Document:

Unassociated Document

     

    Exhibit
      10.91

    EMPLOYMENT
      AGREEMENT

     

    This
      Employment
      Agreement (the "Agreement")
      is made and
      entered into effective April 1, 2006, by and between William M. Smartt
      ("Executive"),
      and Building
      Materials Holding Corporation, a Delaware corporation (the "Company").

     

    WITNESSETH

     

    WHEREAS,
      Executive
      is currently employed by the Company as its Senior Vice President and Chief
      Financial Officer;

     

    WHEREAS,
      the
      Company desires to obtain the benefit of the services of Executive, and
      Executive desires to provide his service to the Company as provided for in
      this
      Agreement; and

     

    WHEREAS,
      the
      Company wishes to extend the duration of Executive's services and further
      clarify the terms and conditions of his employment by entering into this
      Agreement with Executive and Executive is willing to commit his services to
      the
      Company, on the terms and conditions set forth below.

     

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual covenants herein contained,
      Executive and the Company hereto agree as follows:

     

    1.    Term

     

    This
      Agreement
      shall commence on April 1, 2006 (the "Effective
      Date")
      and shall
      continue in effect until the later of (i) May 31, 2009 or (ii) the date that
      the
      employment contract between the Company and Robert E. Mellor is terminated,
      such
      period being referred to herein as the "Employment
      Term."

     

    2.    Employment

     

    2.1    Engagement.
      The Company
      hereby employs Executive and Executive hereby agrees to be employed by the
      Company, subject to the terms and conditions herein set forth. During the
      Employment Term, Executive shall be employed as Senior Vice President and Chief
      Financial Officer of the Company, and shall be responsible for the duties
      normally and customarily attendant to such offices. Executive shall report
      directly to the Company's Chairman, Chief Executive Officer and President,
      and
      also shall render such other services and duties of an executive nature
      consistent with the duties of a senior executive officer of the Company as
      may
      from time to time be designated by the Board of Directors (the "Board").

     

    2.2    Exclusive
      Employment.
      During the
      Employment Term, Executive shall devote his full business time to his duties
      and
      responsibilities set forth in Section 2.1. Without limiting the generality
      of
      the foregoing, Executive shall not, without the prior written approval of the
      Board, during the Employment Term, render services of a business, professional
      or commercial nature to any other person, firm or corporation, whether for
      compensation or otherwise, except that Executive may engage in civic,
      philanthropic and community service activities so long as such activities do
      not
      materially interfere with Executive’s ability to comply with this Agreement and
      are not otherwise in conflict with the policies or interest of the Company,
      and
      Executive may serve on the board of directors of two companies without Company
      approval provided that such companies are not competitive with the Company
      or
      inconsistent with Executive’s role with the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.    Compensation
      and General Benefits

     

    3.1    Base
      Salary.
      During the
      Employment Term, the Company shall pay Executive a base salary in an annualized
      amount equal to three hundred and sixty five thousand dollars ($365,000)
      ("Base
      Salary")
      payable pro rata
      on the Company's regular payday, and subject to adjustment as hereinafter
      provided.

     

    3.2    Salary
      Reviews.
      Executive's Base
      Salary shall be reviewed annually by the Compensation Committee of the Board
      for
      the purpose of considering increases thereof. In conducting this review, the
      Compensation Committee of the Board shall consider appropriate factors,
      including, without limitation, Executive's performance, the Company's financial
      condition and compensation afforded to senior executives of comparable
      corporations. The Base Salary shall not be decreased without the written consent
      of Executive.

     

    3.3    Bonus.
      During the
      Employment Term, Executive shall be eligible to participate in and to receive
      benefits under the Company’s regular officers’ bonus plan or such successor
      annual incentive or bonus plans that the Company may adopt from time to time
      for
      the benefit of its senior executives (collectively referred to as the "Annual
      Bonus Plan") and to earn incentive or bonus awards under the Annual Bonus Plan,
      in accordance with the terms of the Annual Bonus Plan as in effect from time
      to
      time. Notwithstanding any provision in the Annual Bonus Plan to the contrary,
      if
      Executive's employment is terminated for any reason, except in the case the
      Executive is involuntarily terminated by the Company for Cause during the
      Employment Term, then the Executive shall be paid at the end of the then-current
      performance cycle an amount equal to the Executive’s target bonus under the
      Annual Bonus Plan for such performance cycle multiplied by a fraction, the
      numerator of which is equal to the number of whole calendar months that the
      Executive worked during such performance cycle and the denominator of which
      is
      equal to 12. To the extent that the foregoing referenced target bonus is based
      upon a percentage of the Executive’s base compensation, then such target bonus
      shall be based upon the Executive’s annualized base compensation as of the date
      his employment is terminated.

     

    3.4    Equity
Incentive
      Compensation.

     

    (a)    Equity
      Bonus.
      Company agrees to
      provide Executive with the opportunity to earn an equity bonus (the
      "Equity
      Bonus")
      that grants to
      Executive 20,000 units. At the end of the first year of the Employment Term,
      Executive will earn a cash bonus equal to the greater of (1) 20,000 multiplied
      by the average closing price of the company's stock over the five (5) business
      days immediately preceding the Equity Bonus Payment Date or (2) $150,000. The
      Equity Bonus shall be paid within thirty (30) days after March 31, 2007.
      Executive must be employed by the Company on March 31, 2007 in order to receive
      payment of the Equity Bonus, and the Equity Bonus shall be forfeited in its
      entirety if Executive voluntarily terminates employment without Good Reason
      or
      Executive is involuntarily terminated for Cause before March 31, 2007. Company
      agrees to provide Executive with the opportunity to earn an Equity Bonus for
      the
      period of April 1, 2007 through March 31, 2008 and the period of April 1, 2008
      through March 31, 2009 calculated for each such period as follows: the greater
      of (1) 10,000 multiplied by the average closing price of the Company’s stock
      over the five (5) business days immediately preceding April 1, 2008 and April
      1,
      2009 or (2) $300,000. The Equity bonus will be paid within 30 days of the
      calculation date of each year. Executive must be employed by the Company on
      the
      respective payment dates in order to receive payment of the Equity Bonus, and
      the Equity Bonus shall be forfeited in its entirety if Executive voluntarily
      terminates employment without Good Reason of Executive is involuntarily
      terminated for Cause before the respective payment dates.

     

    
      
        
        

      

      
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    (b)    Adjustment
      to
      Equity Units.
      The number of
      equity units granted to the Executive under Section 3.4(a) and the related
      minimum value per unit shall be proportionately adjusted for any increase or
      decrease in the number of issued shares of common stock (“Shares”) of the
      Company resulting from a stock split, reverse stock split, stock dividend,
      combination or reclassification of Shares, or any other increase or decrease
      in
      the number of issued Shares effected without receipt of consideration by the
      Company; provided, however, that conversion of any convertible securities of
      the
      Company shall not be deemed to have been "effected without receipt of
      consideration." Such adjustments shall be made by the Board, whose determination
      in that respect shall be final, binding and conclusive.

     

    (c)    Equity
      Incentive
      Plan.
      Executive may be
      eligible to receive additional incentive compensation subject to the discretion
      of the Compensation Committee which may take into consideration the Equity
      Bonus
      in the form of stock option or restricted stock grants under the 2004 Incentive
      and Performance Plan. All grants made under the 2004 Incentive and Performance
      Plan shall be at the discretion of the Compensation Committee of the Board.
      Except as expressly provided herein, Executive shall be eligible for incentive
      compensation under the 2004 Incentive and Performance Plan on at least the
      same
      basis as other similarly situated members of senior management of the Company,
      and pursuant to the terms and conditions of such plan as in effect from time
      to
      time.

     

    (d)    LTIP.
      The Long-Term
      Incentive Plan ("LTIP") provides for the award of long-term incentive
      compensation based upon the attainment of pre-defined performance goals with
      respect to each applicable three-year performance cycle. As of the Effective
      Date, Executive participated in and was entitled to receive compensation under
      the LTIP for each of the following three-year performance cycles: January 1,
      2004 through December 31, 2006; January 1, 2005 through December 31, 2007;
      and
      January 1, 2006 through December 31, 2008 (each a "Participating Performance
      Cycle"); provided, however, that Executive shall receive 100% of the amount
      otherwise payable for the period January 1, 2004 through December 31, 2006;
      66.67% of the amount otherwise payable for the period January 1, 2005 through
      December 31, 2007; and 33.33% of the amount otherwise payable for the period
      January 1, 2006 through December 31, 2008. Executive will not participate in
      and
      is not eligible to receive compensation under the LTIP for each of the following
      three-year performance cycles: January 1, 2007 through December 31, 2009;
      January 1, 2008 through December 31, 2010; and January 1, 2009 through December
      31, 2011. Notwithstanding any provision of the LTIP to the contrary, if for
      any
      reason Executive’s participation in the LTIP is terminated prior to the
      completion of the Participating Performance Cycle, except in the case where
      such
      termination is due to the Executive’s involuntary termination for Cause or
      voluntary termination not including termination for Good Reason, death or
      disability, then the Executive shall be paid at the end of such Participating
      Performance Cycle an amount equal to the Executive’s target bonus under the LTIP
      multiplied by a fraction the numerator of which is equal to the number of whole
      years that the Executive has worked during the Participating Performance Cycle
      and the denominator of which is equal to 3. To the extent that the foregoing
      referenced target bonus is based upon a percentage of the Executive’s base
      compensation, then such target bonus shall be based upon the Executive’s
      annualized base compensation as of the date his participation in the LTIP
      terminated. Except as expressly provided herein, Executive shall be eligible
      on
      at least the same basis as other similarly situated members of senior management
      of the Company to receive amounts payable under the LTIP in accordance with
      normal plan rules at the end of each Participating Performance
      Cycle.

