Document:

Unassociated Document

    NEITHER
      THIS PROMISSORY NOTE NOR ANY OF THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
      HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
      SECURITIES LAW. NO SALE, TRANSFER, PLEDGE OR ASSIGNMENT OF THIS NOTE OR OF
      THE
      SECURITIES ISSUABLE UPON CONVERSION HEREOF SHALL BE VALID OR EFFECTIVE UNLESS
      (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
      THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW,
      OR (B) SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND OF ANY APPLICABLE STATE SECURITIES LAW.

     

    8.0%
      CONVERTIBLE NOTE

     

    
      	$___________ 	 	
              _____________,
                2006 

            
	 	 	 
	 	 	 

    

     

    

    CROSSPOINT
      ENERGY COMPANY, a Delaware limited liability company (the “Company”),
      for
      value received, hereby promises to pay to _____________ or its registered
      transferees or assigns (the “Holder”),
      the
      principal amount of _____________
      DOLLARS
      ($___________), together with interest on the amount of such principal from
      time
      to time outstanding, in accordance with the terms set forth below. 

    

     

    ARTICLE
      I

    DEFINITIONS

     

    As
      used
      herein, the following terms shall have the following meanings:

     

    “Affiliate”
means
      any Person that directly or indirectly, through one or more intermediaries,
      controls, is controlled by, or is under common control with, another Person,
      where “control” means (i) the possession, directly or indirectly, of the power
      to direct or cause the direction of the management and policies of such other
      Person, whether through the ownership of voting securities, by contract or
      otherwise, or (ii) the ability of a Person to consolidate the financial
      statements of another Person with its own in accordance with generally accepted
      accounting principles.

     

    “Board
      of Directors”
means
      the board of directors of the Company as elected from time to time.

     

    “Certificate
      of Adjustment”
has
      the
      meaning set forth in Section
      4.9(a).

     

    “Common
      Equity”
means
      (i) before the Merger Date, the common interests of the Company and (ii) on
      and
      after the Merger Date, the Common Stock.

     

    “Common
      Stock”
means
      the common stock of the Public Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Company”
means
      CrossPoint Energy Company and any successor by merger.

     

    “Conversion
      Equity”
has
      the
      meaning set forth in Section
      3.1(a).

     

    “Conversion
      Price”
has
      the
      meaning set forth in Section
      3.3.

     

    “Dilution
      Multiple”
means
      the result of the following formula:

     

    (E1
      x
      P1) + (DI x DP)

       E2
      x
      P1

     

    
      	
            	Where:	
              E1
                = the fully-diluted Common Equity outstanding before the Dilutive
                Issuance.

            

    

     

    E2
      = the
      fully-diluted Common Equity outstanding after the Dilutive
      Issuance.

     

    DI
      = the
      Common Equity issued pursuant to the Dilutive Issuance.

     

    P1
      = the
      Conversion Price in effect prior to the Dilutive Issuance.

     

    DP
      = the
      price of the Common Equity issued pursuant to the Dilutive Issuance

     

    “Dilutive
      Issuance”
has
      the
      meaning set forth in Section
      4.1.

     

    “EBITDA
      Multiple”
means
      an amount equal to the product of (a) 3.5 multiplied by (b) the annualized
      earnings before interest, taxes, depreciation, amortization and exploration
      expenses of the Company for the most recently completed calendar
      quarter.

     

    “Event
      of Bankruptcy”
means
      any of (i) the filing by a Person of a voluntary petition in bankruptcy under
      any provision of any bankruptcy law or a petition to take advantage of any
      insolvency act, (ii) the admission in writing by a Person or by any subsidiaries
      of such Person of an inability to pay debts generally as they become due, (iii)
      the appointment of a receiver or receivers for all or a material part of a
      Person’s assets with the consent of such Person, (iv) the filing of any
      bankruptcy, arrangement or reorganization petition by or, with the consent
      of a
      Person, against such Person under any provision of any bankruptcy law, (v)
      the
      filing or granting of any order by a court of competent jurisdiction appointing
      a receiver, liquidator or trustee for or of a Person or a substantial part
      of
      such Person’s assets, which order shall not be dismissed or stayed within thirty
      (30) days, or (vi) the filing of any involuntary petition to reorganize or
      to
      liquidate a Person, which petition shall not be dismissed or stayed within
      thirty (30) days.

     

    “Event
      of Default”
has
      the
      meaning specified in Section
      6.1.

     

    “Excess
      Interest”
has
      the
      meaning specified in Section
      2.6.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Holder”
has
      the
      meaning set forth in the Preamble to this Note.

     

    “Limited
      Liability Company Agreement”
means
      the Operating Agreement of the Company.

     

    “Mandatory
      Conversion Event”
means
      the first Trading Day after (a) the Closing Price equals or exceeds $2.25
      (subject to adjustment for any stock splits and similar events occurring after
      June 30, 2006) for 20 consecutive Trading Days during which an aggregate of
      not
      less than 1,000,000 shares were traded on most senior Stock Exchange on which
      the Common Stock is then traded; and (b) the resale of all the shares of Common
      Stock issued upon conversion is covered by an effective registration statement
      under the Securities Act.

     

    “Maturity
      Date”
means
      June 30, 2009, the date upon which this Note becomes due and payable pursuant
      to
Section
      2.3.

     

    “Maximum
      Rate”
has
      the
      meaning specified in Section
      2.6.

     

    “Merger”
means
      the merger of the Company with a corporation that is wholly-owned by the Public
      Company.

     

    “Merger
      Date”
means
      the date upon which the Merger is consummated.

     

    “Note”
means
      this 8.0% Convertible Note.

     

    “Obligations”
means
      any and all indebtedness and/or liabilities of the Company to Holder arising
      in
      connection with the issuance of this Note, together with all renewals,
      modifications, extensions and increases thereof and all substitutions or
      replacements therefor.

     

    “PIK
      Payment”
means
      the delivery of a number of shares of Registered Common Stock equal to the
      quotient of (i) the amount of interest then due and payable to the Holder,
      divided by (ii) the PIK Price, rounded up to the next full share.

     

    “PIK
      Period”
means
      the period during which the Common Stock is traded on a Stock Exchange beginning
      on the Merger Date and ending on the third business day after December 31,
      2007.

