Document:

exv10w1

Exhibit 10.1

     AMENDMENT NO. 1, dated as of June 10, 2010 (this “Amendment”), to that certain Credit
Agreement, dated as of June 23, 2009, among RAILAMERICA, INC., a Delaware corporation
(“RailAmerica”); RAILAMERICA TRANSPORTATION CORP., a Delaware corporation (“RATC,”
together with RailAmerica, the “Borrowers” and each individually, a “Borrower”);
the lenders party thereto from time to time (the “Lenders”), the LETTER OF CREDIT ISSUER
party thereto from time to time; CITICORP NORTH AMERICA, INC., as administrative agent (in such
capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the
“Collateral Agent”) for the Lenders; and CITIGROUP GLOBAL MARKETS INC. (“CGMI”), as
sole lead arranger and sole bookrunner (in such capacity, the “Lead Arranger”).
Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in
the Credit Agreement (as amended hereby).

     WHEREAS, the Credit Parties have requested that the Lenders agree to amend certain provisions
of the Credit Agreement as provided for herein; and

     WHEREAS, subject to certain conditions, (i) the Required Lenders are willing to agree to the
amendments set forth in Section 1 hereof (collectively, the “Majority Consent Amendments”)
and (ii) all Lenders are willing to consent to the amendment set forth in Section 2 hereof
(collectively, the “100% Consent Amendment”), in each case, relating to the Credit
Agreement;

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

     Section 1. Majority Consent Amendments to the Credit Agreement. The Credit Agreement
is hereby amended effective as of the date hereof as follows:

     (a) Subsection 1.1 of the Credit Agreement is hereby amended by adding the following
definitions in appropriate alphabetical order:

     “Minimum Liquidity Period” shall mean any period (a) commencing when Total
Liquidity for any consecutive three day calendar period is less than $20.0 million and (b)
ending after Total Liquidity is at least $20.0 million for a period of 30 consecutive days.”

     “Total Liquidity” shall mean, at any time, an amount equal to the sum
of (i) Availability and (ii) the total cash balance of RailAmerica and each Credit
Party held in Control Accounts.”

     (b) Subsection 1.1 of the Credit Agreement is further amended by amending or restating the
following defined terms as follows:

     (i) The definition of “Cash Dominion Period” is hereby deleted and replaced with the
following:

 

 

          “Cash Dominion Period” shall mean (i) each period commencing on any date that
either (x) Availability shall have been less than $5.0 million or (y) Total Liquidity shall
have been less than $20.0 million, in each case, for three calendar days and ending, in the
case of clause (x), on the date that Availability shall have been at least equal to $5.0
million or, in the case of clause (y), Total Liquidity shall have been at least equal to
$20.0 million, in each case, for 30 consecutive calendar days or (ii) each period commencing
on the occurrence of an Event of Default and ending on the date on which such Event of
Default has been cured or waived.”

     (ii) The definition of “Eligible Accounts” is hereby amended by deleting clause (ii) in
the parenthetical of subclause (f) thereto and replacing it with the following:

          “(ii) in the case of Union Pacific Railroad Company and its subsidiaries, so long as
Union Pacific Railroad Company maintains an Investment Grade Rating, 50%,”

     (iii) The definition of “Permitted Investments” is hereby deleted and replaced with the
following:

