Exhibit 10.6

DEFAULT WARRANT

THE SECURITIES REPRESENTED BY THIS DEFAULT WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THIS DEFAULT WARRANT MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.

OPEN ENERGY CORPORATION

Default Warrant To Purchase Common Stock

Default Warrant No.:

 

OEGY-FIFE-2

 

 

 

Number of Shares:

 

Such Number of Shares as is equal to two (2) times the number of dollars
represented by the Conversion Debenture of even date herewith, pursuant to the
Note Conversion Letter (as defined in that certain Note and Warrant Purchase
Agreement of even date herewith (the “Note Conversion Letter”))

 

 

 

Default Warrant Exercise Price:

 

$0.50

 

 

 

Expiration Date:

 

The date that is five (5) years from the date of issuance

 

 

 

Date of Issuance:

 

The date on which the Holder shall have delivered the Note Conversion Letter

 

Open Energy Corporation, a Nevada corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, John Fife (the “Holder”), the registered Holder hereof,
or his permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Default Warrant, at any time or
times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the
Expiration Date (as defined herein) such number of fully paid and nonassessable
shares of Common Stock (as defined herein) of the Company as is set forth on the
Note Conversion Letter (the “Default Warrant Shares”) at the exercise price per
share provided in Section 1(b) below or as subsequently adjusted; provided,
however, that in no event shall the Holder be entitled to exercise this Default
Warrant for a number of Default Warrant Shares in excess of that number of
Default Warrant Shares which, upon giving effect to such exercise, would cause
the aggregate number of shares of Common Stock beneficially owned by the Holder
and his affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within sixty (60) days of the Expiration Date
(however, such restriction may be waived by Holder (but only as to himself and
not to any other Holder) upon not less than 65 days prior notice to the
Company).  For purposes of the foregoing proviso, the aggregate number of shares
of Common Stock beneficially owned by the Holder and his affiliates shall
include the number of shares of Common Stock issuable upon exercise of this
Default Warrant with respect to which the determination of such proviso is being
made, but shall exclude shares of Common Stock which would be issuable upon
(i) exercise of the remaining, unexercised Default Warrants beneficially owned
by the Holder and his affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by the Holder and his affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on

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conversion or exercise analogous to the limitation contained herein.  Except as
set forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended.  For purposes of this Default Warrant, in
determining the number of outstanding shares of Common Stock a Holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the
Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company
or its transfer agent setting forth the number of shares of Common Stock
outstanding.  Upon the written request of any Holder, the Company shall
promptly, but in no event later than one (1) Business Day following the receipt
of such notice, confirm in writing to any such Holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the exercise of Default
Warrants (as defined below) by such Holder and his affiliates since the date as
of which such number of outstanding shares of Common Stock was reported.

SECTION 1.

(A)   THIS DEFAULT WARRANT IS ONE OF THE DEFAULT WARRANTS ISSUED PURSUANT TO THE
NOTE AND WARRANT PURCHASE AGREEMENT (“NOTE AND WARRANT PURCHASE AGREEMENT”)
DATED THE DATE HEREOF BETWEEN THE COMPANY AND THE HOLDER OR ISSUED IN EXCHANGE
OR SUBSTITUTION THEREAFTER OR REPLACEMENT THEREOF.  EACH CAPITALIZED TERM USED,
AND NOT OTHERWISE DEFINED HEREIN, SHALL HAVE THE MEANING ASCRIBED THERETO IN THE
NOTE AND WARRANT PURCHASE AGREEMENT.

(B)   DEFINITIONS.  THE FOLLOWING WORDS AND TERMS AS USED IN THIS DEFAULT
WARRANT SHALL HAVE THE FOLLOWING MEANINGS:

(I)            “APPROVED STOCK PLAN” MEANS A STOCK OPTION PLAN THAT HAS BEEN
APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY PRIOR TO THE DATE OF THE NOTE
AND WARRANT PURCHASE AGREEMENT, PURSUANT TO WHICH THE COMPANY’S SECURITIES MAY
BE ISSUED ONLY TO ANY EMPLOYEE, OFFICER OR DIRECTOR FOR SERVICES PROVIDED TO THE
COMPANY.

(II)           “BUSINESS DAY” MEANS ANY DAY OTHER THAN SATURDAY, SUNDAY OR OTHER
DAY ON WHICH COMMERCIAL BANKS IN THE CITY OF NEW YORK ARE AUTHORIZED OR REQUIRED
BY LAW TO REMAIN CLOSED.

(III)          “CLOSING BID PRICE” MEANS THE CLOSING BID PRICE OF COMMON STOCK
AS QUOTED ON THE PRINCIPAL MARKET (AS REPORTED BY BLOOMBERG FINANCIAL MARKETS
(“BLOOMBERG”) THROUGH ITS “VOLUME AT PRICE” FUNCTION).

(IV)          “COMMON STOCK” MEANS (I) THE COMPANY’S COMMON STOCK, PAR VALUE
$0.001 PER SHARE, AND (II) ANY CAPITAL STOCK INTO WHICH SUCH COMMON STOCK SHALL
HAVE BEEN CHANGED OR ANY CAPITAL STOCK RESULTING FROM A RECLASSIFICATION OF SUCH
COMMON STOCK.

(V)           “EVENT OF DEFAULT” MEANS AN EVENT OF DEFAULT UNDER THE NOTE AND
WARRANT PURCHASE AGREEMENT OR THE CONVERTIBLE DEBENTURES ISSUED IN CONNECTION
THEREWITH.

(VI)          “EXCLUDED SECURITIES” MEANS (A) SHARES ISSUED OR DEEMED TO HAVE
BEEN ISSUED BY THE COMPANY PURSUANT TO AN APPROVED STOCK PLAN, (B) SHARES OF
COMMON STOCK ISSUED OR DEEMED TO BE ISSUED BY THE COMPANY UPON THE CONVERSION,
EXCHANGE OR EXERCISE OF ANY RIGHT, OPTION, OBLIGATION OR SECURITY OUTSTANDING ON
THE DATE PRIOR TO DATE OF THE NOTE AND WARRANT PURCHASE AGREEMENT, PROVIDED THAT
THE TERMS OF SUCH RIGHT, OPTION, OBLIGATION OR SECURITY ARE NOT AMENDED OR
OTHERWISE MODIFIED ON OR AFTER THE DATE OF THE NOTE AND WARRANT PURCHASE
AGREEMENT, AND PROVIDED THAT THE CONVERSION PRICE, EXCHANGE PRICE, EXERCISE
PRICE OR OTHER PURCHASE PRICE IS NOT REDUCED, ADJUSTED OR OTHERWISE MODIFIED AND
THE NUMBER OF SHARES OF COMMON STOCK ISSUED OR ISSUABLE IS NOT INCREASED
(WHETHER BY OPERATION OF, OR IN ACCORDANCE WITH, THE RELEVANT GOVERNING
DOCUMENTS OR OTHERWISE) ON OR AFTER THE DATE OF THE NOTE AND WARRANT PURCHASE
AGREEMENT,  AND (C) THE SHARES OF COMMON STOCK ISSUED OR DEEMED TO BE ISSUED BY
THE COMPANY UPON CONVERSION OF THE CONVERTIBLE DEBENTURES OR EXERCISE OF THE
DEFAULT WARRANTS.

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(VII)         “EXPIRATION DATE” MEANS THE DATE THAT IS THE FIFTH (5TH)
ANNIVERSARY DATE OF THE ISSUANCE DATE.

(VIII)        “ISSUANCE DATE” MEANS THE DATE ON WHICH THE HOLDER SHALL HAVE
DELIVERED THE NOTE CONVERSION LETTER.

(IX)           “NOTE CONVERSION LETTER” MEANS A LETTER, IN THE FORM ATTACHED TO
THE NOTE AND WARRANT PURCHASE AGREEMENT, WHICH IS DELIVERED TO THE COMPANY, AND
WHICH STATES THAT (A) THE COMPANY IS IN DEFAULT ON THE NOTE ISSUED PURSUANT TO
THE NOTE AND WARRANT PURCHASE AGREEMENT, (B) THE HOLDER HAS FORECLOSED ON THE
COLLATERAL PLEDGED PURSUANT TO THE STOCK PLEDGE AGREEMENT, (C) THE PROCEEDS FROM
THE SALE OF ALL OF THE COLLATERAL WERE INSUFFICIENT TO COVER ALL AMOUNTS OWED BY
THE COMPANY PURSUANT TO THE NOTE, (D) THAT THE DEFICIENCY THEREUNDER IS BEING
CONVERTED TO PRINCIPAL UNDER THE CONVERTIBLE DEBENTURE AND (E) THE NUMBER OF
SHARES OF COMMON STOCK FOR WHICH THIS DEFICIENCY WARRANT MAY BE EXERCISED IS
EQUAL TO TWO TIMES THE DOLLAR AMOUNT OF THE DEFICIENCY AMOUNT SET FORTH THEREIN.

(X)            “OPTIONS” MEANS ANY RIGHTS, WARRANTS OR OPTIONS TO SUBSCRIBE FOR
OR PURCHASE COMMON STOCK OR OTHER SECURITIES CONVERTIBLE INTO, OR EXERCISABLE OR
EXCHANGEABLE FOR, COMMON STOCK.

(XI)            “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY THEREOF.

