Document:

EXHIBIT 10.3
                                                                    ------------

                      SEVENTH AMENDMENT TO CREDIT AGREEMENT
                       BY AND BETWEEN GMX RESOURCES, INC.
                          AND LOCAL OKLAHOMA BANK, N.A.

            THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is
executed to be effective as of the 18th day of June, 2004 by and between GMX
RESOURCES INC., an Oklahoma corporation, ENDEAVOR PIPELINE INC., an Oklahoma
corporation, and EXPEDITION NATURAL RESOURCES INC., an Oklahoma corporation (the
"Borrowers") and LOCAL OKLAHOMA BANK (the "Bank").

                              W I T N E S S E T H:

            WHEREAS, effective October 31, 2000 Borrowers and Bank entered into
that certain Credit Agreement (the "Original Agreement") whereby Bank provided
Borrowers with a revolving line of credit in an amount governed by a Borrowing
Base which shall not exceed $15,000,000.00, as evidenced by reducing revolving
promissory note with a stated like amount of even date with the Original
Agreement (the "Original Note");

            WHEREAS, as of June 18, 2001, Borrowers and Bank amended the
Original Agreement for the first time (the "First Amendment") in order to permit
certain preferred stock dividends and to evidence certain other changes as set
forth therein;

            WHEREAS, as of May 28, 2002, Borrowers and Bank amended the Original
Agreement as amended by the First Amendment for the second time (the "Second
Amendment") in order to increase the rate of interest, include a termination
fee, alter the reporting requirements and to make such additional changes as are
set forth therein;

            WHEREAS, as of August 14, 2002, Borrowers and Bank amended the
Original Agreement as amended by the First and Second Amendments for the third
time (the "Third Amendment") in order to modify certain financial covenants as
referenced therein;

            WHEREAS, certain portions of the Original Agreement as amended by
First, Second and Third Amendments were amended by a Loan Modification and
Forbearance Agreement in May of 2003 and a Second Loan Modification and
Forbearance Agreement in June 2003 (the "Forbearance Agreements");

            WHEREAS, as of August 31, 2003, Borrowers and Bank amended the
Original Agreement, as amended by the First, Second and Third Amendments for the
fourth time (the "Fourth Amendment") in order to extend the maturity date of the
Note, and to modify certain financial covenants as set forth therein;

            WHEREAS, as of January 16, 2004, Borrowers and Bank amended the
Original Agreement, as amended by the First, Second, Third, and Fourth
Amendments for the fifth time (the "Fifth Amendment") in order to modify the
reporting requirements, modify certain financial covenants, and to permit
certain additional indebtedness;
<PAGE>

            WHEREAS, as of March 1, 2004, Borrowers and Bank amended the
Original Agreement, as amended by the First, Second, Third, Fourth and Fifth
Amendments for the sixth time (the "Sixth Amendment") in order to, among other
things, extend the maturity date (the Original Agreement as amended by the
First, Second, Third, Fourth, Fifth, and Sixth Amendments and as further
modified by the Forbearance Agreements is referred to herein as the
"Agreement");

            WHEREAS, the obligations described in the Agreement are secured by,
among other things not specifically set forth herein, certain oil and gas
properties and other properties as set forth in the Agreement;

            WHEREAS, all capitalized terms not otherwise defined herein shall
have those meanings assigned to such terms in the Agreement; and

            WHEREAS, Borrowers and Bank desire to amend the Agreement for the
seventh time in order to evidence such changes to the Agreement as more
particularly set forth herein;

            NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrowers and the
Bank hereby agree to amend the Agreement as follows:

            A. CHANGES TO THE AGREEMENT

            1. A new definition for the term "Applicable Percentage" shall be
added to Section 1.2 of the Agreement, Additional Defined Terms, which shall be
inserted in its proper alphabetical location and which shall state as follows:

                        "Applicable Percentage" shall mean, for any day, a
            margin of interest over the Base Rate applicable to Advances
            outstanding pursuant to the terms hereof. The Applicable Percentage
            is subject to adjustment, downward or upward, based on the ratio of
            the average monthly Loan Balance to the Commitment Amount (the
            "Leverage Ratio"). The Applicable Percentage shall be adjusted to
            reflect the Applicable Percentage prescribed below as such ratio
            changes:

                   ------ --------------------------- ---------------------

                                Leverage Ratio        Applicable Percentage
                   Tier
                   ------ --------------------------- ---------------------

                   1      Less than or equal to 0.50      PLUS 0.00%
                   ------ --------------------------- ---------------------

                   2      Greater than 0.50 but less      PLUS  0.50%
                          than or equal to 0.67
                   ------ --------------------------- ---------------------

                   3      Greater than 0.67               PLUS 1.00%
                   ------ --------------------------- ---------------------

            2. The reference to "September 1, 2004" in the definition of
"Maturity Date" set forth in Section 1.2 of the Agreement, Additional Defined
Terms, is hereby replaced with

                                       2
<PAGE>

"September 1, 2006" in order to evidence the agreement of the parties to extend
the Maturity Date.

            3. To evidence the Borrowers' continuing obligation to repay the
Note, the Borrower shall make and deliver to the Bank the amended and restated
promissory note in the form of Annex "1" hereto attached (the "Replacement
Note"), which shall substitute and replace in its entirety the Note referred to
in the Agreement, without cancellation, novation or payment.

            4. The document attached hereto as Annex "1" shall replace in its
entirety that document attached to the Agreement as Exhibit "A".

            5. Section 2.5 of the Agreement, Interest Rate, is hereby amended
and restated in its entirety in order to institute a tiered pricing mechanism as
follows:

                         2.5 Interest Rate. The outstanding unpaid principal
             balance of the Note shall bear interest at a fluctuating rate per
             annum equal to the Base Rate plus the Applicable Percentage. Upon
             notice from Lender to Borrowers of the occurrence of any Event of
             Default, the unpaid principal amount from time to time outstanding
             under the Note shall bear interest at a fluctuating rate per annum
             equal to the Default Rate (but not less than the Base Rate in
             effect on the date of the occurrence of the Event of Default). The
             interest rate applicable to the Note shall change as of the
             effective date of any change in the Base Rate or the Applicable
             Percentage. Interest shall be computed on the Note for the actual
             number of days elapsed on the basis of a year consisting of 360
             days.

            6. Pursuant to Section 2.9 of the Agreement, from the date hereof
until the next Borrowing Base Determination the Borrowing Base shall be
$7,040,000.00.

            7. Pursuant to Section 2.9 of the Agreement, Borrowing Base
Determinations, beginning July 1, 2004 and continuing on the first day of each
month thereafter until re-determined pursuant to Section 2.9 of the Agreement,
the Monthly Commitment Reduction shall be $100,000.00.

