Document:

www.EXFILE.com  888-775-4789   GMX RESOURCES - FORM 8-K

    EXHIBIT
      10.1

    
 

    Subscription
      Terms

    

    GMX
      Resources Inc.

    One
      Benham Place

    9400
      North Broadway, Suite 600

    Oklahoma
      City, OK 73114

    

    

    Ladies
      and Gentlemen:

     

    The
      undersigned (the “Investor”)
      hereby
      confirms and agrees with you as follows: 

     

    1.  The
      subscription terms set forth herein (the “Subscription”)
      are
      made as of the date set forth below between GMX Resources Inc., an Oklahoma
      corporation (the “Company”),
      and
      the Investor.

     

    2.  As
      of the
      Closing (as defined below) and subject to the terms and conditions hereof,
      the
      Company and the Investor agree that the Investor will purchase from the Company
      and the Company will issue and sell to the Investor such number of shares (the
      “Shares”)
      of
      common stock, par value $0.001 per share, of the Company (the “Common
      Stock”)
      as is
      set forth on the signature page hereto (the “Signature
      Page”)
      for a
      purchase price of $_______ per Share. The Investor acknowledges that the
      offering is not a firm commitment underwriting and that there is no minimum
      offering amount. 

     

    3.  The
      completion of the purchase and sale of the Shares shall occur at a closing
      (the
“Closing”)
      that,
      in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act
      of
      1934, as amended, is expected to occur on or about February 7, 2007, but in
      no
      event later than February 14, 2007. At the Closing, (a) the Company shall cause
      its transfer agent to release to the Investor the number of Shares being
      purchased by the Investor and (b) the aggregate purchase price for the Shares
      being purchased by the Investor will be delivered by or on behalf of the
      Investor to the Company. The Investor shall settle the Shares via
      Deposit/Withdrawal At Custodian (“DWAC”)
      and
      the provisions set forth in Exhibit
      A
      hereto
      shall be incorporated herein by reference as if set forth fully
      herein.

     

    4.  The
      offering and sale of the Shares are being made pursuant to the Registration
      Statement and the Prospectus (as such terms are defined below). The Investor
      acknowledges that the Company intends to enter into subscriptions in
      substantially the same form as this Subscription with certain other investors
      and intends to offer and sell (the “Offering”)
      up to
      2,000,000 shares of Common Stock pursuant to the Registration Statement and
      Prospectus. The Investor acknowledges and agrees that there is no minimum
      offering amount.

     

    5.  The
      Company has filed with the Securities and Exchange Commission (the “Commission”)
      a
      prospectus (the “Base
      Prospectus”)
      and
      will promptly file a final prospectus supplement (collectively, the
“Prospectus”)
      with
      respect to the registration statement (File No. 333-134911) reflecting the
      Offering, including all amendments thereto, the exhibits and any schedules
      thereto, the documents otherwise deemed to be a part thereof or included therein
      by the rules and regulations of the Commission (the “Rules
      and Regulations”)
      and
      any registration statement relating to the Offering and filed pursuant to Rule
      462(b) under the Rules and Regulations (collectively, the “Registration
      Statement”),
      in
      conformity with the Securities Act of 1933, as amended (the “Securities
      Act”),
      including Rule 424(b) thereunder. The Investor hereby confirms that it has
      had
      full access to the Base Prospectus and the Company’s periodic reports and other
      information incorporated by reference therein, was able to download and print
      such materials and has carefully read and reviewed such material.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.  The
      Company has entered into a Placement Agency Agreement (the “Placement
      Agreement”),
      dated
      February 1, 2007 with A.G. Edwards & Sons, Inc. (the “Placement
      Agent”),
      which
      will act as the Company’s placement agent with respect to the Offering and
      receive a fee in connection with the sale of the Shares. The Placement Agreement
      contains certain representations and warranties of the Company. The Company
      acknowledges and agrees that the Investor may rely on the representations and
      warranties made by it to the Placement Agent in Section 3 of the Placement
      Agreement to the same extent as if such representations and warranties had
      been
      incorporated in full herein and made directly to the Investor. Capitalized
      terms
      used, but not otherwise defined, herein shall have the meanings ascribed to
      such
      terms in the Placement Agreement.

     

    7.  The
      obligations of the Company and the Investor to complete the transactions
      contemplated by this Subscription shall be subject to the
      following:

     

    a.  The
      Company’s obligation to issue and sell the Shares to the Investor shall be
      subject to: (i) the receipt by the Company of the purchase price for the Shares
      being purchased hereunder as set forth on the Signature Page in accordance
      with
      Section 3 above and (ii) the accuracy of the representations and warranties
      made
      by the Investor and the fulfillment of those undertakings of the Investor to
      be
      fulfilled prior to the Closing Date.

    

    b.  The
      Investor’s obligation to purchase the Shares will be subject to the condition
      that the Placement Agent shall not have: (i) terminated the Placement Agreement
      pursuant to the terms thereof or (ii) determined that the conditions to closing
      in the Placement Agreement have not been satisfied. 

    

    8.  The
      Company hereby makes the following representations, warranties and covenants
      to
      the Investor:

     

    a.  The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by this Subscription and otherwise
      to
      carry out its obligations hereunder. The execution and delivery of this
      Subscription by the Company and the consummation by it of the transactions
      contemplated hereunder have been duly authorized by all necessary action on
      the
      part of the Company. This Subscription has been duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms, except as may be limited by any bankruptcy,
      insolvency, reorganization, moratorium, fraudulent conveyance or other similar
      laws affecting the enforcement of creditors’ rights generally or by general
      principles of equity.

     

    b.  The
      Company shall (i) before the opening of trading on The Nasdaq Global Market
      on
      the next trading day after the date hereof, issue a press release disclosing
      all
      material aspects of the transactions contemplated hereby and (ii) make such
      other filings and notices in the manner and time required by the Commission
      with
      respect to the transactions contemplated hereby. Upon the issuance of one or
      more press releases described in the immediately preceding sentence, the
      Investor will not be in receipt of any material, non-public information provided
      to it by the Company, its officers or directors. The Company shall not identify
      the Investor by name in any press release or public filing, or otherwise
      publicly disclose the Investor’s name, without the Investor’s prior written
      consent, unless required by law or the rules and regulations of any
      self-regulatory organization which the Company or its securities are
      subject.

