Document:

ex10_46.htm

    
      

    

    Exhibit
10.46

     

    SECURITY
INTEREST AND PLEDGE AGREEMENT

    

    SECURITY
INTEREST AND PLEDGE AGREEMENT (“Pledge Agreement”) dated as of October 31, 2007
by and among CAMOFI Master LDC and CAMHZN Master LDC (collectively, “Secured
Parties”), D. L. Claire Capital, Inc., a Delaware corporation with its principal
business address at 60 East 42nd
Street, Suite 3405, New York, New York 10165 (the “Company” or the
“Debtor”), Marshall Holdings International, Inc., a Nevada corporation with its
principal business address at 2555 East Washburn Road, North Las Vegas, Nevada
89081 (“MHII”) and Richard A. Bailey, Florian R. Ternes, and Neptune
Communications, Inc., a Nevada corporation.

    

    RECITALS

    

    A.  
         Reference is made to (i)
that certain Purchase Agreement of even date herewith (the “Purchase Agreement”)
to which the Company and the Secured Parties are parties, and (ii) the
Transaction Agreements (as that term is defined in the Loan Agreement),
including, without limitation, the Notes. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the relevant
Transaction Agreements.

    

    B.  
         Pursuant to the
Transaction Agreements, the Debtor has certain obligations to the Secured
Parties (all such obligations, the “Obligations”), including, but not limited
to, obligations to pay principal and interest of the Notes, which was issued in
the original aggregate principal amount of $650,000, on the Maturity Date. The
Note Obligations are secured by (i) the pledge of certain stock of (a) the
Company and (b) MHII and (ii) certain real estate as more fully described below.
The obligations of the Company and of the Pledgors, if any, under the Notes are
referred to collectively as the “Note Obligations.”

    

    C.    
       To secure the Note Obligations, the
Pledgors have agreed to pledge certain shares of Common Stock of (a) the Company
and (b) MHII held by the Pledgors to the Secured Parties as security for the
performance of the Note Obligations.

    

    D.   
        The Pledgors are shareholders
and/or affiliates of the Debtor or otherwise benefit from the transactions
described in the Purchase Agreement and have determined that it is in the
Pledgors’ best interests, including to the benefit of the other interests of the
Pledgors in the Company, to provide the pledge referred to herein.

    

    E.    
        The Secured Parties is willing
to enter into the Purchase Agreement and the other Transaction Agreements only
upon receiving the Pledgors’ pledge of certain stock of (a) the Company and (b)
MHII, as set forth in this Pledge Agreement.

    

    NOW,
THEREFORE, in consideration of the premises, the mutual covenants and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    1.          
  Grant of
Security Interest.

    
 

    (a)           To
secure the Note Obligations of Debtor, the Pledgors hereby pledge to the Secured
Parties (i) all of the shares of Common Stock (the “Pledged Shares”) set forth
on the attached Schedule 2 of this Agreement (Unless otherwise set forth on
Schedule 2 of this Agreement, the Pledgors are the beneficial and record owner
of the Pledged Shares set forth opposite the Pledgor’s name on such Schedule),
(ii) certain real estate (the “Real Estate”) evidenced by mortgages in the form
attached hereto as Exhibit A (collectively, the “Mortgage”). Such Pledged Shares
and Real Estate together with any substitutes therefor, or proceeds thereof, are
hereinafter referred to collectively as the “Collateral.”

    

    (b)           MHII
represents and warrants to the Secured Parties that the Pledged Shares are duly
authorized, validly issued, fully paid and non-assessable and that it will not
permit the transfer of the Pledged Shares except in accordance with this Pledge
Agreement while the same is in effect.

    

    (c)           (i)    MHII has
given written notice to the Transfer Agent regarding the creation of the
security interest of the Secured Parties in the Collateral. MHII has instructed
the Transfer Agent (A) to record on its books the existence of such security
interest with respect to the Pledged Shares, (B) to transfer Pledged Shares in
accordance with the instructions of the Secured Parties without further action
of MHII, and (C) except upon such instructions of the Secured Parties or until
written notice is given by the Secured Parties that such security interest has
been released to the Pledgor in whole or in part, to not allow a transfer of the
shares representing any part of the Collateral or to replace the certificates
representing the Collateral; and

    

    (ii)    The Pledgors
hereby consent to the provisions of the preceding subparagraph (i) and
authorizes the Company to provide such notice and instructions to the Transfer
Agent.

    

    2.      
      Obligations Secured.
During the term hereof, the Collateral shall secure the following:

    

    (a)           The
performance by the Company of the Note Obligations; and

    

    (b)           The
payment of all fees and the delivery of all stock other than principal and
interest under the Notes and any other agreements between the Company and the
Secured Parties.

