Document:

ex10_4.htm

    CONVERTIBLE PROMISSORY
NOTE

    AND SECURITY
AGREEMENT

    

    

    
      
        	
                US
      $50,000

              	
                Las Vegas

                Nevada

              
	 
      	
                April
      21, 2009

              

      

    

    

    For good
and valuable consideration, Secured Diversified Investment,
Ltd., a Nevada Corporation, and Galaxy Gaming, Inc., a Nevada
corporation, (collectively, “Maker”), hereby
jointly and severally makes and delivers this Promissory Note and Security
Agreement (this “Note”) in favor of
The Kleemann Family 2004
Revocable Trust, or its assigns (“Holder”), and hereby
agree as follows:

    

    1.           Principal
Obligation and Interest.  For value
received, Maker promises
to pay to Holder at 526 Via
Sinuosa, Santa Barbara, CA 93110, or at such other place as Holder may
designate in writing, in currently available funds of the United States, the
principal sum of Fifty Thousand
United States Dollars.  Maker’s obligation under this Note
shall accrue interest at the rate of Twelve Percent (12.0%) per
annum from the date hereof until paid in full.  Interest shall
be computed on the basis of a 365-day year or 366-day year, as applicable, and
actual days lapsed.

    

    2.           Payment
Terms.

    

    a. All
accrued interest then outstanding shall be due and payable by the Maker on a
monthly basis, on or before fifteen (15) days from the end of each calendar
month.

    

    b. All
payments shall be applied first to late charges, then to interest, then to
principal and shall be credited to the Maker's account on the date that such
payment is physically received by the Holder.

    

    c. All
principal and accrued interest then outstanding shall be due and payable by the
Maker to the Holder on or before One Hundred and Eighty (180)
Days from the date of issuance of this Note, unless extended at the
option of Holder for an additional term of one hundred and eighty (180) days
upon written notice to Maker delivered not less than ten (10) days prior to the
expiration of the initial term.

    

    d. Maker
shall not have the right to prepay all or any part of the principal under this
Note prior to the expiration of the initial term of 180 days.  If this
Note is extended by Holder in accordance with subsection (c), above, thereafter
Maker shall have the right to prepay all or any part of the principal under this
Note without penalty upon not less than ten (10) days prior written notice to
Holder.

    

    e. Holder
may, upon not less than five (5) days written notice to Maker, convert all or
part of the then unpaid principal and accrued interest balance due of this Note
into common stock of Secured Diversified Investment, Ltd. as per the terms of
that certain Conversion and Registration Rights Agreement of even date and
executed contemporaneously herewith (the “Agreement”).

     

    
      
         

      

      
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    3.           Grant of
Security Interest.  As collateral
security for the prompt, complete, and timely satisfaction of all present and
future indebtedness, liabilities, duties, and obligations of Maker to Holder
evidenced by or arising under this Note, and including, without limitation, all
principal and interest payable under this Note and all attorneys’ fees, costs
and expenses incurred by Maker in the collection or enforcement of the same
(collectively, the “Obligations”), Maker
hereby pledges, assigns and grants to Holder a continuing security interest and
lien in all of Maker’s right, title and interest in and to the property, whether
now owned or hereafter acquired by Maker and whether now existing or hereafter
coming into existence or acquired, including the proceeds of any disposition
thereof, described on Exhibit “A” attached hereto and incorporated herein by
this reference (collectively, the “Collateral”).  As
applicable, the terms of this Note with respect to Maker’s granting of a
security interest in the Collateral to Holder shall be deemed to be a security
agreement under applicable provisions of the Uniform Commercial Code (“UCC”), with Maker as
the debtor and Holder as the secured party.

    

    4.           Perfection.  Upon the
execution and delivery of this Note, Maker authorizes Holder to file such
financing statements and other documents in such offices as shall be necessary
or as Holder may reasonably deem necessary to perfect and establish the relative
priority of the liens granted by this Note, including any amendments,
modifications, extensions or renewals thereof. Maker agrees, upon Holder’s
request, to take all such actions as shall be necessary or as Holder may
reasonably request to perfect and establish the relative priority of the liens
granted by this Note, including any amendments, modifications, extensions or
renewals thereof. Maker shall cooperate fully with Holder in establishing and
maintaining Holder’s perfection of Holder’s security interest in the Collateral,
including notifying and keeping Holder apprised of the current location of all
of the Collateral, providing Holder with current information including any
identifying serial numbers with respect to that portion of the Collateral
consisting of the tables and related software, electronic equipment and
intellectual property that comprise Maker’s primary product (each a “Gaming Unit” and,
collectively, the “Gaming
Units”).

    

    5.           Representations
and Warranties of Maker.  Maker hereby
represents and warrants the following to Holder:

    

    a. Maker and
those executing this Note on its behalf have the full right, power, and
authority to execute, deliver and perform the Obligations under this Note, which
are not prohibited or restricted under the articles of incorporation or bylaws
of Maker.  This Note has been duly executed and delivered by an
authorized officer of Maker and constitutes a valid and legally binding
obligation of Maker enforceable in accordance with its terms.