            8. Section 6.2 of the Agreement, Monthly Financial Statements, is
hereby re-captioned as "Quarterly" financial statements, amended and restated in
its entirety as follows in order to change it from a monthly requirement to a
quarterly requirement, as follows:

                         6.2 Quarterly Financial Statements. Beginning with the
             quarter ending June 30, 2004, deliver to the Lender, (a) on or
             before the 45th day after the close of each calendar quarter, a
             copy of the unaudited Financial Statements of Borrowers prepared on
             a consolidated basis as of the last day of such quarterly period ,
             such Financial Statement to be certified by a Responsible Officer
             of the Borrowers as having been prepared in accordance with GAAP
             and in a manner consistent with the annual audited Financial
             Statements, consistently applied, and as a fair presentation of the
             financial condition of the Borrowers , and (b) concurrent with (a)
             above, a Compliance Certificate executed by Borrowers' Responsible
             Officer stating that such Officers, after due inquiry, has no
             knowledge of a Default or Event of Default and containing a
             computation of, and

                                       3
<PAGE>

             demonstrating compliance with, each financial covenant set forth in
             Section 7 herein.

            9. Section 6.5 of the Agreement, Production Reports, is hereby
amended and restated and re-captioned in its entirety in order to change the
reporting requirement from monthly to quarterly as follows:

                         6.5 Production Reports. Within forty-five (45) days
             from each calendar quarter end, furnish Lender a quarterly summary
             report of oil and gas production for said period indicating the
             immediately preceding quarter's sales volume, sales revenues,
             production taxes, operating expenses, capital expenditures and net
             operating income from or attributable to the Borrowers' Oil and Gas
             Properties pledged to secure the Obligations hereunder, with
             detailed calculations and worksheets, and, in the case of take or
             pay or prepayment agreements during such quarter, provide copies of
             same.

            10. Section 7.1 of the Agreement, Adjusted Current Ratio, and
Section 7.2 of the Agreement, Debt Service Coverage Ratio, are hereby amended
and restated in their entirety as follows:

                         7.1 Adjusted Current Ratio. Beginning with the quarter
             ended June 30, 2004 and for each quarter thereafter, Borrower shall
             maintain a minimum Adjusted Current Ratio, calculated and submitted
             on a quarterly basis of, at least, 1.00:1.00. The "Adjusted Current
             Ratio" is defined as (i) Current Assets plus the Available
             Commitment minus any assets resulting from "mark-to-market"
             accounting treatment for hedging contracts divided by (ii) Current
             Liabilities, minus any liabilities resulting from "mark-to-market"
             accounting treatment for hedging contracts, minus any balance
             outstanding on this credit facility that would otherwise be
             accounted for as a Current Liability.

                        7.2 Debt Service Coverage Ratio. Beginning with the
             quarter ending June 30, 2004, maintain a quarterly Debt Service
             Coverage Ratio, calculated and submitted on a quarterly basis, of
             not less than 1.10:1.00. For purposes of this calculation, the Debt
             Service Coverage Ratio is defined as the quotient of:

                        the sum of consolidated Net Income, MINUS dividends,
                        PLUS interest, depletion, depreciation, and amortization
                        and any other noncash expenses (all for the quarter then
                        ended),

                                   DIVIDED BY

                        the sum of the applicable Monthly Commitment Reductions
                        plus interest, plus any other current maturities of any
                        other long term debt (including Capital Lease
                        Obligations) realized during the quarter then ended.

            11. Section 8.1 of the Agreement, Indebtedness, is hereby amended
and restated in its entirety in order to eliminate certain "Subordinated Notes"
as follows:

                                       4
<PAGE>

                         8.1 Indebtedness. Create, incur, assume or suffer to
             exist any Indebtedness, whether by way of loan or otherwise which
             exceeds, in the aggregate, the sum of $100,000.00 ; provided
             however, the foregoing restriction shall not apply to (a) the
             Obligations, or (b) current accounts payable incurred in the
             ordinary course of business.

            12. Except as otherwise set forth above, all other terms, covenants,
and conditions of the Agreement and all loans and/or notes are unaffected by
this Amendment.

            B. REPRESENTATIONS AND WARRANTIES

            Each Borrower hereby represents and warrants to Bank that:

                  1. Each Borrower is a corporation, duly organized, legally
existing, and in good standing under the laws of the State of Oklahoma, and is
duly qualified as a foreign corporation and in good standing in all other states
wherein the nature of its business or its assets make such qualification
necessary.

                  2. Each Borrower's execution and delivery of this Amendment
and performance of its obligations hereunder: (a) are and will be within its
powers; (b) are duly authorized by its board of directors; (c) are not and will
not be in contravention of any law, statute, rule or regulation, the terms of
its articles of incorporation and bylaws, nor of any agreement or undertaking to
which any Borrower or any of its properties are bound; (d) do not require any
consent or approval (including governmental) which has not been given; and (e)
will not result in the imposition of liens, charges or encumbrances on any of
its properties or assets, except those in favor of Bank hereunder.

                  3. This Amendment, when duly executed and delivered, will
constitute the legal, valid and binding obligations of Borrowers, enforceable in
accordance with its terms.

                  4. All financial statements, balance sheets, income statements
and other financial data which have been or are hereafter furnished to Bank by
Borrowers to induce Bank to make the loans hereunder due, and as to subsequent
financial statements will, fairly represent each Borrower's financial condition
as of the dates for which the same are furnished. All such financial statements,
reports, papers and other data furnished to Bank are and will be, when
furnished: prepared in accordance with generally accepted accounting principles
consistently applied; accurate and correct in all material respects; and
complete insofar as completeness may be necessary to give Bank a true and
accurate knowledge of the subject matter. Since the date of the last such
financial statements, no material adverse change has occurred in the operations
or condition, financial or otherwise and other financial data provided to Bank,
of any Borrower, nor, to the best of their knowledge, has any Borrower incurred,
any material liabilities or made any material investment or guarantees, direct
or contingent, in any single case or in the aggregate, which has not been
disclosed to Bank.

                  5. The Borrowers are the sole and lawful owners of the
Collateral, pledged, mortgaged or assigned by it, and Borrowers have, and as to
after acquired property or new properties will have, good right to cause the
Collateral to be hypothecated to Bank as security for the obligations described
in the Agreement, as amended hereby.

                                       5
<PAGE>

                  6. All of each Borrower's other representations and warranties
set forth in Section 8 of the Agreement, Representations and Warranties, are
true and correct on and as of the date hereof with the same effect as though
made and repeated by such Borrower as of the date hereof.

            C. CONDITIONS

            Bank's obligations under the Agreement, as hereby amended, are
subject to the following conditions:

                  1. Bank and Borrowers shall have executed and delivered this
Amendment.

                  2. Borrowers shall have paid Bank an amendment fee in the
amount of $5,000.00.

                  3. Borrowers shall have executed and delivered such mortgages
or deeds of trust as are necessary, in Bank's discretion, to mortgage to Bank
100% of all of Borrowers' Oil and Gas Properties given value by Bank in the
Borrowing Base.

                  4. Borrowers shall, or will from time to time, have executed
such additional mortgages, deeds of trust, financing statements and such other
documents as are deemed necessary by Bank in order to perfect a lien in favor of
Bank in and to those Oil and Gas Properties necessary to achieve the percentages
required by the covenants set forth herein.

                  5. Each Borrower's representations and warranties set forth in
Section B hereof shall be true and correct on and as of the date hereof, and the
date of any subsequent advance with the same effect as though such
representation and warranty had been on and as of such date.

