Exhibit 10.2
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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 SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  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.
 

 
Provision Holding, Inc.
 
Warrant To Purchase Common Stock
 

Warrant No.: 2010-1       Issuance Date:   May 26, 2010

 
Number of Warrant Shares:  20,000,000

Initial Exercise Price:  $0.12 per share

Provision Holding, Inc., a Nevada corporation (“Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Socius CG II, Ltd., a Bermuda exempted company, the
holder hereof or its designees or assigns (“Holder”), is entitled, subject to
the terms set forth herein, to purchase from the Company, at the Exercise Price
then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any warrant issued in exchange, transfer or replacement hereof, the
“Warrant”), at any time or times after issuance of the Warrant and until 11:59
p.m. Eastern time on the fifth anniversary of the Issuance Date, subject to
acceleration pursuant to Section 3.3 hereof, that number of duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock set forth
above and as adjusted herein (the “Warrant Shares”); provided, however, that
this Warrant may only be exercised, from time to time, for that number of shares
of Common Stock with an Aggregate Exercise Price equal to up to 135% of the
cumulative amount of Tranche Purchase Prices under Tranche Notices delivered
prior to or on the date of exercise.
 
 
 
 
 
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This Warrant is issued pursuant to the Preferred Stock Purchase Agreement dated
 
May 26, 2010, by and among the Company and the investor referred to therein (the
“Purchase Agreement”).  Except as otherwise defined herein, capitalized terms in
this Warrant shall have the meanings set forth in ARTICLE 13 hereof.
 
This Warrant shall consist of and be exercisable in tranches (each, a “Warrant
Tranche”), with a separate tranche being created upon each delivery of a Tranche
Notice under the Purchase Agreement.  Each Warrant Tranche will grant to the
Holder the right, for a five-year period commencing on the applicable Tranche
Notice Date, to exercise the Warrant and purchase up to a number of shares of
Common Stock with an Aggregate Exercise Price equal to 135% of the Tranche
Purchase Price for the applicable Tranche Notice.  Attached to this Warrant is a
schedule (the “Warrant Tranche Schedule”) that sets forth the issuance date, the
number of Warrant Shares, and the Exercise Price for each Warrant Tranche.  The
Warrant Tranche Schedule shall be updated by the Company, with an updated copy
provided to the Holder, promptly following each exercise of this Warrant.  No
portion of this Warrant shall vest or be exercisable except under the Warrant
Tranches.
 
In no event shall the Company be permitted to deliver a Tranche Notice if the
number of registered shares underlying this Warrant is insufficient to cover the
portion of the Warrant that will vest and become exercisable in connection with
such Tranche Notice.  If the number of registered shares underlying this Warrant
is or becomes insufficient to permit the Company to issue registered shares upon
exercise of this Warrant, the Company shall promptly amend the Registration
Statement to include more shares thereunder, with such amendment to be filed
sufficiently in advance of the date the Company intends to deliver a Tranche
Notice so as to ensure that registered shares are available to Holder on the
Tranche Notice Date.
 
ARTICLE 1
 
EXERCISE OF WARRANT.
 
1.1 Mechanics of Exercise.
 
1.1.1 Subject to the terms and conditions hereof, this Warrant may be exercised
by the Holder on any day on or after the Issuance Date, in whole or in part, by
(i) delivery of a written notice to the Company, in the form attached hereto as
Appendix 1 (the “Exercise Notice”), of the Holder’s election to exercise this
Warrant, and (ii) payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (the “Aggregate Exercise Price”), with such payment
made, at Investor’s option, (x) in cash or by wire transfer of immediately
available funds, (y) by the issuance and delivery of a recourse promissory note
substantially in the form attached hereto as Appendix 2 (each, a “Recourse
Note”), or (z) if applicable, by cashless exercise pursuant to Section 1.3.
 
1.1.2 The Holder shall not be required to deliver the original Warrant in order
to effect an exercise hereunder.  Execution and delivery of the Exercise Notice
with respect to less than all of the Warrant Shares shall have the same effect
as cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares.
 
1.1.3 On the Trading Day on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (the “Exercise Delivery Documents”) from
the Holder by 6:30 p.m. Eastern time, or on the next Trading Day if the Exercise
Delivery Documents are received after 6:30 p.m. Eastern time or on a non-Trading
Day (in each case, the “Exercise Delivery Date”), the Company shall transmit (i)
a facsimile acknowledgment of confirmation of receipt of the Exercise Delivery
Documents to the Holder, and (ii) an electronic copy of its share issuance
instructions to the Holder and to the Company’s transfer agent (the “Transfer
Agent”), with such transmissions to comply with the notice provisions contained
in Section 6.2 of the Purchase Agreement, and shall instruct and authorize the
Transfer Agent to credit such aggregate number of freely-tradable Warrant Shares
to which the Holder is entitled to receive upon such exercise to the Holder’s or
its designee’s balance account with The Depository Trust Company (DTC) through
the Fast Automated Securities Transfer (FAST) Program through its Deposit
Withdrawal Agent Commission (DWAC) system, with such credit to occur no later
than 12:00 p.m. Eastern Time on the Trading Day following the Exercise Delivery
Date, time being of the essence; provided, however, that if the Warrant Shares
are not credited as DWAC Shares by 12:00 p.m. Eastern Time on the Trading Day
following the Exercise Delivery Date, then the Tranche Closing Date applicable
to the Exercise Notice shall be extended by one Trading Day for each Trading Day
that timely credit of DWAC Shares is not made.
 
