Document:

THE
SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, (11) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR (I11) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES
LAWS.

    

    

    SUBJECT
TO THE PROVISIONS OF SECTION 8(a) HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00
P.M. EASTERN TIME ON June 30, 2014 (the "EXPIRATION DATE").

    

    No.
5.

     

    CHANCELLOR
GROUP, INC.

     

    
      WARRANT TO PURCHASE 250,000
SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE

    

    
       

      For VALUE
RECEIVED, Patrick Kolenik ("Warrant holder"), is
entitled to purchase, subject to the provisions of this Warrant, from Chancellor
Group, Inc., a Nevada corporation (the "Company"), at any time
after the date hereof (the "Initial Exercise
Date") and not later
than 5:00 P.M., Eastern time, on the Expiration Date (as defined above), at an
exercise price per share equal to $0.125 (the exercise price in effect being
herein called the "Warrant Price"), 250,000 shares
("Warrant
Shares") of the
Company's Common Stock, par value $0.01 per share ("Common Stock"). The number of
Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as described
herein.

    

     

    This
Warrant has been issued as consideration to the Warrant holder for its services
provided to the Company, pursuant to an Agreement, dated as of July 1,
2009.

    

    Section
1. Registration. The
Company shall maintain books for the transfer and registration of the Warrant.
Upon the initial issuance of this Warrant, the Company shall issue and register
the Warrant in the name of the Warrant holder.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    Transfer of Warrant.
This Warrant may be transferred or assigned by the Holder hereof in whole or in
part, provided that the transferor provides, at the Company's request, an
opinion of counsel satisfactory to the Company that such transfer does not
require registration under the Securities Act and the securities laws applicable
with respect to any other applicable jurisdiction.

     

    Section
2. Exercise of
Warrant. (a) Exercise. Subject to
the provisions hereof, the Warrant holder may exercise this Warrant in whole or
in part at any time commencing on the Initial Exercise Date and not later than
5:00 P.M., Eastern time, on the Expiration Date upon surrender of the Warrant,
together with delivery of the duly executed Warrant Exercise Form attached
hereto as Appendix A and payment by cash, certified check or wire transfer of
funds or, in certain circumstances, by cashless exercise as provided in
subsection (b) below, for the aggregate Warrant Price for that number of Warrant
Shares then being purchased, to the Company during normal business hours on any
business day at the Company's principal executive offices. The Warrant Shares so
purchased shall be deemed to be issued to the Warrant holder or the Warrant
holder's designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been duly surrendered, the
Warrant Price shall have been paid and the completed Warrant Exercise Form shall
have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Warrant Exercise
Form, shall be delivered to the Warrant holder within a reasonable time, not
exceeding three (3) business days, after this Warrant shall have been so
exercised (the "Warrant
Share  Delivery Date"). The certificates so delivered shall be
in such denominations as may be requested by the Warrant holder and shall be
registered in the name of the Warrant holder or such other name as shall be
designated by the Warrant holder. If this Warrant shall have been exercised only
in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, within four (4) business
days of exercise, deliver to the Warrant holder a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised. As used herein, "business day" means a day, other than a Saturday or
Sunday, on which banks in New York City are open for the general transaction of
business. Each exercise hereof shall constitute the re-affirmation by the
Warrant holder that the representations and warranties contained in Section 5 of
the Purchase Agreement (as defined below) are true and correct in all material
respects with respect to the Warrant holder as of the time of such
exercise.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (b) Cashless Exercise.
(i) Notwithstanding any other provision contained herein to the contrary,
the Warrant holder may elect to receive, without the payment by the Warrant
holder of the aggregate Warrant Price in respect of the shares of Common Stock
to be acquired, shares of Common Stock equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant (or such portion of this Warrant
being so exercised) together with the Net Issue Election Notice annexed hereto
as Appendix B duly executed, at the office of the Company. The Net Issue
Election Notice must be received by the Company not more than five (5) business
days after the date the election is made. Thereupon, the Company shall issue to
the Warrant holder such number of fully paid, validly issued and nonassessable
shares of Common Stock as is computed using the following formula:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    X = Y (A-B)

      
A

    where

    X = the number of shares of Common
Stock which the Warrant holder has then requested be issued to the Warrant
holder;

     

    Y = the total number of shares of
Common Stock covered by this Warrant which the Warrant holder has surrendered at
such time for cashless exercise (including both shares to be issued to the
Warrant holder and shares to be canceled as payment therefor);

     

    A = the average closing "Market Price"
of one share of Common Stock for the five (5) consecutive business days
preceding the date the net issue election is made; and

     

    B = the Warrant Price in effect under
this Warrant at the time the net issue election is made.

