Exhibit 10.39
SECURITIES PURCHASE AGREEMENT

 
THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made by and between
Magnitude Information Systems, Inc., a Delaware corporation, having its
principal offices located at 330 West 38th Street, New York, New York 10018 (the
“Company”), and _________________________, having an address at
__________________________________________  (the “Purchaser”).
 
Recitals

A.           The Purchaser has offered to subscribe and purchase, and the
Company to privately place with the Purchaser, certain securities of the Company
as more fully described in this Agreement;;
 
B.           The offer and sale of the securities of the Company to be sold to
the Purchaser is being consummated in reliance upon the exemption from
securities registration afforded by Section 4(2) under the Securities Act of
1933, as amended (“1933 Act”), and the provisions of Regulation D (“Regulation
D”), as promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
under the 1933 Act; and
 
C.           By executing this Agreement, the Purchaser has agreed to purchase
the securities identified below, upon the terms and subject to the conditions
stated in this Agreement.
 
NOW, THEREFORE, In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
 
1.     Definitions.  In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
 
 “Accredited Investor” shall have the meaning assigned to such term in Rule
501(a) of Regulation D.
 
“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly controls, is controlled by, or is under common control with, such
Person, where “control” means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
 
“Agreements” means this Agreement and any other agreement entered into, now or
in the future, by the Company and the Purchaser.

 “Closing” means the consummation of the purchase and sale of the Securities.

“Exercise Price” means the exercise price for the Warrants being purchased
pursuant to the terms of this Agreement, which shall be $.05 per Common Share
and which Warrants contain a “Cashless” Exercise provision.

 “Material Adverse Effect” means a material adverse effect on the (i) condition
(financial or otherwise), business, assets or results of operations of the
Company; (ii) ability of the Company to perform any of its material obligations
under the terms of the Agreements; or (iii) material rights and remedies of a
Purchaser under the terms of the Agreements.

                            “Person” means an individual, corporation,
partnership, limited liability company, trust, business trust, association,
joint stock company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

                             "Purchase Price" means the sum of $.025 per “Unit”,
defined below, of Securities the Purchaser shall pay for pursuant to the terms
and provisions of this Agreement.

 
 

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                             “1934 Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

                             “Restricted Common Shares” means the one (1) share
of the restricted common stock per Unit of the Company, representing part of the
Securities being purchased pursuant to the terms of this Agreement.

                             "Securities" means the Restricted Common Shares and
the common stock purchase warrant (defined below as the “Warrant”) to purchase
the Company’s restricted common shares at the Exercise Price, to be purchased by
the Purchaser and sold by the Company per Unit pursuant to the terms of this
Agreement.
 
              "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated hereunder.
 
 “Unit” means one (1) restricted common share and one-quarter (1/4) Warrant for
the Purchase Price of $.025 per Unit.
 
                             “VWAP” means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted for trading as
reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)); (b)  if the OTC Bulletin Board is not
a Trading Market, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the
Common Stock is not then quoted for trading on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
Pink Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by the Holder and reasonably acceptable to the Company.
 
                                "Warrant(s)" means the common stock purchase
warrants, in the form of Exhibit A attached hereto, (A) and in the proportion
described in the “Unit(s)”to be sold to the Purchaser pursuant to the terms of
this Agreement and (B) to be paid to ____________ pursuant to Section 4.7, so
that each of such parties may purchase shares of the Company’s restricted common
shares at the Exercise Price, which Warrants shall be exercisable six months
after issue and have a term of exercise equal to three years from the “Initial
Exercise Date”.
 
                 "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
 
             2.             Purchase and Sale of Securities. Subject to the
terms and conditions of this Agreement and on the basis of the representations
and warranties made herein, the Purchaser agrees to purchase, and the Company
agrees to sell and issue to the Purchaser, that number of Units and for the
purchase price set forth on the Signature Page of this Agreement (the “Purchase
Price”), payable by wire transfer to the Company’s bank account as identified on
Exhibit B attached hereto.
 
3.              Subscription Procedure. A. In order to subscribe and pay for the
Units, the Purchaser shall deliver to the Company, via e-mail or telecopy, a
fully executed copy of this Agreement, and the Purchase Price in accordance with
Section 2 above.  