     

    “PIK
      Price”
means
      the amount that is equal to 90% of the average of the VWAPs of the Common Stock
      for the ten Trading Days immediately prior to the last day of the most recent
      calendar quarter.

     

    “Payment
      Address”
has
      the
      meaning specified in Section
      2.4.

     

    “Person”
means
      any natural person or any corporation, partnership, limited liability company,
      joint venture or other business entity.

     

    “Prepayment
      Date”
has
      the
      meaning specified in Section
      2.5.

     

    “Prepayment
      Notice”
has
      the
      meaning specified in Section
      2.5.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Public
      Company”
means
      the corporation that is (a) a reporting company pursuant to the Exchange Act
      and
      (b) the sole stockholder of a corporation with which the Company merges pursuant
      to the Merger.

     

    “Registered
      Common Stock”
means
      shares of Common Stock, the resale of which is covered by an effective
      registration statement under the Securities Act.

     

    “Reorganization
      Event”
has
      the
      meaning specified in Section
      4.6.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Senior
      Debt”
means
      (a) any indebtedness of the Company or its affiliates held by D.B. Zwirn Special
      Opportunities Fund, L.P. and Drawbridge Special Opportunities Fund, L.P. and
      its
      affiliates under (i) that certain Credit Agreement, dated September 2, 2005
      (the
“Credit
      Agreement”),
      by
      and between the CrossPoint Energy Holdings, LLC and
      the
      Lenders named therein, (ii) any of the Loan Documents (as defined in such Credit
      Agreement) or (iii) any rearrangement,
      refinancing or assignment of such indebtedness as evidenced by such Credit
      Agreement or related Loan Documents; (b) any funded indebtedness secured by
      a
      general lien on the assets of the Company, or (c) any funded indebtedness that,
      by its terms, ranks superior to this Note with respect to payment of principal.
      

     

    “Stock
      Exchange”
means,
      in declining order of seniority, the New York Stock Exchange, the American
      Stock
      Exchange, the Nasdaq Stock Market, the OTC Bulletin Board System or the Pink
      Sheets Quotation Service.

     

    “Trading
      Day”
means
      any day upon which trades are processed on the New York Stock
      Exchange.

     

    “Warrants”
means
      those certain Warrants to purchase Common Stock issued pursuant to the
      Securities Purchase Agreement among the Company and the investors set forth
      therein dated ________, 2006.

     

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Stock Exchange,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Stock Exchange on which the Common Stock
      is
      then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
      from
      9:30 a.m. New York City time to 4:02 p.m. New York City time); or (b) in
      all other cases, the fair market value of one share of Common Stock as
      determined by an independent appraiser selected in good faith by the Holder
      and
      reasonably acceptable to the Company.

     

    
      
        
        

      

      
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    ARTICLE
      II

    ADVANCES
      AND PAYMENT

     

    2.1 Advance.
      Subject
      to the terms and conditions set forth herein, the Company hereby acknowledges
      and agrees that, as of the date hereof, Holder has advanced to the Company
      a sum
      equal to the aggregate principal amount of this Note. 

     

    2.2 Interest.
      From
      the date of this Note through the Maturity Date, interest shall accrue hereunder
      on the outstanding principal amount of this Note at a rate equal to eight
      percent (8.0%) per annum calculated on the basis of the actual number of days
      elapsed over a 360-day year. 

     

    2.3 Payment
      of Principal and Interest.
      

     

    (a) The
      outstanding principal amount of this Note shall be due and payable in full
      on
      the Maturity Date.

     

    (b) Interest
      on this Note shall be payable (i) on the third business day after December
      31,
      2006 and (ii) thereafter on the third business day after the last day of each
      calendar quarter. During the PIK Period, at the option of the Company, interest
      may be paid by delivery of a number of shares of Common Stock equal to the
      PIK
      Payment upon 10 business days’ prior notice to the Holder.

     

    2.4 Manner
      of Payment.
      Payments of principal and interest on this Note may be made to Holder at the
      address for such Holder set forth on the signature page hereof or as otherwise
      directed in writing by Holder (the “Payment Address”). PIK Payments shall be
      made using the Deposit Withdrawal Agent Commission system operated by the
      Depository Trust Company to the account specified in writing by the
      Holder.

     

    2.5 Prepayment.
      At any
      time prior to the Maturity Date if the Common Equity is registered for resale
      by
      the Holder, the Company may prepay this Note, in whole and not in part, by
      payment of 110.0% of the principal amount then outstanding. Such prepayment
      shall be effected by mailing an irrevocable written notice of such prepayment
      (the “Prepayment Notice”) to the Holder at least 30 days prior to the date of
      such prepayment designated in the Prepayment Notice (the “Prepayment Date”). The
      Company shall prepay any principal amount of this Note that has not been
      converted into Common Equity pursuant to Article III upon or promptly after
      the
      Prepayment Date. From and after the Prepayment Date and the payment of the
      funds
      necessary to effect such prepayment to the Holder, notwithstanding that this
      Note so called for prepayment shall not have been surrendered to the Company,
      this Note shall no longer be deemed outstanding and the Holder of this Note
      shall have no rights under or with respect to this Note.

     

    2.6 Interest
      Laws.
      Notwithstanding any provision to the contrary contained in this Note, the
      Company shall not be required to pay, and Holder shall not be permitted to
      contract for, take, reserve, charge or receive, any compensation that
      constitutes interest under applicable laws in excess of the maximum amount
      of
      interest permitted by law. For purposes of this Note, the term “Excess
      Interest”
shall
      mean any compensation that constitutes interest under applicable laws in excess
      of the maximum amount of interest permitted by such applicable laws. If any
      Excess Interest is provided for or determined by a court of competent
      jurisdiction to have been provided for in this Note or otherwise contracted
      for,
      taken, reserved, charged or received by Holder, then (i) the provisions of
      this
Section
      2.6
      shall
      govern and control, (ii) the Company shall not be obligated to pay any Excess
      Interest, (iii) any Excess Interest that Holder may have contracted for, taken,
      reserved, charged or received hereunder shall be credited to unpaid principal,
      (iv) the interest provided herein shall be automatically reduced to the maximum
      lawful rate allowed from time to time under applicable laws (the “Maximum
      Rate”)
      and
      this Note shall be deemed to have been, and shall be, reformed and modified
      to
      reflect such reduction, and (v) the Company shall have no action against Holder
      for any damages arising due to any Excess Interest. All sums paid or agreed
      to
      be paid hereunder for the use, forbearance or detention of sums due shall,
      to
      the extent permitted by applicable law, be amortized, pro-rated, allocated
      and
      spread throughout the full term of the Obligations until payment in full so
      that
      the rate and/or amount of interest charged in connection with the Obligations
      does not exceed the Maximum Rate.