     

    
      
        
        

      

      
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    (e)    Change
      of
      Control.
      If there is a
      Change of Control of the Company, any Equity Bonus to which Executive otherwise
      is entitled under Section 3.4(a) will immediately vest in full upon such Change
      of Control. Such vested payment(s) shall be paid within five (5) business days
      following a Change of Control. Any Equity Bonus payable pursuant to this Section
      3.4(e) shall be calculated using the price of the Company’s stock on the date of
      the Change of Control. A "Change in Control" of the Company shall be deemed
      to
      have occurred if (i) there shall be consummated (x) any consolidation or merger
      of the Company in which the Company is not the continuing or surviving
      corporation or pursuant to which shares of the Company's Common Stock are to
      be
      converted into cash, securities or other property, other than a merger of the
      Company in which the holders of the Company's Common Stock immediately prior
      to
      the merger have the same proportionate ownership of common stock of the
      surviving corporation immediately after the merger, or (y) any sale, lease,
      exchange or other transfer (in one transaction or a series of related
      transactions) of all, or substantially all, of the business and/or assets of
      the
      Company, or (ii) the stockholders of the Company approve a plan or proposal
      for
      the liquidation or dissolution of the Company, or (iii) any "person" (as defined
      in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
      (the "Exchange Act"), including any group), shall become the "beneficial owner"
      (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
      of
      fifty (50%) percent or more of the Company's outstanding Common Stock, or (iv)
      if for any reason a majority of the Board is not comprised of "Continuing
      Directors," where a "Continuing Director" of the Corporation as of any date
      means a member of the Board who (x) was a member of the Board two years prior
      to
      such date and at all times through such date or (y) was nominated for election
      or elected to the Board with the affirmative vote of at least two-thirds of
      the
      directors who were Continuing Directors at the time of such nomination or
      election; provided,
however,
      that no
      individual initially elected or nominated as a director of the Corporation
      as a
      result of an actual or threatened election contest with respect to directors
      or
      any other actual or threatened solicitation of proxies or consents by or on
      behalf of any person other than the Board shall be deemed to be a Continuing
      Director. Payments made under this Section 3.4(e) shall be taken into account
      under Paragraph 6 of the Severance Plan (as defined below) to the extent
      applicable for purposes of calculation of the “gross up” under such Paragraph
      6.

     

    3.5    Vacation.
      Executive shall
      be entitled to four weeks paid vacation in any fiscal year during the Employment
      Term in accordance with Company vacation and leave policies. Vacation time
      shall
      be planned and taken consistent with Executive's duties and obligations
      hereunder.

     

    
      
        
        

      

      
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    3.6    Other
      Benefits.
      During the
      Employment Term, Executive (and his spouse and dependents) shall be entitled
      to
      participate in the Company's executive perquisite plan, supplemental retirement
      plan, liability insurance, life insurance, disability insurance, dental
      insurance, hospitalization insurance, medical, accident, and other employee
      benefit plans from time to time adopted by the Company on the same basis as
      other similarly situated members of senior management of the Company and
      pursuant to the terms and conditions of such plans and programs. The Company
      shall have the right to change insurance carriers and benefit plans as may
      be
      appropriate in light of future market conditions and shall have the right to
      purchase individual policies covering Executive if necessary.

     

    3.7    Post-Termination
      Health Care Coverage.
      Upon termination
      of employment, but only as provided in Section 7, Executive shall be eligible
      to
      participate in the Company’s health care plan, either on an individual basis or
      family basis to include his dependent spouse, until such time as he becomes
      eligible to participate in the BMHC Retirement Health Care Plan (“Retiree Health
      Care Plan”). If Executive wishes to participate in the Company’s health care
      plan after his termination of employment, then Executive must pay each month
      to
      the Company an amount equal to one-half of the COBRA benefit cost applicable
      to
      the selected coverage (i.e.,
      individual or
      family coverage).

     

    3.8    Retiree
      Health
      Care Coverage.
      Executive shall
      be eligible to participate in the Retiree Health Plan in accordance with its
      terms and conditions. For purposes of determining whether the Executive has
      met
      the Retiree Health Plan’s eligibility requirements, the Executive’s prior
      periods of employment with organizations that provide services similar to the
      Company shall be taken into account. If for any reason the Executive is unable
      to participate in the Retiree Health Plan, then the Company shall pay to the
      Executive each month an amount equal to the Retiree Health Plan’s “Monthly
      Cost.” Assuming that the Executive had participated in and received coverage
      under the Retiree Health Plan, the Monthly Cost shall equal the Company’s
      hypothetical monthly cost of providing such coverage. 
      After the
      Executive attains age 65, the Retiree Health Plan shall be secondary to
      Medicare.

     

    3.9    Reimbursement
      of
      Expenses.
      Upon submission
      of appropriate documentation in accordance with Company policy, the Company
      will
      promptly reimburse Executive for all reasonable business expenses incurred
      by
      Executive in pursuing the business of the Company, including, without
      limitation, expenditures for entertainment and travel. The Company shall make
      such reimbursement to the Executive no later than thirty (30) days after
      Executive’s submission to the Company of all required expense documentation. The
      Executive’s right to reimbursement in accordance with this Section 3.9 and the
      Company’s policies as in effect from time to time shall survive termination of
      the Agreement.

     

    3.10    Director
      and
      Officers Insurance.
      During the
      Employment Term, the Company shall obtain and maintain a Director and Officers
      insurance policy which covers Executive and provides for a level of insurance
      coverage and benefits that are customary and usual for a publicly-held
      company.

     

    
      
        
        

      

      
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    3.11    Supplemental
      Executive Retirement Plan Benefits.
      Executive
      participates in the Executives’ Supplemental Retirement Income Plan of Building
      Materials Holding Corporation (“SERP”). Notwithstanding any provision of the
      SERP to the contrary, if the Executive’s employment with the Company is
      involuntarily terminated without Cause, voluntarily terminated due to Good
      Reason as described in Section 7.7 (d), or terminates upon expiration of this
      Agreement , then the Executive shall immediately become fully vested in his
      benefits under the SERP. Notwithstanding any provision of this Agreement to
      the
      contrary, no provison of this Agreement shall be construed as limiting, in
      any
      manner or form, Executive’s right to benefits under the SERP.

     

    4.    Confidential
      Information

     

    During
      the term of
      this Agreement and forever thereafter, Executive agrees to keep confidential
      all
      information provided by the Company, including any such information and material
      relating to any customer, vendor, licensor, licensee, or other party transacting
      business with the Company (collectively, "Confidential Information"), and not
      to
      release, use, or disclose the Confidential Information, except with the prior
      written permission of the Company. Executive further covenants and agrees that
      every document, computer disk, computer software program, notation, record,
      diary, memorandum, development, investigation, or the like, and any method
      or
      manner of doing business, of the Company (or containing any other secret or
      confidential information of the Company) made or acquired by Executive during
      his employment, is and shall be the sole and exclusive property of the Company.
      Confidential Information does not include, however, information which (i) is
      or
      becomes generally available to the public other than as a result of a disclosure
      by Executive, [(ii)
      was available
      to Executive on a non-confidential basis prior to its disclosure by Company,
      (iii) becomes available to Executive on a non-confidential basis from a person
      other than Company who is not otherwise bound by a confidentiality agreement
      with Company, or is not otherwise prohibited from transmitting the information
      to Executive, or (iv) the Executive is required to disclose pursuant to court,
      administrative hearing officer or other judicial or duly authorized governmental
      representative request or demand for such disclosure, unless the Company has
      obtained an appropriate protective order that prohibits such disclosure and
      the
      Company has advised the Executive of such protective order prior to the
      Executive’s fulfillment of such request or demand. 

     

    5.    Covenants
      of Executive.
      

     

    5.1    Non-Compete.
      Executive agrees
      that, during the Employment Term and for a period of one year following a
      termination of employment other than following a Change of Control, he will
      not,
      directly or indirectly, engage in any business or activity competitive with
      the
      business activities of the Company. The foregoing shall not apply to passive
      investments by Executive of up to 5% of the outstanding stock of any publicly
      traded company or to service by Executive on boards of directors of companies
      as
      permitted under this Agreement, regardless of whether such company competes
      with
      the Company.

     

    5.2    Solicitation
      of
      Employees.
      During the
      Employment Term and for a period of one year following a termination of
      employment other than following a Change of Control, (i) he shall not, directly
      or indirectly, individually, or together through any other person, firm,
      corporation or entity, hire any member of senior management of the Company
      (defined as an officer with a title of vice president or higher) who is then
      in
      the employ of the Company, or (ii) solicit for hire any employee of the Company,
      provided, however, that general solicitations not targeted to Company employees
      shall not be deemed to violate this clause (ii).

     

    
      
        
        

      

      
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    5.3    Solicitation
      of
      Customers and Suppliers.
      Executive agrees
      that, during the Employment Term and for a period of one year following a
      termination of employment other than following a Change of Control, he shall
      not, directly or indirectly, individually, or together through any other person,
      firm, corporation or entity, (i) solicit the business of any material customers
      of or supplies to the Company, or (ii) discourage any person or entity which
      is
      a customer of the Company from continuing its business relationship with the
      Company. 

     

    5.4    Compliance
      with
      Company Policies.
      Executive agrees
      that, during the Employment Term, he shall comply with the Company's employee
      manual and other policies and procedures reasonably established by the Company
      from time to time concerning matters such as management, supervision,
      recruiting, diversity, and sexual harassment.

     

    5.5    Cooperation.
      For a period of
      three years following his termination of employment under this Agreement, he
      shall, upon Company’s reasonable request and in good faith and with his best
      efforts, subject to his reasonable availability, cooperate and assist Company
      in
      any dispute, controversy, or litigation in which Company may be involved and
      with respect to which Executive obtained knowledge while employed by the Company
      or any of its affiliates, successors, or assigns, including, but not limited
      to,
      his participation in any court or arbitration proceedings, giving of testimony,
      signing of affidavits, or such other personal cooperation as counsel for the
      Company shall request. Any such activities shall be scheduled, to the extent
      reasonably possible, to accommodate Executive’s business and personal
      obligations at the time. The Company shall pay Executive’s reasonable travel and
      incidental out-of-pocket expenses incurred in connection with any such
      cooperation, as well as the reasonable costs of an attorney Executive engages
      to
      advise him in connection with the foregoing.

     

    5.6    Return
      of
      Business Records and Equipment.
      Upon termination
      of Executive's employment hereunder, Executive shall promptly return to the
      Company: (i) all documents, records, procedures, books, notebooks, and any
      other
      documentation in any form whatsoever, including but not limited to written,
      audio, video or electronic, containing any information pertaining to the Company
      which includes confidential information, including any and all copies of such
      documentation then in Executive's possession or control regardless of whether
      such documentation was prepared or compiled by Executive, Company, other
      employees of the Company, representatives, agents, or independent contractors,
      and (ii) all equipment or tangible personal property entrusted to Executive
      by
      the Company. Executive acknowledges that all such documentation, copies of
      such
      documentation, equipment, and tangible personal property are and shall at all
      times remain the sole and exclusive property of the Company.

