Document:

zealous_8k-ex1005.htm

    EXHIBIT
      10.5

     

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

    

    SERIES
      B COMMON STOCK PURCHASE WARRANT

    

     ZEALOUS
      TRADING GROUP, INC.

     

    
      	
              Warrant
                Shares: _______

              B-

            	Issue
              Date: October 17, 2007

    

     

    THIS
      SERIES B COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
      for value received, _____________ (the “Holder”) is entitled, upon the
      terms and subject to the limitations on exercise and the conditions hereinafter
      set forth, at any time on or after the earlier of (i) Authorized Share Approval
      or (ii) the 18th month anniversary
      of the Issue Date (the “Initial Exercise Date”) and on or prior to the
      close of business on the five year anniversary of the Initial Exercise Date
      (the
“Termination Date”) but not thereafter, to subscribe for and purchase
      from Zealous Trading Group, Inc., a Nevada corporation (the “Company”),
      up to ______ shares (the “Warrant Shares”) of Common
      Stock.  The purchase price of one share of Common Stock under this
      Warrant shall be equal to the Exercise Price, as defined in Section
      2(b).

     

    Section
      1.    Definitions.  Capitalized
      terms used and not otherwise defined herein shall have the meanings set forth
      in
      that certain Securities Purchase Agreement (the “Purchase Agreement”),
      dated October 16, 2007, among the Company and the purchasers signatory
      thereto.

     

    Section
      2.    Exercise.

     

    a)   Exercise
      of Warrant.  Exercise of the purchase rights represented by this
      Warrant may be made, in whole or in part, at any time or times on or after
      the
      Initial Exercise Date and on or before the Termination Date by delivery to
      the
      Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
      hereto (or such other office or agency of the Company as it may designate by
      notice in writing to the registered Holder at the address of the Holder
      appearing on the books of the Company); and, within 3 Trading Days of the date
      said Notice of Exercise is delivered to the Company, the Company shall have
      received  payment of the aggregate Exercise Price of the shares
      thereby purchased by wire transfer or cashier’s check drawn on a United States
      bank.  Notwithstanding anything herein to the contrary, the Holder
      shall not be required to physically surrender this Warrant to the Company until
      the Holder has purchased all of the Warrant Shares available hereunder and
      the
      Warrant has been exercised in full, in which case, the Holder shall surrender
      this Warrant to the Company for cancellation within 3 Trading Days of the date
      the final Notice of Exercise is delivered to the Company.  Partial
      exercises of this Warrant resulting in purchases of a portion of the total
      number of Warrant Shares available hereunder shall have the effect of lowering
      the outstanding number of Warrant Shares purchasable hereunder in an amount
      equal to the applicable number of Warrant Shares purchased.  The
      Holder and the Company shall maintain records showing the number of Warrant
      Shares purchased and the date of such purchases.  The Company shall
      deliver any objection to any Notice of Exercise Form within 2 Business Days
      of
      receipt of such notice.  In the event of any dispute or discrepancy,
      the records of the Holder shall be controlling and determinative in the absence
      of manifest error. The Holder and any assignee, by acceptance of this
      Warrant, acknowledge and agree that, by reason of the provisions of this
      paragraph, following the purchase of a portion of the Warrant Shares hereunder,
      the number of Warrant Shares available for purchase hereunder at any given
      time
      may be less than the amount stated on the face hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b)    Exercise
      Price.  The exercise price per share of the Common Stock under
      this Warrant shall be $0.03, subject to adjustment hereunder (the “Exercise
      Price”).

     

    c)    Cashless
      Exercise.  If at any time after the completion of the
      then-applicable holding period required by Rule 144, or any successor provision
      then in effect, which would allow “tacking” of the holding period of this
      Warrant and the Warrant Shares pursuant to the SEC Manual of Publicly Available
      Telephone Interpretations or other Commission rule or guidance, there is no
      effective Registration Statement registering, or no current prospectus available
      for, the resale of the Warrant Shares by the Holder at a time when such
      Registration Statement is required to be effective pursuant to the Registration
      Rights Agreement, then this Warrant may also be exercised at such time by means
      of a “cashless exercise” in which the Holder shall be entitled to receive a
      certificate for the number of Warrant Shares equal to the quotient obtained
      by
      dividing [(A-B) (X)] by (A), where:

     

    (A)
      = the
      VWAP on the Trading Day immediately preceding the date of such
      election;

     

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

     

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

     

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

     

    d)    Exercise
      Limitations; Holder’s Restrictions.  The Company shall not
      effect any exercise of this Warrant, and a Holder shall not have the right
      to
      exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to
      the
      extent that after giving effect to such issuance after exercise as set forth
      on
      the applicable Notice of Exercise, the Holder (together with the Holder’s
      Affiliates, and any other person or entity acting as a group together with
      the
      Holder or any of the Holder’s Affiliates), would beneficially own in excess of
      the Beneficial Ownership Limitation (as defined below).  For purposes of
      the foregoing sentence, the number of shares of Common Stock beneficially owned
      by the Holder and its Affiliates shall include the number of shares of Common
      Stock issuable upon exercise of this Warrant with respect to which such
      determination is being made, but shall exclude the number of shares of Common
      Stock which would be issuable upon (A) exercise of the remaining, nonexercised
      portion of this Warrant beneficially owned by the Holder or any of its
      Affiliates and (B) exercise or conversion of the unexercised or nonconverted
      portion of any other securities of the Company (including, without limitation,
      any other  Common Stock Equivalents) subject to a limitation on
      conversion or exercise analogous to the limitation contained herein beneficially
      owned by the Holder or any of its affiliates.  Except as set forth in the
      preceding sentence, for purposes of this Section 2(d), beneficial ownership
      shall be calculated in accordance with Section 13(d) of the Exchange Act and
      the
      rules and regulations promulgated thereunder, it being acknowledged by the
      Holder that the Company is not representing to the Holder that such calculation
      is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
      responsible for any schedules required to be filed in accordance
      therewith.   To the extent that the limitation contained in this
      Section 2(d) applies, the determination of whether this Warrant is exercisable
      (in relation to other securities owned by the Holder together with any
      Affiliates) and of which portion of this Warrant is exercisable shall be in
      the
      sole discretion of the Holder, and the submission of a Notice of Exercise shall
      be deemed to be the Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by the Holder together with
      any Affiliates) and of which portion of this Warrant is exercisable, in each
      case subject to the Beneficial Ownership Limitation, and the Company shall
      have
      no obligation to verify or confirm the accuracy of such
      determination.   In addition, a determination as to any group
      status as contemplated above shall be determined in accordance with Section
      13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder.  For purposes of this Section 2(d), in determining the
      number of outstanding shares of Common Stock, a Holder may rely on the number
      of
      outstanding shares of Common Stock as reflected in (x) the Company’s most recent
      periodic or annual report, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other notice by the Company or the
      Company’s Transfer Agent setting forth the number of shares of Common
      Stock