     

    
      
        
        

      

      
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    ARTICLE
      III

    CONVERSION

     

    3.1 Mandatory
      Conversion.
      After
      the Merger Date, all of the outstanding principal amount of this Note, and
      all
      accrued and unpaid interest thereon, shall automatically, and without any
      further action on the part of Holder, be converted into Common Stock upon the
      occurrence of a Mandatory Conversion Event.

     

    3.2 Optional
      Conversion.
      At the
      option of the Holder, all or any part of the outstanding principal amount of
      this Note, and any accrued and unpaid interest thereon, may be converted into
      Common Equity upon the date (the “Optional Conversion Date”) specified in a
      written notice of conversion delivered to the Company. Such optional conversion
      shall be effective upon the Optional Conversion Date.

     

    3.3 Conversion
      Price.
      The
      Conversion Price upon the issuance date of this Note is $1.75.

     

    3.4 Conversion
      Procedure.
      The
      outstanding principal and accrued and unpaid interest on this Note to be
      converted pursuant to Section 3.1 or 3.2 shall be converted into an amount
      of
      Common Equity (the “Conversion
      Equity”)
      equal
      to the quotient of (a) the sum of (i) the outstanding principal amount of this
      Note to be converted plus (ii) the accrued and unpaid interest on this Note
      to
      be converted; divided by (b) the Conversion Price then in effect.

     

    3.5 Effective
      Time of Conversion.
      Upon
      (i) the close of business on the date of a Mandatory Conversion Event in the
      case of a Mandatory Conversion pursuant to Section
      3.1
      or (ii)
      the close of business on the Optional Conversion Date in the case of an Optional
      Conversion pursuant to Section
      3.2,
      the
      relevant principal and interest of this Note shall be deemed to have been
      converted into Conversion Equity as of the close of business on the Maturity
      Date and the Holder of this Note shall have no rights under or with respect
      to
      the converted principal and interest of this Note other than the right to
      receive the Conversion Equity.

     

    
      
        
        

      

      
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    3.6 Delivery
      of Conversion Equity; Execution of Limited Liability Company
      Agreement.
      Immediately following any conversion of this Note, the Company shall deliver
      to
      Holder (or its nominee) one or more certificates representing the Conversion
      Equity. The issuance of such certificates shall be made without charge to Holder
      (or its nominee) for any tax, cost or other expense incurred by the Company
      in
      connection therewith. Conversion Equity shall, when issued, be duly and validly
      issued, fully paid and nonassessable and free and clear from all liens or other
      encumbrances other than the terms of the Company’s organizational documents, and
      any Federal or state securities laws. After the Merger Date, the Public Company
      shall at all times reserve and keep available out of the authorized but unissued
      Common Stock, solely for the purpose of issuance upon the conversion of the
      Notes, the maximum number of shares of Common Stock then issuable upon the
      conversion of all outstanding Notes. If the conversion takes place prior to
      the
      Merger Date, Holder (or, if applicable, its nominee), simultaneously with any
      delivery of Conversion Equity pursuant hereto, shall execute and deliver to
      the
      Company an instrument or other writing in form and substance reasonably
      acceptable to the Company whereby such Holder, if not already bound thereby,
      shall be bound by the Limited Liability Company Agreement.

     

    3.7 Holder’s
      Restrictions.
      The
      Company shall not effect any conversion of this Note, and a Holder shall not
      have the right to convert any portion of this Note, pursuant to Section 3.01
      or
      Section 3.02 or otherwise, to the extent that after giving effect to such
      issuance after conversion of this Note, such Holder (together with such Holder’s
      Affiliates, and any other person or entity acting as a group together with
      such
      Holder or any of such Holder’s Affiliates) would beneficially own in excess of
      the Beneficial Ownership Limitation (as defined below).  For purposes of
      the foregoing sentence, the amount of Common Equity beneficially owned by such
      Holder and its Affiliates shall include the amount of Common Equity issuable
      upon conversion of this Note with respect to which such determination is being
      made, but shall exclude the amount of Common Equity which would be issuable
      upon
      (A) conversion of the remaining, nonconverted portion of this Note beneficially
      owned by such Holder or any of its Affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any other Notes) subject to a limitation on
      conversion or exercise analogous to the limitation contained herein beneficially
      owned by such Holder or any of its affiliates.  Except as set forth in the
      preceding sentence, for purposes of this Section 3.7, beneficial ownership
      shall
      be calculated in accordance with Section 13(d) of the Exchange Act and the
      rules
      and regulations promulgated thereunder, it being acknowledged by a Holder that
      the Company is not representing to such Holder that such calculation is in
      compliance with Section 13(d) of the Exchange Act and such Holder is solely
      responsible for any schedules required to be filed in accordance therewith.
      To
      the extent that the limitation contained in this Section 3.7 applies, the
      determination of whether this Note is convertible (in relation to other
      securities owned by such Holder together with any Affiliates) and of which
      a
      portion of this Note is convertible shall be in the sole discretion of a Holder,
      and the Company shall have no obligation to verify or confirm the accuracy
      of
      such determination. In addition, a determination as to any group status as
      contemplated above shall be determined in accordance with Section 13(d) of
      the
      Exchange Act and the rules and regulations promulgated thereunder. For purposes
      of this Section 3.7, in determining the amount of outstanding Common Equity,
      a
      Holder may rely on the amount of outstanding Common Equity as reflected in
      (x)
      the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a
      more recent public announcement by the Company or (z) any other notice by the
      Company or the Company’s Transfer Agent setting forth the amount of Common
      Equity outstanding.  Upon the written or oral request of a Holder, the
      Company shall within two Trading Days confirm orally and in writing to such
      Holder the amount of Common Equity then outstanding.  In any case, the
      amount of outstanding Common Equity shall be determined after giving effect
      to
      the conversion or exercise of securities of the Company, including this Note,
      by
      such Holder or its Affiliates since the date as of which such Amount of
      outstanding Common Equity was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the amount of Common Equity outstanding immediately after
      giving effect to the issuance of Common Equity issuable upon conversion of
      this
      Note. The Beneficial Ownership Limitation provisions of this Section 3.7 may
      be
      waived by such Holder, at the election of such Holder, upon not less than 61
      days’ prior notice to the Company to change the Beneficial Ownership Limitation
      to 9.99% of the amount of the Common Equity outstanding immediately after giving
      effect to the issuance of Common Equity upon conversion of this Note, and the
      provisions of this Section 3.7 shall continue to apply. Upon such a change
      by a
      Holder of the Beneficial Ownership Limitation from such 4.99% limitation to
      such
      9.99% limitation, the Beneficial Ownership Limitation may not be further waived
      by such Holder. The provisions of this paragraph shall be construed and
      implemented in a manner otherwise than in strict conformity with the terms
      of
      this Section 3.7 to correct this paragraph (or any portion hereof) which may
      be
      defective or inconsistent with the intended Beneficial Ownership Limitation
      herein contained or to make changes or supplements necessary or desirable to
      properly give effect to such limitation. The limitations contained in this
      paragraph shall apply to a successor holder of this Note.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

