Escrow Agreement


    Exibit 10.26

    
 

    THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO FAMILY ROOM ENTERTAINMENT CORPORATION THAT SUCH REGISTRATION
      IS
      NOT REQUIRED.

    


    
      	 	
              Right
                to Purchase 2,000,000,000 shares of Common Stock of Family Room
                Entertainment Corporation (subject to adjustment as provided
                herein)

            


    

    


    CLASS
      C COMMON STOCK PURCHASE WARRANT

    No. 2007-C-001       Issue
      Date: June 5, 2007

    FAMILY
      ROOM ENTERTAINMENT CORPORATION, a corporation organized under the laws of the
      State of New Mexico (the “Company”), hereby certifies that, for value received,
      LONGVIEW FUND, LP., 600 Montgomery Street, 44th
      Floor,
      San Francisco, CA 94111, Fax: (415) 981-5301, or its assigns (the “Holder”), is
      entitled, subject to the terms set forth below, to purchase from the Company
      at
      any time after the Issue Date until 5:00 p.m., E.S.T on the fifth anniversary
      of
      the Issue Date (the “Expiration Date”), up to 2,000,000,000 fully paid and
      nonassessable shares of Common Stock at a per share purchase price of $.0005.
      The aforedescribed purchase price per share, as adjusted from time to time
      as
      herein provided, is referred to herein as the "Purchase Price." The number
      and
      character of such shares of Common Stock and the Purchase Price are subject
      to
      adjustment as provided herein. The Company may reduce the Purchase Price for
      some or all of the Warrants, temporarily or permanently. Capitalized terms
      used
      and not otherwise defined herein shall have the meanings set forth in that
      certain Subscription Agreement (the “Subscription
      Agreement”),
      dated
      as of June 5, 2007, entered into by the Company and the Holder.

    


    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings: 

     

    (a) The
      term
“Company” shall include Family Room Entertainment Corporation and any
      corporation which shall succeed or assume the obligations of Family Room
      Entertainment Corporation hereunder. 

     

    (b) The
      term
“Common Stock” includes (a) the Company's Common Stock, $0.01 par value per
      share, as authorized on the date of the Subscription Agreement, and (b) any
      other securities into which or for which any of the securities described in
      (a) may be converted or exchanged pursuant to a plan of recapitalization,
      reorganization, merger, sale of assets or otherwise.

     

    (c) The
      term
“Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      holder of the Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of the Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 4 or otherwise. 

     

    (d) The
      term
“Warrant Shares” shall mean the Common Stock issuable upon exercise of this
      Warrant.

     


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    


    1. Exercise
      of Warrant.

     

    1.1. Number
      of Shares Issuable upon Exercise.
      From
      and after the Issue Date through and including the Expiration Date, the Holder
      hereof shall be entitled to receive, upon exercise of this Warrant in whole
      in
      accordance with the terms of subsection 1.2 or upon exercise of this
      Warrant in part in accordance with subsection 1.3, shares of Common Stock
      of the Company, subject to adjustment pursuant to Section 4.

     

    1.2. Full
      Exercise.
      This
      Warrant may be exercised in full by the Holder hereof by delivery of an original
      or facsimile copy of the form of subscription attached as Exhibit A hereto
      (the “Subscription Form”) duly executed by such Holder and delivery within two
      days thereafter of payment, in cash, wire transfer or by certified or official
      bank check payable to the order of the Company, in the amount obtained by
      multiplying the number of shares of Common Stock for which this Warrant is
      then
      exercisable by the Purchase Price then in effect. The original Warrant is not
      required to be surrendered to the Company until it has been fully exercised.
      

     

    1.3. Partial
      Exercise.
      This
      Warrant may be exercised in part (but not for a fractional share) by surrender
      of this Warrant in the manner and at the place provided in subsection 1.2
      except that the amount payable by the Holder on such partial exercise shall
      be
      the amount obtained by multiplying (a) the number of whole shares of Common
      Stock designated by the Holder in the Subscription Form by (b) the Purchase
      Price then in effect. On any such partial exercise provided the Holder has
      surrendered the original Warrant, the Company, at its expense, will forthwith
      issue and deliver to or upon the order of the Holder hereof a new Warrant of
      like tenor, in the name of the Holder hereof or as such Holder (upon payment
      by
      such Holder of any applicable transfer taxes) may request, the whole number
      of
      shares of Common Stock for which such Warrant may still be exercised for the
      balance of.

