THIS
      WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGIS-TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
      SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF JULY 25,
      2008, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED
      OR
      ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA-TION STATEMENT FOR SUCH
      SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
      SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
      REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      OR REGULATION S UNDER SUCH ACT.

     

    Right
      to
      Purchase 1,000,000 Shares of Common Stock, no par value per share

     

    STOCK
      PURCHASE WARRANT

     

    THIS
      CERTIFIES THAT,
      for
      value received, AJW Partners, LLC or its registered assigns, is entitled to
      purchase from Standard
      Management Corporation,
      an
      Indiana corporation (the “Company”),
      at
      any time or from time to time during the period specified in Paragraph 2
      hereof, 1,000,000 fully paid and nonassessable shares of the Company’s Common
      Stock, no par value per share (the “Common
      Stock”),
      at an
      exercise price per share equal to $.001 (the “Exercise
      Price”).
      The
      term “Warrant Shares,” as used herein, refers to the shares of Common Stock
      purchasable hereunder. The Warrant Shares and the Exercise Price are subject
      to
      adjustment as provided in Paragraph 4 hereof. The term “Warrants” means this
      Warrant and the other warrants issued pursuant to that certain Securities
      Purchase Agreement, dated July 25, 2008, by and among the Company and the Buyers
      listed on the execution page thereof (the “Securities
      Purchase Agreement”).
      

     

    This
      Warrant is subject to the following terms, provisions, and conditions:


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1. Manner
      of Exercise; Issuance of Certificates; Payment for Shares. 
Subject
      to the provisions hereof, this Warrant may be exercised by the holder hereof,
      in
      whole or in part, by the surrender of this Warrant, together with a completed
      exercise agreement in the form attached hereto (the “Exercise Agreement”), to
      the Company during normal business hours on any business day at the Company’s
      principal executive offices (or such other office or agency of the Company
      as it
      may designate by notice to the holder hereof), and upon (i) payment to the
      Company in cash, by certified or offi-cial bank check or by wire transfer for
      the account of the Company of the Exercise Price for the Warrant Shares
      specified in the Exercise Agreement or (ii) if the resale of the Warrant Shares
      by the holder is not then registered pursuant to an effective registration
      statement under the Securities Act of 1933, as amended (the “Securities Act”),
      delivery to the Company of a written notice of an election to effect a “Cashless
      Exercise” (as defined in Section 11(c) below) for the Warrant Shares specified
      in the Exercise Agreement. The Warrant Shares so purchased shall be deemed
      to be
      issued to the holder hereof or such holder’s designee, as the record owner of
      such shares, as of the close of business on the date on which this Warrant
      shall
      have been surrendered, the completed Exercise Agreement shall have been
      deliv-ered, and payment shall have been made for such shares as set forth above.
      Certifi-cates for the Warrant Shares so purchased, representing the aggregate
      number of shares specified in the Exercise Agreement, shall be delivered to
      the
      holder hereof within a reasonable time, not exceeding five (5) business days,
      after this Warrant shall have been so exercised. The certificates so delivered
      shall be in such denominations as may be requested by the holder hereof and
      shall be registered in the name of such holder or such other name as shall
      be
      designated by such holder. If this Warrant shall have been exercised only in
      part, then, unless this Warrant has expired, the Company shall, at its expense,
      at the time of delivery of such certificates, deliver to the holder a new
      Warrant representing the number of shares with respect to which this Warrant
      shall not then have been exercised. In addition to all other available remedies
      at law or in equity, if the Company fails to deliver certificates for the
      Warrant Shares within five (5) business days after this Warrant is exercised,
      then the Company shall pay to the holder in cash a penalty (the “Penalty”) equal
      to 2% of the number of Warrant Shares that the holder is entitled to multiplied
      by the Market Price (as hereinafter defined) for each day that the Company
      fails
      to deliver certificates for the Warrant Shares. For example, if the holder
      is
      entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the
      Company shall pay to the holder $4,000 for each day that the Company fails
      to
      deliver certificates for the Warrant Shares. The Penalty shall be paid to the
      holder by the fifth day of the month following the month in which it has
      accrued.

