Document:

EX-10.2

 

Exhibit
10.2

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is made and entered into as of
July 11, 2006, among Marshall Edwards, Inc., a Delaware corporation (the “Company”), and
the purchasers signatory hereto (each such purchaser is a “Purchaser” and collectively, the
“Purchasers”).

          This Agreement is made pursuant to the Securities Subscription Agreement, dated as of July 10,
2006, among the Company and the Purchasers (the “Purchase Agreement”).

          The Company and the Purchasers hereby agree as follows:

     1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the following meanings:

     “Advice” shall have the meaning set forth in Section 7(c).

     “Common Stock” means the common stock of the Company, par value $0.00000002,
and any other class of securities into which such shares may hereafter have been
reclassified or changed.

     “Effectiveness Date” means the 90th calendar day following the
Closing, extended by a period of 30 additional days if the Commission reviews the
Registration Statement, provided, however, in the event that the Company is
notified by the Commission that the Registration Statement will not be reviewed or is no
longer subject to further review and comments, the Effectiveness Date as to the Registration
Statement shall be the tenth Trading Day following the date on which the Company is so
notified if such date precedes the dates required above.

     “Effectiveness Period” shall have the meaning set forth in Section 2(a).

     “Filing Date” means the 30th calendar day following the Closing.

     “Holder” or “Holders” means the holder or holders, as the case may be,
from time to time of Registrable Securities.

     “Indemnified Party” shall have the meaning set forth in Section 6(c).

     “Indemnifying Party” shall have the meaning set forth in Section 6(c).

     “Liquidated Damages” shall have the meaning set forth in Section 2(b).

     “Losses” shall have the meaning set forth in Section 6(a).

     “Plan of Distribution” shall have the meaning set forth in Section 2(a).

 

 

     “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.

     “Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such Prospectus.

     “Registrable Securities” means all of (i) the Shares, (ii) the Warrant Shares
and (iii) Common Stock issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing.

     “Registration Statement” means the registration statement required to be filed
hereunder, including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.

     “Registration Default” shall have the meaning set forth in Section 2(b).

     “Registration Default Date” shall have the meaning set forth in Section 2(b).

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

     “Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.

     “Selling Security Holder Questionnaire” shall mean the Questionnaire attached
to this form as Annex B.

     “Shares” shall mean the Common Stock issued pursuant to the Purchase Agreement.

     “Warrants” shall mean the warrants to purchase Common Stock issued pursuant to
the Purchase Agreement.

     “Warrant Shares” shall mean the Common Stock issuable upon exercise of the
Warrants.

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     2. Shelf Registration.

     (a) On or prior to the Filing Date, the Company shall prepare and file with the
Commission the Registration Statement covering the resale of the Registrable Securities for
an offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith) and shall contain (unless otherwise
directed by the Holders) substantially the “Plan of Distribution” attached hereto as
Annex A. Not less than three business days prior to filing of the Registration
Statement, the Company shall provide each Holder with a copy of the Registration Statement
proposed to be filed and shall consider all appropriate comments that are timely provided by
such Holder with respect to the Registration Statement. Subject to the terms of this
Agreement, the Company shall use its commercially reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effectiveness Date, and
shall use its commercially reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until all Registrable Securities covered by
the Registration Statement have been sold or may be sold without volume restrictions
pursuant to Rule 144 as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and
the affected Holders (the “Effectiveness Period”). The Company shall notify the
Holders via facsimile or electronic mail of the effectiveness of the Registration Statement
within 3 Trading Days of the Company telephonically confirming effectiveness with the
Commission. The Company shall, by 9:30 AM Eastern Time on the Trading Day that is 3 Trading
Days after the Effective Date (as defined in the Purchase Agreement), file a Form 424(b)(5)
with the Commission. Each Holder agrees to furnish to the Company a completed Selling
Security Holder Questionnaire simultaneously with the execution of this Agreement.

     (b) If (i) the Registration Statement is not filed on or prior to the Filing Date, or
(ii) the Registration Statement is not declared effective by the Commission by the
Effectiveness Date or (iii) the Registration Statement ceases to be effective or usable at
any time during the Effectiveness Period (without being succeeded on the same date
immediately by a post-effective amendment or supplement to the Registration Statement that
cures such failure and that is itself, in the case of a post-effective amendment, declared
effective within 10 Trading Days of filing with the Commission) or the Holders are not
permitted to utilize the Prospectus therein to resell such Registrable Securities for twenty
consecutive Trading Days or in any individual case an aggregate of thirty Trading Days
during any twelve month period (which need not be consecutive Trading Days) (any of the
foregoing being a “Registration Default” and for purposes of clause (i) or (ii) the
date on which such Registration Default occurs, or for purposes of clause (iii) the date on
which such twenty or thirty Trading Day period, as applicable, is exceeded, each being a
“Registration Default Date”) then, subject to Section 3, the Company shall pay to
each Holder an amount in cash, as liquidated damages and not a penalty (“Liquidated
Damages”) equal to 1.0% of the aggregate purchase price paid by such Holder pursuant to
the Purchase Agreement for any Registrable Securities then held by such Holder per

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month of
time between the Registration Default Date and the date such Registration Default is cured,
prorated for any period less than one month; provided that such Liquidated Damages
paid to each Holder may not exceed more than 10% of the purchase price paid by such Holder
for its Registrable Securities. The foregoing represents the sole monetary remedy to any
Holder in connection with any Registration Default. In no event shall the Company be
required to pay Liquidated Damages in excess of the applicable amount set forth above,
regardless of whether one or multiple Registration Defaults exists. The Company shall pay
the Holders any Liquidated Damages accrued for the first month after a Registration Default
Date within seven calendar days after the end of such month, and any Liquidated Damages
accrued for any subsequent month within seven calendar days after the end of such month. If
the Company fails to pay any liquidated damages pursuant to this Section in full within
seven days after the date payable, the Company will pay interest thereon at a rate of 8% per
annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the
Holder, accruing daily from the date such liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full. A Registration Default under clause (i)
above shall be cured on the date that the Registration Statement is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that the
Registration Statement is declared effective by the SEC; and a Registration Default under
clause (iii) above shall be cured on the date that the Registration Statement is declared
effective by the SEC or is otherwise usable.

     3. Registration Procedures

          In connection with the Company’s registration obligations hereunder, the Company shall:

     (a) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement (subject to
the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule
424; (iii) respond as promptly as reasonably possible to any comments received from the
Commission with respect to the Registration Statement or any amendment thereto; and (iv)
comply in all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance (subject to the terms of
this Agreement) with the intended methods of disposition by the Holders thereof set forth in
the Registration Statement as so amended or in such Prospectus as so supplemented.

     (b) Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (ii) through (v) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as promptly as
reasonably possible and (if requested by any such Person) confirm such notice in writing no
later than one Trading Day following the day (i)(A) when a Prospectus or any

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Prospectus
supplement or post-effective amendment to the Registration Statement is filed; and (B) with
respect to the Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the Commission or any
other federal or state governmental authority of any stop order suspending the effectiveness
of the Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of
any event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in the
Registration Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that requires any
revisions to the Registration Statement, Prospectus or other documents so that, in the case
of the Registration Statement or the Prospectus, as the case may be, it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that any and all of such information
provided pursuant to clause (v) above shall remain confidential to each Holder until such
information otherwise becomes public, unless disclosure by a Holder is required by law;
provide, further, notwithstanding each Holder’s agreement to keep such
information confidential, the Holders make no acknowledgement that any such information is
material, non-public information.

     (c) Use its commercially reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment.

     (d) Furnish to each Holder, upon written request of such Holder, without charge, at
least one conformed copy of the Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated
therein by reference to the extent requested by such Person, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated by
reference).

     (e) Promptly deliver to each Holder, upon written request of such Holder, without
charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Persons may reasonably request in
connection with resales by the Holder of Registrable Securities. Subject to the terms of
this Agreement, the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in connection with
the offering and sale of the Registrable Securities covered by such Prospectus and any

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amendment or supplement thereto, except after the giving of any notice pursuant to Section
3(b).

     (f) Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from the Registration or
qualification) of such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of the
Registrable Securities covered by each Registration Statement; provided that the Company
shall not be required to qualify generally to do business in any jurisdiction where it is
not then so qualified or subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such
jurisdiction.

     (g) If requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to the Registration Statement, which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such names as any
such Holders may request.

     (h) Upon the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s good faith
assessment of any adverse consequences to the Company and its shareholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with clauses (ii) through (v) of Section 3(b) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus have been
made, then the Holders shall suspend use of such Prospectus. The Company will use its
commercially reasonable best efforts to ensure that the use of the Prospectus may be resumed
as promptly as is practicable. The Company will use its commercially reasonable best
efforts to ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this Section 3(h) to
suspend the availability of the Registration Statement and Prospectus for a period not to
exceed 90 days (which need not be consecutive days) in any 365 day period.

     (i) Comply with all applicable rules and regulations of the Commission and the Trading
Market.

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     (j) The Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such Holder and,
if required by the Commission, the person thereof that has voting and dispositive control
over the Shares. During any periods that the Company is unable to meet its obligations
hereunder with respect to the registration of the Registrable Securities solely because any
Holder fails to furnish such information within three Trading Days of the Company’s request,
any Liquidated Damages that are accruing at such time as to such Holder only shall be tolled
and any Registration Default that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is delivered to the Company.

     4. Holder’s Obligations. Each selling Holder agrees, by acquisition of the
Registrable Securities, that no selling Holder shall be entitled to sell any of such Registrable
Securities pursuant to the Registration Statement or to receive the Prospectus relating thereto, or
to receive Liquidated Damages, if any, of the type described in Section 2(b) in respect of the
Registrable Securities, unless the selling Holder has previously furnished the Company at least 5
Trading Days prior to the selling Holder’s proposed sale with a Selling Security Holder
Questionnaire as required by Section 2(a) (including the information required to be included in
such Selling Security Holder Questionnaire). Any sale of any Registrable Securities by any selling
Holder shall constitute a representation and warranty by the selling Holder that the information
relating to the selling Holder and its plan of distribution is as set forth in the Prospectus
delivered by the selling Holder in connection with such disposition, that such Prospectus does not
as of the time of such sale contain any untrue statement of material fact provided by the selling
Holder and that the Prospectus does not as of the time of such sale omit to state any material fact
relating to or provided by the selling Holder necessary to make the statements in the Prospectus,
in light of the circumstances in which they are made, not misleading.