(XII)           “PRIMARY MARKET” MEANS ON ANY OF (A) THE AMERICAN STOCK
EXCHANGE, (B) NEW YORK STOCK EXCHANGE, (C) THE NASDAQ GLOBAL MARKET, (D) THE
NASDAQ CAPITAL MARKET, OR (E) THE NASDAQ OTC BULLETIN BOARD (“OTCBB”)

(XIII)          “SECURITIES ACT” MEANS THE SECURITIES ACT OF 1933, AS AMENDED.

(XIV)         “DEFAULT WARRANT” MEANS THIS DEFAULT WARRANT AND ALL DEFAULT
WARRANTS ISSUED IN EXCHANGE, TRANSFER OR REPLACEMENT THEREOF.

(XV)        “DEFAULT WARRANT EXERCISE PRICE” SHALL BE $0.50 OR AS SUBSEQUENTLY
ADJUSTED AS PROVIDED IN SECTION 8 HEREOF.

(XVI)        “DEFAULT WARRANT SHARE” MEANS A SHARE OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS DEFAULT WARRANT.

(C)   OTHER DEFINITIONAL PROVISIONS.

(I)            EXCEPT AS OTHERWISE SPECIFIED HEREIN, ALL REFERENCES HEREIN
(A) TO THE COMPANY SHALL BE DEEMED TO INCLUDE THE COMPANY’S SUCCESSORS AND
(B) TO ANY APPLICABLE LAW DEFINED OR REFERRED TO HEREIN SHALL BE DEEMED
REFERENCES TO SUCH APPLICABLE LAW AS THE SAME MAY HAVE BEEN OR MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME.

(II)           WHEN USED IN THIS DEFAULT WARRANT, THE WORDS “HEREIN”, “HEREOF”,
AND “HEREUNDER” AND WORDS OF SIMILAR IMPORT, SHALL REFER TO THIS DEFAULT WARRANT
AS A WHOLE AND NOT TO ANY PROVISION OF THIS DEFAULT WARRANT, AND THE WORDS
“SECTION”, “SCHEDULE”, AND “EXHIBIT” SHALL REFER TO SECTIONS OF, AND SCHEDULES
AND EXHIBITS TO, THIS DEFAULT WARRANT UNLESS OTHERWISE SPECIFIED.

(III)          WHENEVER THE CONTEXT SO REQUIRES, THE NEUTER GENDER INCLUDES THE
MASCULINE OR FEMININE, AND THE SINGULAR NUMBER INCLUDES THE PLURAL, AND VICE
VERSA.

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SECTION 2.               EXERCISE OF DEFAULT WARRANT.

(A)   SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THIS DEFAULT WARRANT MAY BE
EXERCISED BY THE HOLDER HEREOF THEN REGISTERED ON THE BOOKS OF THE COMPANY, PRO
RATA AS HEREINAFTER PROVIDED, AT ANY TIME ON ANY BUSINESS DAY ON OR AFTER THE
OPENING OF BUSINESS ON SUCH BUSINESS DAY, COMMENCING WITH THE FIRST DAY AFTER
THE DATE HEREOF, AND PRIOR TO 11:59 P.M. EASTERN TIME ON THE EXPIRATION DATE (I)
BY DELIVERY OF A WRITTEN NOTICE, IN THE FORM OF THE SUBSCRIPTION NOTICE ATTACHED
AS EXHIBIT A HERETO (THE “EXERCISE NOTICE”), OF SUCH HOLDER’S ELECTION TO
EXERCISE THIS DEFAULT WARRANT, WHICH NOTICE SHALL SPECIFY THE NUMBER OF DEFAULT
WARRANT SHARES TO BE PURCHASED, PAYMENT TO THE COMPANY OF AN AMOUNT EQUAL TO THE
DEFAULT WARRANT EXERCISE PRICE(S) APPLICABLE TO THE DEFAULT WARRANT SHARES BEING
PURCHASED, MULTIPLIED BY THE NUMBER OF DEFAULT WARRANT SHARES (AT THE APPLICABLE
DEFAULT WARRANT EXERCISE PRICE) AS TO WHICH THIS DEFAULT WARRANT IS BEING
EXERCISED (PLUS ANY APPLICABLE ISSUE OR TRANSFER TAXES) (THE “AGGREGATE EXERCISE
PRICE”) IN CASH OR WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS AND THE
SURRENDER OF THIS DEFAULT WARRANT (OR AN INDEMNIFICATION UNDERTAKING WITH
RESPECT TO THIS DEFAULT WARRANT IN THE CASE OF ITS LOSS, THEFT OR DESTRUCTION)
TO A COMMON CARRIER FOR OVERNIGHT DELIVERY TO THE COMPANY AS SOON AS PRACTICABLE
FOLLOWING SUCH DATE (“CASH BASIS”) OR (II) IF AT THE TIME OF EXERCISE, THE
DEFAULT WARRANT SHARES ARE NOT SUBJECT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IF AN EVENT OF DEFAULT HAS OCCURRED, BY DELIVERING AN EXERCISE NOTICE AND IN
LIEU OF MAKING PAYMENT OF THE AGGREGATE EXERCISE PRICE IN CASH OR WIRE TRANSFER,
ELECT INSTEAD TO RECEIVE UPON SUCH EXERCISE THE “NET NUMBER” OF SHARES OF COMMON
STOCK DETERMINED ACCORDING TO THE FOLLOWING FORMULA (THE “CASHLESS EXERCISE”):

Net Number =

(A x B) — (A x C)

 

 

B

 

 

For purposes of the foregoing formula:

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

B = the Closing Bid Price of the Common Stock on the date of exercise of the
Default Warrant.

C = the Default Warrant Exercise Price then in effect for the applicable Default
Warrant Shares at the time of such exercise.

IN THE EVENT OF ANY EXERCISE OF THE RIGHTS REPRESENTED BY THIS DEFAULT WARRANT
IN COMPLIANCE WITH THIS SECTION 2, THE COMPANY SHALL ON OR BEFORE THE
FIFTH (5TH) BUSINESS DAY FOLLOWING THE DATE OF RECEIPT OF THE EXERCISE NOTICE,
THE AGGREGATE EXERCISE PRICE AND THIS DEFAULT WARRANT (OR AN INDEMNIFICATION
UNDERTAKING WITH RESPECT TO THIS DEFAULT WARRANT IN THE CASE OF ITS LOSS, THEFT
OR DESTRUCTION) AND THE RECEIPT OF THE REPRESENTATIONS OF THE HOLDER SPECIFIED
IN SECTION 6 HEREOF, IF REQUESTED BY THE COMPANY (THE “EXERCISE DELIVERY
DOCUMENTS”), AND IF THE COMMON STOCK IS DTC ELIGIBLE, CREDIT SUCH AGGREGATE
NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER SHALL BE ENTITLED TO THE
HOLDER’S OR ITS DESIGNEE’S BALANCE ACCOUNT WITH THE DEPOSITORY TRUST COMPANY;
PROVIDED, HOWEVER, IF THE HOLDER WHO SUBMITTED THE EXERCISE NOTICE REQUESTED
PHYSICAL DELIVERY OF ANY OR ALL OF THE DEFAULT WARRANT SHARES, OR, IF THE COMMON
STOCK IS NOT DTC ELIGIBLE  THEN THE COMPANY SHALL, ON OR BEFORE THE FIFTH (5TH)
BUSINESS DAY FOLLOWING RECEIPT OF THE EXERCISE DELIVERY DOCUMENTS, ISSUE AND
SURRENDER TO A COMMON CARRIER FOR OVERNIGHT DELIVERY TO THE ADDRESS SPECIFIED IN
THE EXERCISE NOTICE, A CERTIFICATE, REGISTERED IN THE NAME OF THE HOLDER, FOR
THE NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER SHALL BE ENTITLED
PURSUANT TO SUCH REQUEST.  UPON DELIVERY OF THE EXERCISE NOTICE AND AGGREGATE
EXERCISE PRICE REFERRED TO IN CLAUSE (I) OR (II) ABOVE THE HOLDER OF THIS
DEFAULT WARRANT SHALL BE DEEMED FOR ALL CORPORATE PURPOSES TO HAVE BECOME THE
HOLDER OF RECORD OF THE DEFAULT WARRANT SHARES WITH RESPECT TO WHICH THIS
DEFAULT WARRANT HAS BEEN EXERCISED.  IN THE CASE OF A DISPUTE AS TO THE
DETERMINATION OF THE DEFAULT WARRANT EXERCISE PRICE, THE CLOSING BID PRICE OR
THE ARITHMETIC CALCULATION OF THE DEFAULT WARRANT SHARES, THE COMPANY SHALL
PROMPTLY ISSUE TO THE HOLDER THE NUMBER OF DEFAULT WARRANT SHARES THAT IS NOT
DISPUTED AND SHALL SUBMIT THE DISPUTED DETERMINATIONS OR ARITHMETIC CALCULATIONS
TO THE HOLDER VIA FACSIMILE WITHIN ONE (1) BUSINESS DAY OF RECEIPT OF THE
HOLDER’S EXERCISE NOTICE.

