exhibit102.htm


     

    EXHIBIT 10.2

    
 

    THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY
NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE ASSIGNED IN VIOLATION OF SUCH ACT
AND LAWS OR THE PROVISIONS OF THIS WARRANT.

     

    THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF ARE SUBJECT TO
ADDITIONAL AGREEMENTS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT, BY AND AMONG
THE PARTIES THERETO.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE.

     

    WARRANT

     

    To
Purchase Shares of

     

    ABC
Funding, Inc.

     

    THIS
CERTIFIES THAT, for value received, CIT Capital USA Inc., a Delaware
corporation, or its registered and permitted assigns, (“CIT”) is
entitled, at any time and from time to time commencing on the Initial Exercise
Date and prior to the Expiration Date (as hereinafter defined), to purchase from
ABC Funding, Inc., a Nevada corporation (the “Company”),
an aggregate of 24,199,996 shares (“Warrant
Grant”) of common stock, par value $0.001 per share, of the Company (the
“Shares”),
which Warrant Grant is equal to twenty-seven and one-half percent (27.50%) of
the Fully Diluted Outstanding Shares as of the date hereof (subject to
adjustment as provided herein), in whole or in part, at a purchase price of
thirty-five cents ($0.35) per Share (the “Exercise
Price”), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.

     

     1. DEFINITIONS.  As
used in this Warrant, the following terms have the respective meanings set forth
below:

     

    “Additional
Shares” means all Shares issued by the Company after the Closing Date,
other than Permitted Shares.

     

    “Board”
means the Board of Directors of the Company.

     

    “Business
Day” means any day that is not a Saturday, Sunday or other day when banks
are required or permitted to be closed in the State of Texas.

     

    “Charter Amendment” has the
meaning ascribed to such term in Section 13.2(h).

     

    “CIT” has
the meaning ascribed to such term in the introductory paragraph to this
Warrant.

     

    “Closing
Date” means September 2, 2008.


     

    “Common
Stock” means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed into.

     

     “Commission”
means the U.S. Securities and Exchange Commission.

     

    “Company”
has the meaning set forth in the opening paragraph of this Warrant.

     

    “Conversion
Right” has the meaning set forth in Section 2.3 of this Warrant.

     

    “Conversion
Shares” has the meaning set forth in Section 2.3 of this Warrant.

     

    “Convertible
Securities” means any security convertible into Shares.

     

    “Current Market
Price” means, in respect of any Shares on any date herein specified the
average of the daily market prices for the ten (10) consecutive Business Days
commencing ten (10) Business Days before such date or, at the time of an initial
public offering of the Company’s Shares, the initial public offering
price.  The daily market price for each such Business Day shall be
(i) the last sale price on such date on the principal securities exchange
on which the Shares are then listed or admitted to trading, (ii) if no sale
takes place on such day on any such exchange, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange, (iii) if the Shares are not then listed or admitted to trading on
any stock exchange, the average of the last reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., (iv) if neither such entity at the time is engaged
in the business of reporting such prices, as furnished by any similar firm then
engaged in such business, or (v) if there is no such firm, as furnished by
any member of the NASD selected mutually by the Majority Holders and the Company
or, if they cannot agree upon such selection, as selected by two such members of
the NASD, one of which shall be selected by the Majority Holders and one of
which shall be selected by the Company.

     

    
      
         

      

      
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    “Exercise
Price” has the meaning set forth in the opening paragraph of this Warrant
and as adjusted as provided herein.

     

    “Expiration
Date” means the seventh (7th)
anniversary of the Closing Date.

     

    “Fiscal
Quarter” means a fiscal quarter of any Fiscal Year.

     

    “Fiscal
Year” means the fiscal year of Company and its Subsidiaries ending on
June 30 of each calendar year.

     

    “Fully Diluted
Outstanding” means, when used with reference to Shares, at any date when
the number of Shares is to be determined, the total number of all Shares
outstanding at such date plus any unexercised Warrant Shares outstanding on such
date, plus the number of Shares convertible from any other options or warrants
to purchase, or securities convertible into, Shares outstanding on such
date.

     

    “Holder”
means the Person in whose name the Warrant set forth herein is registered on the
books of the Company maintained for such purpose.

     

    “Independent
Financial Expert” means an investment banking firm of nationally
recognized standing mutually chosen by the Company and the Majority Holders or
otherwise selected pursuant to the procedures specified under “Current Market
Value” above.

     

    “Initial Exercise
Date” means the date of effectiveness of the Charter
Amendment.

     

    “Loan
Agreement” means that certain Second Lien Term Loan Agreement dated as of
even date herewith between the Company, CIT and the Lenders party
thereto.

     

    “Majority
Holders” means holders of Warrants exercisable for in excess of 50% of
the aggregate number of Shares then purchasable upon exercise of all Warrants,
whether or not then exercisable.

     

    “NASD”
means the National Association of Securities Dealers, Inc., or any successor
corporation thereto.

     

    “Option”
means rights, options or warrants to subscribe for, purchase or otherwise
acquire Shares, Convertible Securities or other membership interests in the
Company.

     

    “Other
Property” has the meaning set forth in Section 4.8.

     

    “Permitted
Shares” means (i) Warrant Shares (ii) Shares issued or issuable
on conversion or exercise of Convertible Securities or options or warrants
issued or outstanding on the Closing Date and (iii) up to 8,799,998 Shares that
may be issued to officers, directors, employees and consultants of the Company
pursuant to such plans or agreements that the Board of Directors of the Company
shall determine.

     

    “Person”
shall mean any individual, corporation, general partnership, limited
partnership, limited liability partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision
thereof.

     

    “Privilege
Waiver” shall mean, as reasonably determined by Company counsel and
communicated by such counsel to the relevant Holders or Board Observers, as
applicable, the waiver of any attorney-client privilege (or similar doctrine,
including work product doctrine), the waiver of which the Board of Directors
determines in good faith is not in the Company’s interest.

     

    “Rights”
means any restricted stock, restricted stock unit, option, warrant, convertible
security, or any other right to acquire Shares.

     

    “Securities
Act” means the Securities Act of 1933, as amended.

     

    “Shares”
has the meaning set forth in the recitals.