          “Permitted Investments” shall mean (1) United States dollars, (2) pounds
sterling, (3) (a) euro, or any national currency of any participating member state in the
European Union, (b) Canadian dollars, or (c) in the case of any Foreign Subsidiary that is a
Restricted Subsidiary, such local currencies held by them from time to time in the ordinary
course of business, (4) securities issued or directly and fully and unconditionally
guaranteed or insured by the United States or Canadian government or any agency or
instrumentality thereof the securities of which are unconditionally guaranteed as a full
faith and credit obligation of such government with maturities of 24 months or less from the
date of acquisition, (5) certificates of deposit, time deposits and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $500.0 million, (6) repurchase
obligations for underlying securities of the types described in clauses (4) and (5) entered
into with any financial institution meeting the qualifications specified in clause (5)
above, (7) commercial paper rated at least “P-2” by Moody’s or at least “A-2” by S&P and in
each case maturing within 12 months after the date of creation thereof, (8) marketable
short-term money market and similar securities, having a minimum rating from at least two
out of the three ratings agencies as follows: at least “P-2” by Moody’s, at least “A-2’ by
S&P or at least “F-2” by Fitch, (9) investment funds investing 95% of their assets in
securities of the types described in clauses (1) through (8) above, (10) readily marketable
direct obligations issued by any state of the United States of America or any political
subdivision thereof or any Province of Canada having one of the two highest rating
categories obtainable from either Moody’s or S&P with maturities of 24 months or less from
the date of acquisition and (11) Indebtedness or preferred stock issued by Persons with a
rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 12 months
or less from the date of acquisition.”

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     (iv) The definition of “Weekly Reporting Period” is hereby deleted and replaced with
the following:

          “Weekly Reporting Period” shall mean any period during which either (x)
Availability is less than $5.0 million or (y) Total Liquidity is less than $20.0 million.”

     (c) Section 7 is hereby amended by adding the following as a new Subsection 7.5:

     “Section 7.5. Borrowing Base Certificate. So long as there are no Loans
outstanding or Letters of Credit Outstanding, as soon as practicable and in any event within
five Business Days prior to the date of a Borrowing of Loans or the date of issuance of any
Letter of Credit, the Borrowers shall have delivered a Borrowing Base Certificate in the
form of Exhibit A which calculates the Borrowing Base as of the last day of the calendar
month then last ended and updated information thereto as required by Schedule A to Exhibit
A, together with supporting information in connection therewith and any additional reports
with respect to the Borrowing Base as the Administrative Agent may reasonably request.”

     (d) Subsection 9.1(c) is hereby amended by replacing the words “30 days” with the words “60
days.”

     (e) Subsection 9.1(e) of the Credit Agreement is hereby by deleting subclause (i) thereof and
replacing it with the following:

          “(i) A Borrowing Base Certificate in the form of Exhibit A which calculates the
Borrowing Base as of the last day of the calendar month then last ended and updated
information thereto as required by Schedule A to Exhibit A, together with supporting
information in connection therewith and any additional reports with respect to the
Borrowing Base as the Administrative Agent may reasonably request, either (x) as
soon as available, but in any event on or prior to the 12th Business Day of each
calendar month, if there are Loans outstanding or Letters of Credit Outstanding, or
(y) concurrently with delivery of financial statements under clause (a) or (b) above
if there are no Loans outstanding or Letters of Credit Outstanding.”

     (f) Subsection 10.5(j) of the Credit Agreement is hereby amended by (i) deleting clause
(ii)(B)(x) of the proviso thereto and replacing it with “(x) the Fixed Charge Coverage Ratio for
the most recently ended Test Period for which Section 9.1 Financials have been delivered would be
at least 1.15 to 1.00” and (ii) deleting the word “Availability” in clause (ii)(B)(y) of the
proviso thereto and replacing it with the words “Total Liquidity.”

     (g) Subsection 10.6 of the Credit Agreement is hereby amended by (i) deleting clause (B)(x) of
the proviso to Section 10.6(c) thereto and replacing it with “(x) the Fixed Charge Coverage Ratio
for the most recently ended Test Period for which Section 9.1
Financials have been delivered would be at least 1.25 to 1.00” and (ii) deleting the word
“Availability” in clause (B)(y) of the proviso to Section 10.6(c) thereto and replacing it with the
words “Total Liquidity.”

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     (h) Subsection 10.9 of the Credit Agreement is hereby amended and restated in its entirety as
follows:

     “10.9 Fixed Charge Coverage Ratio. During any Minimum Liquidity Period, RailAmerica will not permit the Fixed Charge
Coverage Ratio for the most recently ended Test Period prior to the commencement of
such Minimum Liquidity Period or for any Test Period ending during such Minimum
Liquidity Period to be less than 1.1 to 1.0.”