1.1.4 Upon delivery of the Exercise Delivery Documents, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account.  If any portion of the Warrant is exercised by Holder in connection
with a Tranche Notice, such portion shall be deemed exercised (i) on the Tranche
Notice Date, if exercised by 6:30 p.m. Eastern time on the Tranche Notice Date,
or (ii) on the next Trading Day, if exercised by Investor after 6:30 p.m.
Eastern Time on the Tranche Notice Date or on any other date, in each case with
Holder deemed to be a holder of record as of such date.
 
1.1.5 If this Warrant is exercised and the number of Warrant Shares represented
by this Warrant is greater than the number of Warrant Shares being acquired upon
such exercise, then the Company shall, as soon as practicable and in no event
later than one Trading Day after such exercise, update the Tranche Exercise
Schedule to reflect the revised number of Warrant Shares for which this Warrant
is then exercisable and deliver a copy of the updated Tranche Exercise Schedule
to the Holder.  No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number.  The Company shall pay
any and all taxes which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.
 
 
 
 
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1.2 Adjustments to Exercise Price and Number of Shares.  In addition to other
adjustments specified herein, the Exercise Price of this Warrant and the number
of shares of Common Stock issuable upon exercise shall be adjusted as follows:
 
1.2.1 Exercise Price.  The “Exercise Price” per share of Common Stock underlying
this Warrant, subject to further adjustment as provided herein, shall be as
follows:
 
(i) with respect to the Warrant issued on the Effective Date and until the first
Tranche Notice Date, the number of shares set forth on the face of this Warrant,
which is a number of shares of Common Stock equal to the Maximum Placement
multiplied by 135%, with the resulting sum divided by the Closing Bid Price of a
share of Common Stock on the Trading Day prior to the Effective Date, and (ii)
with respect to the portion of this Warrant issued on the Effective Date and
until the first Tranche Notice Date, the amount per Warrant Share set forth on
the face of this Warrant, which is equal to Closing Bid Price for the Common
Stock on the Trading Day prior to the Effective Date, and (ii) with respect to
the portion of this Warrant that becomes exercisable on any Tranche Notice Date
(including the first Tranche Notice Date), an amount per Warrant Share equal to
the Closing Bid Price of a share of Common Stock on such Tranche Notice Date.
 
1.2.2 Number of Shares.  The number of Warrant Shares underlying this Warrant
and each Warrant Tranche, subject to further adjustment as provided herein,
shall be, with respect to the portion of this Warrant that becomes exercisable
on any Tranche Notice Date including the first Tranche Notice Date, a number of
shares equal to the Tranche Purchase Price set forth in the applicable Tranche
Notice multiplied by 135%, with the resulting sum divided by the Closing Bid
Price of a share of Common Stock on the Tranche Notice Date.  For example, if
the Tranche Purchase Price is $1,000,000 and the Closing Bid Price is $0.50,
then the number of Warrant Shares underlying that Warrant Tranche shall be
$1,000,000 x 135% = $1,350,000 divided by $0.50 = 2,700,000 shares of Common
Stock.  (In the foregoing example, following issuance of 2,700,000 Warrant
Shares, the number of shares underlying this Warrant would be decreased by such
4,700,000 shares.)  On each Tranche Notice Date, the number of Warrant Shares
underlying the related Warrant Tranche shall vest and become exercisable, and
the aggregate number of Warrant Shares underlying this Warrant that are
currently exercisable shall automatically adjust up or down to account for the
change in the number of Warrant Shares covered by the new Warrant Tranche and
for any Warrant Shares issued upon any prior or simultaneous exercise of this
Warrant.  If at any time the Holder reasonably believes that the number of
Warrant Shares included in the Registration Statement is not sufficient to cover
all exercises under this Warrant, then the Company shall amend such Registration
Statement to include the additional number of Warrant Shares that may be
required to provide such coverage.
 
1.3 Cashless Exercise.  Notwithstanding anything contained herein to the
contrary, if at any time there is not a current, valid and effective
registration statement covering the Warrant Shares that are the subject of the
Exercise Notice (the “Unavailable Warrant Shares”), the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):
 
Net Number =                                (B-C) x A
                                B

For purposes of the foregoing formula:

A = the total number of shares with respect to which this Warrant is then being
exercised.

B = the average of the Closing Bid Prices of the shares of Common Stock (as
reported by Bloomberg) for the five (5) consecutive Trading Days ending on the
date immediately preceding the date of the Exercise Notice.