     

    9.  The
      Investor hereby makes the following representations, warranties and covenants
      to
      the Company:

     

    
      
        2

      

      
        
        

        
          

        

      

      
        
        

      

    

    a.  The
      Investor represents that (i) it has had full access to the Base Prospectus
      and
      the Company’s periodic reports and other information incorporated by reference
      therein, prior to or in connection with its receipt of this Subscription, (ii)
      it is knowledgeable, sophisticated and experienced in making, and is qualified
      to make, decisions with respect to investments in securities representing an
      investment decision like that involved in the purchase of the Shares, and (iii)
      it does not have any agreement or understanding, directly or indirectly, with
      any person or entity to distribute any of the Shares.

     

    b.  The
      Investor has the requisite power and authority to enter into this Subscription
      and to consummate the transactions contemplated hereby. The execution and
      delivery of this Subscription by the Investor and the consummation by it of
      the
      transactions contemplated hereunder have been duly authorized by all necessary
      action on the part of the Investor. This Subscription has been executed by
      the
      Investor and, when delivered in accordance with the terms hereof, will
      constitute a valid and binding obligation of the Investor enforceable against
      the Investor in accordance with its terms, except as enforceability may be
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      similar laws affecting creditors’ and contracting parties’ rights generally and
      except as enforceability may be subject to general principles of equity
      (regardless of whether such enforceability is considered in a proceeding in
      equity or at law).

     

    c.  The
      Investor understands that nothing in this Subscription or any other materials
      presented to the Investor in connection with the purchase and sale of the Shares
      constitutes legal, tax or investment advice. The Investor has consulted such
      legal, tax and investment advisors as it, in its sole discretion, has deemed
      necessary or appropriate in connection with its purchase of Shares.

     

    d.  Neither
      the Investor nor any Person acting on behalf of, or pursuant to any
      understanding with or based upon any information received from, the Investor
      has, directly or indirectly, engaged in any transactions in the securities
      of
      the Company (including, without limitation, any Short Sales involving the
      Company’s securities) since the earlier to occur of (i) the time that the
      Investor was first contacted by the Placement Agent or the Company with respect
      to the transactions contemplated hereby and (ii) the date that is the third
      (3rd) trading day prior to the date of this Subscription. “Short Sales” include,
      without limitation, all “short sales” as defined in Rule 200 promulgated under
      Regulation SHO under the Securities Exchange Act of 1934, as amended (the
“Exchange
      Act”),
      whether or not against the box, and all types of direct and indirect stock
      pledges, forward sale contracts, options, puts, calls, short sales, swaps,
“put
      equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and
      similar arrangements (including on a total return basis), and sales and other
      transactions through non-U.S. broker dealers or foreign regulated brokers.
      The
      Investor covenants that neither it, nor any Person acting on behalf of, or
      pursuant to any understanding with or based upon any information received from,
      the Investor will engage in any transactions in the securities of the Company
      (including Short Sales) prior to the time that the transactions contemplated
      by
      this Subscription are publicly disclosed. 

     

    e.  The
      Investor represents that, except as set forth below, (i) it has had no position,
      office or other material relationship within the past three years with the
      Company or persons known to it to be affiliates of the Company, (ii) it is
      not
      a, and it has no direct or indirect affiliation or association with any, NASD
      member or an Associated Person (as such term is defined under the NASD
      Membership and Registration Rules Section 1011) as of the date hereof, and
      (iii)
      neither it nor any group of investors (as identified in a public filing made
      with the Commission) of which it is a member, acquired, or obtained the right
      to
      acquire, 20% or more of the Common Stock (or securities convertible or
      exercisable for Common Stock) or the voting power of the Company on a
      post-transaction basis. Exceptions:

     

     

      
        

      

    

    (If
      no
      exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

     

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.  Notwithstanding
      any investigation made by any party to this Subscription, all covenants,
      agreements, representations and warranties made by the Company and the Investor
      herein will survive the execution of this Subscription, the delivery to the
      Investor of the Shares being purchased and the payment therefor.

     

    11.  This
      Subscription may not be modified or amended except pursuant to an instrument
      in
      writing signed by the Company and the Investor.

     

    12.   In
      case
      any provision contained in this Subscription should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein will not in any way be affected or
      impaired thereby.

     

    13.  This
      Subscription will 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 that would require the application of the laws of any other
      jurisdiction.

     

    14.  This
      Subscription may be executed in one or more counterparts, each of which will
      constitute an original, but all of which, when taken together, will constitute
      but one instrument, and will become effective when one or more counterparts
      have
      been signed by each party hereto and delivered to the other parties.

     

    15.  The
      Investor acknowledges and agrees that such Investor’s receipt of the Company’s
      counterpart to this Subscription shall constitute written confirmation of the
      Company’s sale of Shares to such Investor.

     

    16.  In
      the
      event that the Placement Agreement is terminated by the Placement Agent pursuant
      to the terms thereof, this Subscription shall terminate without any further
      action on the part of the parties hereto.

     

    
      
        4

      

      
        
        

        
          

        

      

      
        
        

      

    

    INVESTOR
      SIGNATURE PAGE

     

     

    Number
      of
      Shares: ___________________________

     

    Purchase
      Price Per Share: $ ____________________

     

    Aggregate
      Purchase Price: $ ___________________

    

     

    Please
      confirm that the foregoing correctly sets forth the agreement between us by
      signing in the space provided below for that purpose.

     

    

    Dated
      as
      of: February 1, 2007

     

    

    ____________________

    
      	
              INVESTOR

               

               

               

              By:
                _________________________

               

              Print
                Name: ___________________

               

              Title:
                ________________________

               

              Name
                that Shares are to be registered:
                ____________________________

               

              Mailing
                Address:  ____________________________

               

                                              
                _____________________________

               

                                              
                _____________________________

               

              Taxpayer
                Identification Number: _________________________

               

              Manner
                of Settlement of the Shares: DWAC (see Exhibit
                A
                for explanation and instructions)

               

            

    

     

    
      
        5

      

      
        
        

        
          

        

      

      
        
        

      

    

    Agreed
      and Accepted this 1st day of February 2007:

    

     

    GMX
      RESOURCES INC.

     

    

    By:
      _______________________

    Title:
      ______________________

     

    

     

    Sales
      of the Shares purchased hereunder were made pursuant to a registration statement
      or in a transaction in which a final prospectus would have been required to
      have
      been delivered in the absence of Rule 172 promulgated under the Securities
      Act.