     

    
      
        
        

      

      
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    outstanding. 
      Upon the written or oral request of a Holder, the Company shall within two
      Trading Days confirm orally and in writing to the Holder the number of shares
      of
      Common Stock then outstanding.  In any case, the number of outstanding
      shares of Common Stock shall be determined after giving effect to the conversion
      or exercise of securities of the Company, including this Warrant, by the Holder
      or its Affiliates since the date as of which such number of outstanding shares
      of Common Stock was reported.  The “Beneficial Ownership
      Limitation” shall be 4.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock issuable upon exercise of this Warrant.  The Beneficial
      Ownership Limitation provisions of this Section 2(d) may be waived by the
      Holder, at the election of the Holder, upon not less than 61 days’ prior notice
      to the Company to change the Beneficial Ownership Limitation to 9.99% of the
      number of shares of the Common Stock outstanding immediately after giving effect
      to the issuance of shares of Common Stock upon exercise of this Warrant, and
      the
      provisions of this Section 2(d) shall continue to apply.  Upon such a
      change by a Holder of the Beneficial Ownership Limitation from such 4.99%
      limitation to such 9.99% limitation, the Beneficial Ownership Limitation may
      not
      be further waived by the Holder.  The provisions of this paragraph
      shall be construed and implemented in a manner otherwise than in strict
      conformity with the terms of this Section 2(d) to correct this paragraph (or
      any
      portion hereof) which may be defective or inconsistent with the intended
      Beneficial Ownership Limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such limitation.
      The limitations contained in this paragraph shall apply to a successor holder
      of
      this Warrant.

     

    e)    Mechanics
      of Exercise.

     

    i.    Delivery
      of Certificates Upon Exercise.  Certificates for shares purchased
      hereunder shall be transmitted by the transfer agent of the Company to the
      Holder by crediting the account of the Holder’s prime broker with the Depository
      Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”)
      system if the Company is a participant in such system and there is an effective
      Registration Statement permitting the resale of the Warrant Shares by the
      Holder, and otherwise by physical delivery to the address specified by the
      Holder in the Notice of Exercise within 3 Trading Days from the delivery to
      the
      Company of the Notice of Exercise Form, surrender of this Warrant (if required)
      and payment of the aggregate Exercise Price as set forth above (“Warrant
      Share Delivery Date”).  This Warrant shall be deemed to have been
      exercised on the date the Exercise Price is received by the
      Company.  The Warrant Shares shall be deemed to have been issued, and
      Holder or any other person so designated to be named therein shall be deemed
      to
      have become a holder of record of such shares for all purposes, as of the date
      the Warrant has been exercised by payment to the Company of the Exercise Price
      (or by cashless exercise, if permitted) and all taxes required to be paid by
      the
      Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of such
      shares, have been paid. If the Company fails for any reason to deliver to the
      Holder certificates evidencing the Warrant Shares subject to a Notice of
      Exercise by the second (2nd) Trading
      Day
      following the Warrant Share Delivery Date, the Company shall pay to the Holder,
      in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant
      Shares subject to such exercise (based on the VWAP of the Common Stock on the
      date of the applicable Notice of Exercise), $10 per Trading Day (increasing
      to
      $20 per Trading Day on the fifth Trading Day after such liquidated damages
      begin
      to accrue) for each Trading Day after such Warrant Share Delivery Date until
      such certificates are delivered.

     

    
      
        
        

      

      
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    ii.    Delivery
      of New Warrants Upon Exercise.  If this Warrant shall have been
      exercised in part, the Company shall, at the request of a Holder and upon
      surrender of this Warrant certificate, at the time of delivery of the
      certificate or certificates representing Warrant Shares, deliver to Holder
      a new
      Warrant evidencing the rights of Holder to purchase the unpurchased Warrant
      Shares called for by this Warrant, which new Warrant shall in all other respects
      be identical with this Warrant.

     

    iii.    Rescission
      Rights.  If the Company fails to cause its transfer agent to
      transmit to the Holder a certificate or certificates representing the Warrant
      Shares pursuant to this Section 2(e)(i) by the second (2nd) Trading
      Day
      following the Warrant Share Delivery Date, then the Holder will have the right
      to rescind such exercise.

     

    iv.    Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.  In addition to any other rights available to the
      Holder, if the Company fails to cause its transfer agent to transmit to the
      Holder a certificate or certificates representing the Warrant Shares pursuant
      to
      an exercise on or before the second (2nd) Trading
      Day
      following the Warrant Share Delivery Date, and if after such date the Holder
      is
      required by its broker to purchase (in an open market transaction or otherwise)
      or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
      deliver in satisfaction of a sale by the Holder of the Warrant Shares which
      the
      Holder anticipated receiving upon such exercise (a “Buy-In”), then the
      Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
      total purchase price (including brokerage commissions, if any) for the shares
      of
      Common Stock so purchased exceeds (y) the amount obtained by multiplying (A)
      the
      number of Warrant Shares that the Company was required to deliver to the Holder
      in connection with the exercise at issue times (B) the price at which the sell
      order giving rise to such purchase obligation was executed, and (2) at the
      option of the Holder, either reinstate the portion of the Warrant and equivalent
      number of Warrant Shares for which such exercise was not honored or deliver
      to
      the Holder the number of shares of Common Stock that would have been issued
      had
      the Company timely complied with its exercise and delivery obligations
      hereunder.  For example, if the Holder purchases Common Stock having a
      total purchase price of $11,000 to cover a Buy-In with respect to an attempted
      exercise of shares of Common Stock with an aggregate sale price giving rise
      to
      such purchase obligation of $10,000, under clause (1) of the immediately
      preceding sentence the Company shall be required to pay the Holder $1,000.
      The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In and, upon request of the Company,
      evidence of the amount of such loss.  Nothing herein shall limit a
      Holder’s right to pursue any other remedies available to it hereunder, at law or
      in equity including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.