C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
 
 
 
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1.4 Company’s Failure to Timely Deliver Securities.  If the Company shall fail
for any reason or for no reason to credit to the Holder’s balance account with
DTC, by 12:00 p.m. Eastern time on the Trading Day following the Exercise
Delivery Date, the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of this Warrant, then, in addition to all
other remedies available to the Holder, the Company shall pay in cash to the
Holder on each day after such Trading Day that the issuance of such shares of
Common Stock is not timely effected an amount equal to 1.5% of the product of
(A) the sum of the number of shares of Common Stock not issued to the Holder on
a timely basis and to which the Holder is entitled and (B) the Closing Bid Price
of the shares of Common Stock on the Trading Day immediately preceding the last
possible date which the Company could have issued such shares of Common Stock to
the Holder without violating Section 1.1.  In addition to the foregoing, if
after the Company’s receipt of an Exercise Notice the Company shall fail to
timely (pursuant to Section 1.1.3 hereof) credit the Holder’s balance account
with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder, and the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such exercise that the Holder anticipated receiving from the Company, then the
Company shall, within one Trading Day after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to credit such Holder’s balance account with DTC for the
number of Warrant Shares to which the Holder is entitled upon the Holder’s
exercise hereunder and to issue such Warrant Shares shall terminate, or (ii)
promptly honor its obligation to credit such Holder’s balance account with DTC
for the number of Warrant Shares to which the Holder is entitled upon the
Holder’s exercise hereunder and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock sold by Holder in satisfaction of its obligations, times
(B) the Closing Bid Price on the date of exercise.
 
1.5 Exercise Limitation.  Notwithstanding any other provision, at no time may
the Holder (a) exercise this Warrant such that the number of Warrant Shares to
be received pursuant to such exercise exceeds 135.0% of the aggregate of all
Tranche Purchase Prices under and in connection with all Tranche Notices
delivered pursuant to the Purchase Agreement prior to the date of exercise; or
(b) exercise this Warrant such that the number of Warrant Shares to be received
pursuant to such exercise, aggregated with all other shares of Common Stock or
other voting securities of the Company then owned or deemed beneficially owned
by the Holder and its affiliates, would result in the Holder and its affiliates
owning or being deemed to beneficially own more than 9.99% of the Common Stock
or other voting securities of the Company outstanding on the date of exercise,
with such ownership percentage determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder (the
“Holder Ownership Limit”).  In addition, as of any date, the aggregate number of
shares of Common Stock into which this Warrant is exercisable within 61 days,
together with all other shares of Common Stock or other voting securities of the
Company owned or deemed beneficially owned by Holder and its affiliates, shall
not exceed the Holder Ownership Limit.
 
1.6 Activity Restrictions.  For so long as Holder or any of its affiliates holds
this Warrant or any Warrant Shares, neither Holder nor any affiliate will:  (i)
vote any shares of Common Stock owned or controlled by it, solicit any proxies,
or seek to advise or influence any Person with respect to any voting securities
of the Company; (ii) engage or participate in any actions, plans or proposals
which relate to or would result in (a) acquiring additional securities of the
Company, alone or together with any other Person, which would result in
exceeding the Holder Ownership Limit, (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving Company
or any of its subsidiaries, (c) a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries, (d) any change in the present
board of directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board, (e) any material change in the present capitalization or
dividend policy of the Company, (f) any other material change in the Company’s
business or corporate structure, including but not limited to, if the Company is
a registered closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by Section 13 of
the Investment Company Act of 1940, (g) changes in the Company’s charter, bylaws
or instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any Person, (h) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association, (i) a class of equity securities of
the Company becoming eligible for termination of registration pursuant  to
Section 12(g)(4) of the Act, or (j) any action, intention, plan or arrangement
similar to any of those enumerated above; or (iii) request the Company or its
directors, officers, employees, agents or representatives to amend or waive any
provision of this Section 1.6.
 
 
 
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1.7 Disputes.  In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are not disputed
and resolve such dispute in accordance with Section 12.
 
1.8 Insufficient Authorized Shares.  If at any time while any portion of this
Warrant remains outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its obligation to
reserve for issuance upon exercise of this Warrant at least a number of shares
of Common Stock equal to 110% of the number of shares of Common Stock as shall
from time to time be necessary to effect the exercise of the portion of the
Warrant then outstanding (the “Required Reserve Amount”) (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for the portion of
the Warrant then outstanding.  Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than 90 days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized
shares of Common Stock.  In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.
 
ARTICLE 2
 
ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK
 
If the Company at any time on or after the Issuance Date subdivides (by any
stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of Warrant Shares will be proportionately
increased.  If the Company at any time on or after the Issuance Date combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately
decreased.  Any adjustment under this ARTICLE 2 shall become effective at the
close of business on the date the subdivision or combination becomes effective.
 