     

    (ii) For the purposes of this
Agreement, "Market
Price" as of a
particular date (the "Valuation Date") shall mean the
following: (a) if the Common Stock is then listed on a national stock exchange,
the closing sale price of one share of Common Stock on such exchange on the last
trading day prior to the Valuation Date; (b) if the Common Stock is then quoted
on The Nasdaq Stock Market, Inc. ("Nasdaq"), the National
Association of Securities Dealers, Inc. OTC Bulletin Board (the "Bulletin Board") or such similar
exchange or association, the closing sale price of one share of Common Stock on
Nasdaq, the Bulletin Board or such other exchange or association on the last
trading day prior to the Valuation Date or, if no such closing sale price is
available, the average of the high bid and the low asked price quoted thereon on
the last trading day prior to the Valuation Date; or (c) if the Common Stock is
not then listed on a national stock exchange or quoted on Nasdaq, the Bulletin
Board or such other exchange or association, the fair market value of one share
of Common Stock as of the Valuation Date, shall be determined in good faith by
the Board of Directors of the Company and the Warrant holder. If the Common
Stock is not then listed on a national securities exchange, the Bulletin Board
or such other exchange or association, the Board of Directors of the Company
shall respond promptly, in writing, to an inquiry by the Warrant holder prior to
the exercise hereunder as to the fair market value of a share of Common Stock as
determined by the Board of Directors of the Company. In the event that the Board
of Directors of the Company and the Warrant holder are unable to agree upon the
fair market value, the Company and the Warrant holder shall jointly select an
appraiser, who is experienced in such matters. The decision of such appraiser
shall be final and conclusive, and the cost of such appraiser shall be borne
equally by the Company and the Warrant holder.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
3. Compliance with the
Securities Act of 1933. Except as
provided in the Purchase Agreement, the Company may cause the legend set forth
on the first page of this Warrant to be set forth on each Warrant or similar
legend on any security issued or issuable upon exercise of this Warrant, unless
counsel for the Company is of the opinion as to any such security that such
legend is unnecessary.

     

    Section
4. Payment of Taxes.
The Company will pay any documentary stamp taxes attributable to the
initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificates for Warrant Shares in a name other than that of
the Warrant holder in respect of which such shares are issued, and in such case,
the Company shall not be required to issue or deliver any certificate for
Warrant Shares or any Warrant until the person requesting the same has paid to
the Company the amount of such tax or has established to the Company's
reasonable satisfaction that such tax has been paid. The Warrant holder shall be
responsible for income taxes due under federal, state or other law, if any such
tax is due.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
5. Mutilated or
Missing Warrants. In case this Warrant shall be mutilated, lost, stolen,
or destroyed, the Company shall issue in exchange and substitution of and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the
Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the
purchase of a like number of Warrant Shares, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction of the
Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable
indemnity or bond with respect thereto, if requested by the
Company.

     

    Section
6. Reservation of
Common Stock. The Company hereby represents and warrants that there have
been reserved, and the Company shall at all applicable times keep reserved until
issued (if necessary) as contemplated by this Section 7, out of the authorized
and unissued shares of Common Stock, sufficient shares to provide for the
exercise of the rights of purchase represented by this Warrant. The Company
agrees that all Warrant Shares issued upon due exercise of the Warrant shall be,
at the time of delivery of the certificates for such Warrant Shares, duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of the Company.

     