B. Provided that the Purchaser delivered the Purchase Price and a fully executed
copy of this Agreement as required, the Company shall deliver or cause to be
delivered to the Purchaser or his designee: (i) the fully executed copy of this
Agreement; (ii) a Certificate representing the restricted common shares
contained in the Units purchased, issued in the Purchaser’s name, and; (iii) the
Warrant registered in the name of the Purchaser contained in the Units purchased
at the Exercise Price. .

 
 

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4.         Representations and Warranties of the Company.  Except as disclosed
in the Company’s SEC Filings (as defined below), the Company hereby represents
and warrants to the Purchaser that:

4.1.           Organization, Good Standing and Qualification. The Company is a
corporation validly existing and in good standing under the laws of Delaware and
has all requisite corporate power and authority to carry on its business as now
conducted and own its properties.  The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property makes such
qualification or licensing necessary unless the failure to so qualify would not
result in a Material Adverse Effect.
 
4.2.           Authorization.  The Company has full corporate power and
authority and has taken all requisite action on the part of the Company
necessary for (i) the authorization, execution and delivery of the Agreements,
(ii) authorization of the performance of all obligations of the Company
hereunder and thereunder, and (iii) the authorization, issuance (or reservation
for issuance) and delivery of the Securities. The Agreements constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally and general
principles of equity that restrict the availability of equitable or legal
remedies.
 
 4.3.           Valid Issuance.  As of the Closing, the Company has reserved a
sufficient number of shares of Common Stock for the issuance of the Restricted
Common Shares and the Warrant Shares which, when issued in accordance with the
terms of this Agreement and Warrants, will be validly issued, fully paid,
non-assessable and free and clear of all encumbrances and restrictions imposed
by or through the Company, except for restrictions on transfer imposed by
applicable securities laws.
 
4.4.           Consents.  The execution, delivery and performance by the Company
of the Agreements and, subject to the truth and accuracy of the representations
made by the Purchaser in this Agreement, the offer, issuance and sale of the
Securities to the Purchaser, require no consent of, action by or in respect of,
or filing with, any Person, agency, or official and filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws.
 
4.5.           SEC Filings; Business. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to or on the date hereof and all registration statements
and exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC Filings").  As of the date of filing of such SEC Filings, each such SEC
Filing, as it may have been subsequently amended by filings made by the Company
with the SEC prior to the date hereof, complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Filing. None of the SEC Filings,
as of the date filed and as they may have been subsequently amended by filings
made by the Company with the SEC prior to the date hereof, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Filings complied as to form in all material respects with applicable
accounting requirements and published rules and regulations of the SEC with
respect thereto.  Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

 
 

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4.6.           No Conflict, Breach, Violation or Default; Compliance with Law.
The execution, delivery and performance of the Agreements by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, constitute a default under,
require any consent, approval or filing under, result in or require the creation
or imposition of any lien or encumbrance upon or with respect to the Company’s
property under (i) the Company’s Articles of Incorporation (including any
certificates of designation) or the Company’s Bylaws, both as in effect on the
date hereof,  (ii) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company or any of its properties; or (iii) any contract, loan or instrument by
which the company or its property is bound.  The Company (i) is not to its
knowledge in violation of any statute, rule or regulation applicable to the
Company or its assets or its activities, (ii) is not in violation of any
judgment, order or decree applicable to the Company or its assets; and (iii) has
not received notice from any Person of any claim, investigation or inquiry,
that, if adversely determined, would render the preceding sentence untrue or
incomplete and the Company is aware of no facts or circumstances which could
give rise to such a claim, investigation or inquiry.

4.7.           Brokers and Finders. The Purchaser acknowledges that Carella
Asset Management of Zurich, Switzerland will receive a cash fee equal to six
(6%) percent of the Purchase Price to be paid by the Company following the
Closing  Subject to the foregoing, neither the Purchaser nor the Company shall
have any liability or responsibility for the payment of any commission or
finder’s fee to any third party in connection with or resulting from this
Agreement or the transactions contemplated by this Agreement by reason of any
agreement of or action taken by the Company.

