Document:

ex101.htm

    Exhibit
10.1

     

     

     

     

    SUBSCRIPTION
AGREEMENT

     

    SUBSCRIPTION AGREEMENT made as
of this ___ day of ____________, 2009, between Magnolia Solar Corporation, a
Nevada corporation (the “Company”), and the undersigned
(the “Subscriber”).

     

    WHEREAS, pursuant to a
Confidential Private Placement Memorandum dated December 23, 2009 (the “PPM”), the Company is offering
in a private placement (the “Offering”) to accredited
investors a minimum of 15 Units (the “Minimum Offering”) and a
maximum of 60 Units (the “Maximum Offering”) at a
purchase price of $50,000 per Unit, with each Unit (the “Units”) consisting of an
Original Issue Discount Senior Secured Convertible Promissory Note in the
principal amount of $100,000 (the “Note”), and a five-year
detachable warrant (the “Warrant”) to purchase 100,000
shares of Common Stock with an exercise price of $1.65 per share;
and

     

    WHEREAS, the Subscriber
desires to subscribe for the number of Units set forth on the signature page
hereof, on the terms and conditions hereinafter set forth.

     

    NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants hereinafter set forth,
the parties hereto do hereby agree as follows:

     

    
      	
              I.  

            	
              SUBSCRIPTION
      FOR AND REPRESENTATIONS AND COVENANTS OF
  SUBSCRIBER

            

    

     

    1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase from the Company such number of Units set
forth upon the signature page hereof, at a price equal to $50,000 per Unit, and
the Company agrees to sell such to the Subscriber for said purchase price,
subject to the Company’s right to sell to the Subscriber such lesser number of
(or no) Units as the Company may, in its sole discretion, deem necessary or
desirable.  The purchase price is payable by wire transfer of
immediately available funds, pursuant to the wire instructions attached as Exhibit F to the PPM
or by check payable to Sichenzia Ross Friedman Ference LLP as Escrow Agent to
Magnolia Solar Corporation

     

    1.2 The
Subscriber recognizes that the purchase of Units involves a high degree of risk
in that (i) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should consider
investing in the Company and the Units; (ii) the Units are not registered under
the Securities Act of 1933, as amended (the “Act”), or any state securities
law; (iii) there is no trading market for the Units, none is likely ever to
develop, and the Subscriber may not be able to liquidate his, her or its
investment; (iv) transferability of the Units is extremely limited; and (v) an
investor could suffer the loss of his, her or its entire
investment.

     

    1.3 The
Subscriber is an “accredited investor,” as such term in defined in Rule 501 of
Regulation D promulgated under the Act, and the Subscriber is able to bear the
economic risk of an investment in the Units.

     

    1.4 The
Subscriber has prior investment experience (including investment in non-listed
and non-registered securities), and has read and evaluated, or has employed the
services of an investment advisor, attorney or accountant to read and evaluate,
all of the documents furnished or made available by the Company to the
Subscriber and to all other prospective investors in the Units, including the
PPM, as well as the merits and risks of such an investment by the
Subscriber.  The Subscriber’s overall commitment to investments which
are not readily marketable is not disproportionate to the Subscriber’s net
worth, and the Subscriber’s investment in the Units will not cause such overall
commitment to become excessive.  The Subscriber, if an individual, has
adequate means of providing for his or her current needs and personal and family
contingencies and has no need for liquidity in his or her investment in the
Units.  The Subscriber is financially able to bear the economic risk
of this investment, including the ability to afford holding the Units for an
indefinite period or a complete loss of this investment.

     

     

    
      
        
        

      

      
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    1.5 The
Subscriber acknowledges receipt and careful review of the PPM, all supplements
to the PPM, and all other documents furnished in connection with this
transaction by the Company (collectively, the “Offering Documents”) and has
been furnished by the Company during the course of this transaction with all
information regarding the Company which the Subscriber has requested or desires
to know; and the Subscriber has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers or other representatives of
the Company concerning the terms and conditions of the Offering, and any
additional information which the Subscriber has requested.

     

    1.6 The
Subscriber acknowledges that the purchase of the Units may involve tax
consequences to the Subscriber and that the contents of the Offering Documents
do not contain tax advice.  The Subscriber acknowledges that the
Subscriber must retain his, her or its own professional advisors to evaluate the
tax and other consequences to the Subscriber of an investment in the Units. The
Subscriber acknowledges that it is the responsibility of the Subscriber to
determine the appropriateness and the merits of a corporate entity to own the
Subscriber’s Units and the corporate structure of such entity.

     

    1.7 The
Subscriber acknowledges that this Offering has not been reviewed by the
Securities and Exchange Commission (the “SEC”) or any state securities
commission, and that no federal or state agency has made any finding or
determination regarding the fairness or merits of the Offering.  The
Subscriber represents that the Units are being purchased for his, her or its own
account, for investment only, and not with a view toward distribution or resale
to others.  The Subscriber agrees that he, she or it will not sell or
otherwise transfer the Units unless they are registered under the Act or unless
an exemption from such registration is available.

     

    1.8 The
Subscriber understands that the provisions of Rule 144 under the Act are not
available for at least one (1) year to permit resales of the Units or the Common
Stock and Warrants comprising the Units and there can be no assurance that the
conditions necessary to permit such sales under Rule 144 will ever be
satisfied.  The Subscriber understands that the Company is under no
obligation to comply with the conditions of Rule 144 or take any other action
necessary in order to make available any exemption from registration for the
sale of the Units or the Common Stock and Warrants comprising the
Units.

     

    1.9 The
Subscriber understands that the Units have not been registered under the Act by
reason of a claimed exemption under the provisions of the Act which depends, in
part, upon his, her or its investment intention.  In this connection,
the Subscriber understands that it is the position of the SEC that the statutory
basis for such exemption would not be present if his, her or its representation
merely meant that his, her or its present intention was to hold such securities
for a short period, such as the capital gains period of tax statutes, for a
deferred sale, for a market rise, assuming that a market develops, or for any
other fixed period.  The Subscriber realizes that, in the view of the
SEC, a purchase now with an intent to resell would represent a purchase with an
intent inconsistent with his, her or its representation to the Company and the
SEC might regard such a sale or disposition as a deferred sale, for which such
exemption is not available.

     

    1.10 The
Subscriber agrees to indemnify and hold the Company, its directors, officers and
controlling persons and their respective heirs, representatives, successors and
assigns harmless against all liabilities, costs and expenses incurred by them as
a result of any misrepresentation made by the Subscriber contained herein or any
sale or distribution by the Subscriber in violation of the Act (including,
without limitation, the rules promulgated thereunder), any state securities
laws, or the Company’s Certificate of Incorporation or By-laws, as amended from
time to time.

     

    1.11 The
Subscriber consents to the placement of a legend on any certificate or other
document evidencing the Common Stock or the Warrants stating that such
securities have not been registered under the Act and setting forth or referring
to the restrictions on transferability and sale thereof.

     

    1.12 The
Subscriber understands that the Company will review and rely on this
Subscription Agreement without making any independent investigation; and it is
agreed that the Company reserves the unrestricted right to reject or limit any
subscription and to withdraw the Offering at any time.