    

    (c)           The
performance by the Pledgors of their obligations, covenants, and agreements
under this Agreement.   

     

    The
obligations, covenants and agreements described in clauses (a), (b) and (c) are
the “Obligations.”

    

    3.         
    Perfection of Security
Interests. Upon execution of this Pledge Agreement by the Debtor and the
Pledgors,

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (a)           the
Pledgors shall deliver and transfer possession of the stock certificates
identified opposite the Pledgor’s name on Schedule 2 of this Agreement
(collectively, the “Pledged Certificates”), together with stock transfer powers
duly executed in blank by the registered owner of the shares represented by such
Certificates, with appropriate Medallion signature guaranty (“Stock Powers”), to
the Secured Parties.

    

    (b)           the
Pledgors shall deliver and transfer possession of the Mortgage, to the Secured
Parties. Said Mortgage shall be recorded in the County Clerk’s
Office.

    

    The
Collateral will be held by the Secured Parties or the Brokerage Firm, to perfect
the security interest of the Secured Parties, until the earlier of

    

    (i) the
payment in full of all amounts due under the Notes and all other agreements
between the Company and the Secured Parties, or

    

    (ii)
foreclosure of Secured Parties's security interests as provided
herein.

    

    (c)           The
Debtor and the Pledgors hereby appoint the Secured Parties, as attorney-in-fact
with powers of substitution, to execute all documents and perform all acts in
order to perfect and maintain a valid security interest for Secured Parties in
the Collateral.

    

    4.           
  Reserved.

    

    5.       
      Pledgors’ Warranty.
The Pledgors represent and warrant hereby to the Secured Parties as follows with
respect to the Pledged Shares set forth opposite the Pledgor’s name on Schedule
2 to this Agreement:

    

    A.      
     With respect to title to the Transferred
Shares

    

    (i)       
     that upon transfer by the Pledgor of the Pledgor’s
Certificates and Stock Powers to Secured Parties pursuant to this Agreement at
such time, if any, as contemplated hereby upon the occurrence of an Event of
Default, the purchaser of the Pledged Shares or the Secured Parties, as
contemplated herein, as the case may be, will have good title (both record and
beneficial) to the relevant Pledged Shares;

    

    (ii)     
      that there are no restrictions upon transfer
and pledge of the Pledged Shares pursuant to the provisions of this Agreement
except the restrictions, to the extent applicable, imposed by Rule 144 under the
Securities Act of 1933;

    

    (iii)           that
the Pledged Shares are free and clear of any encumbrances of every nature
whatsoever, the Pledgor is the sole owner of the Pledged Shares, and such shares
are duly authorized, validly issued, fully paid and non-assessable;

    

    (iv)           that
the Pledgor has owned the Pledged Shares since the date specified on Schedule 2
to this Agreement and that such shares were fully paid for as of such specified
date; and

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (v)           that
the Pledgor agrees not to grant or create, any security interest, claim, lien,
pledge or other encumbrance with respect to the Pledgor’s Pledged Shares or
attempt to sell, transfer or otherwise dispose of any of such shares until the
Obligations have been paid in full or this Agreement has
terminated.

    

    B.      
      With respect to certain
other matters:

    

    (i)      
      that the Pledgor has made necessary
inquiries of the Company and believes that the Company fully intends to fulfill
and has the capability of fulfilling the Obligations to be performed by the
Company in accordance with the terms of the Transaction Agreements;

    

    (ii)    
       that the Pledgor is not acting, and
has not agreed to act, in any plan to sell or dispose of the Pledged Shares in a
manner intended to circumvent the registration requirements of the Securities
Act of 1933, as amended, or any applicable state law;

    

    (iii)           that
Pledgor has been advised by counsel of the elements of a bona-fide pledge for
purposes of Rule 144(d)(3)(iv) under the Securities Act of 1933, as amended,
including the relevant SEC interpretations and affirms the pledge of shares by
the Pledgor pursuant to this Pledge Agreement will constitute a bona-fide pledge
of such shares for purposes of such Rule; and

    

    (iv)           that
this Pledge Agreement constitutes a legal, valid and binding obligation of the
Pledgor enforceable in accordance with its terms (except as the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws, now or hereafter in
effect).

    

    (v)           that
the Pledgor’s address is as provided under the Pledgor’s signature on the
signature page hereof.

