cmro20170911

0001437749-17-015872.txt : 20170913 0001437749-17-015872.hdr.sgml : 20170913 20170912174917 ACCESSION NUMBER: 0001437749-17-015872 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20170630 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Material Modifications to Rights of Security Holders ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170913 DATE AS OF CHANGE: 20170912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMARCO INC CENTRAL INDEX KEY: 0000022252 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 952088894 STATE OF INCORPORATION: CA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05449 FILM NUMBER: 171081880 BUSINESS ADDRESS: STREET 1: 25541 COMMERCENTRE DRIVE STREET 2: . CITY: LAKE FOREST STATE: CA ZIP: 92630 BUSINESS PHONE: 949-599-7400 MAIL ADDRESS: STREET 1: 25541 COMMERCENTRE DRIVE STREET 2: . CITY: LAKE FOREST STATE: CA ZIP: 92630 8-K 1 cmro20170911_8k.htm FORM 8-K cmro20170911_8k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 30, 2017

Comarco, Inc.

(Exact name of registrant as specified in its charter)

000-05449
(Commission File Number)

California		95-2088894
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

28202 Cabot Road, Suite 300 Laguna Niguel, California		92677
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (949) 599-7400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01.

Entry into a Material Definitive Agreement.

On July 24, 2017, Comarco, Inc. (“we”, “our”, “Comarco”, “us”, or the “Company”) submitted its appeal brief to the United States Court of Appeals for the Federal Circuit, disputing the findings of the previously disclosed February 22, 2017 decision of the Patent Trial Appeal Board (“PTAB”) in our patent infringement action against Apple, Inc. We anticipate that the multi-step appeal process will take several months to complete, and believe that it is in our shareholders’ best interests for us to see this appeal process through to completion. While we have reduced expenses considerably over the past months, quarters, and years, we required additional capital to complete the above-mentioned appeal process.

Therefore, on September 11, 2017, we entered into subscription agreements (the “Subscription Agreements”) with our two largest existing shareholders, Broadwood Partners, L.P. (“Broadwood”) and Elkhorn Partners Limited Partnership (“Elkhorn”), pursuant to which Broadwood and Elkhorn subscribed for and purchased 5,000,000 shares and 2,000,000 shares, respectively, of the Company’s Series A Preferred Stock (as such term is defined in Item 5.03 of this Current Report on Form 8-K) at a purchase price of $0.10 per share, resulting in gross proceeds to the Company of $700,000. The Subscription Agreements also provide that upon the earlier of a Triggering Event (as described in Item 5.03 of this Current Report on Form 8-K) or immediately prior to the liquidation, dissolution or winding up of the Company (subject to the provisions of the Series A Preferred Stock), the Company will issue Broadwood and Elkhorn, for no additional consideration, warrants (the “Warrants”) to purchase 18,026,500 shares and 7,210,600 shares, respectively, of the Company’s common stock (“Common Stock”). If issued, the Warrants will have a term of eight years from the date of issuance and an exercise price of $0.05 per share of Common Stock. The Subscription Agreements and Warrants also contain other representations, warranties, and covenants customary for an investment of this type.

The Subscription Agreements and form of the Warrant are attached as Exhibits 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K. The foregoing summaries of the Subscription Agreements and Warrants are not intended to be complete and are qualified in their entirety by reference to the complete text of the Subscription Agreements and form of the Warrant.

This Item 1.01 of this Current Report on Form 8-K contains forward-looking statements within the meaning of federal securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date of this report and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this report. Additional factors that may affect our appeal of the PTAB’s decision or our infringement action against Apple, Inc. are described in the risk factors included in our filings with the Securities and Exchange Commission (“SEC”), including our most recent Annual Report on Form 10-K, which was filed with the SEC on May 1, 2017 (and amended on May 31, 2017), and later filed quarterly reports on Form 10-Q and Current Reports on Form 8-K. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, whether as a result of new information, future events or otherwise, except as required by law.

Item 3.02.

Unregistered Sales of Equity Securities.

The Company’s issuance of Series A Preferred Stock, as well as the right of Broadwood and Elkhorn to acquire the Warrants and the Common Stock issuable upon exercise of the Warrants, as described under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

The Series A Preferred Stock, the Warrants, and the Common Stock issuable upon exercise of the Warrants (collectively, the “Securities”) have been offered for sale and have been or will be sold to Broadwood and Elkhorn, each of which is an “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration afforded by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated by the SEC under the Securities Act. None of the Securities have been registered under the Securities Act or qualified under any applicable state securities laws, and may not be offered or sold in the United States absent such registration and qualification or applicable exemptions therefrom.

This Current Report on Form 8-K is neither an offer to sell nor the solicitation of an offer to buy any securities.

Item 3.03.

Material Modification to Rights of Security Holders.

The Company’s designation and issuance of Series A Preferred Stock as described under Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 30, 2017, Janet Nguyen Gutkin ceased her consulting relationship with the Company and resigned as the Company’s Chief Accounting Officer. The Company’s President and Chief Executive Officer, Thomas W. Lanni, will fulfill the obligations of Chief Accounting Officer until the Company formally appoints a replacement to such office.

Item 5.03.

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Pursuant to the Company’s articles of incorporation, the Company has authorized 10,000,000 shares of Preferred Stock, which are issuable from time to time in one or more series as the Company’s Board of Directors may determine.

On February 7, 2003, the Company filed a Certificate of Determination of Series A Participating Preferred Stock with the California Secretary of State (the “2003 Certificate of Determination”), pursuant to which 80,000 shares of the Company’s authorized Preferred Stock were designated as Series A Participating Preferred Stock. No shares of Series A Participating Preferred Stock were ever issued by the Company. On August 29, 2017, the Company filed an Officers’ Certificate with the California Secretary of State (the “Certificate of Revocation”) revoking the Series A Participating Preferred Stock, such that the 2003 Certificate of Determination is no longer in force and the Series A Participating Preferred Stock is no longer an authorized series of Preferred Stock of the Company.

On September 6, 2017, the Company filed an Amended and Restated Certificate of Determination of Preferences of Series A Contingent Convertible Preferred Stock with the California Secretary of State (the “2017 Certificate of Determination”), pursuant to which 7,000,000 shares of the Company’s authorized Preferred Stock were designated as Series A Contingent Convertible Preferred Stock (“Series A Preferred Stock”).

The Series A Preferred Stock accrues a cumulative, non-compounding dividend of five percent per annum. So long as the Series A Preferred Stock is outstanding, no dividends may be declared or paid on the Company’s Common Stock unless consented to in writing by the holders of a majority of the outstanding Series A Preferred Stock.