     

    1.13 The
Subscriber hereby represents that the address of the Subscriber furnished at the
end of this Subscription Agreement is the undersigned’s principal residence, if
the Subscriber is an individual, or its principal business address if it is a
corporation or other entity.

     

    1.14 The
Subscriber acknowledges that if the Subscriber is a Registered Representative of
a Financial Industry Regulatory Authority, Inc. (“FINRA”) member firm, the
Subscriber must give such firm the notice required by the FINRA’s Conduct Rules,
receipt of which must be acknowledged by such firm on the signature page
hereof.

     

    1.15 The
Subscriber hereby acknowledges that neither the Company nor any persons
associated with the Company who may provide assistance or advice in connection
with the Offering (other than the placement agent, if one is engaged by the
Company) are or are expected to be members or associated persons of members of
the FINRA or registered broker-dealers under any federal or state securities
laws.

     

    1.16 The
Subscriber understands that, pursuant to the terms of the Offering as set forth
in the PPM, the Company must receive subscriptions for 15 Units for an aggregate
purchase price of $750,000 in order to close on the sale of any Units and that
persons affiliated with the Company or its consultants, advisors, or placement
agents may subscribe for Common Stock, in which case the Company may accept
subscriptions from such affiliated parties in order to reach the Minimum
Offering; and that, accordingly, no investor should conclude that achieving the
Minimum Offering is the result of any independent assessment of the merits or
advantages of the Offering or the Company made by Subscribers in the Minimum
Offering.

     

    1.17 The
Subscriber hereby represents that, except as expressly set forth in the Offering
Documents, no representations or warranties have been made to the Subscriber by
the Company or any agent, employee or affiliate of the Company and, in entering
into this transaction, the Subscriber is not relying on any information other
than that contained in the Offering Documents and the results of independent
investigation by the Subscriber.

     

    1.18 All
information provided by the Subscriber in the Investor Questionnaire attached as
Exhibit B to
the PPM is true and accurate in all respects, and the Subscriber acknowledges
that the Company will be relying on such information to its possible detriment
in deciding whether the Company can sell these securities to the Subscriber
without giving rise to the loss of the exemption from registration under
applicable securities laws.

     

     

     

    
      
        
        

      

      
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              II.  

            	
              REPRESENTATIONS
      BY THE COMPANY

            

    

     

    (a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada and has the corporate power to
conduct the business which it conducts and proposes to conduct.

     

    (b) The
execution, delivery and performance of this Subscription Agreement by the
Company have been duly authorized by the Company and all other corporate action
required to authorize and consummate the offer and sale of the Units has been
duly taken and approved.

     

    (c) The Units
and the underlying Common Stock have been duly and validly authorized and
issued.

     

    (d) The
Company has obtained, or is in the process of obtaining, all licenses, permits
and other governmental authorizations necessary for the conduct of its business,
except where the failure to so obtain such licenses, permits and authorizations
would not have a material adverse effect on the Company. Such licenses, permits
and other governmental authorizations which have been obtained are in full force
and effect, except where the failure to be so would not have a material adverse
effect on the Company, and the Company is in all material respects complying
therewith.

     

    (e) The
Company knows of no pending or threatened legal or governmental proceedings to
which the Company is a party which would materially adversely affect the
business, financial condition or operations of the Company.

     

    (f) The
Company is not in violation of or default under, nor will the execution and
delivery of this Subscription Agreement or the issuance of the Common Stock, or
the consummation of the transactions herein contemplated, result in a violation
of, or constitute a default under, the Company’s Certificate of Incorporation or
By-laws, any material obligations, agreements, covenants or conditions contained
in any bond, debenture, note or other evidence of indebtedness or in any
material contract, indenture, mortgage, loan agreement, lease, joint venture or
other agreement or instrument to which the Company is a party or by which it or
any of its properties may be bound or any material order, rule, regulation,
writ, injunction, or decree of any government, governmental instrumentality or
court, domestic or foreign.

     

    (g) The
Company anticipates using the gross proceeds from the Offering as follows: (i)
approximately $200,000 for offering expenses and (ii) the remainder for
general corporate purposes including growth initiatives and capital
expenditures.

     

    
      	
              III.  

            	
              TERMS
      OF SUBSCRIPTION

            

    

     

    3.1 Subject
to Section 3.2 hereof, the subscription period will begin as of the date of the
PPM and will terminate at 11:59 PM Eastern Time, on the earlier of the date on
which  the Maximum Offering is sold or the Offering is terminated by
the Company (the “Termination
Date”). The minimum subscription amount is $50,000, although the Company
may, in its discretion, accept subscriptions for less than $50,000.

     

    3.2 The
Subscriber shall effect a wire transfer in the full amount of the purchase price
for the Units to the Company’s escrow account in accordance with the wire
instructions attached as Exhibit F to the PPM
or shall deliver a check in payment of the purchase price for the
Units.

     

    3.3 Pending
the sale of the Units, all funds paid hereunder shall be deposited by the
Company in escrow with the Company’s escrow agent.  If the Company
shall not have obtained subscriptions (including this subscription) for the
Minimum Offering on or before the Termination Date (as such date may be extended
by the Company), then this subscription shall be void and all funds paid
hereunder by the Subscriber shall be promptly returned without interest to the
Subscriber, to the same account from which the funds were drawn.  If
subscriptions are received and accepted and payment tendered for the Minimum
Offering on or prior to the Termination Date, then all subscription proceeds
(less fees and expenses) shall be paid over to the Company within ten (10) days
thereafter or such earlier date that is one business day after the amount of
good funds in escrow equals or exceeds $3,000,000.  In such event,
sales of the Units may continue thereafter until the earlier of the date on
which the Maximum Offering is sold and the Termination Date, with subsequent
releases of funds from time to time at the discretion of the
Company.

     

    3.4 The
Subscriber hereby authorizes and directs the Company and its escrow agent to
deliver any certificates or other written instruments representing the Units to
be issued to such Subscriber pursuant to this Subscription Agreement to the
address indicated on the signature page hereof.

     

    3.5 The
Subscriber hereby authorizes and directs the Company and its escrow agent to
return any funds, without interest, for unaccepted subscriptions to the same
account from which the funds were drawn.

     

    
      
        
        

      

      
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    3.6 If the
Subscriber is not a United States person, such Subscriber shall immediately
notify the Company and the Subscriber hereby represents that the Subscriber is
satisfied as to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Units or any use of this
Subscription Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Units, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Units.  Such Subscriber’s subscription and
payment for, and continued beneficial ownership of, the Units will not violate
any applicable securities or other laws of the Subscriber’s
jurisdiction.

     

    3.7 The
Company’s right to accept the subscription of the Subscriber is conditioned upon
the satisfaction of the following conditions precedent on or before the date the
Company accepts such subscription:

     

    (a) As of the
Closing, no legal action, suit or proceeding shall be pending that seeks to
restrain or prohibit the transactions contemplated by this
Agreement.

