NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES OF COMMON
STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“1933 ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE 1933 ACT, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS AND THE COMPANY
SHALL HAVE RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AS TO SUCH
EXEMPTION.

IN ADDITION, A SECURITIES PURCHASE AGREEMENT DATED AS OF JULY 20, 2006 (THE
“PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN THE
PARTIES WITH RESPECT TO THIS WARRANT.
 

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JORDAN 1 HOLDINGS COMPANY

COMMON STOCK PURCHASE WARRANT “A”

Number of Shares:
Holder:

 
Original Issue Date: July 20, 2006    

Expiration Date: July 20, 2011    
Exercise Price per Share: $.35    

Jordan 1 Holdings Company, a Delaware corporation (the “Company”), hereby
certifies that, for value received, _________, or registered assigns (the
“Warrant Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company up to nine million six hundred twenty four thousand
three hundred sixty nine (9,624,369) shares (as adjusted from time to time as
provided in Section 7 of this Warrant, the “Warrant Shares”) of common stock,
$.001 par value (the “Common Stock”), of the Company at a price of thirty five
cents ($.35) per Warrant Share (as adjusted from time to time as provided in
Section 7, the “Exercise Price”), at any time and from time to time from and
after the date thereof and through and including 5:00 p.m. New York City time on
July 20, 2011 (the “Expiration Date”), and subject to the following terms and
conditions:
 
1. Registration of Warrant. The Company shall register this Warrant upon records
to be maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Warrant Holder hereof from time to time. The Company may
deem and treat the registered Warrant Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Warrant Holder, and for all other purposes, and the Company shall not be
affected by notice to the contrary.
 

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2. Investment Representation. The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own account
or the account of an affiliate that is an accredited investor which has been
identified to and approved by (such approval not to be unreasonably withheld or
delayed) for investment purposes and not with the view to any offering or
distribution and that the Warrant Holder will not sell or otherwise dispose of
this Warrant or the underlying Warrant Shares in violation of applicable
securities laws. The Warrant Holder acknowledges that the certificates
representing any Warrant Shares will bear a legend indicating that they have not
been registered under the 1933 Act, and may not be sold by the Warrant Holder
except pursuant to an effective registration statement or pursuant to an
exemption from registration requirements of the 1933 Act and in accordance with
federal and state securities laws. If this Warrant was acquired by the Warrant
Holder pursuant to the exemption from the registration requirements of the 1933
Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. “Person” means an individual, partnership, firm,
limited liability company, trust, joint venture, association, corporation, or
any other legal entity.
 
3. Validity of Warrant and Issue of Shares. The Company represents and warrants
that this Warrant has been duly authorized and validly issued and warrants and
agrees that all of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant will, when issued upon such exercise, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof other than those
incurred by the Holder. The Company further warrants and agrees that during the
Exercise Period, the Company will at all times have authorized and reserved a
sufficient number of Common Stock to provide for the exercise of the rights
represented by this Warrant.
 
4. Registration of Transfers and Exchange of Warrants.
 
(a) Subject to compliance with the federal and state securities laws, the
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant with the Form of Assignment
attached hereto duly completed and signed, to the Company at the office
specified in or pursuant to Section 12. Upon any such registration or transfer,
a new warrant to purchase Common Stock, in substantially the form of this
Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Warrant Holder. The acceptance of the New
Warrant by the transferee thereof shall be deemed the acceptance of such
transferee of all of the rights and obligations of a Warrant Holder of a
Warrant.
 
(b) This Warrant is exchangeable, upon the surrender hereof by the Warrant
Holder to the office of the Company specified in or pursuant to Section 9 for
one or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.
 
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5.
Exercise of Warrants.

 
(a) Upon surrender of this Warrant with the Form of Election to Purchase
attached hereto duly completed and signed to the Company, at its address set
forth in Section 12, and upon payment and delivery of the Exercise Price per
Warrant Share multiplied by the number of Warrant Shares that the Warrant Holder
intends to purchase hereunder, in lawful money of the United States of America,
by wire transfer or by certified or official bank check or checks, to the
Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Date of Exercise (as defined herein)) issue or cause to be issued and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such exercise, with
such restrictive legend as required by the 1933 Act. Any person so designated by
the Warrant Holder to receive Warrant Shares shall be deemed to have become
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant.
 
(b) A “Date of Exercise” means the date on which the Company shall have received
(i) this Warrant (or any New Warrant, as applicable), with the Form of Election
to Purchase attached hereto (or attached to such New Warrant) appropriately
completed and duly signed, and (ii) payment of the Exercise Price for the number
of Warrant Shares so indicated by the Warrant Holder to be purchased.
 
(c) This Warrant shall be exercisable at any time and from time to time during
the Exercise Period for such number of Warrant Shares as is indicated in the
attached Form of Election To Purchase. If less than all of the Warrant Shares
which may be purchased under this Warrant are exercised at any time, the Company
shall issue or cause to be issued, at its expense, a New Warrant evidencing the
right to purchase the remaining number of Warrant Shares for which no exercise
has been evidenced by this Warrant.
 
