ANNEX V
TO
SECURITIES PURCHASE AGREEMENT
<PROTOTYPE FOR EACH ISSUANCE>

FORM OF WARRANT

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

No. 08–  1-  2

AMERICAN SECURITY RESOURCES CORPORATION

COMMON STOCK PURCHASE WARRANT
CLASS 08-__3

1.           Issuance.  In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by AMERICAN SECURITY
RESOURCES CORPORATION, a Nevada corporation (the “Company”),
_____________________________ or registered assigns (the “Holder”) is hereby
granted the right to purchase at any time, on or after the Commencement Date (as
defined below) until 5:00 P.M., New York City time, on the Expiration Date (as
defined below), _________________  Thousand __________ (____________)4 fully
paid and nonassessable shares of the Company’s Common Stock, $0.001 par value
per share (the “Common Stock”), at an initial exercise price per share (the
“Exercise Price”) of $____5 per share, subject to further adjustment as set
forth herein.  This Warrant is being issued pursuant to the terms of that
certain Securities Purchase Agreement, dated as of February __, 2008 (the
“Securities Purchase Agreement”), to which the Company and Holder (or Holder’s
predecessor in interest) are parties.  Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Securities Purchase
Agreement.  This Warrant was originally issued to the Holder or the Holder’s
predecessor in interest on _____________, 20__6 (the “Issue Date”).

2.           Exercise of Warrants.

2.1           General.

(a)  This Warrant is exercisable in whole or in part at any time and from time
to time commencing on the Issue Date.  Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in the Notice of Exercise (or revised by notice given
by the Company as contemplated by the Section headed “NOTICES” in the Securities
Purchase Agreement).  The date such Notice of Exercise is faxed to the Company
shall be the “Exercise Date,” provided that, if such exercise represents the
full exercise of the outstanding balance of the Warrant, the Holder of this
Warrant tenders this Warrant Certificate to the Company within five (5) Trading
Days thereafter.  The Notice of Exercise shall be executed by the Holder of this
Warrant and shall indicate (i) the number of shares then being purchased
pursuant to such exercise and (ii) if applicable (as provided below), whether
the exercise is a cashless exercise.

(b)  The provisions of this Section 2.1(b) shall only be applicable (i) (x) on
or after the six (6) month anniversary of the Issue Date, and (y) if, and only
if, for any reason on the Exercise Date there is no effective registration
statement naming the Holder as selling stockholder pursuant to which the Holder
would be entitled to sell the Warrant Shares on such date, and (ii) on the
Automatic Exercise Date (as defined below), even if there is an effective
Registration Statement covering the Warrant Shares on such date.  If the Notice
of Exercise form elects a “cashless” exercise, the Holder shall thereby be
entitled to receive a number of shares of Common Stock equal to (w) the excess
of the Current Market Value (as defined below) over the total cash exercise
price of the portion of the Warrant then being exercised, divided by (x) the
Market Price of the Common Stock.  For the purposes of this Warrant, the terms
(y) “Current Market Value” shall mean an amount equal to the Market Price of the
Common Stock, multiplied by the number of shares of Common Stock specified in
the applicable Notice of Exercise, and (z) “Market Price of the Common Stock”
shall mean the VWAP for the Trading Day immediately prior to the Exercise Date.

(c)  If the Holder provides on the Notice of Exercise form that the Holder has
elected a “cash” exercise (or if the cashless exercise referred to in the
immediately preceding paragraph (b) is not available in accordance with its
terms), the Exercise Price per share of Common Stock for the shares then being
exercised shall be payable, at the election of the Holder, in cash or by
certified or official bank check or by wire transfer in accordance with
instructions provided by the Company at the request of the Holder.

(d)  Upon the appropriate payment, if any, of the Exercise Price for the shares
of Common Stock purchased, together with the surrender of this Warrant
Certificate (if required), the Holder shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased.  The Company shall
deliver such certificates representing the Warrant Shares in accordance with the
instructions of the Holder as provided in the Notice of Exercise (the
certificates delivered in such manner, the “Warrant Share Certificates”) within
three (3) Trading Days (such third Trading Day, a “Delivery Date”) of (i) with
respect to a “cashless exercise,” the Exercise Date or the Automatic Exercise
Date, as the case may be, or, (ii) with respect to a “cash” exercise, the later
of the Exercise Date or the date the payment of the Exercise Price for the
relevant Warrant Shares is received by the Company.

(e)  The Holder shall be deemed to be the holder of the shares issuable to it in
accordance with the provisions of this Section 2.1 on the Exercise Date.