    ADJUSTMENT
      OF CONVERSION
      PRICE

     

    The
      Conversion Price shall be subject to adjustment from time to time as provided
      in
      this Article.

    

    4.1 Adjustment
      Upon Issuance or Sale of Common Equity.
      

     

    (a) If
      and
      whenever after the date hereof the Company shall issue or sell, or is deemed
      to
      have issued or to have sold, any Common Equity, or any warrant, option or other
      security convertible into any membership interest, in each case for no
      consideration or for a consideration per unit of Common Equity less than the
      Conversion Price in effect immediately prior to such time (the “Dilutive
      Issuance”), then immediately upon such Dilutive Issuance the Conversion Price
      shall be reduced by multiplying the then current Conversion Price by the
      Dilution Multiple and rounding the resulting new Conversion Price down to the
      nearest cent.

     

    (b) Notwithstanding
      anything contained in Section
      4.1(a)
      to the
      contrary, no adjustment shall be made to the Conversion Price if the Company
      issues, in one or more transactions, Common Equity (i) upon the conversion
      of
      any of the Notes or (ii) upon the exercise of any of the Warrants or (iii)
      upon
      the exercise of any options awarded by the Company to employees, officers or
      directors pursuant to any stock or option plan approved by the Board of
      Directors.

     

    4.2 Calculation
      of Consideration Received.
      If any
      Common Equity is issued or sold, or deemed to have been issued or to have been
      sold, in each case for cash, then the consideration received therefor shall
      be
      deemed to be the amount actually received by the Company therefor. If any Common
      Equity is issued or sold, or deemed to have been issued or to have been sold,
      in
      each case for a consideration other than cash, then the amount of the
      consideration other than cash received by the Company shall be the fair value
      of
      such consideration, as determined reasonably and in good faith by the Board
      of
      Directors. If any Common Equity shall be issued or sold, or shall be deemed
      to
      have been issued or to have been sold, in each case in connection with any
      merger or consolidation in which the Company is the surviving entity, the amount
      of consideration actually received therefor shall be deemed to be the fair
      value, as determined reasonably and in good faith by the Board of Directors,
      of
      such portion of the assets and business of the non-surviving entity as such
      Board of Directors may determine to be attributable to such membership
      interests.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    4.3 Record
      Date.
      If the
      Company shall take record of the holders of Common Equity for the purpose of
      entitling them (a) to receive a dividend or other distributions payable in
      Common Equity or in other securities convertible into Common Equity or (b)
      to
      subscribe for or to purchase Common Equity or other securities convertible
      into
      Common Equity, then such record date shall be deemed to be the date of the
      issuance or sale of such Common Equity or other securities convertible into
      Common Equity.

     

    4.4 Dividends
      and Distributions.
      If the
      Company shall declare a dividend or make any other distribution upon any Common
      Equity, which dividend or distribution is payable in Common Equity, then any
      Common Equity payable in connection with such dividend or distribution shall
      be
      deemed to have been issued or sold without consideration. If the Company
      declares a dividend or other distribution payable to all holders of Common
      Equity in evidences of indebtedness or other assets of the Company (including
      cash or other property), then the Conversion Price in effect immediately prior
      to such declaration or other distribution shall be reduced by an amount equal
      to
      the amount of such dividend or distribution payable per unit of Common Equity,
      in the case of any dividend or distribution payable in cash, or by the fair
      market value (on a per unit of Common Equity basis) of such dividend or
      distribution (as reasonably determined in good faith by the Board of Directors),
      in the case of any dividend or distribution payable other than in
      cash.

     

    4.5 Subdivision
      or Combination of Common Equity.
      If the
      Company shall at any time subdivide its outstanding Common Equity into a greater
      amount of Common Equity, then the Conversion Price in effect immediately prior
      to such subdivision shall be proportionately reduced. If the Company shall
      at
      any time combine its outstanding Common Equity into a lesser amount of Common
      Equity, then the Conversion Price in effect immediately prior to such
      subdivision shall be proportionately increased.