     

    6.    Covenants
      of the Company

     

    Indemnification.
      In the event
      Executive is made, or threatened to be made, a party to any legal action or
      proceeding, by reason of the fact that Executive is or was an employee, director
      or officer of the Company or serves or served any other entity in any capacity
      at the Company's request, Executive shall be indemnified by the Company, and
      the
      Company shall pay Executive's related expenses when and as incurred, including
      but not limited to attorney fees, all to the fullest extent permitted by law.
      

     

    
      
        
        

      

      
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    7.    Termination.

     

    7.1    Termination
      Upon
      Death or Disability.
      If Executive's
      employment is terminated as a result of death or Disability prior to the
      expiration of the Employment Term, Executive (or Executive's estate, or other
      designated beneficiary(s) as shown in the records of the Company in the case
      of
      death) shall be entitled to receive (i) any earned but unpaid Base Salary;
      (ii)
      payment of any accrued and unpaid vacation pay through the Date of Termination;
      (iii)
      payment of any unreimbursed business expenses; (iv) a pro-rata amount of the
      annual bonus that Executive would be eligible to receive under the Company's
      Annual Bonus Plan for the year in which Executive's termination occurs;
(v)
      LTIP benefits in accordance with the terms of the LTIP, as modified by Section
      3.4(d) hereof; (vi) benefits under the Supplemental Retirement Plan ("SERP"),
      provided that Executive shall become fully vested in his benefits under the
      SERP
      upon termination pursuant to this Section 7.1; (vii) the benefits provided
      for
      in Sections 3.7 and 3.8 hereof; and (viii) any other benefits that Executive
      is
      entitled to receive as of the Date of Termination under applicable benefit
      plans
      of the Company,
      less standard
      withholdings for tax and social security purposes. Except as required by law,
      after the Date of Termination, the Company shall have no obligation to make
      any
      other payment, including severance or other compensation, of any kind to
      Executive (or
      Executive's
      estate, or other designated beneficiary(s) as shown in the records of the
      Company in the case of death) upon
      a termination
      of employment by death or Disability.

     

    7.2    Voluntary
      Termination.
      If Executive
      terminates employment with the Company without Good Reason, Executive agrees
      to
      provide the Company with ninety (90) days' prior written notice. The Company
      may
      accelerate the termination of Executive's employment and the right to any
      further compensation to a date prior to the 90th day upon written notice thereof
      being delivered to Executive by the Company. In the event that Executive's
      employment is terminated under this Section 7.2, Executive shall receive payment
      for (i) any earned and unpaid Base Salary; (ii) payment of any accrued and
      unpaid vacation pay through the Date of Termination; (iii) payment of any
      unreimbursed business expenses; (iv) earned but unpaid amount of the annual
      bonus that Executive would be eligible to receive under the Company's Annual
      Bonus Plan, but only those amounts that were earned during the fiscal year
      immediately preceding the fiscal year during which the Executive's termination
      occurs; and (v) benefits the Executive is entitled to receive under the employee
      benefit plans of the Company, including the SERP, if any, less standard
      withholdings for tax and social security purposes, through the Date of
      Termination. Except
      as required
      by law,
      after
      the Date of
      Termination the Company shall have no further obligation to pay any compensation
      of any kind or severance payment of any kind nor to make any further payment
      in
      lieu of notice to Executive.

     

    7.3    Termination
      for
      Cause.
      The Company may
      terminate Executive's employment with the Company at any time for Cause. In
      the
      event that Executive's employment is terminated under this Section 7.3,
      Executive shall receive (i) payment for all earned but unpaid Base Salary;
      (ii)
      payment for accrued but unused vacation; (iii) payment of any unreimbursed
      business expenses; and (iv) benefits the Executive is then entitled to receive
      under the employee benefit plans of the Company, if any, but excluding bonuses
      otherwise payable under the Company's Annual Bonus Plan, less standard
      withholdings for tax and social security purposes, through the Date of
      Termination. Except
      as required
      by law,
      after
      the Date of
      Termination the Company shall have no further obligation to pay any severance
      or
      compensation of any kind nor to make any payment in lieu of notice to Executive.
      Except as required by law, all benefits provided by the Company to Executive
      under this Agreement or otherwise shall cease as of the Date of
      Termination.

     

    
      
        
        

      

      
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    7.4    Termination
      Without Cause.
      The Company may,
      at any time and without prior written notice, terminate Executive without Cause.
      In the event that Executive's employment with the Company is terminated without
      Cause, Executive shall receive (i) payment for all earned but unpaid Base
      Salary; (ii) payment for accrued but unused vacation; (iii) payment of any
      unreimbursed business expenses; (iv) a pro-rata amount of the annual bonus
      that
      Executive would be eligible to receive under the Company's Annual Bonus Plan
      for
      the year in which Executive's termination occurs; (v) LTIP benefits in
      accordance with the terms of the LTIP, as
      modified by
      Section 3.4(d) hereof; (vi) benefits under the SERP, provided that Executive
      shall become fully vested in his benefits under the SERP upon termination
      pursuant to this Section 7.4; (vii) the benefits provided for in Sections 3.7
      and 3.8 hereof; (viii) payment of the Equity Bonus as provided in Section 3.4
      hereof, provided
      that
      Executive shall become fully vested in his benefits under Section 3.4 upon
      termination pursuant to this Section 7.4,
      and (ix) any other
      benefits that Executive is entitled to receive as of the Date of Termination
      under applicable benefit plans of the Company,
      less standard
      withholdings for tax and social security purposes.
      Except as
      specifically provided in this Section 7.4 and except as required by law, all
      benefits provided by the Company to Executive under this Agreement or otherwise
      shall cease as of the Date of Termination.

     

    7.5    Termination
      for
      Good Reason.
      Notwithstanding
      anything in this Section 7 to the contrary, Executive may voluntarily terminate
      his employment with the Company and receive the benefits detailed in Section
      7.4
      upon or within 180 days following the occurrence of an event constituting Good
      Reason.

     

    7.6    Certain
      Definitions.
      For purposes of
      this Agreement, the following term shall have the meanings set forth
      below.

     

    (a)    "Cause"
      shall mean that
      Executive shall: (i) commit an act of fraud, embezzlement or misappropriation
      involving the Company; (ii) be convicted by a court of competent jurisdiction
      of, or enter a plea of guilty of no contest to, any felony involving moral
      turpitude or dishonesty (other than driving while intoxicated or while under
      the
      influence of alcohol or drugs); (iii) commit an act, or fail to commit an act,
      involving the Company which amounts to, or with the passage of time would amount
      to, willful misconduct, gross negligence or a breach of this Agreement and
      which
      results or will result in material harm to the Company; or (iv) willfully fail
      to perform the responsibilities and duties specified herein for a period of
      ten
      (10) days following receipt of written notice from the Company which
      specifically describes past instances of willful failure of performance;
      provided that in the case of (iv) above, during the 10-day period following
      receipt of such notice, Executive shall be given the opportunity to take
      reasonable steps to cure any such claimed past failure of
      performance.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)    "Date
      of
      Termination"
      shall mean
      (i) if Executive is terminated by the Company for Disability, 30 days after
      written notice of termination is given to Executive (provided that Executive
      shall not have returned to the performance of his duties on a full-time basis
      during such 30-day period) or (ii) if Executive's employment is terminated
      by the Company for any other reason or by Executive, the date on which a written
      notice of termination, specifying in reasonable detail the facts and
      circumstances claimed to provide a basis for termination of Executive's
      employment is given; provided that, in the case of a termination for Cause,
      Executive shall not have cured the matter or matters stated in the notice of
      termination within the 10-day notice period provided in Section 7.6(a)
      above.

     

    (c)    "Disability"
      shall mean a
      physical or mental disability that renders Executive unable, as determined
      in
      good faith by a licensed physician, to perform the essential functions of his
      position, even with reasonable accommodation, for 180 days within any 12-month
      period. The Company and Executive or his legal representative shall use their
      best efforts to agree on the physician to determine Disability. If they cannot
      agree within 10 days after the first party makes a written proposal stating
      the
      name of a physician, then the other party shall select a physician within 10
      days and within 10 days thereafter the two physicians shall select a third
      physician. All such physicians must be board certified in the medical area
      giving rise to the alleged Disability. The determination of the third physician
      shall be final and binding. If one party fails to select a physician within
      the
      10-day period, the physician named by the other party shall make the
      determination of Disability.

     

    (d)    "Good
      Reason"
      shall mean
      Executive's resignation from employment within 180 days after the occurrence
      of
      one of the following events:

     

    (i)
      a change of
      Executive's title as Chief Financial Officer or a material reduction in
      Executive's responsibilities without Executive's written consent;

     

    (ii)
      any one of the
      following reductions in Executive’s compensation by the Company: (1) reduction
      in Base Salary at any time during the Employment Term; (2) reduction in the
      number of Equity Bonus units granted to Executive for a fiscal year to a number
      of Equity Bonus units that is less than the number of such units required to
      be
      granted to Executive under Section 3.4(a) of the Agreement; (3) reduction in
      the
      amount of cash bonus paid to Executive under the Company's Bonus Plan to an
      amount that is less than the highest cash bonus paid to Executive under the
      Bonus Plan for any of the three fiscal years immediately preceding the fiscal
      year in which the Executive provides notice to the Company of his termination
      for Good Reason (“Good Reason Notice”); (4) reduction in the amount contributed
      as a Company matching or profit-sharing contribution (“Employer Contribution”)
      made on behalf of Executive under the Company's 401(k) plan (or any successor
      plan) to an amount that is less than the highest Employer Contribution made
      on
      behalf of the Executive for any of the three fiscal years immediately preceding
      the fiscal year in which Good Reason Notice occurs, unless such reduction is
      required to comply with the requirements under the Internal Revenue Code that
      are applicable to tax-qualified retirement plans; and (5) reduction in amounts
      allocated or accrued (whether or not funded) as a Company contribution on behalf
      of Executive under the Company's SERP (or any successor plan) (“SERP Accrual”)
      to an amount that is less than the highest SERP Accrual made on behalf of
      Executive for any of the three fiscal years immediately preceding the year
      in
      which Good Reason Notice occurs;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (iii)
      relocation to
      any place more than twenty-five (25) miles from the office regularly occupied
      by
      the Executive as of the Effective Date, except for required travel by the
      Executive on the Company's business to an extent substantially consistent with
      the Executive's business travel obligations as of the Effective Date;

     

    (iv)
      any material
      breach by the Company of any provision of this Agreement; or 

     

    (v)
      the failure by
      the Company or by any successor or assign of the Company (whether by operation
      of law or otherwise, including any surviving company in a merger or similar
      transaction involving the Company), within ten business days following a Change
      in Control to deliver to the Executive an agreement expressly reaffirming its
      obligations under or agreeing to assume and comply with the obligations of
      the
      Company under this Agreement.

