Document:

Unassociated Document

    
      Exhibit
10.46

       

      AGREEMENT

      

      

      AMONG

      

      

      NEW MEDIA
LOTTERY SERIVCES, INC.

      

      AND

      

      NEW MEDIA
LOTTERY SERVICES, PLC.

      

      AND

      

      NEW MEDIA
LOTTERY SERVICES (INTERNATIONAL) LIMITED

      

      AND

      

      TRAFALGAR
CAPITAL SPECIALISED INVESTMENT FUND FIS

      

      AND

      

      JOHN
CARSON

      

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      

      
        AGREEMENT

      

      
        

      

      
        THIS
AGREEMENT dated as of March 11, 2010 (this “Agreement”), by and
among, New Media Lottery Services, Inc., a corporation formed under the laws of
the State of Delaware (the “Company”), New Media Lottery Services PLC, a
corporation formed under the laws of Ireland (“NMPLC”), New Media Lottery
Services (International), Limited, a corporation formed under the laws of
Ireland (“NMLTD”), Trafalgar Capital Specialised Investment Fund FIS
(“Trafalgar”) and John Carson, the President/Chief Executive Officer and a
director of the Company (“Carson”). The Company, NMPLC, MMLTD, Trafalgar and
Carson are referred to collectively herein as the “Parties”.

      

      
        

      

      
        BACKGROUND

      

      
        

      

      
        The
Company, through its direct and indirect subsidiaries, NMPLC and NMLTD, designs,
builds, implements, manages, hosts and supports Internet and wireless devise
based lottery programs. The Company desires to divest and transfer to NMLTD any
remaining technology, including but not limited to, software and methods
relating to the process and transacting game play, integrated tools to monitor
events, infrastructure consisting of servers residing in the United Kingdom, and
game library, now owned or hereinafter acquired that is not currently held as an
asset by NMLTD (the “Technology”). NMLTD desires to grant, assign and transfer
to Trafalgar a first priority security interest in the Technology. NMPLC and
NMLTD owe to the Company an approximate $6,300,000 as evidenced on the unaudited
financial statements for quarter ended October 31, 2009 (the “Debt”), which the
Company desires to waive and release NMPLC and NMLTD from any and all
obligations concerning the Debt. NMPLC owes Trafalgar €2,211,111 Euros in
principal and approximately €140,037 Euros in accrued interest (the “Trafalgar
Debt”), which NMPLC desires to transfer to the Company. NMPLC agrees to
guarantee the complete and full payment of the Trafalgar Debt regardless of how
the Trafalgar Debt shall become due, of all indebtedness owing by the Company to
Trafalgar. The Company and Trafalgar previously entered into that certain loan
facility restructuring agreement dated February 28, 2009 (the “Restructuring
Agreement”) and corresponding share pledge agreement dated March 24, 2009 (the
“Share Pledge Agreement”) pursuant to which Trafalgar retains a first priority
security interest in and to approximately 20,205,129 shares of NMPLC held of
record by the Company (the “Pledged Shares”). Under Section 8 of the Share
Pledge Agreement, the Company is deemed to be in default of the Share Pledge
Agreement and Trafalgar desires to execute its remedies as a secured creditor in
accordance with Section 9 of the Share Pledge Agreement by seizing title to the
Pledged Shares. Trafalgar desires to subsequently transfer the Pledged Shares to
Carson in exchange for the 87,714 shares of the Company held of record by Carson
(the “Company Shares”). The Company further desires to release any and all
security interests in and to the Technology and to further release NMPLC and
NMLTD from any and all claims relating to ownership of the Technology, now
existing or hereinafter developed, and to patents, contracts or any other assets
now existing or hereinafter developed. NMPLC desires to issue to Trafalgar an
aggregate of 100 shares of its preferred stock (the NMPLC “Preferred Stock”),
which rights and privileges of the NMPLC Preferred Stock include payment to
Trafalgar of a dividend in the aggregate amount $1 million. In the event that
NMPLC or NMLTD arranges potential financing with a third party, Trafalgar agrees
to negotiate in good faith to facilitate the closing of such financing and not
be “unreasonable” in its demands.

        

        NOW,
THEREFORE, in consideration of the premises and the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties, intending to be legally bound, hereby agree as
follows.

      

      
         

        
          
            
            

          

          
            A-2

            
              

            

          

          
            
            

          

        

        

      

      
        1.  Basic
Transactions.

        

        (a)  Transfer of
Technology.  On and subject to the terms and conditions of this
Agreement, the Company shall assign, transfer and deliver to NMLTD all of its
respective interest in and to the Technology, and waives any existing or future
claims to the Technology.

        

        (b)  Security
Interest.  NMLTD agrees to grant, assign, transfer and set over
to Trafalgar a first priority security interest in all of NMLTD’s right, title
and interest in and to the Technology.

      

      
        

      

      
        (c)  Release of
Debt.  On and subject to the terms and conditions of this
Agreement, the Company agrees to release and forever discharge NMPLC and NMLTD
from any and all claims, manner of actions, whether at law or in equity suits,
judgments, debts, liens, liabilities, demands, damages, and losses, fixed or
contingent, which it now has or may have hereafter, directly or indirectly,
relating to the Debt.