     

    

     

    
      
        
          

        

        6

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

     

    TO
      BE COMPLETED BY INVESTOR

     

    SETTLING
      VIA DWAC

     

    Delivery
      by electronic book-entry at The Depository Trust Company (“DTC”),
      registered in the Investor’s name and address as set forth on the Signature Page
      of the Subscription to which this Exhibit
      A
      is
      attached, and released by UMB Bank, n.a., the Company’s transfer agent (the
“Transfer
      Agent”),
      to
      the Investor at the Closing.

     

    
      	
              Name
                of DTC Participant (broker-dealer at which the account or accounts
                to be
                credited with the Shares are maintained)

            	 
	
              DTC
                Participant Number

            	 
	
              Name
                of Account at DTC Participant being credited with the
                Shares

            	 
	
              Account
                Number at DTC Participant being credited with the Shares

            	 

    

    

    
      	 	 	
              NO
                LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THE
                SUBSCRIPTION
                TO WHICH THIS EXHIBIT
                A
                IS ATTACHED BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
                

            

    

     

    
      	 	 	
              (I)

            	
              DIRECT
                THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED
                WITH THE
                SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN
                (“DWAC”)
                INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS
                WITH THE
                SHARES, AND

            

    

     

    
      	 	
              (II)

            	
              REMIT
                BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE
                PRICE
                FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING
                ACCOUNT:

            

    

    

    PNC
      Bank
      New Jersey

    ABA#: 
      031207607

    Account
      Name: Lowenstein Sandler PC Special Trust Account I

    Account
      #: 8025720174

    

    Such
      funds shall be held in a non-interest bearing escrow pursuant to an escrow
      agreement entered into between Lowenstein Sandler PC (the “Escrow
      Agent”),
      the
      Placement Agent and the Company (the “Escrow
      Agreement”)
      until
      the Closing and delivered by the Escrow Agent on behalf of the Investor to
      the
      Company upon the satisfaction, in the sole judgment of the Placement Agent,
      of
      the conditions set forth in Section 7(b) of the Subscription to which this
      Exhibit
      A
      is
      attached. The
      Company and the Investor agree to indemnify and hold the Escrow Agent harmless
      from and against any and all losses, costs, damages, expenses and claims
      (including, without limitation, court costs and reasonable attorneys
      fees)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     (“Losses”)
      with
      respect to the funds held in escrow pursuant hereto or arising under the Escrow
      Agreement, unless it is finally determined that such Losses resulted directly
      from the willful misconduct or gross negligence of the Escrow Agent. Anything
      in
      this paragraph to the contrary notwithstanding, in no event shall the Escrow
      Agent be liable for any special, indirect or consequential loss or damage of
      any
      kind whatsoever (including but not limited to lost profits), even if the Escrow
      Agent has been advised of the likelihood of such loss or damage and regardless
      of the form of action.

    

     

     

     

     

     

     

    
 

    
      
        2Stock Purchase Agreement

     

    THIS
      WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGIS-TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
      SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF DECEMBER
      27,
      2006, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED
      OR
      ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA-TION STATEMENT FOR SUCH
      SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
      SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
      REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      OR REGULATION S UNDER SUCH ACT.

     

    Right
      to
      Purchase 582,609 Shares of Common Stock, par value $.001 per share

     

    STOCK
      PURCHASE WARRANT

     

    THIS
      CERTIFIES THAT,
      for
      value received, Lionheart Associates, LLC/ DBA Fairhills Capital or
      its
      registered assigns, is entitled to purchase from Camelot
      Entertainment
      Group Inc.,
      a
      Delaware Corporation (the “Company”), at any time or from time to time during
      the period specified in Paragraph 2 hereof, 582,609 fully paid and
      nonassessable shares of the Company’s Common Stock, par value $.001 per share
      (the “Common Stock”), at an exercise price per share equal to $.15 (the
“Exercise Price”). The term “Warrant Shares,” as used herein, refers to the
      shares of Common Stock purchasable hereunder. The Warrant Shares and the
      Exercise Price are subject to adjustment as provided in Paragraph 4 hereof.
      

     

    This
      Warrant is subject to the following terms, provisions, and conditions:

     

    1.  Manner
      of Exercise; Issuance of Certificates; Payment for Shares.

     

    Subject
      to the provisions hereof, this Warrant may be exercised by the holder hereof,
      in
      whole or in part, by the surrender of this Warrant, together with a completed
      exercise agreement in the form attached hereto (the “Exercise Agreement”), to
      the Company during normal business hours on any business day at the Company’s
      principal executive offices (or such other office or agency of the Company
      as it
      may designate by notice to the holder hereof), and upon (i) payment to the
      Company in cash, by certified or offi-cial bank check or by wire transfer for
      the account of the Company of the Exercise Price for the Warrant Shares
      specified in the Exercise Agreement or (ii) delivery to the Company of a written
      notice of an election to effect a “Cashless Exercise” (as defined in Section
      10(c) below) for the Warrant Shares specified in the Exercise Agreement. The
      Warrant Shares so purchased shall be deemed to be issued to the holder hereof
      or
      such holder’s designee, as the record owner of such shares, as of the close of
      business on the date on which this Warrant shall have been surrendered, the
      completed Exercise Agreement shall have been deliv-ered, and payment shall
      have
      been made for such shares as set forth above. Certifi-cates for the Warrant
      Shares so purchased, representing the aggregate number of shares specified
      in
      the Exercise Agreement, shall be delivered to the holder hereof within a
      reasonable time, not exceeding five (5) business days, after this Warrant shall
      have been so exercised. The certificates so delivered shall be in such
      denominations as may be requested by the holder hereof and shall be registered
      in the name of such holder or such other name as shall be designated by such
      holder. If this Warrant shall have been exercised only in part, then, unless
      this Warrant has expired, the Company shall, at its expense, at the time of
      delivery of such certificates, deliver to the holder a new Warrant representing
      the number of shares with respect to which this Warrant shall not then have
      been
      exercised. In addition to all other available remedies at law or in equity,
      if
      the Company fails to deliver certificates for the Warrant Shares within five
      (5)
      business days after this Warrant is exercised, then the Company shall pay to
      the
      holder in cash a penalty (the “Penalty”) equal to 2% of the number of Warrant
      Shares that the holder is entitled to multiplied by the Market Price (as
      hereinafter defined) for each day that the Company fails to deliver certificates
      for the Warrant Shares. For example, if the holder is entitled to 100,000
      Warrant Shares and the Market Price is $2.00, then the Company shall pay to
      the
      holder $4,000 for each day that the Company fails to deliver certificates for
      the Warrant Shares. The Penalty shall be paid to the holder by the fifth day
      of
      the month following the month in which it has accrued.