                  6. Each Borrower shall have delivered copies of any amendments
to each such Borrower's Articles of Incorporation and/or Certificate of
Incorporation and all amendments to each such Borrower's by-laws occurring
subsequent to the date of the Original Agreement accompanied by a certificate
issued by the secretary or an assistant secretary of the Borrowers, to the
effect that each such copy is correct and complete or a certificate that no such
amendments have occurred.

                  7. Each Borrower shall have delivered a current certificate of
incumbency and signature of all of each Borrower's officers who are authorized
to execute Loan Documents on behalf of such Borrower, executed by the secretary
or an assistant secretary of such Borrower.

                  8. Each Borrower shall have delivered copies of corporate
resolutions approving this Seventh Amendment, the Replacement Note and any other
documents required by Bank to be executed by each Borrower authorizing the
transactions contemplated herein and therein, duly adopted by the board of
directors of each of the Borrowers, accompanied by a certificate of the
respective secretary or an assistant secretary of each Borrower, to the effect
that such copies are true and correct copies of resolutions duly adopted at a
meeting or by unanimous consent of the board of directors of each Borrower and
that such resolutions

                                       6
<PAGE>

constitute all the resolutions adopted with respect to such transactions, have
not been amended, modified, or revoked in any respect, and are in full force and
effect as of the date of such certificate.

                  9. Borrowers shall have satisfied all conditions set forth in
the Agreement.

                  10. As of the date hereof, and the date of any subsequent
Advance, no Event of Default nor any event which, with the giving of notice or
lapse of time, would constitute an Event of Default shall have occurred and be
continuing.

            D. OTHER NOTICES, COVENANTS AND MISCELLANEOUS TERMS

                  1. As set forth above, the Bank hereby notifies Borrower that
from the date hereof the Borrowing Base shall be $7,040,000.00 and the Monthly
Commitment Reduction is $100,000.00 beginning July 1, 2004.

                  2. Except as expressly amended and supplemented hereby, the
Agreement shall remain unchanged and in full force and effect, and the same is
hereby ratified and extended.

                  3. The obligations described in the Agreement, as amended
hereby, including but not limited to the indebtedness evidenced by the Note
executed in conjunction with the Agreement, shall continue to be secured by the
Collateral, without interruption or impairment of any kind.

                  4. Borrowers agree to execute such additional mortgages, deeds
of trust and/or amendments to such documents already in place as Bank deems
necessary to adequately secure the loan at any time and from time to time
hereafter.

                  5. The Borrowers hereby agree to pay all reasonable attorney
fees and legal expenses incurred by Bank in preparation, execution and
implementation of this Amendment and any mortgages, guaranty agreements,
subordination agreements, deeds of trust, security agreements, pledge agreements
or any amendments thereto.

                  6. This Amendment shall be construed in accordance with and
governed by the laws of the State of Oklahoma, and shall be binding on and inure
to the benefit of the Borrower and Bank, and their respective successors and
assigns. All obligations of the Borrowers under the Agreement and all rights of
Bank and any other holder of the Note, whether expressed herein or in any Note,
shall be in addition to and not in limitation of those provided by applicable
law. Borrowers irrevocably agree that, subject to Bank's sole election, all
suits or proceedings arising from or related to the Agreement, as amended, or
the Note may be litigated in courts (whether State or Federal) sitting in
Oklahoma City, Oklahoma, and the Borrowers hereby irrevocably waive any
objection to such jurisdiction and venue.

                  7. This Amendment may be executed in as many counterparts as
are deemed necessary or convenient, and it shall not be necessary for the
signature of more than any one party to appear on any single counterpart. Each
counterpart shall be deemed an original, but all shall be construed together as
one and the same instrument. The failure of any party to sign shall not affect
or limit the liability of any party executing any such counterpart.

                                       7
<PAGE>

             E. RELEASE. Borrowers hereby remise, release, and forever discharge
Bank, its successors and assigns, its officers, directors, employees, agents and
attorneys (collectively, "Released Parties") of and from all actions, causes of
action, suits, proceedings, debts, contracts, claims, damages, liability and
demands whatsoever, known or unknown, in law or equity, which Borrowers ever had
or now have, by reason of any matter, cause, or thing whatsoever arising from
the actions or inactions of the Released Parties in any matter relating to the
Agreement, Note, and other Loan Documents (collectively, "Released Matters"),
and Borrowers covenant not to sue any of the Released Parties with respect to
the Released Matters. The release and covenant not to sue set forth in this
provision are intended by the parties to be as broad and comprehensive as
possible.

             F. WAIVER. Bank hereby provides Borrowers with a one time waiver of
the default created by Borrower's failure to comply with Section 7.2 of the
Agreement, Debt Service Coverage Ratio, for the months of January, February and
March of 2004. The Bank specifically does not waive any other Event of Default
set forth in the Agreement and this waiver is granted without prejudice to, and
does not constitute a waiver or release of, the Bank's right at any time in the
future to exercise any and all rights and remedies conferred upon the Bank by
the Agreement or otherwise at law or in equity, without regard to future
defaults.

             G. CONSENT. Bank hereby provides Borrowers with Bank's consent to
Borrowers pay off of the Subordinated Notes.

             So executed effective the 18th day of June, 2004.

                                       BORROWERS:

                                       GMX RESOURCES INC.,
                                       an Oklahoma corporation

                                       /s/ Ken L. Kenworthy, Sr.
                                       ----------------------------------------
                                       By:         Ken L. Kenworthy, Sr.
                                       Title:      Chief Financial Officer

                                       ENDEAVOR PIPELINE INC.,
                                       an Oklahoma corporation

                                       /s/ Ken L. Kenworthy, Sr.
                                       ----------------------------------------
                                       By:         Ken L. Kenworthy, Sr.
                                       Title:      Chief Financial Officer

                                       EXPEDITION NATURAL RESOURCES INC.,
                                       an Oklahoma corporation

                                       /s/ Ken L. Kenworthy, Sr.
                                       ----------------------------------------
                                       By:         Ken L. Kenworthy, Sr.
                                       Title:      Chief Financial Officer

                                       8
<PAGE>

                                       BANK:

                                       LOCAL OKLAHOMA BANK

                                       /s/ John K. Slay, Jr.
                                       ----------------------------------------
                                       By:         John K. Slay, Jr.
                                       Title:      Senior Vice President

                                       9
<PAGE>

                                    EXHIBIT A
                    TO SEVENTH AMENDMENT TO CREDIT AGREEMENT

                   FOURTH AMENDED AND RESTATED PROMISSORY NOTE
                            (REDUCING REVOLVING NOTE)

$15,000,000.00                                           Oklahoma City, Oklahoma
                                                                   June 18, 2004

            FOR VALUE RECEIVED, the undersigned, GMX Resources Inc., an Oklahoma
corporation, Endeavor Pipeline Inc., an Oklahoma corporation, and Expedition
Natural Resources Inc., an Oklahoma corporation (jointly and severally, the
"Borrowers"), hereby jointly and severally promise to pay to the order of LOCAL
OKLAHOMA BANK ("Bank"), on or before September 1, 2006 (the "Maturity Date"),
the principal sum of Fifteen Million and No/100 Dollars ($15,000,000.00), or as
much thereof as is disbursed and remains outstanding hereunder, together with
interest on the unpaid balance from time to time outstanding at the rates
hereinafter provided.