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(B)   IF THE HOLDER AND THE COMPANY ARE UNABLE TO AGREE UPON THE DETERMINATION
OF THE DEFAULT WARRANT EXERCISE PRICE OR ARITHMETIC CALCULATION OF THE DEFAULT
WARRANT SHARES WITHIN ONE (1) DAY OF SUCH DISPUTED DETERMINATION OR ARITHMETIC
CALCULATION BEING SUBMITTED TO THE HOLDER, THEN THE COMPANY SHALL IMMEDIATELY
SUBMIT VIA FACSIMILE (I) THE DISPUTED DETERMINATION OF THE DEFAULT WARRANT
EXERCISE PRICE OR THE CLOSING BID PRICE TO AN INDEPENDENT, REPUTABLE INVESTMENT
BANKING FIRM OR (II) THE DISPUTED ARITHMETIC CALCULATION OF THE DEFAULT WARRANT
SHARES TO ITS INDEPENDENT, OUTSIDE ACCOUNTANT.  THE COMPANY SHALL CAUSE THE
INVESTMENT BANKING FIRM 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 FORTY-EIGHT (48) HOURS FROM THE TIME IT RECEIVES THE
DISPUTED DETERMINATIONS OR CALCULATIONS.  SUCH INVESTMENT BANKING FIRM’S OR
ACCOUNTANT’S DETERMINATION OR CALCULATION, AS THE CASE MAY BE, SHALL BE DEEMED
CONCLUSIVE ABSENT MANIFEST ERROR.

(C)   UNLESS THE RIGHTS REPRESENTED BY THIS DEFAULT WARRANT SHALL HAVE EXPIRED
OR SHALL HAVE BEEN FULLY EXERCISED, THE COMPANY SHALL, AS SOON AS PRACTICABLE
AND IN NO EVENT LATER THAN FIVE (5) BUSINESS DAYS AFTER ANY EXERCISE AND AT ITS
OWN EXPENSE, ISSUE A NEW DEFAULT WARRANT IDENTICAL IN ALL RESPECTS TO THIS
DEFAULT WARRANT EXERCISED EXCEPT IT SHALL REPRESENT RIGHTS TO PURCHASE THE
NUMBER OF DEFAULT WARRANT SHARES PURCHASABLE IMMEDIATELY PRIOR TO SUCH EXERCISE
UNDER THIS DEFAULT WARRANT EXERCISED, LESS THE NUMBER OF DEFAULT WARRANT SHARES
WITH RESPECT TO WHICH SUCH DEFAULT WARRANT IS EXERCISED.

(D)   NO FRACTIONAL DEFAULT WARRANT SHARES ARE TO BE ISSUED UPON ANY PRO RATA
EXERCISE OF THIS DEFAULT WARRANT, BUT RATHER THE NUMBER OF DEFAULT WARRANT
SHARES ISSUED UPON SUCH EXERCISE OF THIS DEFAULT WARRANT SHALL BE ROUNDED UP OR
DOWN TO THE NEAREST WHOLE NUMBER.

(E)   IF THE COMPANY OR ITS TRANSFER AGENT SHALL FAIL FOR ANY REASON OR FOR NO
REASON TO ISSUE TO THE HOLDER WITHIN TEN (10) DAYS OF RECEIPT OF THE EXERCISE
DELIVERY DOCUMENTS, A CERTIFICATE FOR THE NUMBER OF DEFAULT WARRANT SHARES TO
WHICH THE HOLDER IS ENTITLED OR TO CREDIT THE HOLDER’S BALANCE ACCOUNT WITH THE
DEPOSITORY TRUST COMPANY FOR SUCH NUMBER OF DEFAULT WARRANT SHARES TO WHICH THE
HOLDER IS ENTITLED UPON THE HOLDER’S EXERCISE OF THIS DEFAULT WARRANT, THE
COMPANY SHALL, IN ADDITION TO ANY OTHER REMEDIES UNDER THIS DEFAULT WARRANT OR
OTHERWISE AVAILABLE TO SUCH HOLDER, PAY AS ADDITIONAL DAMAGES IN CASH TO SUCH
HOLDER ON EACH DAY THE ISSUANCE OF SUCH CERTIFICATE FOR DEFAULT WARRANT SHARES
IS NOT TIMELY EFFECTED AN AMOUNT EQUAL TO 0.025% OF THE PRODUCT OF (A) THE SUM
OF THE NUMBER OF DEFAULT WARRANT SHARES NOT ISSUED TO THE HOLDER ON A TIMELY
BASIS AND TO WHICH THE HOLDER IS ENTITLED, AND (B) THE CLOSING BID PRICE OF THE
COMMON STOCK FOR THE TRADING DAY IMMEDIATELY PRECEDING THE LAST POSSIBLE DATE
WHICH THE COMPANY COULD HAVE ISSUED SUCH COMMON STOCK TO THE HOLDER WITHOUT
VIOLATING THIS SECTION 2.

(F)    IF WITHIN TEN (10) DAYS AFTER THE COMPANY’S RECEIPT OF THE EXERCISE
DELIVERY DOCUMENTS, THE COMPANY FAILS TO DELIVER A NEW DEFAULT WARRANT TO THE
HOLDER FOR THE NUMBER OF DEFAULT WARRANT SHARES TO WHICH SUCH HOLDER IS ENTITLED
PURSUANT TO SECTION 2 HEREOF, THEN, IN ADDITION TO ANY OTHER AVAILABLE REMEDIES
UNDER THIS DEFAULT WARRANT, OR OTHERWISE AVAILABLE TO SUCH HOLDER, THE COMPANY
SHALL PAY AS ADDITIONAL DAMAGES IN CASH TO SUCH HOLDER ON EACH DAY AFTER SUCH
TENTH (10TH) DAY THAT SUCH DELIVERY OF SUCH NEW DEFAULT WARRANT IS NOT TIMELY
EFFECTED IN AN AMOUNT EQUAL TO 0.25% OF THE PRODUCT OF (A) THE NUMBER OF DEFAULT
WARRANT SHARES REPRESENTED BY THE PORTION OF THIS DEFAULT WARRANT WHICH IS NOT
BEING EXERCISED AND (B) THE CLOSING BID PRICE OF THE COMMON STOCK FOR THE
TRADING DAY IMMEDIATELY PRECEDING THE LAST POSSIBLE DATE WHICH THE COMPANY COULD
HAVE ISSUED SUCH DEFAULT WARRANT TO THE HOLDER WITHOUT VIOLATING THIS SECTION 2.

SECTION 3.               COVENANTS AS TO COMMON STOCK.  THE COMPANY HEREBY
COVENANTS AND AGREES AS FOLLOWS:

(A)   THIS DEFAULT WARRANT IS, AND ANY DEFAULT WARRANTS ISSUED IN SUBSTITUTION
FOR OR REPLACEMENT OF THIS DEFAULT WARRANT WILL UPON ISSUANCE BE, DULY
AUTHORIZED AND VALIDLY ISSUED.

(B)   ALL DEFAULT WARRANT SHARES WHICH MAY BE ISSUED UPON THE EXERCISE OF THE
RIGHTS REPRESENTED BY THIS DEFAULT WARRANT WILL, UPON ISSUANCE, BE VALIDLY
ISSUED, FULLY PAID AND NONASSESSABLE AND FREE FROM ALL TAXES, LIENS AND CHARGES
WITH RESPECT TO THE ISSUE THEREOF.

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(C)   DURING THE PERIOD WITHIN WHICH THE RIGHTS REPRESENTED BY THIS DEFAULT
WARRANT MAY BE EXERCISED, THE COMPANY WILL AT ALL TIMES HAVE AUTHORIZED AND
RESERVED AT LEAST ONE HUNDRED PERCENT (100%) OF THE NUMBER OF SHARES OF COMMON
STOCK NEEDED TO PROVIDE FOR THE EXERCISE OF THE RIGHTS THEN REPRESENTED BY THIS
DEFAULT WARRANT AND THE PAR VALUE OF SAID SHARES WILL AT ALL TIMES BE LESS THAN
OR EQUAL TO THE APPLICABLE DEFAULT WARRANT EXERCISE PRICE.  IF AT ANY TIME THE
COMPANY DOES NOT HAVE A SUFFICIENT NUMBER OF SHARES OF COMMON STOCK AUTHORIZED
AND AVAILABLE, THEN THE COMPANY SHALL CALL AND HOLD A SPECIAL MEETING OF ITS
STOCKHOLDERS WITHIN SIXTY (60) DAYS OF THAT TIME FOR THE SOLE PURPOSE OF
INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.

(D)   IF AT ANY TIME AFTER THE DATE HEREOF THE COMPANY SHALL FILE A REGISTRATION
STATEMENT, THE COMPANY SHALL, AT THE HOLDER’S OPTION, INCLUDE THE DEFAULT
WARRANT SHARES ISSUABLE TO THE HOLDER, PURSUANT TO THE TERMS OF THIS DEFAULT
WARRANT.  THE COMPANY SHALL MAINTAIN, SO LONG AS ANY OTHER SHARES OF COMMON
STOCK SHALL BE SO LISTED, SUCH LISTING OF ALL DEFAULT WARRANT SHARES FROM TIME
TO TIME ISSUABLE UPON THE EXERCISE OF THIS DEFAULT WARRANT; AND THE COMPANY
SHALL SO LIST ON EACH NATIONAL SECURITIES EXCHANGE OR AUTOMATED QUOTATION
SYSTEM, AS THE CASE MAY BE, AND SHALL MAINTAIN SUCH LISTING OF, ANY OTHER SHARES
OF CAPITAL STOCK OF THE COMPANY ISSUABLE UPON THE EXERCISE OF THIS DEFAULT
WARRANT IF AND SO LONG AS ANY SHARES OF THE SAME CLASS SHALL BE LISTED ON SUCH
NATIONAL SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM.