    

    6.             Reports under Securities Act
and Exchange Act. With a view to making available to Secured Parties the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the SEC that may at any time permit Secured Parties to
sell securities of MHIIto the public without Registration (“Rule 144”), MHII
agrees to:

    

    (i)  
          make and keep public
information available, as those terms are understood and defined in Rule
144;

    

    (ii)      
     file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and

    

    (iii)           until
the date when the Secured Parties may sell all Registrable Securities under Rule
144 without volume or other restrictions or limits (the “Unrestricted Sale
Date”), furnish to the Secured Parties so long as the Secured Parties owns or
has a security interest in the Pledged Shares (a “Holder”), promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) if not available on the SEC’s EDGAR system, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company and (iii) such other information as may be reasonably
requested to permit the Secured Parties to sell such securities pursuant to Rule
144 without registration; and

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (d)           at
the request of any Holder, give its Transfer Agent instructions (supported by an
opinion of the Company’s counsel, if required or requested by the Transfer
Agent) to the effect that, upon the Transfer Agent’s receipt from such Holder
of

    
       

      
        (i) a
certificate (a “Rule 144 Certificate”) certifying (A) that the Holder’s holding
period (as determined in accordance with the provisions of Rule 144) for the
Pledged Shares which the Holder proposes to sell (the “Securities Being Sold”)
is not less than (1) year and (B) as to such other matters as may be appropriate
in accordance with Rule 144 under the Securities Act,
and

      

       

      (ii) an opinion of counsel acceptable to the Company that, based
on the Rule 144 Certificate, Securities Being Sold may be sold pursuant to the
provisions of Rule 144, even in the absence of an effective Registration
Statement,

    

    

    the
Transfer Agent is to effect the transfer of the Securities Being Sold and issue
to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent’s books and records (except to the extent any such
legend or restriction results from facts other than the identity of the Holder,
as the seller or transferor thereof, or the status, including any relevant
legends or restrictions, of the shares of the Securities Being Sold while held
by the Holder). If the Transfer Agent reasonably requires any additional
documentation at the time of the transfer, the Company shall deliver or cause to
be delivered all such reasonable additional documentation as may be necessary to
effectuate the issuance of an unlegended certificate.

    

    7.       
     Voting Rights. Unless
and until the Secured Parties has exercised its rights under this Pledge
Agreement to foreclose its security interest in the Collateral, the Pledgor
shall have the right to exercise any voting rights evidenced by, or relating to,
the Collateral.

    

    8.       
     Warrants and Options.
In the event that, during the term of this Pledge Agreement, subscription,
warrants, dividends, or any other rights or option shall be issued to the
Pledgors in connection with the Collateral, such warrants, dividends, rights and
options shall be immediately delivered to Secured Parties to be held under the
terms hereof in the same manner as the Collateral.

    

    9.          
  Preservation of the Value of
the Collateral and Reimbursement of Secured Parties. Pledgor shall pay
all taxes, charges, and assessments against the Collateral and do all acts
necessary to preserve and maintain the value thereof. On failure of Pledgor so
to do, Secured Parties may make such payments on account thereof as (in Secured
Parties's discretion) is deemed desirable, and Pledgor shall reimburse Secured
Parties immediately on demand for any and all such payments expended by Secured
Parties in enforcing, collecting, and exercising its remedies
hereunder.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    10.           Default and
Remedies.

    

    (a)        
   For purposes of this Agreement, “Event of Default” shall mean
any one or more of the following events:

    

    (i)     
      any default in the performance by the
Company or any Pledgor of any of the Note Obligations, after the expiration,
without cure, of the cure period (but only if any such cure period is
specifically provided in the Transaction Agreements and without any regard to
any cure period if no such cure period is provided; it being specifically
acknowledged by the Company and the Pledgor that all payment obligations are
time of the essence obligations, with no cure periods provided), or

    

    (ii)    
       a breach by the Company or Pledgor of
any of the its respective representations, warranties, covenants or agreements
in this Pledge Agreement, subject to applicable cure periods.

    

    (b)    During the
term of this Pledge Agreement, the Secured Parties shall have the following
rights after any Event of Default and for so long as the Obligations are not
satisfied in full:

    

    (i) the
rights and remedies provided by the Uniform Commercial Code as adopted by the
State of New York (as said law may at any time be amended), except that the
Secured Parties waives any right to a deficiency pursuant to Section 9-608
thereof or otherwise;

    

    (ii) the
right to receive and retain all dividends, payments and other distributions of
any kind upon any or all of the Pledged Shares as additional Collateral;
and

    