     5. Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect to filings required
to be made with the Trading Market on which the Common Stock are then listed for trading and (B) in
compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of printing
prospectuses for a Holder if the printing of prospectuses is reasonably requested by such Holder),
(iii) messenger, telephone and delivery expenses related to the Company’s obligations hereunder,
(iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if
the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the consummation of the
transactions

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contemplated by this Agreement. In addition, the Company shall be responsible for all
of its internal expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder, including all fees and expenses of the depositary. In no
event shall the Company be responsible for any broker or similar commissions or, except to the
extent provided for in the Transaction Documents, including Section 5.1 of the Purchase Agreement,
any legal fees or other costs of the Holders.

     6. Indemnification.

     (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to perform under
a margin call of Ordinary Shares), investment advisors and employees of each of them, each
Person who controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, members, partners, agents
and employees of each such controlling Person, to the fullest extent permitted by applicable
law, from and against any and all losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs (including, without limitation, reasonable attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, arising out of or relating to (i)
any untrue or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (a) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates to such
Holder or such Holder’s proposed method of distribution of Registrable Securities as set
forth in Annex A hereto or any changes to Annex A hereto that are expressly
approved in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto or (b) in
the case of an occurrence of an event of the type specified in Section 3(b)(ii)-(v), the use
by such Holder of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 7(c); (ii) any violation by the Company of
the Securities Act, or any other law, including, without limitation, any state securities
laws, or any rule or regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement; or (iii) any material violation of this
Agreement by the Company, its agents or representatives. The Company shall notify the
Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection with
the transactions contemplated by this Agreement of which the Company is aware.

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     (b) Indemnification by Holders. Each Holder shall, notwithstanding any
termination of this Agreement, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses as to the extent arising
solely out of or based solely upon (i) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act; or (ii) upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein not
misleading to the extent that (1) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to such Holder or
such Holder’s proposed method of distribution of Registrable Securities as set forth in
Annex A hereto or any changes to Annex A hereto that are expressly approved
in writing by such Holder expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of
an occurrence of an event of the type specified in Section 3(b)(ii)-(v), the use by such
Holder of an outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 7(c). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities covered by such
Registration Statement giving rise to such indemnification obligation.

     (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have
the right to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have prejudiced the Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the
Indemnifying Party shall have failed promptly to assume the defense of such Proceeding;
(3) the Indemnifying Party shall have failed promptly to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (4) the named parties to

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any such Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the reasonable fees and expenses of one separate counsel
shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

     The Indemnified Party shall promptly reimburse the Indemnifying Party for that portion
of such fees and expenses applicable to such actions for which such Indemnified Party is not
entitled to indemnification hereunder, determined based upon the relative faults of the
parties.

     (d) Contribution. If the indemnification under Section 6(a) or 6(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable
by such Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 6(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in accordance with
its terms.

     The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of this Section 6(d),
no Holder shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such untrue or

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alleged untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.

     The indemnity and contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified Parties.

     7. Miscellaneous.

     (a) Remedies. In the event of a breach by the Company or by a Holder, of any
of their obligations under this Agreement, each Holder or the Company, as the case may be,
in addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the defense that a
remedy at law would be adequate

     (b) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the Registration Statement.

     (c) Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(b)(ii) through Section 3(c)(v), such Holder
will forthwith discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the “Advice”) by
the Company that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration Statement. The
Company agrees and acknowledges that any periods during which the Holder is required to
discontinue the disposition of the Registrable Securities hereunder shall be subject to the
provisions of Section 2(b). The Company will use its commercially reasonable best efforts
to ensure that the use of the Prospectus may be resumed as promptly as it practicable.

     (d) Piggy-Back Registrations. If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable Securities
and the Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of such
determination

11

 

and, if within fifteen days after the date of such notice, any such Holder
shall so request in writing, the Company shall include in such registration statement all or
any part of such Registrable Securities such Holder requests to be registered;
provided, however, that, the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(d) that are eligible for resale pursuant
to Rule 144(k) promulgated under the Securities Act or that are the subject of a
then-effective Registration Statement.

     (e) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the same shall be
in writing and signed by the Company and each Holder of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the rights of Holders
and that does not directly or indirectly affect the rights of other Holders may be given by
Holders of all of the Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the immediately
preceding sentence.

     (f) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth in the
Purchase Agreement.

     (g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its rights or
obligations hereunder without the prior written consent of all of the Holders of the
then-outstanding Registrable Securities. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

     (h) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement with respect
to its securities, that would have the effect of impairing the rights granted to the Holders
in this Agreement.

     (i) Execution and Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an original and, all
of which taken together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such signature is executed)
the same with the same force and effect as if such facsimile signature were the original
thereof.

     (j) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined with the provisions of
the Purchase Agreement.

12

 

     (k) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

     (l) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     (m) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

     (n) Independent Nature of Holders’ Obligations and Rights. The obligations of
each Holder hereunder are several and not joint with the obligations of any other Holder
hereunder, and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any Holder pursuant
hereto or thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Holders are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Holder to be joined as an additional party in
any proceeding for such purpose.

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

13

 

                    IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

	 	 	 	 	 
	 	MARSHALL EDWARDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

[SIGNATURE PAGE OF HOLDERS TO RRA]

Name of Holder:                                         

Signature of Authorized Signatory of Holder:                                         

Name of Authorized Signatory:                                         

Title of Authorized Signatory:                                         

[SIGNATURE PAGES CONTINUE]

 

ANNEX A

Plan of Distribution

     Each selling security holder and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their common stock on the Nasdaq National Market System
or any other stock exchange, market or trading facility on which the common stock is traded or in
private transactions. These sales may be at fixed or negotiated prices. A selling security holder
may use any one or more of the following methods when selling their common stock:

     • ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

     • block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to facilitate the
transaction;

     • purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

     • an exchange distribution in accordance with the rules of the applicable
exchange;

     • public or privately negotiated transactions;

     • settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;

     • on the Nasdaq National Market System (or through facilities of any national
securities exchange or US inter-dealer quotation system of a registered national securities
association on which the common stock is then listed, admitted to unlisted trading privileges or
included for quotation);

     • broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share;

     • through underwriters, brokers or dealers (who may act as agents or
principals) or directly to one or more purchasers;

     • through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

     • a combination of any such methods of sale; or

     • any other method permitted pursuant to applicable law.

     The selling security holders may also sell shares under Rule 144 under the Securities Act of
1933, as amended, if available, rather than under this prospectus.

 

 

     Broker-dealers engaged by the selling security holders may arrange for other brokers-dealers
to participate in sales. Broker-dealers may receive commissions or discounts from the selling
security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with NASDR IM-2440.

     In connection with the sale of the common stock or interests therein, the selling security
holders may enter into hedging transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the common stock in the course of hedging the positions
they assume. The selling security holders may also sell shares of the common stock short and
deliver these securities to close out their short positions, or loan or pledge the common stock to
broker-dealers that in turn may sell these securities. The selling security holders may also enter
into option or other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such broker-dealer or
other financial institution of shares offered by this prospectus, which shares such broker-dealer
or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). The selling security holders may also pledge shares to a
broker-dealer or other financial institution which, upon default, they may in turn resell.

     In addition to the foregoing methods, the selling security holders may offer their shares from
time to time in transactions involving principals or brokers not otherwise contemplated above, in a
combination of such methods or described above or any other lawful methods. The selling security
holders may also transfer, donate or assign their shares to lenders, family members and others and
each of such persons will be deemed to be a selling security holder for purposes of this
prospectus. The security holders or their successors in interest may from time to time pledge or
grant a security interest in some or all of the shares of common stock, and if the selling security
holders default in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from to time under this prospectus; provided however
in the event of a pledge or then default on a secured obligation by the selling security holder, in
order for the shares to be sold under this registration statement, unless permitted by law, we must
distribute a prospectus supplement and/or amendment to this registration statement amending the
list of selling security holders to include the pledgee, secured party or other successors in
interest of the security holder under this prospectus.

     The selling security holders may also sell their shares pursuant to Rule 144 under the
Securities Act, which permits limited resale of shares purchased in a private placement subject to
the satisfaction of certain conditions, including, among other things, the availability of certain
current public information concerning the issuer, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any three-month period not
exceeding certain limitations.

 

 

     Sales through brokers may be made by any method of trading authorized by any stock exchange or
market on which the shares may be listed or quoted, including block trading in negotiated
transactions. Without limiting the foregoing, such brokers may act as dealers by purchasing any or
all of the shares covered by this prospectus, either as agents for others or as principals for
their own accounts, and reselling such shares pursuant to this prospectus. The selling security
holders may effect such transactions directly, or indirectly through underwriters, broker-dealers
or agents acting on their behalf. In effecting sales, broker-dealers or agents engaged by the
selling security holders may arrange for other broker-dealers to participate. Broker-dealers or
agents may receive commissions, discounts or concessions from the selling security holders, in
amounts to be negotiated immediately prior to the sale (which compensation as to a particular
broker-dealer might be in excess of customary commissions for routine market transactions).

     The selling security holders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any profits received by the selling security holders or such
broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.

     We are required to pay certain fees and expenses incurred by us incident to the registration
of the shares. We have agreed to indemnify the selling security holders against certain losses,
claims, damages and liabilities, including liabilities under the Securities Act.

     We agreed to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the selling security holders without registration and without regard to any
volume limitations by reason of Rule 144(e) under the Securities Act or any other rule of similar
effect or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect.

     Under applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale shares may not simultaneously engage in market making activities with
respect to the common stock for the applicable restricted period, as defined in Regulation M, prior
to the commencement of the distribution. In addition, the selling security holders will be subject
to applicable provisions of the Exchange Act and the rules and regulations thereunder, including
Regulation M, which may limit the timing of purchases and sales of shares of the common stock by
the selling security holders or any other person. We will make copies of this prospectus available
to the selling security holders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.