     

    1.4. Fair
      Market Value.
      Fair
      Market Value of a share of Common Stock as of a particular date (the
      "Determination Date") shall mean: 

     

    (a) If
      the
      Company's Common Stock is traded on an exchange or is quoted on the National
      Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ"), Global
      Market, Nasdaq Global Select Market, the NASDAQ Capital Market or the American
      Stock Exchange, LLC, then the closing or last sale price, respectively, reported
      for the last business day immediately preceding the Determination
      Date;

     

    (b) If
      the
      Company's Common Stock is not traded on an exchange or on the NASDAQ Global
      Market, the NASDAQ Capital Market or the American Stock Exchange, Inc., but
      is
      traded in the over-the-counter market, then the average of the closing bid
      and
      ask prices reported for the last business day immediately preceding the
      Determination Date;

     

    (c) Except
      as
      provided in clause (d) below, if the Company's Common Stock is not publicly
      traded, then as the Holder and the Company agree, or in the absence of such
      an
      agreement, by arbitration in accordance with the rules then standing of the
      American Arbitration Association, before a single arbitrator to be chosen from
      a
      panel of persons qualified by education and training to pass on the matter
      to be
      decided; or

     

    (d) If
      the
      Determination Date is the date of a liquidation, dissolution or winding up,
      or
      any event deemed to be a liquidation, dissolution or winding up pursuant to
      the
      Company's charter, then all amounts to be payable per share to holders of the
      Common Stock pursuant to the charter in the event of such liquidation,
      dissolution or winding up, plus all other amounts to be payable per share in
      respect of the Common Stock in liquidation under the charter, assuming for
      the
      purposes of this clause (d) that all of the shares of Common Stock then
      issuable upon exercise of all of the Warrants are outstanding at the
      Determination Date.

     

    1.5. Company
      Acknowledgment.
      The
      Company will, at the time of the exercise of the Warrant, upon the request
      of
      the Holder hereof acknowledge in writing its continuing obligation to afford
      to
      such Holder any rights to which such Holder shall continue to be entitled after
      such exercise in accordance with the provisions of this Warrant. If the Holder
      shall fail to make any such request, such failure shall not affect the
      continuing obligation of the Company to afford to such Holder any such
      rights.

     

    1.6. Trustee
      for Warrant Holders.
      In the
      event that a bank or trust company shall have been appointed as trustee for
      the
      Holder of the Warrants pursuant to Subsection 3.2, such bank or trust
      company shall have all the powers and duties of a warrant agent (as hereinafter
      described) and shall accept, in its own name for the account of the Company
      or
      such successor person as may be entitled thereto, all amounts otherwise payable
      to the Company or such successor, as the case may be, on exercise of this
      Warrant pursuant to this Section 1. 

     

      1.7 Delivery
      of Stock Certificates, etc. on Exercise.
      The
      Company agrees that the shares of Common Stock purchased upon exercise of this
      Warrant shall be deemed to be issued to the Holder hereof as the record owner
      of
      such shares as of the close of business on the date on which this Warrant shall
      have been surrendered and payment made for such shares as aforesaid. As soon
      as
      practicable after the exercise of this Warrant in full or in part, and in any
      event within three (3) business
      days
      thereafter (“Warrant Share Delivery Date”), the Company at its expense
      (including the payment by it of any applicable issue taxes) will cause to be
      issued in the name of and delivered to the Holder hereof, or as such Holder
      (upon payment by such Holder of any applicable transfer taxes) may direct in
      compliance with applicable securities laws, a certificate or certificates for
      the number of duly and validly issued, fully paid and non-assessable shares
      of
      Common Stock (or Other Securities) to which such Holder shall be entitled on
      such exercise, plus, in lieu of any fractional share to which such Holder would
      otherwise be entitled, cash equal to such fraction multiplied by the then Fair
      Market Value of one full share of Common Stock, together with any other stock
      or
      other securities and property (including cash, where applicable) to which such
      Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
      The Company understands that a delay in the delivery of the Warrant Shares
      after
      the Warrant Share Delivery Date could result in economic loss to the Holder.
      As
      compensation to the Holder for such loss, the Company agrees to pay (as
      liquidated damages and not as a penalty) to the Holder for late issuance of
      Warrant Shares upon exercise of this Warrant the proportionate amount of $100
      per business day after the Warrant Share Delivery Date for each $10,000 of
      Purchase Price of Warrant Shares for which this Warrant is exercised which
      are
      not timely delivered. The Company shall pay any payments incurred under this
      Section in immediately available funds upon demand. Furthermore, in addition
      to
      any other remedies which may be available to the Holder, in the event that
      the
      Company fails for any reason to effect delivery of the Warrant Shares by the
      Warrant Share Delivery Date, the Holder may revoke all or part of the relevant
      Warrant exercise by delivery of a notice to such effect to the Company,
      whereupon the Company and the Holder shall each be restored to their respective
      positions immediately prior to the exercise of the relevant portion of this
      Warrant, except that the liquidated damages described above shall be payable
      through the date notice of revocation or rescission is given to the Company.
      