     

    8.    Change
      of Control.

     

    8.1    Severance
      Benefits.
      Upon the
      occurrence of a Change of Control, Executive shall be entitled to severance
      payments as specified in Section 5 of the Building Materials Holding Corporation
      Severance Plan for Certain Executive Officers, Senior Management and Key
      Employees of the Company and its Subsidiaries, including any amendments thereto,
      as of the Effective Date ("Severance Plan"); for avoidance of doubt, reference
      to the provisions of the Severance Plan made herein shall be without regard
      to
      any amendments to the Severance Plan made after the Effective Date unless such
      subsequent amendments have the effect of increasing any benefit pursuant to
      the
      Severance Plan. A copy of the Severance Plan in effect as of the Effective
      Date
      of this Agreement is attached as Exhibit 1. The multiple used to calculate
      the
      amount payable under Section 5(i), 5(ii) and 5(iii) of the Severance Plan shall
      be the number of whole years remaining in the Employment Term plus a fraction
      representing any partial year remaining in the Employment Term. The payments
      to
      Executive under the Severance Plan shall be increased as provided in Section
      6
      of the Severance Plan to the extent such payments trigger the provisions of
      Section 6. For avoidance of doubt, Executive shall not participate in the
      Severance Plan and shall not be entitled to severance benefits except as
      expressly provided in this Section 8.

     

    8.2    Severance
      Calculation.
      Notwithstanding
      any provision of the Severance Plan to the contrary, the definition of “Cash
      Compensation" shall include the sum of the highest Equity Bonus paid under
      Section 3.4 hereunder to Executive or any annualized comparable bonus paid
      to
      Executive under any predecessor employment agreement (all such bonuses shall
      be
      referred to as “Equity Bonus”) with the Company during any of the three fiscal
      years immediately preceding the year in which the Change of Control occurs
      or,
      if greater, the annualized value of any pro rata Equity Bonus paid during the
      year in which the Change of Control occurs. 

     

    8.3    Code
      Section
      409A.
      Notwithstanding
      anything herein or in the Severance Plan to the contrary, to the extent that
      the
      Board determines, in its sole discretion, that any payment or benefit to be
      provided under Section 8.1 to or for the benefit of Executive would be subject
      to the additional tax imposed under Section 409A(a)(1)(B) of the Internal
      Revenue Code of 1986, as amended (the "Code")
      or a successor
      or comparable provision, the commencement of such payments and/or benefits
      shall
      be delayed until the earlier of (x) the date that is six months following
      the Date of Termination or (y) the date of Executive's death or disability
      (within the meaning of Section 409A(a)(2)(C) of the Code) (such date is referred
      to herein as the "Distribution Date"). In the event that the Board determines
      that the commencement of any of the benefits to be provided under Section 8.1
      are to be delayed pursuant to the preceding sentence, the Company shall require
      Executive to bear the full cost of such benefits until the Distribution Date
      at
      which time the Company shall reimburse Executive for all such
      costs.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    8.4    Termination
      of
      Obligations.
      Upon the
      consummation of a Change of Control, Executive's obligations under this
      Agreement shall terminate, except as otherwise provided in Sections 4 and
      5.

     

    8.5    Payment
      of
      Severance.
      Payment of the
      Severance benefit to Executive shall occur within 10 days of the Change of
      Control notwithstanding Section 8.3 of this agreement or any provisions in
      the
      Severance Agreement.

    

    9.    Warranties
      and Representations.
      Executive hereby
      represents and warrants to the Company that he is not now under any obligation
      of a contractual or quasi-contractual nature known to him that is inconsistent
      or in conflict with this Agreement or that would prevent, limit or impair the
      performance by Executive of his obligations hereunder; and has been or has
      had
      the opportunity to be represented by legal counsel in the preparation,
      negotiation, execution and delivery of this Agreement and understands fully
      the
      terms and provisions hereof

     

    10.    Notices

     

    All
      notices
      required or permitted to be given by either party hereunder shall be in writing
      and shall be deemed sufficiently given if mailed by registered or certified
      mail, or personally delivered to the party entitled thereto at the address
      stated below, or to such changed address as the addressee may have given by
      a
      similar notice:

     

    
      	
              To
                the
                Company:

            	
              Building
                Materials Holding Corporation

              Four
                Embarcadero Center, Suite 3200

              San
                Francisco, California 94111

              Attn:
                Chairman of the Compensation Committee 

              Fax:
                (415)
                627-9119

               

            
	
              With
                a Copy
                to:

            	
              Building
                Materials Holding Corporation

              720
                Park
                Blvd., Suite 200

              P.O.
                Box
                7006

              Boise,
                Idaho,
                83707

              Fax:
                (208)
                387-4367

              Attention:
                Paul Street, Esq.

               

            
	
              To
                Executive:

            	
              William
                M.
                Smartt

              Building
                Materials Holding Corporation

              Four
                Embarcadero Center, Suite 3200

              San
                Francisco, California 94111

              Telecopier:
                (415) 627-9119

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    11.    General
      Provisions

     

    11.1    Waiver.
      No waiver by any
      party hereto of any failure of any other party to keep or perform any covenant
      or condition of this Agreement shall be deemed to be a waiver of any preceding
      or succeeding breach of the same, or any other covenant or
      condition.

     

    11.2    Amendments.
      No provision of
      this Agreement may be amended, modified or waived unless such amendment,
      modification or waiver shall be agreed to in writing and signed by Executive
      and
      a duly authorized officer of the Company.

     

    11.3    Severability.
      If any provision
      of this Agreement shall be determined to be invalid or unenforceable by a court
      of competent jurisdiction, the remaining provisions of this Agreement shall
      remain in full force and effect to the fullest extent permitted by
      law.

     

    11.4    Assignment.
      No right to or
      interest in any payments shall be assignable by either party; provided; however,
      that this provision shall not preclude Executive from designating one or more
      beneficiaries to receive any amount that may be payable after his death and
      shall not preclude his executor or administrator from assigning any right
      hereunder to the person or persons entitled hereto. Further, the Company may
      assign this Agreement: (a) to an affiliate so long as such affiliate assumes
      the
      Company's obligations hereunder, or (b) in connection with a merger or
      consolidation involving the Company or a sale of substantially all its assets
      or
      shares to the surviving corporation or purchaser as the case may be so long
      as
      such assignee assumes the Company's obligations hereunder.

     

    11.5    Successors
      and
      Assigns.
      This Agreement
      and the obligations of the Company and Executive hereunder shall be binding
      upon
      and shall be assumed by their respective successors including, without
      limitation, any corporation or corporations acquiring the Company, whether
      by
      merger, consolidation, sale or otherwise.

     

    11.6    Governing
      Law.
      The validity,
      interpretation, performance, and enforcement of this Agreement shall be governed
      by the laws of the State of California without regard to the principles of
      conflict of laws thereof.

     

    11.7    Attorney's
      Fees
      and Costs.
      If any action at
      law or in equity is necessary to enforce or interpret the terms of this
      Agreement, the prevailing party shall be entitled to reasonable attorneys'
      fees,
      costs, and necessary disbursements in addition to any other relief to which
      that
      party may be entitled, provided that in the case of any dispute involving
      payment or calculation of the amount of payment under the Severance Plan and
      as
      provided for in Section 8 of this Agreement, the Company shall pay Executive’s
      legal fees incurred including and costs incurred in enforcing the terms of
      the
      Severance Agreement and this Agreement. This provision shall be construed as
      applicable to the entire contract.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    11.8    No
      Representation.
      No officer,
      employee or representative of the Company has any authority to make any
      representation or promise in connection with this Agreement or the subject
      matter hereto which is not contained herein, and Executive agrees that he has
      not executed this Agreement in reliance upon any such representation or
      promise.

     

    11.9    Interpretation
      of Agreement.
      Each of the
      parties has been represented by counsel in the negotiation and preparation
      of
      this Agreement. The parties agree that this Agreement is to be construed as
      jointly drafted. Accordingly, this Agreement will be construed according to
      the
      fair meaning of its language, and the rule of construction that ambiguities
      are
      to be resolved against the drafting party will not be employed in the
      interpretation of this Agreement.

     

    11.10    Headings.
      The headings of
      sections and subsections are included solely for convenience of reference and
      shall not control the meaning or interpretation of any of the provisions of
      this
      Agreement.

     

    11.11    Entire
      Agreement.
      This document
      constitutes the entire understanding and Agreement of the parties with respect
      to the subject matter of this Agreement, and any and all prior agreements,
      understandings and representations are hereby terminated and cancelled in their
      entirety and are of no further force or effect.

     

    11.12    Counterparts.
      This Agreement
      may be executed in two or more counterparts with the same effect as if the
      signatures to all such counterparts was upon the same instrument, and all such
      counterparts shall constitute but one instrument.

     

    11.13    Remedies.
      In view of the
      position of confidence which Executive will enjoy with the Company and the
      anticipated relationship with the clients, customers, and employees of the
      Company and its affiliates pursuant to his employment hereunder, and recognizing
      both the access to confidential financial and other information which Executive
      will have pursuant to his employment, Executive expressly acknowledges that
      the
      restrictive covenants set forth in Section 5 are reasonable and necessary in
      order to protect and maintain the proprietary interests and other legitimate
      business interests of the Company and its affiliates. Executive further
      acknowledges that (1) it would be difficult to calculate damages to the Company
      and its affiliates from any breach of his obligations under this Section 5,
      (ii)
      that injury to the Company and its affiliates from any such breach would be
      irreparable and impossible to measure, and (iii) that the remedy at law for
      any
      breach or threatened breach of Section 5 would therefore be an inadequate remedy
      and, accordingly, the Company shall, in addition to all other available remedies
      (including without limitation seeking such damages as it can show it and its
      affiliates has sustained by reason of such breach and/or the exercise of all
      other rights it has under this Agreement), be entitled to injunctive and other
      similar equitable remedies.