 

 

Annex B

Marshall Edwards, Inc.

Selling Security Holder Notice and Questionnaire

     The undersigned beneficial owner of common stock, par value $0.00000002 (the
“Common Stock”), of Marshall Edwards, Inc., a Delaware corporation (the
“Company”), (the “Registrable Securities”) understands that the Company has filed
or intends to file with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (the “Registration Statement”) for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of July 11, 2006 (the “Registration Rights Agreement”), among the Company and the
Purchasers named therein. A copy of the Registration Rights Agreement is available from the
Company upon request at the address set forth below. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling security holder in the
Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling security holder in the Registration
Statement and the related prospectus.

NOTICE

     The undersigned beneficial owner (the “Selling Security Holder”) of Registrable Securities
hereby elects to include the Registrable Securities owned by it and listed below in Item 3 (unless
otherwise specified under such Item 3) in the Registration Statement.

 

 

The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:

QUESTIONNAIRE

1. Name.

	 	(a)	 	Full Legal Name of Selling Security Holder:
	 
	 	 	 	 
	 
	 	(b)	 	Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:
	 
	 	 	 	 
	 
	 	(c)	 	Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):

2. Address for Notices to Selling Security Holder:

	 	 	 
	 
	 
	 	 
	 
	 
	 	 
	 
	Telephone:
	 	 
	 

	 	 
	Fax:
	 	 
	 

	 	 
	Contact Person:
	 	 
	 

	 	 

3. Beneficial Ownership of Registrable Securities:

	 	(a)	 	Type and Number of Registrable Securities beneficially owned:
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

 

 

4. Broker-Dealer Status:

	 	(a)	 	Are you a broker-dealer?

Yes o          No o

	 	(b)	 	If “yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.

Yes o          No o

	 	Note: If no, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.
	 
	 	(c)	 	Are you an affiliate of a broker-dealer?

Yes o          No o

	 	(d)	 	If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of the
purchase of the Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to distribute the Registrable
Securities?

Yes o          No o

	 	Note: If no, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

	5.	 	Beneficial Ownership of Other Securities of the Company Owned by the Selling Security
Holder.
	 
	 	 	Except as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable Securities
listed above in Item 3.

	 	(a)	 	Type and Amount of Other Securities beneficially owned by the Selling Security
Holder:
	 
	 	 	 	 

	 
	 	 	 	 

 

 

	6.	 	Relationships with the Company:
	 
	 	 	Except as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
	 
	 	 	State any exceptions here:
	 
	 	 	 

	 
	 	 	 

     The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof at any time while the
Registration Statement remains effective.

     By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 6 and the inclusion of such information in the
Registration Statement and the related prospectus and any amendments or supplements
thereto . The undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement and the related
prospectus.

     IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.

	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	Beneficial Owner:	 	 	 
	 

	 	 
	 	 	 	 	 

	 	 	 	 	 	 
	 

	 	 By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL
BY OVERNIGHT MAIL, TO:

Sean Hayes

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, NY 10178-0060

Phone: 212 309 6350

Fax: 212 309 6001

Mobile: 917 716 2469

E-mail: shayes@morganlewis.comEX-10.3

 

Exhibit
10.3

FORM OF

WARRANT AGREEMENT

between

MARSHALL EDWARDS, INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.

 

 

 

Warrants to Purchase up to 2,709,051 Shares of Common Stock

 

 

WARRANT AGREEMENT

     This Warrant Agreement is entered into between Marshall Edwards,
Inc., a Delaware corporation (the “Company”), and Computershare Shareholder Services, Inc., a
Delaware corporation (“CSS”), and its wholly owned subsidiary, Computershare Trust Company, N.A.
(the “Trust Company”), as warrant agent (CSS and the Trust Company, individually or collectively,
the “Warrant Agent”).

RECITALS

     A. The Company proposes to issue 2,709,863 Warrants to purchase up to 2,709,863 shares of
common stock, par value $0.00000002 per share (the “Common Stock”) of the Company.

     B. The Company desires the Warrant Agent to act on behalf of the Company, and the Warrant
Agent is willing to act on behalf of the Company, in connection with the issuance of the Warrant
Certificates (as defined below) and the other matters provided herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

     “Additional Common Stock” shall mean all Common Stock issued or issuable by the Company after
the date of this Agreement, other than the Warrant Shares.

     “Affiliate” shall mean, as to any Person, any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control of such Person. For purposes of this
definition, “control” when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings
correlative to the foregoing. Notwithstanding the foregoing, “Affiliate” shall not include any
wholly-owned Subsidiary of the Company.

     “Agreement” shall mean this Warrant Agreement, as the same may be amended, modified or
supplemented from time to time.

     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which the New York
Stock Exchange is not required to be open.

     “Capital Stock” of any Person shall mean any and all shares, interests, participations or
other equivalents however designated of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such Person and any rights (other than debt

1

 

securities convertible or exchangeable into an equity interest), warrants or options to
acquire an equity interest in such Person.

     “Common Stock” shall mean (i) the Common Stock, par value U.S. $0.00000002 per share, of the
Company, as constituted on the original issuance of the Warrants, (ii) any Capital Stock into which
such Common Stock may thereafter be changed and (iii) any share of the Company of any other class
issued to holders of such Common Stock upon any reclassification thereof.

     “Company” shall mean the company identified in the preamble hereof and its successors and
assigns.

     “Company Order” shall mean a written request or order signed in the name of the Company by its
Chairman of the Board, its Chief Executive Officer, its President, any Vice President, its Chief
Financial Officer and by its Treasurer, any Assistant Treasurer its Secretary or any Assistant
Secretary, and delivered to the Warrant Agent.

     “Corporate Agency Office” shall have the meaning given such term in Article 9.

     “Countersigning Agent” shall mean any Person authorized by the Warrant Agent to act on behalf
of the Warrant Agent to countersign Warrant Certificates.

     “Effective Date” shall mean the date that the Registration Statement is declared effective
under the Securities Act.

     “Effective Registration” shall mean that the Company shall have filed and caused to become
effective a Registration Statement under the Securities Act for the sale of Warrants by the
Holders.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

     “Expiration Date” shall mean July 11, 2010.

     “Holder” or “Warrantholder” shall mean any Person in whose name at the time any Warrant
Certificate is registered upon the Warrant Register.

     “Institutional Accredited Investor” shall mean an institution that is an “accredited investor”
as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

     “Non-Surviving Combination” shall mean any merger, consolidation or other business combination
by the Company with one or more other entities in a transaction in which the Company is not the
surviving entity.

     “Outstanding” shall mean, as of the time of determination, when used with respect of any
Warrants, all Warrants originally issued under this Agreement except (i) Warrants that have been
exercised pursuant to Section 3.2(a), (ii) Warrants that have expired pursuant to Sections 3.2(b),
5 or 7 and (iii) Warrants that have otherwise been acquired by the Company; provided, however,

2

 

that in determining whether the Holders of the requisite amount of the outstanding Warrants
have given any request, demand, authorization, direction, notice, consent or waiver under the
provisions of this Agreement, Warrants owned by the Company or any Subsidiary or Affiliate of the
Company or any Person that is at such time a party to a merger or acquisition agreement with the
Company shall be disregarded and deemed not to be outstanding.

     “Person” shall mean an individual, a corporation, a partnership, a limited liability company,
an association, a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

     “Qualified Institutional Buyer” shall have the meaning given such term in Rule 144A under the
Securities Act.

     “Recipient” shall have the meaning given such term in Section 3.2(e).

     “Registration Rights Agreement” shall mean that certain Registration Rights Agreement, dated
July 11, 2006, by and among the Company and the purchasers named on the signature pages thereto, as
such agreement may be amended, modified or supplemented from time to time.

     “Registration Statement” shall have the meaning given such term in Section 1 of the
Registration Rights Agreement.

     “Restricted Warrants” shall have the meaning given such term in Section 2.2(b).

     “Restricted Warrant Legend” shall mean the legend so designated on the Warrant Certificate
attached hereto as Exhibit A.

     “Rule 144” shall mean Rule 144 promulgated under the Securities Act.

     “SEC” shall mean the Securities and Exchange Commission or any successor agency thereto.

     “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

     “Subsidiary” shall mean, with respect to any Person, any corporation, association or other
business entity of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of such Person or a combination thereof.

     “Warrant Agent” shall mean the warrant agent named in the preamble hereof or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.

     “Warrant Certificates” shall mean those certain warrant certificates evidencing the Warrants,
substantially in the form of Exhibit A attached hereto.

3

 

     “Warrant Price” shall mean the exercise price per Warrant Share set at 125% of the closing bid
price of the Common Stock on July 11, 2006.

     “Warrant Register” shall have the meaning given such term in Article 9.

     “Warrant Shares” shall mean the Common Stock issuable upon exercise of the Warrants, the
number of which is subject to adjustment from time to time in accordance with Article 6.

     “Warrants” shall mean those warrants issued hereunder to purchase initially up to an aggregate
of 2,709,051 Warrant Shares at the Warrant Price, subject to adjustment pursuant to Article 6.

ARTICLE 2

WARRANT CERTIFICATES

     Section 2.1 Issuance of Warrants. Each Warrant Certificate shall evidence the number of
Warrants specified therein, and each Warrant evidenced thereby shall represent the right, subject
to the provisions contained herein and therein, to purchase seven Warrant Shares, subject to
adjustment as provided in Article 6.

     Section 2.2 Form, Denomination and Date of Warrants. (a) The Warrant Certificates shall be
substantially in the form of Exhibit A hereto. The Warrants shall be numbered, lettered or
otherwise distinguished in such manner or in accordance with such plans as the officers of the
Company executing the same may determine with the approval of the Warrant Agent. Each Warrant
shall be dated the date of its authentication. Any of the Warrants may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this Agreement, as may be
required to comply with any law or with any rules or regulations pursuant thereto, or with the
rules of any securities market in which the Warrants are admitted to trading, or to conform to
general usage. All Warrants shall be otherwise substantially identical except as to denomination
and as provided herein.