     

    “Subsidiary”
means any corporation, association, trust, limited liability company,
partnership, joint venture or other business association or entity (i) at least
50% of the Outstanding voting securities of which are at the time owned or
controlled, directly or indirectly, by the Company; or (ii) with respect to
which the Company possesses, directly or indirectly, the power to direct or
cause the direction of the affairs or management of such Person.

     

    “Trading
Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin
Board.

     

    “Transfer”
means any disposition of any Warrant or Warrant Shares or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the
Securities Act.

     

    “Warrant
Price” means an amount equal to (i) the number of Shares being
purchased upon any exercise of this Warrant pursuant to Section 2, multiplied by
(ii) the Exercise Price as adjusted pursuant to the terms of this Warrant
as of the date of such exercise.

     

    “Warrant
Shares” means the Shares purchased by Holders of the Warrants upon the
exercise thereof.

     

    “Warrants”
means this Warrant and all warrants issued upon transfer, division or
combination of, or in substitution for, any thereof; provided that all Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of Shares for which they may be exercised.

     

    
      
         

      

      
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     2. EXERCISE OF
WARRANT

     

    
      	
                     

            	
              2.1   General.  From
      time to time after the Initial Exercise Date and until 5:00 p.m., Houston,
      Texas time, on the Expiration Date, Holder may exercise this Warrant, on
      any Business Day, for all or any part of the number of Shares purchasable
      hereunder, at the stated Exercise Price, as adjusted pursuant to Section
      4, if applicable.

            


    

     

           
2.2   Cash
Exercise.  Holder may exercise this Warrant, in whole or in
part, by delivering to the Company at the Company’s principal offices at 4606 FM
1960 West, Suite 400, Houston, Texas 77069 or at such other office or agency
designated by the Company pursuant to Section 12
the following: (i) a written notice of Holder’s election to exercise this
Warrant specifying the number of Shares to be purchased, (ii) payment of
the Warrant Price and (iii) this Warrant.  Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder.  Upon receipt
thereof, the Company shall, as promptly as practicable, and in any event within
five (5) Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
reflecting Holder’s ownership of the aggregate number of Shares issuable upon
such exercise, together with cash in lieu of any fraction of a Share, as
hereinafter provided in Section 2.3.  The Share certificate or
certificates so delivered shall be in such denomination or denominations as
Holder shall request in the notice and shall be registered in the name of Holder
or, subject to any restrictions on transfer, such other name as shall be
designated in the notice.  This Warrant shall be deemed to have been
exercised and such 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
of delivery of the Warrant Shares by the Company.  If this Warrant has
been exercised in part, the Company shall, 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 Shares
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of Holder, appropriate notation
may be made on this Warrant and the same returned to Holder.  Payment
of the Warrant Price and all taxes required to be paid by Holder, if any,
pursuant to Section 2.4, shall be paid by Holder prior to delivery of the
Warrant Shares by the Company and shall be made at the option of Holder by
certified bank check or by wire transfer of immediately available
funds.

     

           
2.3   Cashless
Exercise.

     

    (a) In lieu
of the payment of the Warrant Price, Holder shall have the right (but not the
obligation), to require the Company to convert this Warrant, in whole or in
part, into Shares as provided for in this Section 2.3 (the “Conversion
Right”).  Upon exercise of the Conversion Right, the Company
shall deliver to Holder (without payment by the Holder of any of the Warrant
Price) that number of Warrant Shares (the “Conversion
Shares”) equal to the quotient obtained by dividing (x) the value of this
Warrant (or portion thereof as to which the Conversion Right is being exercised
if the Conversion Right is being exercised in part) at the time the Conversion
Right is exercised (determined by subtracting the aggregate Warrant Price of the
Warrant Shares as to which the Conversion Right is being exercised in effect
immediately prior to the exercise of the Conversion Right from the aggregate
Current Market Price of the Warrant Shares as to which the Conversion Right is
being exercised immediately prior to the exercise of the Conversion Right) by
(y) the Current Market Price of one (1) Share immediately prior to the exercise
of the Conversion Right.

     

    (b) The
Conversion Rights provided under this Section 2.3
may be exercised in whole or in part and at any time and from time to time while
this Warrant remains outstanding.  In order to exercise the Conversion
Right, the Holder shall surrender to the Company, at its offices, this Warrant,
and the Notice of Conversion in the form attached hereto as Exhibit C duly
executed.  The presentation and surrender shall be deemed a waiver of
Holder’s obligation to pay all or any portion of the aggregate purchase price
payable for the Warrant Shares as to which such Conversion Right is being
exercised.  This Warrant (or so much thereof as shall have been
surrendered for conversion) shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Warrant for
conversion in accordance with the foregoing provisions.

     

    2.4   Payment of
Taxes.  When the Warrant Price is paid to the Company, all such
Warrant Shares shall be validly issued, fully paid and nonassessable and without
any preemptive rights.  The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery thereof, unless such tax or
charge is imposed by law upon Holder, in which case, Holder shall pay such taxes
or charges.  The Company shall not be required to pay any tax or other
charge imposed in connection with any transfer involved in the issue or delivery
of any certificate for Shares issuable upon exercise of this Warrant in any name
other than that of Holder, and in such case, the Company shall not be required
to register such Shares in any name other than Holder until such tax or other
charge has been paid or it has been established to the reasonable satisfaction
of the Company that no such tax or other charge is due.

     

    2.5   Fractional
Shares.  The Company shall not be required to issue a
fractional Share upon the exercise of this Warrant.  As to any
fraction of a Share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of such
final fraction (calculated on an aggregate basis for all Warrants exercised) in
an amount equal to the same fraction of the Current Market Price per Share of a
Warrant Share on the date of exercise.

     

     3. TRANSFER, DIVISION AND
COMBINATION

     

    3.1   Transfer.  Subject
to the terms and conditions hereof, and compliance with all applicable
securities laws, transfer of this Warrant and all rights hereunder, in whole or
in part, shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal office of the
Company referred to in Section 2.2 or the office or
agency designated by the Company pursuant to Section  12, together with (i) a written assignment of this
Warrant substantially in the form of Exhibit B hereto duly executed by Holder
and (ii) evidence reasonably satisfactory to the Company that the transfer of
the Warrant to such person does not violate any transfer restrictions applicable
to the Warrant.  Upon such surrender the Company shall execute and
deliver a new Warrant or Warrants in the name of the transferee or transferees
and in the denomination 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.  