     

    11.14    No
      Mitigation of
      Damages.
      Executive shall
      not be required to mitigate damages or the amount of any payment provided for
      under this Agreement by seeking other employment or otherwise, nor shall the
      amount of any payment provided for under this Agreement be reduced by any
      compensation earned by Executive as a result of employment by another employer
      or by retirement benefits after the Date of Termination, except as specifically
      provided hereunder. The provisions of this Agreement, and any payment provided
      for hereunder, shall not reduce any amounts otherwise payable, or in any way
      diminish the Executive's then existing rights, or rights which would accrue
      solely as a result of the passage of time, under any Company benefit plan or
      other contract, plan or arrangement.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    11.15    Dispute
      Resolution and Binding Arbitration.
      Executive and the
      Company agree that in the event a dispute arises concerning or relating to
      Executive's employment with the Company, such dispute shall be submitted to
      binding arbitration in accordance with the employment arbitration rules of
      Judicial Arbitration and Mediation Services ("JAMS")
      by a single
      impartial arbitrator selected as follows: if the Company and Executive are
      unable to agree upon an impartial arbitrator within ten (10) days of a request
      for arbitration, the parties shall request a panel of employment arbitrators
      from JAMS and alternative strike names until a single arbitrator remains. The
      arbitration shall take place in San Francisco, California, and both Executive
      and the Company agree to submit to the jurisdiction of the arbitrator selected
      in accordance with JAMS' rules and procedures. Except as set forth in
      Section 10.13 hereof, Executive and the Company agree that the arbitration
      procedure provided for in this section will be the exclusive avenue of redress
      for any disputes relating to or arising from Executive's employment with the
      Company, and that the award of the arbitrator shall be final and binding on
      both
      parties, and nonappealable. The arbitrator shall have discretion to award
      monetary and other damages, or no damages, and to fashion such other relief
      as
      the arbitrator deems appropriate. The arbitration charges will be shared equally
      by the parties up to the cost of a first appearance fee in state court; any
      arbitration charge in excess of the first appearance fee shall be paid by the
      Company. THE COMPANY AND EXECUTIVE ACKNOWLEDGE AND AGREE THAT BY AGREEING TO
      ARBITRATE, THEY ARE WAIVING ANY RIGHT TO BRING AN ACTION AGAINST THE OTHER
      IN A
      COURT OF LAW, EITHER STATE OR FEDERAL, AND ARE WAIVING THE RIGHT TO HAVE CLAIMS
      AND DAMAGES, IF ANY, DETERMINED BY A JURY.

     

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

     

    
      	 	 	 
	
              

              William
                M.
                Smartt  

            	
              BUILDING
                MATERIALS HOLDING CORPORATION

            
	 
 	 
 	 
 
	 	By:  	 
	 	 	
              
 
	 	Title:  	 
	 	
              

            
	 	 

    

     

    
      
        
        

      

      15EXHIBIT
      4.7

    

    THE
      WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
      EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED (THE “ACT”), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
      PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
      TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER
      TO
      THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR
      THE
      COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
      AVAILABLE.

    

    EXERCISABLE
      UNTIL ON OR BEFORE

    5:00
      P.M., NEW YORK TIME, _________, 2011

    

      
        	
                No.
                  ______

              	 	
                ___________________
                  Warrants

              

      

      NANOSENSORS,
        INC.

    

    

    UNIT
      PURCHASE WARRANT

    

    This
      warrant certificate (the “Warrant Certificate”) certifies that _______________
      or registered assigns, is the registered holder of warrants to purchase from
      NANOSENSORS, INC., a Nevada corporation (the “Company”) at any time from the
      date hereof until 5:00 P.M. New York time on ___________, 2011 (the “Warrant
      Exercise Term”), up to _______________________________ (_______) Units of the
      Company’s securities at the exercise price set forth in Section 4 below. Each
      Unit consists of one share of common stock, par value $.001 (the “Warrant
      Shares”) and one five-year warrant to purchase one share of Common Stock at an
      exercise price of $.01per share (the “Unit Warrant”). Upon exercise of this
      Warrant, each Warrant Share will be fully-paid and non-assessable.

    

    This
      Warrant shall be exercisable for Warrant Shares and Unit Warrants at any time,
      or from time-to-time, during the Warrant Exercise Term upon the surrender to
      the
      Company at its principal place of business (or at such other location as the
      Company may advise the Holder in writing) of this Warrant properly endorsed
      with
      a form of subscription in substantially the form attached hereto duly filled
      in
      and signed and, if applicable, upon payment of the aggregate Exercise Price
      for
      the number of Warrant Shares and Unit Warrant for which this Warrant is being
      exercised determined in accordance with the provisions hereof. Payment of the
      aggregate Exercise Price may be made as elected by Holder in accordance with
      Section 1 hereof. 

    

    1. Exercise
      of Warrants.

    

    1.1
       Exercise
      Procedure.
      Each
      Warrant is initially exercisable to purchase one Warrant Share and one Unit
      Warrant at an initial exercise price of $0.01 per Warrant Share and Unit
      Warrant, subject to adjustment as set forth in Article 5 hereof, payable in
      cash
      or by check to the order of the Company, or any combination of cash or check.
      Upon surrender of this Warrant Certificate with the annexed Form of Election
      to
      Purchase duly executed, together with payment of the Exercise Price (as
      hereinafter defined) for the Warrant Shares and Unit Warrants purchased, at
      the
      Company’s principal offices (presently located at 1800 Wyatt Drive, Santa Clara,
      California 95054), the registered holder of the Warrant Certificate (“Holder” or
“Holders”) shall be entitled to receive a certificate or certificates for the
      Warrant Shares and Unit Warrants so purchased. 

    

    
      
        
        

      

      
        1

        
          

        

      

       

    

      1.2 Cashless
      Exercise.
      At any
      time during the Warrant Exercise Term, the Holder may, at its option, exchange
      the Warrants represented by such Holder's Warrant Certificate, in whole or
      in
      part (a “Cashless Exercise”), into the number of fully paid and non-assessable
      Warrant Shares and Unit Warrants determined in accordance with this Section
      1.2,
      by surrendering such Warrant Certificate at the principal office of the Company
      or at the office of its transfer agent, accompanied by a notice stating such
      Holder's intent to effect such exchange, the number of Warrants (the “Total
      Share Number”) to be exchanged and the date on which the Holder requests that
      such Cashless Exercise occur (the “Notice of Exchange”). The Cashless Exercise
      shall take place on the date specified in the Notice of Exchange, or, if later,
      the date the Notice of Exchange is received by the Company (the “Exchange
      Date”). Certificates for the Warrant Shares issuable upon such Cashless Exercise
      and, if applicable, a new Warrant Certificate of like tenor evidencing the
      balance of the Warrant Shares remaining subject to the Holder's Warrant
      certificate, shall be issued as of the Exchange Date and delivered to the Holder
      within three (3) days following the Exchange Date. For purposes of Rule 144,
      it
      is intended and acknowledged that the Warrant Shares issued in a Cashless
      Exercise transaction shall be deemed to have been acquired by the Holder, and
      the holding period for the Warrant Shares required by Rule 144 shall be deemed
      to have been commenced, on the Issue Date. 

    

    The
      Holder may effect a Cashless Exercise by surrendering this Warrant to the
      Company and noting on the Exercise Notice that the Holder wishes to effect
      a
      Cashless Exercise, upon which the Company shall issue to the Holder the number
      of Warrant Shares determined as follows:

     

    X
      = Y x
      (A-B)/A

    

    where:          X
      = the
      number of Warrant Shares to be issued to the Holder;

    
 

    
      	 	 	 	
              Y
                =
                the number of Warrant Shares with respect to which this Warrant is
                being
                exercised;

            

    

     

    
      	 	 	 	
              A
                =
                the Market Price (as defined below) as of the Exercise Date;
                and

            

    

    

    
      	 	 	 	
              B
                =
                the Exercise Price.

            

    

    

    As
      used
      herein, the phrase “Market Price” at any date shall be deemed to be the last
      reported sale price, or, in case no such reported sale takes place on such
      day,
      the average of the last reported sale prices for the preceding three trading
      days, in either case as officially reported by the principal securities exchange
      on which the Common Stock is listed or admitted to trading or as reported in
      the
      Nasdaq National Market System, or, if the Common Stock is not listed or admitted
      to trading on any national securities exchange or quoted on the Nasdaq National
      Market System, the last reported sale price as furnished by the National
      Association of Securities Dealers, Inc. through Nasdaq or similar organization
      if Nasdaq is no longer reporting such information, or if the Common Stock is
      not
      quoted on Nasdaq, as determined in good faith by resolution of the Board of
      Directors of the Company, based on the best information available to it for
      the
      two days immediately preceding the Exchange Date.

    

        1.3. Vesting
      Period.
      The
      purchase rights represented by this Warrant Certificate are exercisable at
      the
      option of the Holder hereof, in whole or in part at anytime.

     

    1.4. Partial
      Exercise; New Warrant.
      In the
      case of the purchase of less than all the Warrant Shares and Unit Warrants
      purchasable under this Warrant Certificate, the Company shall cancel this
      Warrant Certificate upon the surrender thereof and shall execute and deliver
      a
      new Warrant Certificate of like tenor for the balance of the Warrant Shares
      and
      Unit Warrants purchasable hereunder.

    
      
        
        

      

      
        2

        
          

        

      

       

    

    2. Issuance
      of Certificates.
      Upon
      the exercise of the Warrants, the issuance of certificates for the Warrant
      Shares and Unit Warrants purchased pursuant to such exercise shall be made
      forthwith without charge to the Holder thereof including, without limitation,
      any tax which may be payable in respect of the issuance thereof, and such
      certificates shall (subject to the provisions of Article 3 hereof) be issued
      in
      the name of, or in such names as may be directed by, the Holder thereof;
      provided, however, that the Company shall not be required to pay any tax which
      may be payable in respect of any transfer involved in the issuance and delivery
      of any such certificates in a name other than that of the Holder and the Company
      shall not be required to issue or deliver such certificates unless or until
      the
      person or persons requesting the issuance thereof shall have paid to the Company
      the amount of such tax or shall have established to the satisfaction of the
      Company that such tax has been paid.