    Section
7. Adjustments.
Subject and pursuant to the provisions of this Section 8, the Warrant Price and
number of Warrant Shares subject to this Warrant shall be subject to adjustment
from time to time as set forth hereinafter.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (a) If
the Company shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, subdivide its outstanding shares of Common Stock into a greater
number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrant holder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrant holder would have received
if the Warrant had been exercised immediately prior to such event upon payment
of a Warrant Price that is equal to an amount determined by multiplying the
Warrant Price in effect immediately prior to such change by the number of shares
of Common Stock or other capital stock issuable upon exercise of this Warrant
immediately prior to such change and dividing the product so obtained by the
adjusted number of shares of Common Stock or other capital stock issuable upon
the exercise of this Warrant as the result of such change. Such adjustments
shall be made successively whenever any event listed above shall
occur.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     
(b) If any consolidation or merger of the Company with another corporation in
which the Company is not the survivor, or sale, transfer or other disposition of
all or substantially all of the Company's assets to another corporation shall be
effected, then, as a condition of such consolidation, merger, sale, transfer or
other disposition, lawful and adequate provision shall be made whereby each
Warrant holder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such consolidation, merger, sale, transfer or other disposition
not taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each Warrant holder to the end that the
provisions hereof (including, without limitation, provision for adjustment of
the Warrant Price) shall thereafter be applicable, as nearly equivalent as may
be practicable in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the Warrant
holder, at the last address of the Warrant holder appearing on the books of the
Company, such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Warrant holder may be entitled to purchase, and the
other obligations under this Warrant. The provisions of this subsection (b)
shall similarly apply to successive consolidations, mergers, sales, transfers or
other dispositions. Notwithstanding the provisions of this subsection (b), in
the event that (i) holders of Common Stock receive only cash for their shares of
Common Stock as a result of any such consolidation, merger, sale, transfer or
other disposition, or (ii) the surviving entity's common stock is not registered
under the Securities Exchange Act of 1934, as amended, not later
than one (1) business day after the effective date of such consolidation,
merger, sale, transfer or other disposition or transaction, the Warrant holder
shall be entitled to receive in full satisfaction of its rights under this
Warrant an amount in cash (the "Spread") equal to (x) the difference between (A)
the per share cash to be received by holders of Common Stock in connection with
such consolidation, merger, sale, transfer or other disposition and (B) the
Warrant Price in effect immediately prior to the effective date of such
consolidation, merger, sale, transfer or other disposition, multiplied by (y)
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the effective date of such consolidation, merger, sale,
transfer or other disposition. Upon payment in full of the Spread to the Warrant
holder as provided above, this Warrant shall expire and be of no further force
and effect. In the event that the Spread is not a positive number, no amount
shall be payable to the Warrant holder as a result of such consolidation,
merger, sale, transfer or other disposition or transaction, and this Warrant
shall expire and be of no further force and effect as of the effective date of
such consolidation, merger, sale, transfer or other
disposition.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (c) In
case the Company shall fix a record date for the making of a distribution to all
holders of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness or assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends or distributions referred to in Section 8(a)), or subscription rights
or warrants, the Warrant Price to be in effect after such record date shall be
determined by multiplying the Warrant Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding multiplied by the Market Price per share of
Common Stock immediately prior to such payment date, less the fair market value
(as determined by the Company's Board of Directors in good faith) of said assets
or evidences of indebtedness so distributed, or of such subscription rights or
warrants, and the denominator of which shall be the total number of shares of
Common Stock outstanding multiplied by such Market Price per share of Common
Stock immediately prior to such payment date.

     

     
(d) An adjustment to the Warrant Price shall become effective immediately after
the payment date in the case of each dividend or distribution and immediately
after the effective date of each other event which requires an
adjustment.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

     
(e) In the event that, as a result of an adjustment made pursuant to this
Section 8, the Warrant holder shall become entitled to receive any shares of
capital stock of the Company other than shares of Common Stock, the number of
such other shares so receivable upon exercise of this Warrant shall be subject
thereafter to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Warrant.

     

     
(f) No adjustment of the number of shares issued upon exercise of this Warrant
shall be made if the amount of such adjustment shall be less than 0.10% of the
number of shares issuable before such adjustment, and no adjustment of the
Warrant Price shall be made if the amount of such adjustment shall be less than
$0.01 per Warrant Share; provided, however
that in such case any adjustment that would otherwise be required then to
be made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment that, together with any adjustment so
carried forward, shall amount to at least $0.10% of the number of shares
issuable before such adjustment or $0.01 per Warrant Share, as
applicable.

     

    Section
8. Fractional
Interest. The Company shall not be required to issue fractions of Warrant
Shares upon the exercise of this Warrant. If any fractional share of Common
Stock would, except for the provisions of the first sentence of this Section 9,
be deliverable upon such exercise, the Company, in lieu of delivering such
fractional share, shall pay to the exercising Warrant holder an amount in cash
equal to the Market Price of such fractional share of Common Stock on the date
of exercise.

     

    Section
9. Benefits.
Nothing in this Warrant shall be construed to give any person, firm or
corporation (other than the Company and the Warrant holder) any legal or
equitable right, remedy or claim, it being agreed that this Warrant shall be for
the sole and exclusive benefit of the Company and the Warrant
holder.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
10. Notices to Warrant
holder. Upon the
happening of any event requiring an adjustment of the Warrant Price and/or the
Warrant Shares, the Company shall promptly give written notice thereof to the
Warrant holder at the address appearing in the records of the Company, stating
the adjusted Warrant Price and the adjusted number of Warrant Shares resulting
from such event and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. Failure to give such notice
to the Warrant holder or any defect therein shall not affect the legality or
validity of the subject adjustment.