     

    
      
         

      

      
        -
          1 -

        
          

        

      

      
         

      

    

     

    Notwithstanding
      anything in this Warrant to the contrary, in no event shall the holder of this
      Warrant be entitled to exercise a number of Warrants (or portions thereof)
      in
      excess of the number of Warrants (or portions thereof) upon exercise of which
      the sum of (i) the number of shares of Common Stock beneficially owned by the
      holder and its affiliates (other than shares of Common Stock which may be deemed
      beneficially owned through the ownership of the unexercised Warrants and the
      unexercised or unconverted portion of any other securities of the Company
      (including the Notes (as defined in the Securities Purchase Agreement)) subject
      to a limitation on conversion or exercise analogous to the limitation contained
      herein) and (ii) the number of shares of Common Stock issuable upon exercise
      of
      the Warrants (or portions thereof) with respect to which the determination
      described herein is being made, would result in beneficial ownership by the
      holder and its affiliates of more than 4.9% of the outstanding shares of Common
      Stock. For purposes of the immediately preceding sentence, beneficial ownership
      shall be determined in accordance with Section 13(d) of the Securities Exchange
      Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise
      provided in clause (i) of the preceding sentence. Notwithstanding anything
      to
      the contrary contained herein, the limitation on exercise of this Warrant set
      forth herein may not be amended without (i) the written consent of the holder
      hereof and the Company and (ii) the approval of a majority of shareholders
      of
      the Company.

     

    2.  Period
      of Exercise.

     

     This
      Warrant is exercisable at any time or from time to time on or after the date
      on
      which this Warrant is issued and delivered pursuant to the terms of the
      Securities Purchase Agreement and before 6:00 p.m., New York, New York time
      on
      the seventh (7th)
      anniversary of the date of issuance (the “Exercise Period”).

     

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

    

     

    3.  Certain
      Agreements of the Company.

     

    The
      Company hereby covenants and agrees as follows:

     

    (a)  Shares
      to be Fully Paid.
      All
      Warrant Shares will, upon issuance in accordance with the terms of this Warrant,
      be validly issued, fully paid, and nonassessable and free from all taxes, liens,
      and charges with respect to the issue thereof.

     

    (b)  Reservation
      of Shares.
      During
      the Exercise Period, the Company shall at all times have authorized, and
      reserved for the purpose of issuance upon exercise of this Warrant, a
      suf-ficient number of shares of Common Stock to provide for the exercise of
      this
      Warrant.

     

    (c)  Listing.
      The
      Company shall promptly secure the listing of the shares of Common Stock issuable
      upon exercise of the Warrant upon each national securities exchange or automated
      quotation system, if any, upon which shares of Common Stock are then listed
      (subject to official notice of issuance upon exercise of this Warrant) and
      shall
      maintain, so long as any other shares of Common Stock shall be so listed, such
      listing of all shares of Common Stock from time to time issuable upon the
      exercise of this Warrant; and the Company shall so list on each national
      securities exchange or automated quotation system, as the case may be, and
      shall
      maintain such listing of, any other shares of capital stock of the Company
      issuable upon the exercise of this Warrant if and so long as any shares of
      the
      same class shall be listed on such national securities exchange or automated
      quotation system.

     

    (d)  Certain
      Actions Prohibited.
      The
      Company will not, by amendment of its charter or through any re-organi-zation,
      transfer of assets, consolidation, mer-ger, dissolution, issue or sale of
      securities, or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed by it hereunder,
      but will at all times in good faith assist in the carrying out of all the
      provisions of this Warrant and in the taking of all such action as may
      reasonably be requested by the holder of this Warrant in order to protect the
      exercise privilege of the holder of this Warrant against dilu-tion or other
      impairment, consistent with the tenor and purpose of this Warrant. Without
      limiting the general-ity of the foregoing, the Company (i) will not increase
      the
      par value of any shares of Common Stock receivable upon the exercise of this
      Warrant above the Exercise Price then in effect, and (ii) will take all such
      actions as may be necessary or appropriate in order that the Company may validly
      and legally issue fully paid and nonassessable shares of Common Stock upon
      the
      exercise of this Warrant.

     

    (e)  Successors
      and Assigns.
      This
      Warrant will be binding upon any entity succeeding to the Company by merger,
      consolidation, or acquisition of all or sub-stantially all the Company’s
      assets.

     

    4.  Antidilution
      Provisions.
      

     

    During
      the Exercise Period, the Exercise Price and the number of Warrant Shares shall
      be subject to adjustment from time to time as provided in this Paragraph
      4.

     

    In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.

     

    (a)  Adjustment
      of Exercise Price and Number of Shares upon Issuance of Common
      Stock.
      Except
      as otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever on
      or
      after the date of issuance of this Warrant, the Company issues or sells, or
      in
      accordance with Paragraph 4(b) hereof is deemed to have issued or sold, any
      shares of Common Stock for no consideration or for a consideration per share
      (before deduction of reasonable expenses or commissions or underwriting
      discounts or allowances in connection therewith) less than the Market Price
      on
      the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive
      Issuance, the Exercise Price will be reduced to a price determined by
      multiplying the Exercise Price in effect immediately prior to the Dilutive
      Issuance by a fraction, (i) the numerator of which is an amount equal to the
      sum
      of (x) the number of shares of Common Stock actually outstanding immediately
      prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
      consideration, calculated as set forth in Paragraph 4(b) hereof, received by
      the
      Company upon such Dilutive Issuance divided by the Market Price in effect
      immediately prior to the Dilutive Issuance, and (ii) the denominator of which
      is
      the total number of shares of Common Stock Deemed Outstanding (as defined below)
      immediately after the Dilutive Issuance. 