    

    The
      Warrant Certificates and, upon exercise of the Warrants, the certificates
      representing the Warrant Shares and Unit Warrants shall be executed on behalf
      of
      the Company by the manual or facsimile signature of those officers required
      to
      sign such certificates under applicable law.

    

    3. Restricted
      Shares; Registration Rights.

    

    3.1 Restricted
      Shares upon Exercise. This
      Warrant Certificate and, upon exercise of the Warrants, in part or in whole,
      certificates representing the Warrant Shares and Unit Warrants shall bear a
      legend substantially similar to the following:

    

    “The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended (“Act”), and may not be offered or sold or
      otherwise transferred except (i) pursuant to an effective registration statement
      under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the
      Act
      (or any similar rule under such Act relating to the disposition of securities),
      or (iii) upon the delivery by the holder to the Company of an opinion of
      counsel, reasonably satisfactory to counsel to the issuer, stating that an
      exemption from registration under such Act is available.”

    

    3.2 Restriction
      on Transfer of Warrants.
      The
      Holder of this Warrant Certificate, by its acceptance thereof, covenants and
      agrees that the Warrants and the Warrant Shares and Unit Warrants issuable
      upon
      exercise of the Warrants are being acquired as an investment and not with a
      view
      to the distribution thereof and that the Warrants and the Warrant Shares and
      Unit Warrants may not be transferred unless such securities are either
      registered under the Act and any applicable state securities law or an exemption
      from such registration is available. The Holder of this Warrant Certificate
      acknowledges that the Holder has been provided with an opportunity to ask
      questions of representatives of the Company concerning the Company and that
      all
      such questions were answered to the satisfaction of the Holder. In connection
      with any purchase of Warrant Shares and Unit Warrants the Holder agrees to
      execute any documents which may be reasonably required by counsel to the Company
      to comply with the provisions of the Act and applicable state securities
      laws.

    

    3.3.
       Registration
      Rights. 

    

      
      (a) The
      Company and Holder agree that the Holder shall be entitled to registration
      rights equivalent to the rights granted to the purchasers of the securities
      of
      the Company contemplated by that certain Selling Agent Agreement between the
      Company and the Holder dated May 10, 2006, as amended (the “Agency Agreement”).
      The registration rights granted by the Company to the purchasers of the
      securities contemplated by the Agency Agreement is set forth in that certain
      Registration Rights Agreement dated as of the date of this Warrant (the
“Registration Rights Agreement”) between the Holder and the Company.
      Accordingly, the Company shall include the Warrant Shares and shares of Common
      Stock issuable upon exercise of the Unit Warrants in any registration statement
      that if files pursuant to the Registration Rights Agreement, in accordance
      with
      the terms and conditions thereof, to allow for the resale of such shares by
      the
      Holder, regardless of whether such registration statement is filed pursuant
      to
      the demand of the parties to the Registration Rights Agreement or
      otherwise.

    
      
        
        

      

      
        3

        
          

        

      

       

    

    (b) In
      addition to the rights granted to the Holder in Section 3.3(a) of this Warrant,
      the Company agrees to include, on a one time basis, in any registration
      statement filed by the Company after the date hereof (excluding registration
      statements on Form S-4 or S-8 in connection with any merger or acquisition
      or
      employee option plans, respectively) the Warrant Shares and the shares of common
      stock underlying the Unit Warrants to allow the resale of such shares by the
      Holder under the federal securities laws. Any such registration statement shall
      be at the cost and expense of the Company, except for fees of counsel to the
      Holder and any underwriting or sales commissions with respect to Holder’s
      shares. The Company shall provide the Holder with at least 15 days written
      notice of its intent to file a registration statement with the Securities and
      Exchange Commission. The Company agrees to use its best efforts to have the
      registration statement declared effective as soon as possible, but the Company
      shall have the right, in its sole discretion, to terminate the filing at any
      time prior to its effectiveness. The Company further agrees to use its best
      efforts to maintain the effectiveness of such registration statement for at
      least nine months from the effective date. The Company shall provide the holder
      with such numbers of prospectuses as the holder may reasonably request in
      connection with the sale of any shares pursuant to the registration
      statement.

    

    (c) The
      Holder agrees by its acceptance of this Warrant that it shall provide any such
      information as may be reasonably required by the Company in connection with
      the
      registration statement regarding the Holder, including information regarding
      the
      Holder’s intended method of resale, amount and nature of shares held and other
      relevant information. The Holder hereby agrees to indemnify and hold harmless
      the Company, its officers, directors, accountants, agents and employees and
      any
      person who controls the Company within the meaning of Section 15 of the
      Securities Act of 1933 or Section 20(a) of the Securities and Exchange Act
      of
      1934, and any underwriter of the shares being sold by the Holder against all
      damages, claims, losses, causes of action, investigations (and expenses incurred
      with the foregoing) arising from any written information provided by the Holder
      to the Company for specific inclusion in the registration statement.

    

      (d) The
      Company further agrees that all of the Company’s obligations as described in the
      Registration Rights Agreement shall further extend to the Holder of this
      Warrant, including the obligations of the Company to provide such information
      and notices in accordance with the Registration Rights Agreement and the
      indemnification obligations described in the Registration Rights
      Agreement.

    

    4. Price

    

    4.1 Initial
      and Adjusted Exercise Price.
      The
      initial exercise price of each Warrant shall be $0.01 per share. The adjusted
      exercise price shall be the price which shall result from time to time from
      any
      and all adjustments of the initial exercise price in accordance with the
      provisions of Article 5 hereof.

    

    4.2 Exercise
      Price.
      The
      term “Exercise Price” herein shall mean the initial exercise price or the
      adjusted exercise price, depending upon the context.

    
      
        
        

      

      
        4

        
          

        

      

       

    

    5. Adjustments
      of Exercise Price and Number of Warrant Shares and Unit Warrants.

    

    5.1 Stock
      Dividends, Subdivisions, Reclassifications or Combinations.
      If the
      Company shall (A) declare a dividend or make a distribution on its Common Stock
      in shares of its Common Stock, (B) subdivide or reclassify the outstanding
      shares of Common Stock into a greater number of shares, or (C) combine or
      reclassify the outstanding Common Stock into a smaller number of shares, the
      Exercise Price in effect at the time of the record date for such dividend or
      distribution or the effective date of such subdivision, combination or
      reclassification shall be proportionately adjusted and the Holder, after such
      date, shall be entitled to receive the number of shares of Common Stock which
      he
      would have owned or been entitled to receive had this Warrant been exercised
      immediately prior to such date. Any adjustment made pursuant to this Section
      5.1
      that results in a decrease (or increase) in the Exercise Price shall also effect
      a proportional increase (or decrease) in the number of Warrant Shares and Unit
      Warrants into which this Warrant is exercisable. Successive adjustments in
      the
      Exercise Price shall be made whenever any event specified above shall occur.
      

    

    5.2 Consolidation,
      Merger, Sale or Conveyance.
      In case
      of any consolidation or merger of the Company with any other corporation (other
      than a wholly owned subsidiary), or in case of sale or transfer of all or
      substantially all of the assets of the Company, or in the case of any share
      exchange whereby the Common Stock is converted into other securities or
      property, the Company will be required to make appropriate provision so that
      the
      Holder will have the right thereafter to exercise this Warrant into the kind
      and
      amount of shares of stock and other securities and property receivable upon
      such
      consolidation, merger, sale, transfer or share exchange by a holder of the
      number of shares of Common Stock for which this Warrant was exercisable
      immediately prior to such consolidation, merger, sale, transfer or share
      exchange. Any adjustment made herein that results in a decrease (or increase)
      in
      the Exercise Price shall also effect a proportional increase or (decrease)
      in
      the number of Warrant Shares and Unit Warrants into which this Warrant is
      exercisable.

    

    5.3 Dilutive
      Issuances.

    

    (i) Adjustment
      Upon Dilutive Issuance.
      If, at
      any time commencing on the Issue Date and prior to the Expiration Date, the
      Company issues or sells any shares of Common Stock or any equity or equity
      equivalent securities (including any equity, debt or other instrument that
      is at
      any time over the life thereof convertible into or exchangeable for Common
      Stock
      or other securities which are so convertible or exchangeable) (collectively,
      “Common
      Stock Equivalents”)
      for
      per share consideration less than the Exercise Price on the date of such
      issuance or sale, (a “Dilutive
      Issuance”)
      (if
      the holder of the Common Stock or Common Stock Equivalent 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 a 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
      adjusted so as to equal the consideration received or receivable by the Company
      (on a per share basis) for the additional shares of Common Stock or Common
      Stock
      Equivalents so issued, sold or deemed issued or sold in such Dilutive Issuance
      (which, in the case of a deemed issuance or sale, shall be calculated in
      accordance with subparagraph (ii) below). Such adjustment shall be made whenever
      such Common Stock or Common Stock Equivalents are issued. 

     

    (ii) Effect
      On Exercise Price Of Certain Events.
      For
      purposes of determining the adjusted Exercise Price under subparagraph (i)
      of
      this paragraph 5.3, the following will be applicable:

     

      (A) Issuance
      of Common Stock Equivalents.
      If the
      Company issues or sells any Common Stock Equivalents, whether or not immediately
      convertible, exercisable or exchangeable, and the price per share for which
      Common Stock is issuable upon such conversion, exercise or exchange is less
      than
      the Exercise Price in effect on the date of issuance or sale of such Common
      Stock Equivalents, then the maximum total number of shares of Common Stock
      issuable upon the conversion, exercise or exchange of all such Common Stock
      Equivalents shall, as of the date of the issuance or sale of such Common Stock
      Equivalents, be deemed to be outstanding and to have been issued and sold by
      the
      Company for such price per share. 