ARTICLE 3
 
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS
 
3.1 Purchase Rights.  In addition to any adjustments pursuant to ARTICLE 2
above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) immediately before
the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
 
3.2 Fundamental Transactions.  The Company shall not enter into or be party to a
Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance with the
provisions of this Section 3.2 pursuant to written agreements in form and
substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver
to each Holder of this Warrant in exchange for such Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and satisfactory to the Required Holders.  Upon the occurrence of
any Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein.  Upon consummation of the Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of the Common Stock (or other securities,
cash, assets or other property) purchasable upon the exercise of this Warrant
prior to such Fundamental Transaction, such shares of stock, securities, cash,
assets or any other property whatsoever (including warrants or other purchase or
subscription rights) which the Holder would have been entitled to receive upon
the happening of such Fundamental Transaction had this Warrant been converted
immediately prior to such Fundamental Transaction, as adjusted in accordance
with the provisions of this Warrant.  In addition to and not in substitution for
any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of the Common Stock (or other securities,
cash, assets or other property) purchasable upon the exercise of this Warrant
prior to such Fundamental Transaction, such shares of stock, securities, cash,
assets or any other property whatsoever (including warrants or other purchase or
subscription rights) which the Holder would have been entitled to receive upon
the happening of such Fundamental Transaction had this Warrant been exercised
immediately prior to such Fundamental Transaction; provided, however, that in
the event the Fundamental Transaction involves the issuance of cash or freely
tradable securities by an issuer listed on the New York Stock Exchange or the
Nasdaq Stock Market, then the ability to exercise this Warrant shall expire on
the consummation of that Fundamental Transaction.  Provision made pursuant to
the preceding sentence shall be in a form and substance reasonably satisfactory
to the Required Holders.  The provisions of this Section 3.2  shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise of
this Warrant.
 
 
 
 
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3.3 Purchase of Warrant.  Notwithstanding the foregoing Section 3.2, in the
event of a Fundamental Transaction other than one in which the Successor Entity
is a Public Successor Entity that assumes this Warrant such that this Warrant
shall be exercisable for the publicly traded common stock of such Public
Successor Entity, at the request of the Holder delivered before the 90th day
after the effective date of such Fundamental Transaction, the Company (or the
Successor Entity) shall purchase this Warrant from the Holder by paying to the
Holder, within five (5) Trading Days after such request (or, if later, on the
effective date of the Fundamental Transaction), cash in an amount equal to the
value of the remaining unexercised portion of this Warrant on the date of such
consummation, which value shall be determined by use of the Black Scholes Option
Pricing Model using a volatility equal to the 100 day average historical price
volatility prior to the date of the public announcement of such Fundamental
Transaction.
 
ARTICLE 4
 
NONCIRCUMVENTION
 
The Company hereby covenants and agrees that the Company will not, by amendment
of its certificate or articles of incorporation, articles of association,
bylaws, or any other organization documents, or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, and
will at all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder.  Without
limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, so long as any portion of this
Warrant remains outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of effecting the exercise of this Warrant, 110% of the number of
shares of Common Stock as shall from time to time be necessary to effect the
exercise of this Warrant then outstanding (without regard to any limitations on
exercise).
 
ARTICLE 5                                
 
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
 
Except as otherwise specifically provided herein, the Holder, solely in such
Person’s capacity as a holder of this Warrant, shall not be entitled to vote or
receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant.  In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the
Company.  Notwithstanding this ARTICLE 5, the Company shall provide the Holder
with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.
 
ARTICLE 6
 
REISSUANCE OF WARRANTS
 
6.1 Transfer of Warrant.  If this Warrant is to be transferred in whole or in
part, the Holder shall surrender this Warrant to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 6.4), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less then the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 6.4) to the Holder representing the right to purchase the number of
Warrant Shares not being transferred.
 
6.2 Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Warrant,
the Company shall execute and deliver to the Holder a new Warrant (in accordance
with Section 6.4) representing the right to purchase the Warrant Shares then
underlying this Warrant.
 
6.3 Exchangeable for Multiple Warrant.  This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 6.4) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no Warrant for fractional shares of
Common Stock shall be given.
 
6.4 Issuance of New Warrant.  Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 6.1 or
Section 6.3, the Warrant Shares designated by the Holder which, when added to
the number of shares of Common Stock underlying the other new Warrant issued in
connection with such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as indicated on the
face of such new Warrant which is the same as the Issuance Date, and (iv) shall
have the same rights and conditions as this Warrant.
 
ARTICLE 7
 
NOTICES
 
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 6.2 of
the Purchase Agreement.  The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant, including in
reasonable detail a description of such action and the reason
therefore.  Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any adjustment of the
Exercise Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least fifteen days prior to the date
on which the Company closes its books or takes a record (A) with respect to any
dividend or distribution upon the shares of Common Stock, (B) with respect to
any grants, issuances or sales of any Options, Convertible Securities or rights
to purchase stock, warrants, securities or other property to holders of shares
of Common Stock as such or (C) for determining rights to vote with respect to
any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.
 
