Preferred Stock Warrant Agreement

Preferred Stock Warrant Agreement

This Preferred Stock Warrant Agreement (the "Agreement") is made as of by and between Company Name: , a corporation organized under the laws of State of Incorporation: with principal office at (the "Company"), and Holder Name: of Holder Address: (the "Holder").

Recitals

WHEREAS, the Company is authorized to issue shares of Preferred Stock and desires to grant to the Holder certain warrants to purchase shares of the Company's Preferred Stock on the terms and conditions set forth herein; and

WHEREAS, the Holder desires to accept such warrants and to be bound by the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows:

1. Definitions

1.1 "Warrant" means the right granted by this Agreement to purchase Warrant Shares as specified in Section 2. "Warrant Shares" means the number of shares of Preferred Stock purchasable upon exercise of the Warrant; provided, however, that the number of Warrant Shares shall be subject to adjustment as set forth in Section 5.

1.2 "Exercise Price" means the per-share purchase price for the Warrant Shares as set forth in Section 3.

2. Grant of Warrant

2.1 Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to the Holder the right to purchase from the Company shares of Preferred Stock (the "Warrant Shares") at the Exercise Price set forth herein.

3. Exercise Price and Mechanics

3.1 Exercise Price. The Exercise Price per Warrant Share shall be .

3.2 Exercise Procedure. The Warrant may be exercised in whole or in part by delivery to the Company of a duly executed Exercise Notice in substantially the form attached as Exhibit A and payment of the aggregate Exercise Price by certified check, wire transfer to an account designated by the Company, or by such other method as the parties may agree in writing. Upon timely exercise and payment, the Company shall, as soon as practicable but in no event later than ten (10) business days following receipt, issue and deliver to the Holder a certificate or book-entry evidencing the Warrant Shares free of preemptive rights of any then-existing securityholders, subject to compliance with applicable securities laws.

3.3 Cashless Exercise. The Holder may elect to effect a cashless exercise of this Warrant if permitted under this Agreement by checking the box below and complying with any additional procedures required by the Company: Cashless exercise permitted

4. Term and Expiration

4.1 Expiration. The Warrant shall expire and be null and void if not exercised prior to the close of business on (the "Expiration Date").

5. Adjustments; Anti-Dilution

5.1 Stock Splits and Combinations. In the event of any subdivision or combination of the outstanding shares of Preferred Stock or other recapitalization, the number of Warrant Shares and/or the Exercise Price shall be proportionately adjusted so that the Holder's economic interest is preserved.

5.2 Special Equity Events. Upon any reclassification, exchange, merger, consolidation, sale of substantially all assets or other transaction affecting capital structure, appropriate adjustments shall be made to the Warrant Shares and Exercise Price to preserve the Holder's proportionate economic interest, determined in good faith by the Company's board of directors and evidenced in writing.

5.3 Adjustments to be Binding. Any adjustment under this Section 5 shall be binding on the Holder and the Company, and the Company shall deliver written notice of any adjustment to the Holder within a reasonable time after such adjustment is determined.

6. Transferability

6.1 Restrictions on Transfer. The Warrant shall not be transferred, assigned or encumbered except (a) with the prior written consent of the Company (which consent shall not be unreasonably withheld), or (b) by operation of law to a permitted transferee in connection with estate planning, family transfers, or transfers to affiliates, provided that the transferee agrees in writing to be bound by the terms of this Agreement.

6.2 Legend. Certificates or book-entry credits evidencing Warrant Shares issued upon exercise of the Warrant may bear such stop-transfer and other legends as reasonably required by the Company under applicable securities laws or the Company's governing documents.

7. Representations and Warranties

7.1 Company Representations. The Company represents and warrants to the Holder that: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) this Agreement constitutes a valid and binding obligation enforceable against the Company in accordance with its terms; and (c) the issuance of Warrant Shares upon exercise will not violate any agreement binding on the Company, except as disclosed in writing to the Holder.

7.2 Holder Representations. The Holder represents and warrants that the Holder has full power and authority to enter into this Agreement and to perform its obligations hereunder, that the Holder is acquiring the Warrant for investment for the Holder's own account and not with a view to distribution, and that the Holder has received all information it reasonably considers necessary to evaluate the investment.

8. Covenants

8.1 Reservation of Shares. The Company covenants that at all times while the Warrant remains exercisable it will reserve and keep available out of its authorized but unissued Preferred Stock a sufficient number of shares to satisfy the exercise of the Warrant.

8.2 Corporate Action. The Company shall use commercially reasonable efforts to obtain all consents and approvals required by applicable law or by any of its contractual obligations for the valid issuance of Warrant Shares upon exercise of the Warrant.

9. Notices

All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally, by nationally recognized overnight courier, or three business days after deposit in the United States mail, postage prepaid, in each case to the addresses set forth above or such other address as either party may specify by notice to the other.

10. Governing Law; Venue

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to principles of conflicts of law. Any legal action arising out of or relating to this Agreement shall be brought exclusively in the state or federal courts located in that state, and the parties hereby submit to the personal jurisdiction and venue of such courts.

11. Miscellaneous

11.1 Entire Agreement. This Agreement, together with any exhibits and schedules hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, understandings and agreements.

11.2 Amendments; Waiver. No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by both parties. No failure or delay by either party in exercising any right shall operate as a waiver thereof.

11.3 Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the remainder of this Agreement shall be enforced to the fullest extent permitted by law and the invalid provision shall be reformed to reflect the parties' original intent to the extent possible.

11.4 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures delivered by facsimile, electronic image, or other electronic transmission shall be binding for all purposes.

11.5 Expenses. Except as otherwise provided herein, each party shall bear its own fees and expenses incurred in connection with the negotiation, preparation and execution of this Agreement.

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