Exhibit 10.3


     

    


    


    


    NEITHER
      THIS SECURITY NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY 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

    


    THEATER
      XTREME ENTERTAINMENT GROUP, INC.

     

    
      	 Warrant Shares: 460,600	
               Initial
                Exercise Date:  March 6,
                2007

            


    

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
      received, Kinzer Technology, LLC, a Virginia limited liability company (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
      date hereof (the “Initial Exercise Date”) and on or prior to the close of
      business on the fifth anniversary of the Initial Exercise Date (the “Termination
      Date”) but not thereafter, to subscribe for and purchase from Theater Xtreme
      Entertainment Group, Inc., a Florida corporation (the “Company”), up to 460,600
      shares (the “Warrant Shares”) of common stock, par value $0.001 per share, of
      the Company (the “Common Stock”). The purchase price of each 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 used and not otherwise defined herein shall have the
      respective meanings set forth in that certain Securities Purchase Agreement
      (the
“Purchase Agreement”), dated the date hereof, by and between the Company and
      Holder.

     

     

    
      
        
        

      

      
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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
      and
      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 Holder appearing on the books of the
      Company); and, within three (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.
      Each
      exercise of this Warrant (other than the final such exercise) shall be for
      a
      whole number of shares. 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 three (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
      reducing the number of Warrant Shares purchasable thereafter in an amount equal
      to the 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. The Company shall deliver any objection to any Notice of
      Exercise Form within one (1) Business Day of receipt of such notice. “Business
      Day” means any day except Saturday, Sunday, any day which shall be a federal
      legal holiday in the United States or any day on which banking institutions
      in
      the State of New York are authorized or required by law or other governmental
      action to close. 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.

     

    (b)  Exercise
      Price.
      The
      exercise price per share of the Common Stock under this Warrant shall be One
      Dollar and Ten Cents ($1.10), subject to adjustment hereunder (the “Exercise
      Price”).

     

    (c)  Exercise
      Limitations.
      The
      Company shall not effect any exercise of this Warrant, and Holder shall not
      have
      the right to exercise any portion of this Warrant to the extent that after
      giving effect to such issuance after exercise as set forth on the applicable
      Notice of Exercise, Holder (together with Holder’s Affiliates, and any other
      person or entity acting as a group together with Holder or any of 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 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 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
      Holder or any of its Affiliates. Except as set forth in the preceding sentence,
      for purposes of this Section 2(c), beneficial ownership shall be calculated
      in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder, it being acknowledged by Holder that the Company is
      not
      representing to Holder that such calculation is in compliance with Section
      13(d)
      of the Exchange Act and 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(c) applies, the determination of whether this 

     

     

    
      
        
        

      

      
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    Warrant
      is exercisable (in relation to other securities owned by Holder together with
      any Affiliates) and of which a portion of this Warrant is exercisable shall
      be
      in the sole discretion of Holder, and the submission of a Notice of Exercise
      shall be deemed to be Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by 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 and the rules and
      regulations promulgated thereunder. For purposes of this Section 2(c), in
      determining the number of outstanding shares of Common Stock, Holder may rely
      on
      the number of outstanding shares of Common Stock as reflected in (x) the
      Company’s most recent quarterly or annual period report filed under the Exchange
      Act, 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 Holder, the Company shall within two (2) Trading Days confirm orally
      and in writing to 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 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(c) may be waived by Holder,
      at
      the election of Holder, upon not less than sixty-one (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(c) shall continue to apply. Upon such a change
      by
      Holder of the Beneficial Ownership Limitation from such 4.99% limitation to
      such
      9.99% limitation, the Beneficial Ownership Limitation may be further waived
      by
      Holder to exceed 9.99% in its sole discretion. 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(c) 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.

     

    (d)  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 (including payment for the Warrant
      Shares), 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).

     

     

    
      
        
        

      

      
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    (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 three (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 and all taxes required to be paid by the
      Holder, if any, pursuant to Section 2(d)(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
      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.

     

    (iv)  Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to Holder a certificate
      or
      certificates representing the Warrant Shares pursuant to this Section 2(d)(iv)
      by the second Trading Day following the Warrant Share Delivery Date, then 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 third
      Trading Day following 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 by (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.

     

    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 makes 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.