     

    
      
         

      

      
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    (b)  Effect
      on Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
      the following will be applicable:

     

    (i)  Issuance
      of Rights or Options.
      If the
      Company in any manner issues or grants any warrants, rights or options, whether
      or not immediately exercisable, to subscribe for or to purchase Common Stock
      or
      other securities convertible into or exchangeable for Common Stock (“Convertible
      Securities”) (such warrants, rights and options to purchase Common Stock or
      Convertible Securities are hereinafter referred to as “Options”) and the price
      per share for which Common Stock is issuable upon the exercise of such Options
      is less than the Market Price on the date of issuance or grant of such Options,
      then the maximum total number of shares of Common Stock issuable upon the
      exercise of all such Options will, as of the date of the issuance or grant
      of
      such Options, be deemed to be outstanding and to have been issued and sold
      by
      the Company for such price per share. For purposes of the preceding sentence,
      the “price per share for which Common Stock is issuable upon the exercise of
      such Options” is determined by dividing (i) the total amount, if any, received
      or receivable by the Company as consideration for the issuance or granting
      of
      all such Options, plus the minimum aggregate amount of additional consideration,
      if any, payable to the Company upon the exercise of all such Options, plus,
      in
      the case of Convertible Securities issuable upon the exercise of such Options,
      the minimum aggregate amount of additional consideration payable upon the
      conversion or exchange thereof at the time such Convertible Securities first
      become convertible or exchangeable, by (ii) the maximum total number of shares
      of Common Stock issuable upon the exercise of all such Options (assuming full
      conversion of Convertible Securities, if applicable). No further adjustment
      to
      the Exercise Price will be made upon the actual issuance of such Common Stock
      upon the exercise of such Options or upon the conversion or exchange of
      Convertible Securities issuable upon exercise of such Options.

     

    (ii)  Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities, whether or
      not
      immediately convertible (other than where the same are issuable upon the
      exercise of Options) and the price per share for which Common Stock is issuable
      upon such conversion or exchange is less than the Market Price on the date
      of
      issuance, then the maximum total number of shares of Common Stock issuable
      upon
      the conversion or exchange of all such Convertible Securities will, as of the
      date of the issuance of such Convertible Securities, be deemed to be outstanding
      and to have been issued and sold by the Company for such price per share. For
      the purposes of the preceding sentence, the “price per share for which Common
      Stock is issuable upon such conversion or exchange” is determined by dividing
      (i) the total amount, if any, received or receivable by the Company as
      consideration for the issuance or sale of all such Convertible Securities,
      plus
      the minimum aggregate amount of additional consideration, if any, payable to
      the
      Company upon the conversion or exchange thereof at the time such Convertible
      Securities first become convertible or exchangeable, by (ii) the maximum total
      number of shares of Common Stock issuable upon the conversion or exchange of
      all
      such Convertible Securities. No further adjustment to the Exercise Price will be
      made upon the actual issuance of such Common Stock upon conversion or exchange
      of such Convertible Securities.

     

    
      
         

      

      
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    (iii)  Change
      in Option Price or Conversion Rate.
      If there
      is a change at any time in (i) the amount of additional consideration payable
      to
      the Company upon the exercise of any Options; (ii) the amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      of
      any Convertible Securities; or (iii) the rate at which any Convertible
      Securities are convertible into or exchangeable for Common Stock (other than
      under or by reason of provisions designed to protect against dilution), the
      Exercise Price in effect at the time of such change will be readjusted to the
      Exercise Price which would have been in effect at such time had such Options
      or
      Convertible Securities still outstanding provided for such changed additional
      consideration or changed conversion rate, as the case may be, at the time
      initially granted, issued or sold.

     

    (iv)  Treatment
      of Expired Options and Unexercised Convertible
      Securities.
      If, in
      any case, the total number of shares of Common Stock issuable upon exercise
      of
      any Option or upon conversion or exchange of any Convertible Securities is
      not,
      in fact, issued and the rights to exercise such Option or to convert or exchange
      such Convertible Securities shall have expired or terminated, the Exercise
      Price
      then in effect will be readjusted to the Exercise Price which would have been
      in
      effect at the time of such expiration or termination had such Option or
      Convertible Securities, to the extent outstanding immediately prior to such
      expiration or termination (other than in respect of the actual number of shares
      of Common Stock issued upon exercise or conversion thereof), never been
      issued.

     

    (v)  Calculation
      of Consideration Received.
      If any
      Common Stock, Options or Convertible Securities are issued, granted or sold
      for
      cash, the consideration received therefor for purposes of this Warrant will
      be
      the amount received by the Company therefor, before deduction of reasonable
      commissions, underwriting discounts or allowances or other reasonable expenses
      paid or incurred by the Company in connection with such issuance, grant or
      sale.
      In case any Common Stock, Options or Convertible Securities are issued or sold
      for a consideration part or all of which shall be other than cash, the amount
      of
      the consideration other than cash received by the Company will be the fair
      value
      of such consideration, except where such consideration consists of securities,
      in which case the amount of consideration received by the Company will be the
      Market Price thereof as of the date of receipt. In case any Common Stock,
      Options or Convertible Securities are issued in connection with any acquisition,
      merger or consolidation in which the Company is the surviving corporation,
      the
      amount of consideration therefor will be deemed to be the fair value of such
      portion of the net assets and business of the non-surviving corporation as
      is
      attributable to such Common Stock, Options or Convertible Securities, as the
      case may be. The fair value of any consideration other than cash or securities
      will be determined in good faith by the Board of Directors of the
      Company.

     

    
      
         

      

      
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    (vi)  Exceptions
      to Adjustment of Exercise Price.
      No
      adjustment to the Exercise Price will be made (i) upon the exercise of any
      warrants, options or convertible securities granted, issued and outstanding
      on
      the date of issuance of this Warrant; (ii) upon the grant or exercise of any
      stock or options which may hereafter be granted or exercised under any employee
      benefit plan, stock option plan or restricted stock plan of the Company now
      existing or to be implemented in the future, so long as the issuance of such
      stock or options is approved by a majority of the independent members of the
      Board of Directors of the Company or a majority of the members of a committee
      of
      independent directors established for such purpose; or (iii) upon the exercise
      of the Warrants.

     

    (c)  Subdivision
      or Combination of Common Stock.
      If the
      Company at any time subdivides (by any stock split, stock dividend,
      recapitalization, reorganization, reclassification or otherwise) the shares
      of
      Common Stock acquirable hereunder into a greater number of shares, then, after
      the date of record for effecting such subdivision, the Exercise Price in effect
      immediately prior to such subdivision will be proportionately reduced. If the
      Company at any time combines (by reverse stock split, recapitalization,
      reorganization, reclassification or otherwise) the shares of Common Stock
      acquirable hereunder into a smaller number of shares, then, after the date
      of
      record for effecting such combination, the Exercise Price in effect immediately
      prior to such combination will be proportionately increased.