     

    Notwithstanding
      anything in this Warrant to the contrary, in no event shall the holder of this
      Warrant be entitled to exercise a number of Warrants (or portions thereof)
      in
      excess of the number of Warrants (or portions thereof) upon exercise of which
      the sum of (i) the number of shares of Common Stock beneficially owned by the
      holder and its affiliates (other than shares of Common Stock which may be deemed
      beneficially owned through the ownership of the unexercised Warrants and the
      unexercised or unconverted portion of any other securities of the Company
      (including the Notes (as defined in the Securities Purchase Agreement)) subject
      to a limitation on conversion or exercise analogous to the limitation contained
      herein) and (ii) the number of shares of Common Stock issuable upon exercise
      of
      the Warrants (or portions thereof) with respect to which the determination
      described herein is being made, would result in beneficial ownership by the
      holder and its affiliates of more than 4.9% of the outstanding shares of Common
      Stock. For purposes of the immediately preceding sentence, beneficial ownership
      shall be determined in accordance with Section 13(d) of the Securities Exchange
      Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise
      provided in clause (i) of the preceding sentence. Notwithstanding anything
      to
      the contrary contained herein, the limitation on exercise of this Warrant set
      forth herein may not be amended without (i) the written consent of the holder
      hereof and the Company and (ii) the approval of a majority of shareholders
      of
      the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2. Period
      of Exercise.This
      Warrant is exercisable at any time or from time to time on or after the date
      on
      which this Warrant is issued and delivered pursuant to the terms of the
      Securities Purchase Agreement and before 6:00 p.m., New York, New York time
      on
      the seventh (7th)
      anniversary of the date of issuance (the “Exercise Period”).

     

    3. Certain
      Agreements of the Company.  The
      Company hereby covenants and agrees as follows:

     

    (a) Shares
      to be Fully Paid.
      All
      Warrant Shares will, upon issuance in accordance with the terms of this Warrant,
      be validly issued, fully paid, and nonassessable and free from all taxes, liens,
      and charges with respect to the issue thereof.

     

    (b) Reservation
      of Shares.
      During
      the Exercise Period, the Company shall at all times have authorized, and
      reserved for the purpose of issuance upon exercise of this Warrant, a
      suf-ficient number of shares of Common Stock to provide for the exercise of
      this
      Warrant.

     

    (c) Listing.
      The
      Company shall promptly secure the listing of the shares of Common Stock issuable
      upon exercise of the Warrant upon each national securities exchange or automated
      quotation system, if any, upon which shares of Common Stock are then listed
      (subject to official notice of issuance upon exercise of this Warrant) and
      shall
      maintain, so long as any other shares of Common Stock shall be so listed, such
      listing of all shares of Common Stock from time to time issuable upon the
      exercise of this Warrant; and the Company shall so list on each national
      securities exchange or automated quotation system, as the case may be, and
      shall
      maintain such listing of, any other shares of capital stock of the Company
      issuable upon the exercise of this Warrant if and so long as any shares of
      the
      same class shall be listed on such national securities exchange or automated
      quotation system.

     

    (d) Certain
      Actions Prohibited.
      The
      Company will not, by amendment of its charter or through any re-organi-zation,
      transfer of assets, consolidation, mer-ger, dissolution, issue or sale of
      securities, or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed by it hereunder,
      but will at all times in good faith assist in the carrying out of all the
      provisions of this Warrant and in the taking of all such action as may
      reasonably be requested by the holder of this Warrant in order to protect the
      exercise privilege of the holder of this Warrant against dilu-tion or other
      impairment, consistent with the tenor and purpose of this Warrant. Without
      limiting the general-ity of the foregoing, the Company (i) will not increase
      the
      par value of any shares of Common Stock receivable upon the exercise of this
      Warrant above the Exercise Price then in effect, and (ii) will take all such
      actions as may be necessary or appropriate in order that the Company may validly
      and legally issue fully paid and nonassessable shares of Common Stock upon
      the
      exercise of this Warrant.

     

    (e) Successors
      and Assigns.
      This
      Warrant will be binding upon any entity succeeding to the Company by merger,
      consolidation, or acquisition of all or sub-stantially all the Company’s
      assets.

     

    4. Antidilution
      Provisions.  During
      the Exercise Period, the Exercise Price and the number of Warrant Shares shall
      be subject to adjustment from time to time as provided in this Paragraph 4.
      Notwithstanding anything herein to the contrary, the antidilution provisions
      of
      this Paragraph 4 shall not apply to the issuance of any securities contemplated
      by the Securities Purchase Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.

