Document:

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                                                                     EXHIBIT 4.5

                                                                      EXHIBIT B1

      VOID AFTER 5:00 P.M., NEW YORK CITY
      TIME, ON JULY 1, 2010
      (UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)

      THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
      STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
      NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS
      UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

                                         Right to Purchase [_______]Shares of
                                         Common Stock, par value $0.02 per share

Date: July 1, 2005

                             PDG ENVIRONMENTAL, INC.
                          COMMON STOCK PURCHASE WARRANT

      THIS CERTIFIES THAT, for value received, _______________________, or its
registered assigns, is entitled to purchase from PDG Environmental, Inc. , a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
at any time or from time to time during the period specified in Section 2
hereof, ____________________________ (_____) fully paid and nonassessable shares
(the "WARRANT SHARES") of the Company's common stock, par value $0.02 per share
(the "COMMON STOCK"), at an exercise price per share (the "EXERCISE PRICE")
equal to One Dollar and Eleven Cents ($1.11). The number of Warrant Shares and
the Exercise Price are subject to adjustment as provided in Section 4 hereof.
The term "WARRANT" and all references thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented, including all
Warrants issued upon transfer or exchange of this Warrant as provided herein,
and the term "WARRANTS" means this Warrant and the other warrants of the Company
issued pursuant to that certain Securities Purchase Agreement, dated as of July
1, 2005, by and among the Company and the other signatories thereto (the
"SECURITIES PURCHASE AGREEMENT").

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

1. Exercise of Warrant.

      (a) Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 10 hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant, together
with a completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by written notice to the holder hereof), and upon
(i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company, of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement or (ii) if the holder is
effectuating a Cashless Exercise (as defined in Section 9 hereof) pursuant to
Section 9 hereof, delivery to the Company of a written notice of an election to
effect a Cashless Exercise for the Warrant Shares specified in the Exercise
Agreement.

      (b) The Warrant Shares purchased upon exercise of this Warrant in
accordance with this Section 1 shall be deemed to be issued to the holder hereof
or the holder's designee, as the record owner of such shares, and shall be
deemed to be outstanding, in each case, as of the close of business on the date
on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment shall have been made for such
shares as set forth above or, if such date is not a business day, on the next
succeeding business day. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof or the holder's designee within a reasonable
time, not exceeding three (3) business days, after this Warrant shall have been
so exercised (the "DELIVERY PERIOD"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and so long as the certificates are not required to bear a
legend (pursuant to the terms of the Securities Purchase Agreement) and the
holder is not obligated to return such certificate for the placement of a legend
thereon (pursuant to the Securities Purchase Agreement), the Company shall cause
its transfer agent to electronically transmit the Warrant Shares so purchased to
the holder or the holder's designee by crediting the account of the holder or
the holder's designee or its respective nominee with DTC through its Deposit
Withdrawal Agent Commission system ("DTC TRANSFER"). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to the
holder or the holder's designee physical certificates representing the Warrant
Shares so purchased. Notwithstanding the foregoing, the holder or the holder's
designee may instruct the Company to deliver to the holder or such designee
physical certificates representing the Warrant Shares so purchased in lieu of
delivering such shares by way of DTC Transfer. Any certificates so delivered
shall be in such denominations as may be reasonably requested by the holder
hereof or the holder's designee, shall be registered in the name of the holder
or such other name as shall be designated by the holder and, following the date
on which the Warrant Shares have been registered under the Securities Act
pursuant to that certain Registration Rights Agreement, dated as of July 1,
2005, by and among the Company and the other signatories thereto (the
"REGISTRATION RIGHTS AGREEMENT") or otherwise may be sold by the holder without
limitation as to volume pursuant to Rule 144(k) promulgated under the Securities
Act (or a

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successor rule), shall not bear any restrictive legend. If this Warrant shall
have been exercised only in part, then the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.

      (c) If, at any time, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price for each of
the Warrant Shares specified in the Exercise Agreement (including pursuant to a
Cashless Exercise), and the Company fails for any reason (other than the reasons
contemplated by Section 10 hereof) to deliver, on or prior to the fourth
business day following the expiration of the Delivery Period for such exercise,
the number of shares of Common Stock to which the holder is entitled upon such
exercise (an "EXERCISE DEFAULT"), then the Company shall pay to the holder
payments ("EXERCISE DEFAULT PAYMENTS") for an Exercise Default in the amount of
(i) (N/365), multiplied by (ii) the amount by which the Closing Sales Price (as
defined in Section 11 hereof) of the Common Stock on the date the Exercise
Agreement giving rise to the Exercise Default is transmitted in accordance with
this Section 1 (the "EXERCISE DEFAULT DATE") exceeds the Exercise Price in
respect of such Warrant Shares, multiplied by (iii) the number of shares of
Common Stock the Company failed to so deliver in such Exercise Default,
multiplied by (iv) .24 (24%), where N equals the number of days from the
Exercise Default Date to the date that the Company effects the full exercise of
this Warrant which gave rise to the Exercise Default. The accrued Exercise
Default Payment for each calendar month shall be paid in cash and shall be made
to the holder by the fifth day of the month following the month in which it has
accrued. Nothing herein shall limit the holder's right to pursue actual damages
for the Company's failure to maintain a sufficient number of authorized shares
of Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).

2. Period of Exercise. This Warrant shall be exercisable at any time or from
time to time during the period (the "EXERCISE PERIOD") commencing on the date of
initial issuance of this Warrant (the "ISSUE DATE") and ending at 5:00 p.m., New
York City time, on the fifth (5th) anniversary of the Issue Date. The Exercise
Period shall automatically be extended by one day for each day on which (a) the
Company does not have a number of shares of Common Stock reserved for issuance
upon exercise hereof at least equal to the number of shares of Common Stock
issuable upon exercise hereof or otherwise fails to deliver shares of Common
Stock in the names set forth in Section 1 hereof upon exercise hereof, or (b)
the Warrant Shares are not then otherwise registered for resale as required
pursuant to the terms of the Registration Rights Agreement.

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

      (a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid and
non-assessable and free from all taxes, liens, security interests, claims and
encumbrances, except those created by the holder hereof.

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      (b) Reservation of Shares. During the Exercise Period, the Company shall
at all times have authorized, and reserved for the purpose of issuance upon
exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 10 hereof).

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

      (d) Certain Actions Prohibited. The Company shall not, by amendment of its
charter 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 to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the economic benefit inuring to the holder hereof
and the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.

      (e) Successors and Assigns. This Warrant shall be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company's assets.

      (f) Blue Sky Laws. The Company shall, on or before the date of issuance of
any Warrant Shares, take such actions as the Company shall reasonably determine
are necessary to qualify the Warrant Shares for, or obtain exemption for the
Warrant Shares for, sale to the holder of this Warrant upon the exercise hereof
under applicable securities or "blue sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the holder of
this Warrant prior to such date; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (i) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(f), (ii) subject itself to general taxation in
any such jurisdiction or (iii) file a general consent to service of process in
any such jurisdiction.

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4. Antidilution Provisions. During the Exercise Period, the Exercise Price and
the number of Warrant Shares issuable hereunder shall be subject to adjustment
from time to time as provided in this Section 4.

      (a) Stock Splits, Stock Dividends, Etc. If, at any time during the
Exercise Period, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, combination, reclassification or other similar
event, the Exercise Price in effect immediately prior to such increase shall be
proportionately reduced, or if the number of outstanding shares of Common Stock
is decreased by a reverse stock split, combination, reclassification or other
similar event, the Exercise Price in effect immediately prior to such decrease
shall be proportionately increased.

      (b) Merger, Consolidation, Etc. If, at any time during the Exercise
Period, there shall be (i) any reclassification or change of the outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation or merger of the Company with any other
entity (other than a merger in which the Company is the surviving or continuing
entity and its capital stock is unchanged), (iii) any sale or transfer of all or
substantially all of the assets of the Company or (iv) any share exchange or
other transaction pursuant to which all of the outstanding shares of Common
Stock are converted into other securities or property (each of (i) - (iv) above
being a "CORPORATE CHANGE"), then the holder hereof shall thereafter have the
right to receive upon exercise of this Warrant, in lieu of the Warrant Shares
otherwise issuable, such shares of stock, securities and/or other property as
would have been issued or payable in such Corporate Change with respect to or in
exchange for the number of Warrant Shares which would have been issuable upon
exercise had such Corporate Change not taken place (without giving effect to the
limitations contained in Section 10), and in any such case, appropriate
provisions (in form and substance reasonably satisfactory to the holder hereof)
shall be made with respect to the rights and interests of the holder to the end
that the economic value of this Warrant is in no way diminished by such
Corporate Change and that the provisions hereof (including, without limitation,
in the case of any such consolidation, merger or sale in which the successor
entity or purchasing entity is not the Company, an immediate adjustment of the
Exercise Price and Warrant Shares so that the Exercise Price and Warrant Shares
immediately after the Corporate Change reflects the same relative value as
compared to the value of the surviving entity's common stock that existed
between the Exercise Price and the Warrant Shares and the value of the Company's
Common Stock immediately prior to such Corporate Change) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the exercise thereof. The Company
shall not effect any Corporate Change unless (A) the holder hereof has received
written notice of such transaction at least 45 days prior thereto, but in no
event later than 15 days prior to the record date for the determination of
stockholders entitled to vote with respect thereto, (B) if required by Section
4(h) of the Securities Purchase Agreement, the consent of the Purchasers (as
such term is defined in the Securities Purchase Agreement) shall have been
obtained in accordance with such Section 4(h), and (C) the resulting successor
or acquiring entity (if not the Company), and, if an entity other than the
successor or acquiring entity is the entity whose capital stock or assets the
holders of the Common Stock are entitled to receive as a result of such
Corporate Change, such other entity, assumes by written instrument (in form and
substance reasonable satisfactory to the holder hereof) the obligations of the
Company under this Warrant. The above provisions shall apply

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regardless of whether or not there would have been a sufficient number of shares
of Common Stock authorized and available for issuance upon exercise hereof as of
the date of such transaction, and shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

      (c) Distributions. Other than in respect of adjustments to the Exercise
Price that have otherwise been effected pursuant to Section 4(a) hereof, if, at
any time during the Exercise Period, the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company's stockholders
in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a "DISTRIBUTION"), then the holder hereof shall be
entitled, upon any exercise of this Warrant after the date of record for
determining stockholders entitled to such Distribution (or if no such record is
taken, the date on which such Distribution is declared or made), to receive the
amount of such assets which would have been payable to the holder with respect
to the Warrant Shares issuable upon such exercise (without giving effect to the
limitations contained in Section 10) had the holder hereof been the holder of
such Warrant Shares on the record date for the determination of stockholders
entitled to such Distribution (or if no such record is taken, the date on which
such Distribution is declared or made).

