Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Linux Gold Corp. - Exhibit 4.2

Exhibit 4.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY
  IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
  OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
  REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
  AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
  REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
  OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
  AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
  THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
  AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED
  IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
  SECURITIES.

Original Issue Date: May 8, 2006

SENIOR SECURED CONVERTIBLE DISCOUNT NOTE

DUE NOVEMBER 8, 2007

THIS SENIOR SECURED CONVERTIBLE DISCOUNT NOTE is one of a series
  of duly authorized and issued Senior Secured Convertible Discount Notes of Linux
  Gold, Corp., a British Columbia corporation, having a principal place of business
  at 1103-11871 Horseshoe Way, Richmond, British Columbia V7A 5H5 Canada (the
  "Company"), designated as its Senior Secured Convertible Note, due November
  8, 2007 (this Note, the "Note" and collectively with the other such series of
  Notes, the "Notes").

FOR VALUE RECEIVED, the Company promises to pay to____________________________or
  its registered assigns (the "Holder"), or shall have paid pursuant to the terms
  hereunder, the principal sum of $____________ by November 8, 2007 or such earlier
  date as this Note is required or permitted to be repaid as provided hereunder
  (the "Maturity Date"). This Note is subject to the following additional provisions:

          Section
  1. Definitions. For the purposes hereof, in addition to the terms defined
  elsewhere in this Note: (a) capitalized terms not otherwise defined herein have
  the meanings given to such terms in the Purchase Agreement, and (b) the following
  terms shall have the following meanings:

          "Alternate
  Consideration" shall have the meaning set forth in Section 5(d).

          "Base
  Conversion Price" shall have the meaning set forth in Section 5(b).

          "Business
  Day" means any day except Saturday, Sunday and any day which shall be a
  federal legal holiday in the United States or a day on which banking institutions
  in the State of New York are authorized or required by law or other government
  action to close.

          "Buy-In"
  shall have the meaning set forth in Section 4(d)(v).

          "Change
  of Control Transaction" means the occurrence after the date hereof of any
  of (i) an acquisition after the date hereof by an individual or legal entity
  or "group" (as described in Rule 13d-

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5(b)(1) promulgated under the Exchange Act) of effective control
  (whether through legal or beneficial ownership of capital stock of the Company,
  by contract or otherwise) of in excess of 33% of the voting securities of the
  Company, or (ii) the Company merges into or consolidates with any other Person,
  or any Person merges into or consolidates with the Company and, after giving
  effect to such transaction, the stockholders of the Company immediately prior
  to such transaction own less than 66% of the aggregate voting power of the Company
  or the successor entity of such transaction, or (iii) the Company sells or transfers
  its assets, as an entirety or substantially as an entirety, to another Person
  and the stockholders of the Company immediately prior to such transaction own
  less than 66% of the aggregate voting power of the acquiring entity immediately
  after the transaction, (iv) a replacement at one time or within a three year
  period of more than one-half of the members of the Company's board of directors
  which is not approved by a majority of those individuals who are members of
  the board of directors on the date hereof (or by those individuals who are serving
  as members of the board of directors on any date whose nomination to the board
  of directors was approved by a majority of the members of the board of directors
  who are members on the date hereof), or (v) the execution by the Company of
  an agreement to which the Company is a party or by which it is bound, providing
  for any of the events set forth above in (i) through (iv).

          "Common
  Stock" means the common stock, no par value, of the Company and stock of
  any other class of securities into which such securities may hereafter have
  been reclassified or changed into.

          "Conversion
  Date" shall have the meaning set forth in Section 4(a).

          "Conversion
  Price" shall have the meaning set forth in Section 4(b).

          "Conversion
  Shares" means the shares of Common Stock issuable upon conversion of this
  Note in accordance with the terms hereof.

          "Determination
  Date" shall have the meaning set forth in Section 6 (c) hereto 

          "Dilutive
  Issuance" shall have the meaning set forth in Section 5(b). 

          "Dilutive
  Issuance Notice" shall have the meaning set forth in Section 5(b). 

          "Effective
  Date" shall have the meaning given to such term in the Purchase Agreement.