    (iii) the
right to sell, at a public or private sale, the Collateral or any part thereof
for cash, upon credit or for future delivery, and at such price or prices in
accordance with the Uniform Commercial Code (as such law may be amended from
time to time); it being understood that one or more of the Secured Parties may,
but shall not be required to, take such actions jointly. Upon any such sale,
Secured Parties shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Secured Parties shall give the Pledgor
not less than ten (10) days written notice of its intention to make any such
sale. Any such sale shall be held at such time or times during ordinary business
hours and at such place or places as Secured Parties may fix in the notice of
such sale. Secured Parties may adjourn or cancel any sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the same may
be so adjourned. In case of any sale of all or any part of the Collateral upon
terms calling for payments in the future, any Collateral so sold may be retained
by Secured Parties until the selling price is paid by the purchaser thereof, but
Secured Parties shall incur no liability in the case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in the case of such
failure, such Collateral may again be sold upon like notice. Secured Parties,
however, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the security
interest and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction, the Pledgors having been
given due notice of all such action. Secured Parties shall incur no liability as
a result of a sale of the Collateral or any part thereof.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (iv) in
addition to its rights and remedies under this agreement, the Notes and all
Transaction Agreements, the Company shall have full recourse against any real,
personal, tangible or intangible assets of Pledgors, and may pursue any legal or
equitable remedies that are available to it.

    

    11.           Waiver. Each of the
Debtor and the Pledgors waives any right that it may have to require Secured
Parties to proceed against any other person, or proceed against or exhaust any
other security, or pursue any other remedy Secured Parties may
have.

    

    12.           Term of Agreement.
This Pledge Agreement shall continue in full force and effect until the earlier
of the payment in full of the Notes. If the Notes is paid in full, the security
interests in the relevant Collateral shall be deemed released, and any portion
of the Collateral not transferred to or sold by any one or more Secured Parties
shall be returned to the Pledgors. Upon termination of this Pledge Agreement,
the relevant Collateral shall be returned within five (5) Trading Days to Debtor
or to the Pledgor, as contemplated above.

    

    13.           Reserved.

    

    14.           General
Provisions:

    

    14.1         Binding Agreement; No
Modification of Transaction Agreements. This Pledge Agreement shall be
binding upon and shall inure to the benefit of the successors and assigns of the
respective parties hereto. Except to the extent specifically provided herein,
nothing in this Pledge Agreement shall limit or modify any provision of any of
the Transaction Agreements

    

    14.2         Captions. The
headings used in this Pledge Agreement are inserted for reference purposes only
and shall not be deemed to define, limit, extend, describe, or affect in any way
the meaning, scope or interpretation of any of the terms or provisions of this
Pledge Agreement or the intent hereof.

    

    14.3         Counterparts. This
Pledge Agreement may be signed in any number of counterparts with the same
effect as if the signatures upon any counterpart were upon the same instrument.
All signed counterparts shall be deemed to be one original. A facsimile
transmission of this signed Pledge Agreement shall be legal and binding on all
parties hereto.

     

    
      14.4         Further Assurances.
The parties hereto agree that, from time to time upon the written request of any
party hereto, they will execute and deliver such further documents and do such
other acts and things as such party may reasonably request in order fully to
effect the purposes of this Pledge Agreement. The Transfer Agent Instructions
annexed hereto are deemed an integral part of this Pledge
Agreement.

       

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    14.5         Waiver of Breach. Any
waiver by either party of any breach of any kind or character whatsoever by the
other, whether such be direct or implied, shall not be construed as a continuing
waiver of or consent to any subsequent breach of this Pledge
Agreement.

    

    14.6         Cumulative Remedies.
The rights and remedies of the parties hereto shall be construed cumulatively,
and none of such rights and remedies shall be exclusive of, or in lieu or
limitation of any other right, remedy, or priority allowed by applicable
law.

    

    14.7          Amendment. This
Pledge Agreement may be modified only in a written document that refers to this
Pledge Agreement and is executed by Secured Parties, the Pledgor and the
Debtor.

    

    14.8          Interpretation. This
Pledge Agreement shall be interpreted, construed, and enforced according to the
substantive laws of the State of New York.

    

    14.9          Governing Law. This
Pledge Agreement shall be governed by and construed in accordance with the laws
of the State of New York. Each of the parties consents to the jurisdiction of
the federal courts whose districts encompass any part of the County of New York
or the state courts of the State of New York sitting in the County of New York
in connection with any dispute arising under this Pledge Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non
coveniens, to the bringing of any such proceeding in such
jurisdictions.

    

    14.10        WAIVER OF JURY TRIAL.
The parties to this Pledge Agreement hereby waive a trial by jury in any action,
proceeding or counterclaim brought by any of them against any other in respect
of any matter arising out or in connection with this Pledge
Agreement.