     

    
      
        
        

      

      
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    v.    No
      Fractional Shares or Scrip.  No fractional shares or scrip
      representing fractional shares shall be issued upon the exercise of this
      Warrant.  As to any fraction of a share which Holder would otherwise
      be entitled to purchase upon such exercise, the Company shall at its election,
      either pay a cash adjustment in respect of such final fraction in an amount
      equal to such fraction multiplied by the Exercise Price or round up to the
      next
      whole share.

     

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

     

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

     

    f)    Alternative
      Exercise Date. If as of the Initial Exercise Date the Company has not
      received the Authorized Share Approval, the Holder shall have the option to
      exercise this Warrant for an amount, in cash, equal to the product of (i) the
      number of Warrant Shares then outstanding multiplied by (ii) the difference
      between (A) the then Exercise Price and (B) the average of the closing bid
      prices for the five Trading Days immediately prior to the Initial Exercise
      Date.

     

    Section
      3.    Certain
      Adjustments.

     

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

     

    
      
        
        

      

      
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    b)    Subsequent
      Equity Sales. If the Company or any Subsidiary thereof, as applicable, at
      any time while this Warrant is outstanding, shall sell or grant any option
      to
      purchase, or sell or grant any right to reprice, or otherwise dispose of or
      issue (or announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any Person
      to acquire shares of Common Stock, at an effective price per share less than
      the
      then Exercise Price (such lower price, the “Base Share Price” and such
      issuances collectively, a “Dilutive Issuance”) (if the holder of the
      Common Stock or Common Stock Equivalents so issued shall at any time, whether
      by
      operation of purchase price adjustments, reset provisions, floating conversion,
      exercise or exchange prices or otherwise, or due to warrants, options or rights
      per share which are issued in connection with such issuance, be entitled to
      receive shares of Common Stock at an effective price per share which is less
      than the Exercise Price, such issuance shall be deemed to have occurred for
      less
      than the Exercise Price on such date of the Dilutive Issuance), then the
      Exercise Price shall be reduced and only reduced to equal the Base Share Price
      and the number of Warrant Shares issuable hereunder shall be increased such
      that
      the aggregate Exercise Price payable hereunder, after taking into account the
      decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
      prior to such adjustment.  Such adjustment shall be made whenever such
      Common Stock or Common Stock Equivalents are issued.  Notwithstanding
      the foregoing, no adjustments shall be made, paid or issued under this Section
      3(b) in respect of an Exempt Issuance.  The Company shall notify the
      Holder in writing, no later than the Trading Day following the issuance of
      any
      Common Stock or Common Stock Equivalents subject to this Section 3(b),
      indicating therein the applicable issuance price, or applicable reset price,
      exchange price, conversion price and other pricing terms (such notice the
“Dilutive Issuance Notice”).  For purposes of clarification,
      whether or not the Company provides a Dilutive Issuance Notice pursuant to
      this
      Section 3(b), upon the occurrence of any Dilutive Issuance, after the date
      of
      such Dilutive Issuance the Holder is entitled to receive a number of Warrant
      Shares based upon the Base Share Price regardless of whether the Holder
      accurately refers to the Base Share Price in the Notice of
      Exercise.

     

    c)    Subsequent
      Rights Offerings.  If the Company, at any time while the Warrant
      is outstanding, shall issue rights, options or warrants to all holders of Common
      Stock (and not to Holders) entitling them to subscribe for or purchase shares
      of
      Common Stock at a price per share less than the VWAP at the record date
      mentioned below, then the Exercise Price shall be multiplied by a fraction,
      of
      which the denominator shall be the number of shares of the Common Stock
      outstanding on the date of issuance of such rights or warrants plus the number
      of additional shares of Common Stock offered for subscription or purchase,
      and
      of which the numerator shall be the number of shares of the Common Stock
      outstanding on the date of issuance of such rights or warrants plus the number
      of shares which the aggregate offering price of the total number of shares
      so
      offered (assuming receipt by the Company in full of all consideration payable
      upon exercise of such rights, options or warrants) would purchase at such
      VWAP.  Such adjustment shall be made whenever such rights or warrants
      are issued, and shall become effective immediately after the record date for
      the
      determination of stockholders entitled to receive such rights, options or
      warrants.

     

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

     

    
      
        
        

      

      
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    e)    Fundamental
      Transaction. If, at any time while this Warrant is outstanding, (A) the
      Company effects any merger or consolidation of the Company with or into another
      Person, except for the Merger, (B) the Company effects any sale of all or
      substantially all of its assets in one or a series of related transactions,
      (C)
      any tender offer or exchange offer (whether by the Company or another Person)
      is
      completed pursuant to which holders of Common Stock are permitted to tender
      or
      exchange their shares for other securities, cash or property, except for the
      Merger, or (D) the Company effects any reclassification of the Common Stock
      or
      any compulsory share exchange pursuant to which the Common Stock is effectively
      converted into or exchanged for other securities, cash or property (each
“Fundamental Transaction”), then, upon any subsequent exercise of this
      Warrant, the Holder shall have the right to receive, for each Warrant Share
      that
      would have been issuable upon such exercise immediately prior to the occurrence
      of such Fundamental Transaction, the number of shares of Common Stock of the
      successor or acquiring corporation or of the Company, if it is the surviving
      corporation, and any additional consideration (the “Alternate
      Consideration”) receivable as a result of such 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. For purposes
      of any such exercise, the determination of the Exercise Price shall be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration.  If holders of Common Stock are given any choice as to
      the securities, cash or property to be received in a Fundamental Transaction,
      then the Holder shall be given the same choice as to the Alternate Consideration
      it receives upon any exercise of this Warrant following such Fundamental
      Transaction.  To the extent necessary to effectuate the foregoing
      provisions, any successor to the Company or surviving entity in such Fundamental
      Transaction shall issue to the Holder a new warrant consistent with the
      foregoing provisions and evidencing the Holder’s right to exercise such warrant
      into Alternate Consideration. The terms of any agreement pursuant to which
      a
      Fundamental Transaction is effected shall include terms requiring any such
      successor or surviving entity to comply with the provisions of this Section
      3(e)
      and insuring that this Warrant (or any such replacement security) will be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction. Notwithstanding anything to the contrary, in the event of a
      Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
      transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
      as amended, or (3) a Fundamental Transaction involving a person or entity not
      traded on a national securities exchange, the Nasdaq Global Select Market,
      the
      Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
      entity shall pay at the Holder’s option, exercisable at any time concurrently
      with or within 30 days after the consummation of the Fundamental Transaction,
      an
      amount of cash equal to the value of this Warrant as determined in accordance
      with the Black Scholes Option Pricing Model obtained from the “OV” function on
      Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP
      of
      the Common Stock for the Trading Day immediately preceding the date of
      consummation of the applicable  Fundamental Transaction, (ii) a
      risk-free interest rate corresponding to the U.S. Treasury rate for a period
      equal to the remaining term of this Warrant as of the date of consummation
      of
      the applicable Fundamental Transaction and (iii) an expected volatility equal
      to
      the 100 day volatility obtained from the “HVT” function on Bloomberg L.P.
      determined as of the Trading Day immediately following the public announcement
      of the applicable Fundamental Transaction.