     

    3.2   Division and
Combination.  This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid office or agency of the
Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by Holder.  Subject to
compliance with Section 3.1, as to any Transfer
that 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.

     

    3.3   Expenses.  The
Company shall prepare, issue and deliver at its own cost and expense (other than
transfer taxes) the new Warrant or Warrants under this Section 3.

     

    3.4   Maintenance of
Books.  The Company agrees to maintain, at its aforesaid office
or agency, a ledger recording the Holder(s) of this Warrant and any subsequent
Transfer of this Warrant in compliance with Section 3.1 and/or Section 3.2.

     

    
      
         

      

      
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     4. ADJUSTMENTS.  The
number of Shares for which this Warrant is exercisable, or the price at which
such Shares may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4.  The Company shall give each Holder
notice of any event described below, which requires an adjustment pursuant to
this Section 4 at the time of such
event.

     

    4.1   Distributions, Subdivisions
and Combinations.  If, at any time, the Company:

     

    (a) takes a
record of holders of its Shares for the purpose of entitling them to receive a
distribution payable in, or other distribution of, Additional
Shares,

     

    (b) subdivides
its outstanding Shares into a larger number of Shares, or

     

    (c) combines
its outstanding Shares into a smaller number of Shares,

     

    then (i)
the number of Shares for which this Warrant is exercisable immediately after the
occurrence of any such event shall be adjusted to equal the number of Shares
that a record holder of the same number of Shares for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (ii) the Exercise
Price shall be adjusted to equal (A) the then existing Exercise Price multiplied
by the number of Shares for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of Shares for which this Warrant is
exercisable immediately after such adjustment; provided that if any such
adjustment would reduce the Exercise Price below the par value of the Shares,
the Company will first reduce the par value to below such adjusted Exercise
Price.

     

    4.2   Certain Other
Distributions.  If at any time the Company takes a record of
holders of its Shares for the purpose of entitling them to receive any
distribution of:

     

    (a) any
evidences of its indebtedness, any other securities of any nature whatsoever
(other than Additional Shares) or any other property, dividends or other cash
distributions, or

     

    (b) any
Options to subscribe for or purchase any evidences of its indebtedness, or for
any other securities of any nature whatsoever (other than Additional Shares) or
for any other property,

     

    then (i)
the number of Shares for which this Warrant is exercisable shall be adjusted to
equal the product of the number of Shares for which this Warrant is exercisable
immediately prior to such adjustment by a fraction (A) the numerator of which
shall be the Current Market Price per Share at the date of taking such record
and (B) the denominator of which shall be such Current Market Price per Share at
the date of taking such record, plus the amount of consideration, if any, paid
by the holder of one (1) Share for such evidence of indebtedness, other
securities or property, or options so distributable and minus the amount
allocable to one Share of the fair value (as determined in good faith by the
Board and supported by an opinion from an Independent Financial Expert) of any
and all such evidences of indebtedness, Shares, other securities or property or
warrants or other subscription or purchase rights so distributable, and (ii) the
Exercise Price shall be adjusted to equal (A) the Exercise Price multiplied
by the number of Shares for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of Shares for which this Warrant is
exercisable immediately after such adjustment; provided, that if any such
adjustments would reduce the Exercise Price to below the par value per Share,
the Company will first reduce the par value to below such adjusted Exercise
Price.  A reclassification of the Shares into shares of any other
class of equity shall be deemed a distribution by the Company to Holders of its
Shares of such shares or shares of such other class of equity within the meaning
of this Section 4.2 and, if the outstanding
Shares shall be changed into a larger or smaller number of Shares as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding Shares within the meaning of Section 4.1.

     

    4.3   Issuance of Additional
Shares.  If at any time the Company (except as hereinafter
provided) issues or sells any Additional Shares, in exchange for consideration
in an amount per Additional Share less than the Exercise Price at the time the
Additional Shares are issued (each, a “Lower Issue
Price”), then:

     

    (a) the
Exercise Price for which this Warrant is exercisable shall be reduced to such
Lower Issue Price; provided that if any adjustment would reduce the Exercise
Price to below the par value of the Shares, the Company will first reduce the
par value to below such adjusted Exercise Price; and

     

    the
number of Shares for which this Warrant is exercisable shall be adjusted to
equal the product obtained by multiplying the Exercise Price in effect
immediately prior to such issue or sale by the number of Shares for which this
Warrant is exercisable immediately prior to such issue or sale and dividing the
product thereof by the Exercise Price resulting from the adjustment made
pursuant to clause (a) above.

     

    4.4   Issuance of Warrants or
Other Rights.  If at any time the Company shall take a record
of holders of its Shares for the purpose of entitling them to receive a
distribution of, or shall in any manner (whether directly or by assumption in a
merger where the Company is the surviving corporation) issue or sell, any
warrants or other rights to subscribe for or purchase any Additional Shares or
any Convertible Securities other than Permitted Shares, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per Share for which Shares are issuable upon the exercise of such warrants
or other rights or upon conversion or exchange of such Convertible Securities
shall be less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be adjusted as provided in Section 4.3 on the basis that the maximum number of Additional
Shares issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of the number of Shares for which this Warrant is exercisable and such
warrants or other rights; provided that if any adjustment would reduce the
Exercise Price to below the par value of the Shares, the Company will first
reduce the par value to below such adjusted Exercise Price.  No
further adjustments of the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be made upon the actual issue of such
Shares or of such Convertible Securities upon exercise of such warrants or other
rights or upon the actual issue of such Shares upon such conversion or exchange
of such Convertible Securities.

     

    
      
         

      

      
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    4.5   Issuance of Convertible
Securities.  If at any time the Company shall take a record of
holders of its Shares for the purpose of entitling them to receive a
distribution of, or shall in any manner (whether directly or by assumption in a
merger where the Company is the surviving corporation) issue or sell, any
Convertible Securities other than Permitted Shares, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
Share for which Shares are issuable upon such conversion or exchange shall be
less than the Exercise Price in effect immediately prior to the time of such
issue or sale, then the number of Shares for which this Warrant is exercisable
and the Exercise Price shall be adjusted as provided in Section 4.3 on the basis that the maximum number of Additional
Shares necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the Company
shall have received all of the consideration payable therefor, if any, as of the
date of actual issuance of such Convertible Securities; provided that if any
adjustment would reduce the Exercise Price to below the par value of the Shares,
the Company will first reduce the par value to below such adjusted Exercise
Price. No adjustment of the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be made under this Section 4.5 upon the issuance of any Convertible Securities
that are issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to Section 4.4.  No further adjustments of the number
of Shares for which this Warrant is exercisable and the Exercise Price shall be
made upon the actual issue of such Shares upon conversion or exchange of such
Convertible Securities and, if any issue or sale of such Convertible Securities
is made upon exercise of any warrant or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments of the number of
Shares for which this Warrant is exercisable and the Exercise Price have been or
are to be made pursuant to other provisions of this Section 4, no further adjustments of the number of Shares for
which this Warrant is exercisable and the Exercise Price shall be made by reason
of such issue or sale.