 
 
 
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ARTICLE 8
 
AMENDMENT AND WAIVER
 
Except as otherwise provided herein, the provisions of this Warrant may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Required Holders; provided that except as
set forth in this Warrant no such action may increase the exercise price of any
Warrant or decrease the number of shares or class of stock obtainable upon
exercise of any Warrant without the written consent of the Holder.  No such
amendment shall be effective to the extent that it applies to less than all of
the holders of this Warrant.
 
ARTICLE 9
 
GOVERNING LAW
 
This Warrant shall be governed by and construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.
 
ARTICLE 10
 
CONSTRUCTION; HEADINGS
 
This Warrant shall be deemed to be jointly drafted by the Company and the Holder
and shall not be construed against any person as the drafter hereof.  The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.
 
ARTICLE 11
 
DISPUTE RESOLUTION
 
In the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within 2
Trading Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder.  If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three Trading Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within 2 Trading Days submit via facsimile (a) the disputed determination of the
Exercise Price or arithmetic calculation to an independent, reputable investment
bank or independent registered public accounting firm selected by Holder subject
to Company’s approval, which may not be unreasonably withheld or delayed, or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent registered public accounting firm.  The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than 3 Trading Days from the time it receives the disputed
determinations or calculations.  Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
 
 
 
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ARTICLE 12 
 
REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF
 
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder to pursue actual damages for any
failure by the Company to comply with the terms of this Warrant.  The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate.  The Company therefore agrees that, in the event of any such
breach or threatened breach, the holder of this Warrant shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
 
ARTICLE 13 
 
DEFINITIONS
 
For purposes of this Warrant, in addition to the terms defined elsewhere herein,
the following terms shall have the following meanings:
 
13.1 “Bloomberg” means Bloomberg Financial Markets.
 
13.2 “Closing Bid Price” means, for any security as of any date, the last
closing bid price for such security on the Trading Market, as reported by
Bloomberg, or, if the Trading Market begins to operate on an extended hours
basis and does not designate the closing bid price, then the last bid price of
such security prior to 4:00 p.m., Eastern time, as reported by Bloomberg, or, if
the Trading Market is not the principal securities exchange or trading market
for such security, the last closing bid price of such security on the principal
securities exchange or trading market where such security is listed, quoted or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price is reported for such security by Bloomberg, the average of the
bid prices of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If
the Closing Bid Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Bid Price of such security on such
date shall be the fair market value as mutually determined by the Company and
Holder.  If the Company and Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved pursuant to ARTICLE
11.  All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.
 
13.3 “Common Stock” means (i) the Company’s shares of Common Stock, par value
$0.001 per share, and (ii) any share capital into which such Common Stock shall
have been changed or any share capital resulting from a reclassification of such
Common Stock.
 
13.4 “Common Stock Deemed Outstanding” means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Section 3.1 hereof
regardless of whether the Options or Convertible Securities are actually
exercisable at such time, but excluding any shares of Common Stock owned or held
by or for the account of the Company or issuable upon exercise of this Warrant.
 
13.5 “Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
shares of Common Stock.
 
13.6 “DWAC Shares” means all Warrant Shares issued or issuable to Holder or any
Affiliate, successor or assign of Holder pursuant to this Warrant, all of which
shall be (a) issued in electronic form, (b) freely tradable and without
restriction on resale, and (c) timely credited by Company to the specified
Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated
Securities Transfer (FAST) Program or any similar program hereafter adopted by
DTC performing substantially the same function, in accordance with instructions
issued to and countersigned by the Transfer Agent of the Company.
 
13.7 “Eligible Market” means the Trading Market, The New York Stock Exchange,
Inc., The NASDAQ Global Select Market, The NASDAQ Global Market, The NASDAQ
Capital Market, the NYSE Amex or the OTC Bulletin Board, but does not include
the Pink Sheets.
 
13.8 “Fundamental Transaction” has the meaning set forth in the Purchase
Agreement.
 
13.9 “Maximum Placement” has the meaning set forth in the Purchase Agreement.
 
 
 
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13.10 “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.
 
13.11 “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction.
 
13.12 “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any
other entity and a government or any department or agency thereof.
 
13.13 “Public Successor Entity” means a Successor Entity that is a publicly
traded corporation whose stock is quoted or listed for trading on an Eligible
Market.
 
13.14 “Required Holders” means the Holders of this Warrant representing at least
a majority of shares of Common Stock underlying this Warrant as then
outstanding.
 
13.15 “Successor Entity” means the Person (or, if so elected by the Required
Holders, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Required
Holders, the Parent Entity) with which such Fundamental Transaction shall have
been entered into.
 
13.16 “Trading Day” means any day on which the Common Stock is traded on an
Eligible Market; provided that it shall not include any day on which the Common
Stock (a) is suspended from trading, or (b) is scheduled to trade on such
exchange or market for less than 5 hours.
 
13.17 “Trading Market” means the OTC Bulletin Board, the NASDAQ Capital Market,
the NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE Amex, or the
New York Stock Exchange, whichever is at the time the principal trading exchange
or market for the Common Stock, but does not include the Pink Sheets
inter-dealer electronic quotation and trading system.
 