            This Note is executed and delivered by Borrowers pursuant to, and is
entitled to the benefits of, that certain Restated Credit Agreement dated
effective October 31, 2000 between Borrowers and Bank as amended from time to
time and most recently by that certain Seventh Amendment to Restated Credit
Agreement of even date herewith (the "Agreement"). Reference is hereby made to
the Agreement for the terms and provisions regarding the availability of credit,
the collateral security for payment of this Note, the prepayment rights and
obligations of Borrowers, the right of the holder of this Note to accelerate the
maturity hereof on the occurrence of certain Events of Default specified
therein, and for all other pertinent purposes. This Note is the "Note" referred
to in the Agreement. All capitalized terms not otherwise defined herein shall be
defined as set forth in the Agreement.

            Prior to the occurrence of any Event of Default, the unpaid
principal balance from time to time outstanding hereunder shall bear interest at
a fluctuating rate per annum equal to the Base Rate the Applicable Percentage.
Upon notice from Bank to Borrowers of the occurrence of any Event of Default,
the unpaid principal amount from time to time outstanding under this Note shall
bear interest at a fluctuating rate per annum equal to the Default Rate as set
forth below (but not less than the Base Rate in effect on the date of the
occurrence of the Event of Default). The interest rate applicable to this Note
shall change as of the effective date of any change in the Base Rate or the
Applicable Percentage. The interest rate will be calculated on the basis of
actual number of days elapsed, but computed as if each calendar year consisted
of a 360-day year.

            If any Event of Default occurs and is not cured within the
applicable cure period, if any, described in the Agreement, in lieu of the
interest rate provided in this Note, all sums owing by Borrowers to Bank shall
bear interest at the rate equal to five percent (5%) per annum in excess of the
Base Rate, accrued from the date after the applicable grace period to cure the
Event of Default, to the date on which such Event of Default is cured to the
reasonable satisfaction of the Bank.
<PAGE>

            Beginning on the first (1st) day of July, 2004 and continuing on the
first (1st) day of each month thereafter, Borrowers shall, at a minimum, make a
payment of all accrued but unpaid interest on this Note. If the Loan Balance
exceeds the Commitment Amount as a result of a Monthly Commitment Reduction with
respect to the Loan on the first (1st) day of any month, the Borrowers shall
immediately make such principal payments as may be necessary to reduce the Loan
Balance to an amount at or below the Commitment Amount. The entire outstanding
principal balance of this Note and all unpaid interest accrued thereon shall be
due and payable on the Maturity Date.

            All payments, including prepayments, made by Borrowers, shall be
made to Bank at any one of its offices in the State of Oklahoma, on or before
2:00 p.m., local time, on the date due, in lawful money of the United States of
America and in immediately available funds. If any payment is due on a day other
than a business day, the due date thereof shall be extended to the next
succeeding business day.

            Upon the occurrence and during the continuation of any Event of
Default, the holder of this Note may apply payments received on any amount due
hereunder or under the terms of any instrument now or hereafter evidencing or
securing any said indebtedness as said holder may determine.

            It is the intent of Bank and Borrowers to conform strictly to all
applicable usury laws, and any interest on the principal balance hereof in
excess of that allowed by said usury laws shall be subject to reduction to the
maximum amount of interest allowed under said laws. If any interest in excess of
the maximum amount of interest allowable by said usury laws is inadvertently
paid to the holder hereof, at any time, any such excess interest shall be
refunded by the holder to the party or parties entitled to the same after
receiving notice of payment of such excess interest.

            The records of the holder of this Note shall be prima facie evidence
of the amount owing on this Note.

            If, and as often as, this Note is placed in the hands of an attorney
for collection or to defend or enforce any of the holder's rights hereunder,
Borrowers will pay to the holder hereof its reasonable attorneys' fees, together
with all court costs and other expenses paid by such holder.

            Borrowers, endorsers, sureties, guarantors and all other parties who
may become liable for all or any part of this Note severally waive demand,
presentment, notice of dishonor, protest, notice of protest, and notice of
non-payment, and consent to: (a) any and all extensions of time for any term or
terms regarding any payment due under this Note, including partial payments or
renewals before or after maturity; (b) changes in interest rates; (c) any
substitutions or release of collateral; and (d) the addition, substitution or
release of any party liable for payment of this Note.

                                       2
<PAGE>

            No waiver of any payment or other right under this Note or any
related agreement shall operate as a waiver of any other payment or right. All
of the holder's rights hereunder are cumulative and not alternative. This Note
shall inure to the benefit of the successors and assigns of Bank or other holder
and shall be binding upon the successors and assigns of Borrowers.

            This Note has been delivered to and accepted by Bank in the State of
Oklahoma, is to be performed in the State of Oklahoma and shall be deemed a
contract made under the laws of the State of Oklahoma.

            The purposes of this Note is to Amend and Restate the terms of that
certain Third Amended and Restated Promissory Note (Reducing Revolving Note)
dated effective March 1, 2004. This Note does NOT pay off any outstanding
indebtedness. Rather, the purpose hereof is to amend the rate of interest
charged to outstanding balances hereunder and to extend the maturity date.

            IN WITNESS WHEREOF, the undersigned has executed this instrument
effective for all purposes as of June 18, 2004.

                                       BORROWERS:

                                       GMX RESOURCES INC.,
                                       an Oklahoma corporation

                                       /s/ Ken L. Kenworthy, Sr.
                                       ----------------------------------------
                                       By:         Ken L. Kenworthy, Sr.
                                       Title:      Chief Financial Officer

                                       ENDEAVOR PIPELINE INC.,
                                       an Oklahoma corporation

                                       /s/ Ken L. Kenworthy, Sr.
                                       ----------------------------------------
                                       By:         Ken L. Kenworthy, Sr.
                                       Title:      Chief Financial Officer

                                       EXPEDITION NATURAL RESOURCES INC.,
                                       an Oklahoma corporation

                                       /s/ Ken L. Kenworthy, Sr.
                                       ----------------------------------------
                                       By:         Ken L. Kenworthy, Sr.
                                        Title:     Chief Financial Officer

                                       3EXHIBIT 4.1

                                                     Form of Warrant to Purchase
W-_____                                                   Shares of Common Stock

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK  ISSUABLE  UPON  EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND NEITHER  THIS WARRANT NOR SUCH SHARES MAY BE SOLD,  ENCUMBERED  OR OTHERWISE
TRANSFERRED  EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH
ACT OR AN EXEMPTION  FROM SUCH  REGISTRATION  REQUIREMENT,  AND, IF AN EXEMPTION
SHALL BE  APPLICABLE,  THE  HOLDER  SHALL HAVE  DELIVERED  AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

VOID AFTER 5:00 P.M. NEW YORK CITY TIME ON THE LAST DAY OF THE EXERCISE  PERIOD,
AS DEFINED IN THE WARRANT

                          COMMON STOCK PURCHASE WARRANT
                                       OF
                         NATIONAL SCIENTIFIC CORPORATION