    

    14.11        Notice. Any notice or
other communication required or permitted to be given hereunder shall be
effective upon receipt. Such notices may be sent (i) in the United States mail,
postage prepaid and certified, (ii) by express courier with receipt, (iii) by
facsimile transmission, with a copy subsequently delivered as in (i) or (ii)
above. Any such notice shall be addressed or transmitted as
follows:

    

    If to the
Secured Parties, to:

    CAMOFI
Master LDC

    350
Madison Avenue

    New York,
NY 10017

    Tel:
646-758-6755

    Fax:
646-304-0500

    

    If to the
Company, to:

    D.L.
Claire Capital, Inc.

    60 East
42nd Street

    Suite
3405

    New York,
New York 10165

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    If to
MHII, to:

    Marshall
Holdings International, Inc.

    2555 East
Washburn Road

    North Las
Vegas, Nevada 89081

    

    If to
Richard A. Bailey, to:

    Marshall
Holdings International, Inc.

    2555 East
Washburn Road

    North Las
Vegas, Nevada 89081

    

    If to
Florian R. Ternes, to:

    Marshall
Holdings International, Inc.

    2555 East
Washburn Road

    North Las
Vegas, Nevada 89081

    

    If to
Neptune Communications, Inc., to:

    c/o
Florian R. Ternes

    2555 East
Washburn Road

    North Las
Vegas, Nevada 89081

    

     Any
party may change its address by notice similarly given to the other parties
(except that a Secured Parties need not give notice to other Secured
Parties).

    

    14.12        Acknowledgement by Debtor
and Pledgors. In the event that any provision of the Transaction
Agreements, the Guarantee or this Pledge Agreement as applied to any party or
circumstances shall be adjudged by a court to be invalid or unenforceable, each
of the Debtor or the Pledgor, as the case may be, acknowledges and agrees that
this Pledge Agreement shall remain valid and enforceable in all respects against
the Debtor and the Pledgor.

    

    [THE
REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK. 

    THE
SIGNATURES OF THE PARTIES ARE ON THE NEXT PAGE.]

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the day, month
and year first above written.

    

    CAMOFI
MASTER LDC

    

    

    
      	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    CAMHZN
MASTER LDC

    

    

    
      	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    D.L.CLAIRE
CAPITAL, INC.:

    

    

    
      	
              By:

            	/s/
      David Fuselier
	
              Name:

            	
              David Fuselier

            
	
              Title:

            	
              President

            

    

    

    MARSHALL
HOLDINGS INTERNATIONAL, INC.

    

    

    
      	
              By:

            	/s/
      Richard A. Bailey
	
              Name:

            	
              Richard A. Bailey

            
	
              Title:

            	
              President and Chief Executive
      Officer

            

    

    

    
      	/s/
      Richard A. Bailey 

	
              RICHARD
      A. BAILEY

            
	
              2555
      East Washburn Road

            
	
              North
      Las Vegas, Nevada 89081

            
	
              Tax Id.
      No.:

            	
              ###-##-####

            

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the day, month
and year first above written.

    

    CAMOFI
MASTER LDC

    

    

    
      	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    CAMHZN
MASTER LDC

    

    

    
      	
              By:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      

    

    

    D.L.CLAIRE
CAPITAL, INC.:

    

    

    
      	
              By:

            	 
      
	
              Name:

            	
              David Fuselier

            
	
              Title:

            	
              President

            

    

    

    MARSHALL
HOLDINGS INTERNATIONAL, INC.

    

    

    
      	
              By:

            	/s/
      Richard A. Bailey
	
              Name:

            	
              Richard A. Bailey

            
	
              Title:

            	
              President and Chief Executive
      Officer

            

    

    

    
      	/s/
      Richard A. Bailey
	
              RICHARD
      A. BAILEY

            
	
              2555
      East Washburn Road

            
	
              North
      Las Vegas, Nevada 89081

            
	
              Tax Id.
      No.:

            	
              ###-##-####

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      	/s/
      Florian R. Ternes
	
              FLORIAN
      R. TERNES

            
	
              2555
      East Washburn Road

            
	
              North
      Las Vegas, Nevada 89081

            
	
              Tax
      Id. No.:

            	
              ###-##-####

            

    

    

    NEPTUNE
COMMINCIATIONS, INC.

    

    
      	
              By:

            	/s/
      Florian R. Ternes
	
              Name:

            	
              Florian
      R. Ternes

            
	
              Title:

            	
              President

            
	
              2555
      East Washburn Road

            
	
              North
      Las Vegas, Nevada 89081

            
	
              Tax
      Id. No.:

            	 
      

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    SCHEDULE
2

     

    The
following shares are pledged hereunder as the Pledged Shares, each certificate
in the name of:

     

    
 

    
      	
              Certificate
      No.