     Section 2. 100% Consent Amendment.

     (a) The definition of “Eurodollar Rate” is hereby amended by (a) deleting the words “the
greater of (i)” in the first sentence thereof and (b) deleting the words “and (ii) 2.50%” in the
first sentence thereof.

     Section 3. Effectiveness. This Amendment (other than the 100% Consent Amendment) will
become effective as of the date each of the following conditions precedent shall have been (or are
or will be substantially concurrently therewith) satisfied or waived by the Administrative Agent
(the “Majority Consent Amendment Effective Date”):

     (a) the Administrative Agent shall have received executed signature pages hereto from the
Required Lenders under and as defined in the Credit Agreement and each of the other parties listed
on the signature pages hereto;

     (b) the Administrative Agent shall have received a certificate of an Authorized Officer of
RailAmerica to the effect that the representations and warranties specified in Section 4 of this
Amendment are true and correct in all material respects and no Default or Event of Default has
occurred and is continuing;

     (c) the Borrowers shall have (i) paid the Administrative Agent or its Affiliates all the fees
due to the Administrative Agent or its Affiliates and (ii) reimbursed or paid all expenses required
to be paid or reimbursed by the Borrowers pursuant to the Credit Agreement and Section 9 hereto;
and

     (d) the Borrowers shall have paid a fee to the Administrative Agent, for the account of each
Lender which has returned an executed signature page to this Amendment on or prior to 5:00 p.m.,
New York time, on June 9, 2010 in an amount equal to 0.10% of such consenting Lender’s outstanding
Commitments under the Credit Agreement on the Majority Consent Amendment Effective Date.

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     The 100% Consent Amendment shall become effective on the date on or before June 9, 2010 on
which each of the conditions set forth in clauses (a) through (d) above are satisfied and the
Administrative Agent shall have received executed signature pages hereto from each Lender (the
“100% Consent Amendment Effective Date” and, together with the Majority Consent Amendments
Effective Date, the “Amendment Effective Dates”); provided, that if such date is subsequent
to the Majority Consent Amendments Effective Date, the Borrowers shall have (i) paid the
Administrative Agent or its Affiliates all the fees due to the Administrative Agent or its
Affiliates and (ii) reimbursed or paid all expenses required to be paid or reimbursed by the
Borrowers pursuant to the Credit Agreement and Section 9 hereto, in each case, only to the extent
not previously paid in connection with the Majority Consent Amendments.

     Section 4. Representations and Warranties of the Borrowers. The Borrowers hereby
represent and warrant as of the date hereof and as of each Amendment Effective Date that each of
the representations and warranties contained in the Credit Agreement are true and correct in all
material respects (unless stated to relate to a specific earlier date, in which case, such
representations and warranties are true and correct in all material respects as of such earlier
date) and no Default or Event of Default has occurred and is continuing.

     Section 5. Counterparts. This Amendment may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which when so executed and
delivered shall be deemed to be an original, but all of which when taken together shall constitute
a single instrument. Delivery of an executed counterpart of a signature page of this Amendment by
facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

     Section 6. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     Section 7. Headings. The headings of this Amendment are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof.

     Section 8. Effect of Amendment. Except as expressly set forth herein, this Amendment
shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the
rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or any
other Credit Document, and shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit Agreement or any other
provision of the Credit Agreement or any other Credit Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.

     Section 9. Costs and Expenses. Without duplication of any amounts previously paid or
reimbursed, the Borrowers hereby agree to pay all reasonable costs and expenses of the
Administrative Agent associated with the preparation, execution and delivery of this Amendment,
including, without limitation, the fees and expenses of Cahill Gordon &
Reindel llp, counsel to the Administrative Agent and other out of pocket expenses
related hereto.