     

    (d)  Adjustment
      in Number of Shares.
      Upon
      each adjustment of the Exercise Price pursuant to the provisions of this
      Paragraph 4, the number of shares of Common Stock issuable upon exercise of
      this
      Warrant shall be adjusted by multiplying a number equal to the Exercise Price
      in
      effect immediately prior to such adjustment by the number of shares of Common
      Stock issuable upon exercise of this Warrant immediately prior to such
      adjustment and dividing the product so obtained by the adjusted Exercise
      Price.

     

    (e)  Consolidation,
      Merger or Sale.
      In case
      of any consolidation of the Company with, or merger of the Company into any
      other corporation, or in case of any sale or conveyance of all or substantially
      all of the assets of the Company other than in connection with a plan of
      complete liquidation of the Company, then as a condition of such consolidation,
      merger or sale or conveyance, adequate provision will be made whereby the holder
      of this Warrant will have the right to acquire and receive upon exercise of
      this
      Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
      upon the exercise of this Warrant, such shares of stock, securities or assets
      as
      may be issued or payable with respect to or in exchange for the number of shares
      of Common Stock immediately theretofore acquirable and receivable upon exercise
      of this Warrant had such consolidation, merger or sale or conveyance not taken
      place. In any such case, the Company will make appropriate provision to insure
      that the provisions of this Paragraph 4 hereof will thereafter be applicable
      as
      nearly as may be in relation to any shares of stock or securities thereafter
      deliverable upon the exercise of this Warrant. The Company will not effect
      any
      consolidation, merger or sale or conveyance unless prior to the consummation
      thereof, the successor corporation (if other than the Company) assumes by
      written instrument the obligations under this Paragraph 4 and the obligations
      to
      deliver to the holder of this Warrant such shares of stock, securities or assets
      as, in accordance with the foregoing provisions, the holder may be entitled
      to
      acquire.

     

    
      
         

      

      
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    (f)  Distribution
      of Assets.
      In case
      the Company shall declare or make any distribution of its assets (including
      cash) to holders of Common Stock as a partial liquidating dividend, by way
      of
      return of capital or otherwise, then, after the date of record for determining
      shareholders entitled to such distribution, but prior to the date of
      distribution, the holder of this Warrant shall be entitled upon exercise of
      this
      Warrant for the purchase of any or all of the shares of Common Stock subject
      hereto, to receive the amount of such assets which would have been payable
      to
      the holder had such holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      distribution.

     

    (g)  Notice
      of Adjustment.
      Upon the
      occurrence of any event which requires any adjustment of the Exercise Price,
      then, and in each such case, the Company shall give notice thereof to the holder
      of this Warrant, which notice shall state the Exercise Price resulting from
      such
      adjustment and the increase or decrease in the number of Warrant Shares
      purchasable at such price upon exercise, setting forth in reasonable detail
      the
      method of calculation and the facts upon which such calculation is based. Such
      calculation shall be certified by the Chief Financial Officer of the
      Company.

     

    (h)  Minimum
      Adjustment of Exercise Price.
      No
      adjustment of the Exercise Price shall be made in an amount of less than 1%
      of
      the Exercise Price in effect at the time such adjustment is otherwise required
      to be made, but any such lesser adjustment shall be carried forward and shall
      be
      made at the time and together with the next subsequent adjustment which,
      together with any adjustments so carried forward, shall amount to not less
      than
      1% of such Exercise Price.

     

    (i)  No
      Fractional Shares.
      No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but the Company shall pay a cash adjustment in respect of any
      fractional share which would otherwise be issuable in an amount equal to the
      same fraction of the Market Price of a share of Common Stock on the date of
      such
      exercise.

     

    (j)  Other
      Notices.
      In case
      at any time:

     

    (i)  the
      Company shall declare any dividend upon the Common Stock payable in shares
      of
      stock of any class or make any other distribution (including dividends or
      distributions payable in cash out of retained earnings) to the holders of the
      Common Stock;

     

    (ii)  the
      Company shall offer for subscription pro rata to the holders of the Common
      Stock
      any additional shares of stock of any class or other rights;

     

    (iii)  there
      shall be any capital reorganiza-tion of the Company, or reclassification of
      the
      Common Stock, or consolidation or merger of the Company with or into, or sale
      of
      all or substan-tially all its assets to, another corporation or entity;
      or

     

    (iv)  there
      shall be a voluntary or involun-tary dissolution, liquidation or winding up
      of
      the Company; then, in each such case, the Company shall give to the holder
      of
      this Warrant (a) notice of the date on which the books of the Company shall
      close or a record shall be taken for determining the holders of Common Stock
      entitled to receive any such divi-dend, distribution, or subscription rights
      or
      for determining the holders of Common Stock entitled to vote in respect of
      any
      such reorganization, reclassification, consolidation, merger, sale, dissolution,
      liquidation or winding-up and (b) in the case of any such reorganization,
      reclassification, consolidation, merger, sale, dissolution, liquidation or
      winding-up, notice of the date (or, if not then known, a reasonable
      approximation thereof by the Company) when the same shall take place. Such
      notice shall also specify the date on which the holders of Common Stock shall
      be
      entitled to receive such dividend, distribution, or subscription rights or
      to
      exchange their Common Stock for stock or other securities or property
      deliverable upon such reorganization, re-classification, consolidation, merger,
      sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
      shall be given at least 30 days prior to the record date or the date on which
      the Company’s books are closed in respect thereto. Failure to give any such
      notice or any defect therein shall not affect the validity of the proceedings
      referred to in clauses (i), (ii), (iii) and (iv) above.

     

    
      
         

      

      
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    (k)  Certain
      Events.
      If any
      event occurs of the type contemplated by the adjustment provisions of this
      Paragraph 4 but not expressly provided for by such provisions, the Company
      will
      give notice of such event as provided in Paragraph 4(g) hereof, and the
      Company’s Board of Directors will make an appropriate adjustment in the Exercise
      Price and the number of shares of Common Stock acquirable upon exercise of
      this
      Warrant so that the rights of the holder shall be neither enhanced nor
      diminished by such event.

     

    (l)  Certain
      Definitions. 

     

    (i)  “Common
      Stock Deemed Outstanding”
      shall
      mean the number of shares of Common Stock actually outstanding (not including
      shares of Common Stock held in the treasury of the Company), plus (x) pursuant
      to Paragraph 4(b)(i) hereof, the maximum total number of shares of Common Stock
      issuable upon the exercise of Options, as of the date of such issuance or grant
      of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
      maximum total number of shares of Common Stock issuable upon conversion or
      exchange of Convertible Securities, as of the date of issuance of such
      Convertible Securities, if any. 