      (d) Convertible Securities and Purchase Rights. Other than in respect of
adjustments to the Exercise Price that have otherwise been effected pursuant to
Section 4(a) hereof, if, at any time during the Exercise Period, the Company
issues any securities or other instruments which are convertible into or
exercisable or exchangeable for Common Stock ("CONVERTIBLE SECURITIES") or
options, warrants or other rights to purchase or subscribe for Common Stock or
Convertible Securities ("PURCHASE RIGHTS") pro rata to the record holders of any
class of Common Stock, whether or not such Convertible Securities or Purchase
Rights are immediately convertible, exercisable or exchangeable, then the holder
hereof shall be entitled, upon any exercise of this Warrant after the date of
record for determining stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights are issued), to receive the
aggregate number of Convertible Securities or Purchase Rights which the holder
would have received with respect to the Warrant Shares issuable upon such
exercise (without giving effect to the limitations contained in Section 10) had
the holder hereof been the holder of such Warrant Shares on the record date for
the determination of stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights were issued). If the right to
exercise or convert any such Convertible Securities or Purchase Rights would
expire in accordance with their terms prior to the exercise of this Warrant,
then the terms of such Convertible Securities or Purchase Rights shall provide
that such exercise or convertibility right shall remain in effect until 30 days
after the date the holder receives such Convertible Securities or Purchase
Rights pursuant to the exercise hereof.

      (e) Dilutive Issuances.

            (i) Adjustment Upon Dilutive Issuance. If, at any time during the
Exercise Period, the Company issues or sells, or in accordance with subparagraph
(ii) of this Section 4(e) is deemed to have issued or sold, any shares of Common
Stock for no consideration or for a

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consideration per share less than the Exercise Price in effect on the date of
issuance or sale (or deemed issuance or sale) (a "DILUTIVE ISSUANCE"), then
effective immediately upon the Dilutive Issuance, the Exercise Price shall be
reduced to an amount determined by the following formula, and the Exercise Price
from and after such time shall be the amount represented by "ACP" below, subject
to further adjustments as contemplated elsewhere in this Warrant:

                 AEP= EP x [(EP x O) + P]/[EP x CSDO]

where:

            AEP   = the adjusted Exercise Price;

            EP    = the Exercise Price on (a) for purposes any private offering
                  of securities under Section 4(2) of the Securities Act, the
                  date that the Company enters into legally binding definitive
                  agreements for the issuance of such Common Stock and (b) for
                  purposes of any other such issuance of Common Stock, the date
                  of issuance thereof;

            O     = the number of shares of Common Stock outstanding (on a
                  fully-diluted basis, assuming the full conversion, exercise or
                  exchange of all Convertible Securities and Purchase Rights
                  then outstanding) immediately prior to the Dilutive Issuance;

            P     = the aggregate consideration, calculated as set forth in
                  Section 4(e)(ii) hereof, received by the Company upon such
                  Dilutive Issuance; and

            CSDO  = the total number of shares of Common Stock outstanding (on a
                  fully-diluted basis, assuming the full conversion, exercise or
                  exchange of all Convertible Securities and Purchase Rights
                  then outstanding, and after giving effect to the Dilutive
                  Issuance, and not including shares of Common Stock held in the
                  treasury of the Company), plus (a) in the case of any
                  adjustment required by this Section 4(e)(i) due to the
                  issuance of Purchase Rights, the maximum total number of
                  shares of Common Stock issuable upon the exercise of the
                  Purchase Rights for which the adjustment is required
                  (including any Common Stock issuable upon the conversion of
                  Convertible Securities issuable upon the exercise of such
                  Purchase Rights), and (b) in the case of any adjustment
                  required by this Section 4(e)(i) due to the issuance of
                  Convertible Securities, the maximum total number of shares of
                  Common Stock issuable upon the exercise, conversion or
                  exchange of the Convertible Securities for which the
                  adjustment is required, as of the date of issuance of such
                  Convertible Securities, if any.

Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 4(e) if such adjustment would result in an increase in the Exercise
Price.

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            (ii) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under clause (i) of this Section 4(e),
the following will be applicable:

                  (1) Issuance of Purchase Rights. If the Company issues or
sells any Purchase Rights, whether or not immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of such Purchase
Rights (and the price of any conversion of Convertible Securities, if
applicable) is less than the Exercise Price in effect on the date of issuance or
sale of such Purchase Rights, then the maximum total number of shares of Common
Stock issuable upon the exercise of all such Purchase Rights (assuming full
conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Purchase Rights, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon the exercise of such Purchase Rights" shall
be determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of all such Purchase
Rights, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Purchase Rights, plus, in
the case of Convertible Securities issuable upon the exercise of such Purchase
Rights, the minimum aggregate amount of additional consideration payable upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in clause (ii)(2) of this Section 4(e)) at the time
such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise of all such Purchase Rights (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Exercise Price shall be made upon the actual issuance of such
Common Stock upon the exercise of such Purchase Rights or upon the conversion,
exercise or exchange of Convertible Securities issuable upon exercise of such
Purchase Rights.

                  (2) Issuance of Convertible Securities. If the Company issues
or sells any Convertible Securities, whether or not immediately convertible,
exercisable or exchangeable, and the price per share for which Common Stock is
issuable upon such conversion, exercise or exchange is less than the Exercise
Price in effect on the date of issuance or sale of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
conversion, exercise or exchange of all such Convertible Securities shall, as of
the date of the issuance or sale of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. If the Convertible Securities so issued or sold do not have a fluctuating
conversion or exercise price or exchange ratio, then for the purposes of the
preceding sentence, the "price per share for which Common Stock is issuable upon
such conversion, exercise or exchange" shall be determined by dividing (A) the
total amount, if any, received or receivable by the Company as consideration for
the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion, exercise or exchange thereof (determined in accordance with
the calculation method set forth in this clause (ii)(2) of this Section 4(e)) at
the time such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise, conversion or exchange of all such Convertible Securities. If
the Convertible Securities so issued or sold have a fluctuating conversion or
exercise price or exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then
for purposes of the next preceding sentence, the "price per

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share for which Common Stock is issuable upon such conversion, exercise or
exchange" shall be deemed to be the lowest price per share which would be
applicable (assuming all holding period and other conditions to any discounts
contained in such Variable Rate Convertible Security have been satisfied) if the
conversion price of such Variable Rate Convertible Security on the date of
issuance or sale thereof was seventy-five percent (75%) of the actual conversion
price on such date (the "ASSUMED VARIABLE MARKET PRICE"), and, further, if the
conversion price of such Variable Rate Convertible Security at any time or times
thereafter is less than or equal to the Assumed Variable Market Price last used
for making any adjustment under this Section 4(e) with respect to any Variable
Rate Convertible Security, the Exercise Price in effect at such time shall be
readjusted to equal the Exercise Price which would have resulted if the Assumed
Variable Market Price at the time of issuance of the Variable Rate Convertible
Security had been seventy-five percent (75%) of the actual conversion price of
such Variable Rate Convertible Security existing at the time of the adjustment
required by this sentence. No further adjustment to the Exercise Price shall be
made upon the actual issuance of such Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

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

                  (4) Calculation of Consideration Received. If any Common
Stock, Purchase Rights or Convertible Securities are issued or sold for cash,
the consideration received therefor will be the amount received by the Company
therefor, after deduction of all underwriting discounts or allowances in
connection with such issuance, grant or sale. In case any Common Stock, Purchase
Rights or Convertible Securities are issued or sold for a consideration part or
all of which shall be other than cash, including in the case of a strategic or
similar arrangement in which the other entity will provide services to the
Company, purchase services from the Company or otherwise provide intangible
consideration to the Company, the amount of the consideration other than cash
received by the Company (including the net present value of the consideration
expected by the Company for the provided or purchased services) shall be the
fair market value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration received by
the Company will be the Closing Sales Price thereof as of the date of receipt.
In case any Common Stock, Purchase Rights or Convertible Securities are issued
in connection with any merger or consolidation in which the Company is the
surviving corporation, the amount of consideration therefor will be deemed to be
the fair market value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such Common Stock, Purchase
Rights or Convertible Securities, as the case may be. Notwithstanding anything
else herein to the contrary, if Common Stock, Purchase Rights or Convertible
Securities are issued or sold in conjunction with each

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other as part of a single transaction or in a series of related transactions,
the holder hereof may elect to determine the amount of consideration deemed to
be received by the Company therefor by deducting the fair value of any type of
securities (the "DISREGARDED SECURITIES") issued or sold in such transaction or
series of transactions. If the holder makes an election pursuant to the
immediately preceding sentence, no adjustment to the Exercise Price shall be
made pursuant to this Section 4(e) for the issuance of the Disregarded
Securities or upon any conversion, exercise or exchange thereof. For example, if
the Company were to issue convertible notes having a face value of One Million
Dollars ($1,000,000) and warrants to purchase shares of Common Stock at an
exercise price equal to the Closing Sales Price of the Common Stock on the date
of issuance of such warrants in exchange for One Million Dollars ($1,000,000) of
consideration, the fair value of the warrants would be subtracted from the One
Million Dollars ($1,000,000) of consideration received by the Company for the
purposes of determining whether the shares of Common Stock issuable upon
conversion of the convertible notes shall be deemed to be issued at a price per
share below the Exercise Price and, if so, for purposes of determining any
adjustment to the Exercise Price hereunder as a result of the issuance of the
convertible notes. The Company shall calculate, using standard commercial
valuation methods appropriate for valuing such assets, the fair market value of
any consideration other than cash or securities; provided, however, that if the
holder hereof does not agree to such fair market value calculation within three
business days after receipt thereof from the Company, then such fair market
value shall be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and reasonably
acceptable to the holder, with the costs of such appraisal to be borne by the
Company.

                  (5) Issuances Pursuant to Existing Securities. If the Company
issues (or becomes obligated to issue) shares of Common Stock pursuant to any
antidilution or similar adjustments (other than as a result of stock splits,
stock dividends and the like) contained in any Convertible Securities or
Purchase Rights outstanding as of the date hereof but not included in Section
3(c) of the Disclosure Schedule to the Securities Purchase Agreement, then all
shares of Common Stock so issued shall be deemed to have been issued for no
consideration. If the Company issues (or becomes obligated to issue) shares of
Common Stock pursuant to any antidilution or similar adjustments contained in
any Convertible Securities or Purchase Rights included in Section 3(c) of the
Disclosure Schedule to the Securities Purchase Agreement as a result of the
issuance of the Preferred Stock (as defined in the Securities Purchase
Agreement) or Warrants pursuant to the Securities Purchase Agreement and the
number of shares that the Company issues (or is obligated to issue) as a result
of such initial issuance exceeds the amount specified in Section 3(c) of the
Disclosure Schedule to the Securities Purchase Agreement, such excess shares
shall be deemed to have been issued for no consideration.