     

    (a) Adjustment
      of Exercise Price and Number of Shares upon Issuance of Common
      Stock.
      Except
      as otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever on
      or
      after the date of issuance of this Warrant, the Company issues or sells, or
      in
      accordance with Paragraph 4(b) hereof is deemed to have issued or sold, any
      shares of Common Stock for no consideration or for a consideration per share
      (before deduction of reasonable expenses or commissions or underwriting
      discounts or allowances in connection therewith) less than the Market Price
      on
      the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive
      Issuance, the Exercise Price will be reduced to a price determined by
      multiplying the Exercise Price in effect immediately prior to the Dilutive
      Issuance by a fraction, (i) the numerator of which is an amount equal to the
      sum
      of (x) the number of shares of Common Stock actually outstanding immediately
      prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
      consideration, calculated as set forth in Paragraph 4(b) hereof, received by
      the
      Company upon such Dilutive Issuance divided by the Market Price in effect
      immediately prior to the Dilutive Issuance, and (ii) the denominator of which
      is
      the total number of shares of Common Stock Deemed Outstanding (as defined below)
      immediately after the Dilutive Issuance. 

     

    (b) Effect
      on Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
      the following will be applicable:

     

    (i) Issuance
      of Rights or Options.
      If the
      Company in any manner issues or grants any warrants, rights or options, whether
      or not immediately exercisable, to subscribe for or to purchase Common Stock
      or
      other securities convertible into or exchangeable for Common Stock (“Convertible
      Securities”) (such warrants, rights and options to purchase Common Stock or
      Convertible Securities are hereinafter referred to as “Options”) and the price
      per share for which Common Stock is issuable upon the exercise of such Options
      is less than the Market Price on the date of issuance or grant of such Options,
      then the maximum total number of shares of Common Stock issuable upon the
      exercise of all such Options will, as of the date of the issuance or grant
      of
      such Options, be deemed to be outstanding and to have been issued and sold
      by
      the Company for such price per share. For purposes of the preceding sentence,
      the “price per share for which Common Stock is issuable upon the exercise of
      such Options” is determined by dividing (i) the total amount, if any, received
      or receivable by the Company as consideration for the issuance or granting
      of
      all such Options, plus the minimum aggregate amount of additional consideration,
      if any, payable to the Company upon the exercise of all such Options, plus,
      in
      the case of Convertible Securities issuable upon the exercise of such Options,
      the minimum aggregate amount of additional consideration payable upon the
      conversion or exchange thereof at the time such Convertible Securities first
      become convertible or exchangeable, by (ii) the maximum total number of shares
      of Common Stock issuable upon the exercise of all such Options (assuming full
      conversion of Convertible Securities, if applicable). No further adjustment
      to
      the Exercise Price will be made upon the actual issuance of such Common Stock
      upon the exercise of such Options or upon the conversion or exchange of
      Convertible Securities issuable upon exercise of such Options.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities, whether or
      not
      immediately convertible (other than where the same are issuable upon the
      exercise of Options) and the price per share for which Common Stock is issuable
      upon such conversion or exchange is less than the Market Price on the date
      of
      issuance, then the maximum total number of shares of Common Stock issuable
      upon
      the conversion or exchange of all such Convertible Securities will, as of the
      date of the issuance of such Convertible Securities, be deemed to be outstanding
      and to have been issued and sold by the Company for such price per share. For
      the purposes of the preceding sentence, the “price per share for which Common
      Stock is issuable upon such conversion or exchange” is determined by dividing
      (i) the total amount, if any, received or receivable by the Company as
      consideration for the issuance or sale of all such Convertible Securities,
      plus
      the minimum aggregate amount of additional consideration, if any, payable to
      the
      Company upon the conversion or exchange thereof at the time such Convertible
      Securities first become convertible or exchangeable, by (ii) the maximum total
      number of shares of Common Stock issuable upon the conversion or exchange of
      all
      such Convertible Securities. No further adjustment to the Exercise Price will
      be
      made upon the actual issuance of such Common Stock upon conversion or exchange
      of such Convertible Securities.

     

    (iii) Change
      in Option Price or Conversion Rate.
      If there
      is a change at any time in (i) the amount of additional consideration payable
      to
      the Company upon the exercise of any Options; (ii) the amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      of
      any Convertible Securities; or (iii) the rate at which any Convertible
      Securities are convertible into or exchangeable for Common Stock (other than
      under or by reason of provisions designed to protect against dilution), the
      Exercise Price in effect at the time of such change will be readjusted to the
      Exercise Price which would have been in effect at such time had such Options
      or
      Convertible Securities still outstanding provided for such changed additional
      consideration or changed conversion rate, as the case may be, at the time
      initially granted, issued or sold.