     

     

    
      
        
        

      

      
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    (b)  Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall sell or grant any option to purchase, or sell or grant
      any
      right to reprice its securities, or otherwise dispose of or issue (or announce
      any offer, sale, grant or any option to purchase or other disposition) any
      Common Stock or Common Stock Equivalents entitling any Person other than the
      Holder to acquire shares of Common Stock, at an effective price per share less
      than the then Exercise Price (such lower price, the “Base Share Price” and such
      issuances collectively, a “Dilutive Issuance”) (if the holder of the Common
      Stock or Common Stock Equivalents so issued shall at any time, whether by
      operation of purchase price adjustments, reset provisions, floating conversion,
      exercise or exchange prices or otherwise, or due to warrants, options or rights
      per share which are issued in connection with such issuance, be entitled to
      receive shares of Common Stock at an effective price per share which is less
      than the Exercise Price, such issuance shall be deemed to have occurred for
      less
      than the Exercise Price on such date of the Dilutive Issuance), then the
      Exercise Price shall be reduced and only reduced to equal the Base Share Price
      and the number of Warrant Shares issuable hereunder shall be increased such
      that
      the aggregate Exercise Price payable hereunder, after taking into account the
      decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
      prior to such adjustment. Such adjustment shall be made whenever such Common
      Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing,
      no
      adjustments shall be made, paid or issued under this Section 3(b) in respect
      of
      an Exempt Issuance. The Company shall notify the Holder in writing, no later
      than the Trading Day following the issuance of any Common Stock or Common Stock
      Equivalents subject to this Section 3(b), indicating therein the applicable
      issuance price, or applicable reset price, exchange price, conversion price
      and
      other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes
      of clarification, whether or not the Company provides a Dilutive Issuance Notice
      pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance,
      after the date of such Dilutive Issuance the Holder is entitled to receive
      a
      number of Warrant Shares based upon the Base Share Price regardless of whether
      the Holder accurately refers to the Base Share Price in the Notice of Exercise.
      “Exempt Issuance” shall means the issuance of (i) shares of Common Stock or
      options to employees, officers or directors of the Company pursuant to any
      stock
      or option plan duly adopted for such purpose by a majority of the non-employee
      members of the Board of Directors of the Company or a majority of the members
      of
      a committee of non-employee directors established, (ii) securities issued upon
      the exercise or exchange of or conversion of any Securities issued under the
      Purchase Agreement or of other securities exercisable or exchangeable for or
      convertible into shares of Common Stock issued and outstanding on the date
      of
      the Purchase Agreement, provided that such securities have not been amended
      since the date of the Purchase Agreement to increase the number of such
      securities or to decrease the exercise, exchange or conversion price of such
      securities, and (iii) securities issued pursuant to acquisitions or strategic
      transactions approved by a majority of the disinterested directors of the
      Company, provided any such issuance shall only be to a Person which is, itself
      or through its subsidiaries, an operating company in a business synergistic
      with
      the business of the Company and in which the Company receives benefits in
      addition to the investment of funds, but shall not include a transaction in
      which the Company is issuing securities primarily for the purpose of raising
      capital or to an entity whose primary business is investing in
      securities.

     

     

    
      
        
        

      

      
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    (c)  Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Warrant is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to Holder) entitling
      them to subscribe for or purchase shares of Common Stock at a price per share
      less than the VWAP at the record date mentioned below, then the Exercise Price
      shall be multiplied by a fraction, of which the denominator shall be the number
      of shares of the Common Stock outstanding on the date of issuance of such rights
      or warrants plus the number of additional shares of Common Stock offered for
      subscription or purchase, and of which the numerator shall be the number of
      shares of the Common Stock outstanding on the date of issuance of such rights
      or
      warrants plus the number of shares which the aggregate offering price of the
      total number of shares so offered (assuming receipt by the Company in full
      of
      all consideration payable upon exercise of such rights, options or warrants)
      would purchase at such VWAP. Such adjustment shall be made whenever such rights
      or warrants are issued, and shall become effective immediately after the
      distribution date.