                  (6) Exceptions to Adjustment of Exercise Price.
Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made
upon (A) this issuance of Common Stock upon the exercise or conversion of any
Convertible Securities or Purchase Rights outstanding on the Issue Date and
described in Section 3(c) of the Disclosure Schedule to the Securities Purchase
Agreement in accordance with the terms of such Convertible Securities and
Purchase Rights as of such date; (B) (i) the grant of options to purchase Common
Stock, with exercise prices not less than the market price of the Common Stock
on the date of grant, which are issued to employees, officers, directors or
consultants of the Company for the primary purpose of soliciting or retaining
their employment or service pursuant to an equity

                                      -10-
<PAGE>

compensation plan, so long as such plan and the issuance of Common Stock upon
exercise thereof has been approved by (x) the Company's Board of Directors and
(y) if and to the extent required under the Securities Act, the Exchange Act,
the rules and regulations of the United States Securities and Exchange
Commission thereunder and/or the listing standards of any national exchange or
quotation service, the requisite vote of the holders of the Company's Common
Stock in compliance with applicable law and the Company's organizational
documents, and (ii) the issuance of Common Stock upon exercise of such options;
(C) conversion of the Preferred Stock or exercise of the Warrants, (D) the
issuance of securities in connection with mergers, acquisitions, strategic
business partnerships or joint ventures, the primary purpose of which, in the
reasonable judgment of the Board of Directors, is not to raise additional
capital, (E) the issuance of (i) one million six hundred and sixty-six thousand,
six hundred and sixty seven (1,666,667) newly-issued shares of its Common Stock
at an issuance price of Ninety Cents ($0.90) per share, (ii) warrants (the
"Common Warrants") to purchase (x) four hundred and sixteen thousand, six
hundred and sixty-seven (416,667) shares of its Common Stock at an exercise
price of One Dollar and Eleven Cents ($1.11) per share and (y) four hundred and
sixteen thousand, six hundred and sixty-seven (416,667) shares of its Common
Stock at an exercise price of One Dollar and Thirty-Three Cents ($1.33) per
share in connection with the offering contemplated by Section 7(g) of the
Securities Purchase Agreement and (iii) the issuance of Common Stock upon
exercise of the Common Warrants, or (F) the issuance of securities pursuant to
any equipment financing from a reputable commercial bank, savings and loan
association, savings bank, finance company or other financial institution that
is regularly engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business, which issuance and financing is
approved by the Board of Directors.

      (f) Other Action Affecting Exercise Price. If, at any time during the
Exercise Period, the Company takes any action affecting the Common Stock that
would be covered by Section 4(a) through (e), but for the manner in which such
action is taken or structured, which would in any way diminish the value of this
Warrant, then the Exercise Price shall be adjusted in such manner as the Board
of Directors of the Company shall in good faith determine to be equitable under
the circumstances.

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

      (h) Notice of Adjustment. Upon the occurrence of any event which requires
any adjustment or readjustment of the Exercise Price or change in number or type
of stock, securities and/or other property issuable upon exercise of this
Warrant, then, and in each such case, the Company shall give notice thereof to
the holder hereof, which notice shall state the Exercise Price resulting from
such adjustment or readjustment and any change in the number of type of stock,
securities and/or other property issuable upon exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.

                                      -11-
<PAGE>

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

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

            (i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;

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

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

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

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

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

                                      -12-
<PAGE>

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

7. Transfer, Exchange, Redemption and Replacement of Warrant.

      (a) Restriction on Transfer. This Warrant and the rights granted to the
holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Sections 7(f) and 10 hereof and to the provisions of
Section 5 of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement.

      (b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares (at the Exercise Price therefor) as shall be designated by the holder
hereof at the time of such surrender.

      (c) Replacement of Warrant. Upon 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, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

      (d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant
in connection with any transfer, exchange, or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the holder of this
Warrant or transferees) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 7. The Company
shall indemnify and reimburse the holder of this Warrant for all losses and
damages arising as a result of or related to any breach of the terms of this
Warrant, including costs and expenses (including legal fees) incurred by such
holder in connection with the enforcement of its rights hereunder.

                                      -13-
<PAGE>

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

      (f) Transfer or Exchange Without Registration. If, at the time of the
surrender of this Warrant in connection with any transfer or exchange of this
Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares
issuable hereunder) shall not be registered under the Securities Act and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer or exchange, (i) that the holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
such transfer or exchange may be made without registration under the Securities
Act and under applicable state securities or blue sky laws (the cost of which
shall be borne by the Company if the Company's counsel renders such an opinion,
and up to $1,000 of such cost shall be borne by the Company if the holder's
counsel is required to render such opinion), (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities Act;
provided, however, that no such opinion, letter, or status as an "ACCREDITED
INVESTOR" shall be required in connection with a transfer pursuant to Rule 144
under the Securities Act.

8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.

9. Cashless Exercise. This Warrant may be exercised at any time during the
Exercise Period by delivering a completed Exercise Notice in the form attached
hereto to the Company at its principal executive offices indicating the holder's
intention to effect a cashless exercise, including a calculation of the number
of shares of Common Stock to be issued upon such exercise in accordance with the
terms hereof (a "CASHLESS EXERCISE"). In the event of a Cashless Exercise, in
lieu of paying the Exercise Price in cash, the holder shall surrender this
Warrant for that number of shares of Common Stock determined by multiplying the
number of Warrant Shares to which it would otherwise be entitled by a fraction,
the numerator of which shall be the difference between the then current Closing
Sales Price of a share of the Common Stock on the date of exercise and the
Exercise Price, and the denominator of which shall be the then current Closing
Sales Price per share of Common Stock.

10. Additional Restrictions on Exercise of Warrant and Conversion of Preferred
Stock and Transfer. The exercise of this Warrant shall be subject to the
following limitations (each of which limitations shall be applied
independently):

      (a) Cap Amount. If the Company is prohibited by Rule 4350(i) of the
National Association of Securities Dealers, Inc. ("NASD"), or any successor or
similar rule, or the rules or regulations of any other securities exchange on
which the Common Stock is then listed or traded,

                                      -14-
<PAGE>

from issuing a number of shares of Common Stock upon exercise of this Warrant or
any other Warrant or upon conversion of Series C Preferred Stock (including
payment of Premium in connection therewith) beneficially owned by the holder
hereof (together with any other shares of Common Stock issued pursuant to other
securities issued pursuant to the Securities Purchase Agreement or other
agreements entered in connection therewith) in excess of a prescribed amount
(the "CAP AMOUNT") (without stockholder approval or otherwise), then the Company
shall not issue shares upon any such exercise in excess of the Cap Amount.
Assuming solely for purposes of this Section 10(a) that such Rule 4350(i) or
similar rule is applicable, the Cap Amount shall be that number of shares equal
to 19.99% of the Company's outstanding Common Stock on the Issue Date, subject
to equitable adjustment from time to time for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to the Common
Stock occurring after the Issue Date. The Cap Amount shall be allocated pro rata
to the holders of Warrants (and the holders of such other securities issued
pursuant to the Securities Purchase Agreement or other agreements entered into
in connection therewith) as provided in Section 12(h). In the event that the
Company is prohibited from issuing shares of Common Stock upon any exercise of
this Warrant or any other Warrant or upon conversion of Series C Preferred Stock
(including payment of Premium in connection therewith) beneficially owned by the
holder hereof as a result of the operation of this Section 10(a), the Company
shall immediately notify the holder hereof of such occurrence and the holder
shall thereafter have the option, exercisable in whole or in part at any time
and from time to time, by delivery of written notice to such effect (a
"REDEMPTION NOTICE") to the Company, to require the Company to redeem for cash,
at an amount per share equal to the Redemption Amount (as defined below), a
portion of this Warrant such that, after giving effect to such redemption, the
then unissued portion of the holder's Cap Amount allocable to the Warrants then
held by such holder is at least equal to one hundred percent (100%) of the total
number of shares of Common Stock issuable upon exercise of the Warrants
(including, for such purposes, any and all Warrants issuable upon the full
exercise of the Preferred Warrants) held by such holder. If the Company fails to
redeem such portion of this Warrant within five (5) business days after its
receipt of such Redemption Notice, then the holder hereof shall be entitled to
interest on the Redemption Amount at a per annum rate equal to the lower of
twenty-four percent (24%) and the highest interest rate permitted by applicable
law from the date on which such Redemption Amount is required to be paid
hereunder until the actual date of payment of the Redemption Amount hereunder.
For purposes of this Section 10(a), the "REDEMPTION AMOUNT" equals (i) the value
of that portion of the Warrant being so redeemed derived using the Black-Scholes
formula (using Bloomberg) as of the date on which the holder gives the
Redemption Notice, assuming the volatility of the Company's Common Stock equals
sixty percent (60)% and the risk-free interest rate equals the then applicable
yield for a one year Treasury bill, multiplied by (ii) one hundred and twenty
percent (120%).

      (b) Reserved Amount. On or prior to the Issuance Date, the Corporation
shall reserve nine million, thirty-three thousand, seven hundred and fifty
(9,033,750) shares of its authorized but unissued shares of Common Stock for
issuance upon conversion of the Series C Preferred Stock (including any and all
shares of Series C Preferred Stock issuable upon exercise of the Preferred
Warrants and including payment of Premium in connection therewith) and exercise
of the Warrants (including any and all Warrants issuable upon exercise of the
Preferred Warrants), and, at all times from and after the earlier of (i) the
date on which the stockholder approval contemplated by Section 4(f) of the
Securities Purchase Agreement has been obtained and (ii) September 30, 2005, the
number of authorized but unissued shares of Common Stock so reserved

                                      -15-
<PAGE>

(the "RESERVED AMOUNT") shall be sufficient to provide for (i) the full
conversion of all of the Series C Preferred Stock outstanding (including, for
such purposes, any and all shares of Preferred Stock issuable upon the full
exercise of the Preferred Warrants), together with all accrued Premium as of
such date, at the then-current Conversion Price thereof (taking into account any
"reset" of the Conversion Price pursuant to Article II.E. of the Certificate of
Designation), (ii) the full exercise of the Warrants outstanding (including, for
such purposes, any and all Warrants issuable upon the full exercise of the
Preferred Warrants) at the then-current exercise price thereof and (iii) the
issuance of any additional shares of Common Stock issuable on conversion of the
Series C Preferred Stock or exercise of any Warrants, including on account of
anti-dilution or other adjustments or otherwise, in each case, without giving
effect to the limitations contained in Article XV of the Certificate of
Designation or in Section 10 hereof. If, at any time from and after the date on
which the Registration Statement required to be filed pursuant to Section 2(a)
of the Registration Rights Agreement is first declared effective by the United
States Securities and Exchange Commission, the Company fails to have authorized
and reserved such number of shares of Common Stock, then the Company shall
immediately notify the holder hereof of such occurrence and the holder shall
thereafter have the option, exercisable in whole or in part at any time and from
time to time, by delivery of a Redemption Notice to the Company, to require the
Company to redeem for cash, at an amount per share equal to the Redemption
Amount, a portion of this Warrant such that, after giving effect to such
redemption, the then unissued portion of the holder's Reserved Amount allocable
to the Warrants then held by such holder is at least equal to one hundred
percent (100%) of the total number of shares of Common Stock issuable upon
exercise of the Warrants (including, for such purposes, any and all Warrants
issuable upon the full exercise of the Preferred Warrants) held by such holder.
If the Company fails to redeem such portion of this Warrant within five (5)
business days after its receipt of such Redemption Notice, then the holder
hereof shall be entitled to interest on the Redemption Amount at a per annum
rate equal to the lower of twenty-four percent (24%) and the highest interest
rate permitted by applicable law from the date on which such Redemption Amount
is required to be paid hereunder until the actual date of payment of the
Redemption Amount hereunder. The Reserved Amount shall be allocated among the
holders of Series C Preferred Stock and the Warrants as provided in Article
XVI.C of the Certificate of Designation and Section 12(h) hereof.

