Exhibit 4.10


NEITHER THIS SECURITY NOR
THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES AS PERMITTED BY LAW AND THE SECURITIES PURCHASE
AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ISSUED.


	
                 COMMON STOCK PURCHASE WARRANT

  	
   

  	
  NO. 1

  



 


To Purchase Shares of Common Stock of


UNIPIXEL, INC.


This COMMON STOCK
PURCHASE WARRANT (this “Warrant”)
certifies that, for value received, CAPSOURCE FUND, L.P., a Mississippi limited
partnership (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof, May
24, 2006 (the “Initial Exercise Date”),
and on or prior to the close of business on the fifth anniversary of the
Initial Exercise Date (the “Termination Date”),
to subscribe for and purchase from UNIPIXEL, INC., a Delaware corporation (the “Company”), such number of shares
of common stock, par value $001 per share, of the Company (the “Common Stock”), subject to
adjustment herein (the “Warrant Shares”)
as follows:


750,000 divided
by: the lesser of (i) $1.75; or (ii) 70% of the average price per share of the Common Stock and Common Stock
Equivalents sold to any Person in the first Qualifying Transaction to be
consummated following the Original Issue Date (determined by dividing the total
number of shares of Common Stock issued plus shares issuable under Common Stock
Equivalents in such Qualifying Transaction, by the aggregate consideration
received by the Company plus all consideration to be received upon
exercise or conversion of all Common Stock Equivalents issued in such
Qualifying Transaction).  With respect to
determining the price paid per share in any asset purchase, only shares of
Common Stock actually issued and outstanding shall be used in determining such
per share calculation.


In the event no Qualifying Transaction has been consummated on or by
the first anniversary hereof, then the number of Warrant Shares purchasable
hereby shall equal 5% (subject to adjustment as set forth in Section 4.15 of
the Purchase Agreement) of then outstanding Common Stock, computed on a Fully
Diluted Basis.



 1
 






 



 


Notwithstanding the foregoing, the parties agree that the number of
Warrant Shares to be issued in accordance herewith shall be adjusted up from
the determination resulting from the foregoing formula by mutual agreement of
the parties in the event that any convertible securities are sold to investors
in any Qualifying Transaction, the parties hereby recognizing that the issuance
thereof, even at an exercise or conversion price above the Exercise Price (as
defined below), would increase the value of the securities issued to such
investors and thus entitle Holder to a greater number of Warrant Shares.  The parties agree to negotiate such
determination in good faith.


The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).


Section 1.               Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
in that certain Securities Purchase Agreement (the “Purchase Agreement”), of even date herewith, entered
into by and among the Company and the Holder.


Section 2.               Exercise.


a)             Exercise
of Warrant.  Exercise of the purchase
rights represented by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination Date (each, an “Exercise Date”) by delivery to
the Company of a duly executed facsimile copy of the Notice of Exercise Form
annexed  hereto (or such other office or
agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the
Company); provided, however,
within five Business Days of the date said Notice of Exercise is delivered to
the Company, the Holder shall have surrendered this Warrant to the Company and
the Company shall have received  payment
of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank.


b)            Exercise Price.  The Exercise Price (so called
herein) of each share of Common Stock under this Warrant shall be equal to the
lesser of:


(i)                                     90%
of the average price per share of the Common Stock and Common Stock
Equivalents sold to any Person in the first Qualifying Transaction to be
consummated following the Initial Exercise Date (determined by dividing the
total number of shares of Common Stock issued plus shares issuable under Common
Stock Equivalents in such Qualifying Transaction, by the aggregate
consideration received by the Company plus all consideration to be received
upon exercise or conversion of all Common Stock Equivalents issued in such
Qualifying Transaction).  With respect to
determining the price paid per share in any asset purchase, only shares of
Common Stock actually issued and outstanding shall be used in determining such
per share calculation; or



 2
 






 



 


(ii)                                  $1.75 per share (which such Exercise Price
shall apply in the event no Qualifying Transaction has closed on or by the
Exercise Date.