(E)   THE COMPANY WILL NOT, BY AMENDMENT OF ITS ARTICLES OF INCORPORATION OR
THROUGH ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION, MERGER,
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 TO BE
OBSERVED OR PERFORMED BY IT HEREUNDER, BUT WILL AT ALL TIMES IN GOOD FAITH
ASSIST IN THE CARRYING OUT OF ALL THE PROVISIONS OF THIS DEFAULT WARRANT AND IN
THE TAKING OF ALL SUCH ACTION AS MAY REASONABLY BE REQUESTED BY THE HOLDER OF
THIS DEFAULT WARRANT IN ORDER TO PROTECT THE EXERCISE PRIVILEGE OF THE HOLDER OF
THIS DEFAULT WARRANT AGAINST DILUTION OR OTHER IMPAIRMENT, CONSISTENT WITH THE
TENOR AND PURPOSE OF THIS DEFAULT WARRANT.  THE COMPANY WILL NOT INCREASE THE
PAR VALUE OF ANY SHARES OF COMMON STOCK RECEIVABLE UPON THE EXERCISE OF THIS
DEFAULT WARRANT ABOVE THE DEFAULT WARRANT EXERCISE PRICE THEN IN EFFECT, AND
(II) WILL 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 DEFAULT WARRANT.

(F)    THIS DEFAULT WARRANT WILL BE BINDING UPON ANY ENTITY SUCCEEDING TO THE
COMPANY BY MERGER, CONSOLIDATION OR ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF
THE COMPANY’S ASSETS.

SECTION 4.               TAXES.  THE COMPANY SHALL PAY ANY AND ALL TAXES, EXCEPT
ANY APPLICABLE WITHHOLDING, WHICH MAY BE PAYABLE WITH RESPECT TO THE ISSUANCE
AND DELIVERY OF DEFAULT WARRANT SHARES UPON EXERCISE OF THIS DEFAULT WARRANT.

SECTION 5.               DEFAULT WARRANT HOLDER NOT DEEMED A STOCKHOLDER. 
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, NO HOLDER, AS SUCH, OF THIS
DEFAULT WARRANT SHALL BE ENTITLED TO VOTE OR RECEIVE DIVIDENDS OR BE DEEMED THE
HOLDER OF SHARES OF CAPITAL STOCK OF THE COMPANY FOR ANY PURPOSE, NOR SHALL
ANYTHING CONTAINED IN THIS DEFAULT WARRANT BE CONSTRUED TO CONFER UPON THE
HOLDER HEREOF, AS SUCH, 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
THIS DEFAULT WARRANT OF THE DEFAULT WARRANT SHARES WHICH HE OR SHE IS THEN
ENTITLED TO RECEIVE UPON THE DUE EXERCISE OF THIS DEFAULT WARRANT.  IN ADDITION,
NOTHING CONTAINED IN THIS DEFAULT WARRANT SHALL BE CONSTRUED AS IMPOSING ANY
LIABILITIES ON SUCH HOLDER TO PURCHASE ANY SECURITIES (UPON EXERCISE OF THIS
DEFAULT WARRANT OR OTHERWISE) OR AS A STOCK OF THE COMPANY, WHETHER SUCH
LIABILITIES ARE ASSERTED BY THE COMPANY OR BY CREDITORS OF THE COMPANY. 
NOTWITHSTANDING THIS SECTION 5, THE COMPANY WILL PROVIDE THE HOLDER OF THIS
DEFAULT WARRANT 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.

SECTION 6.               REPRESENTATIONS OF HOLDER.  THE HOLDER OF THIS DEFAULT
WARRANT, BY THE ACCEPTANCE HEREOF, REPRESENTS THAT HE IS ACQUIRING THIS DEFAULT
WARRANT AND THE DEFAULT WARRANT SHARES

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FOR HIS OWN ACCOUNT FOR INVESTMENT ONLY AND NOT WITH A VIEW TOWARDS, OR FOR
RESALE IN CONNECTION WITH, THE PUBLIC SALE OR DISTRIBUTION OF THIS DEFAULT
WARRANT OR THE DEFAULT WARRANT SHARES, EXCEPT PURSUANT TO SALES REGISTERED OR
EXEMPTED UNDER THE SECURITIES ACT; PROVIDED, HOWEVER, THAT BY MAKING THE
REPRESENTATIONS HEREIN, THE HOLDER DOES NOT AGREE TO HOLD THIS DEFAULT WARRANT
OR ANY OF THE DEFAULT WARRANT SHARES FOR ANY MINIMUM OR OTHER SPECIFIC TERM AND
RESERVES THE RIGHT TO DISPOSE OF THIS DEFAULT WARRANT AND THE DEFAULT WARRANT
SHARES AT ANY TIME IN ACCORDANCE WITH OR PURSUANT TO A REGISTRATION STATEMENT OR
AN EXEMPTION UNDER THE SECURITIES ACT.  THE HOLDER OF THIS DEFAULT WARRANT
FURTHER REPRESENTS, BY ACCEPTANCE HEREOF, THAT, AS OF THIS DATE, SUCH HOLDER IS
AN “ACCREDITED INVESTOR” AS SUCH TERM IS DEFINED IN RULE 501(A)(1) OF REGULATION
D PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT
(AN “ACCREDITED INVESTOR”).  UPON EXERCISE OF THIS DEFAULT WARRANT THE HOLDER
SHALL, IF REQUESTED BY THE COMPANY, CONFIRM IN WRITING, IN A FORM SATISFACTORY
TO THE COMPANY, THAT THE DEFAULT WARRANT SHARES SO PURCHASED ARE BEING ACQUIRED
SOLELY FOR THE HOLDER’S OWN ACCOUNT AND NOT AS A NOMINEE FOR ANY OTHER PARTY,
FOR INVESTMENT, AND NOT WITH A VIEW TOWARD DISTRIBUTION OR RESALE AND THAT SUCH
HOLDER IS AN ACCREDITED INVESTOR.  IF SUCH HOLDER CANNOT MAKE SUCH
REPRESENTATIONS BECAUSE THEY WOULD BE FACTUALLY INCORRECT, IT SHALL BE A
CONDITION TO SUCH HOLDER’S EXERCISE OF THIS DEFAULT WARRANT THAT THE COMPANY
RECEIVE SUCH OTHER REPRESENTATIONS AS THE COMPANY CONSIDERS REASONABLY NECESSARY
TO ASSURE THE COMPANY THAT THE ISSUANCE OF ITS SECURITIES UPON EXERCISE OF THIS
DEFAULT WARRANT SHALL NOT VIOLATE ANY UNITED STATES OR STATE SECURITIES LAWS.

SECTION 7.               OWNERSHIP AND TRANSFER.

(A)   THE COMPANY SHALL MAINTAIN AT ITS PRINCIPAL EXECUTIVE OFFICES (OR SUCH
OTHER OFFICE OR AGENCY OF THE COMPANY AS IT MAY DESIGNATE BY NOTICE TO THE
HOLDER HEREOF), A REGISTER FOR THIS DEFAULT WARRANT, IN WHICH THE COMPANY SHALL
RECORD THE NAME AND ADDRESS OF THE PERSON IN WHOSE NAME THIS DEFAULT WARRANT HAS
BEEN ISSUED, AS WELL AS THE NAME AND ADDRESS OF EACH TRANSFEREE.  THE COMPANY
MAY TREAT THE PERSON IN WHOSE NAME ANY DEFAULT WARRANT IS REGISTERED ON THE
REGISTER AS THE OWNER AND HOLDER THEREOF FOR ALL PURPOSES, NOTWITHSTANDING ANY
NOTICE TO THE CONTRARY, BUT IN ALL EVENTS RECOGNIZING ANY TRANSFERS MADE IN
ACCORDANCE WITH THE TERMS OF THIS DEFAULT WARRANT.

SECTION 8.               ADJUSTMENT OF DEFAULT WARRANT EXERCISE PRICE AND NUMBER
OF SHARES.  THE DEFAULT WARRANT EXERCISE PRICE AND THE NUMBER OF SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS DEFAULT WARRANT SHALL BE ADJUSTED
FROM TIME TO TIME AS FOLLOWS:

(A)   ADJUSTMENT OF DEFAULT WARRANT EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK.  IF AND WHENEVER ON OR AFTER THE ISSUANCE DATE OF THIS
DEFAULT WARRANT, THE COMPANY ISSUES OR SELLS, OR IS DEEMED TO HAVE ISSUED OR
SOLD, ANY SHARES OF COMMON STOCK (OTHER THAN EXCLUDED SECURITIES) FOR A
CONSIDERATION PER SHARE LESS THAN A PRICE (THE “APPLICABLE PRICE”) EQUAL TO THE
DEFAULT WARRANT EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ISSUANCE OR
SALE, THEN IMMEDIATELY AFTER SUCH ISSUE OR SALE THE DEFAULT WARRANT EXERCISE
PRICE THEN IN EFFECT SHALL BE REDUCED TO AN AMOUNT EQUAL TO SUCH CONSIDERATION
PER SHARE; PROVIDED THAT, IN NO EVENT SHALL THE DEFAULT WARRANT EXERCISE PRICE
BE REDUCED TO LESS THAT $.05 PER SHARE (PURSUANT TO THIS SECTION 8(A).  UPON
EACH SUCH ADJUSTMENT OF THE DEFAULT WARRANT EXERCISE PRICE HEREUNDER, THE NUMBER
OF DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS DEFAULT WARRANT SHALL
BE ADJUSTED TO THE NUMBER OF SHARES DETERMINED BY MULTIPLYING THE DEFAULT
WARRANT EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT BY THE
NUMBER OF DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS DEFAULT WARRANT
IMMEDIATELY PRIOR TO SUCH ADJUSTMENT AND DIVIDING THE PRODUCT THEREOF BY THE
DEFAULT WARRANT EXERCISE PRICE RESULTING FROM SUCH ADJUSTMENT.