      (c) Additional Restrictions on Exercise, Conversion and Transfer. In no
event shall the holder hereof be entitled to exercise any portion of this
Warrant (or any other Warrant beneficially owned by the holder hereof) or
convert any Series C Preferred Stock for shares of Common Stock (nor shall the
Corporation be permitted to effect any of the foregoing) to the extent that (x)
the number of shares of Common Stock beneficially owned by the holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of this Warrant, the
unconverted portion of the Series C Preferred Stock or the unexercised or
unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitations contained
herein) and (y) the number of shares of Common Stock issuable upon the exercise
of this Warrant or conversion of Series C Preferred Stock with respect to which
the determination of this sentence is being made, would result in beneficial
ownership by a holder and such holder's affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with

                                      -16-
<PAGE>

Section 13(d) of the Exchange Act and Regulation 13D-G thereunder, except as
otherwise provided in clause (x) of such sentence.

      (d) Amendments, Etc. to Section 10. Notwithstanding anything in this
Warrant to the contrary, the restriction contained in this Section 10 may not be
altered, amended, deleted or changed in any manner whatsoever unless the holders
of a majority of the outstanding shares of Common Stock and the holder hereof
shall approve, in writing, such alteration, amendment, deletion or change.

11. Certain Definitions. For purposes of this Warrant, the following capitalized
terms shall have the respective meanings assigned to them:

      (a) "BUSINESS DAY" means any day, other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law, regulation or executive order to close.

      (b) "CLOSING SALES PRICE" means, for any security as of any date, the last
sales price of such security on the Nasdaq Over-the-Counter Bulletin Board (the
"OTC") or the Bulletin Board Exchange (collectively with the OTC, the "BULLETIN
BOARD") or such other principal trading market where such security is listed or
traded as reported by Bloomberg Financial Markets (or a comparable reporting
service of national reputation selected by the Company and reasonably acceptable
to the holders if Bloomberg Financial Markets is not then reporting closing
sales prices of such security) (collectively, "BLOOMBERG"), or if the foregoing
does not apply, the last reported sales price of such security on a national
exchange for such security as reported by Bloomberg, or, if no such price is
reported for such security by Bloomberg, the average of the bid prices of all
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a
trading day for such security, on the next preceding date which was a trading
day. If the Closing Sales Price cannot be calculated for such security as of
either of such dates on any of the foregoing bases, the Closing Sales Price of
such security on such date shall be the fair market value as reasonably
determined by an investment banking firm selected by the Company and reasonably
acceptable to the holders, with the costs of such appraisal to be borne by the
Company.

      (c) "TRADING DAY" means any day on which principal United States
securities exchange or trading market where the Common Stock is then listed or
traded, is open for trading.

12. Miscellaneous.

      (a) Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the exclusive jurisdiction of the United States federal
courts and the state courts located in the County of New Castle, State of
Delaware, in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding in such forum.
The Company further agrees that service

                                      -17-
<PAGE>

of process upon the Company mailed by first class mail shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the right of the holder to serve process
in any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.

      (b) Construction. Whenever the context requires, the gender of any word
used in this Warrant includes the masculine, feminine or neuter, and the number
of any word includes the singular or plural. Unless the context otherwise
requires, all references to articles and sections refer to articles and sections
of this Warrant, and all references to schedules are to schedules attached
hereto, each of which is made a part hereof for all purposes. The descriptive
headings of the several articles and sections of this Warrant are inserted for
purposes of reference only, and shall not affect the meaning or construction of
any of the provisions hereof.

      (c) Severability. If any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Warrant or the
validity or enforceability of this Warrant in any other jurisdiction.

      (d) Entire Agreement; Amendments. This Warrant contains the entire
understanding of the Company and the holder hereof with respect to the matters
covered herein. Subject to any additional express provisions of this Warrant, no
provision of this Warrant may be waived other than by an instrument in writing
signed by the party to be charged with enforcement, and no provision of this
Warrant may be amended other than by an instrument in writing signed by the
Company and the holder.

      (e) Notices. Any notices required or permitted to be given under the terms
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by nationally recognized overnight carrier
or by confirmed facsimile transmission, and shall be effective five days after
being placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by nationally recognized overnight carrier or confirmed
facsimile transmission, in each case addressed to a party. The initial addresses
for such communications shall be as follows, and each party shall provide notice
to the other parties of any change in such party's address:

            (i)   If to the Company:

                  PDG Environmental, Inc.
                  1386 Beulah Road, Building 801
                  Pittsburgh, Pennsylvania 15235
                  Telephone: (412) 243-3200
                  Facsimile: (412) 243-4900
                  Attention: Chief Executive Officer

                  with a copy simultaneously transmitted by like means (which
                  transmittal shall not constitute notice hereunder) to:

                                      -18-
<PAGE>

                  Cohen & Grigsby, P.C.
                  11 Stanwix Street, 15th Floor
                  Pittsburgh, PA 15222
                  Telephone: (412) 297-4831
                  Facsimile: (412) 209-1825
                  Attention: James D. Chiafullo, Esq.

            (ii) If to the holder, at such address as shall be set forth in the
Warrant Register from time to time.

      (f) Successors and Assigns. This Warrant shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Except as
provided herein, the Company shall not assign this Warrant or its obligations
hereunder. The holder hereof may assign or transfer this Warrant and such
holders rights hereunder in accordance with Section 7 hereof.

      (g) Equitable Relief. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holder by vitiating the
intent and purpose of this Warrant. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations hereunder will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Warrant, that the holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security
being required.

      (h) Allocation of Cap Amount and Reserved Amount. The initial Cap Amount
and Reserved Amount shall be allocated pro rata among the holders of the
Warrants and the holders of such other securities issued pursuant to the
Securities Purchase Agreement or other agreements entered in connection
therewith based on the number of shares of Common Stock issuable upon exercise
of the Warrants and upon exercise or conversion of such other securities issued
to each such holder. Each increase to the Cap Amount and each increase to the
Reserved Amount shall be allocated pro rata among the holders of the Warrants
and the holders of such other securities issued pursuant to the Securities
Purchase Agreement or other agreements entered in connection therewith based on
the number of shares of Common Stock issuable upon exercise of the Warrants and
upon exercise or conversion of such other securities held by each holder at the
time of such increase. In the event the holder shall sell or otherwise transfer
any of the holder's Warrants or any such other securities, each transferee shall
be allocated a pro rata portion of such transferor's Cap Amount and Reserved
Amount. Any portion of the Cap Amount and Reserved Amount which remains
allocated to any person or entity which does not hold any Warrants or any such
other securities shall be allocated to the remaining holders of the Warrants and
the holders of such other securities issued pursuant to the Securities Purchase
Agreement or other agreements entered in connection therewith, pro rata based on
the number of shares of Common Stock issuable upon exercise of the Warrants and
upon exercise or conversion of such other securities then held by such holders.

                [REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

                                      -19-
<PAGE>

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

                                                     PDG ENVIRONMENTAL, INC.

                                                     By:
                                                         -----------------------
                                                     Name: John C. Regan
                                                     Title: President & CEO

                    [SIGNATURE PAGE TO COMMON STOCK WARRANT]

<PAGE>

                             FORM OF EXERCISE NOTICE

         (TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)

To:   PDG ENVIRONMENTAL, INC.
      1386 Beulah Road, Building 801
      Pittsburgh, Pennsylvania 15235
      Telephone: (412) 243-3200
      Facsimile: (412) 243-4900
      Attention: Chief Executive Officer

      The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of PDG Environmental, Inc., a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
evidenced by the attached Warrant, and herewith [makes payment of the Exercise
Price with respect to such shares in full][elects to effect a Cashless Exercise
(as defined in Section 9 of such Warrant)], all in accordance with the
conditions and provisions of said Warrant.

      The undersigned agrees not to offer, sell, transfer or otherwise dispose
of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.

            [ ] The undersigned requests that the Company cause its transfer
            agent to electronically transmit the Common Stock issuable pursuant
            to this Exercise Agreement to the account of the undersigned or its
            nominee (which is _________________) with DTC through its Deposit
            Withdrawal Agent Commission System ("DTC TRANSFER"), provided that
            such transfer agent participates in the DTC Fast Automated
            Securities Transfer program.

            [ ] In lieu of receiving the shares of Common Stock issuable
            pursuant to this Exercise Agreement by way of DTC Transfer, the
            undersigned hereby requests that the Company cause its transfer
            agent to issue and deliver to the undersigned physical certificates
            representing such shares of Common Stock.