(d) (i) Notwithstanding anything contained herein to the contrary, but subject
to Section 5(e) and Section 6, the holder of this Warrant may, at its election
exercised 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 = (A x (B - C))/B
 
(ii) For purposes of the foregoing formula:
 
A= the total number shares with respect to which this Warrant is then being
exercised.
 
B= the last reported sale price (as reported by Bloomberg) of the Common Stock
on the trading day immediately preceding the date of the Exercise Notice.
 
C= the Warrant Exercise Price then in effect at the time of such exercise.
 
 
(e) The holder of this Warrant may not make a Cashless Exercise (i) during the
twelve (12) months following the Original Issue Date and (ii) thereafter if the
sale by the Holder of the Warrant Shares is covered by an effective registration
statement.
 
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6. Maximum Exercise. The Warrant Holder shall not be entitled to exercise
this Warrant on a Date of Exercise in connection with that number of shares of
Common Stock which would be in excess of the sum of (i) the number of shares of
Common Stock beneficially owned by the Warrant Holder and its affiliates on the
Date of Exercise, and (ii) the number of shares of Common Stock issuable upon
the exercise of this Warrant with respect to which the determination of this
limitation is being made on an Date of Exercise, which would result in
beneficial ownership by the Warrant Holder and its affiliates of more than 4.9%
of the outstanding shares of Common Stock on such date. This Section 6 may be
not be waived or amended. As used in this Warrant, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder.
 
7. Adjustment of Exercise Price and Number of Shares. The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefore, are subject to adjustment upon the
occurrence of the following events, and all such adjustments shall be
cumulative:
 
(a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc. The
Exercise Price of this Warrant and the number of shares of Common Stock or other
securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, stock
distribution, combination of shares, reverse split, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of stock or securities.
 
(b) Adjustment for Reorganization, Consolidation, Merger, Etc. In case of any
consolidation or merger of the Company with or into any other corporation,
entity or person, or any other corporate reorganization, in which the Company
shall not be the continuing or surviving entity of such consolidation, merger or
reorganization (any such transaction being hereinafter referred to as a
“Reorganization”), then, in each case, the holder of this Warrant, on exercise
hereof at any time after the consummation or effective date of such
Reorganization (the “Effective Date”), shall receive, in lieu of the shares of
stock or other securities at any time issuable upon the exercise of the Warrant
issuable on such exercise prior to the Effective Date, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
 
(c) Certificate as to Adjustments. In case of any adjustment or readjustment in
the price or kind of securities issuable on the exercise of this Warrant, the
Company will promptly give written notice thereof to the holder of this Warrant
in the form of a certificate, certified and confirmed by the Board of Directors
of the Company, setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based.
 
(d) Sales of Common Stock at less than the Exercise Price. From the date hereof
until such time as the holder of this warrant holds no Securities, as defined in
the Purchase Agreement, except for (i) Exempt Issuances, as defined in the
Purchase Agreement, (ii) issuances covered by Sections 7(a), 7(b) and 7(e)
hereof or (iii) an issuance of Common Stock upon exercise or upon conversion of
warrants, options or other convertible securities for which an adjustment has
already been made pursuant to this Section 7, as to all of which this Section
7(d) does not apply, if the Company closes on the sale or issuance of Common
Stock at a price, or warrants, options, convertible debt or equity securities
with a exercise price per share or exercise price per share which is less than
the Exercise Price then in effect (such lower sales price, conversion or
exercise price, as the case may be, being referred to as the “Lower Price”), the
Exercise Price in effect from and after the date of such transaction shall be is
reduced to the Lower Price. For purpose of determining the exercise price of
warrants, the price, if any, paid per share for the warrants shall be added to
the exercise price of the warrants.
 
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(e) Price Adjustments Based on Pre-Tax Income Per Share.
 

 
i.
In the event the Company’s consolidated Pre-Tax Income for the year ended
December 31, 2006 is less than $.034 per share on a fully-diluted basis, then
the Exercise Price shall be reduced by the percentage shortfall, up to a maximum
of 35%. Thus, if Pre-Tax Income for the year ended December 31, 2006 is $.0289
per share on a fully-diluted basis, the Exercise Price shall be reduced by 15%.
Such reduction shall be made at the time the Company files its Form 10-KSB for
the year ended December 31, 2006, and shall apply to the Note and all shares of
the Series A Preferred Stock, as the case may be, which are outstanding on the
date the Form 10-KSB is filed, or, if not filed on time, on the date that filing
was required.

 

 
ii.
In the event the Company’s consolidated Pre-Tax Income for the year ended
December 31, 2007 is less than $.051 per share on a fully-diluted basis, then
the Exercise Price then in effect shall be reduced by the percentage shortfall,
up to a maximum of 35%. Thus, if Pre-Tax Income for the year ended December 31,
2007 is $.04335 per share on a fully-diluted basis, the Exercise Price shall be
reduced by 15%. Such reduction shall be made at the time the Company files its
Form 10-KSB for the year ended December 31, 2007, and shall apply to the Note
and all shares of the Series A Preferred Stock, as the case may be, which are
outstanding on the date the Form 10-KSB is filed, or, if not filed on time, on
the date that filing was required.