     

    4.6 Reorganization,
      Reclassification, Consolidation, Merger or Sale.
      If the
      Company shall effect, or agree to effect, any recapitalization, reorganization
      or reclassification of the Common Equity, or any consolidation, merger, or
      equity exchange of the Company with another Person, or any sale or other
      disposition of all or substantially all of the Company’s assets to another
      Person, in each case whereby holders of the Common Equity are entitled to
      receive (either directly or upon subsequent liquidation) capital stock,
      securities or assets with respect to or in exchange for such membership interest
      units (each such transaction, a “Reorganization
      Event”),
      then
      the following provisions shall apply:

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (a) As
      a
      condition to such Reorganization Event, the Company shall make lawful and
      adequate provision (in form and substance reasonably satisfactory to Holder)
      to
      insure that (i) Holder shall have the right to acquire and to receive, upon
      the
      terms and conditions specified in this Note and in lieu of or in addition to
      (as
      the case may be) the Conversion Equity immediately theretofore receivable upon
      conversion of this Note, such shares of capital stock, securities or assets
      as
      may be issued or payable with respect to or in exchange for a number of
      membership interest units equal to the Conversion Equity that would have been
      receivable by Holder had such Reorganization Event not taken place, and (ii)
      the
      provisions of this Note, including, but not limited to, the provisions relating
      to the adjustment of the Conversion Price and amount of Conversion Equity
      receivable upon conversion of this Note, shall thereafter be applicable, as
      nearly as possible, to any shares of capital stock, securities or assets
      thereafter deliverable upon the conversion of this Note;

     

    (b) If
      such
      Reorganization Event will result in a number of outstanding shares of capital
      stock or its equivalent of the successor Person that is greater or lesser than
      the amount of Conversion Equity (after giving effect to the conversion of the
      Notes) outstanding immediately prior to such Reorganization Event, then the
      Conversion Price in effect immediately prior to such Reorganization Event shall
      be adjusted in the same manner as provided in Section
      4.5;
      and

     

    (c) The
      Company shall not effect any Reorganization Event, other than a Reorganization
      Event in which the sole consideration is cash, unless, prior to the consummation
      of such Reorganization Event, the successor Person resulting from such
      Reorganization Event (if other than the Company) assumes by written instrument
      (in form and substance reasonably satisfactory to Holder), the obligation to
      deliver to Holder such shares of capital stock, securities or assets as
      Holder,
      in
      accordance with the foregoing provisions, may be entitled to acquire. Upon
      the
      written request of Holder, such successor Person shall issue a new Note to
      Holder that reflects the modifications to this Note effected
      hereby.

     

    4.7 Certain
      Other Events.
      If any
      other event occurs that is of the type contemplated by the provisions of this
      Article
      IV
      but that
      is not expressly addressed by the provisions hereof (including, without
      limitation, the granting of rights with equity features), then the Company
      shall
      make an appropriate adjustment in the Conversion Price so as to protect the
      rights of Holder.

     

    4.8 Notice
      Of Adjustment.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (a) If
      the
      Conversion Price or the amount of Conversion Equity issuable upon conversion
      of
      this Note shall be adjusted, or if the rights of Holder hereunder shall
      otherwise change by reason of any event specified in this Article
      IV,
      then
      the Company shall prepare a certificate setting forth the Adjusted Conversion
      Price and/or the shares of capital stock, securities or assets receivable as
      a
      result of such change of rights (each, a “Certificate
      of Adjustment”),
      which
      Certificate of Adjustment shall be executed by a duly authorized officer or
      manager of the Company and shall describe in reasonable detail the facts and
      calculations upon which such adjustments or other changes are based. Thereafter,
      the Company shall promptly (but no later than three Trading Days after the
      date
      upon which adjustment or change of rights became effective) deliver, or cause
      to
      be delivered, to Holder an original of such Certificate of
      Adjustment.

     

    (b) If,
      at
      any time, the Company proposes to effect or effects any of the transactions
      contemplated by Sections
      4.4,
      4.5
      or
4.6,
      or any
      voluntary or involuntary dissolution, liquidation or winding up of the Company,
      then the Company shall give Holder no less than ten Trading Days prior
      written notice of any date upon which the Company shall close its books or
      take
      record with respect thereto. With respect to any Reorganization Event, or any
      dissolution, liquidation or winding up of the Company, the Company shall also
      give Holder no less than five Trading Days prior
      written notice of the date upon which such Reorganization Event or such
      dissolution, liquidation or winding up shall become effective.

     

     

    ARTICLE
      V

    SECURITY
      AND SUBORDINATION

    

    5.1 Security.
      This
      Note is an unsecured obligation of the Company.

     

    5.2 Seniority.
      This
      Note shall rank senior in right of payment to all indebtedness on the Company
      other than the Senior Debt.

     

    5.3 Subordination.
      This
      Note is subordinate to the rights of the Senior Debt. Unless the holders of
      the
      Senior Debt consent in writing, the Company shall not make and the Holder shall
      not receive or accept any payment of the principal of this Note so long as
      any
      Senior Debt remains outstanding.

     

     

    ARTICLE
      VI

    DEFAULT
      AND REMEDIES

     

    6.1 Events
      of Default.
      An
“Event of Default” under this Note shall be deemed to have occurred immediately
      upon the occurrence of any of the following:

     

    (a) The
      Company defaults in the payment of the principal or interest on this Note when
      such principal or interest becomes due and payable.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (b) The
      Company shall fail to pay, to perform or to observe any obligation, agreement,
      covenant, term or condition contained in this Note (other than the covenants
      provided for in Section 6.1(a) above), and such failure is not cured within
      thirty (30) days after notice thereof.

     

    (c) An
      Event
      of Bankruptcy shall have occurred with respect to the Company.

     

    (d) The
      amount of Senior Debt outstanding exceeds the greater of (i) $12,000,000 or
      (ii)
      the EBITDA Multiple.

     

    (e) The
      Company shall issue any new class of security or debt that is senior to the
      Note
      with respect to repayment without the written consent of the Holder, other
      than
      (i) Senior Debt if, following such issuance, the total amount of Senior Debt
      does not cause an Event of Default under (d), above; or (ii) purchase money
      indebtedness secured only by the asset purchased.

     

    6.2 Remedies
      Upon the Occurrence of an Event of Default.
      Upon
      the occurrence of an Event of Default, the Holder may, at its option, pursue
      any
      of the following remedies:

     

    (a) Declare
      any and all outstanding principal and accrued and unpaid interest on the Note
      to
      be immediately due and payable.

     

    (b) Pursue
      any other remedies to which Holder may be entitled to at law or in
      equity.

     

    6.3 No
      Waiver of Remedies.
      Holder’s failure to exercise any right, privilege or remedy granted hereby as a
      result of an Event of Default shall not, directly or indirectly, in any manner
      whatsoever, (i) impair, prejudice or otherwise adversely affect Holder’s right
      at any time to exercise any other right, privilege or remedy available to it
      in
      connection herewith or (ii) constitute a course of dealing or other basis for
      altering any obligation of the Company or any right, privilege or remedy of
      Holder hereunder.