     

    (b) The
representations and warranties of the Company contained in this Agreement shall
have been true and correct in all material respects on the date of this
Agreement and shall be true and correct as of the Closing as if made on the
Closing Date.

     

    (c) The
Company shall have provided the Subscriber with a substantially completed draft
of a Current Report on Form 8-K containing such information about
Pubco  as would be required to be disclosed in a Registration
Statement on Form 10 (the “Jumbo 8-K”), and
following receipt of such Jumbo 8-K, the Subscriber shall have reconfirmed, in
writing, its subscription hereunder.

     

    (d) The
Company shall have consummated its acquisition of Pubco’s issued and outstanding
capital stock.

     

    
      	
              IV.  

            	
              MISCELLANEOUS

            

    

     

    4.1 Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by reputable overnight courier, facsimile (with receipt of
confirmation) or registered or certified mail, return receipt requested,
addressed to the Company, at the address set forth in the first paragraph
hereof, Attention: Chief Executive Officer, and to the Subscriber at the address
or facsimile number indicated on the signature page hereof.  Notices
shall be deemed to have been given on the date when mailed or sent by facsimile
transmission or overnight courier, except notices of change of address, which
shall be deemed to have been given when received.

     

    4.2 This
Subscription Agreement shall not be changed, modified or amended except by a
writing signed by both (a) the Company and (b) subscribers in the Offering
holding a majority of the Units issued in the Offering.

     

    4.3 This
Subscription Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns.  This Subscription Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

     

    4.4 Notwithstanding
the place where this Subscription Agreement may be executed by any of the
parties hereto, the parties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and governed by the laws of the
State of New York.  The parties hereby agree that any dispute which
may arise between them arising out of or in connection with this Subscription
Agreement shall be adjudicated only before a Federal court located in New York,
New York and they hereby submit to the exclusive jurisdiction of the federal
courts located in New York, New York with respect to any action or legal
proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Subscription Agreement or
any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of the
address set forth below or such other address as the undersigned shall furnish
in writing to the other.  The parties further agree that in the event
of any dispute, action, suit or other proceeding arising out of or in connection
with this Subscription Agreement, the PPM or other matters related to this
subscription brought by a Subscriber (or transferee), the Company (and each
other defendant) shall recover all of such party’s attorneys’ fees and costs
incurred in each and every action, suit or other proceeding, including any and
all appeals or petitions therefrom. As used herein, attorney’s fees shall be
deemed to mean the full and actual costs of any investigation and of legal
services actually performed in connection with the matters involved, calculated
on the basis of the usual fee charged by the attorneys performing such
services.

     

    4.5 This
Subscription Agreement may be executed in counterparts.  Upon the
execution and delivery of this Subscription Agreement by the Subscriber, this
Subscription Agreement shall become a binding obligation of the Subscriber with
respect to the purchase of Units as herein provided; subject, however, to the
right hereby reserved by the Company to (i) enter into the same agreements with
other subscribers, (ii) add and/or delete other persons as subscribers and (iii)
reduce the amount of or reject any subscription.

     

     

    
      
        
        

      

      
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    4.6 The
holding of any provision of this Subscription Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Subscription Agreement, which shall remain in full force and
effect.

     

    4.7 It is
agreed that a waiver by either party of a breach of any provision of this
Subscription Agreement shall not operate or be construed as a waiver of any
subsequent breach by that same party.

     

    4.8 The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further actions as may be necessary or
appropriate to carry out the purposes and intent of this Subscription
Agreement.

     

    
      	
              V.  

            	
              REGISTRATION
      RIGHTS

            

    

     

    5.1 Definitions.  As
used in this Agreement, the following terms shall have the following
meanings.

     

    (a) The term
“Holder” shall mean any person owning or having the right to acquire Registrable
Securities or any permitted transferee of a Holder.

     

    (b) The terms
“register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or order of effectiveness of such
registration statement or document.

     

    (c) The term
“Registrable Securities” shall mean the shares underlying the Notes and
Warrants, provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC;
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale; (C) are held by a Holder or a permitted transferee of
a Holder pursuant to Section 5.8; and (D) may not be disposed of under Rule 144
under the Securities Act without restriction.

     

    (d)           The
term “SEC Guidance” means (i) any publicly-available written or oral guidance,
requirements or notice of the staff of the SEC, and (ii) the Securities
Act.

    

    (e)           The
term “Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the SEC having substantially the
same purpose and effect as such Rule.

    

    5.2 Piggyback
Registration.  At any time after the date hereof, if the
Company shall determine to register for its account or for the account of others
any of its equity securities, the Company shall include in such registration
statement the Registrable Securities, as permitted by SEC Guidance, including,
without limitation, Rule 415, provided, however, that the Company may reduce the
number of Registrable Securities registered pro rata in view of market
conditions.

     

    5.3 Registration
Procedures.  Whenever required under this Article V to include
Registrable Securities in a Company registration statement, the Company shall,
as expeditiously as reasonably possible:

     

    (a) Use its
best reasonable efforts to (i) cause such registration statement to become
effective, and (ii) cause such registration statement to remain effective until
the earliest to occur of (A) such date as the sellers of Registrable Securities
(the “Selling Holders”) have completed the distribution described in the
registration statement and (B) such time that all of such Registrable Securities
are no longer, by reason of Rule 144 under the Securities Act, required to be
registered for the sale thereof by such Holders.  The Company will
also use its best reasonable efforts to, during the period that such
registration statement is required to be maintained hereunder, file such
post-effective amendments and supplements thereto as may be required by the
Securities Act and the rules and regulations thereunder or otherwise to ensure
that the registration statement does not contain any untrue statement of
material fact or omit to state a fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they are made, not misleading; provided, however, that if applicable rules
under the Securities Act governing the obligation to file a post-effective
amendment permits, in lieu of filing a post-effective amendment that (i)
includes any prospectus required by Section 10(a)(3) of the Securities Act or
(ii) reflects facts or events representing a material or fundamental change in
the information set forth in the registration statement, the Company may
incorporate by reference information required to be included in (i) and (ii)
above to the extent such information is contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement.

     

     

    
      
        
        

      

      
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    (b) Prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.

     

    (c) Furnish
to the Selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus as amended or supplemented from time to time, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.

     

    (d) Use best
reasonable efforts to register and qualify the securities covered by such
registration statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the Selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.

     

    (e) In the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering.  Each Selling Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

     

    (f) Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, (i) when the registration statement or any post-effective
amendment and supplement thereto has become effective; (ii) of the issuance by
the SEC of any stop order or the initiation of proceedings for that purpose (in
which event the Company shall make every effort to obtain the withdrawal of any
order suspending effectiveness of the registration statement at the earliest
possible time or prevent the entry thereof); (iii) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iv) of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.

     

    (g) Cause all
such Registrable Securities registered hereunder to be listed on each securities
exchange or quotation service on which similar securities issued by the Company
are then listed or quoted.

     

    (h) Provide a
transfer agent for all Registrable Securities registered pursuant hereunder and
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration.

     

    (i) Cooperate
with the Selling Holders and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Securities to be sold, which certificates will not bear any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, shall request at
least two business days prior to any sale of the Registrable Securities to the
underwriters.