13.18 “Tranche Closing Date” has the meaning set forth in the Purchase
Agreement.
 
13.19 “Tranche Notice” has the meaning set forth in the Purchase Agreement.
 
13.20 “Tranche Notice Date” has the meaning set forth in the Purchase Agreement.
 
13.21 “Tranche Purchase Price” has the meaning set forth in the Purchase
Agreement.
 
 
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.
 

 
PROVISION HOLDING, INC.
         
 
By:
/s/        Name: Curt Thornton       Title:   President and Chief Executive
Officer          

 
 
 
 
 
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Warrant Exercise Schedule
 
Exercise Date
Number of Warrant Shares
Exercise Price
Per Share
Aggregate Exercise Price
Dollar Amount Remaining
         

 

 
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APPENDIX 1
 
EXERCISE NOTICE
 

 
PROVISION HOLDING, INC.
 
The undersigned hereby exercises the right to purchase ________________ shares
of Common Stock (“Warrant Shares”) of Provision Holding, Inc., a Nevada
corporation (“Company”), evidenced by the attached Warrant to Purchase Common
Stock (“Warrant”).  Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.  The Holder intends
that payment of the Exercise Price shall be made as:
 
___           Cash Exercise with respect to ____________ Warrant Shares

___           Cashless Exercise with respect to ____________ Warrant Shares

___           Recourse Note Exercise with respect to ____________ Warrant Shares

           Please issue

___           A certificate or certificates representing said shares of Common
Stock in the namespecified below

 
___
Said shares in electronic form to the Deposit/Withdrawal at Custodian (DWAC)
account with Depository Trust Company (DTC) specified below.

 

                                                      

Holder Name

By:   ____________________________________________
                                                   
Name:  __________________________________________
                                                              
Title:   ___________________________________________                                                   

 
 
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ACKNOWLEDGMENT
 
The Company hereby acknowledges the foregoing Exercise Notice and hereby directs
[_________]  to issue the above indicated number of shares of Common Stock as
specified above, in accordance with the Transfer Agent Instructions dated
[_________] from the Company, and acknowledged and agreed to by the transfer
agent.
 

 
PROVISION HOLDING, INC.
         
 
By:
/s/        Name        Title           

 
 
 
 
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APPENDIX 2
 
FORM OF NOTE
 

 

 

 
SECURED PROMISSORY NOTE

$[_____________]                                                                                                           Date:           [________],
20[__]
 
FOR VALUE RECEIVED, [_____________] (“Borrower”) promises to pay to the order of
Provision Holding, Inc. (“Lender”), at [________], or at such other place as
Lender may from time to time designate in writing, the principal sum of
$[________], with interest, as follows:

1. Interest.  The principal balance outstanding from time to time under this
Secured Promissory Note (this “Note”), shall bear interest from and after the
date hereof at the rate of 2.0% per year.  Interest shall be calculated on a
simple interest basis and the number of days elapsed during the period for which
interest is being calculated.  Payments of interest will be due on each annual
anniversary of the date of this Note; provided that Borrower will not be in
default hereunder for failure to make any annual interest payment when due
(other than on the Maturity Date) and the amount of interest not paid when due
shall be added to the principal balance of this Note and such amount will
thereafter accrue interest at the rate set forth above.
 
2. Payments.  If not sooner paid, the entire unpaid principal balance, interest
thereon and any other charges due and payable under this Note shall be due and
payable on the fourth anniversary of the date of this Note (“Maturity
Date”); provided, however, that no payments on this Note will be due or payable
so long as either (a) Lender is in default under any preferred stock purchase
agreement for Series B Preferred Stock with Borrower or any Warrant issued
pursuant thereto, any loan agreement or other material agreement entered into
with Borrower, or (b) there are any shares of Series B Preferred Stock of Lender
issued or outstanding (each, a “Non-Payment Event”).  Upon the termination or
cure of any Non-Payment Event, Borrower’s obligation to pay amounts outstanding
on this Note will immediately be reinstated.  Borrower shall have the right to
prepay all or any part of the principal balance of this Note at any time without
penalty or premium.  In the event that Lender redeems all or a portion of any
shares of Series B Preferred Stock then held by Borrower, the proceeds of any
such redemption will be applied by Borrower to pay down the accrued interest and
outstanding principal of this Note and Lender will be permitted to offset the
full amount of such proceeds against amounts outstanding under this Note.  All
payments on this Note shall be first applied to interest, then to reduce the
outstanding principal balance hereof.
 
3. Full Recourse Note.  THIS IS A FULL RECOURSE PROMISSORY NOTE.  Accordingly,
notwithstanding that Borrower’s obligations under this Note are secured by the
Collateral, in the event of a material default hereunder, Lender shall have full
recourse to all the other assets of Borrower.  Moreover, Lender shall not be
required to proceed against or exhaust any Collateral, or to pursue any
Collateral in any particular order, before Lender pursues any other remedies
against Borrower or against any of Borrower’s assets.
 