5.           Representations and Warranties of the Purchaser.  The Purchaser
hereby represents and warrants to the Company that:

5.1           Organization, Good Standing, Authorization.  If Purchaser is an
entity, it is a corporation, limited liability company, trust or partnership or
other similar entity duly organized, validly existing and in good standing under
the laws of its jurisdiction.  Purchaser has full power and authority (corporate
or otherwise) to execute, deliver and enter into this Agreement.  The execution,
delivery and performance by the Purchaser of this Agreement have been duly
authorized and this Agreement constitutes the valid and legally binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally and general principles of equity
that restrict the availability of equitable or legal remedies.
 
5.2           Purchase Entirely for Own Account.  The Securities to be received
by the Purchaser hereunder will be acquired for the Purchaser’s own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same.  The Purchaser is not a
registered broker dealer or an entity engaged in the business of being a broker
dealer.
 
5.3           Investment Experience.  The Purchaser acknowledges that he can
bear the economic risk and complete loss of his investment in the Securities and
has such knowledge and experience in financial or business matters and in
private placement transactions of companies similar to the Company so that he is
capable of evaluating the merits and risks of the purchase contemplated hereby.

 5.4           Disclosure of Information.  The Purchaser has had an opportunity
to receive documents related to the Company and to ask questions of and receive
answers from the Company regarding the Company, its business and the terms and
conditions of the offering of the Securities and has received and read the SEC
Filings filed via EDGAR.  Neither such inquiries nor any other due diligence
investigation conducted by the Purchaser shall modify, amend or affect the
Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or made pursuant to this Agreement.
 
5.5       Restricted Securities.  The Purchaser understands that the Securities
are characterized as “restricted securities” under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable state laws
and regulations such securities may be resold without registration under the
1933 Act only in certain limited circumstances.
 
5.6       Legends.  It is understood that the certificates evidencing the
Securities shall bear a legend substantially similar to the following:

 
 

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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
OR CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY
 
 5.7      Accredited Investor.  The Purchaser is an Accredited Investor.
 
5.8.      No General Solicitation.  The Purchaser did not learn of the
investment in the Shares as a result of any public advertising or general
solicitation.

6.         Miscellaneous.
 
6.1       Successors and Assigns.  This Agreement may not be assigned by the
Company or the Purchaser. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective parties.  Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
 
6.2       Counterparts. This Agreement may be executed in two or more
counterparts, by original or facsimile signature, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
  
6.3       Titles and Subtitles.  The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
6.4       Notices.  Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given only upon delivery to each party to be notified by (i) personal delivery,
(ii) facsimile, with electronic confirmation of transmittal, (iii) certified
mail, return receipt requested, or (iv) an internationally recognized overnight
air courier, addressed to the party to be notified at the address as follows, or
at such other address as such party may designate by ten days’ advance written
notice to the other party:
 
If to the Company:

Magnitude Information Systems, Inc.
330 West 38th Street
New York, New York 10018
Facsimile: (908) ________________
E-Mail: JKlaube@att,net
Att:  Joerg H. Klaube, Chief Financial Officer

With a copy to:
Joseph J. Tomasek, Esq.
77 North Bridge Street
Somerville, New Jersey 08876
Facsimile: (908) 429-0040
E-Mail: JToma4368@aol.com

If to the Purchaser, to the address set forth on the signature page hereto.

 
 

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6.5   Amendments and Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser.
 
6.6     Severability.  If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
 
6.7     Entire Agreement.  This Agreement, including the exhibits and schedules
hereto, and the other documents contemplated hereby constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.
 
6.8    Further Assurances.  The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
  
6.9    Applicable Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
 
6.10  No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement and the other Agreements.  In the
event an ambiguity or question of intent or interpretation arises, this
Agreement and the other Agreements shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement or any of the other Agreements.
 
[Signature Pages Follow]

 
 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the ___ day
of November, 2009.