     This is to certify that,  FOR VALUE  RECEIVED,  ______,  with an address at
_______________ (and or its assign(s) and/or transferee(s)) (hereinafter, each a
"Holder" and  collectively the "Holders"),  is entitled to purchase,  subject to
the provisions of this Warrant,  from National Scientific  Corporation,  a Texas
corporation  (the  "Company"),  at an initial  exercise  price equal to $.11 per
share,  _____________  (______) fully paid and  non-assessable  shares of Common
Stock,  par value $.01 per share  ("Common  Stock").  The shares of Common Stock
deliverable upon such exercise, and as adjusted from time-to-time as provided in
this Warrant, are hereinafter  sometimes referred to as "Warrant Stock," and the
exercise  price for the  purchase  of a share of Common  Stock  pursuant to this
Warrant in effect at any time and as adjusted from  time-to-time  is hereinafter
sometimes  referred to as the  "Exercise  Price." The aggregate  purchase  price
payable  for the  Warrant  Stock  purchasable  hereunder  is  referred to as the
"Aggregate  Purchase  Price."  The  Aggregate  Purchase  Price is not subject to
adjustment.  In the event of an adjustment to the Exercise Price, as provided in
Section  6 herein,  the  number of shares  of  Warrant  Stock  deliverable  upon
exercise of this Warrant  shall be adjusted by dividing the  Aggregate  Purchase
Price by the Exercise Price in effect immediately after such adjustment.

     This  warrant and  additional  warrants of like tenor,  including  warrants
issued in exchange and/or substitution  thereof  (collectively,  the "Warrants")
were originally  issued in connection with a private  placement of securities of
the Company,  through  Casimir  Capital  L.P.,  as Placement  Agent  ("Placement
Agent"),  pursuant  to the terms of a  Confidential  Term Sheet  dated March 15,
2004, as may be amended from time-to-time,  and as set forth in the Subscription
Agreements between the subscribers and the Company ("Subscription Agreements").

<PAGE>

     1.   DEFINITIONS. The following terms have the meanings set forth below:

          "Current  Market Value" of a share of Warrant Stock as of a particular
date (the "Determination Date") shall mean:

          a.   If the Common Stock is listed on a national  securities  exchange
     or admitted to unlisted  trading  privileges on such exchange or listed for
     trading on the NASDAQ  National  Market,  the current market value shall be
     the last reported sale price of the Common Stock on such exchange or market
     on the last  business  day prior to the date of exercise of this Warrant or
     if no such  sale is made on such day,  the  average  closing  bid and asked
     prices for such day on such exchange or market; or

          b.   If the  Common  Stock is not so listed or  admitted  to  unlisted
     trading  privileges,  but is  traded on the  NASDAQ  SmallCap  Market,  the
     current  market  value  shall be the  average of the  closing bid and asked
     prices  for  such  day on such  market  and if the  Common  Stock is not so
     traded,  the current  market  value shall be the mean of the last  reported
     bid-and asked prices reported by the National Quotation Bureau, Inc. on the
     last business day prior to the date of the exercise of this Warrant; or

          c.   If the  Common  Stock is not so listed or  admitted  to  unlisted
     trading  privileges  and bid and  asked  prices  are not so  reported,  the
     current  market value shall be an amount,  not less than book value thereof
     as at the end of the most recent fiscal year of the Company ending prior to
     the date of the  exercise of the  Warrant,  determined  in such  reasonable
     manner as may be prescribed by the Board of Directors of the Company.

          "Convertible Securities" shall mean evidences of indebtedness,  shares
of stock or other securities,  including but not limited to options, warrants or
purchase, subscription or other rights, which are convertible into, exchangeable
or exercisable  for, or represent the right to receive,  with or without payment
of  additional  consideration  in cash or  property,  shares of Common Stock (or
other Convertible  Securities),  either  immediately or upon the occurrence of a
specified date or a specified event.

          "Exercise  Period" shall mean the period commencing on the date hereof
and ending at 5 p.m., eastern time on the day preceding the fifth anniversary of
the date hereof.

          "Permitted  Issuances"  shall mean (i) Common Stock issuable or issued
to employees,  consultants or directors of the Company  pursuant to a stock plan
or other  compensation  arrangement  approved by the Board of  Directors  of the
Company,  but in no event, more than Eight Million shares in the aggregate,  and
(ii) Common  Stock  issued or issuable  upon  conversion  of the Warrants or any
other securities  exercisable or exchangeable for, or convertible into shares of
Common Stock outstanding as of March 15, 2004.

     2.   EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
at any time or from time to time  commencing  on the date hereof and until April
8, 2009 (the "Exercise Period"), provided, however, that if either such day is a
day on which banking institutions in the State of New York are authorized by law
to close,  then on the next  succeeding  day which shall not be such a day. This
Warrant may be exercised by presentation  and surrender hereof to the Company at
its principal office, or at the office of its stock transfer agent, if any, with
the Purchase Form annexed hereto duly executed and accompanied by payment of the

                                       2
<PAGE>

Exercise Price for the number of shares of Warrant Stock specified in such form.
As soon as practicable  after each such exercise of this Warrant,  but not later
than seven days from the date of such  exercise,  the  Company  shall  issue and
deliver to the Holder a certificate  or  certificates  for the shares of Warrant
Stock issuable upon such  exercise,  registered in the name of the Holder or its
designee.  If this Warrant  should be exercised in part only, the Company shall,
upon  surrender  of this  Warrant  for  cancellation,  execute and deliver a new
Warrant  evidencing  the rights of the Holder thereof to purchase the balance of
the shares of Warrant Stock purchasable thereunder.  Upon receipt by the Company
of this Warrant at its office,  or by the stock transfer agent of the Company at
its office,  in proper form for  exercise,  the Holder shall be deemed to be the
holder of record of the  shares of Common  Stock  issuable  upon such  exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that  certificates  representing such shares of Common Stock shall not
then be physically delivered to the Holder.

     3.   RESERVATION  OF  SHARES/FRACTIONAL  SHARES.  The Company hereby agrees
that at all times there shall be reserved  for  issuance  and/or  delivery  upon
exercise  of this  Warrant  such  number of  shares of Common  Stock as shall be
required for issuance and delivery upon exercise of this Warrant. If the Company
hereafter lists its Common Stock on any national securities exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market,  it shall use its best efforts to
keep the Warrant  Stock  authorized  for listing on such exchange upon notice of
issuance. No fractional shares or script representing fractional shares shall be
issued upon the  exercise of this  Warrant.  With  respect to any  fraction of a
share,  called for upon exercise hereof,  the Company shall pay to the Holder an
amount in cash equal to such fraction  multiplied by the Current Market Value of
a share of Warrant Stock.