      

      
        

      

      
        (d)  Transfer and Assumption of
Trafalgar Debt and Guarantee of Payment.  On and subject to the
terms and conditions of this Agreement, NMPLC shall transfer to the Company and
the Company shall assume the Trafalgar Debt. NMPLC hereby agrees to absolutely
and unconditionally guarantee the prompt complete and full payment when, due of
the Trafalgar Debt, and regardless of how such Trafalgar Debt shall become due,
of all indebtedness owing by the Company to Trafalgar, whether evidenced by any
note or other documentation.  Trafalgar agrees to release NMPLC of
their guarantee in the event that the Company satisfies the Trafalgar Debt
through any means.  In the event that NMPLC develops a public market
for its trading stock in the future, Trafalgar will convert its Preferred Stock
into common tradable stock at 80% of market trading price. Upon the consummation
of this agreement and after the transfer of the Trafalgar Debt to the Company,
Trafalgar agrees to release NMPLC and NMLTD from the Trafalgar
Debt.  In so doing, Trafalgar will notify NMPLC, NMLTD and the proper
authorities of the satisfaction/cancellation of the convertible notes and
debentures and forfeit its warrants for the purchase of 4.5 million shares of
NMPLC common stock.

        

        (e)  Exercise of Remedies Under
the Share Pledge Agreement. 

        

      

      
        (i)  On and subject to the
terms and conditions of this Agreement and in accordance with Section 9 of the
Share Pledge Agreement, Trafalgar shall exercise its remedies as a secured
creditor. The Company agrees to transfer to Trafalgar all of its right, title
and interest in and to the Pledged Shares.

        

        (ii)  In further accordance
with Section 9(b) of the Share Pledge Agreement, Trafalgar agrees to assign,
transfer and deliver all of the Pledged Shares to Carson.

        

        (iii)  In consideration
therefore, Carson agrees to transfer to Trafalgar an aggregate of 87,714 shares
of restricted common stock of the Company held of record (the “Company
Shares”).

      

      
        

      

      
        (f)  Issuance of NMPLC Preferred
Stock.

      

      
        

        (i)  Upon Closing of this
transaction, NMPLC agrees to issue to Trafalgar an aggregate of 100 shares of
Preferred Stock.

      

      
        

        
          
            
            

          

          
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      (ii)  Trafalgar as the record
holder of an aggregate of 100 shares of Preferred Stock shall be entitled to
receive, in preference to the holders of any other shares of capital stock of
NMPLC, quarterly cumulative dividends when and as if they may be declared by the
Board out of funds legally available therefore in the aggregate amount of $1
million (the “Dividends”). The Dividends shall accrue on the Preferred Stock
commencing on the date of original issuance thereof and continuing until
Trafalgar has received an aggregate of $1 million. Dividends shall only be paid
when NMPLC has reached cash flow positive and at such time, the dividend payment
will be equal to 5% of net revenue. For purposes of this Agreement, “cash flow
positive” shall mean when NMPLC is able to meet the insolvency test (i.e, when
NMPLC has sufficient funds in its cash account to meet its obligations as they
arise on a daily basis. For purposes of this Agreement, “net revenue” shall mean
the net revenue in U.S. Dollars derived by NMPLC from the sale of its products
(net of cost of goods sold, general and administrative expenses and taxes. The
Preferred Stock can be redeemed in a lump sum payment at the election of NMPLC.
The shares of Preferred Stock shall rank senior to any shares of common stock of
NMPLC or other securities of a class or series of stock of NMPLC the terms of
which do not expressly provide that it ranks senior to or on a parity with the
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Corporation.

       

      
        (g)   Release by Trafalgar.
Trafalgar agrees to release and any all security interests in all the assets,
including but not limited to the technology, cash, cash equivalents, inventory,
and contracts of NMPLC and NMLTD (collectively, the “Assets”). Simultaneously with the execution and
delivery of this Agreement, Trafalgar shall make, execute, acknowledge, file,
record and deliver to NMPLC
and NMLTD any documents
reasonably requested by NMPLC and NMLTD to release its security interest in the
Assets including, without limitation,
termination of financing statements, certificates,
local termination of
lien documents, affidavits
and forms as may, in Trafalgar’s reasonable judgment, be necessary to
effectuate and complete the release of any and all security
interests in the Assets.

      

      

      (h)   Resignations.

      

      (i) Simultaneous with the Closing of
this transaction, Carson shall resign as the President/ChiefExecutive Officer
and a member of the Board of Directors of the Company. The Company and
Carsonshall agree to release each other and forever discharge any and all
claims, manner of actions, whether at law or in equity suits, judgments, debts,
liens, liabilities, demands, damages, losses, sums of money, expenses or
disputes, known or unknown, fixed or contingent, which it now has or may have
hereafter, directly or indirectly, individually or in any capacity against each
other, their successors and assigns, as well as its present or former owners,
directors, officers, stockholders, employees, agents, heirs, by reason of any
act, omission, matter, cause, or thing whatsoever, from the beginning of time
to, and including the date of the execution of this Agreement, relating to the
resignation.

      

      (ii) Simultaneous with the Closing of
this transaction, Jeff Sternberg shall resign from the Board of Directors of
NMPLC. NMPLC and Sternberg shall agree to release each other and forever
discharge any and all claims, manner of actions, whether at law or in equity
suits, judgments, debts, liens, liabilities, demands, damages, losses, sums of
money, expenses or disputes, known or unknown, fixed or contingent, which it now
has or may have hereafter, directly or indirectly, individually or in any
capacity against each other, their successors and assigns, as well as its
present or former owners, directors, officers, stockholders, employees, agents,
heirs, by reason of any act, omission, matter, cause, or thing whatsoever, from
the beginning of time to, and including the date of the execution of this
Agreement, relating to the resignation.

       

      
        
          
          

        

        
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        (i)  The
Closing.  The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place through the offices of Trafalgar in
Florida before February ___, 2010 subject to the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the “Closing Dates”).