The Series A Preferred Stock is initially non-voting, except that the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock, voting as a single class, is required in order for the Company to: (a) subject to certain exceptions, issue any additional shares of capital stock (regardless of class or series), (b) increase or decrease the authorized number of shares of Series A Preferred Stock, (c) amend or modify the rights, preferences, privileges or restrictions of the Series A Preferred Stock, or (d) amend or modify the Company’s articles of incorporation in a manner that would adversely affect the rights, preferences, privileges or restrictions of the Series A Preferred Stock (including, without limitation, creating any class of security having rights senior to, or pari passu with, the Series A Preferred Stock). However, if any shareholder of the Company becomes the beneficial owner of more than 50% of the outstanding Common Stock of the Company, then each share of Series A Preferred Stock shall be entitled to voting rights equal to 1,000 shares of Common Stock on all matters submitted to the vote or approval of the holders of the Company’s Common Stock.

In the event of a liquidation, Deemed Liquidation, dissolution, or winding up of the Company (subject to the provisions of the Series A Preferred Stock), holders of the Series A Preferred Stock will be entitled to receive, in preference to any amounts payable on account of the Company’s Common Stock, an amount per share equal to the Series A Preferred Stock purchase price of $0.10 per share, together with an amount equal to all accumulated and unpaid dividends attributable to the Series A Preferred Stock. As used in the 2017 Certificate of Determination, the term “Deemed Liquidation” includes, among other things, (a) the sale or transfer of 40% or more of the Company’s assets over any rolling 12-month period, (b) a merger, stock purchase or other business combination where a person or group acquires more than 50% of the outstanding shares of the Company’s Common Stock, or (c) any person or group becoming the beneficial owner of 50% of more of the Company’s Common Stock.

Immediately upon the occurrence of a Triggering Event, each share of Series A Preferred Stock will automatically convert into one share of Common Stock (subject to adjustment for stock splits and similar transactions). As used in the 2017 Certificate of Determination, the term “Triggering Event” includes, among other things, (a) the Court of Appeals for the Federal Circuit (or other court of appeals with appropriate jurisdiction) overturns the decision of the Patent Trial Appeal Board (“PTAB”) issued on February 22, 2017 (the “PTAB Decision”) regarding obviousness of the Company’s U.S. Patent No. 8,492,933 B2 (the “933 Patent”), (b) the Court of Appeals for the Federal Circuit (or other court of appeals with appropriate jurisdiction) requires that the PTAB review and reconsider the PTAB Decision, (c) the United States Supreme Court issuing a decision in the case of Oil States Energy Services, LLC vs. Greene’s Energy Group, LLC (or in any subsequent case brought before the United States Supreme Court) that declares the Inter Partes Review process unconstitutional or otherwise reaching a decision resulting in the vacating or invalidity of the PTAB Decision, provided that such United States Supreme Court decision is made prior to a Court of Appeals action described in foregoing subparts (a) or (b), or (d) the Company receives cumulative incremental additional funds from any source, other than borrowings or the issuance of securities, after September 6, 2017, in an amount at or in excess of $700,000.

The Certificate of Revocation and the 2017 Certificate of Determination are attached as Exhibits 3.1 and 3.2, respectively, to this Current Report on Form 8-K. The foregoing summary of the Certificate of Revocation, the 2017 Certificate of Determination and the rights, preferences, privileges and restrictions of the Series A Preferred Stock is not intended to be complete and is qualified in its entirety by reference to the complete text of the Certificate of Revocation and the 2017 Certificate of Determination.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description

3.1	Officers’ Certificate – Revocation of Series A Participating Preferred Stock
3.2	Amended and Restated Certificate of Determination of Preferences of Series A Contingent Convertible Preferred Stock
10.1	Subscription Agreement for Series A Contingent Convertible Preferred Stock, dated September 11, 2017, between Comarco, Inc. and Broadwood Partners, L.P.
10.2	Subscription Agreement for Series A Contingent Convertible Preferred Stock, dated September 11, 2017, between Comarco, Inc. and Elkhorn Partners Limited Partnership
10.3	Form of Warrant to Purchase Common Stock

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		COMARCO, INC.

Date: September 12, 2017	By:	/s/ THOMAS W. LANNI
		Thomas W. Lanni President and Chief Executive Officer

EX-3.1 2 ex3-1.htm EXHIBIT 3.1 ex3-1.htm

Exhibit 3.1

OFFICERS’ CERTIFICATE

COMARCO, INC.

REVOCATION OF SERIES A PARTICIPATING PREFERRED STOCK

Pursuant to Section 401(b) of the California General Corporation Law, Thomas W. Lanni hereby certifies that:

1. He is the Chief Executive Officer and the Secretary of Comarco, Inc., a California corporation (the “Corporation”).

2. None of the shares of the Series A Participating Preferred Stock of the Corporation has been issued.

3. The Board of Directors of Corporation duly adopted the following resolutions:

NOW, THEREFORE, BE IT RESOLVED, that (i) all rights, preferences, privileges and restrictions set forth in the Certificate of Determination of Series A Participating Preferred Stock of the Corporation filed with the Secretary of State of the State of California on February 7, 2003 (the “Certificate of Determination”), be, and hereby are, revoked, (ii) the Certificate of Determination shall no longer be in force and (iii) the Series A Participating Preferred Stock of the Corporation shall no longer be an authorized series of capital stock the Corporation;

RESOLVED FURTHER, that the officers of the Corporation be, and each of them hereby is, authorized and directed, in the name and on behalf of the Corporation, under its corporate seal or otherwise, to take all such further actions and to execute, deliver and accept delivery of any and all such further agreements, documents, certificates and instruments, and to pay all such expenses, as they or any of them may deem necessary or advisable to carry out the purposes of any and all of the foregoing resolutions and the transactions contemplated thereby; and that the taking of such action, the execution and delivery of such agreement, document, certificate or instrument, and the payment of each such expense shall be conclusive evidence of its necessity or advisability, and that any action previously taken by any officer or director of the Corporation in this respect hereby is approved, ratified, adopted and confirmed in all respects; and

RESOLVED FURTHER, that the President and the Secretary of the Corporation be, and hereby are, authorized and directed to execute an officers’ certificate setting forth the foregoing resolutions pursuant to, and in accordance with, Section 401(b) of the California General Corporation Law.

[Signature Page Follows]

The undersigned further declare under penalty of perjury under the laws of the State of California that the matters set forth in this Officers’ Certificate are true and correct to the knowledge of the undersigned.

Date: August 29, 2017

	/s/ Thomas W. Lanni
	Thomas W. Lanni Chief Executive Officer and Secretary

[Signature Page to Officers’ Certificate]

EX-3.2 3 ex3-2.htm EXHIBIT 3.2 ex3-2.htm

Exhibit 3.2

AMENDED AND RESTATED
CERTIFICATE OF DETERMINATION
OF PREFERENCES OF
SERIES A CONTINGENT CONVERTIBLE PREFERRED STOCK

Comarco, Inc.,
a California corporation

The undersigned, Thomas W. Lanni, does hereby certify:

1. He is the duly elected and acting Chief Executive Officer and Secretary of Comarco, Inc., a California corporation.

2. None of the shares of Series A Contingent Convertible Preferred Stock of the corporation have been issued.

3. Pursuant to authority given by the corporation’s articles of incorporation, the board of directors of the corporation has duly adopted the following resolutions:

WHEREAS, the articles of incorporation provide for a class of authorized shares known as Preferred Stock, comprising 10,000,000 shares issuable from time to time in one or more series as the board of directors may determine;

WHEREAS, the articles of incorporation authorize the board of directors to determine and alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, and to fix the number of shares of any series of Preferred Stock and the designation of any such series of Preferred Stock;

WHEREAS, pursuant to the authority of the articles of incorporation, the corporation filed a Certificate of Determination of Preferences of Series A Contingent Convertible Preferred Stock on August 29, 2017, providing for the issue of a series of Preferred Stock of the corporation consisting of up to Seven Million (7,000,000) shares designated as “Series A Contingent Convertible Preferred Stock” with no par value per share;

WHEREAS, none of the shares of Series A Contingent Convertible Preferred Stock of the corporation have been issued; and

WHEREAS, it is the desire of the board of directors, pursuant to its authority aforesaid, to amend and restate the rights, preferences, privileges, restrictions and other matters relating to the Series A Contingent Convertible Preferred Stock.