Notwithstanding the
foregoing, the parties agree that the Exercise Price shall be adjusted down
from the determination resulting from the foregoing formula by mutual agreement
of the parties in the event that any convertible securities are sold to
investors in any Qualifying Transaction, the parties hereby recognizing that
the issuance thereof, even at an exercise or conversion price above the
Exercise Price, would increase the value of the securities issued to such
investors and thus entitle Holder to a greater number of shares of Common Stock
upon conversion hereof.  The parties
agree to negotiate such determination in good faith.


c)             Cashless
Exercise.  If at any time after one
year from the date of issuance of this Warrant there is no effective
Registration Statement registering the resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for
the number of Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:


(A)      =     the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted
to trading on any securities exchange, the last sale price for the Common Stock
on the National Association of Securities Dealers national market system on
such date, or, if there shall have been no trading on such date or if the
Common Stock shall not be listed on such system, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Company for such purpose or, if the
Common Stock is not traded, then such price as is reasonably determined by the
Company’s Board of Directors (the “Market Value”);


(B)        =     the Exercise Price of this Warrant, as adjusted; and


(X)       =     the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.


Notwithstanding anything herein to the contrary, on
the Termination Date, this Warrant shall be automatically exercised via cashless
exercise pursuant to this Section 2(c).


d)            Intentionally Deleted.



 3
 






 



 


e)             Mechanics
of Exercise.


i.      Authorization
of Warrant Shares.  The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issuance thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issuance). 
The Company covenants that during the period the Warrant is outstanding,
it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant. 
The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed.


ii.     Delivery
of Certificates Upon Exercise. 
Certificates for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a
participant in such system and if the certificates may be issued without a
restrictive legend in accordance with applicable federal securities laws, and
otherwise by physical delivery to the address specified by the Holder in the
Notice of Exercise within two (2) Business Days from the delivery to the
Company of the Notice of Exercise Form, surrender of this Warrant and payment
of the aggregate Exercise Price as set forth above (“Warrant
Share Delivery Date”). 
This Warrant shall be deemed to have been exercised on the date the
Exercise Price is received by the Company. 
The Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section
2(d)(vii) prior to the issuance of such shares, have been paid.


iii.    Delivery
of New Warrants Upon Exercise.  If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to 



 4
 






 



purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.


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


v.     Failure
to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to
the Holder, if the Company or the Company’s transfer agent fails to cause
delivery to the Holder of a certificate or certificates representing the
Warrant Shares or if the Company or its transfer agent fails to deliver such
certificates without the restrictive legend (if applicable) on or before the
Warrant Share Delivery Date, the Company shall pay to Purchaser, in cash, as
partial liquidated damages and not as a penalty, the greater of (i) $500 for
each Business Day after the Warrant Share Delivery Date until such certificate
is delivered with an appropriate legend or without a restrictive legend, as the
case may be; and (ii) the difference in the Market Value of the Warrant Shares
on the Warrant Share Delivery Date and the date such shares are actually
received by the Holder.  Nothing herein
shall limit Purchaser’s right to pursue actual damages for the Company’s
failure to deliver certificates representing any Securities as required herein,
and Purchaser shall have the right to pursue all remedies available to it at
law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.


vi.    No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall round such fractional share up to the next
whole number.


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



 5
 






 



 


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


Section 3.               Certain Adjustments.


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


b)            Subsequent
Equity Sales. If the Company at any time while this Warrant is outstanding,
shall offer, sell, grant any option to purchase or offer, sell or grant any
right to reprice its securities, or otherwise dispose of or issue  any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an effective price
per share less than the then Exercise Price (such lower price, the “Base Share Price” and such
issuances collectively, a “Dilutive Issuance”),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued
in connection with such issuance, be entitled to receive shares of Common Stock
at an effective price per share which is less than the Exercise Price, such
issuance shall be deemed to have occurred for less than the Exercise Price),
then, the Exercise Price shall be reduced to equal the Base Share Price and the
number of Warrant Shares issuable hereunder shall be increased such that the
aggregate Exercise Price payable hereunder, after taking into account the
decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
prior to such adjustment.  Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued.  The Company shall notify the
Holder in writing, no later than the Business Day following the issuance of any
Common Stock or Common Stock Equivalents subject to this section, indicating
therein the applicable issuance price, or of applicable reset price, exchange
price, conversion price and other pricing terms (such notice the “Dilutive Issuance



 6
 






 



Notice”).  For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b),
upon the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based
upon the Base Share Price regardless of whether the Holder accurately refers to
the Base Share Price in the Notice of Exercise.