    

    b. The
execution of this Note and Maker’s compliance with the terms, conditions and
provisions hereof does not conflict with or violate any provision of any
agreement, contract, lease, deed of trust, indenture, or instrument to which
Maker is a party or by which Maker is bound, or constitute a default thereunder
or result in the imposition of any lien, charge, encumbrance, claim or security
interest of any nature whatsoever upon any of the Collateral.

    

    
      
         

      

      
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    c. The
security interest granted hereby in and to the Collateral constitutes a present,
valid, binding and enforceable security interest as collateral security for the
Obligations.

    

    d. The
approximate cost per Gaming Unit is $1,200 USD.

    

    6.
           Covenants
of Maker.  For so long as any Obligations remain
outstanding:

    

    a. Maker
shall use the proceeds of this Note solely for the purpose of the manufacture,
delivery and installation of Gaming Units;

    

    b. Maker
shall not sell, assign or transfer any of the Collateral, or any part thereof or
interest therein;

    

    c. Maker
shall pay or cause to be paid promptly when due all taxes and assessments on the
Collateral; and

    

    d. Maker
shall keep Holder apprised, in writing, as to the current location of all of the
Collateral, providing Holder with current information including any identifying
serial numbers with respect to that portion of the Collateral consisting of the
Gaming Units so that Holder may perfect and maintain the relative priority of
its security interest therein.

    

    7.           Use of
Collateral.  For so long as no
event of default shall have occurred and be continuing under this Note, Maker
shall be entitled to use and possess the Collateral and to exercise its rights,
title and interest in all contracts, agreements, and licenses subject to the
rights, remedies, powers and privileges of Holder under this Note and to such
use, possession or exercise not otherwise constituting an event of
default.  Notwithstanding anything herein to the contrary, Maker shall
remain liable to perform its duties and obligations under the contracts and
agreements included in the Collateral in accordance with their respective terms
to the same extent as if this Note had not been executed and delivered; the
exercise by Holder of any right, remedy, power or privilege in respect of this
Note shall not release the Maker from any of its duties and obligations under
such contracts and agreements; and Holder shall have no duty, obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Note, nor shall Holder be obligated to perform any of the duties
or obligations of Maker under any such contract or agreement or to take any
action to collect or enforce any claim (for payment) under any such contract or
agreement.

    

    8.           Defaults.  The following
events shall be defaults under this Note:

     

    
      
         

      

      
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    a.           Maker’s
failure to remit any payment under this Note on before the date due, if such
failure is not cured in full within five (5) days of written notice of
default;

    

    b.           Maker’s
failure to perform or breach of any non-monetary obligation or covenant set
forth in this Note or in the Agreement if such failure is not cured in full
within ten (10) days following delivery of written notice thereof from Holder to
Maker;

    

    c.           If
Maker is dissolved, whether pursuant to any applicable articles of incorporation
or bylaws, and/or any applicable laws, or otherwise;

    

    d.           Default
in the Maker’s obligation for borrowed money, other than this loan, which shall
continue for a period of twenty (20) days;

    

    e.           The
commencement of any action or proceeding which affects the Collateral or title
thereto or the interest of Holder therein, including, but not limited to eminent
domain, insolvency, code enforcement or arrangements or proceedings involving a
bankrupt or decedent;

    

    f.           The
entry of a decree or order by a court having jurisdiction in the premises
adjudging the Maker bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Maker under the federal Bankruptcy code or any other applicable
federal or state law, or appointing a receiver, liquidator, assignee or trustee
of the Maker, or any substantial part if its property, or ordering the winding
up or liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of twenty (20) days; or

    

    g.           Maker’s
institution of proceedings to be adjudicated a bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it, or its filing of a petition or answer or consent seeking reorganization or
relief under the federal Bankruptcy Code or any other applicable federal or
state law, or its consent to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee or trustee of the company, or of
any substantial part of its property, or its making of an assignment for the
benefit of creditors or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by the
Maker in furtherance of any such action.

    

    h.           The
failure by Secured Diversified Investment, Ltd. to timely file with the United
States Securities and Exchange Commission (“SEC”) all reports and other
documents required of the Maker under the Securities Act of 1933 (“Securities
Act”) and the Securities Exchange Act of 1934 (“Exchange Act”).

    

    i.           Any
act or series of acts by Maker which has the effect of Secured Diversified
Investment, Ltd. no longer being registered as a publicly reporting company
pursuant to the Exchange Act or no longer having Secured Diversified Investment,
Ltd.’s common stock trade on the OTCBB, once that common stock begins to trade
following clearance from FINRA of the trading of such stock following the
bankruptcy of Secured Diversified Investment, Ltd. concluded in or about
February 2009.