     

    (iv) Treatment
      of Expired Options and Unexercised Convertible
      Securities.
      If, in
      any case, the total number of shares of Common Stock issuable upon exercise
      of
      any Option or upon conversion or exchange of any Convertible Securities is
      not,
      in fact, issued and the rights to exercise such Option or to convert or exchange
      such Convertible Securities shall have expired or terminated, the Exercise
      Price
      then in effect will be readjusted to the Exercise Price which would have been
      in
      effect at the time of such expiration or termination had such Option or
      Convertible Securities, to the extent outstanding immediately prior to such
      expiration or termination (other than in respect of the actual number of shares
      of Common Stock issued upon exercise or conversion thereof), never been
      issued.

     

    (v) Calculation
      of Consideration Received.
      If any
      Common Stock, Options or Convertible Securities are issued, granted or sold
      for
      cash, the consideration received therefor for purposes of this Warrant will
      be
      the amount received by the Company therefor, before deduction of reasonable
      commissions, underwriting discounts or allowances or other reasonable expenses
      paid or incurred by the Company in connection with such issuance, grant or
      sale.
      In case any Common Stock, Options or Convertible Securities are issued or sold
      for a consideration part or all of which shall be other than cash, the amount
      of
      the consideration other than cash received by the Company will be the fair
      value
      of such consideration, except where such consideration consists of securities,
      in which case the amount of consideration received by the Company will be the
      Market Price thereof as of the date of receipt. In case any Common Stock,
      Options or Convertible Securities are issued in connection with any acquisition,
      merger or consolidation in which the Company is the surviving corporation,
      the
      amount of consideration therefor will be deemed to be the fair value of such
      portion of the net assets and business of the non-surviving corporation as
      is
      attributable to such Common Stock, Options or Convertible Securities, as the
      case may be. The fair value of any consideration other than cash or securities
      will be determined in good faith by the Board of Directors of the
      Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (vi) Exceptions
      to Adjustment of Exercise Price.
      No
      adjustment to the Exercise Price will be made (i) upon the exercise of any
      warrants, options or convertible securities granted, issued and outstanding
      on
      the date of issuance of this Warrant; (ii) upon the grant or exercise of any
      stock or options which may hereafter be granted or exercised under any employee
      benefit plan, stock option plan or restricted stock plan of the Company now
      existing or to be implemented in the future, so long as the issuance of such
      stock or options is approved by a majority of the independent members of the
      Board of Directors of the Company or a majority of the members of a committee
      of
      independent directors established for such purpose; or (iii) upon the exercise
      of the Warrants.

     

    (c) Subdivision
      or Combination of Common Stock.
      If the
      Company at any time subdivides (by any stock split, stock dividend,
      recapitalization, reorganization, reclassification or otherwise) the shares
      of
      Common Stock acquirable hereunder into a greater number of shares, then, after
      the date of record for effecting such subdivision, the Exercise Price in effect
      immediately prior to such subdivision will be proportionately reduced. If the
      Company at any time combines (by reverse stock split, recapitalization,
      reorganization, reclassification or otherwise) the shares of Common Stock
      acquirable hereunder into a smaller number of shares, then, after the date
      of
      record for effecting such combination, the Exercise Price in effect immediately
      prior to such combination will be proportionately increased.

     

    (d) Adjustment
      in Number of Shares.
      Upon
      each adjustment of the Exercise Price pursuant to the provisions of this
      Paragraph 4, the number of shares of Common Stock issuable upon exercise of
      this
      Warrant shall be adjusted by multiplying a number equal to the Exercise Price
      in
      effect immediately prior to such adjustment by the number of shares of Common
      Stock issuable upon exercise of this Warrant immediately prior to such
      adjustment and dividing the product so obtained by the adjusted Exercise
      Price.

     