          (b) Purchasers of Warrants will receive certificated Warrants bearing the Restricted Warrant
Legend (“Restricted Warrants”). Restricted Warrants will bear the Restricted Warrant Legend unless
removed in accordance with Section 2.4.

     Upon the occurrence of an Effective Registration, all requirements with respect to legends on
Warrants will cease to apply, and certificated Warrants without legends will be available to the
Holders.

     Section 2.3 Execution and Delivery of Warrant Certificates. (a) Warrant Certificates
evidencing the Warrants which may be countersigned and delivered under this Agreement are limited
to Warrant Certificates evidencing 2,709,051 Warrants, except for Warrant Certificates
countersigned and delivered upon registration of transfer of, or in exchange for, or in lieu of,
one or more previously countersigned Warrant Certificates pursuant to Sections 2.6, 3.2(e), 7 and
9.

4

 

          (b) At any time and from time to time on or after the date of this Agreement, Warrant
Certificates evidencing the Warrants may be executed by the Company and delivered to the Warrant
Agent for countersignature, and the Warrant Agent shall, upon receipt of a Company Order and at the
direction of the Company set forth therein, countersign and deliver such Warrant Certificates to
the Company for issuance. The Warrant Agent is further hereby authorized to countersign and
deliver Warrant Certificates as required by this Section 2.3 or by Sections 2.2, 2.6, 3.2(e), 7 or
9.

          (c) The Warrant Certificates shall be executed in the corporate name and on behalf of the
Company by the Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer or any one of the Vice Presidents of the Company under corporate seal reproduced
thereon and attested to by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature printed thereon. The Warrant
Certificates shall be countersigned by the Warrant Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company whose signature shall have been placed
upon any of the Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates
may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same
force and effect as though such person had not ceased to be such officer of the Company, and any
Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the Company, although at
the date of the execution of this Agreement any such person was not such an officer.

     Section 2.4 Transfer and Exchange. (a) If a holder of a Restricted Warrant wishes at any
time to transfer such Restricted Warrant to a Person who wishes to take delivery thereof in the
form of a Restricted Warrant, such holder may, subject to the restrictions on transfer set forth
herein and in such Restricted Warrant, cause the exchange of such Restricted Warrants for one or
more Restricted Warrants of any authorized denomination or denominations and exercisable for the
same aggregate number of Warrant Shares. Upon receipt by the Warrant Agent at its Corporate Agency
Office of (1) such Restricted Warrant, duly endorsed as provided herein, (2) instructions from such
holder directing the Warrant Agent to authenticate and deliver one or more Restricted Warrants
exercisable for the same aggregate number of Warrant Shares as the Restricted Warrant to be
exchanged, such instructions to contain the name or names of the designated transferee or
transferees, the authorized denomination or denominations of the Restricted Warrants to be so
issued and appropriate delivery instructions, (3) a certificate in the form of Exhibit B
attached hereto given by the Person acquiring the Restricted Warrants, to the effect set forth
therein, and (4) an opinion of counsel to the transferor of such Restricted Warrant substantially
to the effect set forth in Exhibit C hereto, to the effect set forth therein, then the
Warrant Agent shall cancel or cause to be cancelled such Restricted Warrant and, concurrently
therewith, the Company shall execute, and the Warrant Agent shall authenticate and deliver, one or
more Restricted Warrants to the effect set forth therein, in accordance with the instructions
referred to above.

          (b) If Warrants are issued upon the transfer, exchange or replacement of Warrants bearing the
Restricted Warrant Legend, or if a request is made to remove such Restricted Warrant Legend, the
Warrants so issued shall bear the Restricted Warrant Legend; or

5

 

the Restricted Warrant Legend shall not be removed, as the case may be, unless (i) there is
delivered to the Company and the Warrant Agent satisfactory evidence, which shall include an
opinion of counsel as may be reasonably required by the Company and the Warrant Agent to the effect
that neither the Restricted Warrant Legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of the Securities Act or, with
respect to Restricted Warrants, that such Warrants are not “restricted” within the meaning of Rule
144 under the Securities Act or (ii) there is an Effective Registration with respect to the
Warrants then in effect or the Warrants as to which the Restricted Warrant Legend is sought to be
removed have been disposed of in accordance with the Registration Statement. Upon (i) provision of
such satisfactory evidence, or (ii) notification by the Company to the Warrant Agent of an
Effective Registration with respect to the Warrants, the Warrant Agent, at the direction of the
Company, shall authenticate and deliver Warrant Certificates that do not bear the Restricted
Warrant Legend.

          (c) No service charge shall be made to a Warrantholder for any registration of transfer or
exchange.

     Section 2.5 Effective Registration. In the event the Company has an Effective Registration,
the Company shall notify the Warrant Agent within two Business Days after the Effective Date.
Promptly after delivering to the Warrant Agent notice of the Effective Registration, the Company
shall cause to be delivered to the Warrant Agent certificates for Warrants without legends and the
Warrant Agent shall authenticate and deliver certificated Warrants without legends to Holders
presenting their certificated Warrants for exchange to transferees of Warrants covered by the
Registration Statement in the names and denominations specified by them.

ARTICLE 3

EXERCISE, REDEMPTION AND EXPIRATION OF WARRANTS

     Section 3.1 Right to Acquire Warrant Shares Upon Exercise. Each Warrant Certificate shall,
when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions
thereof and of this Agreement, to acquire from the Company, for each Warrant evidenced thereby,
seven Warrant Shares at the Warrant Price, subject to adjustment as provided in this Agreement.
The Warrant Price shall be adjusted from time to time as required by Section 6.1.

     Section 3.2 Exercise and Expiration of Warrants. (a) Exercise of Warrants. Subject to the
terms and conditions set forth herein, including, without limitation, the exercise procedure
described in Section 3.2(c), a Holder of a Warrant Certificate may exercise all or any whole number
of the Warrants evidenced thereby, on any Business Day from and after January 11, 2007 until 5:00
p.m., New York City time, on the Expiration Date (subject to earlier expiration pursuant to Article
5) for the Warrant Shares purchasable thereunder.

          (b) Expiration of Warrants. The Warrants shall terminate and become void as of 5:00 p.m., New
York time on the Expiration Date, subject to earlier expiration in accordance

6

 

with Article 5. In the event that the Warrants are to expire by reason of Article 5, the term
“Expiration Date” shall mean such earlier date for all purposes of this Agreement.

          (c) Method of Exercise.

               (i) Cash Exercise. The Holder may deliver to the Warrant Agent at the Corporate Agency Office
(A) a written notice of such Holder’s election to exercise Warrants, duly executed by such Holder
in the form set forth on the reverse of, or attached to, such Warrant Certificate, which notice
shall specify the number of Warrant Shares to be purchased, (B) the Warrant Certificate evidencing
such Warrants and (C) to CSS, a sum equal to the aggregate Warrant Price for the Warrant Shares
into which such Warrants are being exercised, which sum shall be paid in any combination elected by
such Holder of (x) certified or official bank checks in New York Clearing House funds payable to
the order of the Company and delivered to CSS at the Corporate Agency Office, or (y) to CSS, wire
transfers in immediately available funds to the account of the Company at such banking institution
as the Company shall have given notice to the Warrant Agent and the Holders in accordance with
Section 13.1(b); or

               If fewer than all the Warrants represented by a Warrant Certificate are exercised, such
Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for
the number of Warrants which were not exercised shall be executed by the Company. The Warrant
Agent shall countersign the new Warrant Certificate, registered in such name or names, subject to
the provisions of Article 9, as may be directed in writing by the Holder, and shall deliver the new
Warrant Certificate to the Person or Persons in whose name such new Warrant Certificate is so
registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Warrant Certificates duly executed on behalf of the Company for such purpose.

               (ii) Cashless Exercise. In lieu of exercising the Warrant, the Holder may elect to receive
shares of Common Stock equal to the value of the Warrant (or the portion thereof being canceled) by
surrender of the Warrant at the principal office of the Company or Warrant Agent together with
notice of such election, in which event the Company or Warrant Agent shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

	 	 	 	 	 
	X

	=
	Y (A-B)	 	 
	 

	 	A 	 	

          Where X = the number of shares of Common Stock to be issued to the Holder.

               Y= the number of shares of Common Stock purchasable under the Warrant.

               A = the fair market value of one share of the Company’s Common Stock.

               B = the Exercise Price (as adjusted to the date of such calculation).

7

 

          For purposes of the Warrant, the fair market value of the Company’s Common Stock shall be
determined as follows:

          a. If the Common Stock is listed on a National Securities Exchange or admitted to unlisted
trading privileges on such exchange or listed for trading on the Nasdaq system, the current market
value shall be the last reported sale price of the Common Stock on such exchange or system on the
last business day prior to the date of exercise of the Warrant or, if no such sale is made on such
day, the average of the closing bid and asked prices for such day on such exchange or system; or

          b. If the Common Stock is not so listed or admitted, the current market shall be the average
of the closing bid and asked prices as quoted by the OTC Bulletin Board; or

          c. If the Common Stock is not so listed or admitted to unlisted trading privileges, the
current market value shall be the mean of the last reported bid and asked prices reported by the
National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of the
Warrant; or

          d. If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and
asked prices are not so reported, the current market value shall be an amount, not less than book
value thereof as at the end of the most recent fiscal year of the Company ending prior to the date
of the exercise of the Warrant, determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company.