      

      
        

      

      
        (j)  Transfer of Technology and
Pledged Shares. The transfers of the Technology and the Pledged Shares
shall be in accordance with instructions delivered to the Parties from the
attorney for Trafalgar. In accordance with the terms and provisions of this
Agreement and simultaneous with execution of this Agreement, the Company shall
deliver to Trafalgar and Trafalgar shall deliver to Carson and Carson shall
deliver to Trafalgar the following:  (i) all of the stock certificates
representing the Pledged Shares and the Company Shares, endorsed in blank and/or
accompanied by duly executed assignment documents and including a Medallion
Guarantee or such other assignments required by the transfer agent, including
corporate resolutions as required, (ii) the unaudited consolidated financial
statements of the Company as of quarter ended October 31, 2009 evidencing the
Trafalgar Debt; (iii) the unaudited consolidated financial statements of the
Company as of quarter ended October 31, 2009 evidencing the Debt; and (iv) a
removal of all liens and security interests filed by Trafalgar evidencing
release by Trafalgar of any and all security interests in the Assets excepting
the Technology as discussed in section 1(b).

      

      
        

        2.  Representations and
Warranties Concerning the Transaction.

        

      

      
        (a)  Representations and
Warranties of the Company.  The Company represents and warrants
to the Parties that the statements contained in this paragraph 2(a) are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date.

        

      

      
        (i)  Organization of Company;
Subsidiaries.  The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware.  The Company is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction where such qualification is
required. The Company has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on its business. The Company has
one subsidiary, NMPLC, and one indirect subsidiary, NMLTD. NMLTD is a wholly
owned subsidiary of NMPLC.

      

      
        

      

      
        (ii)  Authorization of
Transaction.  The Company has full power and authority to
execute and deliver this Agreement and to perform its respective obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Company, enforceable in accordance with its terms and
conditions.  The Company does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
governmental authority in order to consummate the transactions contemplated by
this Agreement. The Company will need to file the appropriate documentation with
the SEC.

        

        
          
            
            

          

          
            A-5

            
              

            

          

          
            
            

          

        

         

        (iii)  Non-contravention.  Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any governmental authority to which the Company is subject, or
(B) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Company is a party or by
which it  is bound or to which any of its assets is
subject.

      

      
        

      

      
        (iv)  Brokers'
Fees.  The Company does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company could become
liable or obligated.

        

      

      
        (v) Ownership of
Technology. Notwithstanding that NMLTD holds title to substantially all
of its technology, the Company shall transfer to NMLTD any remaining interest
held by the Company in the Technology and NMLTD shall receive good and
marketable title to the Technology free and clear of all encumbrances except as
discussed in section 1(b).

        

      

      
        (vi)  Financial
Statements.  The Company will provide to the Parties the
consolidated balance sheet and statements of income, changes in stockholders'
equity and cash flows as of and for the quarter ended October 31, 2009 (the
“Financial Statements”). The Financial Statements will be prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis, fairly present the financial condition, results of operations
and cash flows of the Company as of the respective dates thereof and for the
periods referred to therein and are consistent with the books and records of the
Company. The Financial Statements shall reflect the Debt and the Trafalgar
Debt.

        

        (vii)   Pledged
Shares.   The Company is the record owner of the Pledged
Shares, and owns all the ownership, voting and other rights in the Pledged
Shares, free and clear of all claims, liens, pledges, options, security
interests, attachments, and encumbrances, except for those created under the
Share Pledge Agreement, and will warrant and defend Trafalgar’s security
interest in such Pledged Shares and all related collateral against the claims of
all persons whomsoever. The Company has full power, right and is authorized to
transfer the Pledged Shares to Trafalgar in accordance with the election by
Trafalgar of its remedies under the Share Pledge Agreement.

        

      

      
        (b)  Representations and
Warranties of NMPLC.  NMPLC represents and warrants to the
Parties that the statements contained in this paragraph 2(b) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.

        

      

      
        (i)  Organization of
NMPLC.  NMPLC is a corporation duly organized, validly
existing, and is not in good standing under the laws of Ireland and is a
subsidiary of the Company. NMPLC is duly authorized to conduct business under
the laws of each jurisdiction where such qualification is required. NMPLC has
full corporate power and authority and all licenses, permits, and authorizations
necessary to carry on its business.

      

      
        

        
          
            
            

          

          
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        (ii)  Authorization of
Transaction.  NMPLC has full power and authority to execute and
deliver this Agreement and to perform its respective obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of NMPLC,
enforceable in accordance with its terms and conditions.  NMPLC does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any governmental authority in order to
consummate the transactions contemplated by this Agreement.

        

      

      
        (iii)
Non-contravention.  Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any governmental authority to which NMPLC is subject, or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which NMPLC is a party or by which
it  is bound or to which any of its assets is subject.

        

      

      
        (iv)  Brokers’
Fees.  The Company does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company could become
liable or obligated.

        

        (v)  Preferred
Shares.  NMPLC has full authorization to issue the 100 shares
of Preferred Stock to Trafalgar, and the Board of Directors has authorized and
approved the creation and associated rights and preferences regarding the shares
of Preferred Stock. The appropriate documentation has or will be filed with the
governing regulatory bodies in Ireland formally creating the shares of Preferred
Stock. In the event that notice to the shareholders of NMPLC is required to
issue the Preferred Shares to Trafalgar, NMPLC shall use its best efforts to
provide such shareholder approval diligently and expeditiously.