     

    (j) Comply
with all applicable rules and regulations of the SEC.

     

    (k) If the
offering is underwritten and at the request of any Selling Holder, use its best
reasonable efforts to furnish on the date that Registrable Securities are
delivered to the underwriters for sale pursuant to such registration: (i)
opinions dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters and the transfer agent for the
Registrable Securities so delivered, respectively, to the effect that such
registration statement has become effective under the Securities Act and such
Registrable Securities are freely tradable, and covering such other matters as
are customarily covered in opinions of issuer’s counsel delivered to
underwriters and transfer agents in underwritten public offerings and (ii) a
letter dated such date from the independent public accountants who have
certified the financial statements of the Company included in the registration
statement or the prospectus, covering such matters as are customarily covered in
accountants’ letters delivered to underwriters in underwritten public
offerings.

     

    5.4 Furnish
Information.  It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any Selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be reasonably required by the Company to
effect the registration of such Holder’s Registrable Securities.

     

    5.5 Registration
Expenses.  The Company shall bear and pay all registration
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registration pursuant to Section 5.2
for each Holder, but excluding (i) legal expenses of the Holders and (ii)
underwriting discounts and commissions relating to Registrable
Securities.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    5.6 Delay of
Registration.  No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Article.

     

    5.7 Indemnification.  In
the event that any Registrable Securities are included in a registration
statement under this Article V:

     

    (a) To the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
“Violation”):  (i) any untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 5.7(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.

     

    (b) To the
extent permitted by law, each Selling Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, or the Exchange
Act, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the
indemnity agreement contained in this Section 5.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that, in no
event shall any indemnity under this Section 5.7(b) exceed the greater of the
cash value of the (i) gross proceeds from the Offering received by such Holder
or (ii) such Holder’s investment pursuant to this Agreement as set forth on the
signature page attached hereto.

     

    (c) Promptly
after receipt by an indemnified party under this Section 5.7 of notice of the
commencement of any action (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.7, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel selected by the indemnifying party and approved
by the indemnified party (whose approval shall not be unreasonably withheld);
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding.  The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.7.

     

    (d) If the
indemnification provided for in this Section 5.7 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    (e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall
control.

     

    (f) The
obligations of the Company and Holders under this Section 5.7 shall survive the
completion of the Offering.

     

    5.8 Permitted
Transferees.  The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Article
V may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities, to (a) any partner or retired partner of a
Holder that is a partnership or member or Manager of a limited Liability Company
of a Holder that is an LLC, or (b) any family member or trust for the benefit of
any individual Holder, provided that (i) such Holder gives prior written notice
to the Company; (ii) such transferee agrees to comply with the terms and
provisions of this Agreement;  (iii) such transfer is otherwise
in compliance with this Agreement; and (iv) such transfer is otherwise
effected in accordance with applicable securities laws.  Except as
specifically permitted by this Section 5.8, the rights of a Holder with respect
to Registrable Securities as set out herein shall not be transferable to any
other person, and any attempted transfer shall cause all rights of such Holder
therein to be forfeited.

     

    

    [Signature
Pages Follow]

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    IN WITNESS WHEREOF, the
parties have executed this Subscription Agreement as of the day and year first
written above.

     

    

    
      	
              __________________________

            	
              X
      $50,000 for each Unit

            	
              =
      $_____________________.

            
	
              Number
      of Units subscribed for

            	 
      	
              Aggregate
      Purchase Price

            

    

    

    Manner
in which Title is to be held (Please Check One):

     

    
      	
              1.

            	
              ___

            	
              Individual

            	
              7.

            	
              ___

            	
              Trust/Estate/Pension
      or Profit Sharing Plan

              Date
      Opened:______________

            
	
              2.

            	
              ___

            	
              Joint
      Tenants with Right of Survivorship

            	
              8.

            	
              ___

            	
              As
      a Custodian for

              ________________________________

              Under
      the Uniform Gift to Minors Act of the State of

              ________________________________

            
	
              3.

            	
              ___

            	
              Community
      Property

            	
              9.

            	
              ___

            	
              Married
      with Separate Property

            
	
              4.

            	
              ___

            	
              Tenants
      in Common

            	
              10.

            	
              ___

            	
              Keogh

            
	
              5.

            	
              ___

            	
              Corporation/Partnership/
      Limited Liability Company

            	
              11.

            	
              ___

            	
              Tenants
      by the Entirety

            
	
              6.

            	
              ___

            	
              IRA

            	
              12.

            	
              ___

            	
              Foundation
      described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
      amended.

            

    

    

    IF
MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN:

     

    · INDIVIDUAL
SUBSCRIBERS MUST COMPLETE PAGE A-10

     

    · SUBSCRIBERS
WHICH ARE ENTITIES MUST COMPLETE PAGE A-11

     

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

     

    EXECUTION BY NATURAL
PERSONS

     

    
      	
               

              _____________________________________________________________________________

              Exact
      Name in Which Title is to be Held

               

               

            
	 	 	 
	
              Name
      (Please Print)

               

               

            	 
      	
              Name
      of Additional Subscriber

            
	
              Residence:
      Number and Street

            	 
      	
              Address
      of Additional Subscriber

               

               

            
	
              City,
      State and Zip Code

               

               

            	 
      	
              City,
      State and Zip Code

            
	
              Social
      Security Number

               

               

            	 
      	
              Social
      Security Number

               

            
	
              Telephone
      Number

            	 
      	
              Telephone
      Number

               

               

            
	
              Fax
      Number (if available)

               

               

            	 
      	
               

              Fax
      Number (if available)

            
	
              E-Mail
      (if available)

               

               

            	 
      	
              E-Mail
      (if available)

            
	
              (Signature)

            	 
      	
              (Signature
      of Additional Subscriber)

            
	 
      	 
      	 
      
	 
      	
              ACCEPTED
      this ___ day of _________ 2009, on behalf of Magnolia Solar
      Corporation

            
	 
      
	 
      	
              By:_____________________________

              Name:

              Title:

            

    

    

     

     

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    EXECUTION BY SUBSCRIBER
WHICH IS AN ENTITY

     

    (Corporation,
Partnership, Trust, Etc.)

     

    
      	
              ____________________________________________________________________________

              Name
      of Entity (Please Print)

            
	
              Date
      of Incorporation or Organization:

            
	
              State
      of Principal Office:

            
	
              Federal
      Taxpayer Identification Number:

               

               

              ____________________________________________

              Office
      Address

              ____________________________________________

              City,
      State and Zip Code

              ____________________________________________

              Telephone
      Number

              ____________________________________________

              Fax
      Number (if available)

              ____________________________________________

              E-Mail
      (if available)

            
	
               

              [seal]

               

              Attest:                      

              (If
      Entity is a Corporation)

            	
               

              By:  ___________________                                                              

              Name:__________________

              Title:

            
	 
      	 
      
	
              *If
      Subscriber is a Registered Representative with a FINRA member firm, have
      the following acknowledgement signed by the appropriate
    party:

            	 
      
	
              The
      undersigned FINRA member firm acknowledges receipt of the
      notice

              required
      by Rule 3050 of the FINRA

              Conduct
      Rules

            	 
      
	 
      
	
               

               

              Name
      of FINRA Firm

            	
              ACCEPTED
      this ____ day of __________ 2009, on behalf of Magnolia Solar
      Corporation.