    
      
        
        

      

      
        5

        
          

        

      

       

    

      (B) Change
      in Conversion Rate.
      If,
      following an adjustment to the Exercise Price upon the issuance of Common Stock
      Equivalents pursuant to a Dilutive Issuance, there is a change at any time
      in
      (y) the amount of additional consideration, if any, payable to the Company
      upon
      the conversion, exercise or exchange of any Common Stock Equivalents; or (z)
      the
      rate at which any Common Stock Equivalents are convertible into or exercisable
      or exchangeable for Common Stock (in each such case, other than under or by
      reason of provisions designed to protect against dilution), then in any such
      case, the Exercise Price in effect at the time of such change shall be
      readjusted to the Exercise Price which would have been in effect at such time
      had such Common Stock Equivalents still outstanding provided for such changed
      additional consideration or changed conversion, exercise or exchange rate,
      as
      the case may be, at the time initially issued or sold.

     

         (C) Calculation
      of Consideration Received.
      If any
      Common Stock or Common Stock Equivalents are issued or sold for cash, the
      consideration received therefor will be the amount received by the Company
      therefor. In case any Common Stock or Common Stock Equivalents are issued or
      sold for a consideration part or all of which shall be other than cash,
      including in the case of a strategic or similar arrangement in which the other
      entity will provide services to the Company, purchase services from the Company
      or otherwise provide intangible consideration to the Company, the amount of
      the
      consideration other than cash received by the Company (including the net present
      value of the consideration other than cash expected by the Company for the
      provided or purchased services) shall be the fair market value of such
      consideration, except where such consideration consists of publicly traded
      securities, in which case the amount of consideration received by the Company
      will be the Market Price thereof on the date of receipt. The term “Market
      Price”
means,
      as of a particular date, the average of the high and low price of the Common
      Stock for the ten (10) consecutive Trading Days occurring immediately prior
      to
      (but not including) any given date, as reported in the Principal Market. In
      case
      any Common Stock or Common Stock Equivalents are issued in connection with
      any
      merger or consolidation in which the Company is the surviving corporation,
      the
      amount of consideration therefor will be deemed to be the fair market value
      of
      such portion of the net assets and business of the non-surviving corporation
      as
      is attributable to such Common Stock or Common Stock Equivalents. The
      independent members of the Company’s Board of Directors shall calculate
      reasonably and in good faith, using standard commercial valuation methods
      appropriate for valuing such assets, the fair market value of any consideration
      other than cash or securities.

     

    (D) Issuances
      Without Consideration Pursuant to Existing Securities.
      If the
      Company issues (or becomes obligated to issue) shares of Common Stock pursuant
      to any anti-dilution or similar adjustments (other than as a result of stock
      splits, stock dividends and the like) contained in any Common Stock Equivalents
      outstanding as of the date hereof, then all shares of Common Stock so issued
      shall be deemed to have been issued for no consideration. 

     

    (iii) Exceptions
      To Adjustment Of Exercise Price.
      Notwithstanding the foregoing, no adjustment to the Exercise Price shall be
      made
      pursuant to this Section
      5.3
      upon the
      issuance of any Excluded Securities. For purposes hereof, “Excluded
      Securities”
means
      (A) securities contemplated by the Agency Agreement, including any securities
      purchased in the financing contemplated thereby; (B) securities issued upon
      exercise of the Warrants issued in the financing contemplated by the Agency
      Agreement or upon the exercise of the warrants issued to Selling Agents as
      provided for in the Agency Agreement; (C) shares of Common Stock issuable or
      issued to (x) employees or directors from time to time either directly or upon
      the exercise of options, in such case granted or to be granted in the discretion
      of the Board of Directors, pursuant to one or more stock option plans or stock
      purchase plans adopted
      by the Company, or (y) to consultants or vendors, either directly or pursuant
      to
      warrants or other convertible securities to acquire shares of Common Stock
      that
      are outstanding on the date hereof or issued hereafter; (D) shares of Common
      Stock issued in connection with any Common Stock Equivalents outstanding on
      the
      date hereof; (E) shares of Common Stock or Common Stock Equivalents issued
      to
      third parties in connection with a joint venture, strategic alliance or other
      commercial relationship with such third party relating to the operation of
      the
      Company’s business, the primary purpose of which is not to raise equity capital;
      (F) the reduction in the exercise price of the common stock purchase warrants
      issued and outstanding prior to the commencement of the Offering as contemplated
      in financing described in the Agency Agreement; and (G) shares of Common Stock
      or other securities issued in connection with any stock split, stock dividend
      or
      recapitalization of the Company.

    
      
        
        

      

      
        6

        
          

        

      

       

    

      (iv) Adjustments;
      Additional Shares, Securities or Assets.
      In the
      event that at any time, as a result of an adjustment made pursuant to this
      Section
      5.3,
      each
      Holder shall, upon conversion of such Holder’s Warrants, become entitled to
      receive securities or assets (other than Common Stock) then, wherever
      appropriate, all references herein to shares of Common Stock shall be deemed
      to
      refer to and include such shares and/or other securities or assets; and
      thereafter the number of such shares and/or other securities or assets shall
      be
      subject to adjustment from time to time in a manner and upon terms as nearly
      equivalent as practicable to the provisions of this Section
      5.3.

     

    6. Exercise
      Limitation.
      In
      no
      event shall a Holder be permitted to exercise
      this Warrant, or part hereof, if, upon such exercise, the
      number of shares of Common Stock beneficially owned by the Holder (other than
      shares which would otherwise be deemed beneficially owned except for being
      subject to a limitation on conversion or exercise analogous to the limitation
      contained in this Section
      6),
      would
      exceed 4.99% of the number of shares of Common Stock then issued and
      outstanding. As used herein, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and the rules thereunder. To the extent that the limitation contained
      in this Section
      6
      applies,
      the submission of an Exercise Notice by the Holder shall be deemed to be the
      Holder’s representation that this Warrant is exercisable pursuant to the terms
      hereof and the Company shall be entitled to rely on such representation without
      making any further inquiry as to whether this Section
      6
      applies.
      Nothing contained herein shall be deemed to restrict the right of a Holder
      to
      exercise this Warrant, or part thereof, at such time as such exercise will
      not
      violate the provisions of this Section
      6.
      The
      limitations contained in this Section
      5
      shall
      cease to apply (x) upon sixty (60) days’ prior written notice from the Holder to
      the Company, or (y) immediately upon written notice from the Holder to the
      Company at any time after the public announcement or other disclosure of the
      (i)
      sale,
      conveyance or disposition of all or substantially all of the assets of the
      Company; (ii) effectuation of a transaction or series of transactions in which
      more than 50% of the voting power of the Company is disposed of (other than
      as a
      direct result of normal, uncoordinated trading activities in the Common Stock
      generally); (iii) the consolidation, merger or other business combination of
      the
      Company with or into any other entity, immediately following which the prior
      stockholders of the Company fail to own, directly or indirectly, at least 50%
      of
      the voting equity of the surviving entity; or (d) a transaction or series of
      transactions in which any person or entity Person or “group” (as such term is
      used in Sections 13(d) and 14(d) of the Exchange Act) acquires more than 50%
      of
      the voting equity of the Company (any of the foregoing transactions in this
      Section
      5(y) (i) - (iv),
      a
“Change of Control”).

     

    
      
        
        

      

      
        7

        
          

        

      

       

    

    7. Exchange
      and Replacement of Warrant Certificates.
      This
      Warrant Certificate is exchangeable without expense, upon the surrender hereof
      by the registered Holder at the principal executive office of the Company,
      for a
      new Warrant Certificate of like tenor and date representing in the aggregate
      the
      right to purchase the same number of Warrant Shares and Unit Warrants in such
      denominations as shall be designated by the Holder thereof at the time of such
      surrender. Upon receipt by the Company of evidence reasonably satisfactory
      to it
      of the loss, theft, destruction or mutilation of this Warrant Certificate,
      and,
      in case of loss, theft or destruction, of indemnity or security reasonably
      satisfactory to it, and reimbursement to the Company of all reasonable expenses
      incidental thereto, and upon surrender and cancellation of the Warrants, if
      mutilated, the Company will make and deliver a new Warrant of like tenor, in
      lieu thereof.

    

    8. Elimination
      of Fractional Interests.
      The
      Company shall not be required to issue certificates representing fractions
      of
      Warrant Shares and Unit Warrants and shall not be required to issue scrip or
      pay
      cash in lieu of fractional interests, it being the intent of the parties that
      all fractional interests shall be eliminated by rounding any fraction up to
      the
      nearest whole number of Warrant Shares and Unit Warrants.

    

    9. Reservation
      of Shares.
      Subject
      to its requirement to amend its Certificate of Incorporation so as to increase
      its number of authorized shares of Common Stock, the Company covenants that
      it
      will at all times reserve and keep available out of its authorized Common Stock,
      solely for the purpose of issuance upon exercise of this Warrant as herein
      provided, such number of shares of Common Stock as shall then be issuable upon
      the exercise of this Warrant. The Company covenants that all shares of Common
      Stock which shall be so issuable shall be duly and validly issued and fully-paid
      and non-assessable.

    

    10. Notices.
      All
      notices, requests, consents and other communications hereunder shall be in
      writing and shall be deemed to have been duly made when delivered, or mailed
      by
      registered or certified mail, return receipt requested:

    

    (a) If
      to a
      registered Holder of the Warrants, to the address of such Holder as shown on
      the
      books of the Company; or

    

    (b) If
      to the
      Company, to the address set forth in Article 1 of this Agreement or to such
      other address as the Company may designate by notice to the
      Holders.

    

    11. Binding
      Effect; Successors.
      This
      Warrant shall be binding upon any entity succeeding the Company by merger,
      consolidation or acquisition of all or substantially all of the Company’s
      assets. All of the obligations of the Company relating to the Common Stock
      issuable upon the exercise of this Warrant shall survive the exercise and
      termination of this Warrant. All the covenants and provisions of this Agreement
      by or for the benefit of the Company and the Holders inure to the benefit of
      their respective successors and assigns hereunder. 

    

    12. Survival.
      The
      rights and obligations of the Company, of the Holder of this Warrant and of
      the
      holder of shares of Common Stock issued upon exercise of this Warrant, shall
      survive the exercise of this Warrant.

    

    13. Governing
      Law

    
      
        
        

      

      
        8

        
          

        

      

       

    

    13.1 Choice
      of Law.
      This
      Agreement shall be governed as to validity, interpretation, construction, effect
      and in all other respects by the internal laws of the State of New
      York.