     

     

    ARTICLE
      VII

    MISCELLANEOUS

     

    7.1 Consent
      to Amendments.
      This
      Note may be amended, and the Company may take any action herein prohibited,
      or
      omit to perform any act herein required to be performed by it, if and only
      if
      the Company shall obtain the written consent to such amendment from
      Holder.

     

    7.2 Successors
      and Assigns.
      All
      covenants and agreements in this Note made by or on behalf of the Company and
      Holder shall bind and inure to the benefit of the respective successors and
      permitted assigns.

     

    7.3 Restrictions
      on Transfer.
      This
      Note may not be conveyed, transferred or otherwise assigned, in whole or in
      part, without the express written consent of the non-assigning party, which
      consent shall not be unreasonably withheld. Notwithstanding anything contained
      or implied herein to the contrary, Holder shall have the right to convey, to
      assign or otherwise to transfer this Note to any affiliate of
      Holder.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    7.4 Notices.
      Except
      as otherwise provided, all communications to the Company or Holder provided
      for
      herein or with reference to this Note shall be deemed to have been sufficiently
      given or served for all purposes three (3) Business Days after being sent by
      certified or registered mail, postage and charges prepaid. The address of the
      Company for receipt of notices is:

     

    CrossPoint
      Energy Company

    2801
      Network Blvd. Suite 810

    Frisco,
      Texas 75034

    Attn:
      Daniel Collins

    Fax
      no.
      214-818-1122

     

    or
      at any
      other address communicated to Holder in accordance with the provisions of this
      Section
      7.4.

    

    7.5 Severability.
      If any
      provision of this Note shall be held or deemed to be invalid, illegal or
      unenforceable by any court of competent jurisdiction, then (a) the validity,
      legality and enforceability of the remaining provisions of this Note shall
      not
      in any way be affected or impaired thereby, provided such construction does
      not
      destroy the essence of the bargain provided for hereunder, and (b) such invalid,
      illegal or unenforceable provision shall be enforced to the fullest extent
      permissible by law.

     

    7.6 Governing
      Law.
      This
      Note shall be governed by, and construed in accordance with, the internal laws
      of the State of New York (without regard to principles of choice of
      law).

     

     

    [The
      remainder of this page is intentionally blank.]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      undersigned parties have executed this Note as of the date first set forth
      above.

     

    THE
      COMPANY

     

    CROSSPOINT
      ENERGY COMPANY

     

    By:
      ________________________      

    Name: 
      ________________________      

    Title: 
      ________________________      

     

    HOLDER

     

    [INSERT
      NAME]

     

    By: 
      ________________________      

    Name: 
      ________________________      

    Title: 
      ________________________      

    

    Address
      for Notices:

     ________________________

     ________________________

    
       ________________________

    

    

    Fax
      no.
      ________________________

     

        

    
      
        
        

      

      14Unassociated Document

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

    

    COMMON
      UNIT PURCHASE WARRANT

    

    To
      Purchase __________ Common Units of

     

    CROSSPOINT
      ENERGY COMPANY

     

    THIS
      COMMON UNIT PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, _____________ (the “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from CrossPoint Energy Company,
      a
      Texas limited liability company (the “Company”),
      up to
      ______ Common Units (the “Warrant
      Units”)
      of the
      Company (the “Common
      Units”).
      The
      purchase price of one Common Unit under this Warrant shall be equal to the
      Exercise Price, as defined in Section 2(b). 

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      June 30, 2006, among the Company and the purchasers signatory
      thereto.

     

    Section
      2. Exercise.

     

    a) Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise Form annexed hereto (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company); and, within 3 Trading Days of the date said Notice of Exercise is
      delivered to the Company, the Holder shall have surrendered this Warrant and
      the
      Company shall have received payment of the aggregate Exercise Price of the
      shares thereby purchased by wire transfer or cashier’s check drawn on a United
      States bank. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b) Exercise
      Price.
      The
      exercise price per share of the Common Units under this Warrant shall be $1.95,
      subject to adjustment hereunder (the “Exercise
      Price”).

     

    c) Cashless
      Exercise.
      If at
      any time after one year from the date of issuance of this Warrant there is
      no
      effective Registration Statement registering, or no current prospectus available
      for, the resale of the Warrant Units by the Holder, then this Warrant may also
      be exercised at such time by means of a “cashless exercise” in which the Holder
      shall be entitled to receive a certificate for the number of Warrant Units
      equal
      to the quotient obtained by dividing [(A-B) (X)] by (A), where:

     

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

    

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

    

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

    

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

    

    As
      used
      herein, “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Units are then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Units for such date (or
      the nearest preceding date) on the Trading Market on which the Common Units
      are
      then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
      from
      9:30 a.m. New York City time to 4:02 p.m. New York City time); (b) if the
      OTC Bulletin Board is not a Trading Market, the volume weighted average price
      of
      the Common Units for such date (or the nearest preceding date) on the OTC
      Bulletin Board; (c) if the Common Units are not then listed or quoted on the
      OTC
      Bulletin Board and if prices for the Common Units are then reported in the
“Pink
      Sheets” published by Pink Sheets, LLC (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid price
      per
      unit of the Common Unit so reported; or (d) in all other cases, the fair
      market value of one Common Unit as determined by an independent appraiser
      selected in good faith by the Holder and reasonably acceptable to the
      Company.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    d) Exercise
      Limitations.
      

     

    
      	 	
              i.