(B)   EFFECT ON DEFAULT WARRANT EXERCISE PRICE OF CERTAIN EVENTS.  FOR PURPOSES
OF DETERMINING THE ADJUSTED DEFAULT WARRANT EXERCISE PRICE UNDER SECTION 8(A)
ABOVE, THE FOLLOWING SHALL BE APPLICABLE:

(I)            ISSUANCE OF OPTIONS.  IF AFTER THE DATE HEREOF, THE COMPANY IN
ANY MANNER GRANTS ANY OPTIONS AND THE LOWEST PRICE PER SHARE FOR WHICH ONE SHARE
OF COMMON STOCK IS ISSUABLE UPON THE EXERCISE OF ANY SUCH OPTION OR UPON
CONVERSION OR EXCHANGE OF ANY CONVERTIBLE SECURITIES ISSUABLE UPON EXERCISE OF
ANY SUCH OPTION IS LESS THAN THE APPLICABLE PRICE, THEN SUCH SHARE OF COMMON
STOCK SHALL BE DEEMED TO BE OUTSTANDING AND TO HAVE BEEN ISSUED AND SOLD BY THE
COMPANY AT THE TIME OF THE GRANTING

--------------------------------------------------------------------------------

OR SALE OF SUCH OPTION FOR SUCH PRICE PER SHARE.  FOR PURPOSES OF THIS SECTION
8(B)(I), THE LOWEST PRICE PER SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS
ISSUABLE UPON EXERCISE OF SUCH OPTIONS OR UPON CONVERSION OR EXCHANGE OF SUCH
CONVERTIBLE SECURITIES SHALL BE EQUAL TO THE SUM OF THE LOWEST AMOUNTS OF
CONSIDERATION (IF ANY) RECEIVED OR RECEIVABLE BY THE COMPANY WITH RESPECT TO ANY
ONE SHARE OF COMMON STOCK UPON THE GRANTING OR SALE OF THE OPTION, UPON EXERCISE
OF THE OPTION OR UPON CONVERSION OR EXCHANGE OF ANY CONVERTIBLE SECURITY
ISSUABLE UPON EXERCISE OF SUCH OPTION.  NO FURTHER ADJUSTMENT OF THE DEFAULT
WARRANT EXERCISE PRICE SHALL BE MADE UPON THE ACTUAL ISSUANCE OF SUCH COMMON
STOCK OR OF SUCH CONVERTIBLE SECURITIES UPON THE EXERCISE OF SUCH OPTIONS OR
UPON THE ACTUAL ISSUANCE OF SUCH COMMON STOCK UPON CONVERSION OR EXCHANGE OF
SUCH CONVERTIBLE SECURITIES.

(II)           ISSUANCE OF CONVERTIBLE SECURITIES.  IF THE COMPANY IN ANY MANNER
ISSUES OR SELLS ANY CONVERTIBLE SECURITIES AND THE LOWEST PRICE PER SHARE FOR
WHICH ONE SHARE OF COMMON STOCK IS ISSUABLE UPON THE CONVERSION OR EXCHANGE
THEREOF IS LESS THAN THE APPLICABLE PRICE, THEN SUCH SHARE OF COMMON STOCK SHALL
BE DEEMED TO BE OUTSTANDING AND TO HAVE BEEN ISSUED AND SOLD BY THE COMPANY AT
THE TIME OF THE ISSUANCE OR SALE OF SUCH CONVERTIBLE SECURITIES FOR SUCH PRICE
PER SHARE.  FOR THE PURPOSES OF THIS SECTION 8(B)(II), THE LOWEST PRICE PER
SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS ISSUABLE UPON SUCH CONVERSION OR
EXCHANGE SHALL BE EQUAL TO THE SUM OF THE LOWEST AMOUNTS OF CONSIDERATION (IF
ANY) RECEIVED OR RECEIVABLE BY THE COMPANY WITH RESPECT TO ONE SHARE OF COMMON
STOCK UPON THE ISSUANCE OR SALE OF THE CONVERTIBLE SECURITY AND UPON CONVERSION
OR EXCHANGE OF SUCH CONVERTIBLE SECURITY.  NO FURTHER ADJUSTMENT OF THE DEFAULT
WARRANT EXERCISE PRICE SHALL BE MADE UPON THE ACTUAL ISSUANCE OF SUCH COMMON
STOCK UPON CONVERSION OR EXCHANGE OF SUCH CONVERTIBLE SECURITIES, AND IF ANY
SUCH ISSUE OR SALE OF SUCH CONVERTIBLE SECURITIES IS MADE UPON EXERCISE OF ANY
OPTIONS FOR WHICH ADJUSTMENT OF THE DEFAULT WARRANT EXERCISE PRICE HAD BEEN OR
ARE TO BE MADE PURSUANT TO OTHER PROVISIONS OF THIS SECTION 8(B), NO FURTHER
ADJUSTMENT OF THE DEFAULT WARRANT EXERCISE PRICE SHALL BE MADE BY REASON OF SUCH
ISSUE OR SALE.

(III)          CHANGE IN OPTION PRICE OR RATE OF CONVERSION.  IF THE PURCHASE
PRICE PROVIDED FOR IN ANY OPTIONS, THE ADDITIONAL CONSIDERATION, IF ANY, PAYABLE
UPON THE ISSUE, CONVERSION OR EXCHANGE OF ANY CONVERTIBLE SECURITIES, OR THE
RATE AT WHICH ANY CONVERTIBLE SECURITIES ARE CONVERTIBLE INTO OR EXCHANGEABLE
FOR COMMON STOCK CHANGES AT ANY TIME, THE DEFAULT WARRANT EXERCISE PRICE IN
EFFECT AT THE TIME OF SUCH CHANGE SHALL BE ADJUSTED TO THE DEFAULT WARRANT
EXERCISE PRICE WHICH WOULD HAVE BEEN IN EFFECT AT SUCH TIME HAD SUCH OPTIONS OR
CONVERTIBLE SECURITIES PROVIDED FOR SUCH CHANGED PURCHASE PRICE, ADDITIONAL
CONSIDERATION OR CHANGED CONVERSION RATE, AS THE CASE MAY BE, AT THE TIME
INITIALLY GRANTED, ISSUED OR SOLD AND THE NUMBER OF DEFAULT WARRANT SHARES
ISSUABLE UPON EXERCISE OF THIS DEFAULT WARRANT SHALL BE CORRESPONDINGLY
READJUSTED.  FOR PURPOSES OF THIS SECTION 8(B)(III), IF THE TERMS OF ANY OPTION
OR CONVERTIBLE SECURITY THAT WAS OUTSTANDING AS OF THE ISSUANCE DATE OF THIS
DEFAULT WARRANT ARE CHANGED IN THE MANNER DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE, THEN SUCH OPTION OR CONVERTIBLE SECURITY AND THE COMMON STOCK DEEMED
ISSUABLE UPON EXERCISE, CONVERSION OR EXCHANGE THEREOF SHALL BE DEEMED TO HAVE
BEEN ISSUED AS OF THE DATE OF SUCH CHANGE.  NO ADJUSTMENT PURSUANT TO THIS
SECTION 8(B) SHALL BE MADE IF SUCH ADJUSTMENT WOULD RESULT IN AN INCREASE OF THE
DEFAULT WARRANT EXERCISE PRICE THEN IN EFFECT.

(IV)          CALCULATION OF CONSIDERATION RECEIVED.  IF ANY COMMON STOCK,
OPTIONS OR CONVERTIBLE SECURITIES ARE ISSUED OR SOLD OR DEEMED TO HAVE BEEN
ISSUED OR SOLD FOR CASH, THE CONSIDERATION RECEIVED THEREFORE WILL BE DEEMED TO
BE THE NET AMOUNT RECEIVED BY THE COMPANY THEREFORE.  IF ANY COMMON STOCK,
OPTIONS OR CONVERTIBLE SECURITIES ARE ISSUED OR SOLD FOR A CONSIDERATION OTHER
THAN CASH, THE AMOUNT OF SUCH CONSIDERATION RECEIVED BY THE COMPANY WILL BE THE
FAIR VALUE OF SUCH CONSIDERATION, EXCEPT WHERE SUCH CONSIDERATION CONSISTS OF
MARKETABLE SECURITIES, IN WHICH CASE THE AMOUNT OF CONSIDERATION RECEIVED BY THE
COMPANY WILL BE THE MARKET PRICE OF SUCH SECURITIES ON THE DATE OF RECEIPT OF
SUCH SECURITIES.  IF ANY COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES ARE
ISSUED TO THE OWNERS OF THE NON-SURVIVING ENTITY IN CONNECTION WITH ANY MERGER
IN WHICH THE COMPANY IS THE SURVIVING ENTITY, THE AMOUNT OF CONSIDERATION
THEREFORE WILL BE DEEMED TO BE THE FAIR VALUE OF SUCH PORTION OF THE NET ASSETS
AND BUSINESS OF THE NON-SURVIVING ENTITY AS IS ATTRIBUTABLE TO SUCH COMMON
STOCK, OPTIONS OR CONVERTIBLE SECURITIES, AS THE CASE MAY BE.  THE FAIR VALUE OF
ANY CONSIDERATION OTHER THAN CASH OR SECURITIES WILL BE DETERMINED JOINTLY BY
THE COMPANY AND THE HOLDERS OF DEFAULT WARRANTS REPRESENTING AT LEAST TWO-THIRDS
(B) OF THE DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF THE DEFAULT WARRANTS
THEN OUTSTANDING.  IF SUCH PARTIES ARE UNABLE TO REACH AGREEMENT WITHIN TEN (10)
DAYS AFTER THE OCCURRENCE OF AN EVENT REQUIRING VALUATION (THE “VALUATION
EVENT”), THE FAIR VALUE OF SUCH CONSIDERATION WILL BE DETERMINED WITHIN FIVE (5)