     

    Section
11. Identity of
Transfer Agent. The Transfer
Agent for the Common Stock is Quicksilver Stock Transfer Company. Upon the
appointment of any subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant, the Company will mail to the Warrant
holder a statement setting forth the name and address of such transfer
agent.

     

    Section
12. Notices. Unless
otherwise provided, any notice required or permitted under this Warrant shall be
given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given upon
such delivery, (ii) if given by telex or facsimile, then such notice shall be
deemed given upon receipt of confirmation of complete transmittal, (iii) if
given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient or (B) three (3) days after such notice
is deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one (1) business day after delivery to such carrier. All notices
shall be addressed as follows: if to the Warrant
holder, at its address as set forth in the Company's books and records and, if
to the Company, at the address as follows, or at such other address as the
Warrant holder or the Company may designate by ten (10) days' advance written
notice to the other:

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    If to the
Company:

     

    Chancellor
Group, Inc.

     

    216 South
Price Road, Pampa TX, 79065.

     

    Section 13. Piggy-Back
Rights. If at any time
prior to the Expiration Date when the Holder is unable to sell the Shares
without restriction as to amount under Rule 144 the Company proposes to register
shares of its Common Stock under the Securities Act on any form for the
registration of its Common Stock under the Securities Act (the "Registration
Statement") for the account
of stockholders in a manner which would permit registration of the Shares for
sale to the public under the Securities Act (a "Piggyback
Registration"), it will at such
time give prompt written notice to the Holder of its intention to do so and of
the Holder's rights under this Section 8.1. Such rights are referred to
hereinafter as "Piggyback Registration
Rights". Upon the
written request of the Holder to the Company made within ten (10) days after the
giving of any such notice (which request shall specify the number of Shares
intended to be disposed of by the Holder and the intended method of disposition
thereof), the Company will include in the Registration Statement the Shares (the
"Registrable Shares")
which the Company has been so requested to register by the Holder,
provided that the Company's obligation shall continue after exercise of the
Warrants, but it need not include any Shares in a Registration Statement filed
after the Expiration Date and it need not include any Shares prior to the
Expiration Date that may be sold by the Holder without restriction as to amount
under Rule 144. And provided also, if the underwriter in a Company underwritten
offering determines in good faith that marketing factors require a limitation of
the number of shares to be underwritten or sold pursuant to the Registration
Statement, the number of shares that may be included in the Registration
Statement shall be allocated, first, to the Company, and second to the Warrant
holder on a pro-rata basis based on the total number of shares held by persons
with similar "piggyback" registration rights.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    If the
securities covered by the Registration Statement are to be underwritten, the
Company shall not be required to include therein any of the Registrable Shares
unless the Holder accepts the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it.

     

    The
Company is obligated to file only one Registration Statement pursuant to this
Section 8 which is declared effective under the Securities Act. The Piggyback
Registration Rights under this Section 8 are the only rights granted by the
Company to the Holder to include its Shares in a Registration
Statement.

     

    Section 14. Successors.
All the covenants and provisions hereof by or for the benefit of the
Warrant holder shall bind and inure to the benefit of its respective successors
and assigns hereunder.

     

    Section 15. Governing Law;
Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be
governed by, and construed in accordance with, the internal laws of the State of
New York, without reference to the choice of law provisions thereof. The Company
and, by accepting this Warrant, the Warrant holder, each irrevocably submits to
the exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Warrant and the transactions contemplated hereby. Service
of process in connection with any such suit, action or proceeding may be served
on each party hereto anywhere in the world by the same methods as are specified
for the giving of notices under this Warrant. The Company and, by accepting this
Warrant, the Warrant holder, each irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue
in such court. The Company and, by accepting this Warrant, the Warrant holder,
each irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE WARRANT HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER,

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section 16. No Rights as
Stockholder. Prior to the
exercise of this Warrant in accordance with Section 3 hereof, the Warrant holder
shall not have or exercise any rights as a stockholder of the Company by virtue
of its ownership of this Warrant.