     

    4.6   Superseding
Adjustment.  If, at any time after any adjustment of the number
of Shares for which this Warrant is exercisable and the Exercise Price has been
made pursuant to Section 4.4 or Section 4.5 as the result of any issuance of warrants, rights
or Convertible Securities:

     

    (a) such
warrants or rights, or the right of conversion or exchange in such other
Convertible Securities, shall expire, and all or a portion of such warrants or
rights, or the right of conversion or exchange with respect to all or a portion
of such other Convertible Securities, as the case may be, shall not have been
exercised, or

     

    (b) the
consideration per Share for which Shares are issuable pursuant to such warrants
or rights, or the terms of such other Convertible Securities, shall be increased
solely by virtue of provisions therein contained for an automatic increase in
such consideration per Share upon the occurrence of a specified date or
event,

     

    then for
each outstanding Warrant such previous adjustments shall be rescinded and
annulled and the Additional Shares that were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation.  Thereupon, a recomputation shall be made of the effect
of such rights or options or other Convertible Securities on the basis
of:

     

    (i) treating
the number of Additional Shares or other property, if any, theretofore actually
issued or issuable pursuant to the previous exercise of any such warrants or
rights or any such right of conversion or exchange, as having been issued on the
date or dates of any such exercise and for the consideration actually received
and receivable therefor, and

     

    (ii) treating
any such warrants or rights or any such other Convertible Securities that then
remain outstanding as having been granted or issued immediately after the time
of such increase of the consideration per Share for which Shares or other
property are issuable under such warrants or rights or other Convertible
Securities, whereupon a new adjustment of the number of Shares for which this
Warrant is exercisable and the Exercise Price shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and
annulled.

     

    4.7   Other Provisions Applicable
to Adjustments under This Section.  The following provisions
shall be applicable to making adjustments to the number of Shares for which this
Warrant is exercisable and the Exercise Price provided for in this Section
4:

     

    (a) Computation of
Consideration.  To the extent that any Additional Shares or any
Convertible Securities or any warrants or other rights to subscribe for or
purchase any Additional Shares or any Convertible Securities are issued for cash
consideration, the consideration received by the Company therefor shall be the
amount of the cash received by the Company therefor, or, if such Additional
Shares or Convertible Securities are offered by the Company for subscription,
the subscription price, or, if such Additional Shares or Convertible Securities
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued distributions and
without taking into account any compensation, discounts or expenses paid or
incurred by the Company for and in the underwriting of, or otherwise in
connection with, the issuance thereof).  To the extent that such
issuance is for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair market value of such consideration at the time of such issuance
as determined in good faith by the Board, upon the request of Holder, and
supported by an opinion from an Independent Financial Expert.  In case
any Additional Shares or any Convertible Securities or any warrants or other
rights to subscribe for or purchase such Additional Shares or Convertible
Securities shall be issued in connection with any merger where the Company
issues any securities, the amount of consideration therefor shall be deemed to
be the fair market value, as determined in good faith by the Board and, upon the
request of Holder, supported by an opinion from an Independent Financial Expert
of such portion of the assets and business of the nonsurviving corporation as
the Board in good faith shall determine to be attributable to such Additional
Shares, Convertible Securities, warrants or other rights, as the case may
be.  The consideration for any Additional Shares issuable pursuant to
any warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other rights
plus the additional consideration payable to the Company upon exercise of such
warrants or other rights.  The consideration for any Additional Shares
issuable pursuant to the terms of any Convertible Securities shall be the
consideration received by the Company for issuing warrants or other rights to
subscribe for or purchase such Convertible Securities, plus the consideration
paid or payable to the Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any, payable
to the Company upon the exercise of the right of conversion or exchange in such
Convertible Securities.  If any Additional Shares or Convertible
Securities are issued at any time in payment or satisfaction of any
distributions upon any class of Shares other than Shares, the Company shall be
deemed to have received for such Additional Shares or Convertible Securities a
consideration equal to the amount of such distribution so paid or
satisfied

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b) When Adjustments Shall Be
Made.  The adjustments required by this Section  4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that any adjustment
of the number of Shares for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of the Shares, as provided for in Section 4.1) up to, but not beyond the date of exercise if
such adjustment either by itself or with other adjustments not previously made
adds or subtracts less than one percent (1%) of the Shares for which this
Warrant is exercisable immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) that is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum
adjustment on the date of exercise. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence.

     

    (c) Timing of Issuance of Additional
Shares Upon Adjustments.  In any case in which the provisions
of this Section 4 shall require that an adjustment shall become effective
immediately after a record date for an event, the Company, after such record
date and before the occurrence of such event, may defer until the occurrence of
such event issuing to Holder the Additional Shares or other property issuable or
deliverable upon exercise by reason of the adjustment required by such event
over and above the Shares issuable or deliverable upon such exercise before
giving effect to such adjustment; provided, however, that the Company shall,
upon request of Holder, deliver to Holder a due bill or other appropriate
instrument evidencing  Holder’s right to receive such Additional
Shares or other property upon the occurrence of the event requiring such
adjustment.

     

    (d) Fractional
Interests.  In computing adjustments under this Section  4, fractional interests in Shares shall be taken into
account to the nearest 1/10th of a Share.

     

    (e) When Adjustment Not
Required.  If the Company takes a record of holders of its
Shares for the purpose of entitling them to receive a distribution or
subscription or purchase rights and, thereafter and before the distribution to
holders thereof, legally abandons its plan to pay or deliver such distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.