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


d)            Fundamental
Transaction. If, at any time while this Warrant is outstanding, there
occurs a Fundamental Transaction, then, upon any subsequent conversion of this
Warrant, the Holder shall have the right to receive, for each Warrant Share
that would have been issuable upon such exercise absent such Fundamental
Transaction, at the option of the Holder, (a) upon exercise of this Warrant,
the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and Alternate
Consideration receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in an all
cash transaction, cash equal to the value of this Warrant as determined by the
difference between the applicable Exercise Price and the amount of cash paid
per share to the shareholders of the Company (the “Alternate
Consideration”).  For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common
Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder 



 7
 






 



shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  To the extent
necessary to effectuate the foregoing provisions, any successor to the Company
or surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with the foregoing provisions and evidencing the Holder’s
right to exercise such warrant into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this Section 3(d) and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.


e)             Exempt
Issuance. Notwithstanding the foregoing, no adjustments, Alternate
Consideration, nor notices shall be made, paid, or issued under this Section 3
in respect of an Exempt Issuance.


f)             Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not includes shares of Common Stock
owned or held by or for the account of the Company, and the description of any
such shares of Common Stock shall be considered on issue or sale of Common  Stock. 
For purposes of this Section 3, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.


g)            Voluntary
Adjustment By Company. The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the Company.


h)            Intentionally Omitted.


i)              Notice
to Holders.


i.      Adjustment to Exercise Price. Whenever the Exercise
Price is adjusted pursuant to this Section 3, the Company shall promptly mail
to each Holder a notice setting forth the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment. If the
Company issues a variable rate security, despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible conversion or exercise price at
which such securities may be converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement), or the lowest possible
adjustment price in the case of an MFN Transaction.  The term “MFN
Transaction” shall mean a transaction in which the Company
issues or sells any securities in a capital raising transaction or series of
related transactions which grants to an investor the right to receive
additional shares based 



 8
 






 



upon future transactions
of the Company on terms more favorable than those granted to such investor in
such offering.


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


Section 4.               Transfer of Warrant.


a)             Transferability.  Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant
and all rights hereunder are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or 



 9
 






 



Warrants in the name of the assignee or assignees and
in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled.  A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.


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


c)             Warrant
Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to
time.  The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.


d)            Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant
shall not be registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be
an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act or a qualified institutional buyer as defined in Rule
144A(a) under the Securities Act.


Section 5.               Covenants.


(a)           Negative
Covenants. So long as any portion of this Warrant is outstanding, without
the prior written consent of the Holder, which consent may be withheld in the
sole discretion of the Holder, the Company will not and will not permit any of
its Subsidiaries to directly or indirectly:


i.              Sale
of Assets, Dissolution, Etc. 
Transfer, sell, assign, lease or otherwise dispose of all or
substantially all of its properties or assets, or any assets or properties
necessary or desirable for the proper conduct of its business, or transfer,
sell, assign or otherwise dispose of any of its accounts, or contract rights to
any person or entity, or change the nature of its business, wind-up,
liquidate or 



 10
 






 



dissolve, or agree to any of the foregoing, other than
in the ordinary course of business;


ii.             No
Further Issuance of Securities. 
Other than in accordance herewith or with respect to an Exempt Issuance,
create, issue or permit the issuance of any additional securities of the
Company or of any of its Subsidiaries (including with respect to any Qualifying
Transaction), if any, or any rights, options or warrants to acquire any such
securities; provided, however, that in
the event that Company desires to issue securities with preferences or rights
greater than that which the Common Stock has and the Holder consents to same,
the Holder will then have the option of converting all or any part of this
Warrant into such stock in lieu of the Common Stock;;


iii.            Agreement.           Enter into any agreement obligating
the Company to undertake any of the matters set forth in this Section 5(a).