        

      

      
        (vi)  Capitalization. Restrictive
Agreement. NMPLC’s authorized capital stock, as of the date of this
Agreement, consists of 150 million shares of Common Stock, .001 par value, of
which 25,184,350 shares are issued and outstanding. There are no other forms of
equity securities or debt instruments which could convert to equity securities
which are authorized, issued or outstanding [excepting the Trafalgar convertible
notes which are to be transferred according to 1(d) above].  No other
form of equity or debt is authorized, issued or outstanding.  All of
the issued and outstanding shares of common stock are validly issued, fully paid
and non-assessable and have been issued in compliance with applicable laws,
including, without limitation, applicable federal and state securities
laws.  Trafalgar shall forfeit its warrants for the purchase of 4.5
million shares such that there are outstanding options and warrants to acquire
additional shares of capital stock of NMPLC, in the amount of 1,035,000
shares.  There are no agreements relating to the voting, purchase or
sale of capital stock between or among NMPLC and any of its stockholders or
other third party. No equity financings resulting in the issuance of further
shares nor any further debt financings will be authorized by NMPLC of any nature
or description either prior to or subsequent to the execution of this Agreement
without the prior written consent of Trafalgar, which covenant shall remain in
full force and effect until the Trafalgar Debt is fully paid and Trafalgar has
realized an aggregate of $1 million in payment of Dividends.

      

      
        

        
          
            
            

          

          
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        (c)  Representations and
Warranties of NMLTD.  NMLTD represents and warrants to the
Parties that the statements contained in this paragraph 2(c) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.

        

      

      
        (i)  Organization of
NMLTD.  NMLTD is a corporation duly organized, validly
existing, and is not in good standing under the laws of Ireland and is a
subsidiary of the Company. NMLTD is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction where such qualification is
required. NMLTD has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on its
business.

      

      
        

      

      
        (ii)  Authorization of
Transaction.  NMLTD has full power and authority to execute and
deliver this Agreement and to perform its respective obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of NMLTD,
enforceable in accordance with its terms and conditions.  NMLTD does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any governmental authority in order to
consummate the transactions contemplated by this Agreement.

        

        (iii)   Security Interest.
After consummation of this Agreement and the transfer by the Company to
NMLTD of its remaining interest, title and right in and to the Technology, NMLTD
shall hold title to the Technology, free and clear of all claims, liens,
pledges, options, security interests, attachments and encumbrances, except for
that to be created on behalf of Trafalgar. NMLTD shall execute and deliver any
documentation required under the laws of Ireland to create a security interest
in and to the Technology on behalf of Trafalgar (the “Trafalgar Security
Documents”, and has the full power, right and authority to execute, deliver and
perform the pledge, assignment, transfer and grant of the security interest to
be set forth in the Trafalgar Security Documents.

        

        (iv)  Non-contravention.  Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any governmental authority to which NMLTD is subject, or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which NMLTD is a party or by which
it  is bound or to which any of its assets is subject.

        

        (v)  Brokers’
Fees.  NMLTD does not have any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which NMLTD could become liable
or obligated.

         

      

      
         (d)  Representations and
Warranties of Carson.  Carson represents and warrants to the
Parties that the statements contained in this paragraph 2(d) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.

      

      
        

        
          
            
            

          

          
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        (i)  Authorization of
Transaction.  Carson has full power and authority to execute
and deliver this Agreement and to perform his respective obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of Carson,
enforceable in accordance with its terms and conditions. Carson does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any governmental authority in order to consummate the
transactions contemplated by this Agreement.

        

        (ii)  Company Shares.
Carson is the record owner of the Company Shares, and owns all the
ownership, voting and other rights in the Company Shares, free and clear of all
claims, liens, pledges, options, security interests, attachments, and
encumbrances. Carson has full power, right and is authorized to transfer the
Company Shares to Trafalgar.

        

      

      
        (e)  Representations and
Warranties of Trafalgar.  Trafalgar represents and warrants to
the Parties that the statements contained in this paragraph 2(e) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.

      

      
        

         (i)  Authorization of
Transaction.  Trafalgar has full power and authority to execute
and deliver this Agreement and to perform its respective obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
Trafalgar, enforceable in accordance with its terms and
conditions.  Trafalgar does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
governmental authority in order to consummate the transactions contemplated by
this Agreement.

        

        (ii)  Non-contravention.  Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any governmental authority to which Trafalgar is subject, or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Trafalgar is a party or by which
it  is bound or to which any of its assets is subject.

        

        (iii)  Secured
Party.  Trafalgar is a party to the Share Pledge Agreement
pursuant to which the Company granted, assigned and transferred to Trafalgar a
first priority security interest in all of the Company’s Pledged Shares.
Trafalgar deems that an Event of Default has occurred under the Share Pledge
Agreement and has the right to exercise its remedies under the Share Pledge
Agreement in accordance with Section 9.  Trafalgar further has the
right in any commercially reasonable manner to sell, resell, assign, transfer
and deliver all or any part of the Pledged Shares. Upon transfer of the Pledged
Shares from the Company to Trafalgar, Trafalgar shall transfer the Pledged
Shares to Carson.

        

      

      
        (iv)
Fundraising.  In
the event that NMPLC or NMLTD arranges potential financing with a third party,
Trafalgar agrees to negotiate in good faith to facilitate the closing of such
financing and not be “unreasonable” in its demands.