     

    (f) Challenge to Good Faith
Determination.  Whenever the Board is required to make a
determination in good faith of the fair market value of any item under this
Section  4, the Majority Holders may challenge
such determination in good faith, and an Independent Financial Expert chosen by
both parties shall resolve any such dispute.  If the parties cannot
agree on an Independent Financial Expert, then the Majority Holders and the
Company shall each choose one Independent Financial Expert, and the respective
chosen Independent Financial Experts shall agree on another Independent
Financial Expert that shall make the determination.  The costs of all
such Independent Financial Experts shall be paid by the Company.

     

    4.8 Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.  If the Company reorganizes its capital, reclassifies
its capital securities, consolidates or merges with or into another Person
(where the Company is not the surviving Person or where there is a change in or
distribution with respect to the Shares of the Company), or sells, transfers or
otherwise disposes of all or substantially all its property, assets or business
to another Person and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, units or
shares of stock of the successor or acquiring Person or of the Company, or any
cash, units or shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of the units or shares of stock of the successor or
acquiring Person (“Other
Property”), are to be received by or distributed to Holders of the Shares
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of a Warrant, the number of Shares, units or shares of stock of
the successor or acquiring Person or of the Company, if it is the surviving
Person, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of Shares for which this Warrant is exercisable
immediately prior to such event.  If any such reorganization,
reclassification, merger, consolidation or disposition of assets occurs, the
successor or acquiring Person (if other than Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by the Board and supported by an opinion from
an Independent Financial Expert) in order to provide for adjustments of the
Shares for which this Warrant is exercisable, which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 4. For purposes of this Section 4.8, “units or shares of stock of the successor or
acquiring Person” includes units or shares of stock of such Person of any class
that is not preferred as to distributions or assets over any other class of
units or shares of stock of such corporation and that is not subject to
redemption and shall also include any evidences of indebtedness, units or shares
of stock or other securities that are convertible into or exchangeable for any
such units or shares of stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such Shares or stock.  The
foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations, or disposition of assets.

     

     5. NOTICES TO WARRANT
HOLDERS

     

    5.1   Notice of
Adjustments.  Whenever the number of Shares for which this
Warrant is exercisable, or whenever the price at which such Shares may be
purchased upon exercise of the Warrants, is adjusted pursuant to Section 4, the Company shall prepare a certificate to be
executed by its chief financial officer, if any, or its principal financial
officer(s) in case there is no chief financial officer, setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
the Board determined the fair market value of any evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights referred to in Section 4.2),
specifying the number of Shares for which this Warrant is exercisable and
describing the number and kind of any other Shares or Other Property for which
this Warrant is exercisable, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change.  The
Company shall promptly cause a signed copy of such certificate to be delivered
to each Holder in accordance with Section 14.3.  The Company shall keep at its office
or agency designated pursuant to Section  12
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.

     

    
      
         

      

      
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    5.2   Notice of Company
Action.  If at any time:

     

    (a) the
Company takes a record of holders of its Shares for the purpose of entitling
them to receive a distribution of any type including cash, property, or any
right to subscribe for or purchase any evidences of its indebtedness, any Shares
of any class or series or any other securities or property, or to receive any
other right, or

     

    (b) there is
any capital reorganization of the Company, any reclassification or
recapitalization of the Company or any consolidation or merger of the Company
with, or any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another business entity not
affiliated with the Company, or

     

    (c) there is
a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

     

    then, in
any one or more of such cases, the Company shall give to Holder: (i) at
least twenty (20) days’ prior written notice of the date on which a record date
shall be selected for such distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) if any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up occurs, at least twenty (20) days’ prior written notice of the date when the
same shall take place.  Such notice also shall specify: (i) the
date on which any such record is to be taken for the purpose of such
distribution or right, the date on which Holders of Shares shall be entitled to
any such distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
Holders of Shares shall be entitled to exchange their Shares for securities or
other property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up.  Each such written notice shall be deemed sufficiently given if
addressed to Holder at the last address of Holder appearing on the books of the
Company.

     

     6. NO
IMPAIRMENT.  Except and to the extent as waived or consented to
be the Holder, the Company shall not by any action, including, without
limitation, through any amendment to its articles of incorporation 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 carrying out all such actions as may be reasonably
necessary or appropriate to protect the rights of Holder against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) take all such action as may be reasonably necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Shares upon the exercise of this Warrant, and (b) use its
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.

     

     7. RESERVATION AND
AUTHORIZATION OF SHARES.  From and after the effective date of
the Charter Amendment (hereinafter defined), the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued Shares as will be sufficient to permit the
exercise in full of all outstanding Warrants.  All Shares, when issued
upon exercise of any Warrant and payment therefor in accordance with the terms
of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.  

     

    Before
taking any action that would result in an adjustment in the number of 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.

     

    If any
Shares required to be reserved for issuance upon exercise of Warrants require
registration or qualification with any governmental authority or other
governmental approval or filing under any federal or state law before such
Shares may be so issued, the Company will in good faith and as expeditiously as
possible and at its expense endeavor to cause such Shares to be duly registered
or qualified.

     

     8. TAKING OF RECORD; SHARES AND
WARRANT TRANSFER BOOKS.  In the case of all distributions by
the Company to holders of its Shares with respect to which any provision of
Section 4 refers to the taking of a record of such
holders, the Company will in each such case take such a record as of the close
of business on a Business Day.  The Company will not at any time,
except upon dissolution, liquidation or winding up of the Company, close its
transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.  

     

     9. RESTRICTIVE
LEGEND.  This Warrant and any Warrant issued upon transfer or
partial exercise of this Warrant shall be imprinted with the following legend,
in addition to any legend required under applicable state securities
laws:

     

    “THIS WARRANT AND THE SECURITIES
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE ASSIGNED IN VIOLATION OF SUCH ACT AND LAWS OR THE PROVISIONS OF THIS
WARRANT.”

     

    “THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF ARE SUBJECT TO
ADDITIONAL AGREEMENTS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT, BY AND AMONG
THE PARTIES THERETO.  A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE.”

     

    Each
Share certificate representing Warrant Shares shall bear the following
legend:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE ASSIGNED IN VIOLATION OF SUCH ACT AND LAWS OR THE
PROVISIONS OF THIS WARRANT.”

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO ADDITIONAL AGREEMENTS
SET FORTH IN A REGISTRATION RIGHTS AGREEMENT, BY AND AMONG THE PARTIES
THERETO.  A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE.”