 

 
iii.
For purpose of determining Pre-Tax Income Per Share on a fully-diluted basis,
all shares of Common Stock issuable upon conversion of convertible securities
and upon exercise of warrants and options shall be deemed to be outstanding,
regardless of whether (i) such shares are treated as outstanding for determining
diluted earnings per share under GAAP, (ii) such securities are “in the money,”
or (iii) such shares may be issued as a result of the 4.9% Limitation.

 

 
iv.
An adjustment pursuant to Sections 7(d) or 7(e) of this Warrant shall not affect
the number of shares of Common Stock issuable upon exercise of this Warrant.

 
8. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. The number of
full Warrant Shares that shall be issuable upon the exercise of this Warrant
shall be computed on the basis of the aggregate number of Warrants Shares
purchasable on exercise of this Warrant so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 8, be issuable on
the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
 
9. Sale or Merger of the Company. Upon a Merger Transaction, the restriction
contained in Section 6 shall immediately be released and the Warrant Holder will
have the right to exercise this Warrant concurrently with such Merger
Transaction. For purposes of this Warrant, the term “Merger Transaction” shall
mean a consolidation or merger of the Company into another company or entity in
which the Company is not the surviving entity or the sale of all or
substantially all of the assets of the Company to another company or entity not
controlled by the then existing stockholders of the Company.
 
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10. Notice of Intent to Sell or Merge the Company. The Company will give Warrant
Holder ten (10) business days notice before any Merger Transaction.
 
11. Issuance of Substitute Warrant. In the event of a merger, consolidation,
recapitalization or reorganization of the Company or a reclassification of
Company shares of stock, which results in an adjustment to the number of shares
subject to this Warrant and/or the Exercise Price hereunder, the Company agrees
to issue to the Warrant Holder a substitute Warrant reflecting the adjusted
number of shares and/or Exercise Price upon the surrender of this Warrant to the
Company. However, in the event that the Company does not issue a substitute
warrant, the number and class of Warrant Shares or other securities and the
Exercise Price shall be adjusted as provided in this Warrant, and this Warrant
shall relate the adjusted number of Warrant Shares and Exercise Price.
 
12. Notice. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given (i) on the date they are delivered if
delivered in person; (ii) on the date initially received if delivered by
facsimile transmission followed by registered or certified mail confirmation;
(iii) on the date delivered by an overnight courier service; or (iv) on the date
of delivery after it is mailed by registered or certified mail, return receipt
requested with postage and other fees prepaid as follows:
 
If to the Company:
 

With a copy to:
 
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Attention: Darrin Ocasio, Esq.
Facsimile No.: (212) 930-9725
e-mail: dmocasio@srff.com 

If to the Warrant Holder:
 
at the address or telecopier number and to the attention of the person shown on
the Company’s warrant register.
 
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13. Miscellaneous.
 
(a) This Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Warrant may
be amended only by a writing signed by the Company and the Warrant Holder.
 
(b) Nothing in this Warrant shall be construed to give to any person or
corporation other than the Company and the Warrant Holder any legal or equitable
right, remedy or cause of action under this Warrant; this Warrant shall be for
the sole and exclusive benefit of the Company and the Warrant Holder.
 
(c) This Warrant shall be governed by, construed and enforced in accordance with
the internal laws of the State of New York without regard to the principles of
conflicts of law thereof.
 
(d) The headings herein are for convenience only, do not constitute a part of
this Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
 
(e) In case any one or more of the provisions of this Warrant shall be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
 
(f) The Warrant Holder shall not, by virtue hereof, be entitled to any voting or
other rights of a stockholder of the Company, either at law or equity, and the
rights of the Warrant Holder are limited to those expressed in this Warrant.
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
the authorized officer as of the date first above stated.
 

      Date: July 20, 2006  JORDAN 1 HOLDINGS COMPANY  
   
   
  Date:  By:   /s/ Robert P. Moyer  

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Robert Moyer, Chief Executive Officer    

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FORM OF ELECTION TO PURCHASE

(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)

To: Jordan 1 Holdings Company:

In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock (“Common Stock”), $.001 par value, of Jordan 1 Holdings Company and
encloses the warrant and $____ for each Warrant Share being purchased or an
aggregate of $________________ in cash or certified or official bank check or
checks, which sum represents the aggregate Exercise Price (as defined in the
Warrant) together with any applicable taxes payable by the undersigned pursuant
to the Warrant.

The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
 

           
  (Please print name and address)
     
  (Please insert Social Security or Tax Identification Number)
 

 
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:

 

            (Please print name and address)      

Dated:
 
Name of Warrant Holder:
 

 

 
(Print)
   
(By:)
         
(Name:)
   
(Title:)
         
Signature must conform in all respects to name of
Warrant Holder as specified on the face of the
Warrant

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