      

      

      
        (v) Release of Security
Interest.  Upon the payment of $1 million in aggregate
dividends by NMPLC, Trafalgar shall make, execute, acknowledge, file,
record and deliver to NMPLC
and NMLTD any documents
reasonably requested by NMPLC and NMLTD to release its security interest in the
Technology including, without limitation,
termination of financing statements, certificates,
local termination of
lien documents, affidavits
and forms as may, in NMPLC’s reasonable judgment, be necessary to
effectuate and complete the release of any and all security
interests in the Technology.

         

        
          
            
            

          

          
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        3.  Post-Closing
Covenants.  The Parties agree as follows with respect to the
period following the Closing.

      

      
        

      

      
        (a)  General.  In
case at any time after the Closing any further action is necessary or desirable
to carry out the purposes of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such further instruments
and documents) as any other Party may request, all at the sole cost and expense
of the requesting Party (unless the requesting Party is entitled to
indemnification therefore under Section 7 below). The Company acknowledges and
agrees that from and after the Closing Trafalgar will be entitled to possession
of certain documents, books, records, agreements, and financial data of any sort
relating to the Company, NMPLC and NMLTD, and the parties agree to fully
cooperate in the delivery of any and all books, accounts, records, corporate
documents and all similar such items at the expense of the
Company

      

      
        

      

      
        (b)  Transition.  Trafalgar
will not take any action that is designed or intended to have the effect of
impairing the Company’s legal or regulatory status pending, at or after the
Closing.

      

      
        

      

      
        4.  Remedies for Breaches of
This Agreement.

      

      
        

      

      
        (a)  Survival of Representations
and Warranties.

      

      
        

      

      
        All of
the representations and warranties of the Parties shall survive the Closing
hereunder and continue in full force and effect for a period of one year
thereafter.

      

      
        

      

      
        (b)  Indemnification Provisions
for Benefit of Trafalgar.

        

      

      
        (i)  In
the event the Company, NMPLC or NMLTD breaches any of their representations,
warranties, and covenants contained herein, then the Company, NMPLC and NMLTD
shall indemnify Trafalgar from and against any adverse consequences that
Trafalgar may suffer through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).

        

        (ii)  In
the event Trafalgar breaches any of its representations, warranties, and
covenants contained herein, then Trafalgar shall indemnify each of the Company,
NMPLC and NMLTD from and against the entirety of any adverse consequences that
the Company, NMPLC or NMLTD may suffer through and after the date of the claim
for indemnification resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach).

      

      
        

      

      
        5.  Miscellaneous.

      

      
        

         (a)  Press Releases and Public
Announcements.  No Party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties, provided, however,
that the Company may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the Company will use its best efforts
to advise the other Parties prior to making the disclosure).

      

      
        

        
          
            
            

          

          
            A-10

            
              

            

          

          
            
            

          

        

      

      
         

        (b)  No Third-Party
Beneficiaries.  This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.

      

      
        

      

      
        (c)  Succession and
Assignment.  This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns.  No Party may assign either this Agreement or any
of his or its rights, interests, or obligations hereunder without the prior
written approval of the other Parties; provided, however,
that the Parties may assign any or all of its rights and interests hereunder in
accordance with the terms of this Agreement.

      

      
        

      

      
        (d)  Counterparts; Facsimile
Execution.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.  Facsimile
execution of this Agreement shall be legal, valid and binding for all
purposes.

      

      
        

      

      
        (e)  Headings.  The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.

      

      
        

      

      
        (f)  Governing
Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.

      

      
        

      

      
         (g)  Amendments and
Waivers.  No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by the
Parties.  No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

      

      
        

      

      
        (h)  Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.

      

      
        

      

      
        (i)  Construction. The
Parties have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  Any reference to any federal, state or local statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word “including” shall
mean including without limitation.  The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance.  If any Party has breached any representation, warranty,
or covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.

      

      
        

        
          
            
            

          

          
            A-11

            
              

            

          

          
            
            

          

        

      

      
         

        (j)  Specific
Performance.  Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached.  Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.

      

      

      

      
        [signature
pages follow]

      

       

      
        
          
          

        

        
          A-12

          
            

          

        

        
          
          

        

      

      
         

        IN
WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the
date first above written.

        

        
          
            
              
                	 	NEW
      MEDIA LOTTERY SERVICES INC.	 
	 	 	 	 
	
                        Date:
      February __, 2010

                      	
                        By:
      

                      	 	 
	 	 	President	 
	 	 	 	 

              

            

          

        

         

        
          
            	 	NEW
      MEDIA LOTTERY SERVICES PLC.	 
	 	 	 	 
	
                    Date:
      February __, 2010

                  	
                    By:
      

                  	 	 
	 	 	President	 
	 	 	 	 

          

        

         

        
          
            	 	
                    

                      NEW
      MEDIA LOTTERY SERVICES (INTERNATIONAL) LIMITED

                    

                  	 
	 	 	 	 
	
                    Date:
      February __, 2010

                  	
                    By:
      

                  	 	 
	 	 	President	 
	 	 	 	 

          

        

         

        
          
            
              
                
                  
                    
                      
                        
                          	 	TRAFALGAR
      CAPITAL SPECIALISED INVESTMENT FUND FIS	 
	 	 	 	 
	
                                  Date:
      February __, 2010

                                	
                                  By:
      

                                	 	 
	 	 	President	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	Date:
      February __, 2010	 	 
	 	 John
      Carson	 

                        

                      

                    

                     

                    
                      
                        
                        

                      

                      
                        A-13Exhibit
4.2

    

    

     

    THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ANY STATE SECURITIES LAWS, OR
THE LAWS OF ANY FOREIGN JURISDICTION.  NEITHER THIS WARRANT NOR THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE SOLD, OFFERED FOR
SALE, OR PLEDGED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
ACTIONS AS TO THE APPLICABLE SECURITIES UNDER SUCH ACT, STATE LAWS, OR LAWS OF
FOREIGN JURISDICTIONS OR AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY
SATISFACTORY TO THE ISSUER STATING THAT SUCH REGISTRATION OR OTHER ACTION IS NOT
REQUIRED.