    (e) Consolidation,
      Merger or Sale.
      In case
      of any consolidation of the Company with, or merger of the Company into any
      other corporation, or in case of any sale or conveyance of all or substantially
      all of the assets of the Company other than in connection with a plan of
      complete liquidation of the Company, then as a condition of such consolidation,
      merger or sale or conveyance, adequate provision will be made whereby the holder
      of this Warrant will have the right to acquire and receive upon exercise of
      this
      Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
      upon the exercise of this Warrant, such shares of stock, securities or assets
      as
      may be issued or payable with respect to or in exchange for the number of shares
      of Common Stock immediately theretofore acquirable and receivable upon exercise
      of this Warrant had such consolidation, merger or sale or conveyance not taken
      place. In any such case, the Company will make appropriate provision to insure
      that the provisions of this Paragraph 4 hereof will thereafter be applicable
      as
      nearly as may be in relation to any shares of stock or securities thereafter
      deliverable upon the exercise of this Warrant. The Company will not effect
      any
      consolidation, merger or sale or conveyance unless prior to the consummation
      thereof, the successor corporation (if other than the Company) assumes by
      written instrument the obligations under this Paragraph 4 and the obligations
      to
      deliver to the holder of this Warrant such shares of stock, securities or assets
      as, in accordance with the foregoing provisions, the holder may be entitled
      to
      acquire.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f) Distribution
      of Assets.
      In case
      the Company shall declare or make any distribution of its assets (including
      cash) to holders of Common Stock as a partial liquidating dividend, by way
      of
      return of capital or otherwise, then, after the date of record for determining
      shareholders entitled to such distribution, but prior to the date of
      distribution, the holder of this Warrant shall be entitled upon exercise of
      this
      Warrant for the purchase of any or all of the shares of Common Stock subject
      hereto, to receive the amount of such assets which would have been payable
      to
      the holder had such holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      distribution.

     

    (g) Notice
      of Adjustment.
      Upon the
      occurrence of any event which requires any adjustment of the Exercise Price,
      then, and in each such case, the Company shall give notice thereof to the holder
      of this Warrant, which notice shall state the Exercise Price resulting from
      such
      adjustment and the increase or decrease in the number of Warrant Shares
      purchasable at such price upon exercise, setting forth in reasonable detail
      the
      method of calculation and the facts upon which such calculation is based. Such
      calculation shall be certified by the Chief Financial Officer of the
      Company.

     

    (h) Minimum
      Adjustment of Exercise Price.
      No
      adjustment of the Exercise Price shall be made in an amount of less than 1%
      of
      the Exercise Price in effect at the time such adjustment is otherwise required
      to be made, but any such lesser adjustment shall be carried forward and shall
      be
      made at the time and together with the next subsequent adjustment which,
      together with any adjustments so carried forward, shall amount to not less
      than
      1% of such Exercise Price.

     

    (i) No
      Fractional Shares.
      No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but the Company shall pay a cash adjustment in respect of any
      fractional share which would otherwise be issuable in an amount equal to the
      same fraction of the Market Price of a share of Common Stock on the date of
      such
      exercise.

     

    (j) Other
      Notices.
      In case
      at any time:

     

    (i) the
      Company shall declare any dividend upon the Common Stock payable in shares
      of
      stock of any class or make any other distribution (including dividends or
      distributions payable in cash out of retained earnings) to the holders of the
      Common Stock;

     

    (ii) the
      Company shall offer for subscription pro rata to the holders of the Common
      Stock
      any additional shares of stock of any class or other rights;

     

    (iii) there
      shall be any capital reorganiza-tion of the Company, or reclassification of
      the
      Common Stock, or consolidation or merger of the Company with or into, or sale
      of
      all or substan-tially all its assets to, another corporation or entity;
      or

     

    (iv) there
      shall be a voluntary or involun-tary dissolution, liquidation or winding up
      of
      the Company;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    then,
      in
      each such case, the Company shall give to the holder of this Warrant (a) notice
      of the date on which the books of the Company shall close or a record shall
      be
      taken for determining the holders of Common Stock entitled to receive any such
      divi-dend, distribution, or subscription rights or for determining the holders
      of Common Stock entitled to vote in respect of any such reorganization,
      reclassification, consolidation, merger, sale, dissolution, liquidation or
      winding-up and (b) in the case of any such reorganization, reclassification,
      consolidation, merger, sale, dissolution, liquidation or winding-up, notice
      of
      the date (or, if not then known, a reasonable approximation thereof by the
      Company) when the same shall take place. Such notice shall also specify the
      date
      on which the holders of Common Stock shall be entitled to receive such dividend,
      distribution, or subscription rights or to exchange their Common Stock for
      stock
      or other securities or property deliverable upon such reorganization,
      re-classification, consolidation, merger, sale, dissolution, liquidation, or
      winding-up, as the case may be. Such notice shall be given at least 30 days
      prior to the record date or the date on which the Company’s books are closed in
      respect thereto. Failure to give any such notice or any defect therein shall
      not
      affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
      and (iv) above.

     

    (k) Certain
      Events.
      If any
      event occurs of the type contemplated by the adjustment provisions of this
      Paragraph 4 but not expressly provided for by such provisions, the Company
      will
      give notice of such event as provided in Paragraph 4(g) hereof, and the
      Company’s Board of Directors will make an appropriate adjustment in the Exercise
      Price and the number of shares of Common Stock acquirable upon exercise of
      this
      Warrant so that the rights of the holder shall be neither enhanced nor
      diminished by such event.