            	
              Name

            	
              No.
      of Shares

            	
              Ratio

            	
              Date
      of Certificate

            
	
              101

            	
              Neptune
      Communications

            	
              125

            	
              1,000

            	
              01/13/03

            
	
              102

            	
              Richard
      Bailey

            	
              7,000

            	
              1,000

            	
              08/13/03

            
	
              108

            	
              Richard
      Bailey

            	
              17,000

            	
              1,000

            	
              09/04/03

            
	
              109

            	
              Florian
      Ternes

            	
              17,000

            	
              1,000

            	
              09/04/03

            
	
              110

            	
              Richard
      Bailey

            	
              35,000

            	
              1,000

            	
              10/06/03

            
	
              111

            	
              Florian
      Ternes

            	
              35,000

            	
              1,000

            	
              10/06/03

            
	
              112

            	
              Richard
      Bailey

            	
              42,000

            	
              1,000

            	
              10/22/03

            
	
              113

            	
              Florian
      Ternes

            	
              42,000

            	
              1,000

            	
              10/22/03

            
	
              114

            	
              Richard
      Bailey

            	
              50,000

            	
              1,000

            	
              11/14/03

            
	
              116

            	
              Richard
      Bailey

            	
              200,000

            	
              1,000

            	
              12/16/03

            
	
              117

            	
              Florian
      Ternes

            	
              200,000

            	
              1,000

            	
              12/16/03

            
	
              118

            	
              Florian
      Ternes

            	
              135,000

            	
              1,000

            	
              01/07/04

            
	
              119

            	
              Richard
      Bailey

            	
              135,000

            	
              1,000

            	
              01/07/04

            
	
              121

            	
              Florian
      Ternes

            	
              2,000,000

            	
              1,000

            	
              08/23/04

            
	
              153

            	
              Richard
      Bailey

            	
              10,000,000

            	
              1,000

            	
              08/31/06

            
	
              154

            	
              Florian
      Ternes

            	
              10,000,000

            	
              1,000

            	
              08/31/06

            
	
              155

            	
              Florian
      Ternes

            	
              5,000,000

            	
              1,000

            	
              03/28/07

            
	
              157

            	
              Richard
      Bailey

            	
              1,000,000

            	
              1,000

            	
              08/20/07

            

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Exhibit
A

    Mortgage

     

     

     14ex10_47.htm

    
      

    

     

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

    
      

      COMMON
STOCK PURCHASE WARRANT

      

      To
Purchase 424,936 Shares of Common Stock of

      

      MARSHALL
HOLDINGS INTERNATIONAL, INC.

      

      THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, CAMHZN Master LDC (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial Exercise
Date”) and on or prior to the close of business on October 31, 2012, the
five year anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Marshall Holdings
International, Inc., a Nevada corporation (the “Company”), 424,936
shares (the “Warrant
Shares”) of Common Stock, $0.001 par value, of the Company (the “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 Purchase Agreement (the “Purchase Agreement”),
dated October 26, 2007, between D.L. Claire Capital, Inc. and the Buyers
signatory thereto.

      

      Section 2.      Exercise.

      

      
        	
                 
      

              	
                a)

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

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                b)

              	
                Exercise Price.
      The exercise price of the Common Stock under this Warrant shall be equal
      to 110% of the closing price of the common stock on October 25, 2007 (the
      “Exercise
      Price”), subject to adjustment pursuant to Section 3
      hereof.

              

      

      

      
        	
                 
      

              	
                c)

              	
                Cashless
      Exercise. This Warrant may also be exercised 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.

      

      
        	
                 
      

              	
                d)

              	
                Exercise
      Limitations; Holder’s
      Restrictions. The Holder shall not have the right to exercise any
      portion of this Warrant, pursuant to Section 2(c) or otherwise, to the
      extent that after giving effect to such issuance after exercise, the
      Holder (together with the Holder’s affiliates), as set forth on the
      applicable Notice of Exercise, would beneficially own in excess of 4.9% of
      the number of shares of the Common Stock outstanding immediately after
      giving effect to such issuance. 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 the determination of
      such sentence 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 Notes or Warrants) 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, it being acknowledged
      by Holder that the Company is not representing to Holder that such
      calculation is in compliance with Section 13(d) of the Exchange Act and
      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) and of
      which a portion of this Warrant is exercisable shall be in the sole
      discretion of such Holder, and the submission of a Notice of Exercise
      shall be deemed to be such Holder’s determination of whether this Warrant
      is exercisable (in relation to other securities owned by such Holder) and
      of which portion of this Warrant is exercisable, in each case subject to
      such aggregate percentage limitation, and the Company shall have no
      obligation to verify or confirm the accuracy of such
      determination.  For purposes of this Section 2(d), in
      determining the number of outstanding shares of Common Stock, the Holder
      may rely on the number of outstanding shares of Common Stock as reflected
      in (x) the Company’s most recent Form 10-QSB or Form 10-KSB (or similar
      form), 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
      outstanding.  Upon the written or oral request of the 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 provisions
      of this Section 2(d) may be waived by the Holder upon, at the election of
      the Holder, not less than 61 days’ prior notice to the Company, and the
      provisions of this Section 2(d) shall continue to apply until such 61st
      day (or such later date, as determined by the Holder, as may be
      specified in such notice of
waiver).