          (d) Issuance of Warrant Shares. Upon surrender of a Warrant Certificate evidencing Warrants
in conformity with the foregoing provisions and payment of the Warrant Price in respect of the
exercise of one or more Warrants evidenced thereby, the Warrant Agent shall, when such payment is
received, deliver to the Company the notice of exercise received pursuant to Section 3.2(c), and,
in accordance with Section 3.3, deliver or deposit all funds received as instructed in writing by
the Company and advise the Company by means of a weekly activity report of the amount of funds so
deposited to its account. The Company shall thereupon, as promptly as practicable, and in any
event within three Business Days after receipt by the Company of such notice of exercise, execute
or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) a
certificate or certificates representing the aggregate number of Warrant Shares issuable upon such
exercise (based upon the aggregate number of Warrants so exercised), determined in accordance with
Section 3.6, together with an amount in cash in lieu of any fractional share(s) determined in
accordance with Section 6.4. The certificate or certificates so delivered shall be, to the extent
possible, in such denomination or denominations as such Holder shall request in such notice of
exercise and shall be registered or otherwise placed in the name of, and delivered to, the Holder
or, such other Person as shall be designated by the Holder in such notice (the Holder or such other
Person being referred to herein as the “Recipient”).

          (e) Time of Exercise. A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date on which all requirements set forth in Section 3.2(c) applicable
to such exercise have been satisfied. Subject to Section 6.1(e)(iv), certificate(s) evidencing the
Warrant Shares issued upon the exercise of such Warrant shall be

8

 

deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as
between such Person and the Company, be deemed to be and entitled to all rights of the holder of
record of such Warrant Shares as of such time.

     Section 3.3 Application of Funds Upon Exercise of Warrants. Any funds delivered to CSS upon
exercise of any Warrant(s) shall be held by CSS in trust for the Company. CSS shall promptly
deliver and pay to or upon the written order of the Company all funds received by it upon the
exercise of any Warrants by bank wire transfer to an account designated by the Company or as CSS
otherwise may be directed in writing by the Company.

     Section 3.4 Payment of Taxes. The Company shall pay any and all taxes (other than income
taxes) and other charges that may be payable in respect of the issue or delivery of Warrant Shares
on exercise of Warrants pursuant hereto. Neither the Company nor the Warrant Agent shall be
required, however, to pay any tax or other charge imposed in respect of any transfer involved in
the issue and delivery of any certificates for Warrant Shares or payment of cash to any Recipient
other than the Holder of the Warrant Certificate surrendered upon the exercise of a Warrant, and in
case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue
or deliver any certificate or, in the case of CSS, pay any cash until (a) such tax or charge has
been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent
or the Company or (b) it has been established to the Company’s satisfaction that any such tax or
other charge that is or may become due has been paid.

     Section 3.5 Surrender of Certificates. Any Warrant Certificate surrendered for exercise
shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant
Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by such
Warrant Agent and shall not be reissued by the Company. Warrant Certificates shall be retained by
the Company in accordance with applicable law.

     Section 3.6 Shares Issuable. The number of Warrant Shares “issuable upon exercise” of
Warrants at any time shall be the number of Warrant Shares into which such Warrants are then
exercisable. The number of Warrant Shares “into which each Warrant is exercisable” initially shall
be one share, subject to adjustment as provided in Section 6.1.

ARTICLE 4

REGISTRATION RIGHTS

     The Warrantholders and holders of Warrant Shares shall have the registration rights provided
for in the Registration Rights Agreement. The Company shall keep copies of the Registration Rights
Agreement available for inspection by the Holders during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of copies of the
Registration Rights Agreement as the Warrant Agent may request.

9

 

ARTICLE 5

DISSOLUTION, LIQUIDATION OR WINDING UP

     If, on or prior to the Expiration Date, the Company (or any other Person controlling the
Company) shall propose a voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, the Company shall give written notice thereof to the Warrant Agent and all
Holders of Warrant Certificates in the manner provided in Article 13 prior to the date on which
such transaction is expected to become effective or, if earlier, the record date for such
transaction. Such notice shall also specify the date as of which the holders of record of the
Common Stock shall be entitled to exchange their shares for monies, securities or other property
deliverable upon such dissolution, liquidation or winding up, as the case may be, on which date
each Holder of Warrant Certificates shall be entitled to receive the monies, securities or other
property which such Holder would have been entitled to receive had such Holder been the holder of
record of the Warrant Shares into which the Warrants were exercisable immediately prior to such
dissolution, liquidation or winding up (net of the then applicable Warrant Price) and the rights to
exercise the Warrants shall terminate.

     In case of any such voluntary or involuntary dissolution, liquidation or winding up of the
Company, the Company shall deposit with the Warrant Agent any monies, securities or other property
which the Holders are entitled to receive under this Agreement, together with a Company Order as to
the distribution thereof. After receipt of such deposit from the Company and after any Holder has
surrendered a Warrant Certificate to the Warrant Agent, the Warrant Agent shall make payment in the
appropriate amount to such Person or Persons as it may be directed in writing by the Holder
surrendering such Warrant Certificate. The Warrant Agent shall not be required to pay interest on
any money deposited pursuant to the provisions of this Article 5 except such as it shall agree with
the Company to pay thereon. Any monies, securities or other property which at any time shall be
deposited by the Company or on its behalf with the Warrant Agent pursuant to this Article 5 shall
be, and are hereby, assigned, transferred and set over to the Warrant Agent in trust for the
purpose for which such monies, securities or other property shall have been deposited; provided
that monies, securities or other property need not be segregated from other monies, securities or
other property held by the Warrant Agent except to the extent required by law.

ARTICLE 6

ADJUSTMENTS

     Section 6.1 Adjustments. The number of Warrant Shares into which each Warrant is exercisable
and the Warrant Price shall be subject to adjustment from time to time after the date hereof in
accordance (and only in accordance) with the provisions of this Article 6:

          (a) Adjustment for Recapitalization, Reorganization, Consolidation, Merger, Etc. In
case (i) the outstanding shares of the Common Stock shall be subdivided into a greater number of
shares, (ii) a dividend or other distribution in Common Stock shall be paid in respect of Common
Stock, (iii) the outstanding shares of Common Stock shall be combined into a smaller number of
shares thereof, or (iv) any shares of the Company’s capital stock are issued by

10

 

reclassification of the Common Stock (including any reclassification upon a consolidation or merger
in which the Company is the continuing corporation), the Exercise Price in effect immediately prior
to such subdivision, combination or reclassification or at the record date of such dividend or
distribution shall simultaneously with the effectiveness of such subdivision, combination or
reclassification or immediately after the record date of such dividend or distribution be
proportionately adjusted to equal the product obtained by multiplying the Exercise Price by a
fraction, the numerator of which is the number of outstanding shares of Common Stock (on a fully
diluted basis) after giving effect to such combination, subdivision, reclassification or dividend
and the denominator of which is the number of outstanding shares of Common Stock (on a fully
diluted basis) outstanding immediately prior to such combination, subdivision, reclassification or
dividend.

          (b) For purposes of the Warrant, “on a fully diluted basis” means that all outstanding
options, rights or Warrants to subscribe for shares of Common Stock and all securities convertible
into or exchangeable for shares of Common Stock (such options, rights, Warrants and securities are
collectively referred to herein as “Convertible Securities”) and all options or rights to acquire
Convertible Securities have been exercised, converted or exchanged.

          (c) Whenever the Exercise Price per share is adjusted as provided in the immediately preceding
paragraph, the number of shares of Common Stock purchasable upon conversion of the Warrant
immediately prior to such Exercise Price adjustment shall be adjusted, effective simultaneous with
the Exercise Price adjustment, to equal the product obtained (calculated to the nearest full share)
by multiplying such number of shares of Common Stock by a fraction, the numerator of which is the
Exercise Price per share in effect immediately prior to such Exercise Price adjustment and the
denominator of which is the Exercise Price per share in effect upon such Exercise Price adjustment,
which adjusted number of shares of Common Stock shall thereupon be the number of shares of Common
Stock purchasable upon conversion of the Warrant until further adjusted as provided herein.

          (d) Adjustment for Reorganization, Consolidation, Merger, Liquidation Etc. In case of
any reorganization of the Company (or any other corporation, the securities of which are at the
time receivable on the exercise of the Warrant) after the date hereof or in case after such date
the Company (or any such other corporation) shall consolidate with or merge into another
corporation or convey all or substantially all of its assets to another corporation or liquidate,
then, and in each such case, the Holder of the Warrant upon the exercise thereof as provided in
Section 1 at any time after the consummation of such reorganization, consolidation, merger,
conveyance or liquidation, shall be entitled to receive, in lieu of the securities and property
receivable upon the exercise of the Warrant prior to such consummation, the securities or property
to which such Holder would have been entitled upon such consummation if such Holder had exercised
the Warrant immediately prior thereto; in each such case, the terms of the Warrant shall be
applicable to the securities or property receivable upon the exercise of the Warrant after such
consummation.

          (e) No Dilution. The Company will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Warrant, but will at all times in good faith assist in the

11

 

carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of the Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, while the Warrant is outstanding, the
Company (a) will not permit the par value, if any, of the shares of Common Stock receivable upon
the exercise of the Warrant to be above the amount payable therefor upon such exercise and (b) will
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue or sell fully paid and non-assessable shares of Common Stock upon the exercise of the
Warrant.

          (f) Certificate as to Adjustments. In each case of an adjustment in the number of
shares of Warrant Shares receivable on the exercise of the Warrant, the Company at its expense will
promptly compute such adjustment in accordance with the terms of the Warrant and prepare a
certificate executed by an executive officer of the Company setting forth such adjustment and
showing in detail the facts upon which such adjustment is based. The Company will forthwith mail a
copy of each such certificate to the Holder.

          (g) Notices of Record Date, Etc. In case:

               (i) the Company shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend (other than a cash dividend at the same rate as the rate of
the last cash dividend theretofore paid) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other securities, or to
receive any other right; or

               (ii) of any capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation or merger of the Company with or 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 or involuntary dissolution, liquidation or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to each Holder of the
Warrant 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 to which the holders of
record of Common Stock (or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding up. Such notice shall be mailed at least 20
days prior to the date therein specified and the Warrant may be exercised prior to said date during
the term of the Warrant.