            
	
               

              By: _______________________                                                               

              Name:

              Title:

            	
               

              By:    ____________________                                                            

              Name:____________________

              Title:

            

    

    
 

     

     

    11ex102.htm

    Exhibit
10.2

     

     

    
      	 
      	 
      	 
      
	 
      	
              WARRANT

            	 
      
	
              NO.
      MSC-001

            	
              MAGNOLIA
      SOLAR CORPORATION

            	
              ________
      Shares

            
	 
      	 
      	 
      

    

    WARRANT TO PURCHASE COMMON
STOCK

     

    VOID
AFTER 5:30 P.M., EASTERN

    TIME,
ON THE EXPIRATION DATE

     

    THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.

     

    FOR VALUE
RECEIVED, MAGNOLIA SOLAR CORPORATION, a Nevada corporation (the “Company”), hereby
agrees to sell upon the terms and on the conditions hereinafter set forth, but
no later than 5:30 p.m., Eastern Time, on the Expiration Date (as hereinafter
defined) to ________________ or registered
assigns (the “Holder”), under the
terms as hereinafter set forth, __________________
(_____________) fully paid and non-assessable shares of the Company’s
Common Stock, par value $0.0001 per share (the “Warrant Stock”), at a
purchase price of ONE DOLLAR AND SIXTY FIVE CENTS ($1.65) per share (the “Warrant Price”),
pursuant to this warrant (this “Warrant”).  The
number of shares of Warrant Stock to be so issued and the Warrant Price are
subject to adjustment in certain events as hereinafter set forth.  The
term “Common
Stock” shall mean, when used herein, unless the context otherwise
requires, the stock and other securities and property at the time receivable
upon the exercise of this Warrant.  This Warrant was originally issued
to the Holder of the Holder’s predecessor in interest on ____________, 20091 (the “Issue Date”).

     

    

     

    1. Exercise of
Warrant.

     

    a. The
Holder may exercise this Warrant in whole or in part according to its terms by
delivering the Notice of Exercise to the Company at the address set forth in
Section 9, the Notice of Exercise attached hereto having then been duly executed
by the Holder, accompanied by cash, certified check or bank draft in payment of
the purchase price, in lawful money of the United States of America, for the
number of shares of the Warrant Stock specified in the Notice of Exercise, or as
otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Time, on
__________________, 20142 (the “Expiration
Date”).  Partial exercises of this Warrant resulting in
purchases of a portion of the total number of shares of Warrant Stock 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
shares of Warrant Stock purchased

     

    b. The
provisions of this Section 1(b) shall only be applicable (i) prior to the
Automatic Exercise Date (as defined below),if, and only if, the provisions of
the following sentence are satisfied, or (ii) on the Automatic Exercise Date,
whether or not such provisions are satisfied.  Notwithstanding
anything contained herein to the contrary, if at any time after twelve (12)
months from the Issue Date of this Warrant there is no effective registration
statement registering, or no current prospectus available for, the resale of all
of the shares of Warrant Stock issuable hereunder, then the Holder may, in its
sole discretion, exercise this Warrant in whole or in part by means of a
“cashless exercise” in lieu of making a cash payment, and the Holder shall then
be entitled to receive a certificate for the number of shares of Warrant Stock
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:

     

    (A)
=                      VWAP
(as defined below) on the Trading Day immediately preceding thedate of such election;

    

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

    

    (X)
=                      the
number of shares of Warrant Stock issuable upon exercise of thisWarrant in accordance with the terms of this
Warrant by means of a cashexercise rather than a cashless
exercise.

     

     

     

     

     

    
      

        

      

        
        1
Insert Closing Date for original issuance of the Warrant.

        
          

2
Insert date which is last day of calendar month in which 5th
anniversary occurs

           

      

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
 

    For purposes of this Warrant, “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 for trading 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 closing 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. For purposes of this Warrant, “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the New York Stock Exchange, NYSE Amex,
NASDAQ Capital Market, NASDAQ Global Market, or NASDAQ Global Select
Market.  For purposes of this Warrant, “Trading Day” means a
day on which the Trading Market is open for trading.

    

    

    c. This
Warrant may be exercised in whole or in part so long as any exercise in part
hereof would not involve the issuance of fractional shares of Warrant
Stock.  If exercised in part, the Company shall, at the request of the
Holder, deliver to the Holder a new Warrant, identical in form, in the name of
the Holder, evidencing the right to purchase the number of shares of Warrant
Stock as to which this Warrant has not been exercised, which new Warrant shall
be signed by the Chairman, Chief Executive Officer or President and the
Secretary or Assistant Secretary of the Company.  The term Warrant as
used herein shall include any subsequent Warrant issued as provided
herein.

     

    d. No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. The Company shall pay cash in lieu of fractions
with respect to the Warrants based upon the fair market value of such fractional
shares of Common Stock (which shall be the closing sale price of such shares on
the exchange or market on which the Common Stock is then traded) at the time of
exercise of this Warrant.

     

    e. In the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the Warrant Stock so purchased, registered in the name of
the Holder, shall be delivered to the Holder within four (4) Trading Days (the
“Warrant Stock
Delivery Date”). The person or entity in whose name any certificate for
the Warrant Stock is issued upon exercise of the rights represented by this
Warrant shall for all purposes be deemed to have become the holder of record of
such shares immediately prior to the close of business on (i) the date on which
the  payment of the Warrant Price if relevant  is received
by the Company (ii)  or the date of a cashless exercise pursuant to
Section 1 (b) . The Company shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on exercise of this Warrant.  If the Company fails for
any reason to deliver to the Holder certificates evidencing the Warrant Stock
subject to a Notice of Exercise by the Warrant Stock 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 Stock 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 tenth Trading Day after
such liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such certificates are delivered.

     

    f. 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 Stock, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

     

    g. Rescission
Rights.  If the Company fails to cause the transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant
Stock pursuant to Section 1(e) by the Warrant Stock Delivery Date, then the
Holder will have the right to rescind such exercise.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    h. 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 Stock pursuant to an exercise on or before
the Warrant Stock 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 Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Company was required to deliver to
the Holder in connection with the exercise at issue times (B) the price at which
the sell order giving rise to such purchase obligation was executed, and (2) at
the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of shares of Warrant Stock for which such exercise was not
honored or deliver to the Holder the number of shares of Common Stock that would
have been issued had the 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 (1) 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.