     4.   EXCHANGE,  TRANSFER,  ASSIGNMENT OR LOSS OF WARRANT. This Warrant (and
all rights  hereunder) is exchangeable,  without  expense,  at the option of the
Holder,  upon  presentation and surrender hereof to the Company or at the office
of  its  stock  transfer   agent,  if  any,  for  other  Warrants  of  different
denominations  entitling the holder or any assignee and/or transferee thereof to
purchase in the aggregate the same number of shares of Common Stock  purchasable
hereunder. Upon surrender of this Warrant to the Company or at the office of its
stock  transfer  agent,  if any, with the  Assignment  Form annexed  hereto duly
executed  and funds  sufficient  to pay any  transfer  tax,  the Company  shall,
without  charge,  execute and deliver a new Warrant in the name of the  assignee
and/or  transferee named in such instrument of assignment and this Warrant shall
promptly  be  canceled.  This  Warrant  may be  divided or  combined  with other
Warrants which carry the same rights upon  presentation  hereof at the office of
the Company or at the office of its stock transfer agent, if any,  together with
a written notice  specifying the names and  denominations  in which new Warrants
are to be issued and signed by the Holder  hereof.  The term  "Warrant"  as used
herein  includes  any  Warrants  into  which  this  Warrant  may be  divided  or
exchanged.  Upon  receipt by the Company of evidence  satisfactory  to it of the
loss,  theft,  destruction  or mutilation  of this Warrant,  and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender  and  cancellation  of this Warrant,  if  mutilated,  the Company will
execute and deliver a new Warrant of like tenor.  Any such new Warrant  executed
and delivered shall constitute an additional  contractual obligation on the part
of the  Company,  whether or not this  Warrant so lost,  stolen,  destroyed,  or
mutilated shall be at any time enforceable by anyone.

     5.   RIGHTS OF THE HOLDER. The Holder shall not, by virtue of this Warrant,
be  entitled to any rights of a  stockholder  in the  Company,  either at law or

                                       3
<PAGE>

equity,  and the  rights of the Holder are  limited  to those  expressed  in the
Warrant and are not  enforceable  against  the Company  except to the extent set
forth herein.  In addition,  no provision  hereof, in the absence of affirmative
action by Holder to purchase shares of Common Stock,  and no enumeration  herein
of the rights or privileges of Holder  hereof,  shall give rise to any liability
of such Holder for the purchase price of any Common Stock or as a stockholder of
Company,  whether  such  liability  is  asserted by Company or by  creditors  of
Company.

     6.   ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and
the number and kind of  securities  purchasable  upon  exercise of each  Warrant
shall be subject to adjustment as follows and the Company shall give each Holder
notice of any event  described  below which  requires an adjustment  pursuant to
this Section 6 at the time of such event:

          (a)  STOCK DIVIDENDS,  SUBDIVISIONS AND COMBINATIONS.  If, at any time
     or from time to time after the date of this Warrant,  the Company shall (i)
     pay a dividend or make a distribution to any holder of its capital stock in
     shares of Common Stock,  (ii)  subdivide its  outstanding  shares of Common
     Stock into a greater number of shares, (iii) combine its outstanding shares
     of  Common  Stock  into a  smaller  number  of  shares  or  (iv)  issue  by
     reclassification  of its Common  Stock any  shares of capital  stock of the
     Company,  the  Exercise  Price shall be adjusted to be equal to a fraction,
     the  numerator  of which  shall be the  Aggregate  Purchase  Price  and the
     denominator of which shall be the number of shares of Common Stock or other
     capital  stock of the Company that the Holder would have owned  immediately
     following  such action had such Warrant been  exercised  immediately  prior
     thereto.  An adjustment  made pursuant to this  Subsection (a) shall become
     effective  immediately  after the record  date in the case of a dividend or
     distribution,  and shall become effective  immediately  after the effective
     date in the case of a  subdivision,  combination or  reclassification,  and
     shall  result  in a  corresponding  adjustment  to the  number of shares of
     Warrant Stock issuable upon exercise of this Warrant.

          (b)  CERTAIN OTHER  DISTRIBUTIONS AND ADJUSTMENTS.  If, at any time or
     from time to time after the date of this  Warrant,  the Company shall issue
     or  distribute  to any  holder of shares of Common  Stock  evidence  of its
     indebtedness,  any other securities of the Company or any cash, property or
     other assets (excluding a subdivision, combination or reclassification,  or
     dividend or distribution payable in shares of Common Stock,  referred to in
     Subsection  (a), and also excluding  cash  dividends or cash  distributions
     paid out of net  profits  legally  available  therefor  in the full  amount
     thereof  (any  such  non-excluded  event  being  herein  called a  "Special
     Dividend")),  the  Exercise  Price  shall be adjusted  by  multiplying  the
     Exercise  Price then in effect by a fraction,  the numerator of which shall
     be the then  Current  Market  Value in  effect on the  record  date of such
     issuance or  distribution  less the fair  market  value (as  determined  in
     accordance  with  paragraph  B. of this  Section 6 (g)) of the  evidence of
     indebtedness,  cash,  securities  or property,  or other  assets  issued or
     distributed  in such  Special  Dividend  applicable  to one share of Common
     Stock and the  denominator  of which shall be the then Current Market Value
     in  effect  on the  record  date  of  such  issuance  or  distribution.  An
     adjustment  made  pursuant to this  Subsection  (b) shall become  effective
     immediately  after the record date of any such  Special  Dividend and shall
     result in a  corresponding  adjustment  to the  number of shares of Warrant
     Stock issuable upon exercise of this Warrant.

                                       4
<PAGE>

          (c)  ISSUANCE OF  ADDITIONAL  SHARES OF COMMON  STOCK AND  CONVERTIBLE
     SECURITIES.

               (i)  If at any time the Company shall issue or sell any shares of
          Common  Stock  or  Convertible  Securities  (whether  directly  or  by
          assumption in a merger in which Company is the surviving corporation),
          in exchange for consideration in an amount per share of Common Stock (
          determined  by  dividing  (i) the total  amount,  if any,  received or
          receivable by the Company in  consideration of the issuance or sale of
          such securities plus the total  consideration,  if any, payable to the
          Company  upon  exercise,   conversion  or  exchange   thereof  ("Total
          Consideration")  by (ii) the  number  of  additional  shares of Common
          Stock  issued,  sold or  issuable  upon the  exercise,  conversion  or
          exchange  of such  securities)  that is less than the  Exercise  Price
          (excluding Permitted Issuances),  then (A) the Exercise Price shall be
          adjusted so that it shall equal the price  determined  by  multiplying
          such Exercise Price by a fraction, the numerator of which shall be the
          number of shares of Common Stock  outstanding  on the date of issuance
          or sale  (calculated  on a fully  diluted  basis as if all  securities
          exercisable, convertible or exchangeable for Common Stock have been so
          exercised, converted or exchanged) plus the number of shares of Common
          Stock which the aggregate offering price would purchase based upon the
          Exercise  Price and the  denominator  of which  shall be the number of
          shares of Common  Stock  outstanding  on the date of  issuance or sale
          (calculated on a fully diluted basis as if all securities exercisable,
          convertible or  exchangeable  for Common Stock have been so exercised,
          converted or exchanged)  plus the maximum number of additional  shares
          of Common  Stock  issued,  sold or  issuable in  connection  with such
          offering or transaction,  and (B) the number of shares of Common Stock
          for which this Warrant is  exercisable  shall be adjusted to equal the
          product   obtained  by  multiplying   the  Exercise  Price  in  effect
          immediately  prior to such  issue or sale by the  number  of shares of
          Common Stock for which this Warrant is exercisable  immediately  prior
          to such issue or sale and dividing the product thereof by the Exercise
          Price resulting from the adjustment made pursuant to clause (A) above.