     

    
      
         

      

      
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    9.           Rights
and Remedies of Holder.  Upon the occurrence of an event of
default by Maker under this Note or at any time before default when the Holder
reasonably feels insecure, then, in addition to all other rights and remedies at
law or in equity, Holder may exercise any one or more of the following rights
and remedies:

    

    a.           Accelerate
the time for payment of all amounts payable under this Note by written notice
thereof to Maker, whereupon all such amounts shall be immediately due and
payable.

    

    b.           Pursue
and enforce all of the rights and remedies provided to a secured party with
respect to the Collateral under the Uniform Commercial Code.

    

    c.           Make
such appearance, disburse such sums, and take such action as Holder deems
necessary, in its sole discretion, to protect Holder’s interest, including but
not limited to (i) disbursement of attorneys’ fees, (ii) entry upon the Maker’s
property to make repairs to the Collateral, and (iii) procurement of
satisfactory insurance.  Any amounts disbursed by Holder pursuant to
this Section, with interest thereon, shall become additional indebtedness of the
Maker secured by this Note and shall be immediately due and payable and shall
bear interest from the date of disbursement at the default rate stated in this
Note.  Nothing contained in this Section shall require Holder to incur
any expense or take any action.

    

    d.           Require
Maker to assemble the Collateral and make it available to the Maker at the place
to be designated by the Holder which is reasonably convenient to both parties.
The Holder may sell all or any part of the Collateral as a whole or in part
either by public auction, private sale, or other method of
disposition.  The Holder may bid at any public sale on all or any
portion of the Collateral.  Unless the Collateral threatens to decline
speedily in value, Holder shall give Maker reasonable notice of the time and
place of any public sale or of the time after which any private sale or other
disposition of the Collateral is to be made, and notice given at least 10 days
before the time of the sale or other disposition shall be conclusively presumed
to be reasonable.

    

    e.           Pursue
any other rights or remedies available to Holder at law or in
equity.

    

    10.           Interest
To Accrue Upon Default. Upon the occurrence of an
event of default by Maker under this Note, the balance then owing under the
terms of this Note shall accrue interest at the rate of Eighteen Percent percent (18.0%) per
annum from the date of default until Holder is satisfied in
full.

    

    11.           Full
Recourse.  The liability of Maker for the Obligations shall not
be limited to the Collateral, and Maker shall have full liability therefor
beyond the Collateral.

     

    
      
         

      

      
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    12.           Representation
of Counsel.  Maker
acknowledges that they have consulted with or have had the opportunity to
consult with their legal counsel prior to executing this Note.  This
Note has been freely negotiated by Maker and Holder and any rule of construction
to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Note.

    

    13.           Choice of
Laws; Actions.  This Note shall
be constructed and construed in accordance with the internal substantive laws of
the State of Nevada, without regard to the choice of law principles of said
State.  Maker acknowledges that this Note has been negotiated in Clark
County, Nevada.  Accordingly, the exclusive venue of any action, suit,
counterclaim or cross claim arising under, out of, or in connection with this
Note shall be the state or federal courts in Clark County,
Nevada.  Maker hereby consents to the personal jurisdiction of any
court of competent subject matter jurisdiction sitting in Clark County,
Nevada.

    

    14.           Usury
Savings Clause.  Maker expressly agrees and acknowledges that
Maker and Holder intend and agree that this Note shall not be subject to the
usury laws of any state other than the State of
Nevada.  Notwithstanding anything contained in this Note to the
contrary, if collection from Maker of interest at the rate set forth herein
would be contrary to applicable laws, then the applicable interest rate upon
default shall be the highest interest rate that may be collected from Maker
under applicable laws at such time.

    

    15.           Costs of
Collection.  Should the
indebtedness represented by this Note, or any part hereof, be collected at law,
in equity, or in any bankruptcy, receivership or other court proceeding, or this
Note be placed in the hands of any attorney for collection after default, Maker
agrees to pay, in addition to the principal and interest due hereon, all
reasonable attorneys’ fees, plus all other costs and expenses of collection and
enforcement, including any fees incurred in connection with such proceedings or
collection of the Note and/or enforcement of Holder’s rights with respect to the
administration, supervision, preservation or protection of, or realization upon,
any Collateral securing payment hereof.

     

    
      
         

      

      
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    16.           Miscellaneous.

    

    a.           This
Note shall be binding upon Maker and shall inure to the benefit of Holder and
its successors, assigns, heirs, and legal representatives.

    

    b.           Any
failure or delay by Holder to insist upon the strict performance of any term,
condition, covenant or agreement of this Note, or to exercise any right, power
or remedy hereunder shall not constitute a waiver of any such term, condition,
covenant, agreement, right, power or remedy.

    

    c.           Any
provision of this Note that is unenforceable shall be severed from this Note to
the extent reasonably possible without invalidating or affecting the intent,
validity or enforceability of any other provision of this Note.

    

    d.           This
Note may not be modified or amended in any respect except in a writing executed
by the party to be charged.