2.2           Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Securities Purchase Agreement or of the other Transaction
Agreements, in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, or (ii) while there is outstanding a tender
offer for any or all of the shares of the Company’s Common Stock) shall the
Holder be entitled to exercise this Warrant, or shall the Company have the
obligation to issue shares upon such exercise of all or any portion of this
Warrant to the extent that, after such exercise the sum of (1) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unexercised portion of the Warrants or other rights
to purchase Common Stock or through the ownership of the unconverted portion of
convertible securities), and (2) the number of shares of Common Stock issuable
upon the exercise of the Warrants with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock
(after taking into account the shares to be issued to the Holder upon such
exercise).  For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, except as otherwise provided in
clause (1) of such sentence.  Nothing herein shall preclude the Holder from
disposing of a sufficient number of other shares of Common Stock beneficially
owned by the Holder so as to thereafter permit the continued exercise of this
Warrant.

2.3           Automatic Exercise.  If any portion of this Warrant remains
unexercised as of the Expiration Date and the Market Price of the Common Stock
as of the Expiration Date is greater than the applicable Exercise Price as of
the Expiration Date, then, without further action by the Holder, this Warrant
shall be deemed to have been exercised automatically on  the date (the
“Automatic Exercise Date”) which is the day immediately prior to the close of
business on the Expiration Date (or, in the event that the Expiration Date is
not a Trading Day, the immediately preceding Trading Day) as if the Holder had
duly given a Notice of Exercise for a “cashless” exercise as contemplated by
Section 2.1(b) hereof, and the Holder (or such other person or persons as
directed by the Holder) shall be treated for all purposes as the holder of
record of such Warrant Shares as of the close of business on such Automatic
Exercise Date. This Warrant shall be deemed to be surrendered to the Company on
the Automatic Exercise Date by virtue of this Section 2.3 without any action by
the Holder.

2.4           Certain Definitions.  As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:

(a)           “Commencement Date” means the date the Specific Purchase Note has
been paid or otherwise satisfied in full.

(b)           “Expiration Date” means the earlier of (i) the Scheduled
Expiration Date or (ii) the Accelerated Expiration Date (as defined below).

(c)           “Scheduled Expiration Date” means the date which is the last
calendar day of the month in which the seventh anniversary of the Issue Date
occurs.

(d)           “Specific Purchase Note” means the Purchase Note issued by the
Holder (or the Holder’s predecessor in interest) on the Issue Date specifically
designated as payment of the balance of the purchase price for this specific
Warrant.

2.5           Accelerated Expiration Date.

           (a)           At any time after the Commencement Date, if all, but
not less than all, of the Acceleration Conditions (as defined below) are
satisfied, during the Accelerated Period (as defined below), the Company, in its
sole discretion, may give a written notice (the “Accelerated Expiration Notice”)
to the Holder specifying that the rights to exercise all or a specified part of
this Warrant will expire on a date (the “Accelerated Expiration Date”) specified
in the Accelerated Expiration Notice, provided that the date so specified shall
be at least twenty (20) Trading Days after the date (the “Accelerated Expiration
Notice Date”) on which the Company gives of the Accelerated Expiration Notice
(but provided that  the Holder actually receives such Accelerated Expiration
Notice no later than the Trading Day immediately after such notice is given by
the Company).   Notwithstanding the foregoing, if the Acceleration Period
Conditions (as defined below) are not satisfied during the period (the
“Accelerated Period”) commencing on the Accelerated Expiration Notice Date
through and including the Accelerated Expiration Date, the Accelerated
Expiration Notice shall be deemed cancelled.

(b)           The Holder will continue to have the right to exercise this
Warrant through and including the Accelerated Expiration Date, as determined in
accordance with the provisions, but not thereafter.  If the Accelerated
Expiration Notice provides that less than all of the outstanding Warrant is
subject to such acceleration, any exercise of the Warrant by the Holder on or
after the Accelerated Expiration Notice Date shall be applied against such
acceleration.7

(c)           The term “Acceleration Determination Period” means the consecutive
twenty (20) Trading Days ending on the Trading Day immediately before the
Accelerated Expiration Notice Date.

(d)           The term “Acceleration Conditions” means that, as of the
Accelerated Expiration Notice Date, each of (and not less than all of) the
following conditions has been satisfied:

(i) there is no Event of Default (as that term is defined in the Debenture, but
the existence of such Event of Default shall be determined without regard to the
passage of time or the giving of notice or both as may be provided in the
Debenture);

(ii) the VWAP is at least one hundred fifty percent (150%) of the Exercise Price
as in effect on the Issue Date (as the same may be adjusted for adjusted
pursuant to the provisions of Section 6 hereof other than pursuant to Section
6.4 hereof); and

(iii) the Company shall have duly issued, and the Holder shall have timely
received, the Accelerated Expiration Notice.