          "Effectiveness
  Period" shall have the meaning given to such term in the Registration Rights
  Agreement.

          "Equity
  Conditions" shall mean, during the period in question, (i) the Company shall
  have duly honored all conversions and redemptions scheduled to occur or occurring
  by virtue of one or more Notice of Conversions of the Holder, if any, (ii) all
  liquidated damages and other amounts owing to the Holder in respect of this
  Note shall have been paid, (iii) there is an effective Registration Statement
  pursuant to which the Holder is permitted to utilize the prospectus thereunder
  to resell all of the shares issuable pursuant to the Transaction Documents (and
  the Company believes, in good faith, that such effectiveness will continue uninterrupted
  for the foreseeable future), (iv) there is a sufficient number of authorized
  but unissued and otherwise unreserved shares of Common Stock for the issuance
  of all of the shares issuable pursuant to the Transaction Documents, (v) there
  is then existing no Event of Default or event which, with the passage of time
  or the giving of notice, would constitute an Event of Default, (vi) the issuance
  of the shares in question to the Holder would not violate the limitations set
  forth in Section 4(c)(i) and (vii) no public announcement of a pending or proposed
  Fundamental Transaction, Change of Control Transaction or acquisition transaction
  has occurred that has not been consummated.

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          "Event
  of Default" shall have the meaning set forth in Section 8.

          "Exchange
  Act" means the Securities Exchange Act of 1934, as amended, and the rules
  and regulations promulgated thereunder.

          "Exempt
  Issuance" shall have the meaning set forth in the Purchase Agreement.

          
  "Forced Conversion Date" shall have the meaning set forth in Section
  6(d).

          "Forced
  Conversion Notice" shall have the meaning set forth in Section 6(d). 

          "Forced
  Conversion Notice Date" shall have the meaning set forth in Section 6(d).

          
  "Fundamental Transaction" shall have the meaning set forth in Section
  6(c) hereto. 

          "Interim
  Payment" shall have the meaning set forth in Section 6(e) hereto. 

          "Liquidity
  Benchmark" shall have the meaning set forth in Section 2(d).

          "Monthly
  Conversion Period" shall have the meaning set forth in Section 6(b) hereof.

          "Monthly
  Conversion Price" shall have the meaning set forth in Section 6(b) hereof.

          "Monthly
  Redemption" shall mean the redemption of this Note pursuant to Section 6(b)
  hereof.

          "Monthly
  Redemption Amount" shall mean the initial principal amount of the Note divided
  by the number of months between the initial Monthly Redemption Date and the
  Maturity Date.

          "Monthly
  Redemption Date" means the first day of the month following the earlier
  of the Effective Date or 120 days after the Original Issue Date, and on the
  first day of each month thereafter, and ending upon the full redemption of this
  Note.

          "Monthly
  Redemption Notice" shall have the meaning set forth in Section 6(b) hereof.

          "Monthly
  Redemption Period" shall mean the 15 Trading Day period immediately following
  the Monthly Redemption Notice.

          "Monthly
  Redemption Share Amount" shall have the meaning set forth in Section 6(b)
  hereof.

          "New
  York Courts" shall have the meaning set forth in Section 9(d).

          "Notice
  of Conversion" shall have the meaning set forth in Section 4(a).

          "Optional
  Redemption" shall have the meaning set forth in Section 6(a).

          "Optional
  Redemption Amount" shall mean the sum of (i) 125% of the principal amount
  of the Note then outstanding and (ii) all liquidated damages and other amounts
  due in respect of the Note.

          "Optional
  Redemption Date" shall have the meaning set forth in Section 6(a).

          "Optional
  Redemption Notice" shall have the meaning set forth in Section 6(a).

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          "Optional
  Redemption Notice Date" shall have the meaning set forth in Section 6(a).

          "Original
  Issue Date" shall mean the date of the first issuance of the Notes regardless
  of the number of transfers of any Note and regardless of the number of instruments
  which may be issued to evidence such Note.