    

    e.           Time
is of the essence.

    

    17.           Notices.   All notices
required to be given under this Note shall be given as follows or at such other
address as a party may designate by written notice to the other
parties:

    

    
      	
               

            	
              To
      Maker:

            

    

     

    
      
        
          	
                  Secured
      Diversified Investment, Ltd.

                  Galaxy
      Gaming, Inc.

                
	
                  Attn:  Robert
      Saucier, President

                
	
                  6980
      O’Bannon Drive

                
	
                  Las
      Vegas, NV 89117

                
	
                  (702)
      938-1735 (fax)

                

        

      

    

    

    
      	
               
      

            	
              To
      Holder:

            

    

     

    
      	
              ___________________

            
	      
              
                ______________________

              

            
	
              ___________________

            
	
              ___________________

            
	
              ___________________

            

    

    

    
      
         

      

      
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    Notices
may be transmitted by facsimile, certified mail, private delivery, or any other
commercially reasonable means, and shall be deemed given upon receipt by the
Party to whom they are addressed.

    

    

    18.           Waiver of
Certain Formalities. All parties to this Note
hereby waive presentment, dishonor, notice of dishonor and
protest.  All parties hereto consent to, and Holder is hereby
expressly authorized to make, without notice, any and all renewals, extensions,
modifications or waivers of the time for or the terms of payment of any sum or
sums due hereunder, or under any documents or instruments relating to or
securing this Note, or of the performance of any covenants, conditions or
agreements hereof or thereof or the taking or release of collateral securing
this Note.  Any such action taken by Holder shall not discharge the
liability of any party to this Note.

    

    IN WITNESS WHEREOF, this Note
has been executed effective the date and place first written above.

    

    
      	
              Secured
      Diversified Investment, Ltd. “Maker”:

               

               

              By:
      ________________________________

               

              Its:
      ________________________________

               

              Print Name:

               

              Date:______________________________

            	
              Galaxy
      Gaming, Inc. “Maker”:

               

               

              By:
      ________________________________

               

              Its:
      ________________________________

               

              Print Name:

               

              Date:______________________________

            
	
               

               

              __________________________
      “Holder”:

               

               

              By:
      ________________________________

               

              Its:
      ________________________________

               

              Print Name:

               

              Date:______________________________

            	 
      

    

    

    
      
         

      

      
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    Exhibit
“A”

    

    Collateral

    

    Each and
all of the following in which Secured Diversified Investment,
Ltd., a Nevada Corporation, and/or Galaxy Gaming, Inc., a Nevada
corporation, has any right, title, or interest, regardless of the manner in
which such items are formally held or titled; all as defined in the Nevada
Uniform Commercial Code - Secured Transactions (Nevada Revised Statutes (“NRS”)
§§ 104.9101 et. seq.) as of the date of the Note, and as the same may be amended
hereafter:

    

    (1)
Equipment, as defined in NRS 104.9102(1)(gg), specifically consisting of the
electronic components, signage, software, and intellectual property that
comprise the Gaming Units.

    

    (2)  Accounts,
as defined in NRS 104.9102(1)(a)

    

    (3)  Cash
proceeds, as defined in NRS 104.9102(1)(I)

    

    (4)
Inventory, as defined in NRS 104.9102(1)(vv)

    

    (5)
Noncash proceeds, as defined in NRS 104.9102(1)(fff)

    

    (6)
Proceeds, as defined in NRS 104.9102(1)(lll)

    

    (7)
Software, as defined in NRS 104.9102(1)(www)ex10_5.htm

    NEITHER
THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY OTHER
APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES
LAWS.  NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE
HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT.

     

    

     

    STOCK
PURCHASE WARRANT

    

    

    To
Purchase up to 43,750 Shares of Common Stock of Secured Diversified Investment,
Ltd.

     

    THIS
CERTIFIES that, for value received, The Kleemann Family 2004 Revocable Trust
(the “Holder”), shall have the right to purchase from Secured Diversified
Investment, Ltd., a Nevada corporation (the “Company”), up to 43,750 fully paid
and non-assessable shares of the Company’s Common Stock (the “Common Stock”) at
an exercise price of $0.40 US per share (the “Exercise Price”), subject to
further adjustment as set forth herein, at any time on or before April 21, 2014
(the “Termination Date”).

     

    1. Title to
Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly
endorsed.

     

    2. Authorization of
Shares.  The Company covenants that all shares of Common Stock
which may be issued upon the exercise of rights represented by this Warrant
will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such
issue).

     

    3. Exercise of
Warrant.

     

    (a)           Exercise
of the purchase rights represented by this Warrant may be made at any time or
times on or after the closing of the offering, and before the close of business
on the Termination Date by the surrender of this Warrant and the Notice of
Exercise Form annexed hereto duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder hereof at the address of such holder appearing
on the books of the Company) and upon payment of the Exercise Price of the
shares thereby purchased by wire transfer or cashier’s check drawn on a United
States bank, the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased.