     

    (ii)  “Market
      Price,”
      as of
      any date, (i) means the average of the last reported sale prices for the shares
      of Common Stock on the OTCBB for the five (5) Trading Days immediately preceding
      such date as reported by Bloomberg, or (ii) if the OTCBB is not the principal
      trading market for the shares of Common Stock, the average of the last reported
      sale prices on the principal trading market for the Common Stock during the
      same
      period as reported by Bloomberg, or (iii) if market value cannot be calculated
      as of such date on any of the foregoing bases, the Market Price shall be the
      fair market value as reasonably determined in good faith by (a) the Board of
      Directors of the Company or, at the option of a majority-in-interest of the
      holders of the outstanding Warrants by (b) an independent investment bank of
      nationally recognized standing in the valuation of businesses similar to the
      business of the corporation. The manner of determining the Market Price of
      the
      Common Stock set forth in the foregoing definition shall apply with respect
      to
      any other security in respect of which a determination as to market value must
      be made hereunder.

     

    (iii)  “Common
      Stock,”
      for
      purposes of this Paragraph 4, includes the Common Stock, par value $.001 per
      share, and any additional class of stock of the Company having no preference
      as
      to dividends or distributions on liquidation, provided that the shares
      purchasable pursuant to this Warrant shall include only shares of Common Stock,
      par value $.001 per share, in respect of which this Warrant is exercisable,
      or
      shares resulting from any subdivision or combination of such Common Stock,
      or in
      the case of any reorganization, reclassification, consolidation, merger, or
      sale
      of the character referred to in Paragraph 4(e) hereof, the stock or other
      securities or property provided for in such Paragraph.

     

    
      
         

      

      
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    5.  Issue
      Tax.

     

    The
      issuance of certificates for Warrant Shares upon the exercise of this Warrant
      shall be made without charge to the holder of this Warrant or such shares for
      any issuance tax or other costs in respect thereof, provided that the Company
      shall not be required to pay any tax which may be payable in respect of any
      transfer involved in the issuance and delivery of any certificate in a name
      other than the holder of this Warrant.

     

    6.  No
      Rights or Liabilities as a Shareholder.

     

    This
      Warrant shall not entitle the holder hereof to any voting rights or other rights
      as a shareholder of the Company. No provision of this Warrant, in the absence
      of
      affirmative action by the holder hereof to purchase Warrant Shares, and no
      mere
      enumeration herein of the rights or privileges of the holder hereof, shall
      give
      rise to any liability of such holder for the Exercise Price or as a shareholder
      of the Company, whether such liability is asserted by the Company or by
      creditors of the Company.

     

    7.  Transfer,
      Exchange, and Replacement of Warrant.

     

    (a)  Restriction
      on Transfer.
      This
      Warrant and the rights granted to the holder hereof are transferable, in whole
      or in part, upon surrender of this Warrant, together with a properly executed
      assignment in the form attached hereto, at the office or agency of the Company
      referred to in Paragraph 7(e) below, pro-vided, however, that any transfer
      or assignment shall be subject to the conditions set forth in Paragraph 7(f)
      hereof and to the applicable provisions of the Securities Purchase Agreement.
      Until due presentment for registration of transfer on the books of the Company,
      the Company may treat the registered holder hereof as the owner and holder
      hereof for all purposes, and the Company shall not be affected by any notice
      to
      the con-trary. 

     

    (b)  Warrant
      Exchangeable for Different Denomina-tions.
      This
      Warrant is exchange-able, upon the surrender hereof by the holder hereof at
      the
      office or agency of the Company referred to in Paragraph 7(e) below, for new
      Warrants of like tenor representing in the aggregate the right to purchase
      the
      number of shares of Common Stock which may be purchased hereunder, each of
      such
      new Warrants to represent the right to purchase such number of shares as shall
      be designated by the holder hereof at the time of such surrender.

     

    (c)  Replacement
      of Warrant.
      Upon
      receipt of evi-dence reasonably satisfactory to the Company of the loss, theft,
      destruction, or mutilation of this Warrant and, in the case of any such loss,
      theft, or destruc-tion, upon delivery of an indemnity agreement reason-ably
      satisfactory in form and amount to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of this Warrant, the Company, at
      its
      expense, will execute and deliver, in lieu thereof, a new Warrant of like
      tenor.

     

    (d)  Cancellation;
      Payment of Expenses.
      Upon the
      surrender of this Warrant in connection with any trans-fer, exchange, or
      replacement as provided in this Paragraph 7, this Warrant shall be promptly
      canceled by the Company. The Company shall pay all taxes (other than securities
      transfer taxes) and all other expenses (other than legal expenses, if any,
      incurred by the holder or transferees) and charges payable in connection with
      the preparation, execution, and delivery of Warrants pursuant to this Paragraph
      7.

     

    (e)  Register.
      The
      Company shall maintain, at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee and each prior owner of this
      Warrant.

     

    
      
         

      

      
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    (f)  Exercise
      or Transfer Without Registration.
      If, at
      the time of the surrender of this Warrant in connection with any exercise,
      transfer, or exchange of this Warrant, this Warrant (or, in the case of any
      exercise, the Warrant Shares issuable hereunder), shall not be registered under
      the Securities Act of 1933, as amended (the “Securities Act”) and under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such exercise, transfer, or exchange, (i) that the holder
      or transferee of this Warrant, as the case may be, furnish to the Company a
      written opinion of counsel, which opinion and counsel are acceptable to the
      Company, to the effect that such exercise, transfer, or exchange may be made
      without registration under said Securities Act and under applicable state
      securities or blue sky laws, (ii) that the holder or transferee execute and
      deliver to the Company an investment letter in form and substance acceptable
      to
      the Company and (iii) that the transferee be an “accredited investor” as defined
      in Rule 501(a) promulgated under the Securities Act; provided that no such
      opinion, letter or status as an “accredited investor” shall be required in
      connection with a transfer pursuant to Rule 144 under the Securities Act. The
      first holder of this Warrant, by taking and holding the same, represents to
      the
      Company that such holder is acquiring this Warrant for investment and not with
      a
      view to the distribution thereof. 