     

    1.8 Buy-In.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      deliver to a Holder the Warrant Shares as required pursuant to this Warrant,
      within seven (7) business days after the Warrant Share Delivery Date and the
      Holder or a broker on the Holder’s behalf, purchases (in an open market
      transaction or otherwise) shares of common stock to deliver in satisfaction
      of a
      sale by such Holder of the Warrant Shares which the Holder was entitled to
      receive from the Company (a "Buy-In"),
      then
      the Company shall pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (A) the Holder's
      total purchase price (including brokerage commissions, if any) for the shares
      of
      common stock so purchased exceeds (B) the aggregate Purchase Price of the
      Warrant Shares
      required
      to have been delivered together
      with interest thereon at a rate of 15% per annum, accruing until such amount
      and
      any accrued interest thereon is paid in full (which amount shall be paid as
      liquidated damages and not as a penalty). For
      example, if a Holder purchases shares of Common Stock having a total purchase
      price of $11,000 to cover a Buy-In with respect to $10,000 of Purchase Price
      of
      Warrant Shares to have been received upon exercise of this Warrant, the Company
      shall be required to pay the Holder $1,000,
      plus interest. The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    2. Cashless
      Exercise.

     

    (a) This
      Warrant may be exercisable at the option of the Holder either in (i) cash,
      wire transfer or by certified or official bank check payable to the order of
      the
      Company equal to the applicable aggregate Purchase Price, (ii) by delivery
      of
      Common Stock issuable upon exercise of the Warrants in accordance with
      Section (b) below or (iii) by a combination of any of the
      foregoing methods, for the number of Common Stock specified in such form (as
      such exercise number shall be adjusted to reflect any adjustment in the total
      number of shares of Common Stock issuable to the holder per the terms of this
      Warrant) and the holder shall thereupon be entitled to receive the number of
      duly authorized, validly issued, fully-paid and non-assessable shares of Common
      Stock (or Other Securities) determined as provided herein.

     

    (b) Subject
      to the provisions herein to the contrary, if the Fair Market Value of one share
      of Common Stock is greater than the Purchase Price (at the date of calculation
      as set forth below), in lieu of exercising this Warrant for cash, the holder
      may
      elect to receive shares equal to the value (as determined below) of this Warrant
      (or the portion thereof being cancelled) by surrender of this Warrant at the
      principal office of the Company together with the properly endorsed Subscription
      Form in which event the Company shall issue to the holder a number of shares
      of
      Common Stock computed using the following formula:

     

    X=Y
      (A-B)

    A

    


    Where X= the
      number of shares of Common Stock to be issued to the holder

    


    
      	 	
              Y=

            	
              the
                number of shares of Common Stock purchasable under the Warrant or,
                if only
                a portion of the Warrant is being exercised, the portion of the Warrant
                being exercised (at the date of such
                calculation)

            


    

     

    
      	 	
              A=

            	
              the
                average of the closing sale prices of the Common Stock for the five
                (5)
                Trading Days immediately prior to (but not including) the Exercise
                Date,
                or Fair Market Value, whichever is
                less

            


    

     

    
      	 	
              B=

            	
              Purchase
                Price (as adjusted to the date of such
                calculation)

            


    

     

    For
      purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
      and acknowledged that the Warrant Shares issued in a cashless exercise
      transaction shall be deemed to have been acquired by the Holder, and the holding
      period for the Warrant Shares shall be deemed to have commenced, on the date
      this Warrant was originally issued pursuant to the Subscription
      Agreement.