     

    f)    Calculations.
      All calculations under this Section 3 shall be made to the nearest cent or
      the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    h)    Notice
      to Holder.

     

    i.    Adjustment
      to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any
      provision of this Section 3, the Company shall promptly mail to the Holder
      a
      notice setting forth the Exercise Price after such adjustment and setting forth
      a brief statement of the facts requiring such adjustment. If the Company enters
      into a Variable Rate Transaction (as defined in the Purchase Agreement), despite
      the prohibition thereon in the Purchase Agreement, the Company shall be deemed
      to have issued Common Stock or Common Stock Equivalents at the lowest possible
      conversion or exercise price at which such securities may be converted or
      exercised.

     

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

     

    i)    Merger
      Exception. Notwithstanding the foregoing, no adjustments shall be made, paid
      or issued under Section 3 in respect of any securities issued in connection
      with
      the Merger (except to the extent, but only to the extent that the Merger effects
      a capital change described in Section 3(a)).

     

    Section
      4.    Transfer of
      Warrant.

     

    a)    Transferability.  Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
      Agreement, this Warrant and all rights hereunder (including, without limitation,
      any registration rights) are transferable, in whole or in part, upon surrender
      of this Warrant at the principal office of the Company or its designated agent,
      together with a written assignment of this Warrant substantially in the form
      attached hereto duly executed by the Holder or its agent or attorney and funds
      sufficient to pay any transfer taxes payable upon the making of such
      transfer.  Upon such surrender and, if required, such payment, the
      Company shall execute and deliver a new Warrant or Warrants in the name of
      the
      assignee or assignees and in the denomination or denominations specified in
      such
      instrument of assignment, and shall issue to the assignor a new Warrant
      evidencing the portion of this Warrant not so assigned, and this Warrant shall
      promptly be cancelled.  A Warrant, if properly assigned, may be
      exercised by a new holder for the purchase of Warrant Shares without having
      a
      new Warrant issued.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    b)    New
      Warrants. This Warrant may be divided or combined with other Warrants upon
      presentation hereof at the aforesaid office of the Company, together with a
      written notice specifying the names and denominations in which new Warrants
      are
      to be issued, signed by the Holder or its agent or attorney.  Subject
      to compliance with Section 4(a), as to any transfer which may be involved in
      such division or combination, the Company shall execute and deliver a new
      Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
      combined in accordance with such notice. All Warrants issued on transfers or
      exchanges shall be dated the original Issue Date and shall be identical with
      this Warrant except as to the number of Warrant Shares issuable pursuant
      thereto.

     

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

     

    d)    Transfer
      Restrictions. If, at the time of the surrender of this Warrant in connection
      with any transfer of this Warrant, the transfer of this Warrant shall not be
      registered pursuant to an effective registration statement under the Securities
      Act and under applicable state securities or blue sky laws, the Company may
      require, as a condition of allowing such transfer, that the Holder or transferee
      of this Warrant, as the case may be, comply with the provisions of Section
      5.7
      of the Purchase Agreement.

     

    Section
      5.    Miscellaneous.

     

    a)    No
      Rights as Shareholder Until Exercise.  This Warrant does not
      entitle the Holder to any voting rights or other rights as a shareholder of
      the
      Company prior to the exercise hereof as set forth in Section
      2(e)(i).

     

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

     

    c)    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 not be a Business Day, then such action may be taken or such right may
      be
      exercised on the next succeeding Business Day.

     

    d)    Authorized
      Shares.

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    j)    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 and not to assert
      the defense in any action for specific performance that a remedy at law would
      be
      adequate.

     

    k)    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 the Holder or holder of Warrant Shares.

     

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

     

    m)    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.

     

    n)    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.

     

    

    ********************

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

     

    
      	 	
              ZEALOUS
                TRADING GROUP, INC.

               

               

            
	 	
              By:__________________________________________

                   Name:

                   Title:

               

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF EXERCISE

    

    TO:    ZEALOUS
      TRADING GROUP, INC.

     

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

     

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

     

    [  ]
      in lawful money of the United States; or

     

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

     

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

     

    _______________________________

     

    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    

    _______________________________

    _______________________________

    _______________________________

     

    (4)    Accredited
      Investor.  The undersigned is an “accredited investor” as defined
      in Regulation D promulgated under the Securities Act of 1933, as
      amended.

    

    [SIGNATURE
      OF HOLDER]

    

    Name
      of
      Investing Entity:
      _______________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      _______________________________________________________________________________________

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    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, [____] all of or [_______] shares of the foregoing Warrant and all
      rights evidenced thereby are hereby assigned to

     

    

    _______________________________________________
      whose address is

    

    _____________________________________________________________.

    

    

    

    _____________________________________________________________

    

    Dated:  ______________,
      _______

    

     

    Holder’s
      Signature:     
____________________________

     

    Holder’s
      Address:       
____________________________

     

    ____________________________

    

    

    

    Signature
      Guaranteed:  ___________________________________________

    

    

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

     

    14zealous_8k-ex1006.htm

    EXHIBIT
      10.6

    

    GUARANTEE

    

    GUARANTEE,
      dated as of October 17, 2007 (this “Guarantee”), made by Zealous
      Holdings, Inc., a Delaware corporation (the “Guarantor”), in favor of the
      purchasers signatory (the “Purchasers”) to that certain Securities
      Purchase Agreement, dated as of the date hereof, between Zealous Trading Group,
      Inc., a Nevada corporation (the “Company”) and the
      Purchasers.