              

      

      
        
           

        

        
          Page
2

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                e)

              	
                Mechanics of
      Exercise.

              

      

      

      
        	
                 
      

              	
                i)

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

              

      

      

      
        	
                 
      

              	
                ii)

              	
                Delivery of
      Certificates Upon Exercise. Certificates for shares purchased
      hereunder shall be transmitted by the transfer agent of the Company to the
      Holder by crediting the account of the Holder’s prime broker with the
      Depository Trust Company through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system if the Company is a participant in such system, and 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 and payment of the
      aggregate Exercise Price as set forth above (“Warrant Share Delivery
      Date”). This Warrant shall be deemed to have been exercised on the
      date the Exercise Price is received by the Company. The Warrant Shares
      shall be deemed to have been issued, and Holder or any other person so
      designated to be named therein shall be deemed to have become a holder of
      record of such shares for all purposes, as of the date the Warrant has
      been exercised by payment to the Company of the Exercise Price and all
      taxes required to be paid by the Holder, if any, pursuant to Section
      2(e)(vii) prior to the issuance of such shares, have been
      paid.

              

      

      
        
           

        

        
          Page
3

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                iii)

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

              

      

      

      
        	
                 
      

              	
                iv)

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

              

      

      

      
        	
                 
      

              	
                v)

              	
                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 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) 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,
      together with applicable confirmations and other evidence reasonably
      requested by the Company. 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.

              

      

      
        
           

        

        
          Page
4

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                vi)

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

              

      

      

      
        	
                 
      

              	
                vii)

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

              

      

      

      
        	
                 
      

              	
                viii)

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

              

      

      

      Section 3.      Certain
Adjustments.

      

      
        	
                 
      

              	
                a)

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

              

      

      
        
           

        

        
          Page
5

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                b)

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

              

      

      

      
        	
                 
      

              	
                c)

              	
                Pro Rata
      Distributions. If the Company, at any time prior to the Termination
      Date, shall distribute to all holders of Common Stock (and not to Holders
      of the Warrants) evidences of its indebtedness or assets or rights or
      warrants to subscribe for or purchase any security other than the Common
      Stock (which shall be subject to Section 3(b)), then in each such case the
      Exercise Price shall be adjusted by multiplying the Exercise Price in
      effect immediately prior to the record date fixed for determination of
      stockholders entitled to receive such distribution by a fraction of which
      the denominator shall be the 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 Holders of
      the portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common
      Stock.  Such adjustment shall be made whenever any such
      distribution is made and shall become effective immediately after the
      record date mentioned above.

              

      

      
        
           

        

        
          Page
6

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                d)

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

              

      

      

      
        	
                 
      

              	
                e)

              	
                Notice to
      Holders.

              

      

      

      i.           Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to this Section
3, the Company shall promptly mail to each Holder a notice setting forth the
Exercise Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. If the Company issues a variable rate security,
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) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the Holder
at its last addresses 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
20-day period commencing the date of such notice to the effective date of the
event triggering such notice.

      
        
           

        

        
          Page
7

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                f)

              	
                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, (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, 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 (in any such case, a
      “Fundamental
      Transaction”), then, upon any subsequent conversion of this
      Warrant, the Holder shall have the right to receive, for each Warrant
      Share that would have been issuable upon such exercise absent such
      Fundamental Transaction, at the option of the Holder, (a) upon exercise of
      this Warrant, the number of shares of Common Stock of the successor or
      acquiring corporation or of the Company, if it is the surviving
      corporation, and Alternate Consideration receivable upon or as a result of
      such reorganization, reclassification, merger, consolidation or
      disposition of assets by a Holder of the number of shares of Common Stock
      for which this Warrant is exercisable immediately prior to such event or
      (b) cash equal to the value of this Warrant as determined in accordance
      with the Black-Scholes option pricing formula (the “Alternate
      Consideration”). For purposes of any such exercise, the
      determination of the Exercise Price shall be appropriately adjusted to
      apply to such Alternate Consideration based on the amount of Alternate
      Consideration issuable in respect of one share of Common Stock in such
      Fundamental Transaction, and the Company shall apportion the Exercise
      Price among the Alternate Consideration in a reasonable manner reflecting
      the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction,
      then the Holder 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 paragraph (f) and insuring that this Warrant
      (or any such replacement security) will be similarly adjusted upon any
      subsequent transaction analogous to a Fundamental
    Transaction.