NOW, THEREFORE, BE IT RESOLVED, that the board of directors does hereby amend and restate the rights, preferences, restrictions and other matters relating to the Series A Contingent Convertible Preferred Stock as follows:

Section 1. Definitions. For purposes of this Amended and Restated Certificate of Determination (“Certificate of Determination”), the following definitions shall apply:

(a) “Conversion Price” initially equals $0.10, subject to adjustment as provided in Section 7.

(b) “Conversion Rate” equals the Series A Issue Price divided by the Conversion Price in effect at the time of conversion pursuant to Section 7.

(i) The corporation effects any merger or consolidation of the corporation with or into another entity where the other entity acquires more than 50% of the outstanding shares of the corporation in one or a series of related transactions;

(ii) The corporation effects any sale or transfer of 40% in the aggregate, in one or a series of related transactions, of the properties and assets of the corporation to another person(s) in any rolling twelve (12) month period;

(iii) any purchase, exchange or tender offer (whether by the corporation or another entity) is completed pursuant to which holders of an aggregate of 50% or more of the outstanding shares of Common Stock of the corporation are permitted to tender or exchange their shares for other securities (whether of the corporation or another person), cash or property;

(iv) The corporation consummates a stock purchase or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons whereby such other persons acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons making or party to, or associated or affiliated with, the other persons making or party to, such stock purchase or other business combination);

(v) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, in one or a series of related transactions, of 50% or more of the aggregate Common Stock of the corporation; or

(vi) The corporation effects any reclassification of the Common Stock or any share exchange pursuant to which more than 50% of the Common Stock of the corporation is effectively converted into or exchanged for other securities (whether of the corporation or another person), cash or property.

(d) “Series A Issue Price” means $0.10 per share of Series A Preferred Stock.

(e) “Triggering Deemed Liquidation” means a Deemed Liquidation where payment per share of Series A Preferred Stock on an as-if-converted-to-Common-Stock basis (pursuant to the conversion mechanics of Section 7) would exceed the Preference Amount (calculated as of the date of the Deemed Liquidation). If any portion of the consideration payable in connection with a Deemed Liquidation is placed into escrow and/or is payable subject to contingencies, for purposes of determining whether a Triggering Deemed Liquidation has occurred, such amounts shall be deemed paid only upon the amounts placed in escrow being released or such contingent consideration actually being paid.

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(f) “Triggering Event” means any one or more of the following:

(i) the Court of Appeals for the Federal Circuit (or other court of appeals with appropriate jurisdiction) overturns the decision of the Patent Trial Appeal Board (“PTAB”) issued on February 22, 2017 (the “PTAB Decision”) regarding obviousness of the corporation’s U.S. Patent No. 8,492,933 B2 (the “933 Patent”);

(ii) the Court of Appeals for the Federal Circuit (or other court of appeals with appropriate jurisdiction) requests and requires that the PTAB review and reconsider the PTAB Decision;

(iii) the United States Supreme Court decision in the case of Oil States Energy Services, LLC vs. Greene’s Energy Group, LLC (or in any subsequent case brought before the United States Supreme Court) declares the Inter Partes Review process unconstitutional or otherwise reaches a decision resulting in the vacating or invalidity of the PTAB Decision, provided that such United States Supreme Court decision is made prior to a Court of Appeals action described in foregoing subparts (i) or (ii);

(iv) the corporation receives cumulative incremental additional funds from any source, other than borrowings or the issuance of securities, after the date of this Certificate of Determination in an amount at or in excess of $700,000; or

(v) a Triggering Deemed Liquidation.

Section 2. Designation and Amount. The shares of such series shall be designated as “Series A Contingent Convertible Preferred Stock” (referred to herein as the “Series A Preferred Stock”) and the number of shares constituting such series shall be seven million (7,000,000).

Section 3. Dividends and Distributions. The holders of outstanding Series A Preferred Stock shall be entitled to receive out of any funds legally available therefore, dividends in cash at the rate of five percent (5.0%) per annum of the Series A Issue Price. Such dividends shall accrue on each share of Series A Preferred Stock from the date of its original issuance and shall accrue from day to day, whether or not earned, and shall be payable only when, as, and if declared by the board of directors. Such dividends shall be cumulative and are prior and in preference to any declaration or payment on the Common Stock. At any time when shares of Series A Preferred Stock are outstanding, no dividends or other distributions shall be paid or declared with respect to the corporation’s Common Stock unless either (a) consented to in writing by the holders of a majority of the shares of Series A Preferred Stock then outstanding, or (b) the holders of outstanding shares of Series A Preferred Stock have previously, or concurrently therewith, received payment in accordance with Section 6 or such shares of Series A Preferred Stock have previously, or concurrently therewith, been converted into Common Stock.

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Section 4. Voting Rights. No holder of Series A Preferred Stock shall have any voting rights, except as specifically provided in this Section 4, Section 5, or as required by the California General Corporation Law. Without the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock voting as a single class, the corporation shall not:

(a) issue any additional shares of capital stock (whether Common Stock or Preferred Stock), other than (i) up to seven million (7,000,000) shares of Series A Preferred Stock authorized pursuant to this Certificate of Determination, (ii) shares of Common Stock issuable under warrants to purchase Common Stock so long as such warrants were outstanding as of the date of this Certificate of Determination, (iii) shares of Common Stock issuable under warrants to purchase Common Stock issuable to holders of Series A Preferred Stock pursuant to the subscription agreements to purchase Series A Preferred Stock, (iv) shares of Common Stock issuable under stock options or other equity awards granted under a stock incentive plan approved by the board of directors (whether such awards are granted prior to, on or after the date of this Certificate of Determination), provided that such stock options or other equity awards are less than or equal annually to the annual average of those granted within the last three years, or (v) pursuant to subpart (iv) or (v) of the definition of Triggering Event;

(b) increase or decrease the aggregate number of authorized shares of Series A Preferred Stock, other than an increase or decrease incident to a stock split, reverse stock split or similar subdivision or combination of such shares of Series A Preferred Stock;

(d) amend, modify or change the articles of incorporation of the corporation in a manner that would adversely affect the rights, preferences, privileges or restrictions of the Series A Preferred Stock (including, without limitation, creating any class of security having rights senior to, or pari passu with, the Series A Preferred Stock).