     

    (d)  Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holder of the Warrant) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common Stock (which
      shall be subject to Section 3(b)), then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the VWAP
      determined as of the record date mentioned above, and of which the numerator
      shall be such VWAP on such record date less the then per share fair market
      value
      at such record date of the portion of such assets or evidence of indebtedness
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith. In either case the
      adjustments shall be described in a statement provided to the Holder of the
      portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common Stock. Such adjustment
      shall be made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

     

    (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) 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 Holder of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such event or (b) at
      the
      10 Trading Days’ prior written election of either the Company or the Holder
      (during which period the Holder has the right to exercise this Warrant for
      shares of Common Stock), cash equal to the greater of (i) the value of this
      Warrant as determined in accordance with the Black-Scholes option pricing
      formula with an annualized volatility that is calculated using the trading
      history over the 4 calendar weeks immediately prior to the notice of exercise
      date and (ii) 

     

     

    
      
        
        

      

      
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    upon
      completion of the merger or consolidation, the product of (A) the difference
      between the merger consideration per share less the Exercise Price and (B)
      the
      number of Warrant Shares then issuable hereunder. 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.

     

    (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. If the Company issues a variable rate
      security, the Company shall be deemed to have issued Common Stock or Common
      Stock Equivalents at the lowest possible conversion or exercise price at which
      such securities may be converted or exercised in the case of a Variable Rate
      Transaction. The term “Variable Rate Transaction” shall mean a transaction in
      which the Company issues or sells (i) any debt or equity securities that are
      convertible into, exchangeable or exercisable for, or include the right to
      receive additional shares of Common Stock either (A) at a conversion, exercise
      or exchange rate or other price that is based upon and/or varies with the
      trading prices of or quotations for the shares of Common Stock at any time
      after
      the initial issuance of such debt or equity securities, or (B) with a
      conversion, exercise or exchange price that is subject to being reset at some
      future date after the initial issuance of such debt or equity security or upon
      the occurrence of specified or contingent events directly or indirectly related
      to the business of the Company or the market for the Common Stock or (ii) enters
      into any agreement, including, but not limited to, an equity line of credit,
      whereby the Company may sell securities at a future determined
      price.

     

     

    
      
        
        

      

      
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    (ii)  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.

     

    Section
      4.  Transfer
      of Warrant.

     

    (a)  Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
      Agreement, 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.

     

     

    
      
        
        

      

      
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    (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.

     

    (d)  Transfer
      Restrictions.
      If, at
      the time of the surrender of this Warrant in connection with any transfer of
      this Warrant, the transfer of this Warrant shall not be registered pursuant
      to
      an effective registration statement under the Securities Act and under
      applicable state securities or blue sky laws, the Company may 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(d)(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.

     

     

    
      
        
        

      

      
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    (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.
      

    


    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 provisions of the
      Purchase Agreement.

     

    (f)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (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.

     

    (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 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.

     

    


    [Remainder
      of Page Intentionally Left Blank]

     

     

    
 

    
      
        
        

      

      
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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.

    


    


    


    THEATER
      XTREME ENTERTAINMENT GROUP, INC.

    


    


    By: /s/
      Scott R. Oglum

    Name:
      Scott R. Oglum

    Title:
      Chairman and CEO

    


    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    NOTICE
      OF
      EXERCISE

    


    TO:
      [_______________________

    


    


    (1)
      The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

    


    (2)
      Payment shall be in lawful money of the United States.

    


    (3)
      Please issue a certificate or certificates representing said Warrant Shares
      in
      the name of the undersigned or in such other name as is specified
      below:

    


    _______________________________

    


    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    


    _______________________________

    _______________________________

    _______________________________

    


    (4)
      Accredited Investor. The undersigned is an “accredited investor” as defined in
      Regulation D promulgated under the Securities Act of 1933, as amended.


    


    [SIGNATURE
      OF HOLDER]

    


    Name
      of
      Investing Entity:
      __________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      ___________________________

    Name
      of
      Authorized Signatory:
      ______________________________________________

    Title
      of
      Authorized Signatory:
      _______________________________________________

    Date:
      ___________________________________________________________________

    


    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    ASSIGNMENT
      FORM

    


    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information.

    Do
      not
      use this form to exercise the warrant.)

    


    FOR
      VALUE
      RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
      rights evidenced thereby are hereby assigned to ____________________________
      whose address is
      ______________________________________________________________.

    


    Dated:
      ______________, _______

    


    Holder’s
      Signature: _____________________________

    


    Holder’s
      Address: _____________________________

    _____________________________

    


    Signature
      Guaranteed: ___________________________________________

    


    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

     

     

     

    15