(e)           The term “Acceleration Period Conditions” means that, at all times
during the Acceleration Period, each of (and not less than all of) the following
conditions has been satisfied:

(i) there is no Event of Default (as that term is defined in the Debenture, but
the existence of such Event of Default shall be determined without regard to the
passage of time or the giving of notice or both as may be provided in the
Debenture); and

(ii) the Company has issued all Warrant Shares for all Warrant exercises by the
Holder within two (2) Trading Days after the relevant Delivery Date.

3.           Reservation of Shares.  The Company hereby agrees that,  at all
times during the term of this Warrant, there shall be reserved for issuance upon
exercise of this Warrant, one hundred percent (100%) of the number of shares of
its Common Stock as shall be required for issuance of the Warrant Shares for the
then unexercised portion of this Warrant.  For the purposes of such
calculations, the Company should assume that the outstanding portion of this
Warrants was exercisable in full at any time, without regard to any restrictions
which might limit the Holder’s right to exercise all or any portion of this
Warrant held by the Holder.

4.           Mutilation or Loss of Warrant.  Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

5.           Rights of the Holder.  The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.

6.           Protection Against Dilution and Other Adjustments.

6.1           Adjustment Mechanism.  If an adjustment of the Exercise Price is
required pursuant to this Section 6 (other than pursuant to Section 6.4), the
Holder shall be entitled to purchase such number of shares of Common Stock as
will cause (i) (x) the total number of shares of Common Stock Holder is entitled
to purchase pursuant to this Warrant following such adjustment, multiplied by
(y) the adjusted Exercise Price per share, to equal the result of (ii) (x) the
dollar amount of the total number of shares of Common Stock Holder is entitled
to purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.

6.2           Capital Adjustments.  In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or consolidation (where the Company is not the surviving entity), the
provisions of this Section 6 shall be applied as if such capital adjustment
event had occurred immediately prior to the date of this Warrant and the
original Exercise Price had been fairly allocated to the stock resulting from
such capital adjustment; and in other respects the provisions of this Section
shall be applied in a fair, equitable and reasonable manner so as to give
effect, as nearly as may be, to the purposes hereof.  A rights offering to
stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.  The Company will not effect any consolidation
or  merger,  unless prior to the consummation thereof, the successor or
acquiring entity (if other than the Company) and, if an entity different from
the successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or  merger assumes by written instrument the obligations
under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.

6.3           Adjustment for Spin Off.  If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the “Spin Off”) in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the “Spin Off Securities”) to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder’s unexercised Warrants outstanding on the
record date (the “Record Date”) for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the “Outstanding
Warrants”) been exercised as of the close of business on the Trading Day
immediately before the Record Date (the “Reserved Spin Off Shares”), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.

6.4           Adjustment for Certain Transactions.  Reference is made to the
provisions of Section 4(g) of the Securities Purchase Agreement, the terms of
which are incorporated herein by reference.  The Exercise Price shall be
adjusted as provided in the applicable provisions of said Section 4(g) of the
Securities Purchase Agreement.  In addition, if applicable, the Company will
issue Added Warrant Shares as provided in said Section 4(g) of the Securities
Purchase Agreement.

7.           Transfer to Comply with the Securities Act.  This Warrant has not
been registered under the Securities Act of 1933, as amended, (the “1933 Act”)
and has been issued to the Holder for investment and not with a view to the
distribution of either the Warrant or the Warrant Shares.  Neither this Warrant
nor any of the Warrant Shares or any other security issued or issuable upon
exercise of this Warrant may be sold, transferred, pledged or hypothecated in
the absence of an effective registration statement under the 1933 Act relating
to such security or an opinion of counsel satisfactory to the Company that
registration is not required under the 1933 Act.  Each certificate for the
Warrant, the Warrant Shares and any other security issued or issuable upon
exercise of this Warrant shall contain a legend on the face thereof, in form and
substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section.

8.           Late Delivery of Warrant Shares.    Reference is made to Section
5(b) of the Securities Purchase Agreement, the terms of which are incorporated
herein by reference.

9.           Notices.  Any notice required or permitted hereunder shall be given
in manner provided in the Section headed “NOTICES” in the Securities Purchase
Agreement, the terms of which are incorporated herein by reference.