Section 5. Super Voting Rights. If any shareholder of the corporation becomes the beneficial owner of more than 50% of the outstanding Common Stock, then each share of the outstanding Series A Preferred Stock shall be assigned voting rights equal to 1,000 shares of Common Stock.

Section 6. Liquidation Rights.

(a) Liquidation Preference. In the event of any liquidation, Deemed Liquidation, dissolution or winding up of the corporation, the holders of the Series A Preferred Stock will be entitled to receive an amount per share equal to the Series A Issue Price together with an amount equal to all accumulated and unpaid dividends thereon to and including the date fixed for distribution or payment (the “Preference Amount”). If the corporation has insufficient assets to permit payment of the Preference Amount in full to all holders of Series A Preferred Stock, then the assets of the corporation will be distributed ratably to the holders of the Series A Preferred Stock in proportion to the Preference Amount each such holder would otherwise be entitled to receive. After the full Preference Amount on all outstanding shares of Series A Preferred Stock, including all accumulated and unpaid dividends, has been paid, any remaining funds and assets of the corporation legally available for distribution to shareholders will be distributed pro rata among the holders of the Common Stock.

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(b) Valuation of Non-Cash Consideration. If any assets of the corporation distributed to shareholders in connection with any liquidation, dissolution, or winding up of the corporation are other than cash, then the value of such assets shall be their fair market value as determined in good faith by the board of directors and after the affirmative consent of the holders of a majority of the outstanding Series A Preferred Stock, except that any publicly-traded securities to be distributed to shareholders in a liquidation, dissolution, or winding up of the corporation shall be valued as follows:

(i) if the securities are then traded on a national securities exchange, then the value of the securities shall be deemed to be the average of the closing prices of the securities on such exchange or system over the ten (10) trading day period ending five (5) trading days prior to the date of distribution to the corporation’s shareholders; or

(ii) if the securities are actively traded over-the-counter, then the value of the securities shall be deemed to be the average of the closing bid prices of the securities over the ten (10) trading day period ending five (5) trading days prior to the date of distribution to the corporation’s shareholders.

In the event of a merger or other acquisition of the corporation by another entity, the distribution date shall be deemed to be the date such transaction closes.

For the purposes of this Section 6(c), “trading day” shall mean any day which the exchange or system on which the securities to be distributed are traded is open and “closing prices” or “closing bid prices” shall be deemed to be: (i) for securities traded primarily on a national securities exchange, the last reported trade price or sale price, as the case may be, at 4:00 p.m., New York time, on that day and (ii) for securities listed or traded on other exchanges, markets and systems, the market price as of the end of the regular hours trading period that is generally accepted as such for such exchange, market or system. If, after the date hereof, the benchmark times generally accepted in the securities industry for determining the market price of a stock as of a given trading day shall change from those set forth above, the fair market value shall be determined as of such other generally accepted benchmark times.

(c) No Necessity to Convert. For purposes of determining the proceeds each holder of Series A Preferred Stock is entitled to receive pursuant to this Section 6, each share of Series A Preferred Stock shall be deemed to have been converted (regardless of whether such shares have actually been converted) in accordance with Section 7 into shares of Common Stock immediately prior to the liquidation, dissolution or winding up of the corporation if, as a result of an actual conversion, such holder would receive, in the aggregate, proceeds greater than the amount that would be distributed to such holder if such Series A Preferred Stock were not converted into shares of Common Stock.

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Section 7. Conversion.

(a) Automatic Conversion upon Triggering Event. Immediately upon the occurrence of a Triggering Event, each share of Series A Preferred Stock shall automatically convert at the then applicable Conversion Rate into shares of Common Stock and all accumulated and unpaid dividends on the Series A Preferred Stock shall be paid as soon as practicable and in any event within 30 days after the Triggering Event. The corporation shall give the holders of Series A Preferred Stock written notice within four business days after the occurrence of a Triggering Event.

(b) Mechanics of Conversion. Promptly upon receiving notice from the corporation of a Triggering Event, each holder of Series A Preferred Stock shall surrender the certificate or certificates representing such holders shares of Series A Preferred Stock, duly endorsed, at the office of the corporation. The corporation shall, as soon as practicable thereafter and in any event within 30 days thereafter, issue and deliver to such holder of Series A Preferred Stock a certificate or certificates for the number of shares of Common Stock to which such holder is entitled pursuant to Section 7(a). Such conversion shall be deemed to have been made immediately prior to the close of business on the date of the Triggering Event, and the holder entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. Notwithstanding that the certificate or certificates evidencing such shares of Series A Preferred Stock have not been surrendered to the corporation, all rights with respect to such shares of Series A Preferred Stock shall forthwith cease and terminate, with the sole rights of the holder thereof being the right to receive shares of Common Stock resulting from the conversion thereof.

(c) No Fractional Shares. The corporation shall not be required to issue certificates representing fractional shares of Common Stock resulting from a conversion of a holder’s Series A Preferred Stock, but will make a payment in cash based on the Conversion Price for any fractional share.

(d) Adjustments for Subdivisions or Combinations of Common Stock. If after the date of this Certificate of Determination the outstanding shares of Common Stock shall be subdivided by stock split or otherwise into a greater number of shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. If after the date of this Certificate of Determination the outstanding shares of Common Stock shall be combined (by reverse stock split, reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.

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(e) Reservation of Stock Issuable Upon Conversion. The corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of the Series A Preferred Stock, the corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

Section 8. Mandatory Redemption Provision. If any shares of the Series A Preferred Stock remain outstanding three years from the date of issuance, then on the date of that third anniversary, the corporation shall repurchase any outstanding shares of the Series A Preferred Stock at the Conversion Price and pay any accrued but unpaid Series A Preferred Stock dividends within five days of the repurchase date.

RESOLVED FURTHER, that the Chief Executive Officer, the President or any Vice President and the Secretary or any Assistant Secretary, of the corporation be, and they hereby are, authorized and directed to execute, acknowledge, file and record a certificate of determination of preferences in accordance with the foregoing resolution and the provisions of California law.

4. The authorized number of shares of Preferred Stock of the corporation is 10,000,000, and the number of shares constituting Series A Contingent Convertible Preferred Stock, none of which has been issued, is 7,000,000.

The undersigned, Thomas W. Lanni, the Chief Executive Officer and Secretary of Comarco, Inc., further declares under penalty of perjury under the laws of the State of California that the matters set forth in this Certificate of Determination are true and correct and of his own knowledge.

Executed at Laguna Niguel, California on September 6, 2017.