     

    
      
         

      

      
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    (b)           In
lieu of cash exercising this Warrant, the Holder of this Warrant may elect to
receive shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election, in which event the Company shall issue to
the Holder hereof a number of Shares computed using the following
formula:

     

    X    =
       Y(A-B)/A

     

    
      	Where	X
      --	The
      number of shares of Common Stock to be issued to the holder of
      this Warrant.
	 	 	 
	
               
      

            	
              Y
      --

            	
              The
      number of shares of Common Stock purchasable under this
      Warrant.

            

       

      
        	
                 
      

              	
                A
      --

              	
                The
      fair market value of one share of the Company’s Common
    Stock.

              

      

       

      
        	
                 
      

              	
                B
      --

              	
                The
      Exercise Price (as adjusted to the date of such
    calculations).

              

      

       

    

    For
purposes of this Paragraph 3(b), the fair market value of the Common Stock, if
publicly traded, shall be the five day average of the reported closing price
each day of the Shares for the five days immediately preceding the exercise of
this Warrant.  If the Shares are not publicly traded, their fair
market value shall be the price per share that the Company could obtain from a
willing buyer for shares of Common Stock sold by the Company from authorized but
unissued shares, as such prices shall be determined by reference to the most
recent sale or issuance by the Company of Common Stock.

     

    (c)           Certificates
for shares purchased hereunder shall be delivered to the Holder hereof within
five (5) trading days after the date on which this Warrant shall have been
exercised as aforesaid. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to have
become a Holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by Holder, if any, pursuant to Section 4 prior to
the issuance of such shares, have been paid.

     

    
      
         

      

      
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    4. Charges, Taxes and
Expenses.  Issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, and such certificates shall be issued in the
name of the Holder of this Warrant or in such name or names as may be directed
by the Holder of this Warrant.

     

    5. Closing of
Books.  The Company will not close its shareholder books or
records in any manner which prevents the timely exercise of this
Warrant.

     

    6. Transfer, Division and
Combination.

     

    (a) Subject
to compliance with any applicable securities laws, transfer of this Warrant and
all rights hereunder, in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by Holder or its
agent or attorney.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A Warrant, if properly assigned,
may be exercised by a new Holder for the purchase of shares of Common Stock
without having a new Warrant issued.

     

    (b)           This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney.  Subject to compliance with
Section 6(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

    

    (c)           The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 6.

    

    (d)           The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.

    

    7. No Rights as Shareholder
until Exercise.  This Warrant does not entitle the Holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.  Upon the surrender of this Warrant and
the payment of the aggregate Exercise Price, the Common Stock so purchased shall
be and be deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.

     

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

     

    
      
         

      

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

     

    10. Adjustments of Exercise
Price and Number of Warrant Shares.

     

    (a) Stock Splits, etc.
The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.  In case the Company shall: (i) pay
a dividend in shares of Common Stock or make a distribution in shares of Common
Stock to Holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of shares of Common Stock
purchasable upon exercise of this Warrant (the “Warrant Shares”) immediately
prior thereto shall be adjusted so that the Holder of this Warrant shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company which he would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof.  Upon each such adjustment
of the kind and number of Warrant Shares or other securities of the Company
which are purchasable hereunder, the Holder of this Warrant shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such
adjustment.  An adjustment made pursuant to this paragraph shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event.

     

    (b) Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.  In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation (“Other
Property”), are to be received by or distributed to the Holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event.  In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section
10.  For purposes of this Section 10, “common stock of the successor
or acquiring corporation” shall include stock of such corporation of any class
which is not preferred as to dividends or assets over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such
stock.  The foregoing provisions of this Section 10 shall similarly
apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.

     

    
      
         

      

      
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    11. Notice of
Adjustment.  Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
Holder of this Warrant notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.  Such notice, in the
absence of manifest error, shall be conclusive evidence of the correctness of
such adjustment.

     

    12. Notice of Corporate
Action.  If at any time:

     

    (a)           the
Company shall take a record of the Holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of stock
of any class or any other securities or property, or to receive any other right,
or

    

    (b)           there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to, another
corporation, or

    

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

     

    
      
         

      

      
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    then, in
any one or more of such cases, the Company shall give to Holder (i) at least 3
days’ prior written notice of the date on which a record date shall be selected
for such dividend, distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, liquidation or winding up, and (ii) in the case of
any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 3 days’
prior written notice of the date when the same shall take place.  Such
notice in accordance with the foregoing clause also shall specify (a) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the Holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (b) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the Holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up.  Each such written notice shall be sufficiently given if addressed
to Holder at the last address of Holder appearing on the books of the Company
and delivered in accordance with Section 18(e).