               (ii) The  provisions  of paragraph (i) of this Section 6(c) shall
          not apply to any  issuance  of  shares  of  Common  Stock for which an
          adjustment  is provided  under  Section 6(a) or 6(b). No adjustment of
          the number of shares of Common Stock for which this  Warrant  shall be
          exercisable  shall be made under  paragraph  (i) of this  Section 6(c)
          upon the  issuance  of any  shares of Common  Stock  which are  issued
          pursuant to the  exercise of any  warrants  or other  subscription  or
          purchase  rights or pursuant  to the  exercise  of any  conversion  or
          exchange rights in any Convertible Securities,  if any such adjustment
          shall  previously have been made upon the issuance of such warrants or
          other rights or upon the issuance of such Convertible Securities.

          (d)  No adjustment in the Exercise Price shall be required unless such
     adjustment  would  require an  increase  or  decrease  of at least one cent
     ($0.01) in such price;  provided,  however,  that any adjustments  which by
     reason of this  Section  6(d) are not  required to be made shall be carried
     forward  and taken into  account in any  subsequent  adjustment;  provided,
     further,  however that adjustments shall be required and made in accordance
     with the  provisions  of this  Section 6 not later than such time as may be
     required in order to preserve the tax-free  nature of a distribution to the
     Holder of this Warrant or Common Stock  issuable upon the exercise  hereof.

                                       5
<PAGE>

     All calculations  under this Section 6(d) shall be made to the nearest cent
     or to the nearest one-hundredth of a share, as the case may be.

          (e)  The Company may retain a firm of independent  public  accountants
     of  recognized  standing  selected  by the  Board  (who may be the  regular
     accountants  employed by the Company) to make any  computation  required by
     this Section 6.

          (f)  In the event that at any time, as a result of an adjustment  made
     pursuant to Section  6(a),  (b) or (c) of this  Warrant,  the Holder of any
     Warrant  thereafter  shall  become  entitled  to receive  any shares of the
     Company,  other  than  Common  Stock,  thereafter  the number of such other
     shares so  receivable  upon  exercise  of any  Warrant  shall be subject to
     adjustment from time to time in a manner and on terms as nearly  equivalent
     as practicable to the provisions with respect to the Common Stock contained
     in Sections 6(a) through (h), inclusive, of this Warrant.

          (g)  For purposes of any computation respecting consideration received
     pursuant to this Section 6, the following shall apply:

               A.   in the case of the  issuance  of shares of Common  Stock for
          cash,  the  consideration  shall be the amount of such cash,  provided
          that in no case  shall  any  deduction  be made  for any  commissions,
          discounts  or  other   expenses   incurred  by  the  Company  for  any
          underwriting of the issue or otherwise in connection therewith;

               B.   in the case of the  issuance of shares of Common Stock for a
          consideration  in whole or in part other than cash, the  consideration
          other than cash shall be deemed to be the fair market value thereof as
          determined  in good  faith by the Board of  Directors  of the  Company
          (irrespective   of   the   accounting   treatment   thereof),    whose
          determination shall be conclusive; and

               C.   in the  case  of the  issuance  of  securities  convertible,
          exchangeable or exercisable for shares of Common Stock,  the aggregate
          consideration   received   therefor   shall  be   deemed   to  be  the
          consideration  received  by the  Company  for  the  issuance  of  such
          securities plus the additional  minimum  consideration,  if any, to be
          received by the Company upon the  conversion or exchange  thereof (the
          consideration  in each  case to be  determined  in the same  manner as
          provided in clauses (A) and (B) of this Subsection).

          (h)  Notwithstanding  the foregoing,  no adjustment  shall be effected
     due to, or as a result of, any Permitted Issuances.

     7.   REGISTRATION  RIGHTS.  The  Warrant  Stock  shall be  entitled  to the
registration rights described in Article V of the Subscription Agreements.

     8.   OFFICER'S  CERTIFICATE.   Whenever  the  Exercise  Price(s)  shall  be
adjusted as required by the provisions of Section 6 of this Warrant, the Company
shall  forthwith file in the custody of its Secretary or an Assistant  Secretary
at its principal  office and with its stock transfer agent, if any, an officer's
certificate  showing the adjusted  Exercise  Price(s) and the adjusted number of
shares of Common Stock  issuable upon  exercise of each  Warrant,  determined as
herein  provided,  setting forth in reasonable  detail the facts  requiring such
adjustment,  including a statement of the number of additional  shares of Common

                                       6
<PAGE>

Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such  adjustment.  Each such  officer's  certificate
shall be forwarded by certified mail to Holder as provided in Section 13

     9.   NOTICES  TO  WARRANT  HOLDERS.  So  long  as  this  Warrant  shall  be
outstanding,  (1) if the Company shall pay any dividend or make any distribution
upon Common  Stock,  or (2) if the Company  shall offer to the holders of Common
Stock for  subscription  or purchase by them any share of any class or any other
rights, or (3) if any capital reorganization of the Company, reclassification of
the capital stock of the Company, consolidation or merger of the Company with or
into another entity,  tender offer  transaction for the Company's  Common Stock,
sale, lease or transfer of all or  substantially  all of the property and assets
of the Company, or voluntary or involuntary dissolution,  liquidation or winding
up of the  Company  shall  be  effected,  or (4) if  the  Company  shall  file a
registration statement under the Securities Act of 1933, as amended (the "Act"),
on any form other  than on Form S-4 or S-8 or any  successor  form,  then in any
such case, the Company shall cause to be mailed by certified mail to the Holder,
at least  fifteen days prior to the date  specified in clauses (1),  (2), (3) or
(4),  as the  case  may be,  of  this  Section  9 a  notice  containing  a brief
description of the proposed action and stating the date on which (i) a record is
to be taken for the purpose of such dividend,  distribution  or rights,  or (ii)
such  reclassification,  reorganization,  consolidation,  merger,  tender  offer
transaction,  conveyance,  lease,  dissolution,  liquidation or winding up is to
take  place and the  date,  if any is to be fixed,  as of which the  holders  of
Common  Stock  or  other   securities  shall  receive  cash  or  other  property
deliverable upon such reclassification,  reorganization,  consolidation, merger,
conveyance,  dissolution,  liquidation or winding up, or (iii) such registration
statement is to be filed with the Securities and Exchange Commission.