    

    
      
        	
                No.
      W-0000

              	
                WARRANT
      TO PURCHASE 00000 SHARES

              
	
                Issue
      Date:  ____________

              	
                OF
      COMMON STOCK

              

      

    

    

    FORM OF

    WARRANT

    TO
PURCHASE SHARES OF COMMON STOCK

    

    For value received, PACIFIC FINANCIAL
CORPORATION, a Washington corporation (the
“Company”), grants to _______________________________________
the “Holder”) the right, subject to the terms of this Warrant, to purchase at
any time during the period commencing on the “Issue Date” (as defined below),
and ending on the “Expiration Date” (as defined below), ______ fully paid and
non-assessable shares of Common Stock of the Company at the “Exercise Price” (as
defined below). This Warrant may be exercised in whole or in
part.  The number of shares that may be purchased is subject to
adjustment from time to time under the terms of this Warrant.

    

    Definitions.  As used in this
Warrant, unless the context otherwise requires:

    

    “Common Stock” means the Common
Stock, par value $1.00 per share, of the Company.

    

    “Company” has the meaning
specified in the introductory paragraph.

    

    "Exercise Amount" means the
number of Warrant Shares filled in on the attached Exercise Form delivered to
the Company by the Holder in connection with exercise of all or a portion of
this Warrant.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    “Exercise Date” means any date
on which this Warrant is exercised in the manner indicated in Section
1.2.

    

    “Exercise Price” means $6.50
per share (adjusted as necessary in accordance with
Section 6).

    

    “Expiration Date” means 5:00
p.m. (Pacific time) on the fifth anniversary of the Issue Date.

    

    “Holder” has the meaning
specified in the introductory paragraph.

    

    “Issue Date” has the meaning
specified on the first page of this Warrant.

    

    “Person” means an individual,
corporation, partnership, trust, joint venture or other form of business
entity.

    

    “Securities Act” means the
Securities Act of 1933, as amended from time to time, and all rules and
regulations promulgated thereunder.

    

    “Warrant Shares” means the
shares of Common Stock issued or issuable upon exercise of this Warrant,
adjusted as necessary in accordance with Section 6.

    

    Section 1.              Duration and Exercise of
Warrant.

    

    1.1           Exercise
Period.  Subject to the provisions hereof, this Warrant may be
exercised at any time during the period commencing on the Issue Date and ending
on the Expiration Date.  After the Expiration Date, this Warrant shall
become void and all rights to purchase Warrant Shares hereunder shall thereupon
cease.

    

    1.2           Exercise.  This
Warrant may be exercised by the Holder, in whole or in part, by
(i) executing and delivering to the Secretary of the Company the attached
Exercise Form, (ii) surrendering this Warrant to the Secretary of the
Company, and (iii) paying in full the Exercise Price for the Exercise
Amount by cash, check, or wire transfer unless the Holder indicates in the
Exercise Form that such exercise is being “effected” pursuant to a “cashless
exercise” under Section 1.3 below.

    

    1.3           Cashless
Exercise.  The Holder may satisfy its obligation to pay the
Exercise Price through a “cashless exercise,” in which event the Company shall
issue to the Holder the number of Warrant Shares determined as
follows:

    

    
      
        
          	 
      	
                  X =
      Y [(A-B)/A]

                
	
                   
      where:

                	 
      
	 
      	
                  X =
      the number of Warrant Shares to be issued to the
Holder.

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

                

        

      

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                A =
      the arithmetic average of the last reported trade price for the Company’s
      Common Stock reported for each Trading Day during the 30 calendar day
      period immediately prior to (but not including) the Exercise
      Date.

              
	 
      	 
      
	 
      	
                B =
      the Exercise Price.

              

      

    

    

    For purposes of Rule 144 promulgated
under the Securities Act, it is intended, understood and acknowledged that under
applicable rules, regulations and interpretations in effect as of the Issue
Date, the Warrant Shares issued in a cashless exercise transaction will be
deemed to have been acquired by the Holder, and the holding period for the
Warrant Shares will be deemed to have commenced, on the Issue Date.

    

    1.4          Documentation.  Within
a reasonable period after exercise of this Warrant, the Company, at the
Company's expense, will deliver to the Holder (a) certificates for Warrant
Shares, if any, and (b) if not exercised in full, a new Warrant to purchase
remaining Warrant Shares.

    

    1.5          Effective Date of
Exercise.  This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of completion of each of
the steps required to exercise this Warrant as provided in Section 1.2
above.  The person entitled to receive the Warrant Shares shall be
treated for all purposes as the holder of record of such shares as of the close
of business on the date the Holder is deemed to have exercised this
Warrant.

    

    1.6          Securities Law
Compliance.  By delivering a notice of exercise, the Holder
represents and warrants and acknowledges, as the case may be, that:

     

    1.6.1     Investment
Purpose.  Holder is acquiring Warrant Shares for Holder's own
account and not for the purpose of resale or further distribution in a manner
not permitted by the terms of state and federal securities laws, and no other
person will have a direct or indirect interest in Warrant Shares being
purchased.