	/s/ Thomas W. Lanni
	Thomas W. Lanni Chief Executive Officer and Secretary

-7-

EX-10.1 4 ex10-1.htm EXHIBIT 10.1 ex10-1.htm

Exhibit 10.1

SUBSCRIPTION AGREEMENT
FOR
SERIES A CONTINGENT CONVERTIBLE PREFERRED STOCK

This SUBSCRIPTION AGREEMENT FOR SERIES A CONTINGENT CONVERTIBLE PREFERRED STOCK, dated as of September 11, 2017 (this “Agreement”), is entered into by and between Comarco, Inc., a California corporation (the “Company”), and Broadwood Partners, L.P. (the “Subscriber”). The parties to this Agreement, intending to be legally bound hereby, agree as follows:

1. Subscription. Subscriber hereby irrevocably subscribes for and agrees to purchase 5,000,000 shares of the Company’s Series A Contingent Convertible Preferred Stock (the “Series A Preferred Stock”), at a purchase price of $0.10 per share. The Series A Preferred Stock have the rights, preferences, privileges and restrictions provided for in the Company’s Amended and Restated Certificate of Determination of Preferences of Series A Contingent Convertible Preferred Stock (the “Certificate of Determination”). In addition, pursuant to and in accordance with the terms of Section 2 below, Subscriber is entitled to the issuance by the Company of a Warrant (as defined below) to purchase shares of the Company’s common stock. The shares of Series A Preferred Stock subscribed for by Subscriber, the shares of common stock of the Company issuable upon conversion of such Series A Preferred Stock, the Warrant and the common stock of the Company issuable upon exercise of the Warrant are collectively referred to herein as the “Securities”.

2. Warrant. Upon the earlier of (a) a Triggering Event (as defined in the Certificate of Determination) or (b) immediately prior to the liquidation, dissolution or winding up of the Company, the Company shall, for no additional consideration, issue to each holder of Series A Preferred Stock a warrant to purchase shares of the Company’s common stock in the form attached to this Agreement as Exhibit A (each, a “Warrant”), with such Warrant exercisable for such number of shares of common stock (rounded up to the nearest whole share) as is calculated as (x) the number of shares of Series A Preferred Stock held by the holder thereof, multiplied by 3.6053.

3. Representations and Warranties of Subscriber. By executing this Agreement, Subscriber represents and warrants to the Company as follows:

(a) Requisite Power and Authority. Subscriber has all necessary legal capacity under all applicable provisions of law to execute and deliver this Agreement. Upon its execution and delivery, this Agreement will be valid and binding obligations of Subscriber, enforceable in accordance with its terms.

(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or registered or qualified under the securities laws of any state in that the Securities are being offered and sold to Subscriber pursuant to an exemption from such requirements based, in part, upon Subscriber’s representations contained in this Agreement.

(c) Subscriber Bears Economic Risk. Subscriber has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Subscriber must bear the economic risk of this investment indefinitely unless the applicable Securities are registered pursuant to the Securities Act and applicable state securities laws or an exemption from registration is available. Subscriber acknowledges that it is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber understands that the Company has no present intention of registering the Securities under the Securities Act or any state securities laws. Subscriber also understands that there is no assurance that any exemption from registration under the Securities Act or any state securities laws will be available and that, even if available, such exemption may not allow Subscriber to transfer all or any portion of the Securities under the circumstances, in the amounts or at the times Subscriber might propose. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of the Securities.

(d) Acquisition for Own Account. Subscriber is acquiring the Series A Preferred Stock for Subscriber’s own account for investment only and not with a view towards their distribution.

(e) Subscriber Can Protect Its Interest. Subscriber represents that by reason of his business or financial experience, Subscriber has the capacity to protect his own interests in connection with the transactions contemplated in this Agreement and other agreements required hereunder.

(f) Accredited Investor. Subscriber represents that it is an “accredited investor” within the meaning of Regulation D under the Securities Act.

(g) Company Information. Subscriber has had an opportunity to discuss the Company’s business, management and financial affairs with officers and management of the Company and has had the opportunity to review the Company’s operations. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representatives, by or on behalf of the Company, its affiliates or any other person with respect to the business or prospects of the Company or its financial condition.

(h) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page to this Agreement.

(i) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement or related documents based on any arrangement or agreement binding upon Subscriber.

(j) Tax Consequences. Subscriber acknowledges that the Company is subject to complex federal, state, local and foreign tax regimes. Subscriber hereby represents that he has reviewed with his own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated herein and of being a holder of the Securities. Subscriber is relying solely on such advisors and not on any statements or representations of the Company or any of its affiliates or agents. Subscriber understands that it (and not the Company) shall be responsible for Subscriber’s own tax liability that may arise as a result of an investment in the Securities or the transactions contemplated herein.

4. Risk Factors. AN INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK. SUBSCRIBER HAS CAREFULLY REVIEWED THE RISK FACTORS DISCLOSED IN THE COMPANY’S FILING WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION PRIOR TO MAKING A DECISION TO INVEST IN THE SECURITIES.

5. Indemnification. Subscriber acknowledges and understands the meaning of the representations and warranties made by it in this Agreement and hereby agrees to indemnify and hold harmless the Company and its affiliates and agents from and against any and all loss, costs, expenses, damages and liabilities (including, without limitation, court costs and reasonable attorneys’ fees) arising out of or due to a breach by Subscriber of any such representations. All representations shall survive the delivery of this Agreement and the purchase by Subscriber of the Securities.

6. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Subscriber.

7. Participation Rights. The Subscriber shall have the right to participate in any financing at a level equal to the percentage ownership of the Company’s common stock held by the Subscriber. For the purposes of this section, the percentage of the Company’s common stock held by the Subscriber shall include common stock held plus the shares of common stock issuable pursuant to each share of Series A Preferred Stock held by the Subscriber.

8. Legal Fees. The Company agrees to pay reasonable legal fees incurred by the Subscriber in conjunction with this Agreement, up to a limit of $10,000.

9. Applicable Law. The validity, construction, interpretation and effect of this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof.

EACH OF SUBSCRIBER AND THE COMPANY CONSENTS TO THE EXCLUSIVE VENUE AND JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.

10. Notices. Notice, requests, demands and other communications relating to this Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; (b) mailed by registered or certified mail, postage prepaid, return receipt requested, on the fifth business day after the posting thereof; (c) delivered by overnight courier, on the first business day following deposit with the overnight courier, or (d) delivered by electronic mail, on the date of such delivery during business hours on a business day (or otherwise on the opening of business on the first business day thereafter) to the address of the respective parties as follows:

If to the Company, to:

Comarco, Inc.

28202 Cabot Road, Suite 300

Laguna Niguel, California 92677

Attn: President

E-mail: tlanni@comarco.com

If to Subscriber, to Subscriber’s address as shown on the signature page hereto.

or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice.

11. Counterparts. This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which will be deemed an original, but all of which together will constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.

	SUBSCRIBER:

	BROADWOOD PARTNERS, L.P.


	By:	/s/ Neal C. Bradsher
	Name: Neal C. Bradsher Title: President of Broadwood Capital, Inc. (General Partner of Broadwood Partners, L.P.)

	Address: c/o Broadwood Capital, Inc. 724 Fifth Avenue 9^th Floor New York, NY 10019 Attn: Neal C. Bradsher E-mail: **@********.com

[Signature Page to Subscription Agreement]

	COMPANY:

	COMARCO, INC.