     

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

     

    14. No
Impairment.  The Company shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment.  Without limiting the generality
of the foregoing, the Company will (a) not increase the par value of any shares
of Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of Common Stock upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant. Before taking any action
which would cause an adjustment reducing the current Exercise Price below the
then par value, if any, of the shares of Common Stock issuable upon exercise of
the Warrants, the Company shall take any corporate action which may be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Exercise
Price.

     

    
      
         

      

      
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    15. Written
Acknowledgment.  Upon the request of Holder, the Company will
at any time during the period this Warrant is outstanding acknowledge in
writing, in form reasonably satisfactory to Holder, the continuing validity of
this Warrant and the obligations of the Company hereunder.

     

    16. Prior Regulatory
Approval.  Before taking any action which would result in an
adjustment in the number of shares of Common Stock for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction
thereof.

     

    17. Registration
Rights.

     

    (a) Definitions.  As
used in this Warrant, the following terms shall have the following
meanings.

     

    (1) The term
“Holder” shall mean any person owning or having the right to acquire Registrable
Securities or any permitted transferee of a Holder.

     

    (2) The terms
“register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or order of effectiveness of such
registration statement or document.

     

    (3) The term
“Registrable Securities” shall mean the Warrant Shares; provided, however, that
securities shall only be treated as Registrable Securities if and only for so
long as they (A) have not been disposed of pursuant to a registration statement
declared effective by the SEC; (B) have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
so that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale; (C) are held by a Holder or a
permitted transferee of a Holder; and (D) may not be disposed of under Rule 144
under the Securities Act without restriction.

     

    (b) Piggyback
Registration.

     

    (1) The
Company agrees that if, at any time, and from time to time, after the closing,
the Board of Directors of the Company (the “Board”) shall authorize the filing
of a registration statement under the Securities Act (other than a registration
statement on Form S-8, Form S-4 or any other form that does not include
substantially the same information as would be required in a form for the
general registration of securities) in connection with the proposed offer of any
of its securities by it or any of its stockholders, the Company shall: (A)
promptly notify each Holder that such registration statement will be filed and
that the Registrable Securities then held by such Holder will be included in
such registration statement at such Holder’s request; (B) cause such
registration statement to cover all of such Registrable Securities issued to
such Holder for which such Holder requests inclusion; (C) use best efforts to
cause such registration statement to become effective as soon as practicable;
and (D) take all other reasonable action necessary under any federal or state
law or regulation of any governmental authority to permit all such Registrable
Securities that have been issued to such Holder to be sold or otherwise disposed
of, and will maintain such compliance with each such federal and state law and
regulation of any governmental authority for the period necessary for such
Holder to promptly effect the proposed sale or other disposition.

     

    
      
         

      

      
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    (2) Notwithstanding
any other provision of this Section 17, the Company may at any time, abandon or
delay any registration commenced by the Company.  In the event of such
an abandonment by the Company, the Company shall not be required to continue
registration of shares requested by the Holder for inclusion, the Holder shall
retain the right to request inclusion of shares as set forth above and the
withdrawn registration shall not be deemed to be a registration request for the
purposes of subsection 17(c)(3) below.

     

    (3) Each
Holder shall have the right to request inclusion of any of its Registrable
Securities in a registration statement as described in this subsection 18(c), up
to three times.

     

    (c) Registration
Procedures.  Whenever required under this Section 17 to include
Registrable Securities in a Company registration statement, the Company shall,
as expeditiously as reasonably possible:

     

    (1) Use best
efforts to (i) cause such registration statement to become effective, and (ii)
cause such registration statement to remain effective until the earliest to
occur of (A) such date as the sellers of Registrable Securities (the “Selling
Holders”) have completed the distribution described in the registration
statement and (B) such time that all of such Registrable Securities are no
longer, by reason of Rule 144 under the Securities Act, required to be
registered for the sale thereof by such Holders.  The Company will
also use its best efforts to, during the period that such registration statement
is required to be maintained hereunder, file such post-effective amendments and
supplements thereto as may be required by the Securities Act and the rules and
regulations thereunder or otherwise to ensure that the registration statement
does not contain any untrue statement of material fact or omit to state a fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that if applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permits, in lieu of
filing a post-effective amendment that (i) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (ii) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the Company may incorporate by reference information
required to be included in (i) and (ii) above to the extent such information is
contained in periodic reports filed pursuant to Section 13 or 15(d) of the
Exchange Act in the registration statement.

     

    (2) Prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.

     

    
      
         

      

      
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    (3) Make
available for inspection upon reasonable notice during the Company’s regular
business hours by each Selling Holder, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such Selling Holder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Selling Holder, underwriter,
attorney, accountant or agent in connection with such registration
statement.

     

    (4) Furnish
to the Selling Holders such numbers of copies of a final prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.

     

    (5) Use best
efforts to register and qualify the securities covered by such registration
statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the Selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.