     

    Section 17. Amendment; Waiver;
Reduction of Warrant Price. Any term of
this Warrant may be amended or waived (including the adjustment provisions
included in Section 8 of this Warrant) upon the written consent of the Company
and the Warrant holder. Notwithstanding the immediately preceding sentence, to
the extent permitted by applicable law, the Company from time to time may
unilaterally reduce the Warrant Price by any amount so long as (i) the period
during which such reduction is in effect is at least twenty (20) days, (ii) the
reduction is irrevocable during such period and (iii) the Company's Board of
Directors shall have made a determination that such reduction would be in the
best interests of the Company. Whenever the Warrant Price is reduced pursuant to
the preceding sentence, the Company shall mail or cause to be mailed to the
Warrant holder a notice of the reduction at least five (5) days prior to the
date the reduced Warrant Price is to take effect, which notice shall state the
reduced Warrant Price and the period during which it will be in
effect.

     

    Section 18. Section
Headings. The section
headings in this Warrant are for the convenience of the Company and the Warrant
holder and in no way alter, modify, amend, limit or restrict the provisions
hereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of
the 1st day of July, 2009.

    

    
      
        
          	 
      	
                  CHANCELLOR
      GROUP, INC.

                
	 
      	 
      	 
      
	 
      	
                  By:

                	 
      	 
      
	 
      	
                  Maxwell
      Grant

                
	 
      	
                  Chief
      Executive Officer

                

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    APPENDIX
A

    _____,
INC.

    WARRANT
EXERCISE FORM

    

    To___________, Inc.:

     

    The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant ("Warrant") for, and to purchase thereunder by
the payment of the Warrant Price
and surrender of the Warrant, _____________ shares of Common Stock ("Warrant
Shares") provided for therein, and requests that certificates for the Warrant
Shares be issued as follows:

     

    
      
        
          
            
              

              
                
                  

                
Name

              

              
                

              

              Address

               

              
                

              

               

              
                

              

            

          

        

      

    

    Federal
Tax ID or Social Security No.

     

    and
delivered by     (certified mail to the above address,
or

    (electronically          (provide      DWAC

    Instructions:                    ),
or

    (other                       (specify):

    ____________________

    

    and, if
the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrant holder or the undersigned's Assignee as below indicated
and delivered to the address stated below.

    

    Dated:__________________, ________

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  
                    
                      	
                              Note: The signature must correspond with

                            	 
      
	
                              the name of the Warrant holder as written

                            	 
      
	
                              on the first page of the Warrant in every

                            	
                              Signature:

                            	 
      
	
                              particular, without alteration or enlargement

                            	
                              Name (please print)

                            
	
                              or any change whatever, unless the Warrant

                            	 
      
	
                              has been assigned.

                            	 
      
	 
      	 
      
	 
      	
                              Address

                            
	 
      	 
      
	 
      	 
      
	 
      	
                              Federal Tax Identification or 

                            
	 
      	
                              Social Security No.

                            
	 
      	 
      
	 
      	
                              Assignee:

                            
	 
      	 
      
	 
      	 
      
	 
      	 
      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    APPENDIX
B

    _______,
INC.

    NET ISSUE
ELECTION NOTICE

    

    To:
_________, Inc.

    

    Date:
____________________

    

    The
undersigned hereby elects under Section 3(b) of this
Warrant to surrender the right to purchase _____________ shares of Common Stock pursuant to
this Warrant and hereby requests the issuance of _________ shares of Common Stock. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated
below. 

      

    
      
        

      

      Signature

       

    

    
      

    

    Name for Registration

     

    
      

      Mailing AddressEXHIBIT
4.4

    

    

    SUBSCRIPTION
AGREEMENT

     

    IMPORTANT:
PLEASE READ CAREFULLY BEFORE SIGNING

    SIGNIFICANT REPRESENTATIONS
ARE

    CALLED FOR
HEREIN

    

    

    SpectraScience,
Inc.

    11568-11
Sorrento Valley Rd.

    San
Diego, CA 92121

    

    

    Gentlemen:

    

    The
undersigned, _______________________________ (“Investor”) hereby tenders this
subscription and applies for the purchase of ____________ Units (the
“Securities”) of SpectraScience, Inc. (the
“Company”) at $10.00 per unit.

     

    The
aggregate subscription price, in the amount of $____________ is delivered
herewith by Wire or check made payable to SpectraScience.  The
subscription price is the number of Units multiplied by $10.00.  Wire
instructions are:

     

    Chase
Manhattan Bank

     

     

     

     

     

    The
Investor understands and agrees that this Subscription Agreement is not binding
upon the Company and that the Company may elect to reject this Subscription
Agreement in whole or in part for any reason, including without limitation,
unavailability of shares to fill this or other subscriptions.

     

    By
execution below, the undersigned acknowledges that the Company is relying upon
the accuracy and completeness of the representations contained herein in
complying with its obligations under applicable securities laws.