The undersigned requests that a Warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:

Dated:_________________                     ____________________________________
                                                 Signature of Holder

                                            ____________________________________
                                                 Name of Holder (Print)

                                                 Address:
                                            ____________________________________
                                            ____________________________________
                                            ____________________________________

<PAGE>

                               FORM OF ASSIGNMENT

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

<TABLE>
<CAPTION>
Name of Assignee        Address         No. of Shares
----------------        -------         -------------
<S>                     <C>             <C>
</TABLE>

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

Dated: _____________________, ____

In the presence of

__________________

                                   Name: _______________________________________

                                   Signature: __________________________________
                                   Title of Signing Officer or Agent (if any):

                                   _____________________________________________

                                   Address: ____________________________________
                                            ____________________________________
                                            ____________________________________

                                   Note: The above signature should correspond
                                         exactly with the name on the face of
                                         the within Warrant.<PAGE>

                                                                     EXHIBIT 4.6
                                                                      EXHIBIT B2

      VOID AFTER 5:00 P.M., NEW YORK CITY
      TIME, ON JULY 1, 2010
      (UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)

      THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
      STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
      NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS
      UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

                                            Right to Purchase [_______]Shares of
                                         Common Stock, par value $0.02 per share

Date: July 1, 2005

                             PDG ENVIRONMENTAL, INC.
                          COMMON STOCK PURCHASE WARRANT

      THIS CERTIFIES THAT, for value received, _______________________, or its
registered assigns, is entitled to purchase from PDG Environmental, Inc. , a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
at any time or from time to time during the period specified in Section 2
hereof, ____________________________ (_____) fully paid and nonassessable shares
(the "WARRANT SHARES") of the Company's common stock, par value $0.02 per share
(the "COMMON STOCK"), at an exercise price per share (the "EXERCISE PRICE")
equal to One Dollar and Thirty-Three Cents ($1.33). The number of Warrant Shares
and the Exercise Price are subject to adjustment as provided in Section 4
hereof. The term "WARRANT" and all references thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented, including all
Warrants issued upon transfer or exchange of this Warrant as provided herein,
and the term "WARRANTS" means this Warrant and the other warrants of the Company
issued pursuant to that certain Securities Purchase Agreement, dated as of July
1, 2005, by and among the Company and the other signatories thereto (the
"SECURITIES PURCHASE AGREEMENT").

<PAGE>

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

1. Exercise of Warrant.

      (a) Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 10 hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant, together
with a completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by written notice to the holder hereof), and upon
(i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company, of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement or (ii) if the holder is
effectuating a Cashless Exercise (as defined in Section 9 hereof) pursuant to
Section 9 hereof, delivery to the Company of a written notice of an election to
effect a Cashless Exercise for the Warrant Shares specified in the Exercise
Agreement.

      (b) The Warrant Shares purchased upon exercise of this Warrant in
accordance with this Section 1 shall be deemed to be issued to the holder hereof
or the holder's designee, as the record owner of such shares, and shall be
deemed to be outstanding, in each case, as of the close of business on the date
on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment shall have been made for such
shares as set forth above or, if such date is not a business day, on the next
succeeding business day. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof or the holder's designee within a reasonable
time, not exceeding three (3) business days, after this Warrant shall have been
so exercised (the "DELIVERY PERIOD"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and so long as the certificates are not required to bear a
legend (pursuant to the terms of the Securities Purchase Agreement) and the
holder is not obligated to return such certificate for the placement of a legend
thereon (pursuant to the Securities Purchase Agreement), the Company shall cause
its transfer agent to electronically transmit the Warrant Shares so purchased to
the holder or the holder's designee by crediting the account of the holder or
the holder's designee or its respective nominee with DTC through its Deposit
Withdrawal Agent Commission system ("DTC TRANSFER"). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to the
holder or the holder's designee physical certificates representing the Warrant
Shares so purchased. Notwithstanding the foregoing, the holder or the holder's
designee may instruct the Company to deliver to the holder or such designee
physical certificates representing the Warrant Shares so purchased in lieu of
delivering such shares by way of DTC Transfer. Any certificates so delivered
shall be in such denominations as may be reasonably requested by the holder
hereof or the holder's designee, shall be registered in the name of the holder
or such other name as shall be designated by the holder and, following the date
on which the Warrant Shares have been registered under the Securities Act
pursuant to that certain Registration Rights Agreement, dated as of July 1,
2005, by and among the Company and the other signatories thereto (the
"REGISTRATION RIGHTS AGREEMENT") or otherwise may be sold by the holder without
limitation as to volume pursuant to Rule 144(k) promulgated under the Securities
Act (or a successor rule), shall not bear any restrictive legend. If this
Warrant shall have been exercised

                                       -2-

<PAGE>

only in part, then the Company shall, at its expense, at the time of delivery of
such certificates, deliver to the holder a new Warrant representing the number
of shares with respect to which this Warrant shall not then have been exercised.

      (c) If, at any time, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price for each of
the Warrant Shares specified in the Exercise Agreement (including pursuant to a
Cashless Exercise), and the Company fails for any reason (other than the reasons
contemplated by Section 10 hereof) to deliver, on or prior to the fourth
business day following the expiration of the Delivery Period for such exercise,
the number of shares of Common Stock to which the holder is entitled upon such
exercise (an "EXERCISE DEFAULT"), then the Company shall pay to the holder
payments ("EXERCISE DEFAULT PAYMENTS") for an Exercise Default in the amount of
(i) (N/365), multiplied by (ii) the amount by which the Closing Sales Price (as
defined in Section 11 hereof) of the Common Stock on the date the Exercise
Agreement giving rise to the Exercise Default is transmitted in accordance with
this Section 1 (the "EXERCISE DEFAULT DATE") exceeds the Exercise Price in
respect of such Warrant Shares, multiplied by (iii) the number of shares of
Common Stock the Company failed to so deliver in such Exercise Default,
multiplied by (iv) .24 (24%), where N equals the number of days from the
Exercise Default Date to the date that the Company effects the full exercise of
this Warrant which gave rise to the Exercise Default. The accrued Exercise
Default Payment for each calendar month shall be paid in cash and shall be made
to the holder by the fifth day of the month following the month in which it has
accrued. Nothing herein shall limit the holder's right to pursue actual damages
for the Company's failure to maintain a sufficient number of authorized shares
of Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).

2. Period of Exercise. This Warrant shall be exercisable at any time or from
time to time during the period (the "EXERCISE PERIOD") commencing on the date of
initial issuance of this Warrant (the "ISSUE DATE") and ending at 5:00 p.m., New
York City time, on the fifth (5th) anniversary of the Issue Date. The Exercise
Period shall automatically be extended by one day for each day on which (a) the
Company does not have a number of shares of Common Stock reserved for issuance
upon exercise hereof at least equal to the number of shares of Common Stock
issuable upon exercise hereof or otherwise fails to deliver shares of Common
Stock in the names set forth in Section 1 hereof upon exercise hereof, or (b)
the Warrant Shares are not then otherwise registered for resale as required
pursuant to the terms of the Registration Rights Agreement.

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

      (a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid and
non-assessable and free from all taxes, liens, security interests, claims and
encumbrances, except those created by the holder hereof.

                                       -3-

<PAGE>

      (b) Reservation of Shares. During the Exercise Period, the Company shall
at all times have authorized, and reserved for the purpose of issuance upon
exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 10 hereof).

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

      (d) Certain Actions Prohibited. The Company shall not, by amendment of its
charter 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 to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the economic benefit inuring to the holder hereof
and the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.

      (e) Successors and Assigns. This Warrant shall be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company's assets.

      (f) Blue Sky Laws. The Company shall, on or before the date of issuance of
any Warrant Shares, take such actions as the Company shall reasonably determine
are necessary to qualify the Warrant Shares for, or obtain exemption for the
Warrant Shares for, sale to the holder of this Warrant upon the exercise hereof
under applicable securities or "blue sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the holder of
this Warrant prior to such date; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (i) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(f), (ii) subject itself to general taxation in
any such jurisdiction or (iii) file a general consent to service of process in
any such jurisdiction.

                                       -4-

<PAGE>

4. Antidilution Provisions. During the Exercise Period, the Exercise Price and
the number of Warrant Shares issuable hereunder shall be subject to adjustment
from time to time as provided in this Section 4.

      (a) Stock Splits, Stock Dividends, Etc. If, at any time during the
Exercise Period, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, combination, reclassification or other similar
event, the Exercise Price in effect immediately prior to such increase shall be
proportionately reduced, or if the number of outstanding shares of Common Stock
is decreased by a reverse stock split, combination, reclassification or other
similar event, the Exercise Price in effect immediately prior to such decrease
shall be proportionately increased.

      (b) Merger, Consolidation, Etc. If, at any time during the Exercise
Period, there shall be (i) any reclassification or change of the outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation or merger of the Company with any other
entity (other than a merger in which the Company is the surviving or continuing
entity and its capital stock is unchanged), (iii) any sale or transfer of all or
substantially all of the assets of the Company or (iv) any share exchange or
other transaction pursuant to which all of the outstanding shares of Common
Stock are converted into other securities or property (each of (i) - (iv) above
being a "CORPORATE CHANGE"), then the holder hereof shall thereafter have the
right to receive upon exercise of this Warrant, in lieu of the Warrant Shares
otherwise issuable, such shares of stock, securities and/or other property as
would have been issued or payable in such Corporate Change with respect to or in
exchange for the number of Warrant Shares which would have been issuable upon
exercise had such Corporate Change not taken place (without giving effect to the
limitations contained in Section 10), and in any such case, appropriate
provisions (in form and substance reasonably satisfactory to the holder hereof)
shall be made with respect to the rights and interests of the holder to the end
that the economic value of this Warrant is in no way diminished by such
Corporate Change and that the provisions hereof (including, without limitation,
in the case of any such consolidation, merger or sale in which the successor
entity or purchasing entity is not the Company, an immediate adjustment of the
Exercise Price and Warrant Shares so that the Exercise Price and Warrant Shares
immediately after the Corporate Change reflects the same relative value as
compared to the value of the surviving entity's common stock that existed
between the Exercise Price and the Warrant Shares and the value of the Company's
Common Stock immediately prior to such Corporate Change) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the exercise thereof. The Company
shall not effect any Corporate Change unless (A) the holder hereof has received
written notice of such transaction at least 45 days prior thereto, but in no
event later than 15 days prior to the record date for the determination of
stockholders entitled to vote with respect thereto, (B) if required by Section
4(h) of the Securities Purchase Agreement, the consent of the Purchasers (as
such term is defined in the Securities Purchase Agreement) shall have been
obtained in accordance with such Section 4(h), and (C) the resulting successor
or acquiring entity (if not the Company), and, if an entity other than the
successor or acquiring entity is the entity whose capital stock or assets the
holders of the Common Stock are entitled to receive as a result of such
Corporate Change, such other entity, assumes by written instrument (in form and
substance reasonable satisfactory to the holder hereof) the obligations of the
Company under this Warrant. The above provisions shall apply

                                       -5-

<PAGE>

regardless of whether or not there would have been a sufficient number of shares
of Common Stock authorized and available for issuance upon exercise hereof as of
the date of such transaction, and shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

      (c) Distributions. Other than in respect of adjustments to the Exercise
Price that have otherwise been effected pursuant to Section 4(a) hereof, if, at
any time during the Exercise Period, the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company's stockholders
in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a "DISTRIBUTION"), then the holder hereof shall be
entitled, upon any exercise of this Warrant after the date of record for
determining stockholders entitled to such Distribution (or if no such record is
taken, the date on which such Distribution is declared or made), to receive the
amount of such assets which would have been payable to the holder with respect
to the Warrant Shares issuable upon such exercise (without giving effect to the
limitations contained in Section 10) had the holder hereof been the holder of
such Warrant Shares on the record date for the determination of stockholders
entitled to such Distribution (or if no such record is taken, the date on which
such Distribution is declared or made).