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      pursuant to that certain Securities Purchase Agreement, dated as of the date
      hereof, by and between the Company and the Purchasers (the “Purchase
      Agreement”), the Company has agreed to sell and issue to the Purchasers, and
      the Purchasers have agreed to purchase from the Company the Company’s 5% Senior
      Secured Convertible Debentures, due October 17, 2008 (the “Debentures”),
      subject to the terms and conditions set forth therein; and

    

    WHEREAS,
      the Guarantor will directly
      benefit from the extension of credit to the Company represented by the issuance
      of the Debentures; and

    

    NOW,
      THEREFORE, in consideration of the premises and to induce the Purchasers to
      enter into the Purchase Agreement and to carry out the transactions contemplated
      thereby, the Guarantor hereby agrees with the Purchasers as
      follows:

    

    1.    Definitions.
      Unless otherwise defined herein, terms defined in the Purchase Agreement and
      used herein shall have the meanings given to them in the Purchase Agreement.
      The
      words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import
      when used in this Guarantee shall refer to this Guarantee as a whole and not
      to
      any particular provision of this Guarantee, and Section and Schedule references
      are to this Guarantee unless otherwise specified. The meanings given to terms
      defined herein shall be equally applicable to both the singular and plural
      forms
      of such terms.  The following terms shall have the following
      meanings:

     

    “Guarantee”
      means this Guarantee, as the same may be amended, supplemented or otherwise
      modified from time to time.

     

    “Obligations”
      means, in addition to all other costs and expenses of collection incurred by
      Purchasers in enforcing any of such Obligations and/or this Guarantee, all
      of
      the liabilities and payment obligations (primary, secondary, direct, contingent,
      sole, joint or several) due or to become due, or that are now or may be
      hereafter contracted or acquired, or owing to, of any Debtor to the Secured
      Parties, under this Agreement, the Debentures and the Security Agreement, in
      each case, whether now or hereafter existing, voluntary or involuntary, direct
      or indirect, absolute or contingent, liquidated or unliquidated, whether or
      not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later increased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from any of the
      Secured Parties as a preference, fraudulent transfer or otherwise as such
      obligations may be amended, supplemented, converted, extended or modified from
      time to time.  Without limiting the generality of the foregoing, the
      term “Obligations” shall include, without limitation: (i) principal of, and
      interest on the Debentures and the loans extended pursuant thereto; (ii) any
      and
      all other fees, indemnities, costs, obligations and liabilities of the Debtors
      from time to time under or in connection with this Agreement, the Debentures
      and
      the Security Agreement; and (iii) all amounts (including but not limited to
      post-petition interest) in respect of the foregoing that would be payable but
      for the fact that the obligations to pay such amounts are unenforceable or
      not
      allowable due to the existence of a bankruptcy, reorganization or similar
      proceeding involving any Debtor.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.    Guarantee.

     

    (a)    Guarantee.

     

    
      	 	 	 	(i)	
              The
                Guarantor hereby,  guarantees to the Purchasers and their
                respective successors, indorsees, transferees and assigns, the prompt
                and
                complete payment and performance by the Company when due (whether
                at the
                stated maturity, by acceleration or otherwise) of the
                Obligations.

            
	 	 	 	 	 
	 	 	 	(ii)	
              Anything
                herein or in any other Transaction Document to the contrary
                notwithstanding, the maximum liability of the Guarantor hereunder
                and
                under the other Transaction Documents shall in no event exceed the
                amount
                which can be guaranteed by the Guarantor under applicable federal
                and
                state laws, including laws relating to the insolvency of debtors,
                fraudulent conveyance or transfer or laws affecting the rights of
                creditors generally (after giving effect to the right of contribution
                established in Section 2(b)).

            
	 	 	 	 	 
	 	 	 	(iii)	
              The
                Guarantor agrees that the Obligations may at any time and from time
                to
                time exceed the amount of the liability of the Guarantor hereunder
                without
                impairing the guarantee contained in this Section 2 or affecting
                the
                rights and remedies of the Purchasers hereunder.

            
	 	 	 	 	 
	 	 	 	(iv)	
              The
                guarantee contained in this Section 2 shall remain in full force
                and
                effect until all the Obligations and the obligations of the Guarantor
                under the guarantee contained in this Section 2 shall have been satisfied
                by payment in full.

            

    

     

    
      	 	 	 	(v)	
              No
                payment made by the Company, the Guarantor, any other guarantor or
                any
                other Person or received or collected by the Purchasers from the
                Company,
                the Guarantor, any other guarantor or any other Person by virtue
                of any
                action or proceeding or any set-off or appropriation or application
                at any
                time or from time to time in reduction of or in payment of the Obligations
                shall be deemed to modify, reduce, release or otherwise affect the
                liability of the Guarantor hereunder which shall, notwithstanding
                any such
                payment (other than any payment made by the Guarantor in respect
                of the
                Obligations or any payment received or collected from the Guarantor
                in
                respect of the Obligations), remain liable for the Obligations up
                to the
                maximum liability of the Guarantor hereunder until the Obligations
                are
                paid in full.

            
	 	 	 	 	 
	 	 	 	(vi)	
              Notwithstanding
                anything to the contrary in this Agreement, with respect to any defaulted
                non-monetary Obligations the specific performance of which by the
                Guarantor is not reasonably possible (e.g. the issuance of the Company's
                Common Stock), the Guarantor shall only be liable for making the
                Purchasers whole on a monetary basis for the Company's failure to
                perform
                such Obligations.

            

    

     

    (b)    RESERVED.

     

    (c)    No
      Subrogation.  Notwithstanding any payment made by the Guarantor
      hereunder or any set-off or application of funds of the Guarantor by the
      Purchasers, the Guarantor shall not be entitled to be subrogated to any of
      the
      rights of the Purchasers against the Company or any collateral security or
      guarantee or right of offset held by the Purchasers for the payment of the
      Obligations, nor shall the Guarantor seek or be entitled to seek any
      contribution or reimbursement from the Company in respect of payments made
      by
      the Guarantor hereunder, until all amounts owing to the Purchasers by the
      Company on account of the Obligations are paid in full. If any amount shall
      be
      paid to the Guarantor on account of such subrogation rights at any time when
      all
      of the Obligations shall not have been paid in full, such amount shall be held
      by the Guarantor in trust for the Purchasers, segregated from other funds of
      the
      Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over
      to
      the Purchasers in the exact form received by the Guarantor (duly indorsed by
      the
      Guarantor to the Purchasers, if required), to be applied against the
      Obligations, whether matured or unmatured, in such order as the Purchasers
      may
      determine.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (d)    Amendments,
      Etc. With Respect to the Obligations. The Guarantor shall remain obligated
      hereunder notwithstanding that, without any reservation of rights against the
      Guarantor and without notice to or further assent by the Guarantor, any demand
      for payment of any of the Obligations made by the Purchasers may be rescinded
      by
      the Purchasers and any of the Obligations continued, and the Obligations, or
      the
      liability of any other Person upon or for any part thereof, or any collateral
      security or guarantee therefor or right of offset with respect thereto, may,
      from time to time, in whole or in part, be renewed, extended, amended, modified,
      accelerated, compromised, waived, surrendered or released by the Purchasers,
      and
      the Purchase Agreement and the other Transaction Documents and any other
      documents executed and delivered in connection therewith may be amended,
      modified, supplemented or terminated, in whole or in part, as the Purchasers
      may
      deem advisable from time to time, and any collateral security, guarantee or
      right of offset at any time held by the Purchasers for the payment of the
      Obligations may be sold, exchanged, waived, surrendered or released. The
      Purchasers shall have no obligation to protect, secure, perfect or insure any
      Lien at any time held by them as security for the Obligations or for the
      guarantee contained in this Section 2 or any property subject
      thereto.

