Contract
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SMALL WORLD KIDS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right
to
Purchase up to 685,185 Shares of Common Stock of
Small
World Kids, Inc.
(subject
to adjustment as provided herein)
COMMON
STOCK PURCHASE WARRANT
| No. _________________ |
Issue
Date: January 26,
2007
|
SMALL
WORLD KIDS, INC., a corporation organized under the laws of the State of Nevada
(the “Company”),
hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns
(the “Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company
(as
defined herein) from and after the Issue Date of this Warrant and at any time,
up to 685,185 fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $0.001 par value per share, at the applicable Exercise
Price per share (as defined below). The number and character of such shares
of
Common Stock and the applicable Exercise Price per share are subject to
adjustment as provided herein.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Common
Stock”
includes (i) the Company’s Common Stock, par value $0.001 per share; and (ii)
any other securities into which or for which any of the securities described
in
the preceding clause (i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(b) The
term
“Company”
shall
include Small World Kids, Inc. and any person or entity which shall succeed,
or
assume the obligations of, Small World Kids, Inc. hereunder.
(c) The
“Exercise
Price”
applicable under this Warrant shall be $0.01 per share.
(d) The
term
“Other
Securities”
refers
to any stock (other than Common Stock) and other securities of the Company
or
any other person (corporate or otherwise) which the holder of the Warrant at
any
time shall be entitled to receive, or shall have received, on the exercise
of
the Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of
Common Stock or Other Securities pursuant to Section 4 or otherwise.
(e) The
term
“Security
Agreement”
means
the Security Agreement dated as of February 28, 2006 among the Holder, the
Company and various Subsidiaries of the Company party thereto, as amended,
modified, restated and/or supplemented from time to time.
1. Exercise
of Warrant.
1.1 Number
of Shares Issuable upon Exercise.
From
and after the date hereof, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or
fax
copy of an exercise notice in the form attached hereto as Exhibit A (the
“Exercise
Notice”),
shares of Common Stock of the Company, subject to adjustment pursuant to Section
4.
1.2 Fair
Market Value.
For
purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination
Date”)
shall
mean:
(a) If
the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or Capital Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”),
then
the closing or last sale price, respectively, reported for the last business
day
immediately preceding the Determination Date.
(b) If
the
Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD Over The Counter
Bulletin Board, then the mean of the average of the closing bid and asked prices
reported for the last business day immediately preceding the Determination
Date.
(c) Except
as
provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel
of
persons qualified by education and training to pass on the matter to be
decided.
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up,
or
any event deemed to be a liquidation, dissolution or winding up pursuant to
the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for
the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination
Date.
2
1.3 Company
Acknowledgment.
The
Company will, at the time of the exercise of this Warrant, upon the request
of
the holder hereof acknowledge in writing its continuing obligation to afford
to
such holder any rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.
1.4 Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
2. Procedure
for Exercise.
2.1 Delivery
of Stock Certificates, Etc., on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall
have
been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part,
and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares
of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.
2.2 Exercise.
(a) Payment
may be made either (i) in cash of immediately available funds or by certified
or
official bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of this Warrant, or shares of Common
Stock and/or Common Stock receivable upon exercise of this Warrant in accordance
with the formula set forth in subsection (b) below, or (iii) by a combination
of
any of the foregoing methods, for the number of Common Shares specified in
such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.
3
(b) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share
of
Common Stock is greater than the Exercise Price (at the date of calculation
as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Exercise
Notice in which event the Company 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 this Warrant
or, if
only a portion of this Warrant is being exercised, the portion
of this
Warrant being exercised (at the date of such
calculation)
|
|
A
=
|
the
Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
B
=
|
the
Exercise Price per share (as adjusted to the date of such
calculation)
|
3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
3.1 Reorganization,
Consolidation, Merger, Etc.
In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan
or arrangement contemplating the dissolution of the Company, then, in each
such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder, on the
exercise hereof as provided in Section 1 at any time after the consummation
of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash)
to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
3.2 Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder
pursuant to Section 3.1, or, if the Holder shall so instruct the Company, to
a
bank or trust company specified by the Holder and having its principal office
in
New York, NY as trustee for the Holder.
4
3.3 Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation
or
merger or the effective date of dissolution following any such transfer, as
the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether
or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full
force
and effect after the consummation of the transactions described in this Section
3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holder will be delivered to the Holder or the Trustee as
contemplated by Section 3.2.
4. Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) issue additional shares of the Common Stock
as
a dividend or other distribution on outstanding Common Stock or any preferred
stock issued by the Company, (b) subdivide its outstanding shares of Common
Stock, (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4. The number of
shares of Common Stock that the holder shall thereafter, on the exercise hereof
as provided in Section 1, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Exercise Price that
would otherwise (but for the provisions of this Section 4) be in effect, and
(b)
the denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4). Notwithstanding the
foregoing, in no event shall the Exercise Price be less than the par value
of
the Common Stock.
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or receivable
by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such certificate to
the
holder and any warrant agent of the Company (appointed pursuant to Section
11
hereof).
5
6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant.
The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”)
in
whole or in part. On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached hereto (the
“Transferor
Endorsement Form”)
and
together with evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, which shall include, without
limitation, a legal opinion from the Transferor’s counsel (at the Company’s
expense) that such transfer is exempt from the registration requirements of
applicable securities laws, the Company at its expense (but with payment by
the
Transferor of any applicable transfer taxes) will issue and deliver to or on
the
order of the Transferor thereof a new Warrant of like tenor, in the name of
the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a “Transferee”),
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant so surrendered
by
the Transferor.
8. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
9. Registration
Rights.
The
Holder has been granted certain registration rights by the Company. These
registration rights are set forth in a Registration Rights Agreement entered
into by the Company and Holder dated as of February 28, 2006, as amended by
the
Second Amendment to Registration Rights Agreement dated as of and the date
hereof and as the same may be further amended, modified and/or supplemented
from
time to time.
10. Maximum
Exercise.
Notwithstanding anything herein to the contrary, in no event shall the Holder
be
entitled to exercise any portion of this Warrant in excess of that portion
of
this Warrant upon exercise of which the sum of (1) the number of shares of
Common Stock beneficially owned by the Holder and its Affiliates (other than
shares of Common Stock which may be deemed beneficially owned through the
ownership of the unexercised portion of the Warrant or the unexercised or
unconverted portion of any other security of the Holder subject to a limitation
on conversion analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the exercise of the portion of this
Warrant with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its Affiliates of any
amount greater than 9.99% of the then outstanding shares of Common Stock
(whether or not, at the time of such exercise, the Holder and its Affiliates
beneficially own more than 9.99% of the then outstanding shares of Common
Stock). As used herein, the term “Affiliate”
means
any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
person or entity, as such terms are used in and construed under Rule 144 under
the Securities Act. For purposes of the second preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of
the
Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such sentence. For any
reason at any time, upon written or oral request of the Holder, the Company
shall within one (1) business day confirm orally and in writing to the Holder
the number of shares of Common Stock outstanding as of any given date. The
limitations set forth herein (x) may be waived by the Holder upon provision
of
no less than sixty-one (61) days prior notice to the Company and (y) shall
automatically become null and void following notice to the Company upon the
occurrence and during the continuance of an Event of Default (as defined in
the
Security Agreement).
6
11. Warrant
Agent.
The
Company may, by written notice to the each Holder of the Warrant, appoint an
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
to Section 7, and replacing this Warrant pursuant to Section 8, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
12. Transfer
on the Company’s Books.
Until
this Warrant is transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
13. Rights
of Shareholders.
No
Holder shall be entitled to vote or receive dividends or be deemed the holder
of
the shares of Common Stock or any other securities of the Company which may
at
any time be issuable upon exercise of this Warrant for any purpose (the
“Warrant
Shares”),
nor
shall anything contained herein be construed to confer upon the Holder, as
such,
any of the rights of a shareholder of the Company or any right to vote for
the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon the recapitalization, issuance of shares, reclassification of shares,
change of nominal value, consolidation, merger, conveyance or otherwise) or
to
receive notice of meetings, or to receive dividends or subscription rights
or
otherwise, in each case, until the earlier to occur of (x) the date of actual
delivery to Holder (or its designee) of the Warrant Shares issuable upon the
exercise hereof or (y) the third business day following the date such Warrant
Shares first become deliverable to Holder, as provided herein.
14. Notices,
Etc.
All
notices and other communications from the Company to the Holder shall be mailed
by first class registered or certified mail, postage prepaid, at such address
as
may have been furnished to the Company in writing by such Holder or, until
any
such Holder furnishes to the Company an address, then to, and at the address
of,
the last Holder who has so furnished an address to the Company.