     

    
      	
               
      

            	
              1.

            	
              The
      undersigned acknowledges and represents as
  follows:

            

    

     

    
      	
               
      

            	
              (a)

            	
              That
      the undersigned has received, carefully reviewed, and is familiar with
      certain information about the Company, including the Company’s annual
      report on Form 10-K for the year ended December 31, 2008, and the
      Company’s quarterly report on Form 10-Q for the period ended June 30,
      2009;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              That
      the undersigned is in a financial position to hold the shares for an
      indefinite period of time and is able to withstand a complete loss of his
      or her investment in the shares.

            

    

     

    
      	
               
      

            	
              (c)

            	
              That
      the undersigned has substantial experiece in evaluating and investing in
      securities in companies similar to the Company, so that he or she is
      capable of reading and interpreting the business plan and evaluating the
      merits and risks of his or her investment in the Company, and he or she
      has the capacity to protect his or her own
  interests;

            

    

     

    
      	
               
      

            	
              (d)

            	
              That
      by reason of his or her business or financial experience, the undersigned
      has the capacity to protect his or her own interests in connection with
      his or her purchase of the shares;

            

    

     

    
      	
               
      

            	
              (e)

            	
              That
      the undersigned has been given access to full and complete information
      regarding the Company and has utilized such access to its satisfaction for
      the purpose of obtaining information in addition to, or verifying
      information included in, the Memorandum, and that the undersigned has
      either met with or been given reasonable opportunity to meet with officers
      of the Company for the purpose of asking questions of, and receiving
      answers from, such officers concerning the terms and conditions of the
      offering of the shares and the current and proposed business and
      operations of the Company and to obtain any additional information, to the
      extent reasonably available;

            

    

     

    
      	
               
      

            	
              (f)

            	
              That
      the undersigned acknowledges that he or she has made his or her own
      investigation of the Company, its proposed business, personnel and
      prospects; has had an opportunity to discuss the Company’s proposed
      business, management and financial affairs with directors, officers, and
      management of the Company; and has had the opportunity to review the
      Company’s proposed operations to his or her
  satisfaction;

            

    

     

    
      	
               
      

            	
              (g)

            	
              That
      the undersigned has such knowledge and experience in financial and
      business matters that he or she is capable of evaluating the merits and
      risks of the prospective investment in the shares and has the net worth to
      undertake such risks;

            

    

     

    
      	
               
      

            	
              (h)

            	
              That the undersigned believes
      that the investment in the shares is suitable for him or her based upon
      his or her investment objectives and financial needs, and the undersigned
      has adequate means for providing for his or her current financial needs
      and contingencies and has no need for liquidity of investment with respect
      to the shares;

            

    

     

    
      	
               
      

            	
              (i)

            	
              That the undersigned recognizes
      that purchasing shares as an investment is highly speculative, and
      involves a high degree of risk including, but not limited to, the risk of
      economic losses from operations of the Company and the total loss of his
      or her investment; and

            

    

     

    
      	
               
      

            	
              (j)

            	
              If
      an entity, that the undersigned was not formed for the purpose of
      investing in the shares.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (k)

            	
              The
      undersigned is acquiring the shares of Stock solely for his, her or its
      own account for investment and not with a view to resale or distribution
      thereof, in whole or in part.  The undersigned has no agreement
      or arrangement, formal or informal, with any person to sell or transfer
      all or any of the shares, and the undersigned has no plans to enter
      into any such agreement or arrangement. The undersigned acknowledges that
      Company has agreed to grant to the undersigned only the registration
      rights described in the Registration Rights Agreement in the form annexed
      to the Memorandum.

            

    

     

    
      	
               
      

            	
              (l)

            	
              The
      undersigned is unaware of, is in no way relying on, and did not become
      aware of the offering of the shares through or as a result of, any form of
      general solicitation or general advertising including, without limitation,
      any article, notice, advertisement or other communication published in any
      newspaper, magazine or similar media or broadcast over television, radio
      or over the Internet, in connection with the offering and sale of the
      shares and is not subscribing for the shares and did not become aware of
      the offering of the shares through or as a result of any seminar or
      meeting to which the undersigned was invited by, or any solicitation of a
      subscription by, a person not previously known to the undersigned in
      connection with investments in securities
  generally;

            

    

     

    
      	
               
      

            	
              2.

            	
              The
      undersigned represents and warrants that, if an individual, he or she is a
      bona fide resident of, and is domiciled in, the State/Country of
      _________________; or, if an entity, that its executive offices are
      located in the State/Country
      of __________________; and that the shares are being purchased by him, her
      or it in his, her or its name solely for his, her or its own beneficial
      interest and not as nominee for, or on behalf of, or for the beneficial
      interest of, or with the intention to transfer to, any other person, trust
      or organization.