     

    (e)    Guarantee
      Absolute and Unconditional. The Guarantor waives any and all notice of the
      creation, renewal, extension or accrual of any of the Obligations and notice
      of
      or proof of reliance by the Purchasers upon the guarantee contained in this
      Section 2 or acceptance of the guarantee contained in this Section 2; the
      Obligations, and any of them, shall conclusively be deemed to have been created,
      contracted or incurred, or renewed, extended, amended or waived, in reliance
      upon the guarantee contained in this Section 2; and all dealings between the
      Company and the Guarantor, on the one hand, and the Purchasers, on the other
      hand, likewise shall be conclusively presumed to have been had or consummated
      in
      reliance upon the guarantee contained in this Section 2. The Guarantor waives
      to
      the extent permitted by law diligence, presentment,
      protest, demand for payment and notice of default or nonpayment to or upon
      the
      Company or the Guarantor with respect to the Obligations. The Guarantor
      understands and agrees that the guarantee contained in this Section 2 shall
      be
      construed as a continuing, absolute and unconditional guarantee of payment
      without regard to (a) the validity or enforceability of the Purchase Agreement
      or any other Transaction Document, any of the Obligations or any other
      collateral security therefor or guarantee or right of offset with respect
      thereto at any time or from time to time held by the Purchasers, (b) any
      defense, set-off or counterclaim (other than a defense of payment or performance
      or fraud or misconduct by Purchasers) which may at any time be available to
      or
      be asserted by the Company or any other Person against the Purchasers, or (c)
      any other circumstance whatsoever (with or without notice to or knowledge of
      the
      Company or the Guarantor) which constitutes, or might be construed to
      constitute, an equitable or legal discharge of the Company for the Obligations,
      or of the Guarantor under the guarantee contained in this Section 2, in
      bankruptcy or in any other instance. When making any demand hereunder or
      otherwise pursuing its rights and remedies hereunder against the Guarantor,
      the
      Purchasers may, but shall be under no obligation to, make a similar demand
      on or
      otherwise pursue such rights and remedies as they may have against the Company,
      or any other Person or against any collateral security or guarantee for the
      Obligations or any right of offset with respect thereto, and any failure by
      the
      Purchasers to make any such demand, to pursue such other rights or remedies
      or
      to collect any payments from the Company, or any other Person or to realize
      upon
      any such collateral security or guarantee or to exercise any such right of
      offset, or any release of the Company, or any other Person or any such
      collateral security, guarantee or right of offset, shall not relieve the
      Guarantor of any obligation or liability hereunder, and shall not impair or
      affect the rights and remedies, whether express, implied or available as a
      matter of law, of the Purchasers against the Guarantor. For the purposes hereof,
      “demand” shall include the commencement and continuance of any legal
      proceedings.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (f)    Reinstatement.
      The guarantee contained in this Section 2 shall continue to be effective, or
      be
      reinstated, as the case may be, if at any time payment, or any part thereof,
      of
      any of the Obligations is rescinded or must otherwise be restored or returned
      by
      the Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or
      reorganization of the Company or the Guarantor, or upon or as a result of the
      appointment of a receiver, intervenor or conservator of, or trustee or similar
      officer for, the Company or Guarantor or any substantial part of its property,
      or otherwise, all as though such payments had not been made.

     

    (g)    Payments.
      The Guarantor hereby guarantees that payments hereunder will be paid to the
      Purchasers without set-off or counterclaim in U.S. dollars at the address set
      forth or referred to in the Purchase Agreement.

     

    3.    Representations
      and Warranties. The Guarantor hereby makes the following representations and
      warranties to Purchasers as of the date hereof:

     

    (a)    Organization
      and Qualification. The Guarantor is a corporation, duly incorporated,
      validly existing and in good standing under the laws of the applicable
      jurisdiction set forth on Schedule 1, with the requisite corporate power and
      authority to own and use its properties and assets and to carry on its business
      as currently conducted. The Guarantor has no subsidiaries other than those
      identified as such on the Disclosure Schedules to the Purchase Agreement. The
      Guarantor is duly qualified to do business and is in good standing as a foreign
      corporation in each jurisdiction in which the nature of the business conducted
      or property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not,
      individually or in the aggregate, (x) adversely affect the legality, validity
      or
      enforceability of any of this Guaranty in any material respect, (y) have a
      material adverse effect on the results of operations, assets, prospects, or
      financial condition of the Guarantor or (z) adversely impair in any material
      respect the Guarantor's ability to perform fully on a timely basis its
      obligations under this Guaranty (a “Material Adverse
      Effect”).

     

    (b)    Authorization;
      Enforcement.  The Guarantor has the requisite corporate power and
      authority to enter into and to consummate the transactions contemplated by
      this
      Guaranty, and otherwise to carry out its obligations hereunder. The execution
      and delivery of this Guaranty by the Guarantor and the consummation by it of
      the
      transactions contemplated hereby have been duly authorized by all requisite
      corporate action on the part of the Guarantor. This Guaranty has been duly
      executed and delivered by the Guarantor and constitutes the valid and binding
      obligation of the Guarantor enforceable against the Guarantor in accordance
      with
      its terms, except as such enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
      laws
      relating to, or affecting generally the enforcement of, creditors' rights and
      remedies or by other equitable principles of general application.