The Company:
  MAGNITUDE INFORMATION SYSTEMS, INC.                   By:     
 
      Name: Rudolf Hauke         Title: President                     Purchaser:
   
 
                         
 
                  (Print Name of Purchaser)                    
Number of Units Purchased ($.025 per
Unit):___________________Units
                  Purchase Price ($.025 per Unit)         $      
 
           
Social Security/Tax Identification Number:
                                         
Address:
 
         
 
         
 
       

 
 
 

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Exhibit A
 
Form of Warrant
 
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
COMMON STOCK PURCHASE WARRANT
 
MAGNITUDE INFORMATION SYSTEMS, INC.
 
$.05 EXERCISE PRICE
 
Warrant Shares: _______; Initial Exercise Date: June 7, 2010; Issue Date:
December 7, 2009
 
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value
received, ____________________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the six month anniversary of the date hereof (the
"Initial Exercise Date") and on or prior to the close of business on the three
(3) year anniversary date of the Initial Exercise Date (the "Termination Date")
but not thereafter, to subscribe for and purchase from Magnitude Information
Systems, Inc., Inc., a Delaware corporation (the "Company"), up to
_______________ (______________) shares (the "Warrant Shares") of common stock,
$.0001 par value per share, of the Company (the "Common Stock"). The purchase
price of one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
 
Section 1. Definitions. Capitalized terms shall have the meanings set forth in
this Warrant.
 
 
 

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Section 2. Exercise.
 
 
a.
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date on or before the Termination Date by delivery to the Company of a
duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company); and, within 3 Trading Days of the date said Notice of
Exercise is delivered to the Company, the Company shall have received payment of
the aggregate Exercise Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in which case,
the Holder shall surrender this Warrant to the Company for cancellation within 3
Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder
and the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases, which records shall be reconciled by
the Company and the Holder in writing after each such purchase. The Company
shall deliver any objection to any Notice of Exercise Form within one Business
Day of receipt of such notice. In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less
than the amount stated on the face hereof.

 
Exercise Price and Exercise Conditions . The exercise price per share of the
Common Stock under this Warrant shall be $.05, subject to adjustment hereunder
(the "Exercise Price")

Cashless Exercise. At any time after one year from the date of issuance this
Warrant may also be exercised at such time by means of a "cashless exercise" in
which the Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:

 
 

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(A) = the VWAP on the Trading Day immediately preceding the date of such
election;
 
(B) = the Exercise Price of this Warrant, as adjusted; and
 
(X) = the number of Warrant Shares issuable upon exercise of this Warrant in
accordance with the terms of this Warrant by means of a cash exercise rather
than a cashless exercise.
 
Notwithstanding anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise pursuant to this
Section 2(c).

 
 

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b.
Holder's Restrictions. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, such Holder (together with such Holder's Affiliates, and any other
person or entity acting as a group together with such Holder or any of such
Holder's Affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own in excess of the Beneficial Ownership Limitation (as defined
below).  For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by such Holder and its Affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (A) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by such
Holder or any of its Affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Debentures or Warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such Holder or any of its Affiliates.  Except as
set forth in the preceding sentence, for purposes of this Section 2(d)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act, it being acknowledged by a Holder that the Company is not
representing to such Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and such Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent that the
limitation contained in this Section 2(d) applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by such
Holder together with any Affiliates) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of a Holder, and the submission of a
Notice of Exercise shall be deemed to be each Holder's determination of whether
this Warrant is exercisable (in relation to other securities owned by such
Holder together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act. For purposes of this Section 2(d), 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 (x) the Company's most recent
Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company's Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to 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 conversion or exercise of securities of the Company, including this Warrant,
by such Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The "Beneficial Ownership
Limitation" shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Beneficial Ownership
Limitation provisions of this Section 2(d)(i) may be waived by such Holder, at
the election of such Holder, upon not less than 61 days' prior notice to the
Company to change the Beneficial Ownership Limitation to 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant, and the
provisions of this Section 2(d) shall continue to apply. Upon such a change by a
Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such
9.99% limitation, the Beneficial Ownership Limitation may not be further waived
by such Holder. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 2(d)(i) to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Warrant.