      (d) Convertible Securities and Purchase Rights. Other than in respect of
adjustments to the Exercise Price that have otherwise been effected pursuant to
Section 4(a) hereof, if, at any time during the Exercise Period, the Company
issues any securities or other instruments which are convertible into or
exercisable or exchangeable for Common Stock ("CONVERTIBLE SECURITIES") or
options, warrants or other rights to purchase or subscribe for Common Stock or
Convertible Securities ("PURCHASE RIGHTS") pro rata to the record holders of any
class of Common Stock, whether or not such Convertible Securities or Purchase
Rights are immediately convertible, exercisable or exchangeable, then the holder
hereof shall be entitled, upon any exercise of this Warrant after the date of
record for determining stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights are issued), to receive the
aggregate number of Convertible Securities or Purchase Rights which the holder
would have received with respect to the Warrant Shares issuable upon such
exercise (without giving effect to the limitations contained in Section 10) had
the holder hereof been the holder of such Warrant Shares on the record date for
the determination of stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights were issued). If the right to
exercise or convert any such Convertible Securities or Purchase Rights would
expire in accordance with their terms prior to the exercise of this Warrant,
then the terms of such Convertible Securities or Purchase Rights shall provide
that such exercise or convertibility right shall remain in effect until 30 days
after the date the holder receives such Convertible Securities or Purchase
Rights pursuant to the exercise hereof.

      (e) Dilutive Issuances.

            (i) Adjustment Upon Dilutive Issuance. If, at any time during the
Exercise Period, the Company issues or sells, or in accordance with subparagraph
(ii) of this Section 4(e) is deemed to have issued or sold, any shares of Common
Stock for no consideration or for a

                                       -6-

<PAGE>

consideration per share less than the Exercise Price in effect on the date of
issuance or sale (or deemed issuance or sale) (a "DILUTIVE ISSUANCE"), then
effective immediately upon the Dilutive Issuance, the Exercise Price shall be
reduced to an amount determined by the following formula, and the Exercise Price
from and after such time shall be the amount represented by "ACP" below, subject
to further adjustments as contemplated elsewhere in this Warrant:

            AEP= EP x (EP x O) + P
                 -----------------
                     EP x CSDO

where:

      AEP   = the adjusted Exercise Price;

      EP    = the Exercise Price on (a) for purposes any private offering of
            securities under Section 4(2) of the Securities Act, the date that
            the Company enters into legally binding definitive agreements for
            the issuance of such Common Stock and (b) for purposes of any other
            such issuance of Common Stock, the date of issuance thereof;

      O     = the number of shares of Common Stock outstanding (on a
            fully-diluted basis, assuming the full conversion, exercise or
            exchange of all Convertible Securities and Purchase Rights then
            outstanding) immediately prior to the Dilutive Issuance;

      P     = the aggregate consideration, calculated as set forth in Section
            4(e)(ii) hereof, received by the Company upon such Dilutive
            Issuance; and

      CSDO  = the total number of shares of Common Stock outstanding (on a
            fully-diluted basis, assuming the full conversion, exercise or
            exchange of all Convertible Securities and Purchase Rights then
            outstanding, and after giving effect to the Dilutive Issuance, and
            not including shares of Common Stock held in the treasury of the
            Company), plus (a) in the case of any adjustment required by this
            Section 4(e)(i) due to the issuance of Purchase Rights, the maximum
            total number of shares of Common Stock issuable upon the exercise of
            the Purchase Rights for which the adjustment is required (including
            any Common Stock issuable upon the conversion of Convertible
            Securities issuable upon the exercise of such Purchase Rights), and
            (b) in the case of any adjustment required by this Section 4(e)(i)
            due to the issuance of Convertible Securities, the maximum total
            number of shares of Common Stock issuable upon the exercise,
            conversion or exchange of the Convertible Securities for which the
            adjustment is required, as of the date of issuance of such
            Convertible Securities, if any.

Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 4(e) if such adjustment would result in an increase in the Exercise
Price.

                                       -7-

<PAGE>

            (ii) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under clause (i) of this Section 4(e),
the following will be applicable:

                  (1) Issuance of Purchase Rights. If the Company issues or
sells any Purchase Rights, whether or not immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of such Purchase
Rights (and the price of any conversion of Convertible Securities, if
applicable) is less than the Exercise Price in effect on the date of issuance or
sale of such Purchase Rights, then the maximum total number of shares of Common
Stock issuable upon the exercise of all such Purchase Rights (assuming full
conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Purchase Rights, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon the exercise of such Purchase Rights" shall
be determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of all such Purchase
Rights, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Purchase Rights, plus, in
the case of Convertible Securities issuable upon the exercise of such Purchase
Rights, the minimum aggregate amount of additional consideration payable upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in clause (ii)(2) of this Section 4(e)) at the time
such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise of all such Purchase Rights (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Exercise Price shall be made upon the actual issuance of such
Common Stock upon the exercise of such Purchase Rights or upon the conversion,
exercise or exchange of Convertible Securities issuable upon exercise of such
Purchase Rights.

                  (2) Issuance of Convertible Securities. If the Company issues
or sells any Convertible Securities, whether or not immediately convertible,
exercisable or exchangeable, and the price per share for which Common Stock is
issuable upon such conversion, exercise or exchange is less than the Exercise
Price in effect on the date of issuance or sale of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
conversion, exercise or exchange of all such Convertible Securities shall, as of
the date of the issuance or sale of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. If the Convertible Securities so issued or sold do not have a fluctuating
conversion or exercise price or exchange ratio, then for the purposes of the
preceding sentence, the "price per share for which Common Stock is issuable upon
such conversion, exercise or exchange" shall be determined by dividing (A) the
total amount, if any, received or receivable by the Company as consideration for
the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion, exercise or exchange thereof (determined in accordance with
the calculation method set forth in this clause (ii)(2) of this Section 4(e)) at
the time such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise, conversion or exchange of all such Convertible Securities. If
the Convertible Securities so issued or sold have a fluctuating conversion or
exercise price or exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then
for purposes of the next preceding sentence, the "price per

                                       -8-

<PAGE>

share for which Common Stock is issuable upon such conversion, exercise or
exchange" shall be deemed to be the lowest price per share which would be
applicable (assuming all holding period and other conditions to any discounts
contained in such Variable Rate Convertible Security have been satisfied) if the
conversion price of such Variable Rate Convertible Security on the date of
issuance or sale thereof was seventy-five percent (75%) of the actual conversion
price on such date (the "ASSUMED VARIABLE MARKET PRICE"), and, further, if the
conversion price of such Variable Rate Convertible Security at any time or times
thereafter is less than or equal to the Assumed Variable Market Price last used
for making any adjustment under this Section 4(e) with respect to any Variable
Rate Convertible Security, the Exercise Price in effect at such time shall be
readjusted to equal the Exercise Price which would have resulted if the Assumed
Variable Market Price at the time of issuance of the Variable Rate Convertible
Security had been seventy-five percent (75%) of the actual conversion price of
such Variable Rate Convertible Security existing at the time of the adjustment
required by this sentence. No further adjustment to the Exercise Price shall be
made upon the actual issuance of such Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

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

                  (4) Calculation of Consideration Received. If any Common
Stock, Purchase Rights or Convertible Securities are issued or sold for cash,
the consideration received therefor will be the amount received by the Company
therefor, after deduction of all underwriting discounts or allowances in
connection with such issuance, grant or sale. In case any Common Stock, Purchase
Rights or Convertible Securities are issued or sold for a consideration part or
all of which shall be other than cash, including in the case of a strategic or
similar arrangement in which the other entity will provide services to the
Company, purchase services from the Company or otherwise provide intangible
consideration to the Company, the amount of the consideration other than cash
received by the Company (including the net present value of the consideration
expected by the Company for the provided or purchased services) shall be the
fair market value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration received by
the Company will be the Closing Sales Price thereof as of the date of receipt.
In case any Common Stock, Purchase Rights or Convertible Securities are issued
in connection with any merger or consolidation in which the Company is the
surviving corporation, the amount of consideration therefor will be deemed to be
the fair market value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such Common Stock, Purchase
Rights or Convertible Securities, as the case may be. Notwithstanding anything
else herein to the contrary, if Common Stock, Purchase Rights or Convertible
Securities are issued or sold in conjunction with each

                                       -9-

<PAGE>

other as part of a single transaction or in a series of related transactions,
the holder hereof may elect to determine the amount of consideration deemed to
be received by the Company therefor by deducting the fair value of any type of
securities (the "DISREGARDED SECURITIES") issued or sold in such transaction or
series of transactions. If the holder makes an election pursuant to the
immediately preceding sentence, no adjustment to the Exercise Price shall be
made pursuant to this Section 4(e) for the issuance of the Disregarded
Securities or upon any conversion, exercise or exchange thereof. For example, if
the Company were to issue convertible notes having a face value of One Million
Dollars ($1,000,000) and warrants to purchase shares of Common Stock at an
exercise price equal to the Closing Sales Price of the Common Stock on the date
of issuance of such warrants in exchange for One Million Dollars ($1,000,000) of
consideration, the fair value of the warrants would be subtracted from the One
Million Dollars ($1,000,000) of consideration received by the Company for the
purposes of determining whether the shares of Common Stock issuable upon
conversion of the convertible notes shall be deemed to be issued at a price per
share below the Exercise Price and, if so, for purposes of determining any
adjustment to the Exercise Price hereunder as a result of the issuance of the
convertible notes. The Company shall calculate, using standard commercial
valuation methods appropriate for valuing such assets, the fair market value of
any consideration other than cash or securities; provided, however, that if the
holder hereof does not agree to such fair market value calculation within three
business days after receipt thereof from the Company, then such fair market
value shall be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and reasonably
acceptable to the holder, with the costs of such appraisal to be borne by the
Company.

                  (5) Issuances Pursuant to Existing Securities. If the Company
issues (or becomes obligated to issue) shares of Common Stock pursuant to any
antidilution or similar adjustments (other than as a result of stock splits,
stock dividends and the like) contained in any Convertible Securities or
Purchase Rights outstanding as of the date hereof but not included in Section
3(c) of the Disclosure Schedule to the Securities Purchase Agreement, then all
shares of Common Stock so issued shall be deemed to have been issued for no
consideration. If the Company issues (or becomes obligated to issue) shares of
Common Stock pursuant to any antidilution or similar adjustments contained in
any Convertible Securities or Purchase Rights included in Section 3(c) of the
Disclosure Schedule to the Securities Purchase Agreement as a result of the
issuance of the Preferred Stock (as defined in the Securities Purchase
Agreement) or Warrants pursuant to the Securities Purchase Agreement and the
number of shares that the Company issues (or is obligated to issue) as a result
of such initial issuance exceeds the amount specified in Section 3(c) of the
Disclosure Schedule to the Securities Purchase Agreement, such excess shares
shall be deemed to have been issued for no consideration.