7
15. Miscellaneous.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. THIS WARRANT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY
IN STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF
NEW
YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION
AND
BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing this
Warrant on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorneys’ fees and costs. In the
event that any provision of this Warrant is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof. The Company acknowledges that legal counsel participated
in the preparation of this Warrant and, therefore, stipulates that the rule
of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOLLOWS]
8
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
| SMALL WORLD KIDS, INC. | ||||||
|
WITNESS:
|
||||||
| By: |
|
|||||
| Name: |
|
|||||
| Title: |
|
|||||
9
EXHIBIT
A
FORM
OF SUBSCRIPTION
(To
Be
Signed Only On Exercise Of Warrant)
|
TO:
|
Small
Work Kids, Inc.
|
| 0000 Xxxxxxxxxx Xxxxxxx |
| Xxxxxx Xxxx, XX 00000 |
Attention: Chief
Financial Officer
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):
|
________
|
________
shares of the common stock covered by such warrant; or
|
|
________
|
the
maximum number of shares of common stock covered by such warrant
pursuant
to the cashless exercise procedure set forth in Section
2.
|
The
undersigned herewith makes payment of the full Exercise Price for such shares
at
the price per share provided for in such Warrant, which is $___________.
Such
payment takes the form of (check applicable box or boxes):
|
________
|
$__________
in lawful money of the United States; and/or
|
|
________
|
the
cancellation of such portion of the attached Warrant as is exercisable
for
a total of _______ shares of Common Stock (using a Fair Market
Value of
$_______ per share for purposes of this calculation);
and/or
|
|
________
|
the
cancellation of such number of shares of Common Stock as is necessary,
in
accordance with the formula set forth in Section 2.2, to exercise
this
Warrant with respect to the maximum number of shares of Common
Stock
purchasable pursuant to the cashless exercise procedure set forth
in
Section 2.
|
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to______________ whose address is
_____________________________________________________.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the “Securities
Act”)
or
pursuant to an exemption from registration under the Securities
Act.
| Dated: | ||||
| (Signature must conform to name of holder as specified on the face of the Warrant) | ||||
| Address: | ||||
10
EXHIBIT
B
FORM
OF TRANSFEROR ENDORSEMENT
(To
Be
Signed Only On Transfer Of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of Small World Kids, Inc. into which the within Warrant relates specified
under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of Small World
Kids, Inc. with full power of substitution in the premises.
| Transferees | Address |
Percentage
Transferred
|
Number
Transferred
|
| Dated: | ||||
| (Signature must conform to name of holder as specified on the face of the Warrant) | ||||
| Address: | ||||
| SIGNED IN THE PRESENCE OF: | ||||
|
(Name)
|
||||
| ACCEPTED AND AGREED: | ||||
|
[TRANSFEREE]
|
||||
|
(Name)
|
||||
11
IRREVOCABLE
PROXY
For
good
and valuable consideration, receipt of which is hereby acknowledged, Laurus
Master Fund, Ltd. (“Laurus”), hereby appoints Small World Kids, Inc. (the “Proxy
Holder” or the “Company”), with a mailing address at 0000
Xxxxxxxxxx Xxxxxxx Xxxxxx
Xxxx, XX 00000,
with
full power of substitution, as proxy, to vote all shares of Common Stock of
the
Company, now or in the future owned by Laurus to the extent such shares are
issued to Laurus upon its exercise of (a) the Common Stock Purchase Warrant
(the
“Warrant”), issued by the Company to Laurus as of the date hereof and (b) all
other warrants and/or options issued by the Company in favor of Laurus with
an
exercise price equal to or less than the greater of $0.01 and the par value
of
the Company’s common stock (the “Other Options and Warrants”) (collectively, the
“Shares”).
This
proxy is irrevocable and coupled with an interest. Upon the sale or other
transfer of the Shares, in whole or in part, or the assignment of the
Warrant
or any of the Other Options and Warrants,
this
proxy shall automatically terminate (x) with respect to such sold or transferred
Shares at the time of such sale and/or transfer, and (y) in the case of an
assignment of the Warrant and/or Other Options and Warrants, at the time of
such
assignment in respect of the Shares issuable upon exercise of such assigned
Warrant and/or Other Options and Warrants, in each case, without any further
action required by any person.
Laurus
shall use its best efforts to forward to Proxy Holder within two (2) business
days following Laurus’ receipt thereof, at the address for Proxy Holder set
forth above, copies of all materials received by Laurus relating, in each case,
to the solicitation of the vote of shareholders of the Company.
This
proxy shall remain in effect with respect to the Shares of the Company during
the period commencing on the date hereof and continuing until the payment in
full of all obligations and liabilities owing by the Company to Laurus (as
the
same may be amended, restated, extended or modified from time to
time).
IN
WITNESS WHEREOF, the undersigned has executed this irrevocable proxy as of
the
26th
day of
January 2007.
|
LAURUS
MASTER FUND, LTD.
|
||
| |
|
|
| By: | ||
|
Name:
|
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