          "Permitted
  Indebtedness" shall mean (a) the Indebtedness existing on the Original Issue
  Date and set forth on Schedule 3.1(gg) attached to the Purchase Agreement and
  (b) lease obligations and purchase money Indebtedness of up to $250,000, incurred
  in connection with the acquisition of capital assets and lease obligations with
  respect to newly acquired or leased assets and (c) Indebtedness incurred after
  the Original Issue Date pursuant to which the holders thereof shall have entered
  into a written subordination agreement, which Indebtedness shall have a maturity
  date after the Maturity Date hereof and shall otherwise be junior in all respects
  (including right of payment) to the Notes.

          "Permitted
  Lien" shall mean the individual and collective reference to the following:
  (a) Liens for taxes, assessments and other governmental charges or levies not
  yet due or Liens for taxes, assessments and other governmental charges or levies
  being contested in good faith and by appropriate proceedings for which adequate
  reserves (in the good faith judgment of the management of the Company) have
  been established in accordance with GAAP, (b) Liens imposed by law which were
  incurred in the ordinary course of business, such as carriers’, warehousemen’s
  and mechanics’ Liens, statutory landlords’ Liens, and other similar
  Liens arising in the ordinary course of business, and (x) which do not individually
  or in the aggregate materially detract from the value of such property or assets
  or materially impair the use thereof in the operation of the business of the
  Company and its consolidated Subsidiaries or (y) which are being contested in
  good faith by appropriate proceedings, which proceedings have the effect of
  preventing the forfeiture or sale of the property or asset subject to such Lien
  and (c) Liens incurred in connection with Permitted Indebtedness under clause
  (b) thereunder provided that such Liens are not secured by assets of the Company
  or its Subsidiaries other than the assets so acquired or leased.

          "Person"
  means a corporation, an association, a partnership, organization, a business,
  an individual, a government or political subdivision thereof or a governmental
  agency.

          "Pre-Redemption
  Conversion Shares" shall have the meaning set forth in Section 6(b) hereof.

          "Purchase
  Agreement" means the Securities Purchase Agreement, dated as of May 8, 2006
  to which the Company and the original Holder are parties, as amended, modified
  or supplemented from time to time in accordance with its terms.

          "Registration
  Rights Agreement" means the Registration Rights Agreement, dated as of the
  date of the Purchase Agreement, to which the Company and the original Holder
  are parties, as amended, modified or supplemented from time to time in accordance
  with its terms.

          "Registration
  Statement" means a registration statement meeting the requirements set forth
  in the Registration Rights Agreement, covering among other things the resale
  of the Conversion Shares and naming the Holder as a "selling stockholder" thereunder.

          "Securities
  Act" means the Securities Act of 1933, as amended, and the rules and regulations
  promulgated thereunder.

          "Subsidiary"
  shall have the meaning given to such term in the Purchase Agreement.

          "Threshold
  Period" shall have the meaning given to such term in Section 6(d). 

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          "Trading
  Day" means a day on which the Common Stock is traded on a Trading Market.

          "Trading
  Market" means the following markets or exchanges on which the Common Stock
  is listed or quoted for trading on the date in question: the Nasdaq Small Cap
  Market, the American Stock Exchange, the New York Stock Exchange the Nasdaq
  National Market or the OTC Bulletin Board.

          "Transaction
  Documents" shall have the meaning set forth in the Purchase Agreement.

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

          Section
  2. Interest and Prepayment. No regularly scheduled interest payments
  shall be made on this Note. Except as otherwise set forth in this Note, the
  Company may not prepay any portion of the principal amount of this Note without
  the prior written consent of the Holder.

          Section
  3. Registration of Transfers and Exchanges.

                              (a)
  Different Denominations. This Note is exchangeable for an equal aggregate
  principal amount of Notes of different authorized denominations, as requested
  by the Holder surrendering the same. No service charge will be made for such
  registration of transfer or exchange.

                              (b)
  Investment Representations. This Note has been issued subject to certain
  investment representations of the original Holder set forth in the Purchase
  Agreement and may be transferred or exchanged only in compliance with the Purchase
  Agreement and applicable federal and state securities laws and regulations.