     10.  RECLASSIFICATION,   REORGANIZATION   OR   MERGER.   In   case  of  any
reclassification,  capital  reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another  corporation (other than a merger with a subsidiary
in which merger the Company is the continuing or surviving corporation and which
does not result in any reclassification,  capital reorganization or other change
of  outstanding  shares of Common Stock of the class  issuable  upon exercise of
this  Warrant)  or  in  case  of  any  sale,  lease  or  conveyance  of  all  or
substantially all of the assets of the Company,  or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in  connection  with a merger  of a third  corporation  into the  Company),  the
Company shall,  as a condition  precedent to such  transaction,  cause effective
provisions to be made so that (i) the Holder shall have the right  thereafter by
exercising this Warrant,  to purchase the kind and amount of shares of stock and
other  securities and property  receivable upon such  reclassification,  capital
reorganization  and other change,  consolidation,  merger,  sale,  conveyance or
statutory  exchange  by a holder of the number of shares of Common  Stock  which
could have been  purchased  upon exercise of this Warrant  immediately  prior to
such  reclassification,  change,  consolidation,  merger, sale,  conveyance,  or
statutory  exchange and (ii) the successor or acquiring  entity shall  expressly
assume  the  due and  punctual  observance  and  performance  of each  covenant,
agreement, obligation and condition of this Warrant to be performed and observed
by Company and all  obligations  and  liabilities  hereunder  (including but not
limited to the  provisions  of Section 6 regarding the increase in the number of
shares of Warrant Stock  potentially  issuable  hereunder).  Any such  provision
shall include  provision for adjustments  which shall be as nearly equivalent as
possible  to  the  adjustments  provided  for in  this  Warrant.  The  foregoing

                                       7
<PAGE>

provisions   of  this   Section   10  shall   similarly   apply  to   successive
reclassifications, capital reorganizations and changes of shares of Common Stock
and to successive  consolidations,  mergers, sales or conveyances.  In the event
that in connection  with any such capital  reorganization  or  reclassification,
consolidation, merger, sale, conveyance or statutory exchange, additional shares
of Common  Stock  shall be  issued  in  exchange,  conversion,  substitution  or
payment,  in whole in part,  for a security  of the  Company  other than  Common
Stock, any such issue shall be treated as an issuance of Common Stock covered by
the  provisions of Section 6 of this Warrant.  Notice of any such event shall be
mailed by certified mail to the Holders of the Warrants no less than thirty (30)
days prior to such event.  A sale of all or  substantially  all of the Company's
assets for a consideration  consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.

     11.  TRANSFER TO COMPLY WITH THE  SECURITIES  ACT OF 1933.  This Warrant or
the Warrant Stock or any other security issued or issuable upon exercise of this
Warrant may not be sold or otherwise disposed of except as follows:

          (i)  to a person who, in the  opinion of counsel for the  Company,  or
     counsel for the Holder who is reasonably  acceptable  to the Company,  is a
     person to whom this  Warrant or Warrant  Stock may  legally be  transferred
     without registration and without the delivery of a current prospectus under
     the Act with respect  thereto and then only against receipt of an agreement
     of such  person to  comply  with the  provisions  of this  Section  11 with
     respect  to any  resale  or  other  disposition  of such  securities  which
     agreement  shall be  satisfactory  in form and substance to the Company and
     its counsel; or

          (ii) to any person upon  delivery  of a  prospectus  then  meeting the
     requirements  of the Act  relating  to  such  securities  and the  offering
     thereof for such sale or disposition.

     12.  GOVERNING LAW; JURISDICTION.  The corporate laws of the State of Texas
shall govern all issues  concerning  the relative  rights of the Company and its
stockholders. All issues concerning the construction,  validity, enforcement and
interpretation  of this Warrant shall be governed by and construed in accordance
with the  internal  laws of the State of New York without  giving  effect to the
principles of conflicts of law thereof.  The parties  hereto agree that venue in
any and all  actions  and  proceedings  related  to the  subject  matter of this
Warrant shall be in the state and federal  courts in and for New York, New York,
which courts shall have exclusive jurisdiction for such purpose, and the parties
hereto  irrevocably  submit to the  exclusive  jurisdiction  of such  courts and
irrevocably waive the defense of an inconvenient forum to the maintenance of any
such  action  or  proceeding.  Service  of  process  may be made  in any  manner
recognized  by such  courts.  This  Warrant  and any term hereof may be changed,
waived,  discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the change, waiver,  discharge or termination
is sought.

     13.  NOTICES.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  VIA  facsimile  at the  facsimile
telephone  number  specified in this Section  prior to 6:30 p.m.  (New York City
time) on a Business Day,  (ii) the Business Day after the date of  transmission,
if such notice or  communication  is delivered  VIA  facsimile at the  facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City

                                       8
<PAGE>

time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the  Business Day  following  the date of mailing,  if sent by  nationally
recognized  overnight courier service,  or (iv) upon actual receipt by the party
to whom such notice is required  to be given.  The address for such  notices and
communications shall be as follows:

          If to the Company:  National Scientific Corporation
                              Scottsdale Technology Center
                              14455 North Hayden Road, Suite 202
                              Scottsdale, AZ  85260-6497

          If to the Holder:   To the Address Set Forth on the cover page hereof.

     14.  MODIFICATION   OF  WARRANT.   This  Warrant  shall  not  be  modified,
supplemented or altered in any respect,  nor any provision  waived,  except with
the consent in writing of the Holders  representing  not less than fifty percent
(50%) of the Warrants then outstanding.

     15.  SOLICITATION  FEE.  The  Company  has agreed to pay a fee of 2% of the
Exercise Price to the Placement  Agent upon exercise of the Warrant on or before
April 8, 2005.

     16.  PAYMENT OF TAXES.  The Company  will pay all  documentary  stamp taxes
attributable  to the issuance of shares of Common Stock  underlying this Warrant
upon exercise of this Warrant; provided,  however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the  registration of any  certificate  for shares of Common Stock  underlying
this Warrant in a name other that of the Holder.  The Holder is responsible  for
all other tax  liability  that may arise as a result of holding or  transferring
this Warrant or receiving  shares of Common Stock  underlying  this Warrant upon
exercise hereof.

     IN WITNESS  WHEREOF,  this  Warrant  has been duly  executed as of April 8,
2004.

                                        NATIONAL SCIENTIFIC CORPORATION

                                        By:
                                            ----------------------------------
                                            Michael A. Grollman
                                            Chairman and Chief Executive Officer

ATTEST:

-------------------------------------
Secretary

[CORPORATE SEAL]

                                       9
<PAGE>

                                  SUBSCRIPTION

     The undersigned,  ____________________________,  pursuant to the provisions
of  the  foregoing  Warrant,   hereby  agrees  to  subscribe  for  and  purchase
___________________  shares of the Common Stock,  par value $_____ per share, of
______________________  covered by said Warrant,  and makes payment  therefor in
full at the price per share provided by said Warrant.

Dated: ________________________          Signature:  ___________________________

                                       10
<PAGE>

                                   ASSIGNMENT

     FOR VALUE RECEIVED  ___________________ hereby sells, assigns and transfers
unto  ________________________  the foregoing  Warrant and all rights  evidenced
thereby,  and  does  irrevocably  constitute  and  appoint  ___________________,
attorney, to transfer said Warrant on the books of _________________________.

Dated: ________________________          Signature:  ___________________________

                                         Address:    ___________________________

                               PARTIAL ASSIGNMENT

     FOR VALUE RECEIVED  ___________________ hereby sells, assigns and transfers
unto  ________________________  the  right to  purchase  ____________  shares of
Common Stock, par value $_____ per share of _________________________ covered by
the foregoing  Warrant,  and a proportionate part of said Warrant and the rights
evidenced    thereby,    and   does    irrevocably    constitute   and   appoint
___________________,  attorney,  to  transfer  such part of said  Warrant on the
books of _________________________.

Dated: ________________________          Signature:  ___________________________

                                         Address:    ___________________________

                                       11

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