     

    1.6.2     Sophistication:  Adequate
Means; Acknowledgements.  Holder has such substantial knowledge
in financial and business matters in general, and in similar investments in
particular, that Holder is capable of evaluating the merits and risks of an
investment in the Warrant Shares.  Holder has adequate means of
providing for Holder's current needs and personal contingencies so that Holder
can afford a complete loss of the funds invested in the Warrant
Shares.  Holder has, to the extent Holder considers necessary, taken
advantage of the opportunity to ask questions of the Company's officers and
directors, and Holder acknowledges that the Company has made no representation
or warranty regarding an investment in the Warrant Shares or the Company's
current or future financial performance or condition.  Holder has
sought and received, to the extent deemed necessary or appropriate, professional
advice with respect to tax and investment aspects of an exercise of this
Warrant, including the appropriateness of exercise in light of Holder's
individual circumstances, and is not relying on the Company or its officers,
directors, or other agents and advisers for such advice and such advice has not
been provided.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    1.6.3     Restricted Securities;
Legend.  Holder understands that, in reliance upon
representations contained herein, the Warrant Shares have not been and will not
in the foreseeable future be registered under the Securities Act or state
securities laws.  As a result, the Warrant Shares must be held for at
least as long as is required under holding periods applicable at the time of
exercise to sales made under Rule 144 of the Securities Act.  The
Company may note in its stock transfer records and/or place upon each
certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the Holder:

     

    SALE OF
THE SHARES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS OR THE SECURITIES LAWS OF ANY
FOREIGN JURISDICTION, AND THE SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, OR OTHERWISE DISPOSED OF UNLESS THE TRANSACTION IS REGISTERED UNDER THE
SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF FOREIGN
JURISDICTIONS OR AN EXEMPTION FROM REGISTRATION OR OTHER REQUIREMENTS IS
AVAILABLE AND THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT
REASONABLY SATISFACTORY TO IT.

     

    

    1.7           Validity and Reservation of Warrant
Shares.  The Company covenants that all Warrant Shares issued
upon exercise of this Warrant will be validly issued, fully paid,
nonassessable.  The Company will have duly authorized and reserved for
issuance upon exercise of this Warrant a sufficient number of shares of Common
Stock or other shares of capital stock of the Company as are from time to time
issuable upon exercise of this Warrant.

    

    Section 2.              Fractional
Shares.

    

    No fractional Warrant Shares shall be
issued upon the exercise of this Warrant, and the number of Warrant Shares to be
issued shall be rounded down to the nearest whole number.

    

    Section 3.              No Rights as
Shareholder.

    

    The Holder shall not, solely by virtue
of being the Holder of this Warrant, have any of the rights of a shareholder of
the Company, either at law or equity, until this Warrant shall have been duly
exercised.

    

    Section 4.              Loss of Warrant.

    

    Upon receipt by the Company of
satisfactory evidence of the loss, theft, destruction or mutilation of this
Warrant and either (in the case of loss, theft or destruction) reasonable
indemnification and a bond reasonably satisfactory to the Company if requested
by the Company or (in the case of mutilation) the surrender of this Warrant for
cancellation, the Company will execute and deliver to the Holder, without
charge, a new warrant of like denomination.

    

    Section 5.              Certain
Adjustments.

    

    5.1           Adjustment of Warrant
Shares.  The number, class and Exercise Price per share of
securities for which this Warrant may be exercised are subject to adjustment
from time to time upon the happening of certain events as hereinafter
provided:

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    (a)        Stock Splits or
Dividends.  If the outstanding shares of the Company’s Common
Stock are divided into a greater number of shares or if the Company shall effect
a stock dividend, the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be proportionately increased and the Exercise
Price per share shall be proportionately reduced.  Conversely, if the
outstanding shares of Common Stock are combined into a smaller number of shares
of Common Stock, the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be proportionately reduced and the Exercise Price
per share shall be proportionately increased.  The increases and
reductions provided for in this Section 6.1(a) shall be made with the intent
and, as nearly as practicable, the effect that neither the percentage of the
total equity of the Company obtainable on exercise of this Warrant nor the
aggregate price payable for such percentage shall be affected by any event
described in this Section 6.1(a).

    

    (b)        Merger or Reorganization,
Etc.  In the event of any change in the Common Stock through
merger, consolidation, reclassification, reorganization, or other change in the
capital structure of the Company (not including the issuance of additional
shares of capital stock other than by stock dividend or stock split), then, the
Holder of this Warrant will have the right thereafter to receive upon the
exercise of this Warrant the kind and amount of shares of stock or other
securities or property to which it would have been entitled if, immediately
before the merger, consolidation, reclassification, reorganization,
recapitalization or other change in the capital structure, it had held the
number of shares of Common Stock obtainable upon the exercise of this
Warrant.  In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 6 with respect to the
rights of the Holder after the merger, consolidation, reclassification,
reorganization, recapitalization or other change to the end that the provisions
of this Section 6 (including adjustment of the Exercise Price then in
effect and the number of shares issuable upon exercise of this Warrant) shall be
applicable after that event as nearly equivalent as may be
practicable.

    

    5.2           Notice of
Adjustment.  Whenever an event occurs requiring any adjustment
to be made pursuant to Section 6.1, the Company shall promptly file with its
Secretary at its principal office a certificate of its President or Chief
Financial Officer specifying such adjustment, setting forth in reasonable detail
the acts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such
adjustment.  Such certificate shall be made available at all
reasonable times for inspection by the Holder.  Promptly (but in no
event more than 30 days) after each such adjustment, the Company shall give a
copy of such certificate by certified mail to the Holder.

    

    Section 6.              Miscellaneous.