     

    3. Adjustment
      for Reorganization, Consolidation, Merger, etc.

     

    3.1. Reorganization,
      Consolidation, Merger, etc.
      In case
      at any time or from time to time, the Company shall (a) effect a
      reorganization, (b) consolidate with or merge into any other person or
      (c) transfer all or substantially all of its properties or assets to any
      other person under any plan or arrangement contemplating the dissolution of
      the
      Company, then, in each such case, as a condition to the consummation of such
      a
      transaction, proper and adequate provision shall be made by the Company whereby
      the Holder of this Warrant, on the exercise hereof as provided in
      Section 1, at any time after the consummation of such reorganization,
      consolidation or merger or the effective date of such dissolution, as the case
      may be, shall receive, in lieu of the Common Stock (or Other Securities)
      issuable on such exercise prior to such consummation or such effective date,
      the
      stock and other securities and property (including cash) to which such Holder
      would have been entitled upon such consummation or in connection with such
      dissolution, as the case may be, if such Holder had so exercised this Warrant,
      immediately prior thereto, all subject to further adjustment thereafter as
      provided in Section 4.

     

    3.2. Dissolution.
      In the
      event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, prior to such
      dissolution, shall at its expense deliver or cause to be delivered the stock
      and
      other securities and property (including cash, where applicable) receivable
      by
      the Holder of the Warrants after the effective date of such dissolution pursuant
      to this Section 3 to a bank or trust company (a "Trustee") having its
      principal office in New York, NY, as trustee for the Holder of the
      Warrants. 

     

    3.3. Continuation
      of Terms.
      Upon
      any reorganization, consolidation, merger or transfer (and any dissolution
      following any transfer) referred to in this Section 3, this Warrant shall
      continue in full force and effect and the terms hereof shall be applicable
      to
      the Other Securities and property receivable on the exercise of this Warrant
      after the consummation of such reorganization, consolidation or merger or the
      effective date of dissolution following any such transfer, as the case may
      be,
      and shall be binding upon the issuer of any Other Securities, including, in
      the
      case of any such transfer, the person acquiring all or substantially all of
      the
      properties or assets of the Company, whether or not such person shall have
      expressly assumed the terms of this Warrant as provided in Section 4. In
      the event this Warrant does not continue in full force and effect after the
      consummation of the transaction described in this Section 3, then only in
      such event will the Company's securities and property (including cash, where
      applicable) receivable by the Holder of the Warrants be delivered to the Trustee
      as contemplated by Section 3.2.

     

    3.4 Share
      Issuance.
      Until
      the Expiration Date, if the Company shall issue any Common Stock except for
      the
      Excepted Issuances (as defined in the Subscription Agreement), prior to the
      complete exercise of this Warrant for a consideration less than the Purchase
      Price that would be in effect at the time of such issue, then, and thereafter
      successively upon each such issue, the Purchase Price shall be reduced to such
      other lower price for then outstanding Warrants. For purposes of this
      adjustment, the issuance of any security or debt instrument of the Company
      carrying the right to convert such security or debt instrument into Common
      Stock
      or of any warrant, right or option to purchase Common Stock shall result in
      an
      adjustment to the Purchase Price upon the issuance of the above-described
      security, debt instrument, warrant, right, or option if such issuance is at
      a
      price lower than the Purchase Price in effect upon such issuance and again
      at
      any time upon any subsequent issuances of shares of Common Stock upon exercise
      of such conversion or purchase rights if such issuance is at a price lower
      than
      the Purchase Price in effect upon such issuance. The reduction of the Purchase
      Price described in this Section 3.4 is subject to the provisions of, and in
      addition to the other rights of the Holder described in, the Subscription
      Agreement.

     

    4. Extraordinary
      Events Regarding Common Stock.
      In the
      event that the Company shall (a) issue additional shares of the Common
      Stock as a dividend or other distribution on outstanding Common Stock,
      (b) subdivide its outstanding shares of Common Stock, or (c) combine
      its outstanding shares of the Common Stock into a smaller number of shares
      of
      the Common Stock, then, in each such event, the Purchase Price shall,
      simultaneously with the happening of such event, be adjusted by multiplying
      the
      then Purchase Price by a fraction, the numerator of which shall be the number
      of
      shares of Common Stock outstanding immediately prior to such event and the
      denominator of which shall be the number of shares of Common Stock outstanding
      immediately after such event, and the product so obtained shall thereafter
      be
      the Purchase Price then in effect. The Purchase Price, as so adjusted, shall
      be
      readjusted in the same manner upon the happening of any successive event or
      events described herein in this Section 4. The number of shares of Common
      Stock that the Holder of this Warrant shall thereafter, on the exercise hereof
      as provided in Section 1, be entitled to receive shall be adjusted to a
      number determined by multiplying the number of shares of Common Stock that
      would
      otherwise (but for the provisions of this Section 4) be issuable on such
      exercise by a fraction of which (a) the numerator is the Purchase Price
      that would otherwise (but for the provisions of this Section 4) be in
      effect, and (b) the denominator is the Purchase Price in effect on the date
      of such exercise.