 
 
 

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c.
Mechanics of Exercise.

 
i.
Authorization of Warrant Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges created by the Company in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

 
ii.
Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the
Holder by crediting the account of the Holder's prime broker with the Depository
Trust Company through its Deposit Withdrawal Agent Commission ("DWAC") system if
the Company is a participant in such system, and otherwise by physical delivery
to the address specified by the Holder in the Notice of Exercise within 3
Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the aggregate Exercise
Price as set forth above ("Warrant Share Delivery Date"). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price (or
by cashless exercise, if permitted) and all taxes required to be paid by the
Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such
shares, have been paid.

 
iii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.

 
 
 

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iv.
Rescission Rights. If the Company fails to cause its transfer agent to transmit
to the Holder a certificate or certificates representing the Warrant Shares
pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise.

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

 
 

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vi.
No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.

 
vii.
Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event certificates for Warrant Shares
are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

 
viii.
Closing of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the
terms hereof.

 
ix.

 
 

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Section 3. Certain Adjustments.
 
 
a.
Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (B) subdivides outstanding shares of Common Stock
into a larger number of shares, (C) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

 
b.
[INTENTIONALLY DELETED]

 
c.
[INTENTIONALLY DELETED]

 
d.
[INTENTIONALLY DELETED]

 

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e.
Fundamental Transaction. If, at any time while this Warrant is outstanding, (A)
the Company effects any merger or consolidation of the Company with or into
another Person, (B) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental Transaction"),
then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction, at
the option of the Holder, (a) upon exercise of this Warrant, the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the "Alternate Consideration") receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event or (b) if the Company is acquired in
an all cash transaction, cash equal to the value of this Warrant as determined
in accordance with the Black-Scholes option pricing formula. For purposes of any
such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder's right to
exercise such warrant into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this Section 3(e) and insuring that this Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.

 
f.
Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

 
g.
Voluntary Adjustment By Company. The Company may at any time during the term of
this 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.

 

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h.
Notice to Holder.

 
 
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant
to any provision of this Section 3, the Company shall promptly mail to the
Holder a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock; (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is entitled to
exercise this Warrant during the 20-day period commencing on the date of such
notice to the effective date of the event triggering such notice.

 
 

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Section 4. Transfer of Warrant.
 
 
a.
Transferability. Subject to compliance with any applicable securities laws, this
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued.

 
b.
New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

 
c.
Warrant Register. 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 Holder hereof from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

 

 
 

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d.
Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the Company shall require, as a
condition of allowing such transfer, that (i) the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, and (ii) the Holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company, and (iii) the transferee be an "accredited investor" as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
Securities Act or a "qualified institutional buyer" as defined in Rule 144A(a)
promulgated under the Securities Act.

 
Section 5. Miscellaneous.
 
 
a.
No Rights as Shareholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof as set forth in Section 2(e)(ii).

 
b.
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

 
c.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

 
d.
Authorized Shares. The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed.

 
 

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Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
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 of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
 
Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.
 
 
e.
Jurisdiction. All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be determined in accordance with the
laws of the State of New York.

 
f.
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant will have restrictions upon resale imposed by state and
federal securities laws.

 
g.
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

 
 

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h.
Notices. Any notice, request or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered in accordance with
the notice provisions of the Securities Purchase Agreement.

 
i.
Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

 
j.
Remedies. Holder, in addition to being entitled to exercise all rights granted
by law, including recovery of damages, will be entitled to specific performance
of its rights under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be
adequate.

 
k.
Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

 
l.
Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.

 
m.
Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

 
n.
Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.

 
********************
 
 
 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.

MAGNITUDE INFORMATION SYSTEMS, INC.
 
By:
       
Rudolf Hauke, President

 

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EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
MAGNITUDE INFORMATION SYSTEMS, INC.

The undersigned holder hereby exercises the right to purchase             
of  the shares of Common Stock (“Warrant Shares”) of  MAGNITUDE INFORMATION
SYSTEMS, INC. a Delaware corporation (the “Company”), evidenced by the attached
Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:
      a “Cashless Exercise” with respect to                      Warrant Shares

___ b Cash Exercise, at $.05 per Common Share with respect to ______
                                                                                      Warrant
Shares

2. Delivery of Warrant Shares. The Company shall deliver to the Holder
             Warrant Shares in accordance with the terms of the Warrant.
Date:                  ,             

   
Name of Registered Holder
   
By:
   
Name:
 
Title:

 
 

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