4. Security
 
a. Pledge.  As security for the due and prompt payment and performance of all
payment obligations under this Note and any modifications, replacements and
extensions hereof (collectively, “Secured Obligations”), Borrower hereby pledges
and grants a security interest to Lender in all of Borrower’s right, title, and
interest in and to all of the following, now owned or hereafter acquired or
arising (together the “Collateral”):
 
i. Publicly traded shares of common stock, preferred stock, bonds, notes and/or
debentures (collectively, “Pledged Securities”) with a fair market value on the
date hereof at least equal to the principal amount of this Note, based upon the
trading price of such securities on the OTC Bulletin Board, NASDAQ Capital
Market, NASDAQ Global Market, NASDAQ Global Select Market, NYSE Amex, or New
York Stock Exchange;
 
ii. all rights of Borrower with respect to or arising out of the Pledged
Securities, including voting rights, and all equity and debt securities and
other property distributed or distributable with respect thereto as a result of
merger, consolidation, dissolution, reorganization, recapitalization, stock
split, stock dividend, reclassification, exchange, redemption, or other change
in capital structure; and
 
 
 
 
 
 
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iii. all proceeds, replacements, substitutions, accessions and increases in any
of the Collateral.
 
b. Replacement Securities.  So long as any Secured Obligations remain
outstanding, in the event that Borrower sells or disposes of any Pledged
Securities, Borrower shall promptly provide replacement securities of equal or
greater value than such Pledged Securities.
 
c. Rights With Respect to Distributions.  So long as no default shall have
occurred and be continuing under this Note, Borrower shall be entitled to
receive any and all dividends and distributions made with respect to the Pledged
Securities and any other Collateral.  However, upon the occurrence and during
the continuance of any default, Lender shall have the sole right (unless
otherwise agreed by Lender) to receive and retain dividends and distributions
and apply them to the outstanding balance of this Note or hold them as
Collateral, at Lender’s election.
 
d. Voting Rights.  So long as no default shall have occurred and be continuing
under this Note, Borrower shall be entitled to exercise all voting rights
pertaining to the Pledged Securities and any other Collateral.  However, upon
the occurrence and during the continuance of any default, all rights of Borrower
to exercise the voting rights that Borrower would otherwise be entitled to
exercise with respect to the Collateral shall cease and (unless otherwise agreed
by Lender) all such rights shall thereupon become vested in Lender, which shall
thereupon have the sole right to exercise such rights.
 
e. Financing Statement; Further Assurances.  Borrower agrees, concurrently with
executing this Note, that Lender may file a UCC-1 financing statement relating
to the Collateral in favor of Lender, and any similar financing statements in
any jurisdiction in which Lender reasonably determines such filing to be
necessary.  Borrower further agrees that at any time and from time to time
Borrower shall promptly execute and deliver all further instruments and
documents that Lender may request in order to perfect and protect the security
interest granted hereby, or to enable Lender to exercise and enforce its rights
and remedies with respect to any Collateral following an event of default.  In
addition, following an event of default, Borrower shall deliver the Collateral,
including original certificates or other instruments representing the Pledged
Securities, to Lender to hold as secured party, and Borrower shall, if requested
by Lender, execute a securities account control agreement.
 
f. Powers of Lender.  Borrower hereby appoints Lender as Borrower’s true and
lawful attorney-in-fact to perform any and all of the following acts, which
power is coupled with an interest, is irrevocable until the Secured Obligations
are paid and performed in full, and may be exercised from time to time by Lender
in its discretion:  To take any action and to execute any instrument which
Lender may deem reasonably necessary or desirable to accomplish the purposes of
this Section 4(f) and, more broadly, this Note including, without
limitation:  (i) to exercise voting and consent rights with respect to
Collateral in accordance with this Note, (ii) during the continuance of any
default hereunder, to receive, endorse and collect all instruments or other
forms of payment made payable to Borrower representing any dividend, interest
payment or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same, when and to the extent permitted by
this Note, (iii) to perform or cause the performance of any obligation of
Borrower hereunder in Borrower’s name or otherwise, (iv) during the continuance
of any default hereunder, to liquidate any Collateral pledged to Lender
hereunder and to apply proceeds thereof to the payment of the Secured
Obligations or to place such proceeds into a cash collateral account or to
transfer the Collateral into the name of Lender, all at Lender’s sole
discretion, (v)  to enter into any extension, reorganization or other agreement
relating to or affecting the Collateral, and, in connection therewith, to
deposit or surrender control of the Collateral, (vi) to accept other property in
exchange for the Collateral, (vii) to make any compromise or settlement Lender
deems desirable or proper, and (viii) to execute on Borrower’s behalf and in
Borrower’s name any documents required in order to give Lender a continuing
first lien upon the Collateral or any part thereof.
 