     

    i. If any
portion of this Warrant remains unexercised as of the Expiration Date and the
VWAP on the Expiration Date is greater than the applicable Warrant Price as of
the Expiration Date, then, without further action by the Holder, this Warrant
shall be deemed to have been exercised automatically at the time (the “Automatic
Exercise Date”) which is immediately prior to the close of business on the
Expiration Date (or, in the event that the Expiration Date is not a Trading Day,
the immediately preceding Trading Day) as if the Holder had duly given a Notice
of Exercise for a “cashless” exercise as contemplated by Section 1(b) hereof
(without regard to the satisfaction of the conditions provided in said Section
1(b) to the Holder’s giving such a Notice of Exercise), and the Holder (or such
other person or persons as directed by the Holder) shall be treated for all
purposes as the holder of record of such Warrant Stock as of the close of
business on such Automatic Exercise Date.  This Warrant shall be
deemed to be surrendered to the Company on the Automatic Exercise Date by virtue
of this Section 1(i) without any action by the Holder.

     

    2. Disposition of Warrant Stock
and Warrant.

     

    a. The
Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
pursuant hereto are, as of the date hereof, not registered: (i) under the
Securities Act of 1933, as amended (the “Act”), on the ground
that the issuance of this Warrant is exempt from registration under Section 4(2)
of the Act as not involving any public offering or (ii) under any applicable
state securities law because the issuance of this Warrant does not involve any
public offering; and that the Company’s reliance on the Section 4(2) exemption
of the Act and under applicable state securities laws is predicated in part on
the representations hereby made to the Company by the Holder that it is
acquiring this Warrant and will acquire the Warrant Stock for investment for its
own account, with no present intention of dividing its participation with others
or reselling or otherwise distributing the same unless such sale is made
pursuant to an effective registration statement covering such resale or pursuant
to an available exemption from such registration, subject, nevertheless, to any
requirement of law that the disposition of its property shall at all times be
within its control.

     

    The
Holder hereby agrees that, unless such sale is made pursuant to an effective
registration statement,  it will not sell or transfer all or any part
of this Warrant and/or Warrant Stock unless and until it shall first have
furnished to the Company either (i) an opinion from Company counsel or counsel
reasonably satisfactory to the Company (which shall include Krieger & Prager
LLP), to the effect that the proposed sale or transfer may be made without
registration under the Act and without registration or qualification under any
state law, or (ii) an interpretative letter from the Securities and Exchange
Commission to the effect that no enforcement action will be recommended if the
proposed sale or transfer is made without registration under the
Act.

     

    b. If, at
the time of issuance of the shares issuable upon exercise of this Warrant, no
registration statement is in effect with respect to such shares under applicable
provisions of the Act, the Company may at its election require that the Holder
provide the Company with written reconfirmation of the Holder’s investment
intent and that any stock certificate delivered to the Holder of a surrendered
Warrant shall bear legends reading substantially as follows:

     

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

     

    In
addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions.  Such “stop transfer” orders will be removed if
there is no legend on the stock certificate or when the legend, if any, is
removed.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    3. Reservation of Shares; Valid
Issuance.  The Company hereby agrees that at all times there
shall be reserved for issuance upon the exercise of this Warrant such number of
shares of its Common Stock as shall be required for issuance upon exercise of
this Warrant.  The Company further agrees that all shares which may be
issued upon the exercise of the rights represented by this Warrant will be duly
authorized and will, upon issuance and against payment of the exercise price, be
validly issued, fully paid and non-assessable, free from all taxes, liens,
charges and preemptive rights with respect to the issuance thereof, other than
taxes, if any, in respect of any transfer occurring contemporaneously with such
issuance and other than transfer restrictions imposed by federal and state
securities laws.

     

    4. Exchange, Transfer or
Assignment of Warrant.  This Warrant is exchangeable, without
expense, at the option of the Holder, upon presentation and surrender hereof to
the Company or at the office of its stock transfer agent, if any, for other
Warrants of different denominations, entitling the Holder or Holders thereof to
purchase in the aggregate the same number of shares of Common Stock purchasable
hereunder.  Upon surrender of this Warrant to the Company or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof.

     

    5. Capital
Adjustments.  This Warrant is subject to the following further
provisions:

     

    a. Adjustment Upon Issuance of
Common Stock.  If at any time while the Holder holds in excess
of 50% of the total number of shares of Warrant Stock available hereunder as of
the Issue Date, the Company issues or sells any shares of Common Stock or
securities convertible into or exercisable for Common Stock, other than an
Exempt Issuance (as defined below), for a consideration, conversion price or
exercise price  per share of Common Stock (each, the “New Issuance Price”)
less than a price equal to the Warrant Price  (subject to appropriate
adjustment for any stock dividend, stock split, stock combination,
reclassification or similar transaction after the date hereof) (a “Dilutive Issuance”),
then immediately after such Dilutive Issuance, the Warrant Price then in effect
shall be reduced to an amount equal to the New Issuance Price. For purposes of
this Warrant, “Exempt
Issuance” shall mean the issuance of (a) shares of Common Stock or
options to employees, officers, directors, or consultants of the Company
pursuant to any stock or option plan duly adopted for such purpose by a majority
of the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors, (b) securities
upon the exercise or exchange of or conversion of any securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Warrant,
provided that such securities have not been amended since the date of this
Warrant to increase the number of such securities or to decrease the exercise,
exchange or conversion price of such securities; and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a person which is either an owner of, or an entity that is, itself or
through its subsidiaries, an operating company in a business synergistic with
the business of the Company and in which the Company receives benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in
securities.

     

    b. Recapitalization,
Reclassification and Succession.  If any recapitalization
of the Company or reclassification of its Common Stock or any merger or
consolidation of the Company into or with a corporation or other business
entity, or the sale or transfer of all or substantially all of the Company’s
assets or of any successor corporation’s assets to any other corporation or
business entity (any such corporation or other business entity being included
within the meaning of the term “successor corporation”) shall be effected, at
any time while this Warrant remains outstanding and unexpired, then, as a
condition of such recapitalization, reclassification, merger, consolidation,
sale or transfer, lawful and adequate provision shall be made whereby the Holder
of this Warrant thereafter shall have the right to receive upon the exercise
hereof as provided in Section 1 and in lieu of the shares of Common Stock
immediately theretofore issuable upon the exercise of this Warrant, such shares
of capital stock, securities or other property as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of Common Stock immediately theretofore issuable
upon the exercise of this Warrant had such recapitalization, reclassification,
merger, consolidation, sale or transfer not taken place, and in each such case,
the terms of this Warrant shall be applicable to the shares of stock or other
securities or property receivable upon the exercise of this Warrant after such
consummation.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    c. Subdivision or Combination
of Shares.  If the Company at any time while this Warrant
remains outstanding and unexpired shall subdivide or combine its Common Stock,
the number of shares of Warrant Stock purchasable upon exercise of this Warrant
and the Warrant Price shall be proportionately adjusted.

     

    d. Stock Dividends and
Distributions.  If the Company at any time while this Warrant
is outstanding and unexpired shall issue or pay the holders of its Common Stock,
or take a record of the holders of its Common Stock for the purpose of entitling
them to receive, a dividend payable in, or other distribution of, Common Stock,
then (i) the Warrant Price shall be adjusted in accordance with Section 5(f) and
(ii) the number of shares of Warrant Stock purchasable upon exercise of this
Warrant shall be adjusted to the number of shares of Common Stock that the
Holder would have owned immediately following such action had this Warrant been
exercised immediately prior thereto.