--------------------------------------------------------------------------------

BUSINESS DAYS AFTER THE TENTH (10TH) DAY FOLLOWING THE VALUATION EVENT BY AN
INDEPENDENT, REPUTABLE APPRAISER JOINTLY SELECTED BY THE COMPANY AND THE HOLDERS
OF DEFAULT WARRANTS REPRESENTING AT LEAST TWO-THIRDS (B) OF THE DEFAULT WARRANT
SHARES ISSUABLE UPON EXERCISE OF THE DEFAULT WARRANTS THEN OUTSTANDING.  THE
DETERMINATION OF SUCH APPRAISER SHALL BE FINAL AND BINDING UPON ALL PARTIES AND
THE FEES AND EXPENSES OF SUCH APPRAISER SHALL BE BORNE JOINTLY BY THE COMPANY
AND THE HOLDERS OF DEFAULT WARRANTS.

(V)           INTEGRATED TRANSACTIONS.  IN CASE ANY OPTION IS ISSUED IN
CONNECTION WITH THE ISSUE OR SALE OF OTHER SECURITIES OF THE COMPANY, TOGETHER
COMPRISING ONE INTEGRATED TRANSACTION IN WHICH NO SPECIFIC CONSIDERATION IS
ALLOCATED TO SUCH OPTIONS BY THE PARTIES THERETO, THE OPTIONS WILL BE DEEMED TO
HAVE BEEN ISSUED FOR A CONSIDERATION OF $.01.

(VI)          TREASURY SHARES.  THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
AT ANY GIVEN TIME DOES NOT INCLUDE SHARES OWNED OR HELD BY OR FOR THE ACCOUNT OF
THE COMPANY, AND THE DISPOSITION OF ANY SHARES SO OWNED OR HELD WILL BE
CONSIDERED AN ISSUE OR SALE OF COMMON STOCK.

(VII)         RECORD DATE.  IF THE COMPANY TAKES A RECORD OF THE HOLDERS OF
COMMON STOCK FOR THE PURPOSE OF ENTITLING THEM (1) TO RECEIVE A DIVIDEND OR
OTHER DISTRIBUTION PAYABLE IN COMMON STOCK, OPTIONS OR IN CONVERTIBLE SECURITIES
OR (2) TO SUBSCRIBE FOR OR PURCHASE COMMON STOCK, OPTIONS OR CONVERTIBLE
SECURITIES, THEN SUCH RECORD DATE WILL BE DEEMED TO BE THE DATE OF THE ISSUE OR
SALE OF THE SHARES OF COMMON STOCK DEEMED TO HAVE BEEN ISSUED OR SOLD UPON THE
DECLARATION OF SUCH DIVIDEND OR THE MAKING OF SUCH OTHER DISTRIBUTION OR THE
DATE OF THE GRANTING OF SUCH RIGHT OF SUBSCRIPTION OR PURCHASE, AS THE CASE MAY
BE.

(C)   ADJUSTMENT OF DEFAULT WARRANT EXERCISE PRICE UPON SUBDIVISION OR
COMBINATION OF COMMON STOCK.  IF THE COMPANY AT ANY TIME AFTER THE DATE OF
ISSUANCE OF THIS DEFAULT WARRANT 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, ANY DEFAULT WARRANT EXERCISE PRICE
IN EFFECT IMMEDIATELY PRIOR TO SUCH SUBDIVISION WILL BE PROPORTIONATELY REDUCED
AND THE NUMBER OF SHARES OF COMMON STOCK OBTAINABLE UPON EXERCISE OF THIS
DEFAULT WARRANT WILL BE PROPORTIONATELY INCREASED.  IF THE COMPANY AT ANY TIME
AFTER THE DATE OF ISSUANCE OF THIS DEFAULT WARRANT 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, ANY DEFAULT WARRANT EXERCISE
PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH COMBINATION WILL BE PROPORTIONATELY
INCREASED AND THE NUMBER OF DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF
THIS DEFAULT WARRANT WILL BE PROPORTIONATELY DECREASED.  ANY ADJUSTMENT UNDER
THIS SECTION 8(C) SHALL BECOME EFFECTIVE AT THE CLOSE OF BUSINESS ON THE DATE
THE SUBDIVISION OR COMBINATION BECOMES EFFECTIVE.

(D)   DISTRIBUTION OF ASSETS.  IF THE COMPANY SHALL DECLARE OR MAKE ANY DIVIDEND
OR OTHER DISTRIBUTION OF ITS ASSETS (OR RIGHTS TO ACQUIRE ITS ASSETS) TO HOLDERS
OF COMMON STOCK, BY WAY OF RETURN OF CAPITAL OR OTHERWISE (INCLUDING, WITHOUT
LIMITATION, ANY DISTRIBUTION OF CASH, STOCK OR OTHER SECURITIES, PROPERTY OR
OPTIONS BY WAY OF A DIVIDEND, SPIN OFF, RECLASSIFICATION, CORPORATE
REARRANGEMENT OR OTHER SIMILAR TRANSACTION) (A “DISTRIBUTION”), AT ANY TIME
AFTER THE ISSUANCE OF THIS DEFAULT WARRANT, THEN, IN EACH SUCH CASE:

(I)            ANY DEFAULT WARRANT EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO
THE CLOSE OF BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF HOLDERS
OF COMMON STOCK ENTITLED TO RECEIVE THE DISTRIBUTION SHALL BE REDUCED, EFFECTIVE
AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE, TO A PRICE DETERMINED BY
MULTIPLYING SUCH DEFAULT WARRANT EXERCISE PRICE BY A FRACTION OF WHICH (A) THE
NUMERATOR SHALL BE THE CLOSING SALE PRICE OF THE COMMON STOCK ON THE TRADING DAY
IMMEDIATELY PRECEDING SUCH RECORD DATE MINUS THE VALUE OF THE DISTRIBUTION (AS
DETERMINED IN GOOD FAITH BY THE COMPANY’S BOARD OF DIRECTORS) APPLICABLE TO ONE
SHARE OF COMMON STOCK, AND (B) THE DENOMINATOR SHALL BE THE CLOSING SALE PRICE
OF THE COMMON STOCK ON THE TRADING DAY IMMEDIATELY PRECEDING SUCH RECORD DATE;
PROVIDED THAT, IN NO EVENT SHALL THE DEFAULT WARRANT EXERCISE PRICE BE REDUCED
TO LESS THAT $.05 PER SHARE (PURSUANT TO THIS SECTION 8(D)(I); AND

(II)           EITHER (A) THE NUMBER OF DEFAULT WARRANT SHARES OBTAINABLE UPON
EXERCISE OF THIS DEFAULT WARRANT SHALL BE INCREASED TO A NUMBER OF SHARES EQUAL
TO THE NUMBER OF SHARES OF

--------------------------------------------------------------------------------

COMMON STOCK OBTAINABLE IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE RECORD
DATE FIXED FOR THE DETERMINATION OF HOLDERS OF COMMON STOCK ENTITLED TO RECEIVE
THE DISTRIBUTION MULTIPLIED BY THE RECIPROCAL OF THE FRACTION SET FORTH IN THE
IMMEDIATELY PRECEDING CLAUSE (I), OR (B) IN THE EVENT THAT THE DISTRIBUTION IS
OF COMMON STOCK OF A COMPANY WHOSE COMMON STOCK IS TRADED ON A NATIONAL
SECURITIES EXCHANGE OR A NATIONAL AUTOMATED QUOTATION SYSTEM, THEN THE HOLDER OF
THIS DEFAULT WARRANT SHALL RECEIVE AN ADDITIONAL DEFAULT WARRANT TO PURCHASE
COMMON STOCK, THE TERMS OF WHICH SHALL BE IDENTICAL TO THOSE OF THIS DEFAULT
WARRANT, EXCEPT THAT SUCH DEFAULT WARRANT SHALL BE EXERCISABLE INTO THE AMOUNT
OF THE ASSETS THAT WOULD HAVE BEEN PAYABLE TO THE HOLDER OF THIS DEFAULT WARRANT
PURSUANT TO THE DISTRIBUTION HAD THE HOLDER EXERCISED THIS DEFAULT WARRANT
IMMEDIATELY PRIOR TO SUCH RECORD DATE AND WITH AN EXERCISE PRICE EQUAL TO THE
AMOUNT BY WHICH THE EXERCISE PRICE OF THIS DEFAULT WARRANT WAS DECREASED WITH
RESPECT TO THE DISTRIBUTION PURSUANT TO THE TERMS OF THE IMMEDIATELY PRECEDING
CLAUSE (I).