     

    Upon
request of the holder of a Share certificate, the Company shall issue to that
holder a new certificate free of the foregoing legend, if, with such request,
such holder provides the Company with an opinion of counsel (including in-house
counsel) reasonably acceptable to the Company to the effect that the securities
evidenced by such certificate may be sold without restriction under Rule 144 (or
any other rule permitting resales of securities without restriction) promulgated
under the Securities Act.

     

     10. SUPPLYING
INFORMATION.  The Company shall cooperate with each Holder of a
Warrant and each holder of Warrant Shares in supplying such information as may
be reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale or
transfer of any Warrant or Warrant Shares.  

     

    
      
         

      

      
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     11. LOSS OR
MUTILATION.  Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Warrant (which evidence shall be, in the case of an
institutional investor, notice from such institutional investor of such
ownership and such loss, theft, destruction or mutilation), and

     

    (a) in the
case of loss, theft or destruction, of indemnity reasonably satisfactory to it
(provided that
if the Holder of such Warrant has a minimum net worth of at least $1,000,000,
such Holder’s own unsecured agreement of indemnity shall be deemed to be
satisfactory), or

     

    (b) in the
case of mutilation, upon surrender and cancellation thereof, the Company at its
own expense shall execute and deliver, in lieu thereof, a new Warrant, dated the
date of the original Warrant.

     

    (c) In the
case of mutilation, upon surrender and cancellation thereof.

     

     12.       OFFICE OF THE
COMPANY.  As long as this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this
Warrant.  

     

     13. REPRESENTATIONS, WARRANTIES
AND COVENANTS

     

    .

     

    13.1 Representations, Warranties
and Covenants of Holder.  The Holder hereby represents and
warrants to the Company as of the date hereof and as of the date of any exercise
hereof that:

     

    (a) it is
acquiring this Warrant and, upon exercise of this Warrant, the Warrant Shares,
for its own account, without a view to the distribution thereof, without
prejudice, however, to Holder’s right to Transfer the Warrant Shares in
compliance with applicable Securities Law.

     

    (b) it is an
“accredited investor” within the meaning of Regulation D, under the Securities
Act.

     

    (c) it
acknowledges that (i) this Warrant and the Warrant Shares have not been
registered under the Securities Act or any state securities laws, in reliance on
the non-public offering exemption contained in Section 4(2) of the Securities
Act and Regulation D thereunder and, as such, the Warrant and the Warrant Shares
are “restricted securities” under the Securities Act; (ii) because the Warrant
and the Warrant Shares are not so registered, it must bear the economic risk of
holding this Warrant and the Warrant Shares for an indefinite period of time
unless this Warrant and/or the Warrant Shares are subsequently, registered under
the Securities Act or an exemption from such registration is available with
respect thereto; (iii) it is familiar with Rule 144 under the Securities Act and
the restrictions on resale thereunder; and (iv) there is no trading market for
this Warrant or the Warrant Shares and there is no expectation that such market
will exist in the future.

     

    (d) it will
not assign or transfer this Warrant or the Warrant Shares except in accordance
and in compliance with the requirements of the Securities Act, as then in
effect.

     

    13.2 Representations, Warranties
and Covenants of the Company.  The Company represents and
warrants to, and agrees with, Holder as of the date hereof and as of the date of
any exercise that:

     

    (a) The
Company is duly organized, validly existing and in good standing under the laws
of its jurisdiction of formation or organization and has the requisite corporate
or similar power and authority to own and operate its properties and assets and
to carry on its business as presently conducted.

     

    (b) The
Company has the requisite corporate power and authority and has taken the
requisite corporate action, necessary in order to execute, deliver and perform
its obligations under this Warrant.  The Warrant has been duly
executed and delivered by the Company the Warrant (assuming due and valid
authorization, execution and delivery hereof by the counterparties hereto)
constitutes the valid and binding obligation of the Company and is enforceable
against the Company, in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.

     

    (c) The
authorized capital stock of the Company consists of 24,000,000 shares of common
stock, par value $0.001 per share and 1,000,000 shares of preferred stock, par
value $0.001 per share.  There are no shares of any other class or
series of stock authorized by the Company's Certificate of Incorporation, as
amended.  As of the date hereof, there are 23,363,136 Shares issued
and outstanding and no Shares are held as treasury stock.  As of the
date hereof and after giving effect to the issuance of any other Shares pursuant
to any other Rights there are 87,999,987 Fully Diluted Outstanding Shares. The
authorization, execution and delivery of the Warrant, and the performance by the
Company of its obligations under the Warrant, including the issuance of the
Warrants in accordance with this Warrant or the issuance of Shares upon exercise
of the Warrants in accordance with the terms hereof, will not result in or
trigger any adjustment or modification of the rights of any holder of
outstanding Rights, including without limitation any anti-dilution provisions
relating to such securities.  All of the outstanding Shares are duly
authorized, validly issued, fully paid and non-assessable.  All
Warrant Shares, when issued in accordance with the terms of the Warrants and for
the consideration contemplated thereby, which is not less per share than the par
value thereof, will be duly authorized, validly issued fully paid and
non-assessable.  Except as set forth in this Section, there are no
existing (i) Rights, agreements, arrangements or commitments of any character
obligating the Company to issue, transfer or sell any shares of capital stock or
other equity interest in, the Company or securities convertible into or
exchangeable for such shares or equity interests; (ii) contractual obligations
of the Company to repurchase, redeem or otherwise acquire any capital stock of
the Company (except for any cashless exercise provisions that are substantially
similar to those set forth in the Warrant); or (iii) stockholder agreements,
registration rights agreements, stock transfer restriction agreements (other
than restrictions arising in connection with the Securities Act), voting trusts
or similar agreements to which the Company or, to the knowledge of the Company,
any other person is a party with respect to Common Stock.

     

    
      
         

      

      
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    (d) Except as
set forth in Schedule 13.2(d), neither the execution, delivery or
performance of any the Warrant by the Company, nor the consummation by it of the
obligations and transactions contemplated hereby (including, without limitation,
the issuance, the reservation for issuance and the delivery of the Warrant
Stock) requires any consent of, authorization by, exemption from, filing with or
notice to any governmental authority or any other Person, excluding the Company
or any Holder, but including, without limitation, any stock exchange or
quotation system on which the Common Stock is listed or traded.