(b)           Affirmative Covenants.  So long as any portion of this Warrant is
outstanding and unless the Holder otherwise consents in writing, which consent
may be withheld in the sole discretion of the Holder, the Company will:


i.              True
Books.  Keep true books of record and
account in which full, true and correct entries will be made of all of its
dealings and transactions, and set aside on its books such reserves as may be
required by GAAP, consistently applied, with respect to all taxes, assessments,
charges, levies and claims referred to in (a) above, and with respect to its
business in general, and include such reserves in interim as well as year-end
financial statements; and


ii.             Right
of Inspection.  Permit any person
designated by the Holder, at the Holder’s expense, to visit and inspect any of
the properties, books and financial reports of the Company, all at such
reasonable times upon three (3) Business Days prior notice to the Company, and
as often as the Holder may reasonably request, provided the Holder does not
unreasonably interfere with the daily operations of the Company and Holder
executes a confidentiality agreement.


Section 6.               Miscellaneous.


a)             Title
to Warrant.  Prior to the Termination
Date and subject to compliance with applicable laws and Section 4 of this
Warrant, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.  The transferee shall sign an investment
letter in form and substance reasonably satisfactory to the Company.


b)            No
Rights as Shareholder Until Exercise. 
This Warrant does not entitle the Holder to any voting rights or other
rights as a shareholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased 



 11
 






 



shall be and be deemed to be issued to such Holder as
the record owner of such shares as of the close of business on the later of the
date of such surrender or payment.


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


d)            Saturdays,
Sundays, Holidays, etc.  If the last
or appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.


e)             Authorized
Shares.


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


Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the rights of
Holder as set forth in this Warrant against impairment.  Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Warrant
Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.



 12
 






 



 


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.


f)             Jurisdiction.
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.


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


h)            Expenses.  If the Company willfully and knowingly fails
to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.


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


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


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


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


m)            Amendment
and Waiver.  This Warrant may be
modified or amended only with the written consent of the Company and the
Holder.  No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a 



 13
 






 



waiver of such right or otherwise prejudice Holder’s
rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date.  


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


o)            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.


p)            Registration Rights. The Holder
has certain rights with respect to the registration of the Warrant Shares upon
exercise of this Warrant, such rights being specifically set forth in the
Purchase Agreement entered into by and between Holder and the Company on the
date hereof.


[Signature Page Follows]


 



 14














 


 


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


	
  

  	
  UNIPIXEL, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Reed Killion

  
	
   

  	
   

  	
  Title: President

  



 















 


 


NOTICE OF EXERCISE


TO:         UNIPIXEL, INC.


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


(2)   Payment shall take the form of (check
applicable box):


[  ] in lawful money of the United States; or


[  ] the cancellation of such number of Warrant
Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant
Shares purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).


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


_______________________________


The
Warrant Shares shall be delivered to the following:


_______________________________


_______________________________


_______________________________


(4)  Accredited
Investor.  The undersigned, and, if
applicable, the person or entity identified in subsection 3 above, is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act of
1933, as amended.


[SIGNATURE OF HOLDER]


Name of Investing Entity:
_____________________________________________________________


Signature of Authorized Signatory of Investing
Entity: _______________________________________


Name of Authorized Signatory: _________________________________________________________


Title of Authorized Signatory:
__________________________________________________________


Date:
______________________________________________________________________________









 



 


ASSIGNMENT
FORM


(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)


FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to


_______________________________________________
whose address is


_______________________________________________________________.


_______________________________________________________________


Dated:  ______________, _______


Holder’s Signature:   _____________________________


Holder’s Address:     _____________________________


           _____________________________


Signature
Guaranteed: 
___________________________________________


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