     

    (l) Certain
      Definitions. 

     

    (i) “Common
      Stock Deemed Outstanding”
      shall
      mean the number of shares of Common Stock actually outstanding (not including
      shares of Common Stock held in the treasury of the Company), plus (x) pursuant
      to Paragraph 4(b)(i) hereof, the maximum total number of shares of Common Stock
      issuable upon the exercise of Options, as of the date of such issuance or grant
      of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
      maximum total number of shares of Common Stock issuable upon conversion or
      exchange of Convertible Securities, as of the date of issuance of such
      Convertible Securities, if any. 

     

    (ii) “Market
      Price,”
      as of
      any date, (i) means the average of the last reported sale prices for the shares
      of Common Stock on the OTCBB for the five (5) Trading Days immediately preceding
      such date as reported by Bloomberg, or (ii) if the OTCBB is not the principal
      trading market for the shares of Common Stock, the average of the last reported
      sale prices on the principal trading market for the Common Stock during the
      same
      period as reported by Bloomberg, or (iii) if market value cannot be calculated
      as of such date on any of the foregoing bases, the Market Price shall be the
      fair market value as reasonably determined in good faith by (a) the Board of
      Directors of the Company or, at the option of a majority-in-interest of the
      holders of the outstanding Warrants by (b) an independent investment bank of
      nationally recognized standing in the valuation of businesses similar to the
      business of the corporation. The manner of determining the Market Price of
      the
      Common Stock set forth in the foregoing definition shall apply with respect
      to
      any other security in respect of which a determination as to market value must
      be made hereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iii) “Common
      Stock,”
      for
      purposes of this Paragraph 4, includes the Common Stock, no par value per share,
      and any additional class of stock of the Company having no preference as to
      dividends or distributions on liquidation, provided that the shares purchasable
      pursuant to this Warrant shall include only shares of Common Stock, no par
      value
      per share, in respect of which this Warrant is exercisable, or shares resulting
      from any subdivision or combination of such Common Stock, or in the case of
      any
      reorganization, reclassification, consolidation, merger, or sale of the
      character referred to in Paragraph 4(e) hereof, the stock or other securities
      or
      property provided for in such Paragraph.

     

    5. Issue
      Tax.The
      issuance of certificates for Warrant Shares upon the exercise of this Warrant
      shall be made without charge to the holder of this Warrant or such shares for
      any issuance tax or other costs in respect thereof, provided that the Company
      shall not be required to pay any tax which may be payable in respect of any
      transfer involved in the issuance and delivery of any certificate in a name
      other than the holder of this Warrant.

     

    6. No
      Rights or Liabilities as a Shareholder.This
      Warrant shall not entitle the holder hereof to any voting rights or other rights
      as a shareholder of the Company. No provision of this Warrant, in the absence
      of
      affirmative action by the holder hereof to purchase Warrant Shares, and no
      mere
      enumeration herein of the rights or privileges of the holder hereof, shall
      give
      rise to any liability of such holder for the Exercise Price or as a shareholder
      of the Company, whether such liability is asserted by the Company or by
      creditors of the Company.

     

    7. Transfer,
      Exchange, and Replacement of Warrant.

     

    (a) Restriction
      on Transfer.
      This
      Warrant and the rights granted to the holder hereof are transferable, in whole
      or in part, upon surrender of this Warrant, together with a properly executed
      assignment in the form attached hereto, at the office or agency of the Company
      referred to in Paragraph 7(e) below, pro-vided, however, that any transfer
      or assignment shall be subject to the conditions set forth in Paragraph 7(f)
      hereof and to the applicable provisions of the Securities Purchase Agreement.
      Until due presentment for registration of transfer on the books of the Company,
      the Company may treat the registered holder hereof as the owner and holder
      hereof for all purposes, and the Company shall not be affected by any notice
      to
      the con-trary. 

     

    (b) Warrant
      Exchangeable for Different Denomina-tions.
      This
      Warrant is exchange-able, upon the surrender hereof by the holder hereof at
      the
      office or agency of the Company referred to in Paragraph 7(e) below, for new
      Warrants of like tenor representing in the aggregate the right to purchase
      the
      number of shares of Common Stock which may be purchased hereunder, each of
      such
      new Warrants to represent the right to purchase such number of shares as shall
      be designated by the holder hereof at the time of such surrender.