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their
respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	RAILAMERICA, INC.,

as a Borrower

 	 
	 	By:  	/s/ B. Clyde Preslar
 	 
	 	 	Name:  	B. Clyde Preslar 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	RAILAMERICA TRANSPORTATION CORP.,

as a Borrower

 	 
	 	By:  	/s/ Scott G. Williams
 	 
	 	 	Name:  	Scott G. Williams 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	CITICORP NORTH AMERICA, INC.,

as Administrative Agent and Lender

 	 
	 	By:  	/s/ Matthew Paquin
 	 
	 	 	Name:  	Matthew Paquin 	 
	 	 	Title:  	Vice President and Director 	 
	 

6Exhibit 4.1

Exhibit 4.1

EXHIBIT A

COMMON STOCK PURCHASE WARRANT

CEREPLAST, INC.

	 	 	 
	Warrant Shares:           

	 	Initial Exercise Date: December      , 2010
	 
	 

	 	Issue Date: June      , 2010

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 December
     , 2010 (the “Initial Exercise Date”) and on or prior to the close of business on the
five year anniversary of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Cereplast, Inc., a Nevada 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 Securities Purchase Agreement (the
“Purchase Agreement”), dated June 9, 2010, among the Company and the purchasers signatory
thereto.

Section 2. Exercise.

a) Exercise of the purchase rights represented by this Warrant may be made, in whole or
in part, at any time or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company (or such other office or agency of the Company
as it may designate by notice in writing to the registered Holder at the address of the
Holder appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto. Within three (3) Trading Days 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. Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant
to the Company for cancellation within three (3) Trading Days of the date the final Notice
of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise
Form within 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 the Common Stock under this
Warrant shall be $4.44, subject to adjustment hereunder (the “Exercise Price”).

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

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

	 
	 	(B)	 	= the Exercise Price of this Warrant, as adjusted hereunder;
and

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

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

 

2

 

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

ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to 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.

 

3

 

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

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

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

 

4

 

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

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

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with
the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or
any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of
this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents) subject to a limitation
on conversion or exercise analogous to the limitation contained herein beneficially owned by
the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the Holder that
such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is exercisable shall be
in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be
deemed to be the Holder’s

 

5

 

determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates) and of
which portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in
determining the number of outstanding shares of Common Stock, a Holder may rely on the
number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a more recent
public announcement by the Company or (C) a more recent written notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be [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 not less than 61 days’ prior
notice to the Company, may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no
event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant
held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any
such increase or decrease will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section
2(e) to correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this
Warrant.

f) Call Provision. Subject to the provisions of Section 2(e) and this Section
2(f), if, after the 12 month anniversary of the Closing Date, (i) the VWAP for each of 20
consecutive Trading Days (the “Measurement Period,” which 20 consecutive Trading Day
period shall not have commenced until after the Effective Date) exceeds $11.10 (subject to
adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the
like after the Closing Date), (ii) the average daily volume for such Measurement Period
exceeds 100,000 shares per Trading Day (subject to adjustment for forward and reverse stock
splits, recapitalizations, stock dividends and the like after the Closing Date) and (iii)
the Holder is not in possession of any information that constitutes, or might constitute,
material non-public information which was provided by the Company, then the Company may,
within 1 Trading Day of the end of such Measurement Period, call for cancellation of all or
any portion of this Warrant for which a Notice of Exercise has not yet been delivered (such
right, a

 

6

 