     

    (6) In the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering.  Each Selling Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

     

    (7) Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, (i) when the registration statement or any post-effective
amendment and supplement thereto has become effective; (ii) of the issuance by
the SEC of any stop order or the initiation of proceedings for that purpose (in
which event the Company shall make every effort to obtain the withdrawal of any
order suspending effectiveness of the registration statement at the earliest
possible time or prevent the entry thereof); (iii) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iv) of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.

     

    (8) Cause all
such Registrable Securities registered hereunder to be listed on each securities
exchange or quotation service on which similar securities issued by the Company
are then listed or quoted or, if no such similar securities are listed or quoted
on a securities exchange or quotation service, apply for qualification and use
best efforts to qualify such Registrable Securities for inclusion on the New
York Stock Exchange, American Stock Exchange or listing on a quotation system of
the Financial Industry Regulatory Authority or the National Association of
Securities Dealers, Inc.

     

    
      
         

      

      
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    (9) Cooperate
with the Selling Holders and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Securities to be sold, which certificates will not bear any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, shall request at
least five business days prior to any sale of the Registrable Securities to the
underwriters.

     

    (10) In
connection with an underwritten offering, cause the officers of the Company to
provide reasonable assistance in the preparation of, any “road show”
presentation to potential investors as the managing underwriter may
determine.

     

    (11) Comply
with all applicable rules and regulations of the SEC and make generally
available to its security holders earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 50 calendar days after
the end of any 3-month period (or 105 calendar days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering, and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company, after the effective date of a registration
statement, which statements shall cover said period.

     

    (12) If the
offering is underwritten and at the request of any Selling Holder, use its best
efforts to furnish on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration: (i) opinions dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters and the transfer agent for the Registrable
Securities so delivered, respectively, to the effect that such registration
statement has become effective under the Securities Act and such Registrable
Securities are freely tradable, and covering such other matters as are
customarily covered in opinions of issuer’s counsel delivered to underwriters
and transfer agents in underwritten public offerings and (ii) a letter dated
such date from the independent public accountants who have certified the
financial statements of the Company included in the registration statement or
the prospectus, covering such matters as are customarily covered in accountants’
letters delivered to underwriters in underwritten public offerings.

     

    (d) Furnish
Information.  It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Section 17 with
respect to the Registrable Securities of any Selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be reasonably required by the Company to
effect the registration of such Holder’s Registrable Securities.

     

    (e) Registration
Expenses.  The Company shall bear and pay all registration
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registrations pursuant to Section 17
for each Holder, but excluding underwriting discounts and commissions relating
to Registrable Securities and excluding any professional fees or costs of
accounting, financial or legal advisors to any of the Holders.

     

    
      
         

      

      
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    (f) Underwriting
Requirements.  In connection with any offering involving an
underwriting of shares of the Company’s capital stock, the Company shall not be
required under Section 17 to include any of the Holders’ Registrable Securities
in such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company.  If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders).  For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder who is a
holder of Registrable Securities and is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single “selling
stockholder,” and any pro-rata reduction with respect to such “selling
stockholder” shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
“selling stockholder,” as defined in this sentence.

     

    (g) Delay of
Registration.  No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 17.

     

    (h) Indemnification.  In
the event that any Registrable Securities are included in a registration
statement under this Section 17:

     

    (1) To the
extent permitted by law, the Company will indemnify and hold harmless each
Selling Holder, any underwriter (as defined in the Securities Act) for such
Selling Holder and each person, if any, who controls such Selling Holder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, or the Exchange Act, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”):  (i) any untrue statement of
a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation by the Company of the Securities Act, the
Exchange Act, or any rule or regulation promulgated under the Securities Act, or
the Exchange Act, and the Company will pay to each such Selling Holder,
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 17(i)(1) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Selling Holder, underwriter or controlling
person.

     

    
      
         

      

      
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    (2) To the
extent permitted by law, each Selling Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other Selling Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Selling
Holder, against any losses, claims, damages, or liabilities (joint or several)
to which any of the foregoing persons may become subject, under the Securities
Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Holder expressly for use in connection with such
registration; and each such Selling Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 17(i)(2), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 17(i)(2) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Selling Holder, which
consent shall not be unreasonably withheld or delayed; provided, further, that, in no
event shall any indemnity under this subsection 17(i)(2) exceed the greater of
the cash value of the (i) gross proceeds from the Offering received by such
Selling Holder or (ii) such Selling Holder’s investment pursuant to this
Agreement as set forth on the signature page attached hereto.

     

    (3) Promptly
after receipt by an indemnified party under this subsection 17(i) of notice of
the commencement of any action (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this subsection 17(i), deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly notified,
to assume the defense thereof with counsel selected by the indemnifying party
and approved by the indemnified party (whose approval shall not be unreasonably
withheld or delayed); provided, however, that an indemnified party (together
with all other indemnified parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding.  The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
subsection 17(i), but the omission to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this subsection 17(i).

     

    
      
         

      

      
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    (4) If the
indemnification provided for in this subsection 17(i) is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations.  The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the alleged omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.