            	
              Holder’s
                Restrictions.
                The Company shall not effect any exercise of this Warrant, and a
                Holder
                shall not have the right to exercise any portion of this Warrant,
                pursuant
                to Section 2(c) or otherwise, to the extent that after giving effect
                to
                such issuance after exercise as set forth on the applicable Notice
                of
                Exercise, such Holder (together with such Holder’s Affiliates, and any
                other person or entity acting as a group together with such Holder
                or any
                of such Holder’s Affiliates), as set forth on the applicable Notice of
                Exercise, would beneficially own in excess of the Beneficial Ownership
                Limitation (as defined below).  For purposes of the foregoing
                sentence, the number of Common Units beneficially owned by such Holder
                and
                its Affiliates shall include the number of Common Units issuable
                upon
                exercise of this Warrant with respect to which such determination
                is being
                made, but shall exclude the number of Common Units which would be
                issuable
                upon (A) exercise of the remaining, nonexercised portion of this
                Warrant
                beneficially owned by such Holder or any of its Affiliates and (B)
                exercise or conversion of the unexercised or nonconverted portion
                of any
                other securities of the Company (including, without limitation, any
                other
                Warrants) subject to a limitation on conversion or exercise analogous
                to
                the limitation contained herein beneficially owned by such Holder
                or any
                of its affiliates.  Except as set forth in the preceding sentence,
                for purposes of this Section 2(d)(i), beneficial ownership shall
                be
                calculated in accordance with Section 13(d) of the Exchange Act and
                the
                rules and regulations promulgated thereunder, it being acknowledged
                by a
                Holder that the Company is not representing to such Holder that such
                calculation is in compliance with Section 13(d) of the Exchange Act
                and
                such Holder is solely responsible for any schedules required to be
                filed
                in accordance therewith. To the extent that the limitation contained
                in
                this Section 2(d) applies, the determination of whether this Warrant
                is
                exercisable (in relation to other securities owned by such Holder
                together
                with any Affiliates) and of which a portion of this Warrant is exercisable
                shall be in the sole discretion of a Holder, and the submission of
                a
                Notice of Exercise shall be deemed to be each Holder’s determination of
                whether this Warrant is exercisable (in relation to other securities
                owned
                by such Holder together with any Affiliates) and of which portion
                of this
                Warrant is exercisable, in each case subject to such aggregate percentage
                limitation, and the Company shall have no obligation to verify or
                confirm
                the accuracy of such determination. In addition, a determination
                as to any
                group status as contemplated above shall be determined in accordance
                with
                Section 13(d) of the Exchange Act and the rules and regulations
                promulgated thereunder. For purposes of this Section 2(d), in determining
                the number of outstanding Common Units, a Holder may rely on the
                number of
                outstanding Common Units as reflected in (x) the Company’s most recent
                Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent
                public
                announcement by the Company or (z) any other notice by the Company
                or the
                Company’s Transfer Agent setting forth the number of Common Units
                outstanding.  Upon the written or oral request of a Holder, the
                Company shall within two Trading Days confirm orally and in writing
                to
                such Holder the number of Common Units then outstanding.  In any
                case, the number of outstanding Common Units shall be determined
                after
                giving effect to the conversion or exercise of securities of the
                Company,
                including this Warrant, by such Holder or its Affiliates since the
                date as
                of which such number of outstanding Common Units was reported. The
                “Beneficial Ownership Limitation” shall be 4.99% of the number of Common
                Units outstanding immediately after giving effect to the issuance
                of
                Common Units issuable upon exercise of this Warrant. The Beneficial
                Ownership Limitation provisions of this Section 2(d)(i) may be waived
                by
                such Holder, at the election of such Holder, upon not less than 61
                days’
                prior notice to the Company to change the Beneficial Ownership Limitation
                to 9.99% of the number of the Common Units outstanding immediately
                after
                giving effect to the issuance of Common Units upon exercise of this
                Warrant, and the provisions of this Section 2(d) shall continue to
                apply.
                Upon such a change by a Holder of the Beneficial Ownership Limitation
                from
                such 4.99% limitation to such 9.99% limitation, the Beneficial Ownership
                Limitation may not be further waived by such Holder. The provisions
                of
                this paragraph shall be construed and implemented in a manner otherwise
                than in strict conformity with the terms of this Section 2(d)(i)
                to
                correct this paragraph (or any portion hereof) which may be defective
                or
                inconsistent with the intended Beneficial Ownership Limitation herein
                contained or to make changes or supplements necessary or desirable
                to
                properly give effect to such limitation. The limitations contained
                in this
                paragraph shall apply to a successor holder of this
                Warrant.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    e) Mechanics
      of Exercise.
      

     

    i. Authorization
      of Warrant Units.
      The
      Company covenants that all Warrant Units which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges created
      by the Company in respect of the issue thereof (other than taxes in respect
      of
      any transfer occurring contemporaneously with such issue). 

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    
      
        
        

      