     

    (c)    No
      Conflicts. The execution, delivery and performance of this Guaranty by the
      Guarantor and the consummation by the Guarantor of the transactions contemplated
      thereby do not and will not (i) conflict with or violate any provision of its
      Certificate of Incorporation or By-laws or (ii) conflict with, constitute a
      default (or an event which with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture or instrument to
      which
      the Guarantor is a party, or (iii) result in a violation of any law, rule,
      regulation, order, judgment, injunction, decree or other restriction of any
      court or governmental authority to which the Guarantor is subject (including
      Federal and state securities laws and regulations), or by which any material
      property or asset of the Guarantor is bound or affected, except in the case
      of
      each of clauses (ii) and (iii), such conflicts, defaults, terminations,
      amendments, accelerations, cancellations and violations as could not,
      individually or in the aggregate, have or result in a Material Adverse Effect.
      The business of the Guarantor is not being conducted in violation of any law,
      ordinance or regulation of any governmental authority, except for violations
      which, individually or in the aggregate, do not have a Material Adverse
      Effect.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d)    Consents
      and Approvals. The Guarantor is not required to obtain any consent, waiver,
      authorization or order of, or make any filing or registration with, any court
      or
      other federal, state, local, foreign or other governmental authority or other
      person in connection with the execution, delivery and performance by the
      Guarantor of this Guaranty.

     

    (e)    Purchase
      Agreement. The representations and warranties of the Company set forth in
      the Purchase Agreement as they relate to the Guarantor, each of which is hereby
      incorporated herein by reference, are true and correct as of each time such
      representations are deemed to be made pursuant to such Purchase Agreement,
      and
      the Purchasers shall be entitled to rely on each of them as if they were fully
      set forth herein, provided that each reference in each such representation
      and
      warranty to the Company's knowledge shall, for the purposes of this Section
      3,
      be deemed to be a reference to the Guarantor's knowledge.

     

    (f)    Foreign
      Law.  The Guarantor has consulted with appropriate foreign legal
      counsel with respect to any of the above representations for which non-U.S.
      law
      is applicable. Such foreign counsel have advised each applicable Guarantor
      that
      such counsel knows of no reason why any of the above representations would
      not
      be true and accurate. Such foreign counsel were provided with copies of this
      Guarantee and the Transaction Documents prior to rendering their
      advice.

     

    
      4.    Covenants.

    

     

    (a)    The
      Guarantor covenants and agrees with the Purchasers that, from and after the
      date
      of this Guarantee until the Obligations shall have been paid in full, the
      Guarantor shall take, and/or shall refrain from taking, as the case may be,
      each
      commercially reasonable action that is necessary to be taken or not taken,
      as
      the case may be, so that no Event of Default is caused by the failure to take
      such action or to refrain from taking such action by the Guarantor.

     

    (b)    So
      long
      as any of the Obligations are outstanding, the Guarantor will not directly
      or
      indirectly on or after the date of this Guarantee:

     

    i.    enter
      into, create, incur, assume or suffer to exist any indebtedness for borrowed
      money of any kind, including but not limited to, a guarantee, on or with respect
      to any of its property or assets now owned or hereafter acquired or any interest
      therein or any income or profits therefrom;

     

    ii.    enter
      into, create, incur, assume or suffer to exist any liens of any kind, on or
      with
      respect to any of its property or assets now owned or hereafter acquired or
      any
      interest therein or any income or profits therefrom;

     

    iii.   amend
      its
      certificate of incorporation, bylaws or other charter documents so as to
      adversely affect any rights of the Holder hereunder;

     

    iv.   repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a de
      minimis number of shares of its securities or debt obligations;

     

    v.    pay
      cash
      dividends on any equity securities of the Company;

     

    vi.   enter
      into any transaction with any Affiliate of the Guarantor which would be required
      to be disclosed in any public filing of the Company with the Commission, unless
      such transaction is made on an arm’s-length basis and expressly approved by a
      majority of the disinterested directors of the Company (even if less than a
      quorum otherwise required for board approval); or

     

    vii.   enter
      into any agreement with respect to any of the foregoing.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.    Miscellaneous.

     

    (a)    Amendments
      in Writing. None of the terms or provisions of this Guarantee may be waived,
      amended, supplemented or otherwise modified except in writing by the
      Purchasers.

     

    (b)    Notices.
      All notices, requests and demands to or upon the Purchasers or the Guarantor
      hereunder shall be effected in the manner provided for in the Purchase
      Agreement, provided that any such notice, request or demand to or upon the
      Guarantor shall be addressed to the Guarantor at its notice address set forth
      on
Schedule 5(b).

     

    (c)    No
      Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall not
      by any act (except by a written instrument pursuant to Section 5(a)), delay,
      indulgence, omission or otherwise be deemed to have waived any right or remedy
      hereunder or to have acquiesced in any default under the Transaction Documents
      or Event of Default. No failure to exercise, nor any delay in exercising, on
      the
      part of the Purchasers, any right, power or privilege hereunder shall operate
      as
      a waiver thereof. No single or partial exercise of any right, power or privilege
      hereunder shall preclude any other or further exercise thereof or the exercise
      of any other right, power or privilege. A waiver by the Purchasers of any right
      or remedy hereunder on any one occasion shall not be construed as a bar to
      any
      right or remedy which the Purchasers would otherwise have on any future
      occasion. The rights and remedies herein provided are cumulative, may be
      exercised singly or concurrently and are not exclusive of any other rights
      or
      remedies provided by law.

     

    (d)    Enforcement
      Expenses; Indemnification.

     

    
      	 	 	 	(i)	
              The
                Guarantor agrees to pay, or reimburse the Purchasers for, all its
                costs
                and expenses incurred in collecting against the Guarantor under the
                guarantee contained in Section 2 or otherwise enforcing or preserving
                any
                rights under this Guarantee and the other Transaction Documents to
                which
                the Guarantor is a party, including, without limitation, the reasonable
                fees and disbursements of counsel to the Purchasers.

            
	 	 	 	 	 
	 	 	 	(ii)	
              The
                Guarantor agrees to pay, and to save the Purchasers harmless from,
                any and
                all liabilities with respect to, or resulting from any delay in paying,
                any and all stamp, excise, sales or other taxes which may be payable
                or
                determined to be payable in connection with any of the transactions
                contemplated by this Guarantee.

            
	 	 	 	 	 
	 	 	 	(iii)	
              The
                Guarantor agrees to pay, and to save the Purchasers harmless from,
                any and
                all liabilities, obligations, losses, damages, penalties, actions,
                judgments, suits, costs, expenses or disbursements of any kind or
                nature
                whatsoever with respect to the execution, delivery, enforcement,
                performance and administration of this Guarantee to the extent the
                Company
                would be required to do so pursuant to the Purchase
                Agreement.