    

    13.2 Jurisdiction
      and Service of Process.
      The
      Company and the Holder each (a) agrees that any legal suit, action or proceeding
      arising out of or relating to this Warrant Certificate, or any other agreement
      entered into between the Company and the Holder pursuant to the Offering shall
      be instituted exclusively in the appropriate state court of the State of New
      York, County of New York, or in the United States District Court for the
      Southern District of New York, (b) waives any objection which the Company or
      such Holder may have now or hereafter to the venue of any such suit, action
      or
      proceeding, and (c) irrevocably consents to the jurisdiction of the applicable
      state court of the State of New York, County of New York and the United States
      District Court for the Southern District of New York in any such suit, action
      or
      proceeding. The Company and the Holder each further agrees to accept and
      acknowledge service of any and all process which may be served in any such
      suit,
      action or proceeding in the applicable state court of the State of New York,
      County of New York and the United States District Court for the Southern
      District of New York and agrees that service of process upon the Company or
      the
      Holder mailed by certified mail to their respective addresses shall be deemed
      in
      every respect effective service of process upon the Company or the Holder,
      as
      the case may be, in any suit, action or proceeding.

    

    14. No
      Voting or Dividend Rights.
      Nothing
      contained in this Warrant shall be construed as conferring upon the Holder
      hereof the right to vote as a shareholder of the Company. No dividends or
      interest shall be payable or accrued in respect of this Warrant, the interest
      represented hereby, or the shares purchasable hereunder until, and only to
      the
      extent that, this Warrant shall have been exercised. 

    

    15. Representations
      and Covenants of the Holder.
      This
      Warrant has been entered into by the Company in reliance upon the following
      representations and covenants of the Holder:

    

    A. Investment
      Purpose; Restricted Security.
      This
      Warrant and the Warrant Shares and Unit Warrants issuable upon exercise of
      this
      Warrant will be acquired for investment and not with a view to the sale or
      distribution of any part thereof, and the Holder has no present intention of
      selling or engaging in any public distribution of the same except pursuant
      to a
      registration or exemption. The Holder understands (i) that this Warrant and
      the
      Warrant Shares and Unit Warrants issuable upon exercise of this Warrant are
      not
      registered under the 1933 Act or qualified under applicable state securities
      laws on the ground that the issuance contemplated by this Warrant will be exempt
      from the registration and qualifications requirements thereof, and (ii) that
      the
      Company’s reliance on such exemption is predicated on the representations set
      forth in this Section. The Holder has such knowledge and experience in financial
      and business matters as to be capable of evaluating the merits and risks of
      its
      investment, and has the ability to bear the economic risks of its
      investment.

    

    B. Risk
      of No Registration.
      The
      Holder understands that if a registration statement covering the securities
      under the 1933 Act is not in effect when it desires to sell the Warrant Shares
      issuable upon exercise of the Warrant, it may be required to hold such
      securities for an indefinite period. The Holder also understands that any sale
      of the Warrant Shares issuable upon exercise of the Warrant which might be
      made
      by it in reliance upon Rule 144 under the 1933 Act may be made only in
      accordance with the terms and conditions of that Rule.

    

    16.  Redemption.
       This
      Warrant may be redeemed at the option of the Company, at a redemption price
      of
      $0.01 per Warrant (the “Redemption
      Price”),
      at any
      time commencing twelve months after the effective date of the Registration
      Statement and the Expiration Date upon not less than 30 days (and not more
      than
      60 days) written notice delivered to the Holder, provided: (a) the closing
      bid
      price of the Common Stock is been at least 300% of the Exercise Price for twenty
      (20) consecutive trading days prior to the date of the notice of redemption
      and
      (b) there is an effective registration statement with a current prospectus
      available covering the shares of Common Stock issuable upon exercise of this
      Warrant. On
      and
      after the date fixed for redemption, the Holder shall have no rights with
      respect to this Warrant except to receive the Redemption Price per Warrant
      upon
      surrender of this Certificate. The
      Company covenants and agrees that it will honor all Exercise Notices tendered
      through the
      5:00
      Easter Time on the Business Day immediately preceding the Redemption Date.
      The
      redemption payment shall be made in cash on the date fixed for redemption in
      the
      Company’s notice of redemption, as described below (the “Redemption
      Date”).
      The
      notice of redemption shall specify: (i) the Redemption Price; (ii) the
      Redemption Date; (iii) the place where Warrant Certificates shall be delivered
      and the redemption price paid; and (iv) that the right to exercise the Warrants
      shall terminate at 5:00 p.m. EST on the Business Day immediately preceding
      the
      Redemption Date. An affidavit of the Secretary or an Assistant Secretary of
      the
      Company that notice of redemption has been mailed shall, in the absence of
      fraud, be conclusive evidence of the facts stated therein.

    
      
        
        

      

      
        9

        
          

        

      

       

    

     

    From
      and
      after the Redemption Date, the Company shall, at the place specified in the
      notice of redemption, upon presentation and surrender to the Company by or
      on
      behalf of the Holder thereof of this Warrant, deliver or cause to be delivered
      to or upon the written order of such holder a sum of cash equal to the
      Redemption Price of each such Warrant. From and after the Redemption Date and
      upon the deposit or setting aside by the Company of a sum sufficient to redeem
      all the Warrants called for redemption, such Warrants shall expire and become
      void and all rights hereunder and shall cease, except the right, if any, to
      receive payment of the Redemption Price.

     

    17. Miscellaneous.
      No
      recourse shall be had for any claim based hereon or otherwise in any manner
      in
      respect hereof, against any incorporator, stockholder, officer or director,
      past, present or future, of the Company or of any predecessor corporation,
      whether by virtue of any constitutional provision or statute or rule of law,
      or
      by the enforcement of any assessment or penalty or in any other manner, all
      such
      liability being expressly waived and released by the acceptance hereof and
      as
      part of the consideration for the issue hereof. No course of dealing between
      the
      Company and the Holder hereof shall operate as a waiver of any right of any
      Holder hereof, and no delay on the part of the Holder in exercising any right
      hereunder shall so operate. This Warrant and any provision hereof may be
      changed, waived, discharged or terminated only by an instrument in writing
      signed by (a) the party against which enforcement of the same is sought or
      (b)
      the Company and the holders of at least a majority of the number of shares
      into
      which the Warrants are exercisable (without regard to any limitation contained
      herein on such exercise), it being understood that upon the satisfaction of
      the
      conditions described in (a) and (b) above, each Warrant (including any Warrant
      held by the Holder who did not execute the agreement specified in (b) above)
      shall be deemed to incorporate any amendment, modification, change or waiver
      effected thereby as of the effective date thereof. Notwithstanding the
      foregoing, no modification to this amendment provision will be effective against
      any Holder without his consent. Any amendment shall be endorsed upon this
      Warrant, and all future Holders shall be bound thereby. 

    

    [REMAINDER
      OF PAGE INTENTIONALLY LET BLANK]

    
      
        
        

      

      
        10

        
          

        

      

       

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      its
      officers, thereunto duly authorized this __ day of May, 2006.

     

    
      	 	 	 
	 	NANOSENSORS,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Ted Wong 
	 	Title:
              President

    

    
      
        
        

      

      
        11

        
          

        

      

       

    

    WARRANT
      EXERCISE FORM

    

    
      	TO:	
              Nanosensors,
                Inc.

              Attention: President 

              1800 Wyatt Drive, Suite #2

              Santa Clara, CA
                95054

            

    

     

    The
      undersigned Holder hereby irrevocably elects to exercise the right to purchase
      ________ shares of Common Stock covered by this Warrant according to the
      conditions hereof and herewith makes full payment of the Exercise Price of
      such
      shares. 

    

    The
      undersigned, by marking the box following this sentence, indicates his or her
      intention to exercise this Warrant on a cashless basis in accordance with the
      terms of this Warrant:  o

    

    Kindly
      deliver to the undersigned a certificate representing the Shares. 

    

    INSTRUCTIONS
      FOR DELIVERY 

    

    
      	
              Name:
                __________________________________________________________________

            	 
	 	
              (please
                typewrite or print in block letters)

            	 

    

    

    
      	
              Address:
                ________________________________________________________________

            	 

    

    

    
      	
              Tax
                I.D. No. or Social Security No.:
                ____________________________________________

            	 

    

    

    
      	
              Dated:
                ________________________

            	 

    

    

    Signature
      ________________________________

    

    STATE
      OF
      ___________)

    COUNTY
      OF
      _________) ss:

    

    On
      this
      __ day of ___________, before me personally came ________, to me known, who
      being by me duly sworn, did depose and say that he resides at
      __________________, that he is the holder of the foregoing instrument and that
      he executed such instrument and duly acknowledged to me that he executed the
      same.

    

    
      	 	 	 
	 	 	
              Notary
                Public

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

       

    

     

    [FORM
      OF
      ASSIGNMENT]

    (To
      be
      executed by the registered holder if such holder

    desires
      to transfer the Warrant Certificate.)

    

    FOR
      VALUE
      RECEIVED ___________________________________
      hereby sells, assigns and transfers unto
      ____________________________________________________________________

    
      	
               

            

    

    (Please
      print name and address of transferee)

     

    this
      Warrant Certificate, together with all right, title and interest therein, and
      does hereby irrevocably constitute and appoint  ,
      Attorney, to transfer the within Warrant Certificate on the books of
      NANOSENSORS, INC., with full power of substitution.

    

    Dated: __________________  Signature:  

    ___________________________ 

    

     

    ______________________________

    (Signature
      must conform in all respects to name of holder as specified on the face of
      the
      Warrant Certificate)

    

    __________________________
      

    

    __________________________
      

    (Insert
      Social Security or Other

    Identifying
      Number of Assignee)

    

    STATE
      OF
      ___________)

    COUNTY
      OF
      _________) ss:

    

    On
      this
      __ day of ___________, before me personally came ________, to me known, who
      being by me duly sworn, did depose and say that he resides at
      __________________, that he is the holder of the foregoing instrument and that
      he executed such instrument and duly acknowledged to me that he executed the
      same.

     

    
      	 	 	 
	 	 	
              Notary
                Public

            

    

    

    
      
        
        

      

      
        13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]