12

 

ARTICLE 7

LOSS OR MUTILATION

     Upon (i) receipt by the Warrant Agent of an affidavit with respect to the ownership of and the
loss, theft, destruction or mutilation of any Warrant Certificate and an open penalty surety bond
satisfactory to the Warrant Agent holding both it and the Company harmless and other such security
or indemnity as may be reasonably required to save each of them harmless and (ii) surrender, in the
case of mutilation, of the mutilated Warrant Certificate to the Warrant Agent and cancellation
thereof, then, in the absence of notice to the Company or the Warrant Agent that the Warrants
evidenced thereby have been acquired by a bona fide purchaser, the Company shall execute and upon
its written request the Warrant Agent shall countersign and deliver to the registered Holder of the
lost, stolen, destroyed or mutilated Warrant Certificate, in exchange therefor or in lieu thereof,
a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. At the
written request of such registered Holder, the new Warrant Certificate so issued shall be retained
by the Warrant Agent as having been surrendered for exercise, in lieu of delivery thereof to such
Holder, and shall be deemed for purposes of Section 3.2 to have been surrendered for exercise on
the date the conditions specified in clauses (i) and (ii) of the preceding sentence were first
satisfied.

     Upon the issuance of any new Warrant Certificate under this Article 7, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and other expenses (including the fees and expenses of the Warrant Agent and of
counsel to the Company) in connection therewith.

     Every new Warrant Certificate executed and delivered pursuant to this Article 7 in lieu of any
lost, stolen or destroyed Warrant Certificate shall constitute an additional contractual obligation
of the Company, whether or not the allegedly lost, stolen or destroyed Warrant Certificate shall be
at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally
and proportionately with any and all other Warrant Certificates duly executed and delivered
hereunder.

     The provisions of this Article 7 are exclusive and shall preclude (to the extent lawful) all
other rights or remedies with respect to the replacement of mutilated, lost, stolen, or destroyed
Warrant Certificates.

ARTICLE 8

RESERVATION AND AUTHORIZATION OF WARRANT SHARES

     The Company shall at all times reserve and keep available, free from preemptive rights, solely
for issue upon the exercise of Warrants as herein provided, such number of its authorized but
unissued Warrant Shares deliverable upon the exercise of Warrants as will be sufficient to permit
the exercise in full of all outstanding Warrants. The Company covenants that all Warrant Shares
will, at all times that Warrants are exercisable, be duly approved for listing subject to official
notice of issuance on each securities exchange, if any, on which the Common Stock are then listed.
The Company covenants that (i) all Warrant Shares that may be issued upon exercise

13

 

of Warrants shall, upon issuance, be duly and validly authorized, issued and fully paid and
nonassessable and free of preemptive or similar rights, (ii) the Warrants and Warrant Shares and
the offering thereof are either registered or subject to a valid exemption from registration under
the Securities Act and (iii) the stock certificates issued to evidence any such Warrant Shares will
comply with the Delaware General Corporation Law and any other applicable law.

     The Company hereby authorizes and directs its current and future transfer agents for the
Common Stock at all times to reserve stock certificates for such number of authorized shares as
shall be requisite for such purpose. The Warrant Agent is hereby authorized to requisition from
time to time from any such transfer agents stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement, and the Company
hereby authorizes and directs such transfer agents to comply with all such requests of the Warrant
Agent. The Company will supply such transfer agents with duly executed stock certificates for such
purposes. Promptly after the date of expiration of all of the Warrants in accordance with Section
3.2(c), the Warrant Agent shall certify to the Company the aggregate number of Warrants then
outstanding, and thereafter no Warrant Shares shall be reserved in respect of such Warrants.

ARTICLE 9

WARRANT TRANSFER BOOKS

     The Warrant Agent will maintain an office (the “Corporate Agency Office”) in the United States
of America, where Warrant Certificates may be surrendered for registration of transfer or exchange
and where Warrant Certificates may be surrendered for exercise of Warrants evidenced thereby, which
office is Computershare Trust Company, N.A., 525 Washington Blvd. — Suite 4690, Jersey City, N.J.
07310, on the date hereof. The Warrant Agent will give prompt written notice to all Holders of
Warrant Certificates of any change in the location of such office.

     The Warrant Certificates evidencing the Warrants shall be issued in registered form only. The
Company shall cause to be kept at the office of the Warrant Agent designated for such purpose a
warrant register (the “Warrant Register”) in which, subject to such reasonable regulations as the
Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall
provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant
Certificates as herein provided.

     Subject to Section 2.4, upon surrender for registration of transfer of any Warrant Certificate
at the Corporate Agency Office, the Company shall execute, and the Warrant Agent shall countersign
and deliver, in the name of the designated transferee or transferees, one or more new Warrant
Certificates evidencing a like aggregate number of Warrants.

     Subject to Section 2.4, (i) at the option of the Holder, Warrant Certificates may be exchanged
at the office of the Warrant Agent upon payment of the charges hereinafter provided for other
Warrant Certificates evidencing a like aggregate number of Warrants and (ii) whenever any Warrant
Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent
shall countersign and deliver, the Warrant Certificates of the same tenor and

14

 

evidencing the same number of Warrants as evidenced by the Warrant Certificates surrendered by
the Holder making the exchange.

     All Warrant Certificates issued upon any registration of transfer or exchange of Warrant
Certificates shall be the valid obligations of the Company, evidencing the same obligations, and
entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for
such registration of transfer or exchange.

     Subject to Section 2.4, every Warrant Certificate surrendered for registration of transfer or
exchange shall (if so required by the Company or the Warrant Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant
Agent, duly executed by the Holder thereof or his attorney duly authorized in writing.

     The Warrant Agent shall, upon request of the Company from time to time, deliver to the Company
such reports of registered ownership of the Warrants and such records of transactions with respect
to the Warrants and the Warrant Shares as the Company may request. The Warrant Agent shall also
make available to the Company for inspection by the Company’s agents or employees, from time to
time as the Company may request, such original books of accounts and records maintained by the
Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections
to occur at the Corporate Agency Office during normal business hours.

     The Warrant Agent shall keep copies of this Agreement and any notices given to Holders
hereunder available for inspection by the Holders during normal business hours at the Corporate
Agency Office. The Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.

ARTICLE 10

WARRANTHOLDERS

     Section 10.1 No Voting or Dividend Rights. Prior to the exercise of the Warrants, except as
may be specifically provided for herein, (i) no Holder of a Warrant Certificate, as such, shall be
entitled to any of the rights of a holder of Common Stock, including, without limitation, the right
to vote at or to receive any notice of any meetings of stockholders; (ii) the consent of any Holder
shall not be required with respect to any action or proceeding of the Company; (iii) except as
provided in Article 5, no Holder, by reason of the ownership or possession of a Warrant or the
Warrant Certificate representing the same, shall have any right to receive any stock or cash
dividends, allotments or rights or other distributions paid, allotted or distributed or
distributable to the stockholders of the Company prior to, or for which the relevant record date
preceded, the date of the exercise of such Warrant; and (iv) no Holder shall have any right not
expressly conferred by this Agreement or Warrant Certificate held by such Holder.

     Section 10.2 Treatment of Holders of Warrant Certificates. Every Holder of a Warrant
Certificate, by accepting the same, consents and agrees with the Company, with the Warrant Agent
and with every subsequent holder of such Warrant Certificate that, prior to due presentment of such
Warrant Certificate for registration of transfer, the Company and the

15

 

Warrant Agent may treat the Person in whose name the Warrant Certificate is registered as the
owner thereof for all purposes and as the Person entitled to exercise the rights granted under the
Warrants, and neither the Company, the Warrant Agent nor any agent thereof shall be affected by any
notice to the contrary.

     Section 10.3 Communications to Holders. (a) If any Holder of a Warrant Certificate applies
in writing to the Warrant Agent and such application states that the applicant desires to
communicate with other Holders with respect to its rights under this Agreement or under the
Warrants, then the Warrant Agent shall, within five (5) Business Days after the receipt of such
application, and upon payment to the Warrant Agent by such applicant of the reasonable expenses of
preparing such list, provide to such applicant a list of the names and addresses of all Holders of
Warrant Certificates as of the most recent practicable date.

          (b) Every Holder of Warrant Certificates, by receiving and holding the same, agrees with the
Company and the Warrant Agent that neither the Company nor the Warrant Agent nor any agent of
either of them shall be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders in accordance with Section 10.4(a).

ARTICLE 11

CONCERNING THE WARRANT AGENT

     Section 11.1 Nature of Duties and Responsibilities Assumed. The Company hereby appoints the
Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent
hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the
terms and conditions set forth in this Agreement or as the Company and the Warrant Agent may
hereafter agree, by all of which the Company, by its acceptance thereof, shall be bound; provided,
however, that the terms and conditions contained in the Warrant Certificates are subject to and
governed by this Agreement or any other terms and conditions hereafter agreed to by the Company and
the Warrant Agent.

     The Warrant Agent shall not, by countersigning Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to validity or authorization of (i) the
Warrants or the Warrant Certificates (except as to its countersignature thereon), (ii) any
securities or other property delivered upon exercise of any Warrant, (iii) the accuracy of the
computation of the number or kind or amount of stock or other securities or other property
deliverable upon exercise of any Warrant or (iv) the correctness of any of the representations of
the Company made in such certificates that the Warrant Agent receives. The Warrant Agent shall not
at any time have any duty to calculate or determine whether any facts exist that may require any
adjustments pursuant to Article 6 hereof with respect to the kind and amount of shares or other
securities or any property issuable to Holders upon the exercise of Warrants required from time to
time. The Warrant Agent shall have no duty or responsibility to determine the accuracy or
correctness of such calculation or with respect to the methods employed in making the same. The
Warrant Agent shall not be accountable with respect to the validity or value (or the kind or
amount) of any Warrant Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or upon any adjustment

16

 

pursuant to Article 6 hereof, and it makes no representation with respect thereto. The
Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or
to issue, transfer or deliver any Warrant Shares or stock certificates or other securities or
property upon the surrender of any Warrant Certificate for the purpose of exercise or upon any
adjustment pursuant to Article 6 hereof or to comply with any of the covenants of the Company
contained in Article 12 hereof.