“Call”) for consideration equal to $.001
per Share. To exercise this right, the Company must deliver to the Holder an
irrevocable written notice (a “Call Notice”), indicating therein the portion of
unexercised portion of this Warrant to which such notice applies. If the conditions set
forth below for such Call are satisfied from the period from the date of the Call Notice
through and including the Call Date (as defined below), then any portion of this Warrant
subject to such Call Notice for which a Notice of Exercise shall not have been received by
the Call Date will be cancelled at 6:30 p.m. (New York City time) on the tenth Trading Day
after the date the Call Notice is received by the Holder (such date and time, the “Call
Date”). Any unexercised portion of this Warrant to which the Call Notice does not
pertain will be unaffected by such Call Notice. In furtherance thereof, the Company
covenants and agrees that it will honor all Notices of Exercise with respect to Warrant
Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on
the Call Date. The parties agree that any Notice of Exercise delivered following a Call
Notice which calls less than all the Warrants shall first reduce to zero the number of
Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares
available for purchase under this Warrant. For example, if (A) this Warrant then permits
the Holder to acquire 100 Warrant Shares, (B) a Call Notice pertains to 75 Warrant Shares,
and (C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders a Notice
of Exercise in respect of 50 Warrant Shares, then (x) on the Call Date the right under this
Warrant to acquire 25 Warrant Shares will be automatically cancelled, (y) the Company, in
the time and manner required under this Warrant, will have issued and delivered to the
Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice,
and (z) the Holder may, until the Termination Date, exercise this Warrant for 25 Warrant
Shares (subject to adjustment as herein provided and subject to subsequent Call Notices).
Subject again to the provisions of this Section 2(f), the Company may deliver subsequent
Call Notices for any portion of this Warrant for which the Holder shall not have delivered a
Notice of Exercise. Notwithstanding anything to the contrary set forth in this Warrant, the
Company may not deliver a Call Notice or require the cancellation of this Warrant (and any
such Call Notice shall be void), unless, from the beginning of the Measurement Period
through the Call Date, (1) the Company shall have honored in accordance with the terms of
this Warrant all Notices of Exercise delivered by 6:30 p.m. (New York City time) on the
Call Date, and (2) the Registration Statement shall be effective as to all Warrant Shares
and the prospectus thereunder available for use by the Company for all such Warrant Shares,
and (3) the Common Stock shall be listed or quoted for trading on the Trading Market, and
(4) there is a sufficient number of authorized shares of Common Stock for issuance of all
Securities under the Transaction Documents, and (5) the issuance of the shares shall not
cause a breach of any provision of Section 2(e) herein. The Company’s right to call the
Warrants under this Section 2(f) shall be exercised ratably among the Holders based on each
Holder’s initial purchase of Warrants.

 

7

 

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) [Reserved].

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

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

 

8

 

e) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance
or other disposition of all or substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property, (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person 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 that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction”
as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving
a person or entity not traded on a national securities exchange, including, but not

 

9

 

limited
to, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market,
the Company or any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the consummation of the
Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an
amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this
Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes
Value” means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as
of the day of consummation of the applicable Fundamental Transaction for pricing purposes
and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the
greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of
the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the sum of
the price per share being offered in cash, if any, plus the value of any non-cash
consideration, if any, being offered in such Fundamental Transaction and (D) a remaining
option time equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the survivor (the
“Successor Entity”) to assume in writing all of the obligations of the Company under
this Warrant and the other Transaction Documents in accordance with the provisions of this
Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, 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.

 

10

 

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

g) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after
such adjustment and 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 is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange their
 shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity
of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder 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.

 

11

 

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. 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. 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).

 

12

 

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

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

d) Authorized Shares.

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

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.

 

13

 

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

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

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

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other
provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results in any material damages to
the Holder, the Company shall pay to 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 Purchase 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.

 

14

 

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)

 

15

 

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.

	 	 	 	 	 
	 	CEREPLAST, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Frederic Scheer 	 
	 	 	Title:  	Chief Executive Officer 	 

 

16

 

NOTICE OF EXERCISE

TO: CEREPLAST, INC.

(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):

o in lawful money of the United States; or

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

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

	 	 	 	 	 
	 

	 	 	 	 

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

	 	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

[SIGNATURE OF HOLDER]

Name of Investing Entity:                                                                    
             

Signature of Authorized Signatory of Investing Entity:                                                                        
         

Name of Authorized Signatory:            
               
               
                                   
    

Title of Authorized Signatory:           
                                                                  
    

Date:                                                                      
           

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

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

                                           
                 
whose address is

 
                                                                               
                                        .

                                                            
    
                                                        

Dated:                     ,           

	 	 	 	 	 	 	 
	 

	 	Holder’s Signature:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Holder’s Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Signature Guaranteed:                                                             
                                        

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

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