     

    e. Stock and Rights Offering to
Shareholders.  If the Company shall at any time after the date
of issuance of this Warrant distribute to all holders of its Common Stock any
shares of capital stock of the Company (other than Common Stock) or evidences of
its indebtedness or assets (excluding cash dividends or distributions paid from
retained earnings or current year’s or prior year’s earnings of the Company) or
rights or warrants to subscribe for or purchase any of its securities (excluding
those referred to in the immediately preceding paragraph) (any of the foregoing
being hereinafter in this paragraph called the “Securities”), then in each such
case, the Company shall reserve shares or other units of such Securities for
distribution to the Holder upon exercise of this Warrant so that, in addition to
the shares of the Common Stock to which such Holder is entitled, such Holder
will receive upon such exercise the amount and kind of such Securities which
such Holder would have received if the Holder had, immediately prior to the
record date for the distribution of the Securities, exercised this
Warrant.

     

    f. Spin Off.  If,
for any reason, prior to the exercise of this Warrant in full, the Company spins
off or otherwise divests itself of a part of its business or operations or
disposes all or of a part of its assets in a transaction (the “Spin Off”) in
which the Company does not receive compensation for such business, operations or
assets, but causes securities of another entity to be issued to security holders
of the Company, then the Company shall  notify the Holder at least thirty
(30) days prior to the record date with respect to such Spin-Off.

     

    

    g. Adjustment for Spin
Off.  If, for any reason, prior to the exercise of this Warrant in
full, the Company spins off or otherwise divests itself of a part of its
business or operations or disposes all or a part of its assets in a transaction
(the “Spin Off”) in which the Company does not receive compensation for such
business, operations or assets, but causes securities of another entity (the
“Spin Off Securities”) to be issued to security holders of the Company,
then

     

               
(a)  the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had all
of the Holder’s unexercised Warrants outstanding on the record date (the “Record
Date”) for determining the amount and number of Spin Off Securities to be issued
to security holders of the Company (the “Outstanding Warrants”) been exercised
as of the close of business on the trading day immediately before the Record
Date (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on
the exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by
(y) a fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of the
Outstanding Warrants; and

     

    
      	
                         

            	
              (b)
      the Warrant Price on the Outstanding Warrants shall be adjusted
      immediately after consummation of the Spin Off by multiplying the Warrant
      Price by a fraction (if, but only if, such fraction is less than 1.0), the
      numerator of which is the average closing bid price of the Common Stock
      for the five (5) Trading Days immediately following the fifth Trading Day
      after the Record Date, and the denominator of which is the average closing
      bid price of the Common Stock on the five (5) trading days immediately
      preceding the Record Date; and such adjusted Warrant Price shall be deemed
      to be the Warrant Price with respect to the Outstanding Warrants after the
      Record Date.

            

    

    

     

    h. Warrant Price
Adjustment.  Except as otherwise provided herein, whenever the
number of shares of Warrant Stock purchasable upon exercise of this Warrant is
adjusted, as herein provided, the Warrant Price payable upon the exercise of
this Warrant shall be adjusted to that price determined by multiplying the
Warrant Price immediately prior to such adjustment by a fraction (i) the
numerator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately prior to such adjustment, and (ii) the
denominator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately thereafter.

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    i. Adjustment to Number of
Warrant Shares.  If the Warrant Price is reduced pursuant to the
preceding provisions of this Section 5, the number of shares issuable on
exercise of the Warrants shall be increased to a number of shares (the “Adjusted Warrant Shares
Number”) such that the aggregate Warrant Price (after taking into account
such reduction) for the Adjusted Warrant Shares Number shall be equal to the
aggregate Warrant Price (immediately before such reduction) for the Warrant
Stock issuable on exercise of the Warrants prior to the adjustment contemplated
by this clause (g) (for purposes of all such calculations, all Warrants shall be
assumed to be fully exercisable without regard to any limitations, restrictions
or conditions that may be provided herein or in any other provision of any of
the Transaction Documents).

     

    j. Certain Shares
Excluded.  The number of shares of Common Stock outstanding at
any given time for purposes of the adjustments set forth in this Section 5 shall
exclude any shares then directly or indirectly held in the treasury of the
Company.

     

    k. Deferral and Cumulation of
De Minimis Adjustments.  The Company shall not be required to
make any adjustment pursuant to this Section 5 if the amount of such adjustment
would be less than one percent (1%) of the Warrant Price in effect immediately
before the event that would otherwise have given rise to such
adjustment.  In such case, however, any adjustment that would
otherwise have been required to be made shall be made at the time of and
together with the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to not less than one percent
(1%) of the Warrant Price in effect immediately before the event giving rise to
such next subsequent adjustment.

     

    l. Duration of
Adjustment.  Following each computation or readjustment as
provided in this Section 5, the new adjusted Warrant Price and number of shares
of Warrant Stock purchasable upon exercise of this Warrant shall remain in
effect until a further computation or readjustment thereof is
required.

     

    6. Call
Right.  Subject to the provisions of Section 7, this Warrant
may be redeemed prior to the Expiration Date, at the option of the Company, at a
price of $0.001 per share of Warrant Stock (“Redemption Price”),
upon not less than 10 Trading Days’ prior written notice (“Redemption Period”)
to the Holder notifying Holder of the Company’s intent to exercise such right
and setting forth a time and date for such redemption (the “Redemption Date”);
provided, however, that no
redemption under this Section 6 may occur unless (i) the Company’s Common Stock
has had a per share closing sales price of at least 200% of the Warrant Price
for each of the sixty (60) consecutive Trading Days immediately prior to the
issuance of such notice   (ii) in excess of 200,000 shares of the
Company’s Common Stock has traded for each of the sixty (60) consecutive Trading
Days immediately prior to such notice (iii) at the date of the redemption notice
and during the entire Redemption Period, there is an effective registration
statement covering the resale of the Warrant Stock  or the
Warrant  Shares issued in a cashless exercise  may be
immediately resold in accordance with the provisions of Rule 144 ,(iv) the
Company is current in its required Periodic Filings with the SEC and (v) there
are at least 2 market makers for the Common Stock. This Warrant may be
thereafter exercised by the Holder, for cash or on a cashless basis, at any time
after notice of redemption has been given by the Company and prior to the time
and date fixed for redemption, and the other provisions of this Warrant shall
remain in full force and effect through and including the redemption date.. This
Warrant may be exercised by the Holder, for cash or on a cashless basis, at any
time after notice of redemption has been given by the Company
through  the time and date fixed for redemption, and the other
provisions of this Warrant shall remain in full force and effect through and
including the Redemption Date.  After the Redemption Date, the Holder
shall have no further rights except to receive, upon surrender of this Warrant,
the Redemption Price.