(E)   CERTAIN EVENTS.  IF ANY EVENT OCCURS OF THE TYPE CONTEMPLATED BY THE
PROVISIONS OF THIS SECTION 8 BUT NOT EXPRESSLY PROVIDED FOR BY SUCH PROVISIONS
(INCLUDING, WITHOUT LIMITATION, THE GRANTING OF STOCK APPRECIATION RIGHTS,
PHANTOM STOCK RIGHTS OR OTHER RIGHTS WITH EQUITY FEATURES), THEN THE COMPANY’S
BOARD OF DIRECTORS WILL MAKE AN APPROPRIATE ADJUSTMENT IN THE DEFAULT WARRANT
EXERCISE PRICE AND THE NUMBER OF SHARES OF COMMON STOCK OBTAINABLE UPON EXERCISE
OF THIS DEFAULT WARRANT SO AS TO PROTECT THE RIGHTS OF THE HOLDERS OF THE
DEFAULT WARRANTS; PROVIDED, EXCEPT AS SET FORTH IN SECTION 8(C),THAT NO SUCH
ADJUSTMENT PURSUANT TO THIS SECTION 8(E) WILL INCREASE THE DEFAULT WARRANT
EXERCISE PRICE OR DECREASE THE NUMBER OF SHARES OF COMMON STOCK OBTAINABLE AS
OTHERWISE DETERMINED PURSUANT TO THIS SECTION 8.  NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS SECTION 8(E), (I) THE DEFAULT WARRANT EXERCISE PRICE SHALL
NOT BE REDUCED TO LESS THAT $0.05 PER SHARE (EXCEPT AS MAY BE ADJUSTED PURSUANT
TO SECTION 8(C)), AND (II) THE NUMBER OF DEFAULT WARRANT SHARES OBTAINABLE UPON
EXERCISE OF THIS DEFAULT WARRANT SHALL NOT BE ADJUSTED TO EXCEED THAT NUMBER OF
SHARES DETERMINED BY MULTIPLYING THE DEFAULT WARRANT EXERCISE PRICE IN EFFECT
IMMEDIATELY PRIOR  TO THE ADJUSTMENT PURSUANT TO THIS SECTION 8(E), BY THE
NUMBER OF DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS DEFAULT WARRANT
IMMEDIATELY PRIOR TO SUCH ADJUSTMENT AND DIVIDING THE PRODUCT THEREOF BY THE
DEFAULT WARRANT EXERCISE PRICE RESULTING FROM SUCH ADJUSTMENT.

(F)    VOLUNTARY ADJUSTMENTS BY COMPANY.  THE COMPANY MAY AT ANY TIME DURING THE
TERM OF THIS DEFAULT WARRANT REDUCE THE THEN CURRENT EXERCISE PRICE TO ANY
AMOUNT AND FOR ANY PERIOD OF TIME DEEMED APPROPRIATE BY THE BOARD OF DIRECTORS
OF THE COMPANY.

(G)   NOTICES.

(I)            IMMEDIATELY UPON ANY ADJUSTMENT OF THE DEFAULT WARRANT EXERCISE
PRICE, THE COMPANY WILL GIVE WRITTEN NOTICE THEREOF TO THE HOLDER OF THIS
DEFAULT WARRANT, SETTING FORTH IN REASONABLE DETAIL, AND CERTIFYING, THE
CALCULATION OF SUCH ADJUSTMENT.

(II)           THE COMPANY WILL GIVE WRITTEN NOTICE TO THE HOLDER OF THIS
DEFAULT WARRANT AT LEAST TEN (10) 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 COMMON STOCK, (B) WITH RESPECT TO ANY PRO RATA
SUBSCRIPTION OFFER TO HOLDERS OF COMMON STOCK OR (C) FOR DETERMINING RIGHTS TO
VOTE WITH RESPECT TO ANY ORGANIC CHANGE (AS DEFINED BELOW), DISSOLUTION OR
LIQUIDATION, PROVIDED THAT SUCH INFORMATION SHALL BE MADE KNOWN TO THE PUBLIC
PRIOR TO OR IN CONJUNCTION WITH SUCH NOTICE BEING PROVIDED TO SUCH HOLDER.

(III)          THE COMPANY WILL ALSO GIVE WRITTEN NOTICE TO THE HOLDER OF THIS
DEFAULT WARRANT AT LEAST TEN (10) DAYS PRIOR TO THE DATE ON WHICH ANY ORGANIC
CHANGE, DISSOLUTION OR LIQUIDATION WILL TAKE PLACE, PROVIDED THAT SUCH
INFORMATION SHALL BE MADE KNOWN TO THE PUBLIC PRIOR TO OR IN CONJUNCTION WITH
SUCH NOTICE BEING PROVIDED TO SUCH HOLDER.

SECTION 9.               PURCHASE RIGHTS; REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.

(A)   IN ADDITION TO ANY ADJUSTMENTS PURSUANT TO SECTION 8 ABOVE, IF AT ANY TIME
THE COMPANY GRANTS, ISSUES OR SELLS ANY OPTIONS, CONVERTIBLE SECURITIES OR
RIGHTS TO PURCHASE STOCK, DEFAULT WARRANTS, SECURITIES OR OTHER PROPERTY PRO
RATA TO THE RECORD HOLDERS OF ANY CLASS OF COMMON STOCK (THE

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“PURCHASE RIGHTS”), THEN THE HOLDER OF THIS DEFAULT WARRANT WILL BE ENTITLED TO
ACQUIRE, UPON THE TERMS APPLICABLE TO SUCH PURCHASE RIGHTS, THE AGGREGATE
PURCHASE RIGHTS WHICH SUCH HOLDER COULD HAVE ACQUIRED IF SUCH HOLDER HAD HELD
THE NUMBER OF SHARES OF COMMON STOCK ACQUIRABLE UPON COMPLETE EXERCISE OF THIS
DEFAULT 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 COMMON STOCK ARE TO BE DETERMINED FOR
THE GRANT, ISSUE OR SALE OF SUCH PURCHASE RIGHTS.

(B)   ANY RECAPITALIZATION, REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER, SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS TO ANOTHER
PERSON OR OTHER TRANSACTION IN EACH CASE WHICH IS EFFECTED IN SUCH A WAY THAT
HOLDERS OF COMMON STOCK ARE ENTITLED TO RECEIVE (EITHER DIRECTLY OR UPON
SUBSEQUENT LIQUIDATION) STOCK, SECURITIES OR ASSETS WITH RESPECT TO OR IN
EXCHANGE FOR COMMON STOCK IS REFERRED TO HEREIN AS AN “ORGANIC CHANGE.”  PRIOR
TO THE CONSUMMATION OF ANY (I) SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S
ASSETS TO AN ACQUIRING PERSON OR (II) OTHER ORGANIC CHANGE FOLLOWING WHICH THE
COMPANY IS NOT A SURVIVING ENTITY, THE COMPANY WILL SECURE FROM THE PERSON
PURCHASING SUCH ASSETS OR THE SUCCESSOR RESULTING FROM SUCH ORGANIC CHANGE (IN
EACH CASE, THE “ACQUIRING ENTITY”) A WRITTEN AGREEMENT (IN FORM AND SUBSTANCE
SATISFACTORY TO THE HOLDERS OF DEFAULT WARRANTS REPRESENTING AT LEAST TWO-THIRDS
(III) OF THE DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF THE DEFAULT
WARRANTS THEN OUTSTANDING) TO DELIVER TO EACH HOLDER OF DEFAULT WARRANTS IN
EXCHANGE FOR SUCH DEFAULT WARRANTS, A SECURITY OF THE ACQUIRING ENTITY EVIDENCED
BY A WRITTEN INSTRUMENT SUBSTANTIALLY SIMILAR IN FORM AND SUBSTANCE TO THIS
DEFAULT WARRANT AND SATISFACTORY TO THE HOLDERS OF THE DEFAULT WARRANTS
(INCLUDING AN ADJUSTED DEFAULT WARRANT EXERCISE PRICE EQUAL TO THE VALUE FOR THE
COMMON STOCK REFLECTED BY THE TERMS OF SUCH CONSOLIDATION, MERGER OR SALE, AND
EXERCISABLE FOR A CORRESPONDING NUMBER OF SHARES OF COMMON STOCK ACQUIRABLE AND
RECEIVABLE UPON EXERCISE OF THE DEFAULT WARRANTS WITHOUT REGARD TO ANY
LIMITATIONS ON EXERCISE, IF THE VALUE SO REFLECTED IS LESS THAN ANY APPLICABLE
DEFAULT WARRANT EXERCISE PRICE IMMEDIATELY PRIOR TO SUCH CONSOLIDATION, MERGER
OR SALE).  PRIOR TO THE CONSUMMATION OF ANY OTHER ORGANIC CHANGE, THE COMPANY
SHALL MAKE APPROPRIATE PROVISION (IN FORM AND SUBSTANCE SATISFACTORY TO THE
HOLDERS OF DEFAULT WARRANTS REPRESENTING A MAJORITY OF THE DEFAULT WARRANT
SHARES ISSUABLE UPON EXERCISE OF THE DEFAULT WARRANTS THEN OUTSTANDING) TO
INSURE THAT EACH OF THE HOLDERS OF THE DEFAULT WARRANTS WILL THEREAFTER HAVE THE
RIGHT TO ACQUIRE AND RECEIVE IN LIEU OF OR IN ADDITION TO (AS THE CASE MAY BE)
THE DEFAULT WARRANT SHARES IMMEDIATELY THERETOFORE ISSUABLE AND RECEIVABLE UPON
THE EXERCISE OF SUCH HOLDER’S DEFAULT WARRANTS (WITHOUT REGARD TO ANY
LIMITATIONS ON EXERCISE), SUCH SHARES OF STOCK, SECURITIES OR ASSETS THAT WOULD
HAVE BEEN ISSUED OR PAYABLE IN SUCH ORGANIC CHANGE WITH RESPECT TO OR IN
EXCHANGE FOR THE NUMBER OF DEFAULT WARRANT SHARES WHICH WOULD HAVE BEEN ISSUABLE
AND RECEIVABLE UPON THE EXERCISE OF SUCH HOLDER’S DEFAULT WARRANT AS OF THE DATE
OF SUCH ORGANIC CHANGE (WITHOUT TAKING INTO ACCOUNT ANY LIMITATIONS OR
RESTRICTIONS ON THE EXERCISABILITY OF THIS DEFAULT WARRANT).