     

    5. Certificate
      as to Adjustments.
      In each
      case of any adjustment or readjustment in the shares of Common Stock (or Other
      Securities) issuable on the exercise of the Warrants, the Company at its expense
      will promptly cause its Chief Financial Officer or other appropriate designee
      to
      compute such adjustment or readjustment in accordance with the terms of the
      Warrant and prepare a certificate setting forth such adjustment or readjustment
      and showing in detail the facts upon which such adjustment or readjustment
      is
      based, including a statement of (a) the consideration received or
      receivable by the Company for any additional shares of Common Stock (or Other
      Securities) issued or sold or deemed to have been issued or sold, (b) the
      number of shares of Common Stock (or Other Securities) outstanding or deemed
      to
      be outstanding, and (c) the Purchase Price and the number of shares of
      Common Stock to be received upon exercise of this Warrant, in effect immediately
      prior to such adjustment or readjustment and as adjusted or readjusted as
      provided in this Warrant. The Company will forthwith mail a copy of each such
      certificate to the Holder of the Warrant and any Warrant Agent of the Company
      (appointed pursuant to Section 11 hereof).

     

    6. Reservation
      of Stock, etc. Issuable on Exercise of Warrant; Financial
      Statements.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery on the exercise of the Warrants, all shares of Common Stock (or Other
      Securities) from time to time issuable on the exercise of the Warrant. This
      Warrant entitles the Holder hereof to receive copies of all financial and other
      information distributed or required to be distributed to the holders of the
      Company's Common Stock. 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    7. Assignment;
      Exchange of Warrant.
      Subject
      to compliance with applicable securities laws, this Warrant, and the rights
      evidenced hereby, may be transferred by any registered holder hereof (a
      "Transferor"). On the surrender for exchange of this Warrant, with the
      Transferor's endorsement in the form of Exhibit B attached hereto (the
“Transferor Endorsement Form") and together with an opinion of counsel
      reasonably satisfactory to the Company that the transfer of this Warrant will
      be
      in compliance with applicable securities laws, the Company will issue and
      deliver to or on the order of the Transferor thereof a new Warrant or Warrants
      of like tenor, in the name of the Transferor and/or the transferee(s) specified
      in such Transferor Endorsement Form (each a "Transferee"), calling in the
      aggregate on the face or faces thereof for the number of shares of Common Stock
      called for on the face or faces of the Warrant so surrendered by the
      Transferor.

     

    8. Replacement
      of Warrant.
      On
      receipt of evidence 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 destruction of this Warrant, on delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of this Warrant,
      the
      Company at its expense, twice only, will execute and deliver, in lieu thereof,
      a
      new Warrant of like tenor.

     

    9. Registration
      Rights.
      The
      Holder of this Warrant has been granted certain registration rights by the
      Company. These registration rights are set forth in the Subscription Agreement.
      The terms of the Subscription Agreement are incorporated herein by this
      reference.

     

    10. Maximum
      Exercise.
      The
      Holder shall not be entitled to exercise this Warrant on an exercise
      date, in
      connection with that number of shares of Common Stock which would be in excess
      of the sum of (i) the number of shares of Common Stock beneficially owned
      by the Holder and its affiliates on an exercise date, and (ii) the number
      of shares of Common Stock issuable upon the exercise of this Warrant with
      respect to which the determination of this limitation is being made on an
      exercise date, which would result in beneficial ownership by the Holder and
      its
      affiliates of more than 4.99% of the outstanding shares of Common Stock on
      such
      date. For the 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-3 thereunder.
      Subject to the foregoing, the Holder shall not be limited to aggregate exercises
      which would result in the issuance of more than 4.99%.

     

    11. Warrant
      Agent.
      The
      Company may, by written notice to the Holder of the Warrant, appoint an agent
      (a
“Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities)
      on the exercise of this Warrant pursuant to Section 1, exchanging this
      Warrant pursuant to Section 7, and replacing this Warrant pursuant to
      Section 8, or any of the foregoing, and thereafter any such issuance,
      exchange or replacement, as the case may be, shall be made at such office by
      such Warrant Agent. 