            
	 	 	 	 	 
	 	 	 	(iv)	
              The
                agreements in this Section shall survive repayment of the Obligations
                and
                all other amounts payable under the Purchase Agreement and the other
                Transaction Documents.

            

    

     

    (e)    Successor
      and Assigns. This Guarantee shall be binding upon the successors and assigns
      of the Guarantor and shall inure to the benefit of the Purchasers and their
      respective successors and assigns; provided that no Guarantor may assign,
      transfer or delegate any of its rights or obligations under this Guarantee
      without the prior written consent of the Purchasers.

     

    (f)    Set-Off.
      The Guarantor hereby irrevocably authorizes the Purchasers at any time and
      from
      time to time while an Event of Default under any of the Transaction Documents
      shall have occurred and be continuing, without notice to the Guarantor, any
      such
      notice being expressly waived by the Guarantor, to set-off and appropriate
      and
      apply any and all deposits, credits, indebtedness or claims, in any currency,
      in
      each case whether direct or indirect, absolute or contingent, matured or
      unmatured, at any time held or owing by the Purchasers to or for the credit
      or
      the account of the Guarantor, or any part thereof in such amounts as the
      Purchasers may elect, against and on account of the obligations and liabilities
      of the Guarantor to the Purchasers hereunder and claims of every nature and
      description of the Purchasers against the Guarantor, in any currency, whether
      arising hereunder, under the Purchase Agreement, any other Transaction Document
      or otherwise, as the Purchasers may elect, whether or not the Purchasers have
      made any demand for payment and although such obligations, liabilities and
      claims may be contingent or unmatured. The Purchasers shall notify the Guarantor
      promptly of any such set-off and the application made by the Purchasers of
      the
      proceeds thereof, provided that the failure to give such notice shall not affect
      the validity of such set-off and application. The rights of the Purchasers
      under
      this Section are in addition to other rights and remedies(including, without
      limitation, other rights of set-off) which the Purchasers may have.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (g)    Counterparts.
      This Guarantee may be executed by one or more of the parties to this Guarantee
      on any number of separate counterparts (including by telecopy), and all of
      said
      counterparts taken together shall be deemed to constitute one and the same
      instrument.

     

    (h)    Severability.
      Any provision of this Guarantee which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    (i)    Section
      Headings. The Section headings used in this Guarantee are for convenience of
      reference only and are not to affect the construction hereof or be taken into
      consideration in the interpretation hereof.

     

    (j)    Integration.
      This Guarantee and the other Transaction Documents represent the agreement
      of
      the Guarantor and the Purchasers with respect to the subject matter hereof
      and
      thereof, and there are no promises, undertakings, representations or warranties
      by the Purchasers relative to subject matter hereof and thereof not expressly
      set forth or referred to herein or in the other Transaction
      Documents.

     

    (k)    Governing
      Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
      ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
      PRINCIPLES OF CONFLICTS OF LAWS.

     

    (l)    
Submission
      to Jurisdictional; Waiver. The Guarantor hereby irrevocably
      and unconditionally:

     

    
      	 	 	 	(i)	
              submits
                for itself and its property in any legal action or proceeding relating
                to
                this Guarantee and the other Transaction Documents to which it is
                a party,
                or for recognition and enforcement of any judgment in respect thereof,
                to
                the non-exclusive general jurisdiction of the Courts of the State
                of New
                York, located in New York County, New York, the courts of the United
                States of America for the Southern District of New York, and appellate
                courts from any thereof;

            
	 	 	 	 	 
	 	 	 	(ii)	
              consents
                that any such action or proceeding may be brought in such courts
                and
                waives any objection that it may now or hereafter have to the venue
                of any
                such action or proceeding in any such court or that such action or
                proceeding was brought in an inconvenient court and agrees not to
                plead or
                claim the same;

            
	 	 	 	 	 
	 	 	 	(iii)	
              agrees
                that service of process in any such action or proceeding may be effected
                by mailing a copy thereof by registered or certified mail (or any
                substantially similar form of mail), postage prepaid, to the Guarantor
                at
                its address referred to in the Purchase Agreement or at such other
                address
                of which the Purchasers shall have been notified pursuant
                thereto;

            
	 	 	 	 	 
	 	 	 	(iv)	
              agrees
                that nothing herein shall affect the right to effect service of process
                in
                any other manner permitted by law or shall limit the right to sue
                in any
                other jurisdiction; and

            
	 	 	 	 	 
	 	 	 	(v)	
              waives,
                to the maximum extent not prohibited by law, any right it may have
                to
                claim or recover in any legal action or proceeding referred to in
                this
                Section any special, exemplary, punitive or consequential
                damages.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (m)    Acknowledgements.  The
      Guarantor hereby acknowledges that:

    
       

      
        	 	 	 	(i)	
                
                  it
                    has been advised by counsel in the negotiation, execution and
                    delivery of
                    this Guarantee and the other Transaction Documents to which it
                    is a
                    party;

                

              
	 	 	 	 	 
	 	 	 	(ii)	
                
                  the
                    Purchasers have no fiduciary relationship with or duty to the
                    Guarantor
                    arising out of or in connection with this Guarantee or any of
                    the other
                    Transaction Documents, and the relationship between the Guarantor,
                    on the
                    one hand, and the Purchasers, on the other hand, in connection
                    herewith or
                    therewith is solely that of debtor and creditor;
                    and

                

              
	 	 	 	 	 
	 	 	 	(iii)	
                
                  no
                    joint venture is created hereby or by the other Transaction Documents
                    or
                    otherwise exists by virtue of the transactions contemplated hereby
                    among
                    the Guarantor and the
                    Purchasers.

                

              

      

    

     

    (n)    Release
      of Guarantor. Subject to Section 2.6, the Guarantor will be released from
      all liability hereunder concurrently with the repayment in full of all amounts
      owed under the terms of the Debentures.

     

    (o)    Seniority.
      The Obligations of the Guarantor hereunder rank senior in priority to any other
      Indebtedness (as defined in the Purchase Agreement) of the
      Guarantor.

     

    (p)    Waiver
      of Jury Trial. THE GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE
      PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
      LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM
      THEREIN.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, each of the undersigned has caused this Guarantee to
      be
      duly executed and delivered as of the date first above written.

     

    
      	 	ZEALOUS
              HOLDINGS, INC.
	 	 
	 	By:_________________________________
	 	
              Name:

            
	 	
              Title:

            

    

                              

     

     

     

    9

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