	By:	/s/ Thomas W. Lanni
		Name: Thomas W. Lanni Title: President

[Signature Page to Subscription Agreement]

EXHIBIT A

Form of Warrant

[attached hereto]

EX-10.2 5 ex10-2.htm EXHIBIT 10.2 ex10-2.htm

Exhibit 10.2

SUBSCRIPTION AGREEMENT
FOR
SERIES A CONTINGENT CONVERTIBLE PREFERRED STOCK

This SUBSCRIPTION AGREEMENT FOR SERIES A CONTINGENT CONVERTIBLE PREFERRED STOCK, dated as of September 11, 2017 (this “Agreement”), is entered into by and between Comarco, Inc., a California corporation (the “Company”), and Elkhorn Partners Limited Partnership (the “Subscriber”). The parties to this Agreement, intending to be legally bound hereby, agree as follows:

1. Subscription. Subscriber hereby irrevocably subscribes for and agrees to purchase 2,000,000 shares of the Company’s Series A Contingent Convertible Preferred Stock (the “Series A Preferred Stock”), at a purchase price of $0.10 per share. The Series A Preferred Stock have the rights, preferences, privileges and restrictions provided for in the Company’s Amended and Restated Certificate of Determination of Preferences of Series A Contingent Convertible Preferred Stock (the “Certificate of Determination”). In addition, pursuant to and in accordance with the terms of Section 2 below, Subscriber is entitled to the issuance by the Company of a Warrant (as defined below) to purchase shares of the Company’s common stock. The shares of Series A Preferred Stock subscribed for by Subscriber, the shares of common stock of the Company issuable upon conversion of such Series A Preferred Stock, the Warrant and the common stock of the Company issuable upon exercise of the Warrant are collectively referred to herein as the “Securities”. Notwithstanding the foregoing, Subscriber’s subscription to purchase Series A Preferred Stock pursuant to this Agreement is subject to and contingent upon Broadwood Partners, L.P. purchasing 5,000,000 shares of Series A Preferred Stock at a purchase price of $0.10 per share.

3. Representations and Warranties of Subscriber. By executing this Agreement, Subscriber represents and warrants to the Company as follows:

(d) Acquisition for Own Account. Subscriber is acquiring the Series A Preferred Stock for Subscriber’s own account for investment only and not with a view towards their distribution.

(f) Accredited Investor. Subscriber represents that it is an “accredited investor” within the meaning of Regulation D under the Securities Act.

(h) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page to this Agreement.

6. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Subscriber.

8. Legal Fees. The Company agrees to pay reasonable legal fees incurred by the Subscriber in conjunction with this Agreement, up to a limit of $2,000.

If to the Company, to:

Comarco, Inc.

28202 Cabot Road, Suite 300

Laguna Niguel, California 92677

Attn: President

E-mail: tlanni@comarco.com

If to Subscriber, to Subscriber’s address as shown on the signature page hereto.

or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.

	SUBSCRIBER: ELKHORN PARTNERS LIMITED PARTNERSHIP


	By: /s/ Alan S. Parsow Name: Alan S. Parsow Title: Sole Managing Partner

	Address: 2222 Skyline Drive Elkhorn, NE 68022-1745 Attn: Alan S. Parsow E-mail: *@************.com

[Signature Page to Subscription Agreement]

	COMPANY: COMARCO, INC.


	By: /s/ Thomas W. Lanni Name: Thomas W. Lanni Title: President

[Signature Page to Subscription Agreement]

EXHIBIT A

Form of Warrant

[attached hereto]

EX-10.3 6 ex10-3.htm EXHIBIT 10.3 ex10-3.htm

Exhibit 10.3

NEITHER THE ISSUANCE AND SALE OF THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Right to Purchase [●] shares of Common Stock of Comarco, Inc. (subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

No. [●]

Issue Date: [●], 20[●]

COMARCO, Inc., a corporation incorporated under the laws of the State of California (together with any corporation which shall succeed or assume its obligations, the “Company”), hereby certifies that, for value received, [●], with an address at [●], or its successors, representatives and permitted assigns (collectively, “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time after the Issue Date until 5:00 p.m. Eastern Time on [●], 20[●]¹ (the “Expiration Date”), up to [●] fully paid and nonassessable shares (the “Shares”) of Common Stock (as defined herein) of the Company at a per share exercise price of Five Cents (US$0.05). The afore described exercise price per share, as adjusted from time to time as herein provided, is referred to herein as the “Exercise Price.” The number and character of Shares of Common Stock and the Exercise Price are subject to adjustment as provided herein. The Company may reduce the Exercise Price of this Warrant temporarily or permanently.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) “Common Stock” means (i) the Company’s common stock, $0.001 par value per share, and (ii) the shares of common stock issuable upon conversion or exchange of any Other Securities pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(b) “Other Securities” means any capital stock (other than Common Stock) and other securities of the Company or any other Person which Holder 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 the Common Stock of the Company, or which at any time shall be issuable or shall have been issued in exchange for, or in replacement of, Shares of Common Stock of the Company or Other Securities pursuant to Section 4 hereof or otherwise.

1	Expiration Date will be the 8^th anniversary of the Issue Date.

1. Exercise of Warrant.

1.1. Number of Shares Issuable Upon Exercise. From and after the Issue Date and through and including the Expiration Date, Holder shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject to adjustment pursuant to Section 4.

1.2. Full Exercise. This Warrant may be exercised in full by Holder by delivering to the Company an original or facsimile copy of the form of exercise notice attached as Exhibit A hereto (the “Exercise Form”) duly executed by Holder and payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of Shares of Common Stock for which this Warrant is then exercisable by the Exercise Price then in effect. The original Warrant is not required to be surrendered to the Company until it has been fully exercised.

1.3. Partial Exercise. This Warrant may be exercised in part (but not for a fractional share) by Holder by delivering to the Company an Exercise Form in the manner and at the place provided in Section 1.2 hereof, except that the amount payable by Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole Shares of Common Stock designated by Holder in the Exercise Form by (b) the Exercise Price then in effect. Upon the surrender of the original Warrant by Holder for any such partial exercise, the Company, at its sole expense, shall forthwith issue and deliver to, or upon the order of, Holder a new Warrant of like tenor, in the name of Holder or as Holder (upon payment by Holder of any applicable transfer taxes) may request in compliance with applicable securities laws, the whole number of Shares of Common Stock for which such Warrant may still be exercised.