                  (6) Exceptions to Adjustment of Exercise Price.
Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made
upon (A) this issuance of Common Stock upon the exercise or conversion of any
Convertible Securities or Purchase Rights outstanding on the Issue Date and
described in Section 3(c) of the Disclosure Schedule to the Securities Purchase
Agreement in accordance with the terms of such Convertible Securities and
Purchase Rights as of such date; (B) (i) the grant of options to purchase Common
Stock, with exercise prices not less than the market price of the Common Stock
on the date of grant, which are issued to employees, officers, directors or
consultants of the Company for the primary purpose of soliciting or retaining
their employment or service pursuant to an equity

                                      -10-

<PAGE>

compensation plan, so long as such plan and the issuance of Common Stock upon
exercise thereof has been approved by (x) the Company's Board of Directors and
(y) if and to the extent required under the Securities Act, the Exchange Act,
the rules and regulations of the United States Securities and Exchange
Commission thereunder and/or the listing standards of any national exchange or
quotation service, the requisite vote of the holders of the Company's Common
Stock in compliance with applicable law and the Company's organizational
documents, and (ii) the issuance of Common Stock upon exercise of such options;
(C) conversion of the Preferred Stock or exercise of the Warrants, (D) the
issuance of securities in connection with mergers, acquisitions, strategic
business partnerships or joint ventures, the primary purpose of which, in the
reasonable judgment of the Board of Directors, is not to raise additional
capital, (E) the issuance of (i) one million six hundred and sixty-six thousand,
six hundred and sixty seven (1,666,667) newly-issued shares of its Common Stock
at an issuance price of Ninety Cents ($0.90) per share, (ii) warrants (the
"Common Warrants") to purchase (x) four hundred and sixteen thousand, six
hundred and sixty-seven (416,667) shares of its Common Stock at an exercise
price of One Dollar and Eleven Cents ($1.11) per share and (y) four hundred and
sixteen thousand, six hundred and sixty-seven (416,667) shares of its Common
Stock at an exercise price of One Dollar and Thirty-Three Cents ($1.33) per
share in connection with the offering contemplated by Section 7(g) of the
Securities Purchase Agreement and (iii) the issuance of Common Stock upon
exercise of the Common Warrants, or (F) the issuance of securities pursuant to
any equipment financing from a reputable commercial bank, savings and loan
association, savings bank, finance company or other financial institution that
is regularly engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business, which issuance and financing is
approved by the Board of Directors.

      (f) Other Action Affecting Exercise Price. If, at any time during the
Exercise Period, the Company takes any action affecting the Common Stock that
would be covered by Section 4(a) through (e), but for the manner in which such
action is taken or structured, which would in any way diminish the value of this
Warrant, then the Exercise Price shall be adjusted in such manner as the Board
of Directors of the Company shall in good faith determine to be equitable under
the circumstances.

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

      (h) Notice of Adjustment. Upon the occurrence of any event which requires
any adjustment or readjustment of the Exercise Price or change in number or type
of stock, securities and/or other property issuable upon exercise of this
Warrant, then, and in each such case, the Company shall give notice thereof to
the holder hereof, which notice shall state the Exercise Price resulting from
such adjustment or readjustment and any change in the number of type of stock,
securities and/or other property issuable upon exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.

                                      -11-

<PAGE>

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

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

            (i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;

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

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

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

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

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

                                      -12-

<PAGE>

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

7. Transfer, Exchange, Redemption and Replacement of Warrant.

      (a) Restriction on Transfer. This Warrant and the rights granted to the
holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Sections 7(f) and 10 hereof and to the provisions of
Section 5 of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement.

      (b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares (at the Exercise Price therefor) as shall be designated by the holder
hereof at the time of such surrender.

      (c) Replacement of Warrant. Upon 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, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

      (d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant
in connection with any transfer, exchange, or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the holder of this
Warrant or transferees) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 7. The Company
shall indemnify and reimburse the holder of this Warrant for all losses and
damages arising as a result of or related to any breach of the terms of this
Warrant, including costs and expenses (including legal fees) incurred by such
holder in connection with the enforcement of its rights hereunder.

                                      -13-

<PAGE>

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

      (f) Transfer or Exchange Without Registration. If, at the time of the
surrender of this Warrant in connection with any transfer or exchange of this
Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares
issuable hereunder) shall not be registered under the Securities Act and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer or exchange, (i) that the holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
such transfer or exchange may be made without registration under the Securities
Act and under applicable state securities or blue sky laws (the cost of which
shall be borne by the Company if the Company's counsel renders such an opinion,
and up to $1,000 of such cost shall be borne by the Company if the holder's
counsel is required to render such opinion), (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "ACCREDITED
INVESTOR" as defined in Rule 501(a) promulgated under the Securities Act;
provided, however, that no such opinion, letter, or status as an "accredited
investor" shall be required in connection with a transfer pursuant to Rule 144
under the Securities Act.

8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.

9. Cashless Exercise. This Warrant may be exercised at any time during the
Exercise Period by delivering a completed Exercise Notice in the form attached
hereto to the Company at its principal executive offices indicating the holder's
intention to effect a cashless exercise, including a calculation of the number
of shares of Common Stock to be issued upon such exercise in accordance with the
terms hereof (a "CASHLESS EXERCISE"). In the event of a Cashless Exercise, in
lieu of paying the Exercise Price in cash, the holder shall surrender this
Warrant for that number of shares of Common Stock determined by multiplying the
number of Warrant Shares to which it would otherwise be entitled by a fraction,
the numerator of which shall be the difference between the then current Closing
Sales Price of a share of the Common Stock on the date of exercise and the
Exercise Price, and the denominator of which shall be the then current Closing
Sales Price per share of Common Stock.

10. Additional Restrictions on Exercise of Warrant and Conversion of Preferred
Stock and Transfer. The exercise of this Warrant shall be subject to the
following limitations (each of which limitations shall be applied
independently):

      (a) Cap Amount. If the Company is prohibited by Rule 4350(i) of the
National Association of Securities Dealers, Inc. ("NASD"), or any successor or
similar rule, or the rules or regulations of any other securities exchange on
which the Common Stock is then listed or traded,

                                      -14-

<PAGE>

from issuing a number of shares of Common Stock upon exercise of this Warrant or
any other Warrant or upon conversion of Series C Preferred Stock (including
payment of Premium in connection therewith) beneficially owned by the holder
hereof (together with any other shares of Common Stock issued pursuant to other
securities issued pursuant to the Securities Purchase Agreement or other
agreements entered in connection therewith) in excess of a prescribed amount
(the "CAP AMOUNT") (without stockholder approval or otherwise), then the Company
shall not issue shares upon any such exercise in excess of the Cap Amount.
Assuming solely for purposes of this Section 10(a) that such Rule 4350(i) or
similar rule is applicable, the Cap Amount shall be that number of shares equal
to 19.99% of the Company's outstanding Common Stock on the Issue Date, subject
to equitable adjustment from time to time for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to the Common
Stock occurring after the Issue Date. The Cap Amount shall be allocated pro rata
to the holders of Warrants (and the holders of such other securities issued
pursuant to the Securities Purchase Agreement or other agreements entered into
in connection therewith) as provided in Section 12(h). In the event that the
Company is prohibited from issuing shares of Common Stock upon any exercise of
this Warrant or any other Warrant or upon conversion of Series C Preferred Stock
(including payment of Premium in connection therewith) beneficially owned by the
holder hereof as a result of the operation of this Section 10(a), the Company
shall immediately notify the holder hereof of such occurrence and the holder
shall thereafter have the option, exercisable in whole or in part at any time
and from time to time, by delivery of written notice to such effect (a
"REDEMPTION NOTICE") to the Company, to require the Company to redeem for cash,
at an amount per share equal to the Redemption Amount (as defined below), a
portion of this Warrant such that, after giving effect to such redemption, the
then unissued portion of the holder's Cap Amount allocable to the Warrants then
held by such holder is at least equal to one hundred percent (100%) of the total
number of shares of Common Stock issuable upon exercise of the Warrants
(including, for such purposes, any and all Warrants issuable upon the full
exercise of the Preferred Warrants) held by such holder. If the Company fails to
redeem such portion of this Warrant within five (5) business days after its
receipt of such Redemption Notice, then the holder hereof shall be entitled to
interest on the Redemption Amount at a per annum rate equal to the lower of
twenty-four percent (24%) and the highest interest rate permitted by applicable
law from the date on which such Redemption Amount is required to be paid
hereunder until the actual date of payment of the Redemption Amount hereunder.
For purposes of this Section 10(a), the "REDEMPTION AMOUNT" equals (i) the value
of that portion of the Warrant being so redeemed derived using the Black-Scholes
formula (using Bloomberg) as of the date on which the holder gives the
Redemption Notice, assuming the volatility of the Company's Common Stock equals
sixty percent (60)% and the risk-free interest rate equals the then applicable
yield for a one year Treasury bill, multiplied by (ii) one hundred and twenty
percent (120%).