     The Warrant Agent shall not (i) be liable for any recital or statement of fact contained
herein or in the Warrant Certificates or for any action taken, offered or omitted by it in good
faith on the belief that any Warrant Certificate or any other documents or any signatures are
genuine or properly authorized, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or in the Warrant
Certificates or (iii) be liable for any act or omission in connection with this Agreement except
for its own gross negligence, bad faith or willful misconduct.

     The Warrant Agent is hereby authorized to accept and is protected in accepting instructions
with respect to the performance of its duties hereunder by Company Order and to apply to any such
officer named in such Company Order for instructions (which instructions will be promptly given in
writing when requested), and the Warrant Agent shall be indemnified and held harmless for any
action taken or suffered to be taken by it in good faith in accordance with the instructions in any
Company Order.

     The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys, agents or employees,
provided that reasonable care has been exercised in the selection and in the continued employment
of any such attorney, agent or employee. The Warrant Agent shall not be under any obligation or
duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof,
unless first indemnified to its satisfaction, but this provision shall not affect the power of the
Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without
such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made
or action, suit or proceeding instituted against it arising out of or in connection with this
Agreement.

     The Company shall perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further acts, instruments and assurances as may
reasonably be required by the Warrant Agent in order to enable it to carry out or perform its
duties under this Agreement.

     The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any
obligation or relationship of agency or trust for or with any of the Holders or any beneficial
owners of Warrants. The Warrant Agent shall not be liable except for the failure to perform such
duties as are specifically set forth herein or specifically set forth in the Warrant Certificates,
and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent
whose duties and obligations shall be determined solely by the express provisions hereof or the
express provisions of the Warrant Certificates.

17

 

     Section 11.2 Right to Consult Counsel. The Warrant Agent may at any time consult with legal
counsel satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall
incur no liability or responsibility to the Company or to any Holder for any action taken, suffered
or omitted by it in good faith in accordance with the opinion or advice of such counsel.

     Section 11.3 Compensation, Reimbursement and Indemnification. The Company agrees to pay the
Warrant Agent from time to time compensation for all fees and expenses relating to its services
hereunder as the Company and the Warrant Agent may agree from time to time and to reimburse the
Warrant Agent for reasonable expenses and disbursements, including reasonable counsel fees and
expenses incurred in connection with the execution and administration of this Agreement. The
Company further agrees to indemnify the Warrant Agent for and save it harmless against any losses,
liabilities or reasonable expenses arising out of or in connection with the acceptance and
administration of this Agreement, including the reasonable costs, legal fees and expenses of
investigating or defending any claim of such liability, except that the Company shall have no
liability hereunder to the extent that any such loss, liability or expense results from the Warrant
Agent’s own gross negligence, bad faith or willful misconduct.

     Section 11.4 Warrant Agent May Hold Company Securities. The Warrant Agent, any Countersigning
Agent and any stockholder, director, officer or employee of the Warrant Agent or any Countersigning
Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its
Affiliates, become pecuniarily interested in transactions in which the Company or its Affiliates
may be interested, contract with or lend money to the Company or its Affiliates or otherwise act as
fully and freely as though it were not the Warrant Agent or the Countersigning Agent, respectively,
under this Agreement. Nothing herein shall preclude the Warrant Agent or any Countersigning Agent
from acting in any other capacity for the Company or for any other legal entity.

     Section 11.5 Resignation and Removal; Appointment of Successor. (a) The Warrant Agent may
resign its duties and be discharged from all further duties and liability hereunder (except
liability arising as a result of the Warrant Agent’s own gross negligence or willful misconduct)
after giving thirty (30) days’ prior written notice to the Company. The Company may remove the
Warrant Agent upon thirty (30) days’ written notice, and the Warrant Agent shall thereupon in like
manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The
Warrant Agent shall, at the expense of the Company, cause notice to be given in accordance with
Section 13.1(b) to each Holder of a Warrant Certificate of said notice of resignation or notice of
removal, as the case may be. Upon such resignation or removal, the Company shall appoint in
writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of
thirty (30) calendar days after it has been notified in writing of such resignation by the
resigning Warrant Agent or after such removal, then the Holder of any Warrant Certificate may apply
to any court of competent jurisdiction for the appointment of a new Warrant Agent. Any new Warrant
Agent, whether appointed by the Company or by such a court, shall be a corporation doing business
under the laws of the United States or any state thereof in good standing, authorized under such
laws to act as Warrant Agent, and having a combined capital and surplus of not less than
$50,000,000. The combined capital and surplus of any such new Warrant Agent shall be deemed to be
the combined capital and surplus as set forth in the most recent annual report of its condition
published by such Warrant Agent prior to its

18

 

appointment, provided that such reports are published at least annually pursuant to law or to
the requirements of a Federal or state supervising or examining authority. After acceptance in
writing of such appointment by the new Warrant Agent, it shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it shall be
reasonably necessary or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the reasonable expense of the Company and shall be legally and
validly executed and delivered by the resigning or removed Warrant Agent. Not later than the
effective date of any such appointment, the Company shall file notice thereof with the resigning or
removed Warrant Agent. Failure to give any notice provided for in this Section 11.5(a), however,
or any defect therein, shall not affect the legality or validity of the resignation or removal of
the Warrant Agent or the appointment of a new Warrant Agent, as the case may be.

          (b) Any corporation into which the Warrant Agent or any new Warrant Agent that be merged, or
any corporation resulting from any consolidation to which the Warrant Agent or any new Warrant
Agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further
act, provided that such corporation would be eligible for appointment as successor to the Warrant
Agent under the provisions of Section 11.5(a). Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent to be given in accordance with Section 13.1(b) to
each Holder of a Warrant Certificate at such Holder’s last address as shown on the Warrant
Register.

     Section 11.6 Appointment of Countersigning Agent. (a) The Warrant Agent may appoint a
Countersigning Agent or Agents which shall be authorized to act on behalf of the Warrant Agent to
countersign Warrant Certificates issued upon original issue and upon exchange, registration of
transfer or pursuant to Article 7, and Warrant Certificates so countersigned shall be entitled to
the benefits of this Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. Wherever reference is made in this Agreement
to the countersignature and delivery of Warrant Certificates by the Warrant Agent or to Warrant
Certificates countersigned by the Warrant Agent, such reference shall be deemed to include
countersignature and delivery on behalf of the Warrant Agent by a Countersigning Agent and Warrant
Certificates countersigned by a Countersigning Agent. Each Countersigning Agent shall be
acceptable to the Company and shall at the time of appointment be a corporation doing business
under the laws of the United States of America or any State thereof in good standing, authorized
under such laws to act as Countersigning Agent, and having a combined capital and surplus of not
less than $50,000,000. The combined capital and surplus of any such new Countersigning Agent shall
be deemed to be the combined capital and surplus as set forth in the most recent annual report of
its condition published by such Countersigning Agent prior to its appointment, provided that such
reports are published at least annually pursuant to law or to the requirements of a Federal or
state supervising or examining authority.

          (b) Any corporation into which a Countersigning Agent may be merged, or any corporation
resulting from any consolidation to which such Countersigning Agent shall be a party, shall be a
successor Countersigning Agent without any further act, provided that such corporation would be
eligible for appointment as a new Countersigning Agent under the

19

 

provisions of Section 11.6(a), without the execution or filing of any paper or any further act
on the part of the Warrant Agent or the Countersigning Agent. Any such successor Countersigning
Agent shall promptly cause notice of its succession as Countersigning Agent to be given in
accordance with Section 13.1(b) to each Holder of a Warrant Certificate at such Holder’s last
address as shown on the Warrant Register.

          (c) A Countersigning Agent may resign at any time by giving thirty (30) days’ prior written
notice thereof to the Warrant Agent and to the Company. The Warrant Agent may at any time
terminate the agency of a Countersigning Agent by giving thirty (30) days’ prior written notice
thereof to such Countersigning Agent and to the Company.

          (d) The Warrant Agent agrees to pay to each Countersigning Agent from time to time reasonable
compensation for its services under this Section, and the Warrant Agent shall be entitled to be
reimbursed for such payments, subject to the provisions of Section 11.3.

          (e) Any Countersigning Agent shall have the same rights and immunities as those of the Warrant
Agent set forth in Section 11.1.

ARTICLE 12

ADDITIONAL COVENANTS OF THE COMPANY

     Section 12.1 Reports to Holders. (a) Whether or not required by Sections 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC within any applicable time periods it prescribes
(i) such annual reports as would be required by Sections 13 or 15(d) of the Exchange Act, (ii)
quarterly reports for each of the first three fiscal quarters of each fiscal year and (iii) all
other reports and information as would be required by Sections 13 or 15(d) of the Exchange Act.
Within fifteen (15) days after the same shall be filed with the SEC, the Company shall file with
the Warrant Agent, and supply to each Holder of Warrants, without cost to such Holder, copies of
such reports or other information, unless such reports and information are filed by EDGAR with the
SEC.

          (b) The Company shall provide the Warrant Agent with a sufficient number of copies of all
reports and other documents and information that the Warrant Agent may be required to deliver to
the Holders of the Warrants under this Section 12.1.

     Section 12.2 Compliance with Agreements. The Company shall comply in all material respects
with the terms and conditions of the Registration Rights Agreement.

     Section 12.3 Maintenance of Office. So long as any of the Warrants remain outstanding, the
Company will maintain in the City of New York the following: (a) an office or agency where the
Warrants may be presented for exercise, (b) an office or agency where the Warrants may be presented
for registration of transfer and for exchange as in this Agreement provided and (c) an office or
agency where notices and demands to or upon the Company in respect of the Warrants or of this
Agreement may be served. The Company will give to the Warrant Agent written notice of the location
of any such office or agency and of any change of location thereof. The Company hereby initially
designates the office of the Warrant Agent at Computershare Trust Company, N.A., 525 Washington
Blvd.-Suite 4690, Jersey City, N.J.

20

 

07310, or such other location as the Company may designate upon notice from the Warrant Agent
as the office or agency for each such purpose. In case the Company shall fail to maintain any such
office or agency or shall fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the Corporate Agency
Office.