1.4. Fair Market Value. Fair Market Value of a Share of Common Stock as of the date of an exercise pursuant to Section 1.2 or 1.3 above (the “Determination Date”) shall mean:

(a) If the Company’s Common Stock is traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market, NASDAQ Capital Market, the New York Stock Exchange or the NYSE Alternext, then the last reported sale price (as reported on Bloomberg L.P.) of Common Stock on the trading day immediately preceding the Determination Date;

(b) If the Company’s Common Stock is not traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market, NASDAQ Capital Market, the New York Stock Exchange or the NYSE Alternext, but is traded on the Over-the-Counter Bulletin Board or in the over-the-counter market or Pink Sheets, then the last reported sale price (as reported on Bloomberg L.P.) of Common Stock on the trading day immediately preceding the Determination Date;

(c) Except as provided in clause (d) below and Section 3.1 hereof, if the Company’s Common Stock is not publicly traded, then the Fair Market Value shall be as Holder and the Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing 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; or

(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 certificate of incorporation, then the Fair Market Value is equal to all such amounts to be payable per share to holders of the Company’s Common Stock pursuant to the certificate of incorporation 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 certificate of incorporation, assuming for the purposes of this clause (d) that all of the Shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.

1.5. Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of Holder, acknowledge in writing its continuing obligation to afford to Holder any rights to which Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to Holder any such rights.

1.6. Delivery of Stock Certificates, etc. on Exercise; Buy-In. (a) The Company agrees that, provided the full exercise price listed in the Exercise Form is received in accordance with Section 1.2 hereof, the Shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to Holder as the record owner of such Shares as of the close of business on the date on which the Exercise Form is delivered and payment made for such Shares. 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 (“Warrant Share Delivery Date”), the Company, at its sole expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to Holder, or as Holder (upon payment by 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 non-assessable Shares of Common Stock or Other Securities to which Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which Holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full Share of Common Stock, together with any other capital stock or other securities or property (including cash, where applicable) to which Holder is entitled upon such exercise pursuant to Section 1 hereof or otherwise. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to Holder. As compensation to Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to Holder for any late issuance of Warrant Shares after exercise of this Warrant the proportionate amount of $25 per business day after the Warrant Share Delivery Date for each $10,000 amount of the Exercise Price for which this Warrant is exercised which are not timely delivered. The Company shall pay any payments incurred under this Section in immediately available funds upon demand. Notwithstanding the foregoing, and in addition to any other remedies which may be available to Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, Holder may, in its sole and absolute discretion, revoke all or part of Holder’s Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date of notice of revocation or rescission is delivered to the Company.

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

1.7. Automatic Exercise. In the event this Warrant is exercisable pursuant to the provisions of Section 2 hereof on a cashless basis as of the close of the last trading day on or before the Expiration Date, then this Warrant, to the extent not previously unexercised and subject to the limitation in Section 9 of this Warrant, shall be deemed to have been automatically exercised without the requirement of any notice or delivery of the Exercise Form, pursuant to the terms of Section 2 of this Warrant. Such Expiration Date will be deemed the exercise date for purposes of determining the Warrant Share Delivery Date and similar terms hereof.

2. Exercise.

2.1 Payment upon exercise may be made at the option of Holder in its absolute discretion either in (i) wire transfer payable to the order of the Company equal to the applicable aggregate Exercise Price, (ii) by delivery of Common Stock issuable upon exercise of the Warrants in accordance with Section (b) below, or (iii) by a combination of any of the foregoing methods, for the number of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to Holder per the terms of this Warrant) and 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. Notwithstanding the immediately preceding sentence, payment upon exercise may be made in the manner described in Section 2.2 below commencing one year after the Issue Date, but only with respect to Warrant Shares not included for unrestricted public resale in an effective registration statement.

2.2 Subject to the 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, Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being cancelled) by delivery of a properly endorsed Exercise Form delivered to the Company by any means described in Section 15 hereof, in which event the Company shall issue to Holder a number of shares of Common Stock computed using the following formula:

X=Y (A-B)

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

	Y=	the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation)

Fair Market Value

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

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction in the manner described above shall be deemed to have been acquired by Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued.

3. Adjustment for Reorganization, Consolidation, Merger, etc.

3.1. Fundamental Transaction. If, at any time while this Warrant is outstanding, a Fundamental Transaction (as defined herein) occurs, then, upon any subsequent exercise of this Warrant, Holder shall have the option to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of Holder in its sole and absolute discretion, (a) upon exercise of this Warrant, the number of Shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by Holder of the number of Shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in (1) a transaction where the consideration paid to holders of the Common Stock consists solely of cash, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act or (3) a transaction involving a Person not traded on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, cash equal to the Black-Scholes Value. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to Holder a new warrant consistent with the foregoing provisions and evidencing Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3.1 and ensuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. “Black-Scholes Value” shall be determined in accordance with the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of Common Stock equal to the volume weighted average price (as determined by Bloomberg L.P.) (“VWAP”) of the Common Stock for the trading day immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of such request and (iii) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg L.P. determined as of the trading day immediately following the public announcement of the applicable Fundamental Transaction.

(a) A Fundamental Transaction is defined as the occurrence of any of the following (each, a “Fundamental Transaction”):

(i) The Company effects any merger or consolidation of the Company with or into another entity where the other entity acquires more than 50% of the outstanding shares in one or a series of related transactions;

(ii) The Company effects any sale or transfer of 40% in the aggregate, in one or a series of related transactions, of the properties and assets of the Company to another Person(s) in any rolling twelve (12) month period;

(iii) any purchase, exchange or tender offer (whether by the Company or another entity) is completed pursuant to which holders of an aggregate of 50% or more of the outstanding Shares of Common Stock of the Company are permitted to tender or exchange their Shares for other securities (whether of the Company or another Person), cash or property;

(iv) The Company consummates a stock purchase or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons whereby such other persons acquire more than the 50% of the outstanding Shares of Common Stock (not including any Shares of Common Stock held by such other persons making or party to, or associated or affiliated with, the other persons making or party to, such stock purchase or other business combination);

(vi) The Company effects any reclassification of the Common Stock or any share exchange pursuant to which more than 50% of the Common Stock of the Company is effectively converted into or exchanged for other securities (whether of the Company or another Person), cash or property. The foregoing provision shall similarly apply to successive Fundamental Transactions of a similar nature by any such successor or purchaser.

3.2 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 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 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 hereof.

4. Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional Shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding Shares of Common Stock or (c) combine its outstanding Shares of the Common Stock into a smaller number of Shares of 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 in this Section 4. The number of Shares of Common Stock that Holder of this Warrant shall thereafter, on the exercise hereof, 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.

5. Certificate as to Adjustments. In each case of any adjustment or readjustment in the Shares of Common Stock (or Other Securities) issuable upon exercise of the Warrants, the Company, at its sole expense, shall 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 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 Holder and any Warrant Agent of the Company that is appointed pursuant to Section 10 hereof.

6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all Shares of Common Stock (or Other Securities) from time to time issuable upon the exercise of this Warrant. This Warrant entitles Holder, upon written request, to receive copies of all financial and other information distributed or required to be distributed to holders of the Company’s Common Stock.

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 (a “Transferor”). On the surrender for exchange of the original of this Warrant, with the Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”), and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance with applicable securities laws, the Company will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants 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. [Reserved].

10. Warrant Agent. The Company may, by written notice to Holder, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1 hereof, exchanging this Warrant pursuant to Section 7 hereof and replacing this Warrant pursuant to Section 8 hereof, 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 Warrant Agent.

11. Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered Holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

12. Registration Rights.

12.1 Upon the request of the Holder (the “Request”), the Company shall prepare and, as soon as possible after the Request, but in no event later than the date that is forty-five (45) days after the Request, file with the SEC a registration statement on Form S-1 (the “Registration Statement”) registering the Warrant Shares. The Company shall use its best efforts to have the Registration Statement declared effective by the SEC as soon as possible, but in no event later than one hundred and fifty (150) days from the date of the Request. The Company shall pay one hundred percent (100%) of all costs and expenses related to the registration of the Warrant Shares.

12.2 If a Registration Statement covering the Warrant Shares (i) is not filed with the SEC by the Company within forty-five (45) days after the date of the Request, or (ii) does not become effective within one hundred and fifty (150) days after the date of the Request and remain effective for the Registration Period (as hereinafter defined), the Company shall refund any and all costs and expenses related to the registration of the Warrant Shares previously paid by the Holder and the Company shall be liable for one hundred percent (100%) of such costs and expenses, and pay to the Holder $1,000 per day for the period during which one or more of these violations occurs. The Company agrees that it will not challenge or dispute Holder’s remedies set forth in this Section by asserting that such remedies constitute a penalty or should otherwise not be enforced as written.

12.3 The Company shall use its best efforts to keep such Registration Statement continuously effective until the earlier of (A) the date on which all of the Warrant Shares have been sold by the Holder, (B) the date on which all of the Warrant Shares become eligible for resale by the Holder without volume limitations pursuant to Rule 144 under the Exchange Act and (C) the date on which the Holder notifies the Company that keeping the Registration Statement effective is unnecessary (the “Registration Period”). The Company shall promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to such Registration Statement and any prospectus used in connection therewith, as may be necessary to keep such Registration Statement effective at all times until the expiration of the Registration Period. The Company shall pay one hundred percent (100%) of all costs and expenses related to keeping such Registration Statement effective.

12.4 The Company shall, not less than three (3) business days prior to the filing of the Registration Statement or any related prospectus or any amendment or supplement thereto, (i) furnish to the Holder or any holder under this Agreement copies of the Registration Statement or prospectus proposed to be filed, which documents will be subject to the review of the Holder or any holder under this Agreement, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation. Furthermore, the Company shall advise the Holder or any holder under this Agreement, within two (2) business days: (x) after it shall receive notice or obtain knowledge of the issuance of any stop order by the SEC delaying or suspending the effectiveness of the Registration Statement or of the initiation or threat of any proceeding for that purpose, or any other order issued by any state securities commission or other regulatory authority suspending the qualification or exemption from qualification of any of the Warrant Shares under state securities or “blue sky” laws; and it will promptly use its best efforts to prevent the issuance of any stop order or other order or to obtain its withdrawal at the earliest possible moment if such stop order or other order should be issued; and (y) when the prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective.

13. Piggy-Back Registrations. If there is not an effective Registration Statement covering all of the Warrant Shares and the Company shall determine to prepare and file with the U.S. Securities and Exchange Commission (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 stock option or other employee benefit plans, then the Company shall send to the Holder written notice of such determination and, if within fifteen (15) calendar days after receipt of such notice, the Holder shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Shares such Holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights. To the extent not all of the Warrant Shares may be included for registration in the registration statement, as a result of the Commission’s application of Rule 415 under the Securities Act, priority in such registration statement will be given to the other Common Stock included therein in preference to the Warrant Shares except no preference shall be given to shares held by affiliates. The obligations of the Company under this Section may be waived by the Holder entitled to registration rights under this Section 13. The holders whose shares are included or required to be included in such registration statement are granted the same rights, benefits, liquidated or other damages and indemnification granted to other holders of securities included in such registration statement. Notwithstanding anything to the contrary herein, the registration rights granted to the Holder shall not be applicable for such times as such Warrant Shares may be sold by the Holder thereof without restriction pursuant to Section 144(b)(1) of the Securities Act. In no event shall the liability of the Holder or permitted successor in connection with any Warrant Shares included in any such registration statement be greater in amount than the dollar amount of the net proceeds actually received by such Holder upon the sale of the Warrant Shares sold pursuant to such registration or such lesser amount applicable to other holders of securities included in such registration statement.

14. Severability. In case any one or more of the provisions hereof shall be invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

15. Notices. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable overnight air courier service with charges prepaid, or (iv) transmitted by hand delivery or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice in accordance with this Section. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received), (b) on the first business day following the date of mailing by reputable overnight air courier service, fully prepaid, addressed to such address or (c) three (3) business days after in the mail or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Company, to:

Comarco, Inc.

28202 Cabot Road, Suite 300

Laguna Niguel, California 92677

Facsimile: (949) 599-1430

Attention: Tom Lanni, President and CEO

E-Mail: tlanni@comarco.com

With a copy to (which copy shall not constitute notice):

Rutan & Tucker, LLP

611 Anton Blvd., Suite 1400

Costa Mesa, CA 92626

Facsimile: (714) 546-9035

Attention: Garett Sleichter

E-mail: gsleichter@rutan.com

If to Holder:

[_________________]

Facsimile: [_________________]
Attention: [_________________]

E-mail: [_________________]

With a copy to (which copy shall not constitute notice):

[_________________]

Facsimile: [_________________]
Attention: [_________________]

E-mail: [_________________]

16. Amendment and Waiver. No provision of this Warrant may be amended or otherwise modified except by a written document signed by the Company and Holder. No provision of this Warrant may be waived except by a written document executed by the party against whom the waiver is to be effective. A party’s failure to enforce any provision of this Warrant shall neither be construed as a waiver of such provision nor prevent the party from subsequently enforcing the same or any other provision of this Warrant.

17. Law Governing This Warrant. 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 by either party hereto against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York. The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Warrant or any other agreement delivered in connection herewith 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 to 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 any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Warrant by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

[Signature page follows]

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

COMARCO, Inc.

By:

Name:

Title:

Exhibit A

FORM OF EXERCISE NOTICE

(to be signed only on exercise of Warrant)

TO: COMARCO, Inc.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No. A-___), 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 of the Warrant.

The undersigned herewith makes payment of the full exercise price for such Shares at the price per share provided for in the attached 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 of the Warrant, 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 of the Warrant.

The undersigned requests that the certificates for such Shares be issued in the name of and delivered pursuant to DTC instructions below or 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 attached Warrant shall be made pursuant to registration of the Common Stock under the 1933 Act, or pursuant to an exemption from registration under the 1933 Act.

DTC Instructions:

Dated:___________________

(Signature must conform to name of holder as specified on the face of the Warrant)

(Address)

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 attached Warrant to purchase the percentage and number of Shares of Common Stock of Comarco, Inc. to which the attached 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 Comarco, Inc. with full power of substitution in the premises.

Transferees	Percentage Transferred	Number Transferred

Dated: ______________, ___________

Signed in the presence of:

(Name)

ACCEPTED AND AGREED:

[TRANSFEREE]

(Name)

(Signature must conform to name of holder as specified on the face of the warrant)

(address)