            

    

     

    INVESTORS
MUST REVIEW AND PROVIDE INFORMATION IN RESPONSE TO ITEM 3 BELOW.

     

    The
undersigned agrees to furnish any additional information which the Company deems
necessary in order to verify the answers set forth below.

     

    
      	
               
      

            	
              3.

            	
              The
      undersigned understands that the representations contained below are made
      for the purpose of qualifying him or her as an “accredited investor” as
      that term is defined in Regulation D of the General Rules and Regulations
      promulgated under the Act and for the purpose of inducing a sale of the
      Securities to him or her.  The undersigned hereby represents
      that the statement or statements initialed or otherwise indicated below
      are true and correct in all respects.  The undersigned
      understands that a false representation may constitute a violation of law,
      and that any person who suffers damage as a result of a false
      representation may have a claim against the undersigned for
      damages.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Accredited
      individual investors must initial or otherwise indicate one or both of the
      following statements:

            

    

     

    
      	
               
      

            	
              _______(1)

            	
              I
      certify that I am an accredited investor because I had individual income
      (exclusive of any income attributable to my spouse) of more than $200,000
      in each of the most recent two years or joint income with my spouse of
      more than $300,000 in each of such years and that I reasonably expect to
      have such an income in excess of such amounts for the current
      year.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              _______(2)

            	
              I
      certify that I am an accredited investor because I have an individual net
      worth, or my spouse and I have an individual net worth, in excess of
      $1,000,000.  For purposes of this Subscription Agreement and
      Letter of Investment Intent, “individual net worth” means the excess of
      total assets at fair market value, including home and personal property,
      over total liabilities, except for Illinois residents who should exclude
      the value of homes, home furnishings and
  automobiles.

            

    

    

    
      	
               
      

            	
              _______(3)

            	
              I
      certify that I am an accredited investor because I am a director or
      executive officer of the Company.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Accredited
      partnerships, corporations or other entities must initial one or more of the
      following statements:

            

    

     

    
      	
               
      

            	
              _______(1)

            	
              The
      undersigned hereby certifies that all of the beneficial equity owners of
      the undersigned qualify as accredited individual investors under items
      (a)(1) or (a)(2) above.  (Investors attempting to qualify under
      this item must complete the Certificate of Signatory to this Subscription
      Agreement and Letter of Investment Intent and each equity owner must
      complete a separate copy of this Subscription Agreement and Letter of
      Investment Intent);

            

    

     

    
      	
               
      

            	
              _______(2)

            	
              The
      undersigned is a bank or savings and loan association as defined in
      Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Act acting either in
      its individual or fiduciary
capacity.

            

    

     

    
      	
               
      

            	
              _______(3)

            	
              The
      undersigned is an insurance company as defined in Section 2(13) of the
      Act.

            

    

     

    
      	
               
      

            	
              _______(4)

            	
              The
      undersigned is an investment company registered under the Investment
      Company Act of 1940 or a business development company as defined therein,
      in Section 2(a)(48).

            

    

     

    
      	
               
      

            	
              _______(5)

            	
              The
      undersigned is a Small Business Investment Company licensed by the U.S.
      Small Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958.

            

    

     

    
      	
               
      

            	
              _______(6)

            	
              The
      undersigned is an employee benefit plan within the meaning of Title I of
      the Employee Retirement Income Security Act of 1974 and either (check one
      or more, as applicable):

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              _______(a)

            	
              the
      investment decision is made by a plan fiduciary, as defined therein, in
      Section 3(21), which is either a bank, savings and loan association,
      insurance company, or registered investment adviser;
  or

            

    

     

    
      	
               
      

            	
              _______(b)

            	
              the
      employee benefit plan has total assets in excess of $5,000,000;
      or

            

    

     

    
      	
               
      

            	
              _______(c)

            	
              the
      plan is a self-directed plan with investment decisions made solely by
      persons who are “accredited investors” as defined
  therein.

            

    

     

    
      	
               
      

            	
              _______(7)

            	
              The
      undersigned is a private business development company as defined in
      Section 202(a)(22) of the Investment Advisers Act of
  1940.

