share Price, provided
that the Base Share Price shall not be less than $___2 (subject to adjustment for reverse and
forward stock splits, recapitalizations and similar transactions
following the date of the Warrant Agreement). Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this
Section 3(b) in respect of an Exempt Issuance. The Company shall
notify the Holder, in writing, no later than the Trading Day
following the issuance or deemed issuance of any Common Stock or
Common Stock Equivalents subject to this Section 3(b), indicating
therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such
notice, the “Dilutive Issuance
Notice”). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to
this Section 3(b), upon the occurrence of any Dilutive Issuance,
the Holder is entitled to receive a number of Warrant Shares based
upon the Base Share Price regardless of whether the Holder
accurately refers to the Base Share Price in the Notice of
Exercise. If the Company enters into a Variable Rate Transaction,
the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible price, conversion price or
exercise price at which such securities may be issued, converted or
exercised.

 

c) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided,
however,
that, to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).

 

d) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, that, to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Distribution to such extent (or in the beneficial ownership of
any shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation). To
the extent that this Warrant has not been partially or completely
exercised at the time of such Distribution, such portion of the
Distribution shall be held in abeyance for the benefit of the
Holder until the Holder has exercised this
Warrant.

 

 

 

 

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 or any Subsidiary, 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,
or (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, merger or scheme of
arrangement) with another Person or group of Persons whereby such
other Person or group 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, 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 (or, if
later, the date of the public announcement of the applicable
Fundamental Transaction), purchase
this Warrant from the Holder by paying to the Holder an
amount of cash equal to the Black Scholes Value (as defined below)
of the remaining unexercised portion of this Warrant on the date of
the consummation of such Fundamental Transaction; provided, however, that, if the
Fundamental Transaction is not within the Company's control,
including not approved by the Company's Board of Directors, Holder
shall only be entitled to receive from the Company or any Successor
Entity the same type or form of consideration (and in the same
proportion), at the Black Scholes Value of the unexercised portion
of this Warrant, that is being offered and paid to the holders of
Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash,
stock or any combination thereof, or whether the holders of Common
Stock are given the choice to receive from among alternative forms
of consideration in connection with the Fundamental Transaction;
provided,
further, that if
holders of Common Stock of the Company are not offered or paid any
consideration in such Fundamental Transaction, such holders of
Common Stock will be deemed to have received common stock of the
Successor Entity (which Entity may be the Company following such
Fundamental Transaction) in such Fundamental Transaction.
“Black Scholes
Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the
“OV” function on 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 (determined utilizing a 365 day
annualization factor) 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 greater of (i) 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 (ii) the
highest VWAP during the period beginning on the Trading Day
immediately preceding the announcement of the applicable
Fundamental Transaction (or the consummation of the applicable
Fundamental Transaction, if earlier) and ending on the Trading Day
of the Holder’s request pursuant to this Section 3(e) 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 and
(E) a zero cost of borrow. The payment
of the Black Scholes Value will be made by wire transfer of
immediately available funds (or such other consideration) within
the later of (i) five Business Days of the Holder’s election
and (ii) the date of consummation of the Fundamental
Transaction. 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,
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.

 

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 deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts
requiring such adjustment.

 

 

 

 

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 (or any of its Subsidiaries) is a party, any sale or
transfer of all or substantially all of its assets, 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 delivered by facsimile or email to the
Holder at its last facsimile number or email 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
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. 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.

 

h) Voluntary Adjustment By
Company. Subject to the rules and regulations of the Trading
Market, the Company may at any time during the term of this
Warrant, subject to the prior written consent of the Holder, reduce
the then current Exercise Price to any amount and for any period of
time deemed appropriate by the board of directors of the
Company.

 

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. 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. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. 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 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.

 

Section
5.                                Miscellaneous.

 

a) No Rights as Stockholder Until
Exercise; No Settlement in Cash. 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), except as expressly set forth in Section
3. Without limiting any rights of a Holder to receive Warrant
Shares on a “cashless exercise” pursuant to Section
2(c) or to receive cash payments pursuant to Section 2(d)(i) and
Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.

 

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 issuing the necessary
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).

 

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 Warrant 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 the Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or
the Warrant 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 the 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 the Holder in
collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies
hereunder.

 

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 Warrant Agreement.

 

i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the 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 the
Holder.

 

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 Page Follows)

 

1 Insert the date that
is the 5 year anniversary of the Initial Exercise Date, provided
that, if such date is not a Trading Day, insert the immediately
following Trading Day.

2 greater of (i) $0.10
and (ii) 20% of the closing bid price of the Common Stock on the
date prior to the execution of the Warrant
Agreement.

 

 

 

 

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.

 

	
 

	

	
 

	

By:__________________________________________

     Name:

     Title:

 

 

 

 

 

 

NOTICE OF EXERCISE

TO:            

_______________________

 

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

 

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

 

[ ] 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 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:

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE
OF HOLDER]

 

Name of
Investing Entity:
________________________________________________________________________

Signature of Authorized Signatory of Investing
Entity:
_________________________________________________

Name of
Authorized Signatory:
___________________________________________________________________

Title
of Authorized Signatory:
____________________________________________________________________

Date:
________________________________________________________________________________________

 

 

 

 

  EXHIBIT B

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)

 

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

 

	

Name:

	
 

	
 

	

(Please Print)

	

Address:

	
 

	
 

	

(Please
Print)

	 	
 

	Phone
Number:	
 

	

 

	
 

	Email
Address:	
 

	

 

	
 

	

Dated:

	
 

	

 
                                                                 

	
 

	

Holder’s
Signature:                                                                 

	
 

	

 
                                                                 

	
 

	

Holder’s
Address:

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