ARTICLE 13

NOTICES

     Section 13.1 Notices Generally. (a) Any request, notice, direction, authorization, consent,
waiver, demand or other communication permitted or authorized by this Agreement to be made upon;
given or furnished to or filed with the Company or the Warrant Agent by the other party hereto or
by any Holder shall be sufficient for every purpose hereunder if in writing (including telecopy
communication) and telecopied or delivered by hand (including by courier service) as follows:

     If to the Company, to it at:

Marshall Edwards, Inc.

140 Wicks Road, North Ryde

NSW, 2113 Australia

Attention: David R. Seaton

Fax: +61 2 9878-8474

with a copy to:

Morgan Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178

Attention: Steven A. Navarro, Esq.

Fax: (212) 309-6001

or

     If to the Warrant Agent, to it at:

Computershare Trust Company, N.A.

250 Royal Street

Canton, Massachusetts 02021

Attn: Corporate Actions Department

or, in either case, such other address as shall have been set forth in a notice delivered in
accordance with this Section 13.1(a).

     All such communications shall, when so telecopied or delivered by hand, be effective when
telecopied with confirmation of receipt or received by the addressee, respectively.

21

 

     Any Person that telecopies any communication hereunder to any Person shall, on the same date
as such telecopy is transmitted, also send, by first class mail, postage prepaid and addressed to
such Person as specified above, an original copy of the communication so transmitted.

          (b) Where this Agreement provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at the address of such Holder
as it appears in the Warrant Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to
any particular Holder shall affect the sufficiency of such notice with respect to other Holders.
Where this Agreement provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice.

     In case by reason of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification as shall be made by a
method approved by the Warrant Agent as one which would be most reliable under the circumstances
for successfully delivering the notice to the addressees shall constitute a sufficient notification
for every purpose hereunder.

     Section 13.2 Required Notices to Holders. In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock for which an adjustment is required to be made
pursuant to Article 6, (ii) to distribute to the holders of its Common Stock rights to subscribe
for or to purchase any Additional Common Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its Common Stock, (iv) to
effect any transaction described in Section 6.1(g) or (v) to effect the liquidation, dissolution or
winding up of the Company, then, and in each such case, the Company shall cause to be filed with
the Warrant Agent and shall give to each Holder of a Warrant Certificate, in accordance with
Section 13.1(b), a notice of such proposed action or event. Such notice shall specify (x) the date
on which a record is to be taken for the purposes of such dividend or distribution; and (y) the
date on which such reclassification, transaction, event, liquidation, dissolution or winding up is
expected to become effective and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities, cash or other property
deliverable upon such reclassification, transaction, event, liquidation, dissolution or winding up.
Such notice shall be given, in the case of any action covered by clause (i) or (ii) above, at
least ten (10) days prior to the record date for determining holders of the Common Stock for
purposes of such action or, in the case of any action covered by clauses (iii) through (v), at
least twenty (20) days prior to the applicable effective or expiration date specified above or, in
any such case, prior to such earlier time as notice thereof shall be required to be given pursuant
to Rule 10b-17 under the Exchange Act, if applicable.

     If at any time the Company shall cancel any of the proposed transactions for which notice has
been given under this Section 13.2 prior to the consummation thereof, the Company shall give each
Holder prompt notice of such cancellation in accordance with Section 13.1(b) hereof.

22

 

ARTICLE 14

APPLICABLE LAW

THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND ALL
RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

EACH OF THE PARTIES HERETO CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT LOCATED WITHIN
THE CITY, COUNTY AND STATE OF NEW YORK. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY
HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR
PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY
BE PERMITTED BY ANY APPLICABLE LAW.

ARTICLE 15

COUNTERPARTS

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

ARTICLE 16

AMENDMENTS

     This Agreement may not be changed orally or modified, amended or supplemented without an
express written agreement executed by each of the parties hereto.

ARTICLE 17

INSPECTION

     The Company shall cause a copy of this Agreement to be available at all reasonable times at
its principal executive offices for inspection by the Holder of any Warrant Certificate. The
Company may require such Holder to submit his Warrant Certificate for inspection by it.

23

 

ARTICLE 18

SUCCESSOR TO THE COMPANY

     So long as Warrants remain outstanding, the Company will not enter into any Non-Surviving
Combination unless the acquirer shall expressly assume by a supplemental agreement, executed and
delivered to the Warrant Agent, in form reasonably satisfactory to the Warrant Agent, the due and
punctual performance of every covenant of this Agreement on the part of the Company to be performed
and observed and shall have provided for exercise rights in accordance with Section 6.1(g). Upon
the consummation of such Non-Surviving Combination, the acquirer shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under this Agreement with
the same effect as if such acquirer had been named as the Company herein.

ARTICLE 19

ENTIRE AGREEMENT

     This Agreement sets forth the entire agreement of the parties hereto as to the subject matter
hereof and supersedes all previous agreements among all or some of the parties hereto with respect
thereto, whether written, oral or otherwise.

ARTICLE 20

HEADINGS

     The descriptive headings of the several Sections of this Agreement are inserted for
convenience and shall not control or affect the meaning or construction of any of the provisions
hereof.

ARTICLE 21

DAMAGES

     No party shall be liable for any incidental, indirect, special or consequential damages of any
nature whatsoever, including, but not limited to, loss of anticipated profits, occasioned by a
breach of any provision of this Agreement even if apprised of the possibility of such damages.

ARTICLE 22

THIRD PARTY BENEFICIARIES

     Notwithstanding anything contained herein to the contrary, the provisions of this Agreement
are intended to benefit only the Warrant Agent, the Company and their respective permitted
successors and assigns. No rights shall be granted to any other person by virtue of this Agreement
and there are no third party beneficiaries hereof.

[Signature page to follow.]

24

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	MARSHALL EDWARDS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	COMPUTERSHARE SHAREHOLDER SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

EXHIBIT A

FORM OF WARRANT CERTIFICATE

A-1

 

EXHIBIT B

FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE

(Transfers Pursuant to §2.4(a) of the Warrant Agreement)

                    ___, 20                    

Computershare Trust Company, N.A.

                    

                    

Attention:                    

Re:       Marshall Edwards, Inc. Warrants to Purchase Common Stock (the “Warrants”)

     Reference is hereby made to the Warrant Agreement dated as of June                     , 2006 (the “Warrant
Agreement”) between Marshall Edwards, Inc. and Computershare Trust Company, N.A., as Warrant Agent.
Capitalized terms used but not defined herein shall have the meanings given them in the Warrant
Agreement.

     This letter relates to Warrants exercisable for an aggregate of                     Common Stock
(“Warrant Shares”), which Warrants are held in the name of [name of transferor] (the “Transferor”)
to effect the transfer of the Warrants to the undersigned.

     In connection with such request, and in respect of such Warrants, we confirm that:

     1. We understand that the Warrants and Warrant Shares have not been and may not be registered
under the Securities Act, and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.

     2. We are a corporation, partnership or other entity or person having such knowledge and
experience in financial and business matters as to be capable of evaluating the merits and risks of
an investment in the Warrants, and we are (or any account for which we are purchasing is) an
Institutional Accredited Investor or a Qualified Institutional Buyer (as such terms are defined
under the Securities Act), able to bear the economic risk of investment in the Warrants.

     3. We are acquiring the Warrants for our own account (or for accounts as to which we exercise
sole investment discretion and have authority to make, and do make, the statements contained in
this letter) and not with a view to any distribution of the Warrants or Warrant Shares, subject,
nevertheless, to the understanding that the disposition of our property shall at all times be and
remain within our control.

     4. We understand that (a) the Warrants will be delivered to us in registered form only and
that the certificate delivered to us in respect of the Warrants will bear a legend substantially to
the following effect:

B-1

 

[Restricted Warrant Legend]

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION,
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.

and (b) such certificates shall be reissued without the foregoing legend only in the event of a
disposition of the Warrants in accordance with the provisions of paragraph 5(c) or (d) below, or at
our request at such times as we would be permitted to dispose of the Warrants in accordance with
paragraph 5(d) below.

     5. We agree that in the event that at some future time we wish to dispose of any of the
Warrants or Warrant Shares, we will not do so unless:

     (a) the Warrants or Warrant Shares are sold to the Company or any Subsidiary thereof;

     (b) the Warrants are sold to an Institutional Accredited Investor or a Qualified
Institutional Buyer, that, prior to such transfer, furnishes to the Warrant Agent a signed
letter containing certain representations and agreements relating to the restrictions on
transfer of the Warrants and Warrant Shares (the form of which letter can be obtained from
the Warrant Agent);

     (c) the Warrants or Warrant Shares are sold by us pursuant to Rule 144 under the
Securities Act; or

     (d) the Warrants or Warrant Shares are sold pursuant to an effective registration
statement under the Securities Act.

B-2

 

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	[PURCHASER]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

Dated:                     , 200___

cc: Marshall Edwards, Inc.

B-3

 

EXHIBIT C

FORM OF LEGAL OPINION ON TRANSFER

                    ____, 20___

EquiServe Trust Company, N.A.

                    

                    

Attention:                    

Re:      Marshall Edwards, Inc. Warrants to Purchase Common Stock

Ladies and Gentlemen:

     This opinion is being furnished to you in connection with the sale by                     (the
“Transferor”) to                                         (the “Purchaser”) of Warrants to Purchase Common Stock
exercisable for an aggregate of                     Common Stock, par value $.01 per share, of Marshall
Edwards, Inc. (the “Warrants”).

     We have examined such documents and records as we have deemed appropriate. In our examination
of the foregoing, we have assumed the authenticity of all documents, the genuineness of all
signatures and the due authorization, execution and delivery of the aforementioned by each of the
parties thereto. We have further assumed the accuracy of the representations contained in the
Accredited Investor Transferee Certificate executed and delivered by the Purchaser in connection
with its purchase of the Warrants made by the parties executing such document. We have also
assumed that the sale of the Warrants to the Transferor was exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”).

     Based on the foregoing, we are of the opinion that the sale to the Purchaser of the Warrants
is subject to a valid exemption from the registration requirements of the Securities Act and does
not require registration of such Warrants or the Common Stock issuable upon exercise thereof under
the Securities Act.

Very truly yours,

C-1

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