     

    (c) Replacement
      of Warrant.
      Upon
      receipt of evi-dence reasonably satisfactory to the Company of the loss, theft,
      destruction, or mutilation of this Warrant and, in the case of any such loss,
      theft, or destruc-tion, upon delivery of an indemnity agreement reason-ably
      satisfactory in form and amount to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of this Warrant, the Company, at
      its
      expense, will execute and deliver, in lieu thereof, a new Warrant of like
      tenor.

     

    (d) Cancellation;
      Payment of Expenses.
      Upon the
      surrender of this Warrant in connection with any trans-fer, exchange, or
      replacement as provided in this Paragraph 7, this Warrant shall be promptly
      canceled by the Company. The Company shall pay all taxes (other than securities
      transfer taxes) and all other expenses (other than legal expenses, if any,
      incurred by the holder or transferees) and charges payable in connection with
      the preparation, execution, and delivery of Warrants pursuant to this Paragraph
      7.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e) Register.
      The
      Company shall maintain, at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee and each prior owner of this
      Warrant.

     

    (f) Exercise
      or Transfer Without Registration.
      If, at
      the time of the surrender of this Warrant in connection with any exercise,
      transfer, or exchange of this Warrant, this Warrant (or, in the case of any
      exercise, the Warrant Shares issuable hereunder), shall not be registered under
      the Securities Act of 1933, as amended (the “Securities Act”) and under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such exercise, transfer, or exchange, (i) that the holder
      or transferee of this Warrant, as the case may be, furnish to the Company a
      written opinion of counsel, which opinion and counsel are acceptable to the
      Company, to the effect that such exercise, transfer, or exchange may be made
      without registration under said Act and under applicable state securities or
      blue sky laws, (ii) that the holder or transferee execute and deliver to the
      Company an investment letter in form and substance acceptable to the Company
      and
      (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)
      promulgated under the Securities Act; provided that no such opinion, letter
      or
      status as an “accredited investor” shall be required in connection with a
      transfer pursuant to Rule 144 under the Securities Act. The first holder of
      this
      Warrant, by taking and holding the same, represents to the Company that such
      holder is acquiring this Warrant for investment and not with a view to the
      distribution thereof. 

     

    8. [Intentionally
      Omitted] 

     

    9. Notices. 
      All
      notices, requests, and other communications required or permitted to be given
      or
      delivered hereunder to the holder of this Warrant shall be in writing, and
      shall
      be personally delivered, or shall be sent by certified or registered mail or
      by
      recognized overnight mail courier, postage prepaid and addressed, to such holder
      at the address shown for such holder on the books of the Company, or at such
      other address as shall have been furnished to the Company by notice from such
      holder. All notices, requests, and other communications required or permitted
      to
      be given or delivered hereunder to the Company shall be in writing, and shall
      be
      personally delivered, or shall be sent by certified or registered mail or by
      recognized overnight mail courier, postage prepaid and addressed, to the office
      of the Company at 10689 N. Pennsylvania Street, Indianapolis, IN 46280,
      Attention: Chief Executive Officer, or at such other address as shall have
      been
      furnished to the holder of this Warrant by notice from the Company. Any such
      notice, request, or other communication may be sent by facsimile, but shall
      in
      such case be subsequently confirmed by a writing personally delivered or sent
      by
      certified or registered mail or by recognized overnight mail courier as provided
      above. All notices, requests, and other communications shall be deemed to have
      been given either at the time of the receipt thereof by the person entitled
      to
      re-ceive such notice at the address of such person for purposes of this
      Paragraph 9, or, if mailed by registered or certified mail or with a recognized
      overnight mail courier upon deposit with the United States Post Office or such
      overnight mail courier, if postage is prepaid and the mailing is properly
      addressed, as the case may be.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10. Governing
      Law.THIS
      WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
      ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
      LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
      UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
      ANY
      DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION
      HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
      IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
      SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS
      UPON
      A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
      SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
      SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
      BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH
      SUIT
      OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
      BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR
      ALL
      FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY
      IN CONNECTION WITH SUCH DISPUTE.

     

    11. Miscellaneous.

     

    (a) Amendments.
      This
      Warrant and any provision hereof may only be amended by an instrument in writing
      signed by the Company and the holder hereof.

     

    (b) Descriptive
      Headings.
      The
      descriptive headings of the several paragraphs of this Warrant are in-serted
      for
      purposes of reference only, and shall not affect the meaning or construction
      of
      any of the provisions hereof.