     

    12. Transfer
      on the Company's Books.
      Until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary. 

     

    13. Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: if to the Company, to: Family Room Entertainment
      Corporation, 8530 Wiltshire Boulevard, Suite 420, Beverly Hills, CA 90211,
      Attn:
      George Furla, President & CEO, telecopier: (310) 659-9412, with a copy by
      telecopier only to: Owen M. Naccarato, Esq., Naccarato & Associates, 18301
      Von Karman Avenue, Suite 430, Irvine, CA 92612, telecopier: (949) 851-9262,
      and
      (ii) if to the Holder, to the address and telecopier number listed on the first
      paragraph of this Warrant, with a copy by telecopier only to: Grushko &
Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
      telecopier number: (212) 697-3575.

     

    14. Law
      Governing This Warrant.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Warrant shall be brought only in the state courts of New
      York or in the federal courts located in the state and county of New York.
      The
      parties to this Warrant hereby irrevocably waive any objection to jurisdiction
      and venue of any action instituted hereunder and shall not assert any defense
      based on lack of jurisdiction or venue or based upon forum
      non conveniens.
      The
      Company and Holder waive trial by jury. The prevailing party shall be entitled
      to recover from the other party its reasonable attorney's fees and costs. In
      the
      event that any provision of this Warrant or any other agreement delivered in
      connection herewith is invalid or unenforceable under any applicable statute
      or
      rule of law, then such provision shall be deemed inoperative to the extent
      that
      it may conflict therewith and shall be deemed modified to conform with such
      statute or rule of law. Any such provision which may prove invalid or
      unenforceable under any law shall not affect the validity or enforceability
      of
      any other provision of any agreement.

     


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above. 

     

    
      	 	
              FAMILY
                ROOM ENTERTAINMENT CORPORATION 

               

               

               

                
                By: /s/ George Furla        

               
Name:
                George Furla

               

               

               

            
	 	 	 


    

    



    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    


    Exhibit A

    


    FORM
      OF
      SUBSCRIPTION

    (to
      be
      signed only on exercise of Warrant)

    TO:
      FAMILY ROOM ENTERTAINMENT CORPORATION 

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No.____), hereby irrevocably elects to purchase (check applicable
      box):

    


    ___ ________
      shares of the Common Stock covered by such Warrant; or

    ___ the
      maximum number of shares of Common Stock covered by such Warrant pursuant to
      the
      cashless exercise procedure set forth in Section 2.

    


    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of (check applicable box or boxes):

    


    ___ $__________
      in lawful money of the United States; and/or

    ___ the
      cancellation of such portion of the attached Warrant as is exercisable for
      a
      total of _______ shares of Common Stock (using a Fair Market Value of $_______
      per share for purposes of this calculation); and/or

    


    ___ the
      cancellation of such number of shares of Common Stock as is necessary, in
      accordance with the formula set forth in Section 2, to exercise this
      Warrant with respect to the maximum number of shares of Common Stock purchasable
      pursuant to the cashless exercise procedure set forth in
      Section 2.

    


    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to _____________________________________________________
      whose
      address is _________________________________________________      

    ______________________________________        .

    


    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the "Securities Act"), or pursuant to an exemption from registration
      under the Securities Act.

    


    
      	
              Dated:___________________

            	
               

              (Signature
                must conform to name of holder as specified on the face of the
                Warrant)

               

               

               

              (Address)

            


    

    



    Exhibit B

    


    


    FORM
      OF
      TRANSFEROR ENDORSEMENT

    (To
      be
      signed only on transfer of Warrant)

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto the
      person(s) named below under the heading "Transferees" the right represented
      by
      the within Warrant to purchase the percentage and number of shares of Common
      Stock of FAMILY ROOM ENTERTAINMENT CORPORATION to which the within Warrant
      relates specified under the headings "Percentage Transferred" and "Number
      Transferred," respectively, opposite the name(s) of such person(s) and appoints
      each such person Attorney to transfer its respective right on the books of
      FAMILY ROOM ENTERTAINMENT CORPORATION with full power of substitution in the
      premises.

     

    


    
      	
              Transferees

            	
              Percentage
                Transferred

            	
              Number
                Transferred

            
	 	 	 
	 	 	 
	 	 	 


    

    


    


    
      	
              Dated:
                ______________, ___________

               

               

               

              Signed
                in the presence of:

               

               

              (Name)

               

               

              ACCEPTED
                AND AGREED:

              [TRANSFEREE]

               

               

               

              (Name)

            	
               

              (Signature
                must conform to name of holder as specified on the face of the
                warrant)

               

               

               

               

               

              (address)

               

               

               

              (address)

            


    

    


    
      
        
        

      

      
        -6-