     

    7. Limitation on
Exercises.  Notwithstanding the provisions of this Warrant, in
no event (except (i) as specifically provided in this Warrant as an exception to
this provision, (ii) during the forty-five (45) day period prior to the
Expiration Date, (iii) during the Redemption Period, or (iv) while there is
outstanding a tender offer for any or all of the shares of the Company’s Common
Stock), the Company shall not effect the exercise of this Warrant, and the
Holder shall not have the right to exercise this Warrant, to the extent that
after giving effect to such exercise, the Holder (together with such Holder’s
affiliates) would beneficially own in excess of 4.99% of the shares of Common
Stock outstanding immediately after giving effect to such
exercise.  For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by such Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Holder and its affiliates and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company beneficially owned by such Person and its affiliates (including,
without limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein.  Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended.  To the extent that the limitation contained in this
Section 6 applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any affiliate)
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
affiliate) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of the
determination.  For purposes of this Warrant, in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (1) the Company's most
recent Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, Current Report on Form
8-K or other public filing with the Securities and Exchange Commission, as the
case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company setting forth the number of shares of Common Stock
outstanding.  For any reason at any time, upon the written or oral
request of the Holder, the Company shall within one (1) business 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 and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.  The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 6 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.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    8. Notice to
Holders.

     

    a. Notice of Record
Date.  In case:

     

    (i) the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant) for the
purpose of entitling them to receive any dividend (other than a cash dividend
payable out of earned surplus of the Company) or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right;

     

    (ii) of any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation with or merger of the Company into another
corporation, or any conveyance of all or substantially all of the assets of the
Company to another corporation; or

     

    (iii) of any
voluntary dissolution, liquidation or winding-up of the Company;

     

    then, and
in each such case, the Company will mail or cause to be mailed to the Holder
hereof at the time outstanding a notice specifying, as the case may be, (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any, is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution or winding-up.  Such
notice shall be mailed at least thirty (30) days prior to the record date
therein specified, or if no record date shall have been specified therein, at
least thirty (30) days prior to such specified date, provided, however, failure
to provide any such notice shall not affect the validity of such
transaction.

     

    b. Certificate of
Adjustment. Whenever any adjustment shall be made pursuant to Section 5
hereof, the Company shall promptly make a certificate signed by its Chairman,
Chief Executive Officer, President, Vice President, Chief Financial Officer or
Treasurer, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the Warrant Price and number of shares of Warrant Stock
purchasable upon exercise of this Warrant after giving effect to such
adjustment, and shall promptly cause copies of such certificates to be mailed
(by first class mail, postage prepaid) to the Holder of this
Warrant.

     

    9. Loss, Theft, Destruction or
Mutilation.  Upon receipt by the Company of evidence
satisfactory to it, in the exercise of its reasonable discretion, of the
ownership and the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company and, in the case of mutilation, upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof, without expense
to the Holder, a new Warrant of like tenor dated the date hereof.

     

    10. Warrant Holder Not a
Stockholder.  Prior to the exercise of this Warrant in
accordance with its terms, the Holder of this Warrant, as such, shall not be
entitled by reason of this Warrant to any rights whatsoever as a stockholder of
the Company.

     

    11. Notices.  Any
notice required or contemplated by this Warrant shall be deemed to have been
duly given if transmitted by registered or certified mail, return receipt
requested, or nationally recognized overnight delivery service, to the Company at its
principal executive offices located at 54 Cummings Park, Suite 316
Woburn MA, 01801 Attention: Chief Financial Officer, or to the
Holder at the name and address set forth in the Warrant Register maintained by
the Company.

     

    12. Choice of
Law.  THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    13. Jurisdiction and
Venue.  The Company and Holder hereby agree that any dispute
which may arise between them arising out of or in connection with this Warrant
shall be adjudicated before a court located in New York County, New York and
they hereby submit to the exclusive jurisdiction of the federal and state courts
of the State of York located in New York County with respect to any action or
legal proceeding commenced by any party, and irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Warrant or any acts or
omissions relating to the sale of the securities hereunder, and consent to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth
herein or such other address as either party shall furnish in writing to the
other.

     

    14. Remedies.  The
Company stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Company in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

     

    15. Supplements and Amendments;
Whole Agreement.  This Warrant may be amended or supplemented
only by an instrument in writing signed by the parties hereto.  This
Warrant contains the full understanding of the parties hereto with respect to
the subject matter hereof and thereof and there are no representations,
warranties, agreements or understandings other than expressly contained herein
and therein.

     

    16. Descriptive
Headings.  Descriptive headings of the several Sections of this
Warrant are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

     

    

     

     

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officers, as of this __
day of _____________________, 2009.

     

    
      
        	 	MAGNOLIA
      SOLAR CORPORATION	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

      

    

     

     

     

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

     

     

    NOTICE
OF EXERCISE

     

    
      	
              TO:

            	
              Magnolia
      Solar Corporation

            

    

    
      	
               
      

            	
              54 Cummings
      Park

            

    

    
      	
               
      

            	
              Suite
      316

            

    

    
      	
               
      

            	
              Woburn,
      MA 01801

            

    

    
      	
               
      

            	
              Attn:
      Chief Financial Officer

            

    

    
      	
               
      

            	
              Tel:
      (___) ___-____

            

    

    
      	
               
      

            	
              Fax:
      (___) ___-____

            

    

    

     

    (1) The
undersigned hereby elects to purchase ______________ shares of Warrant Stock of
the Company pursuant to the terms of the attached Warrant to Purchase Common
Stock, and tenders herewith payment of the exercise price in full, as
follows:

     

            o   CASH:                      $
    =
(Exercise Price x Exercise Shares)

    

    Payment is being made by:

    

              oenclosed check

              owire transfer

              oother

    

    o   CASHLESS
EXERCISE [if available pursuant to Section 1(b)]:

    

    Net number of Warrant Shares to be
issued to Holder
:                        _________*

    

    * based
on:                                [(A-B)
(X)] / (A)

    

    where:

    A
=        VWAP                                                                           =           $_______________

    B
=        Warrant
Price                                                                  =           $_______________

    
      	
               
      

            	
              X
      =

            	
              the
      number of shares of Warrant Stock
issuable

            

    

    upon exercise of this Warrant in
accordance with

    the terms of this Warrant

     

    (2) oPlease issue a certificate or
certificates representing said shares of Warrant Stock in the name of the
undersigned or in such other name as is specified below, by physical delivery of
a certificate(s) to:

     

    

     The
shares of Warrant Stock shall be delivered to the following DWAC Account Number,
if permitted:

     

      
        

      

    

    

      
        

      

    

     

     

      
        

      

    

    

    

    (3) Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    [SIGNATURE
OF HOLDER]

     

    Name of
Investing
Entity:  _________________________________________________

                                                                                                                                            

    Signature
of Authorized Signatory of Investing
Entity: _____________________________

                                                                                                                                             

    Name and
Title of Authorized
Signatory:           __________________________________

                                                                                                                                   

    Date:   ________________________________________________________________

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

                                                                                                                                           

    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
Name:      _____________________________________________________________                                                                                                                                    

    Holder’s
Signature: _____________________________________________________________                                                                                                                                         

    Name and
Title of
Signatory:    _____________________________________________________                                                                                                                                      

    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.

     

    

     

     

     

    12

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