      (b) Reserved Amount. On or prior to the Issuance Date, the Corporation
shall reserve nine million, thirty-three thousand, seven hundred and fifty
(9,033,750) shares of its authorized but unissued shares of Common Stock for
issuance upon conversion of the Series C Preferred Stock (including any and all
shares of Series C Preferred Stock issuable upon exercise of the Preferred
Warrants and including payment of Premium in connection therewith) and exercise
of the Warrants (including any and all Warrants issuable upon exercise of the
Preferred Warrants), and, at all times from and after the earlier of (i) the
date on which the stockholder approval contemplated by Section 4(f) of the
Securities Purchase Agreement has been obtained and (ii) September 30, 2005, the
number of authorized but unissued shares of Common Stock so reserved

                                      -15-

<PAGE>

(the "RESERVED AMOUNT") shall be sufficient to provide for (i) the full
conversion of all of the Series C Preferred Stock outstanding (including, for
such purposes, any and all shares of Preferred Stock issuable upon the full
exercise of the Preferred Warrants), together with all accrued Premium as of
such date, at the then-current Conversion Price thereof (taking into account any
"reset" of the Conversion Price pursuant to Article II.E. of the Certificate of
Designation), (ii) the full exercise of the Warrants outstanding (including, for
such purposes, any and all Warrants issuable upon the full exercise of the
Preferred Warrants) at the then-current exercise price thereof and (iii) the
issuance of any additional shares of Common Stock issuable on conversion of the
Series C Preferred Stock or exercise of any Warrants, including on account of
anti-dilution or other adjustments or otherwise, in each case, without giving
effect to the limitations contained in Article XV of the Certificate of
Designation or in Section 10 hereof. If, at any time from and after the date on
which the Registration Statement required to be filed pursuant to Section 2(a)
of the Registration Rights Agreement is first declared effective by the United
States Securities and Exchange Commission, the Company fails to have authorized
and reserved such number of shares of Common Stock, then the Company shall
immediately notify the holder hereof of such occurrence and the holder shall
thereafter have the option, exercisable in whole or in part at any time and from
time to time, by delivery of a Redemption Notice to the Company, to require the
Company to redeem for cash, at an amount per share equal to the Redemption
Amount, a portion of this Warrant such that, after giving effect to such
redemption, the then unissued portion of the holder's Reserved Amount allocable
to the Warrants then held by such holder is at least equal to one hundred
percent (100%) of the total number of shares of Common Stock issuable upon
exercise of the Warrants (including, for such purposes, any and all Warrants
issuable upon the full exercise of the Preferred Warrants) held by such holder.
If the Company fails to redeem such portion of this Warrant within five (5)
business days after its receipt of such Redemption Notice, then the holder
hereof shall be entitled to interest on the Redemption Amount at a per annum
rate equal to the lower of twenty-four percent (24%) and the highest interest
rate permitted by applicable law from the date on which such Redemption Amount
is required to be paid hereunder until the actual date of payment of the
Redemption Amount hereunder. The Reserved Amount shall be allocated among the
holders of Series C Preferred Stock and the Warrants as provided in Article
XVI.C of the Certificate of Designation and Section 12(h) hereof.

      (c) Additional Restrictions on Exercise, Conversion and Transfer. In no
event shall the holder hereof be entitled to exercise any portion of this
Warrant (or any other Warrant beneficially owned by the holder hereof) or
convert any Series C Preferred Stock for shares of Common Stock (nor shall the
Corporation be permitted to effect any of the foregoing) to the extent that (x)
the number of shares of Common Stock beneficially owned by the holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of this Warrant, the
unconverted portion of the Series C Preferred Stock or the unexercised or
unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitations contained
herein) and (y) the number of shares of Common Stock issuable upon the exercise
of this Warrant or conversion of Series C Preferred Stock with respect to which
the determination of this sentence is being made, would result in beneficial
ownership by a holder and such holder's affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with

                                      -16-

<PAGE>

Section 13(d) of the Exchange Act and Regulation 13D-G thereunder, except as
otherwise provided in clause (x) of such sentence.

      (d) Amendments, Etc. to Section 10. Notwithstanding anything in this
Warrant to the contrary, the restriction contained in this Section 10 may not be
altered, amended, deleted or changed in any manner whatsoever unless the holders
of a majority of the outstanding shares of Common Stock and the holder hereof
shall approve, in writing, such alteration, amendment, deletion or change.

11. Certain Definitions. For purposes of this Warrant, the following capitalized
terms shall have the respective meanings assigned to them:

      (a) "BUSINESS DAY" means any day, other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law, regulation or executive order to close.

      (b) "CLOSING SALES PRICE" means, for any security as of any date, the last
sales price of such security on the Nasdaq Over-the-Counter Bulletin Board (the
"OTC") or the Bulletin Board Exchange (collectively with the OTC, the "BULLETIN
BOARD") or such other principal trading market where such security is listed or
traded as reported by Bloomberg Financial Markets (or a comparable reporting
service of national reputation selected by the Company and reasonably acceptable
to the holders if Bloomberg Financial Markets is not then reporting closing
sales prices of such security) (collectively, "BLOOMBERG"), or if the foregoing
does not apply, the last reported sales price of such security on a national
exchange for such security as reported by Bloomberg, or, if no such price is
reported for such security by Bloomberg, the average of the bid prices of all
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a
trading day for such security, on the next preceding date which was a trading
day. If the Closing Sales Price cannot be calculated for such security as of
either of such dates on any of the foregoing bases, the Closing Sales Price of
such security on such date shall be the fair market value as reasonably
determined by an investment banking firm selected by the Company and reasonably
acceptable to the holders, with the costs of such appraisal to be borne by the
Company.

      (c) "TRADING DAY" means any day on which principal United States
securities exchange or trading market where the Common Stock is then listed or
traded, is open for trading.

12. Miscellaneous.

      (a) Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the exclusive jurisdiction of the United States federal
courts and the state courts located in the County of New Castle, State of
Delaware, in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding in such forum.
The Company further agrees that service

                                      -17-

<PAGE>

of process upon the Company mailed by first class mail shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the right of the holder to serve process
in any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.

      (b) Construction. Whenever the context requires, the gender of any word
used in this Warrant includes the masculine, feminine or neuter, and the number
of any word includes the singular or plural. Unless the context otherwise
requires, all references to articles and sections refer to articles and sections
of this Warrant, and all references to schedules are to schedules attached
hereto, each of which is made a part hereof for all purposes. The descriptive
headings of the several articles and sections of this Warrant are inserted for
purposes of reference only, and shall not affect the meaning or construction of
any of the provisions hereof.

      (c) Severability. If any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Warrant or the
validity or enforceability of this Warrant in any other jurisdiction.

      (d) Entire Agreement; Amendments. This Warrant contains the entire
understanding of the Company and the holder hereof with respect to the matters
covered herein. Subject to any additional express provisions of this Warrant, no
provision of this Warrant may be waived other than by an instrument in writing
signed by the party to be charged with enforcement, and no provision of this
Warrant may be amended other than by an instrument in writing signed by the
Company and the holder.

      (e) Notices. Any notices required or permitted to be given under the terms
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by nationally recognized overnight carrier
or by confirmed facsimile transmission, and shall be effective five days after
being placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by nationally recognized overnight carrier or confirmed
facsimile transmission, in each case addressed to a party. The initial addresses
for such communications shall be as follows, and each party shall provide notice
to the other parties of any change in such party's address:

            (i) If to the Company:

                PDG Environmental, Inc.
                1386 Beulah Road, Building 801
                Pittsburgh, Pennsylvania 15235
                Telephone: (412) 243-3200
                Facsimile: (412) 243-4900
                Attention: Chief Executive Officer

                with a copy simultaneously transmitted by like means (which
                transmittal shall not constitute notice hereunder) to:

                                      -18-

<PAGE>

                Cohen & Grigsby, P.C.
                11 Stanwix Street, 15th Floor
                Pittsburgh, PA 15222
                Telephone: (412) 297-4831
                Facsimile: (412) 209-1825
                Attention: James D. Chiafullo, Esq.

            (ii) If to the holder, at such address as shall be set forth in the
Warrant Register from time to time.

      (f) Successors and Assigns. This Warrant shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Except as
provided herein, the Company shall not assign this Warrant or its obligations
hereunder. The holder hereof may assign or transfer this Warrant and such
holders rights hereunder in accordance with Section 7 hereof.

      (g) Equitable Relief. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holder by vitiating the
intent and purpose of this Warrant. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations hereunder will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Warrant, that the holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security
being required.

      (h) Allocation of Cap Amount and Reserved Amount. The initial Cap Amount
and Reserved Amount shall be allocated pro rata among the holders of the
Warrants and the holders of such other securities issued pursuant to the
Securities Purchase Agreement or other agreements entered in connection
therewith based on the number of shares of Common Stock issuable upon exercise
of the Warrants and upon exercise or conversion of such other securities issued
to each such holder. Each increase to the Cap Amount and each increase to the
Reserved Amount shall be allocated pro rata among the holders of the Warrants
and the holders of such other securities issued pursuant to the Securities
Purchase Agreement or other agreements entered in connection therewith based on
the number of shares of Common Stock issuable upon exercise of the Warrants and
upon exercise or conversion of such other securities held by each holder at the
time of such increase. In the event the holder shall sell or otherwise transfer
any of the holder's Warrants or any such other securities, each transferee shall
be allocated a pro rata portion of such transferor's Cap Amount and Reserved
Amount. Any portion of the Cap Amount and Reserved Amount which remains
allocated to any person or entity which does not hold any Warrants or any such
other securities shall be allocated to the remaining holders of the Warrants and
the holders of such other securities issued pursuant to the Securities Purchase
Agreement or other agreements entered in connection therewith, pro rata based on
the number of shares of Common Stock issuable upon exercise of the Warrants and
upon exercise or conversion of such other securities then held by such holders.

                [REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

                                      -19-

<PAGE>

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

                                             PDG ENVIRONMENTAL, INC.

                                             By:
                                                 -------------------------------
                                                 Name: John C. Regan
                                                 Title: President & CEO

                    [SIGNATURE PAGE TO COMMON STOCK WARRANT]

<PAGE>

                             FORM OF EXERCISE NOTICE

         (TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)

To:   PDG ENVIRONMENTAL, INC.
      1386 Beulah Road, Building 801
      Pittsburgh, Pennsylvania 15235
      Telephone: (412) 243-3200
      Facsimile: (412) 243-4900
      Attention: Chief Executive Officer

      The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of PDG Environmental, Inc., a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
evidenced by the attached Warrant, and herewith [makes payment of the Exercise
Price with respect to such shares in full][elects to effect a Cashless Exercise
(as defined in Section 9 of such Warrant)], all in accordance with the
conditions and provisions of said Warrant.

      The undersigned agrees not to offer, sell, transfer or otherwise dispose
of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.

                  [ ] The undersigned requests that the Company cause its
                  transfer agent to electronically transmit the Common Stock
                  issuable pursuant to this Exercise Agreement to the account of
                  the undersigned or its nominee (which is _________________)
                  with DTC through its Deposit Withdrawal Agent Commission
                  System ("DTC TRANSFER"), provided that such transfer agent
                  participates in the DTC Fast Automated Securities Transfer
                  program.

                  [ ] In lieu of receiving the shares of Common Stock issuable
                  pursuant to this Exercise Agreement by way of DTC Transfer,
                  the undersigned hereby requests that the Company cause its
                  transfer agent to issue and deliver to the undersigned
                  physical certificates representing such shares of Common
                  Stock.

The undersigned requests that a Warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:

Dated:_________________                _________________________________________
                                          Signature of Holder

                                       _________________________________________
                                           Name of Holder (Print)

                                           Address:
                                       _________________________________________
                                       _________________________________________
                                       _________________________________________

<PAGE>

                               FORM OF ASSIGNMENT

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

Name of Assignee                     Address                       No. of Shares

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

Dated: _____________________, ____

In the presence of

______________________

                                    Name:_______________________________________

                                    Signature:__________________________________
                                    Title of Signing Officer or Agent (if any):

                                    Address:____________________________________
                                            ____________________________________
                                            ____________________________________

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

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