    

    6.1           Binding Effect;
Assignment.  This Warrant shall inure to the benefit of and be
binding upon the Company and the Holder and their respective successors, heirs,
legal representatives and permitted assigns.  This Warrant and the
Warrant Shares (collectively, "Securities") may only be disposed of 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 compliance with any applicable
federal and state securities laws.  In connection with any transfer of
Securities other than pursuant to an effective registration statement, transfer
may only be made with the prior written consent of the Company, which shall not
be unreasonably withheld, and the Company may require the transferor to provide
to the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
securities under the Securities Act, state securities laws or the laws of any
foreign jurisdiction.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    6.2                      Notice.  All notices
required or permitted under this Warrant shall be given in writing and shall be
deemed effectively given (a) upon personal delivery to the party to be
notified, (b) three days after deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address for such party, or (c) one day after deposit
with a nationally recognized air courier service such as  Federal
Express.

    

    If to the
Company:

    

    Pacific
Financial Corporation

    1101 S.
Boone St.

    PO Box
1826

    Aberdeen,
WA 98520

    Attn:  President

    

    If to the
Holder:

    

    To the
address set forth on the signature page to the stock purchase agreement executed
in connection with acquisition of this Warrant.

    

    or such
other address as such party may designate by 10 days’ advance written notice to
the other party.

    

    6.3           Governing Law.  The
validity, interpretation and performance of this warrant shall be governed by
the laws of the State of Washington, exclusive of conflicts of law
rules.

    

    6.4           Saturdays, Sundays and
Holidays.  If the Expiration Date falls on a Saturday, Sunday
or legal holiday, the Expiration Date shall automatically be extended until 5:00
p.m. Pacific Time on the next business day.

    

    6.5           Headings.  The
headings herein are for convenience only and shall not control or affect the
meaning or construction of this Warrant.

    

    
      
        	 
      	
                PACIFIC
      FINANCIAL CORPORATION

              
	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                President

              

      

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    EXERCISE
FORM

    

    (To Be
Executed by the Warrant Holder

    to
Exercise the Warrant)

    

    To:           PACIFIC
FINANCIAL CORPORATION

    

    
      	
              1.

            	
              The
      undersigned hereby irrevocably elects to exercise the right represented by
      Warrant No. W-0000 to
      purchase _________ shares of Common Stock (the "Exercise Amount")
      provided for in the Warrant as follows [check
  one]:

            

    

    

     ̈           Exercise
for Cash:  Pursuant to Section 1.2 of the Warrant, the Holder hereby
elects to exercise the Warrant for cash and tenders payment herewith (or has
made a wire transfer) to the order of Pacific Financial Corporation in the
amount of $____________ (the Exercise Amount times the Exercise
Price).

    

     ̈           Net
(or Cashless) Exercise:  Pursuant to Section 1.3 of the Warrant, the
Holder hereby elects to exercise the Warrant on a net or "cashless" exercise
basis.

    

    
      	
              2.

            	
              The
      undersigned requests that certificates for such shares of Common Stock be
      issued and delivered as follows:

            

    

    

    
      
        
          	
                  Name:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Address:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Deliver
      to:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Address:

                	 
      	 
      

        

      

    

    

    If the
number of shares of Common Stock to be issued upon this exercise is not all the
shares that may be purchased pursuant to the Warrant, the undersigned requests
that a new warrant evidencing the right to purchase the balance of such shares
be registered in the name of, and be delivered to, the undersigned at the
foregoing address.

    

    
      	
              3.

            	
              In
      connection with the exercise of the Warrant, the undersigned hereby
      represents and warrants to you as
follows:

            

    

    

    
      	
               
      

            	
              (a)

            	
              Purchase Entirely for
      Own Account.  The Common Stock will be acquired for
      investment for the undersigned’s own
account.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Restricted
      Securities.  The undersigned understands the Common Stock
      may not be sold, transferred, or otherwise disposed of without
      registration under the Securities Act or an exemption therefrom and, in
      the absence of an effective registration statement covering the Common
      Stock or an available exemption from registration under the Securities
      Act, the Common Stock must be held
indefinitely.

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              Investment
      Experience.  The undersigned is experienced in evaluating
      and investing in similar companies, can bear the economic risk of an
      investment in the Common Stock, and has enough knowledge and experience in
      financial and business matters to evaluate the merits and risks of an
      investment in the Common Stock.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Investor
      Qualifications.  The undersigned is an Accredited
      Investor as defined in Rule 501 promulgated under the Securities
      Act.

            

    

    

    
      	
               
      

            	
              (e)

            	
              Opportunity to Review
      Documents and Ask Questions.  The Company has made
      available to the undersigned all documents and information requested by
      the undersigned relating to an investment in the Company.  In
      addition, the undersigned has had adequate opportunity to ask questions
      and to receive answers from the management of the Company covering the
      terms and conditions of the offering and the Company’s business,
      management, and financial affairs.

            

    

    

    
      	
              4.

            	
              The
      undersigned understands, agrees, and recognizes
  that:

            

    

    

    
      	
               
      

            	
              (a)

            	
              No
      federal, state or foreign governmental agency has made any finding or
      determination as to the fairness of the investment or any recommendation
      or endorsement of the Common Stock.

            

    

    

    
      	
               
      

            	
              (b)

            	
              All
      certificates evidencing the Common Stock will bear a legend substantially
      similar to the legend set forth in the Warrant regarding resale
      restrictions.

            

    

    

    
      	
              5.

            	
              The
      undersigned is a resident or domicile of the state of
      ________________________.

            

    

    

    Dated:  __________________,
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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]