     

    (c) Cashless
      Exercise.
      Notwithstanding anything to the contrary contained in this Warrant, if the
      resale of the Warrant Shares by the holder is not then registered pursuant
      to an
      effective registration statement under the Securities Act, this Warrant may
      be
      exercised by presentation and surrender of this Warrant to the Company at its
      principal executive offices with a written notice of the holder’s intention to
      effect a cashless exercise, including a calculation of the number of shares
      of
      Common Stock to be issued upon such exercise in accordance with the terms hereof
      (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying
      the Exercise Price in cash, the holder shall surrender this Warrant for that
      number of shares of Common Stock determined by multiplying the number of Warrant
      Shares to which it would otherwise be entitled by a fraction, the numerator
      of
      which shall be the difference between the then current Market Price per share
      of
      the Common Stock and the Exercise Price, and the denominator of which shall
      be
      the then current Market Price per share of Common Stock. For example, if the
      holder is exercising 100,000 Warrants with a per Warrant exercise price of
      $0.75
      per share through a cashless exercise when the Common Stock’s current Market
      Price per share is $2.00 per share, then upon such Cashless Exercise the holder
      will receive 62,500 shares of Common Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (d) Remedies.
      The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to the holder, by vitiating the intent and purpose of the
      transaction contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Warrant will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Warrant, that the holder shall be entitled,
      in
      addition to all other available remedies at law or in equity, and in addition
      to
      the penalties assessable herein, to an injunction or injunctions restraining,
      preventing or curing any breach of this Warrant and to enforce specifically
      the
      terms and provisions thereof, without the necessity of showing economic loss
      and
      without any bond or other security being required.

     

    


     

    


     

    


     

    


     

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     


    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be signed by its duly authorized
      officer.

     

    
      	
              STANDARD
                MANAGEMENT CORPORATION

            
	 
	 
	 
	
              By:
                _______________________________

            
	
              Ronald
                D. Hunter

            
	
              Chief
                Executive Officer

            


    

    


     

    Dated
      as
      of July 25, 2008

     

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     


    FORM
      OF EXERCISE AGREEMENT

     

    


     

    Dated:
      ________ __, 200_

     

    


     

    To: ______________________

     

    


     

    


     

    The
      undersigned, pursuant to the provisions set forth in the within Warrant, hereby
      agrees to purchase ________ shares of Common Stock covered by such Warrant,
      and
      makes pay-ment herewith in full therefor at the price per share provided by
      such
      Warrant in cash or by certified or official bank check in the amount of, or,
      if
      the resale of such Common Stock by the undersigned is not currently registered
      pursuant to an effective registration statement under the Securities Act of
      1933, as amended, by surrender of securities issued by the Company (including
      a
      portion of the Warrant) having a market value (in the case of a portion of
      this
      Warrant, determined in accordance with Section 11(c) of the Warrant) equal
      to
      $_________. Please issue a certificate or certifi-cates for such shares of
      Common Stock in the name of and pay any cash for any fractional share
      to:

     

    


     

    
      	 	
              Name:
                 ______________________________

               

               

              Signature: 

              Address:____________________________

              _____________________________

            


    

    


    


    
      	 	Note:	The above signature should correspond
              exactly
              with the name on the face of the within Warrant, if
              applicable.


    

     

     

    and,
      if
      said number of shares of Common Stock shall not be all the shares purchasable
      under the within Warrant, a new Warrant is to be issued in the name of said
      undersigned covering the balance of the shares purchasable thereunder less
      any
      frac-tion of a share paid in cash.

     

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    FORM
      OF ASSIGNMENT

     

    
 

     

    FOR
      VALUE RECEIVED,
      the
      undersigned hereby sells, assigns, and transfers all the rights of the
      undersigned under the within Warrant, with respect to the number of shares
      of
      Common Stock covered thereby set forth hereinbelow, to:

    


     

    
      	Name of Assignee	 Address	
               No
                of
                Shares

            


    

            

     

     

    


     

    ,
      and
      hereby irrevocably constitutes and appoints ___________________________________
      as agent and attorney-in-fact to trans-fer said Warrant on the books of the
      within-named corporation, with full power of substitution in the
      premises.

     

    


     

    Dated: ________
      __, 200_

     

    


     

    
      	In the presence of:	
               ______________________________ 

            
	 	Name:______________________________
	 	 
	 	 
	 	
              Signature:_________________________

              Title
                of Signing Officer or Agent (if any):

              ______________________________

              Address:  
                 ______________________________

              ______________________________

            


    

        

     

    
      	 	
              Note:

            	
              The
                above signature should correspond exactly with the name on the face
                of the
                within Warrant, if applicable.