     

    (e) The
execution, delivery and performance of the Warrant and the consummation of the
transactions contemplated hereby (including, without limitation, the issuance
and reservation for issuance, as applicable, of the Warrant Stock) will not (i)
result in a violation of the certificate of incorporation or bylaws of the
Company, in each case as amended, (ii) conflict with or result in the breach of
the terms, conditions or provisions of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give rise to any right of termination, acceleration or cancellation under, any
material contract to which the Company or any Subsidiary is a party, (iii)
assuming the accuracy of the representations and warranties set forth in
Section 13 of the Warrant, result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, U.S.
federal and state securities laws and regulations) applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iv) result in the creation of any material
Lien (as defined in the Loan Agreement) upon any of their assets.

     

    (f) Assuming
the truth and accuracy of Holder’s representations and warranties contained in
Section 13.1, the issuance of this Warrant and the issuance of Warrant Shares
pursuant to this Warrant are exempt from the registration and prospectus
delivery requirements of the Securities Act.

     

    (g) The
Company agrees that neither it nor any Person acting on its behalf has offered
or will offer this Warrant or the Warrant Shares or any part thereof or any
similar securities for issue or sale to, or has solicited or will solicit any
offer to acquire any of the same from, any Person so as to bring the issuance
and sale of this Warrant or the Warrant Shares hereunder within the provisions
of the registration and prospectus delivery requirements of the Securities
Act.

     

    (h) Authorized
Shares.

     

    (i) The
Company presently does not have sufficient shares of Common Stock available for
issuance of Warrant Shares upon exercise of this Warrant and covenants that it
will seek to amend its articles of incorporation in the State of Nevada (the
“Charter
Amendment”) to increase the number of authorized shares of
Common  Stock to 149,000,000 and will file an Information Statement
on  Schedule 14C with the Securities and Exchange Commission as soon
as  practicable after the date hereof.

     

    (ii) Subject
to the effectiveness of the Charter Amendment,  the Company covenants
that, (1) 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 (2) 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. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase
rights represented by this Warrant will, when issued upon exercise of the
purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges created
by the Company in respect of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue).

     

    (iii) 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.

     

     14. BUSINESS
INFORMATION

     

    14.1 Board
Rights.  Board Observer.  If
requested by a majority-in-interest of the Holders at any time when the Holders
so requesting, together with their Affiliates, in the aggregate, own Warrants to
acquire more than 10% of the then outstanding Shares, the Company shall give
such Holders all notices of (in the same manner as notice is given to
directors), and permit one Person designated by a majority-in-interest of such
Holders of all Warrants to attend as observer (the “Board
Observer”), all meetings of the Company's Board of Directors and all
executive and other committee meetings of the Board of Directors.  If
requested by such Holders, the Company shall provide to the Board Observer, the
same information concerning the Company, and access thereto, provided to the
members of the Company's Board of Directors and such committees; provided, that
the Board Observer shall not be entitled to participate in a meeting or receive
any information to the extent such meeting or information relates to the
Company’s arrangements with the Holders (or their Affiliates) or to the extent
it would constitute a Privilege Waiver.  The reasonable travel
expenses incurred by the Board Observer in attending any board or committee
meetings shall be reimbursed by the Company to the extent consistent with the
Company's then existing policy of reimbursing directors generally for such
expenses.  The Holders rights under this Section 14.1 shall
terminate at any time when the Holders do not, together with their Affiliates,
in the aggregate, own Warrants to acquire more than 10% of the then outstanding
Shares.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (b)           MISCELLANEOUS

     

    14.2 Nonwaiver and
Expenses.  If any party fails to comply with any provision of
this Warrant (the “Defaulting
Party”), it shall pay to the other party 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 the other party in enforcing any of its rights, powers or remedies
hereunder.  No course of dealing or any delay or failure to exercise
any right hereunder on the part of a party shall operate as a waiver of such
right or otherwise prejudice its rights, powers or remedies.

     

    14.3 Notice
Generally.  Any notice, demand, request, consent, approval,
declaration, delivery or other communication to be made pursuant to the
provisions of this Warrant shall be deemed sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as
follows:

     

    (a) If to any
Holder or holder of Warrant Shares, at its last known address appearing on the
books of the Company maintained for such purpose.

     

    (b) If to the
Company at:

     

    4606 FM
1960 West, Suite 400

    Houston,
Texas 77069

    Telecopy
No. 281-315-8863

    Attention:  Robert
P. Munn 

     

    With a copy to:

     

    Matthew Cohen

    Thompson & Knight LLP

    919 Third Avenue – 39th
Floor

    New York,
New York  10022

    Telecopy
No. 214-999-1613

    


    or at
such address as may be substituted by notice given as herein
provided.  The party entitled to receive any notice required hereunder
may waive such notice in writing.  Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been
deposited in the United States mail. Notice by electronic mail shall not
constitute effective notice hereunder.

     

    14.4 Successors and
Assigns.  Subject to the provisions of Sections 3.1, this
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and assigns of
Holder (provided that this Warrant would otherwise be eligible for Transfer to
such successor or assign). This Warrant and all
rights evidenced by this Warrant may be transferred by Holder to any Person in
accordance with federal and state securities law, including without limitation,
the Securities Act.

     

    14.5 Remedies.  Each
holder of a Warrant or Warrant Shares, 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 the Company of the provisions of this Warrant and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.

     

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

     

    14.7 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 provision or the remaining provisions of this
Warrant.

     

    14.8 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.

     

    14.9 Governing
Law.  This Warrant shall be governed by the laws of the State
of Texas, without regard to the provisions thereof relating to conflict of
laws.

     

    14.10 Facsimile
Signature.  The signature on this Warrant may be delivered by
telecopy,  facsimile or other electronic transmission, with original
signature page to be subsequently substituted therefor.

     

    14.11 Non-Survival.  The
parties hereby agree that all the provisions of this Warrant shall terminate and
be of no further force or effect on the earlier of the exercise in full of this
Warrant and the Expiration Date.

     

    14.12 Counterparts. This Warrant
may be executed by one or more of the parties to this Warrant on any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

     

    15.LIMITATION OF
LIABILITY.  No provision hereof, in the absence of affirmative
action by Holder to purchase Shares, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Shares or as a holder of Shares of Company, whether
such liability is asserted by the Company or by creditors of the
Company.

     

    


     

    [Signature page follows.]