            

    

     

    
      	
               
      

            	
              _______(8)

            	
              The
      undersigned has total assets in excess of $5,000,000, was not formed for
      the specific purpose of acquiring Securities and is one or more of the
      following (check one or more, as
appropriate):

            

    

     

    
      	
               
      

            	
              _______(a)

            	
              an
      organization described in Section 501(c)(3) of the Internal Revenue Code
      of 1986, as amended; or

            

    

     

    
      	
               
      

            	
              _______(b)

            	
              a
      corporation; or

            

    

     

    
      	
               
      

            	
              _______(c)

            	
              a
      Massachusetts or similar business trust;
or

            

    

     

    
      	
               
      

            	
              _______(d)

            	
              a
      partnership; or

            

    

     

    
      	
               
      

            	
              _______(e)

            	
              a
      limited liability company.

            

    

     

    
      	
               
      

            	
              _______(9)

            	
              The
      undersigned is a trust with total assets exceeding $5,000,000, which was
      not formed for the specific purpose of acquiring Securities and whose
      purchase is directed by a person who has such knowledge and experience in
      financial and business matters that he or she is capable of evaluating the
      merits and risks of the investment in the
  Securities.

            

    

     

    
      	
               
      

            	
              4.

            	
              The
      undersigned, if other than an individual, hereby represents that this
      Subscription Agreement has been duly authorized by all necessary action on
      the part of the undersigned, has been duly executed by an authorized
      officer or representative of the undersigned, and is a legal, valid, and
      binding obligation of the undersigned enforceable in accordance with its
      terms.

            

    

     

    
      	
               
      

            	
              5.

            	
              Manner
      in Which Title is to be Held. (check
one)

            

    

     

    
      	
               
      

            	
              (a)

            	
              _______
      Individual Ownership

            

    

    
      	
               
      

            	
              (b)

            	
              _______
      Community Property

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (c)

            	
              _______
      Joint Tenant with Right of Survivorship (both parties must
      sign)

            

    

    
      	
               
      

            	
              (d)

            	
              _______
      Partnership

            

    

    
      	
               
      

            	
              (e)

            	
              _______
      Tenants in Common

            

    

    
      	
               
      

            	
              (f)

            	
              _______
      Corporation

            

    

    
      
        	
              	
                (g)

              	
                _______
      Trust

              

      

      
        	
              	
                (h) 

              	
                _______
      Qualified Retirement Account (i.e. IRA)

              
	 	 	
                 
      Dated:  ____________

              

      

    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              INDIVIDUAL
      INVESTORS

            	
              ENTITY
      INVESTORS

            
	
               

               

               

              ______________________________________

              Signature
      (Individual)

               

              ______________________________________

              Signature

              (all
      record holders should sign)

               

               

              ______________________________________

              Name(s)
      Typed or Printed

               

               

              ______________________________________

              Address
      to Which Correspondence 

              Should
      be Directed

               

              ______________________________________

              ______________________________________

              City,
      State and Zip Code

               

               

              ______________________________________

              Tax
      Identification or Social Security Number

               

              ______________________________________

              Phone
      Number

               

            	
              _____________________________________

              Name
      of Entity, if any

               

              By
      __________________________________

              *Signature

               

              Its
      ___________________________________

              Title

               

               

               

              ______________________________________

              Name
      Typed or Printed

               

               

              ______________________________________

              Address
      to Which Correspondence 

              Should
      be Directed

               

              ______________________________________

              ______________________________________

              City,
      State and Zip Code

               

               

              ______________________________________

              Tax
      Identification or Social Security Number

               

              ______________________________________

              Phone
      Number

               

            

    

    

    
      	
              *

            	
              If
      Securities are being subscribed for by any entity, the Certificate of
      Signatory must also be completed.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    CERTIFICATE
OF SIGNATORY

     

    (To be
completed if Securities are being subscribed

    for by an
entity)

    

     

    I,
_________________________________ the ______________________________ of (the
“Entity”), hereby certify that I am empowered and duly authorized by the Entity
to execute and carry out the terms of the Subscription Agreement and to purchase
the Securities, and certify further that the Subscription Agreement has been
duly and validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.

     

    

     

    IN
WITNESS WHEREOF, I have set my hand this ____ day of ______________,
2009.

     

     

    
      	 	 
	 	
              _________________________________

              (Signature)

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    ACCEPTANCE

     

    

     

    The
Company hereby accepts the foregoing Subscription Agreement as of the date
indicated below for the following number of shares of Preferred B
Stock:

    

    

    _______________________________.

     

    
      
        	 	 	 	 SPECTRASCIENCE,
      INC.	 
	 	 	 	 	 
	 	 	 	 	 
	Date:
      	 	 	 By	 	 

      

    

    
       

      
        
        

      

      
        9

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