5. Additional Terms
 
a. No Waiver.  The acceptance by Lender of payment of a portion of any
installment when due or an entire installment but after it is due shall neither
cure nor excuse the default caused by the failure of Borrower timely to pay the
whole of such installment and shall not constitute a waiver of Lender’s right to
require full payment when due of any future or succeeding installments.
 
b. Default.  Any one or more of the following shall constitute a “default” under
this Note:  (i) a default in the payment when due of any amount hereunder, (ii)
Borrower’s refusal to perform any material term, provision or covenant under
this Note, (iii) the commencement of any liquidation, receivership, bankruptcy,
assignment for the benefit of creditors or other debtor-relief proceeding by or
against Borrower, (iv) the transfer by Borrower of any Pledged Securities
without being replaced by Pledged Securities in accordance with Section 4(b),
and (iv) the levying of any attachment, execution or other process against
Borrower, the Collateral or any material portion thereof.
 
 
 
 
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c. Default Rights
 
i. Upon the occurrence of any payment default Lender may, at its election,
declare the entire balance of principal and interest under this Note immediately
due and payable.  A delay by Lender in exercising any right of acceleration
after a default shall not constitute a waiver of the default or the right of
acceleration or any other right or remedy for such default.  The failure by
Lender to exercise any right of acceleration as a result of a default shall not
constitute a waiver of the right of acceleration or any other right or remedy
with respect to any other default, whenever occurring.  
 
ii. Further, upon the occurrence of any material non-monetary default, following
30 days notice from Lender to Borrower specifying the default and demanded
manner of cure for such non-monetary default, Lender shall thereupon and
thereafter have any and all of the rights and remedies to which a secured party
is entitled after a default under the applicable Uniform Commercial Code, as
then in effect.  In addition to Lender’s other rights and remedies, Borrower
agrees that, upon the occurrence of default, Lender may in its sole discretion
do or cause to be done any one or more of the following:
 
(a) Proceed to realize upon the Collateral or any portion thereof as provided by
law, and without liability for any diminution in price which may have occurred,
sell the Collateral or any part thereof, in such manner, whether at any public
or private sale, and whether in one lot as an entirety, or in separate portions,
and for such price and other terms and conditions as is commercially reasonable
given the nature of the Collateral.
 
(b) If notice to Borrower is required, give written notice to Borrower at least
ten days before the date of sale of the Collateral or any portion thereof.
 
(c) Transfer all or any part of the Collateral into Lender’s name or in the name
of its nominee or nominees.
 
(d) Vote all or any part of the Collateral (whether or not transferred into the
name of Lender ) and give all consents, waivers and ratifications in respect of
the Collateral and otherwise act with respect thereto, as though Lender were the
outright owner thereof.
 
iii. Borrower acknowledges that all or part of foreclosure of the Collateral may
be restricted by state or federal securities laws, Lender may be unable to
effect a public sale of all or part of the Collateral, that a public sale is or
may be impractical and inappropriate and that, in the event of such
restrictions, Lender thus may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to its distribution or resale.  Borrower agrees that if
reasonably necessary Lender may resort to one or more sales to a single
purchaser or a restricted or limited group of purchasers.  Lender shall not be
obligated to make any sale or other disposition, unless the terms thereof shall
be satisfactory to it.
 
iv. If, in the opinion of Lender based upon written advice of counsel, any
consent, approval or authorization of any federal, state or other governmental
agency or authority should be necessary to effectuate any sale or other
disposition of any Collateral, Borrower shall execute all such applications and
other instruments as may reasonably be required in connection with securing any
such consent, approval or authorization, and will otherwise use its commercially
reasonable best efforts to secure the same.
 
v. The rights, privileges, powers and remedies of Lender shall be cumulative,
and no single or partial exercise of any of them shall preclude the further or
other exercise of any of them.  Any waiver, permit, consent or approval of any
kind by Lender of any default hereunder, or any such waiver of any provisions or
conditions hereof, must be in writing and shall be effective only to the extent
set forth in writing.  Any proceeds of any disposition of the Collateral, or any
part thereof, may be applied by Lender to the payment of expenses incurred by
Lender in connection with the foregoing, and the balance of such proceeds shall
be applied by Lender toward the payment of the Secured Obligations.
 
d. No Oral Waivers or Modifications.  No provision of this Note may be waived or
modified orally, but only in a writing signed by Lender and Borrower.
 
e. Attorney Fees.  The prevailing party in any action by Lender to collect any
amounts due under this Note shall be entitled to recover its reasonable
attorneys fees and costs.
 
f. Governing Law.  This Note has been executed and delivered in, and is to be
construed, enforced, and governed according to the internal laws of, the State
of New York without regard to its principles of conflict of laws that would
require or permit the application of the laws of any other jurisdiction.
 
g. Severability.  Whenever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable
law.  However, if any provision of this Note shall be held to be prohibited by
or invalid under applicable law, it shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of that
provision or the other provisions of this Note.
 
h. Entire Agreement.  This Note contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral or written, with respect to such matters.
 

                                                      

By:       ___________________________
                                               
Name:  ___________________________
                                                              
Title:    ___________________________                                                  

 
 
 
 
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