     

    (5) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall
control.

     

    (6) The
obligations of the Company and Selling Holders under this subsection 17(i) shall
survive the completion or termination of the Offering.

     

    (i) Reports Under Securities
Exchange Act of 1934.  With a view to making available to the
Holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3 (or other
applicable form), the Company agrees to:

     

    (1) file with
the SEC all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and

     

    (2) furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (ii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.

     

    (j) Permitted
Transferees.  The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Section
17 may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities if: (a) such Holder gives prior
written notice to the Company; (b) such transferee agrees to comply with the
terms and provisions of this Warrant; (c) such transfer is otherwise in
compliance with this Warrant; and (d) such transfer is otherwise effected
in accordance with applicable securities laws.  Except as specifically
permitted by this subsection 17(k), the rights of a Holder with respect to
Registrable Securities as set out herein shall not be transferable to any other
Person, and any attempted transfer shall cause all rights of such Holder therein
to be forfeited.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (k) Termination of Registration
Rights.  The right of any Holder to request inclusion in any
registration pursuant to Section 17 shall terminate if all shares of Registrable
Securities held by such Holder may immediately be sold under Rule
144.

     

    18. Miscellaneous.

     

    (a) Choice of Laws, Jurisdiction
and Venue. This Warrant shall constitute a contract under the laws of
Nevada and its interpretation and construction shall be determined pursuant to
the laws of Nevada without regard to its conflict of law, principles or
rules.  In the event that a judicial proceeding is necessary, the sole
and exclusive forum for resolving disputes arising out of or relating to this
Warrant is the courts sited in Clark County, Nevada, or the federal courts for
such state and county, and all related appellate courts, the parties hereby
irrevocably consent to the jurisdiction of such courts and agree to said
venue.

     

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

     

    (c) Non-waiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination
Date.  If the Company fails to comply with any provision of this
Warrant, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

     

    (d) Notices – by the
Company.  Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof by the Company shall be
deemed delivered upon deposit by the Company in the U.S. Mail, first class
postage prepaid at the address of the Holder in the shareholder records of the
Company.  The Holder is responsible to notify the Company of any
change in the Holder’s address by delivering written notice of the change of
address to the Company in accordance with subparagraph (e), below.

     

    (e) Notices – By a
Holder. Any notice, request or other document required or permitted to be
given or delivered to the Company hereof by the Holder shall be transmitted
overnight delivery via FedEx, UPS, U.S. Postal Service or other carrier of
similar reliability, signature upon delivery required, attn: General Counsel, to
each of the Company’s head office as reflected on the most recently publicly
filed Annual List with the Nevada Secretary of State or on the most recently
publicly filed 10Q or 10K report, if applicable.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

    (i) Indemnification.  The
Company agrees to indemnify and hold harmless Holder from and against any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys’ fees, expenses and disbursements of any kind which may
be imposed upon, incurred by or asserted against Holder in any manner relating
to or arising out of any failure by the Company to perform or observe in any
material respect any of its covenants, agreements, undertakings or obligations
set forth in this Warrant; provided, however, that the
Company will not be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys’ fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder’s negligence,
bad faith or willful misconduct in its capacity as a stockholder or Warrant
Holder of the Company.

     

    (j) Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

     

    (k) Neutral
Construction.  The Company acknowledges that it has consulted
with or have had the opportunity to consult with its legal counsel prior to
executing this Agreement.  This Agreement has been freely negotiated
by the Company and Holder and any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.

     

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

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (m) Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

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

     

    Dated
this April 21, 2009

     

    
      
        	
                Secured
      Diversified Investment, Ltd.

                 

              
	
                By:

              	 
      
	 
      	
                Authorized
      Representative

              

      

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

NOTICE OF
EXERCISE

    

    

    To:Secured
Diversified Investment, Ltd.

     

    

    (1) The
undersigned hereby elects to purchase _________ shares of Common Stock (the
“Common Stock”), of Secured Diversified Investment, Ltd. pursuant to the terms
of the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.

     

    (2) Please
issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified
below:

     

    

    _______________________________

    (Name)

    

    _______________________________

    (Address)

    _______________________________

    

    _______________________________

    Social Security or Tax Identification
Number

    

    

    

    

    

    Dated:
______________________

    

    

    ______________________________

    Signature

    

    ______________________________

    Print Name

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    
      ASSIGNMENT
FORM

      

      (To
assign the foregoing warrant, execute

      this form
and supply required information.

      Do not
use this form to exercise the warrant.)

      

      

      

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

       

      

      _______________________________________________
whose address is

      

      _______________________________________________________________.

      

      

      

      _______________________________________________________________

      

      Dated:  ______________,
_______

      

      

      Holder's
Signature:          _____________________________

      

      Holder's
Address:            _____________________________

       

                          _____________________________

      

      

      

      Signature
Guaranteed:  ___________________________________________

      

      

      

      

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

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