              

      

      

      
        	
                 
      

              	
                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.

              

      

      

      Section 4.      Transfer of
Warrant.

      

      
        	
                 
      

              	
                a)

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

              

      

      
        
           

        

        
          Page
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.

              

      

      

      
        	
                 
      

              	
                c)

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

              

      

      

      
        	
                 
      

              	
                d)

              	
                Transfer
      Restrictions. If, at the time of the surrender of this Warrant in
      connection with any transfer of this Warrant, the transfer of this Warrant
      shall not be registered pursuant to an effective registration statement
      under the Securities Act and under applicable state securities or blue sky
      laws, the Company may require, as a condition of allowing such transfer
      (i) that the Holder or transferee of this Warrant, as the case may be,
      furnish to the Company a written opinion of counsel (which opinion shall
      be in form, substance and scope customary for opinions of counsel in
      comparable transactions) to the effect that such transfer may be made
      without registration under the Securities Act and under applicable state
      securities or blue sky laws, (ii) that the holder or transferee execute
      and deliver to the Company an investment letter in form and substance
      acceptable to the Company and (iii) that the transferee be an “accredited
      investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities
  Act.

              

      

      

      Section 5.
     Miscellaneous.

      

      
        	
                 
      

              	
                a)

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

              

      

      
        
           

        

        
          Page
9

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                b)

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

              

      

      

      
        	
                 
      

              	
                c)

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

              

      

      

      
        	
                 
      

              	
                d)

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

              

      

      

      
        	
                 
      

              	
                e)

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

              

      

      

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

      
        
           

        

        
          Page
10

          
            

          

        

        
           

        

      

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

      

      
        	
                 
      

              	
                f)

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

              

      

      

      
        	
                 
      

              	
                g)

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

              

      

      

      
        	
                 
      

              	
                h)

              	
                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.

              

      

      

      
        	
                 
      

              	
                i)

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

              

      

      

      
        	
                 
      

              	
                j)

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

              

      

      

      
        	
                 
      

              	
                k)

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

              

      

      
        
           

        

        
          Page
11

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                l)

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

              

      

      

      
        	
                 
      

              	
                m)

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

              

      

      

      
        	
                 
      

              	
                n)

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

              

      

      

      
        	
                 
      

              	
                o)

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

              

      

      

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

      
        
           

        

        
          Page
12

          
            

          

        

        
           

        

      

      

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

      

      Dated:
October 31, 2007

      

      

      
        	 
      	
                MARSHALL
      HOLDINGS INTERNATIONAL, INC.

              
	 
      	 
      	 
      
	 
      	
                By

              	
                /s/
      Richard A Bailey

              
	 
      	 
      	
                Richard
      A Bailey, President and Chief Executive
Officer

              

      

       

      
        
           

        

        
          Page
13

          
            

          

        

        
           

        

      

      

      NOTICE
OF EXERCISE

       

      TO:

       

      (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):

      

      o in lawful money of the
United States; or

      

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

       

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

      

         _______________________________

      

      

      

      The
Warrant Shares shall be delivered to the following:

      

         _______________________________

      

         _______________________________

      

         _______________________________

      

      

      

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

      

      [SIGNATURE
OF HOLDER]

      

      Name of
Investing Entity:
_____________________________________________________________________________

      Signature of Authorized Signatory of
Investing Entity:

      _________________________________________________________________________________________________

      Name of
Authorized Signatory:

      _________________________________________________________________________________________________

      Title of
Authorized Signatory:

      _________________________________________________________________________________________________

      Date:

      _________________________________________________________________________________________________

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ASSIGNMENT
FORM

      

      (To
assign the foregoing warrant, execute 

      this form
and supply required information.  

      Do not
use this form to exercise the warrant.)

      

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

      

      _______________________________________________
whose address is

      

      _______________________________________________________________.

      

      Dated:
______________, _______

      

                                  Holder’s Signature:
_____________________________

      

                                  Holder’s
Address:   _____________________________

      

                                                     
_____________________________

      

      Signature
Guaranteed:  ___________________________________________

      

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

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