      
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    f) Call
      Provision.
      Subject
      to the provisions of Section 2(d) and this Section 2(f), if, at any time after
      the date that is one year and 180 days after the Effective Date (i) the VWAP
      for
      each of at least 20 out of 30 consecutive Trading Days (the “Measurement
      Period”,
      which
      30 Trading Day period shall not have commenced until after the Effective Date)
      exceeds $3.00 (subject to adjustment for forward and reverse stock splits,
      recapitalizations, stock dividends and the like after the Initial Exercise
      Date)
      (the “Threshold
      Price”),
      (ii)
      the daily dollar trading volume for such Threshold Period, which Threshold
      Period shall have commenced only after the Effective Date, exceeds $100,000
      per
      Trading Day and (iii) the Holder is not in possession of any information
      provided by or on behalf of the Company that constitutes, or might constitute,
      material non-public information, then the Company may, within one Trading Day
      of
      the end of such period, call for cancellation of all or any portion of this
      Warrant for which a Notice of Exercise has not yet been delivered (such right,
      a
“Call”).
      To
      exercise this right, the Company must deliver to the Holder an irrevocable
      written notice (a “Call
      Notice”),
      indicating therein the portion of unexercised portion of this Warrant to which
      such notice applies. If the conditions set forth below for such Call are
      satisfied from the period from the date of the Call Notice through and including
      the Call Date (as defined below), then any portion of this Warrant subject
      to
      such Call Notice for which a Notice of Exercise shall not have been received
      by
      the Call Date will be cancelled at 6:30 p.m. (New York City time) on the tenth
      Trading Day after the date the Call Notice is received by the Holder (such
      date
      and time, the “Call
      Date”).
      Any
      unexercised portion of this Warrant to which the Call Notice does not pertain
      will be unaffected by such Call Notice. In furtherance thereof, the Company
      covenants and agrees that it will honor all Notices of Exercise with respect
      to
      Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m.
      (New
      York City time) on the Call Date. The parties agree that any Notice of Exercise
      delivered following a Call Notice which calls less than all the Warrants shall
      first reduce to zero the number of Warrant Shares subject to such Call Notice
      prior to reducing the remaining Warrant Shares available for purchase under
      this
      Warrant. For example, if (x) this Warrant then permits the Holder to acquire
      100
      Warrant Shares, (y) a Call Notice pertains to 75 Warrant Shares, and (z) prior
      to 6:30 p.m. (New York City time) on the Call Date the Holder tenders a Notice
      of Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the
      right
      under this Warrant to acquire 25 Warrant Shares will be automatically cancelled,
      (2) the Company, in the time and manner required under this Warrant, will have
      issued and delivered to the Holder 50 Warrant Shares in respect of the exercises
      following receipt of the Call Notice, and (3) the Holder may, until the
      Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
      adjustment as herein provided and subject to subsequent Call Notices). Subject
      again to the provisions of this Section 2(f), the Company may deliver subsequent
      Call Notices for any portion of this Warrant for which the Holder shall not
      have
      delivered a Notice of Exercise. Notwithstanding anything to the contrary set
      forth in this Warrant, the Company may not deliver a Call Notice or require
      the
      cancellation of this Warrant (and any such Call Notice will be void), unless,
      from the beginning of the 20th consecutive Trading Day used to determine whether
      the Common Stock has achieved the Threshold Price through the Call Date, (i)
      the
      Company shall have honored in accordance with the terms of this Warrant all
      Notices of Exercise delivered by 6:30 p.m. (New York City time) on the Call
      Date, (ii) the Registration Statement shall be effective as to all Warrant
      Shares and the prospectus thereunder available for use by the Holder for the
      resale of all such Warrant Shares and (iii) the Common Stock shall be listed
      or
      quoted for trading on the Trading Market, and (iv) there is a sufficient number
      of authorized shares of Common Stock for issuance of all Securities under the
      Transaction Documents, and (v) the issuance of the shares shall not cause a
      breach of any provision of 2(d) herein. The Company’s right to Call the Warrant
      shall be exercised ratably among the Holders based on each Holder’s initial
      purchase of Warrants.

     

    Section
      3. Certain Adjustments.

     

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

     

    
      
        
        

      

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

     

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

     

    
      
        
        

      

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

     

    e) Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Units are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Units or any compulsory share exchange pursuant to which the Common Units is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Unit that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, at the
      option of the Holder, (a) upon exercise of this Warrant, the number of Common
      Units of the successor or acquiring corporation or of the Company, if it is
      the
      surviving corporation, and any additional consideration (the “Alternate
      Consideration”)
      receivable upon or as a result of such reorganization, reclassification, merger,
      consolidation or disposition of assets by a Holder of the number of Common
      Units
      for which this Warrant is exercisable immediately prior to such event or (b)
      if
      the Company is acquired in an all cash transaction, cash equal to the value
      of
      this Warrant as determined in accordance with the Black-Scholes option pricing
      formula. For purposes of any such exercise, the determination of the Exercise
      Price shall be appropriately adjusted to apply to such Alternate Consideration
      based on the amount of Alternate Consideration issuable in respect of one Common
      Unit in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Units are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any exercise of this Warrant following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this Section 3(e) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    
      
        
        

      

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

     

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

     

    h) Notice
      to Holders.
      

     

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

     

    
      
        
        

      

      
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    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Units; (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Units; (C) the Company shall
      authorize the granting to all holders of the Common Units rights or warrants
      to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights; (D) the approval of any members or stockholders of the Company shall
      be
      required in connection with any reclassification of the Common Units, any
      consolidation or merger to which the Company is a party, any sale or transfer
      of
      all or substantially all of the assets of the Company, of any compulsory share
      exchange whereby the Common Units are converted into other securities, cash
      or
      property; (E) the Company shall authorize the voluntary or involuntary
      dissolution, liquidation or winding up of the affairs of the Company; then,
      in
      each case, the Company shall cause to be mailed to the Holder at its last
      address as it shall appear upon the Warrant Register of the Company, at least
      15
      calendar days prior to the applicable record or effective date hereinafter
      specified, a notice stating (x) the date on which a record is to be taken for
      the purpose of such dividend, distribution, redemption, rights or warrants,
      or
      if a record is not to be taken, the date as of which the holders of the Common
      Units of record to be entitled to such dividend, distributions, redemption,
      rights or warrants are to be determined or (y) the date on which such
      reclassification, consolidation, merger, sale, transfer or share exchange is
      expected to become effective or close, and the date as of which it is expected
      that holders of the Common Units of record shall be entitled to exchange their
      Common Units for securities, cash or other property deliverable upon such
      reclassification, consolidation, merger, sale, transfer or share exchange;
      provided that the failure to mail such notice or any defect therein or in the
      mailing thereof shall not affect the validity of the limited liability company
      action required to be specified in such notice. The Holder is entitled to
      exercise this Warrant during the 15-day period commencing on the date of such
      notice to the effective date of the event triggering such notice.

     

    i) Adjustments
      Not Effected by Exercise Limitations.
      The
      adjustments set forth in this Section 3 shall not be limited or restricted
      by
      the limitations imposed on exercise of this Warrant in Section
      2(d).

     

    Section
      4. Transfer
      of Warrant.

     

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

     

    
      
        
        

      

      
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    b) New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

     

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

     

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

     

    Section
      5. Miscellaneous.

     

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

     

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

     

    
      
        
        

      

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

     

    d) Authorized
      Shares.
      

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

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

     

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

     

    

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

    

    
      
        
        

      

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

     

    
      Dated:
        __________, 2006

    

    
      	 	 	 
	 	CROSSPOINT
              ENERGY COMPANY
	 
 	 
 	 
 
	Date: 	By:  	 
	 	
              

            
	 	Title 

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF EXERCISE

    

    TO: _______________________

    

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

     

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

     

    [
      ] in
      lawful money of the United States; or

     

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

     

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

     

    _______________________________

     

    

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

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

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

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

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

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    Holder’s
      Signature: _____________________________

    

    Holder’s
      Address: _____________________________

     

                      _____________________________

    

     

    Signature
      Guaranteed: ___________________________________________

    

    

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

    

     

    
      
        
        

      

      18

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