SECTION 10.             LOST, STOLEN, MUTILATED OR DESTROYED DEFAULT WARRANT. 
IF THIS DEFAULT WARRANT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE COMPANY
SHALL PROMPTLY, ON RECEIPT OF AN INDEMNIFICATION UNDERTAKING (OR, IN THE CASE OF
A MUTILATED DEFAULT WARRANT, THE DEFAULT WARRANT), ISSUE A NEW DEFAULT WARRANT
OF LIKE DENOMINATION AND TENOR AS THIS DEFAULT WARRANT SO LOST, STOLEN,
MUTILATED OR DESTROYED.

SECTION 11.             NOTICE.  ANY NOTICES, CONSENTS, WAIVERS OR OTHER
COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN UNDER THE TERMS OF THIS DEFAULT
WARRANT MUST BE IN WRITING AND WILL BE DEEMED TO HAVE BEEN DELIVERED:  (I) UPON
RECEIPT, WHEN DELIVERED PERSONALLY; (II) UPON RECEIPT, WHEN SENT BY FACSIMILE
(PROVIDED CONFIRMATION OF RECEIPT IS RECEIVED BY THE SENDING PARTY TRANSMISSION
IS MECHANICALLY OR ELECTRONICALLY GENERATED AND KEPT ON FILE BY THE SENDING
PARTY); OR (III) ONE BUSINESS DAY AFTER DEPOSIT WITH A NATIONALLY RECOGNIZED
OVERNIGHT DELIVERY SERVICE, IN EACH CASE PROPERLY ADDRESSED TO THE PARTY TO
RECEIVE THE SAME.  THE ADDRESSES AND FACSIMILE NUMBERS FOR SUCH COMMUNICATIONS
SHALL BE:

If to Holder:

 

John Fife

 

 

303 East Wacker Drive, Suite 311

 

 

Chicago, IL 60601

 

 

 

 

 

Telephone:            (312)565-1569

 

 

Facsimile:               (312)819-9701

 

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With Copy to:

 

Merrill E. Weber, Esq.

 

 

303 East Wacker Drive, Suite 311

 

 

Chicago, IL 60601

 

 

Telephone:            (312)565-1569

 

 

Facsimile:               (312)819-9701

 

 

 

If to the Company, to:

 

Open Energy Corporation

 

 

514 Via de la Valle, Suite 200

 

 

Solana Beach, CA 92075

 

 

Attention: David Saltman, Chief Executive Officer

 

 

Telephone:            858-794-8800

 

 

Facsimile:               858-794-8811

 

 

 

With a copy to:

 

John Hart, Esq.

 

 

514 Via de la Valle, Suite 200

 

 

Solana Beach, CA 92075

 

 

Telephone:            858-794-8800

 

 

Facsimile:               858-794-8811

 

If to a Holder of this Default Warrant, to him at the address and facsimile
number set forth on Exhibit C hereto, with copies to such Holder’s
representatives as set forth on Exhibit C, or at such other address and
facsimile as shall be delivered to the Company upon the issuance or transfer of
this Default Warrant.  Each party shall provide five days’ prior written notice
to the other party of any change in address or facsimile number.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
facsimile, waiver or other communication, (or (B) provided by a nationally
recognized overnight delivery service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

SECTION 12.             DATE.  THE DATE OF THIS DEFAULT WARRANT IS SET FORTH ON
PAGE 1 HEREOF.  THIS DEFAULT WARRANT, IN ALL EVENTS, SHALL BE WHOLLY VOID AND OF
NO EFFECT AFTER THE CLOSE OF BUSINESS ON THE EXPIRATION DATE, EXCEPT THAT
NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF, THE PROVISIONS OF SECTION 8(B)
SHALL CONTINUE IN FULL FORCE AND EFFECT AFTER SUCH DATE AS TO ANY DEFAULT
WARRANT SHARES OR OTHER SECURITIES ISSUED UPON THE EXERCISE OF THIS DEFAULT
WARRANT.

SECTION 13.             AMENDMENT AND WAIVER.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, THE PROVISIONS OF THE DEFAULT WARRANTS 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 HOLDERS OF DEFAULT WARRANTS REPRESENTING AT LEAST TWO-THIRDS OF
THE DEFAULT WARRANT SHARES ISSUABLE UPON EXERCISE OF THE DEFAULT WARRANTS THEN
OUTSTANDING; PROVIDED THAT, EXCEPT FOR SECTION 8(D), NO SUCH ACTION MAY INCREASE
THE DEFAULT WARRANT EXERCISE PRICE OR DECREASE THE NUMBER OF SHARES OR CLASS OF
STOCK OBTAINABLE UPON EXERCISE OF ANY DEFAULT WARRANT WITHOUT THE WRITTEN
CONSENT OF THE HOLDER OF SUCH DEFAULT WARRANT.

SECTION 14.             DESCRIPTIVE HEADINGS; GOVERNING LAW.  THE DESCRIPTIVE
HEADINGS OF THE SEVERAL SECTIONS AND PARAGRAPHS OF THIS DEFAULT WARRANT ARE
INSERTED FOR CONVENIENCE ONLY AND DO NOT CONSTITUTE A PART OF THIS DEFAULT
WARRANT.  THE CORPORATE LAWS OF THE STATE OF NEVADA SHALL GOVERN ALL ISSUES
CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS.  ALL OTHER
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
JERSEY, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION
OR RULE (WHETHER OF THE STATE OF NEW JERSEY OR ANY OTHER JURISDICTIONS) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE
STATE OF NEW JERSEY.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN HUDSON COUNTY AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR THEREWITH, OR
WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY

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IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO
SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER THIS AGREEMENT 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 MANNER PERMITTED BY LAW.

SECTION 15.            WAIVER OF JURY TRIAL.  AS A MATERIAL INDUCEMENT FOR EACH
PARTY HERETO TO ENTER INTO THIS DEFAULT WARRANT, THE PARTIES HERETO HEREBY WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
DEFAULT WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS
TRANSACTION.

IN WITNESS WHEREOF, the Company has caused this Default Warrant to be signed as
of the date first set forth above.

 

OPEN ENERGY CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

David Saltman

 

 

Title:

Chief Executive Officer

 

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EXHIBIT A TO DEFAULT WARRANT

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS DEFAULT WARRANT

OPEN ENERGY CORPORATION

The undersigned Holder hereby exercises the right to purchase
                           of the shares of Common Stock (“Default Warrant
Shares”) of Open Energy Corporation (the “Company”), evidenced by the Default
Warrant of the Company designated Warrant No. OEGY-FIFE-2 originally issued June
15, 2007 (the “Default Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Default
Warrant.

Specify Method of exercise by check mark:

1.    o     Cash Exercise

(a) Payment of Default Warrant Exercise Price. The Holder shall pay the
Aggregate Exercise Price of $                           to the Company in
accordance with the terms of the Default Warrant.

(b) Delivery of Default Warrant Shares.  The Company shall deliver to the Holder
                   Default Warrant Shares in accordance with the terms of the
Default Warrant.

2.    o     Cashless Exercise

(a) Payment of Default Warrant Exercise Price.  In lieu of making payment of the
Aggregate Exercise Price, the Holder elects to receive upon such exercise the
Net Number of shares of Common Stock determined in accordance with the terms of
the Default Warrant.

(b) Delivery of Default Warrant Shares.  The Company shall deliver to the Holder
                      Default Warrant Shares in accordance with the terms of the
Default Warrant.

Date:                                           ,             

Name of Registered Holder

 

By:

 

 

Name:

Title:

 

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EXHIBIT B TO DEFAULT WARRANT

FORM OF DEFAULT WARRANT POWER

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
                              , Federal Identification No.                   , a
Default Warrant to purchase                         shares of the capital stock
of Open Energy Corporation represented by Default Warrant certificate
no. OEGY-FIFE-2, standing in the name of the undersigned on the books of said
corporation.  The undersigned does hereby irrevocably constitute and appoint
                           , attorney to transfer the Default Warrants of said
corporation, with full power of substitution in the premises.

Dated:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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