     

    


     


    
      
         


      

      
        9 


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, each party hereto has caused this Warrant to be duly executed
by its authorized officer and dated effective as of the Closing
Date.

     

    Dated:  Effective
as of September 2, 2008

     

    
      	
              ABC
      Funding, Inc.

               

            
	
              By: /s/ 
      Carl A.
      Chase                                                                          

              Carl
      A. Chase

              Chief
      Financial Officer

            


    

    



    
      	
              CIT Capital USA,
Inc.

               

            
	
              By: /s/ 
      Brian
      Kerrigan                                                                          

              Brian Kerrigan

              Vice
  President

            


    

    


    



    
      
        
          


           

        

         


      

      
        10 


        
          

        

      

      
         


      

    


    EXHIBIT
A

     

    SUBSCRIPTION
FORM

     

    [To be executed only upon
exercise of Warrant]

     

    The
undersigned registered Holder of this Warrant irrevocably exercises this Warrant
for purchase of ____________
Shares of ABC Funding, Inc., a Delaware corporation, [and herewith makes
payment therefore][pursuant to the cashless exercise provisions set forth in
Section 2.3 of the Warrant, with the calculation
for such cashless exercise attached to this Subscription Form], all at the price
and on the terms and conditions specified in this Warrant and requests that
certificates for the Shares hereby purchased (and any securities or property
issuable upon such exercise) to be issued in the name of the undersigned and
delivered to the undersigned as follows:

     

    Name                                                                           Address

     

    


     

    If the
certificates representing the Shares being purchased pursuant hereto are to be
registered in a name or names other than the name of the holder of this Warrant,
all transfer taxes payable upon such transfer shall be paid by the undersigned
at the time of delivering the notice of exercise and such request.

     

    Solely
with respect to the Warrant Shares being purchased pursuant to this Subscription
Form, the representations and warranties of the Holder contained in Section 13.1 of the Warrant are repeated at and as of the time
of delivery hereof and are true and correct in all material respects at and as
of the time of delivery hereof, except to the extent such representations and
warranties are expressly limited to an earlier date or the Company has expressly
consented in writing to the contrary.

     

    The
undersigned acknowledges that each certificate for Warrant Shares issued upon
exercise of the Warrant shall bear a legend to the effect that such Warrant
Shares may not be transferred except upon compliance with the provisions of the
Securities Act and applicable state securities laws, and each certificate for
Warrant Shares transferred shall bear such a legend unless, in the opinion of
counsel for the Company, such legend is not required.

     

    If the
number of Shares shall not be all the Warrant Shares purchasable under this
Warrant, a new Warrant of like tenor is to be issued in the name of and
delivered to the undersigned for the remaining balance of the Shares purchasable
thereunder.

     

    


    (Name of
Registered Owner)

    


    


    (Signature
of Registered Owner)

    


    


    (Street
Address)

    


    


    (City)                  (State)                   (Zip
Code)

    


    
      	
              NOTICE:

            	
              The
      signature on this subscription must correspond with the names as written
      upon the face of the attached Warrant in every particular, without
      alteration or enlargement or any change
  whatsoever.

            


    

     


    
      
        
          


                                              

        

         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
B

     

    ASSIGNMENT
FORM

     

    FOR VALUE
RECEIVED the undersigned registered Holder of the attached Warrant hereby sells,
assigns and transfers unto the Assignee named below all of the rights of the
undersigned under such Warrant, with respect to the number of Shares set forth
below:

     

    
      	
              Name
      and Address of Assignee

            	 
      	
              No.
      of Shares

            
	 
      	 
      	 
      
	 
      	 
      	 
      


    

    


     

    If the
number of Shares is not all of the Warrant Shares represented by this Warrant, a
new Warrant of like tenor is to be issued in the name of and delivered to the
undersigned for the balance remaining of the Shares represented by this
Warrant.

     

    


     

    
      	
              Dated:

            	
              Print
      Name:                                

            
	 
      	
              Signature:                                

            
	 
      	
              Witness:                      

            


    

    


     

    
      	
              NOTICE:

            	
              The
      signature on this assignment must correspond with the name as written upon
      the face of the Warrant in every particular, without alteration or
      enlargement or any change
whatsoever.

            


    

     

    


     


    
      
        
          


                         

        

         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
C

     

    NOTICE OF
CONVERSION

     

    (To be
executed upon conversion of the attached Warrant)

     

    The
undersigned registered owner irrevocably elects to surrender this Warrant for
the number of Shares as shall be issuable pursuant to the cashless exercise
provisions of Section 2.3 of the Warrant, in
respect of _____ Shares underlying this Warrant, and requests that Green River
Biodiesel, Inc. execute or cause to be executed a certificate or certificates
reflecting the undersigned’s ownership of the aggregate number of Shares
issuable upon such exercise, together with cash in lieu of any fraction of a
Share (and any securities or other property issuable upon such exercise) and
deliver or cause to be delivered to the undersigned such certificate or
certificates the undersigned as follows:

     

    Name                                                                           Address

     

    


     

    The
undersigned acknowledges that each certificate for Warrant Shares issued upon
exercise of this Warrant shall bear a legend to the effect that such Warrant
Shares may not be transferred except upon compliance with the provisions of the
First Refusal and Co-Sale Agreement and the Securities Act and applicable state
securities laws, and each certificate for Warrant Shares transferred shall also
bear such a legend unless, in the opinion of counsel for the Company, such a
legend is not required.

     

    Solely
with respect to the Warrant Shares being received pursuant to this Notice of
Conversion, the representations and warranties of the Holder contained in
Section 13.1 of the Warrant are repeated at and as
of the time of delivery hereof and are true and correct in all material respects
at and as of the time of delivery hereof, except to the extent such
representations and warranties are expressly limited to an earlier date or the
Company has expressly consented in writing to the contrary.

     

    If the
number of Shares shall not be all the Warrant Shares issuable under this
Warrant, a new Warrant of like tenor is to be issued in the name of and
delivered to the undersigned for the remaining balance of the Shares issuable
thereunder.

     

    


    


    (Name of Registered
Owner)

    


    


    (Signature
of Registered Owner)

    


    


    (Street
Address)

    


    


    (City)                  (State)              (Zip
Code)

    


    


    
      	
              NOTICE:

            	
              The
      signature on this subscription must correspond with the names as written
      upon the face of the within Warrant in every particular, without
      alteration or enlargement or any change
  whatsoever.