     

    8.  Notices.

     

    All
      notices, requests, and other communications required or permitted to be given
      or
      delivered hereunder to the holder of this Warrant shall be in writing, and
      shall
      be personally delivered, or shall be sent by certified or registered mail or
      by
      recognized overnight mail courier, postage prepaid and addressed, to such holder
      at the address shown for such holder on the books of the Company, or at such
      other address as shall have been furnished to the Company by notice from such
      holder. All notices, requests, and other communications required or permitted
      to
      be given or delivered hereunder to the Company shall be in writing, and shall
      be
      personally delivered, or shall be sent by certified or registered mail or by
      recognized overnight mail courier, postage prepaid and addressed, to the office
      of the Company at 1282 Camellia Circle, Weston, Florida 33326, Attention: Chief
      Executive Officer, or at such other address as shall have been furnished to
      the
      holder of this Warrant by notice from the Company. Any such notice, request,
      or
      other communication may be sent by facsimile, but shall in such case be
      subsequently confirmed by a writing personally delivered or sent by certified
      or
      registered mail or by recognized overnight mail courier as provided above.
      All
      notices, requests, and other communications shall be deemed to have been given
      either at the time of the receipt thereof by the person entitled to re-ceive
      such notice at the address of such person for purposes of this Paragraph 9,
      or,
      if mailed by registered or certified mail or with a recognized overnight mail
      courier upon deposit with the United States Post Office or such overnight mail
      courier, if postage is prepaid and the mailing is properly addressed, as the
      case may be.

     

    9.  Governing
      Law.

     

    THIS
      WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
      ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
      LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
      UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
      ANY
      DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION
      HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
      IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
      SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS
      UPON
      A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
      SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
      SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
      BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH
      SUIT
      OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
      BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR
      ALL
      FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY
      IN CONNECTION WITH SUCH DISPUTE.

     

    
      
         

      

      
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    10.  Miscellaneous.

     

    (a)  Amendments.
      This
      Warrant and any provision hereof may only be amended by an instrument in writing
      signed by the Company and the holder hereof.

     

    (b)  Descriptive
      Headings.
      The
      descriptive headings of the several paragraphs of this Warrant are in-serted
      for
      purposes of reference only, and shall not affect the meaning or construction
      of
      any of the provisions hereof.

     

    (c)  Cashless
      Exercise.
      Notwithstanding anything to the contrary contained in this Warrant, this Warrant
      may be exercised by presentation and surrender of this Warrant to the Company
      at
      its principal executive offices with a written notice of the holder’s intention
      to effect a cashless exercise, including a calculation of the number of shares
      of Common Stock to be issued upon such exercise in accordance with the terms
      hereof (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of
      paying the Exercise Price in cash, the holder shall surrender this Warrant
      for
      that number of shares of Common Stock determined by multiplying the number
      of
      Warrant Shares to which it would otherwise be entitled by a fraction, the
      numerator of which shall be the difference between the then current Market
      Price
      per share of the Common Stock and the Exercise Price, and the denominator of
      which shall be the then current Market Price per share of Common Stock. For
      example, if the holder is exercising 100,000 Warrants with a per Warrant
      exercise price of $0.75 per share through a cashless exercise when the Common
      Stock’s current Market Price per share is $2.00 per share, then upon such
      Cashless Exercise the holder will receive 62,500 shares of Common
      Stock.

     

    (d)  Remedies.
      The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to the holder, by vitiating the intent and purpose of the
      transaction contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Warrant will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Warrant, that the holder shall be entitled,
      in
      addition to all other available remedies at law or in equity, and in addition
      to
      the penalties assessable herein, to an injunction or injunctions restraining,
      preventing or curing any breach of this Warrant and to enforce specifically
      the
      terms and provisions thereof, without the necessity of showing economic loss
      and
      without any bond or other security being required.

     

    
      
         

      

      
        -
          11 -

        
          

        

      

      
         

      

    

    

    

    

    

     

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

     

    Camelot
      Entertainment Group Inc.

    

    

    By:
      _______________________________

    Robert
      P.
      Atwell

    Chief
      Executive Officer and President

    

     

    Dated
      as
      of December 27, 2006

     

    
      
         

      

      
        -
          12 -

        
          

        

      

      
         

      

    

    

     

    FORM
      OF EXERCISE AGREEMENT

     

    

     

    Dated:
      ________ __, 200_

     

    

     

    To: ______________________

     

    

     

    

     

    The
      undersigned, pursuant to the provisions set forth in the within Warrant, hereby
      agrees to purchase ________ shares of Common Stock covered by such Warrant,
      and
      makes pay-ment herewith in full therefor at the price per share provided by
      such
      Warrant in cash or by certified or official bank check in the amount of, or
      by
      surrender of securities issued by the Company (including a portion of the
      Warrant) having a market value (in the case of a portion of this Warrant,
      determined in accordance with Section 10(c) of the Warrant) equal to $_________.
      Please issue a certificate or certifi-cates for such shares of Common Stock
      in
      the name of and pay any cash for any fractional share to:

     

    

     

    Name:
       ______________________________

    

    

    Signature: 

    Address:____________________________

    _____________________________

    

    

    Note: The
      above
      signature should correspond exactly with the name on the face of the within
      Warrant, if applicable.

    

     

    and,
      if
      said number of shares of Common Stock shall not be all the shares purchasable
      under the within Warrant, a new Warrant is to be issued in the name of said
      undersigned covering the balance of the shares purchasable thereunder less
      any
      frac-tion of a share paid in cash.

     

    

    
      
         

      

      
        -
          13 -

        
          

        

      

      
         

      

    

     

    FORM
      OF ASSIGNMENT

     

    

     

    

     

    FOR
      VALUE RECEIVED,
      the
      undersigned hereby sells, assigns, and transfers all the rights of the
      undersigned under the within Warrant, with respect to the number of shares
      of
      Common Stock covered thereby set forth hereinbelow, to:

    

     

    Name
      of Assignee     
        Address     
          No
      of
      Shares

     

    

     

    

     

    

     

    ,
      and
      hereby irrevocably constitutes and appoints ___________________________________
      as agent and attorney-in-fact to trans-fer said Warrant on the books of the
      within-named corporation, with full power of substitution in the
      premises.

     

    

     

    Dated: ________
      __, 200_

     

    

     

    In
      the
      presence of:      
      ______________________________

     

    Name:______________________________

    

     

    Signature:_________________________

    Title
      of
      Signing Officer or Agent (if any):

                     
      ______________________________

    Address: ______________________________

                     
      ______________________________

    

    

    
      	 	
              Note:

            	
              The
                above signature should correspond exactly with the name on the face
                of the
                within Warrant, if applicable.

            

    

     

     

    
      
         

      

      
        -
          14 -

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