10.           Supplements and Amendments; Whole Agreement.  This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto.  This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.

11.           Governing Law.  This Warrant shall be deemed to be a contract made
under the laws of the State of Illinois for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws.  Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of Chicago or the
state courts of the State of Illinois sitting in the City of Chicago in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.

12.           JURY TRIAL WAIVER.   The Company and the Holder hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.

13.           Remedies.  The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

14.           Counterparts.  This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
 
15.           Descriptive Headings.  Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.

[Balance of page intentionally left blank]

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1Insert unique series letter no. (e.g., A, B, C, etc.) for Warrants issued on
each Closing Date.
 
2Insert unique Warrant number for each Warrant in a series.
 
3See fn 1.
 
4For each Warrant, insert number equal to Closing Date Warrant Amount,
multiplied by (x) a fraction, of which (1) the numerator is the principal amount
of the Related Debenture having the same No. as this Warrant and (2) the
denominator is the Purchase Price for all Debentures issued on the relevant
Closing Date.
 
5Insert amount equal to (x) the VWAP on the Trading Day immediately before the
relevant Closing Date, multiplied by (y) 110%.
 
6Insert the relevant Closing Date.
 
7By way of example: As of the Accelerated Expiration Notice Date, this Warrant
could be exercised for 1,000,000 shares.  The Accelerated Expiration Notice
refers to the accelerated Expiration Date for 400,000 shares.  If, during the
period from the Accelerated Expiration Notice Date through the Accelerated
Expiration Date, (i) the Holder does not exercise this Warrant, then  after the
Accelerated Expiration Date, this Warrant could be exercised for 600,000 shares;
(ii) the Holder exercises this Warrant for an aggregate of 300,000 shares (which
the Company issues to the Holder), then after the Accelerated Expiration Date,
this Warrant could be exercised for 600,000 shares, or (iii) the Holder
exercises this Warrant for 400,000 or more shares, then after the Accelerated
Expiration Date, this Warrant could be exercised for the result of 1,000,000
less the actual number of shares exercised during that period.
 

 
 

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    IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

 
AMERICAN SECURITY RESOURCES CORPORATION
 
   
Dated: _________________, 20___
By:_______________________________________
 
__________________________________________
 
(Print Name)
 
__________________________________________
 
 (Title)

 
 

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NOTICE OF EXERCISE OF WARRANT

TO:           American Security Resources Corporation               VIA
FAX:  (____) ___-____
9601 Katy Freeway, Suite 220
Houston, TX 77024
Attn: President

The undersigned hereby irrevocably elects to exercise the right, represented by
the Common Stock Purchase Warrant Class 2008-___, No. 08-__-__, dated as of
_____________________, 20___, to purchase ___________ shares of the Common
Stock, $0.001 par value (“Common Stock”), of AMERICAN SECURITY RESOURCES
CORPORATION and tenders herewith payment in accordance with Section 2 of said
Common Stock Purchase Warrant, as follows:

9           CASH:                      $     = (Exercise Price x Exercise
Shares)

Payment is being made by:
9           enclosed check
9           wire transfer
9           other
9           CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:

Net number of Warrant Shares to be issued to Holder :                _________*

* based on: Current Market Value - (Exercise Price x Exercise Shares)
Market Price of Common Stock
where:
Market Price of Common Stock [“MP”]         =           $_______________
Current Market Value [MP x Exercise
Shares]                =           $_______________

It is the intention of the Holder to comply with the provisions of Section 2.2
of the Warrant regarding certain limits on the Holder's right to exercise
thereunder.  The Holder believes this exercise complies with the provisions of
said Section 2.2.  Nonetheless, to the extent that, pursuant to the exercise
effected hereby, the Holder would have more shares than permitted under said
Section, this notice should be amended and revised, ab initio, to refer to the
exercise which would result in the issuance of shares consistent with such
provision. Any exercise above such amount is hereby deemed void and revoked.

As contemplated by the Warrant, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.

If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder either (1) has previously surrendered the
Warrant to the Company or (2) will surrender (or cause to be surrendered) the
Warrant to the Company at the address indicated above by express courier within
five (5) Trading Days after delivery or facsimile transmission of this Notice of
Exercise.

The certificates representing the Warrant Shares should be transmitted by the
Company to the Holder

9           via express courier, or

9           by electronic transfer

after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:

_____________________________________
_____________________________________
_____________________________________

Dated: ______________________

____________________________
[Name of Holder]

By: _________________________