                              (c)
  Reliance on Note Register. Prior to due presentment to the Company for
  transfer of this Note, the Company and any agent of the Company may treat the
  Person in whose name this Note is duly registered on the Note Register as the
  owner hereof for the purpose of receiving payment as herein provided and for
  all other purposes, whether or not this Note is overdue, and neither the Company
  nor any such agent shall be affected by notice to the contrary.

          Section
  4. Conversion.

                              (a)
  Voluntary Conversion. At any time after the Original Issue Date until
  this Note is no longer outstanding, this Note shall be convertible into shares
  of Common Stock at the option of the Holder, in whole or in part at any time
  and from time to time (subject to the limitations on conversion set forth in
  Section 4(c) hereof). The Holder shall effect conversions by delivering to the
  Company the form of Notice of Conversion attached hereto as Annex A (a "Notice
  of Conversion"), specifying therein the principal amount of this Note to be
  converted and the date on which such conversion is to be effected (a 

7

"Conversion Date"). If no Conversion Date is specified in a Notice
  of Conversion, the Conversion Date shall be the date that such Notice of Conversion
  is provided hereunder. To effect conversions hereunder, the Holder shall not
  be required to physically surrender this Note to the Company unless the entire
  principal amount of this Note has been so converted. Conversions hereunder shall
  have the effect of lowering the outstanding principal amount of this Note in
  an amount equal to the applicable conversion. The Holder and the Company shall
  maintain records showing the principal amount converted and the date of such
  conversions. The Company shall deliver any objection to any Notice of Conversion
  within 1 Business Day of receipt of such notice. In the event of any dispute
  or discrepancy, the records of the Holder shall be controlling and determinative
  in the absence of manifest error. The Holder and any assignee, by acceptance
  of this Note, acknowledge and agree that, by reason of the provisions of this
  paragraph, following conversion of a portion of this Note, the unpaid and unconverted
  principal amount of this Note may be less than the amount stated on the face
  hereof.

                              (b)
  Conversion Price. The conversion price in effect on any Conversion Date
  shall be equal to $0.40, subject to adjustment herein, (the "Conversion Price").

                              (c)
  Conversion Limitations. The Company shall not effect any conversion of
  this Note, and the Holder shall not have the right to convert any portion of
  this Note, pursuant to Section 4(a) or otherwise, to the extent that after giving
  effect to such conversion, the Holder (together with the Holder's Affiliates),
  as set forth on the applicable Notice of Conversion, would beneficially own
  in excess of the Beneficial Ownership Limitation. For purposes of the foregoing
  sentence, the number of shares of Common Stock beneficially owned by the Holder
  and its Affiliates shall include the number of shares of Common Stock issuable
  upon conversion of this Note with respect to which the determination of such
  sentence is being made, but shall exclude the number of shares of Common Stock
  which would be issuable upon (A) conversion of the remaining, nonconverted portion
  of this Note beneficially owned by the Holder or any of its Affiliates and (B)
  exercise or conversion of the unexercised or nonconverted portion of any other
  securities of the Company (including, without limitation, any other Notes or
  the Warrants) subject to a limitation on conversion or exercise analogous to
  the limitation contained herein beneficially owned by the Holder or any of its
  Affiliates. Except as set forth in the preceding sentence, for purposes of this
  Section 4(c), beneficial ownership shall be calculated in accordance with Section
  13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
  To the extent that the limitation contained in this section applies, the determination
  of whether this Note is convertible (in relation to other securities owned by
  the Holder) and of which a portion of this Note is convertible shall be in the
  sole discretion of such Holder. To ensure compliance with this restriction,
  the Holder will be deemed to represent to the Company each time it delivers
  a Notice of Conversion that such Notice of Conversion has not violated the restrictions
  set forth in this paragraph and the Company shall have no obligation to verify
  or confirm the accuracy of such determination. In addition, a determination
  as to any group status as contemplated above shall be determined in accordance
  with Section 13(d) of the Exchange Act and the rules and regulations promulgated
  thereunder. For purposes of this Section 4(c), in determining the number of
  outstanding shares of Common Stock, the Holder may rely on the number of outstanding
  shares of Common Stock as reflected in (x) the Company's most recent Form 20-F,
  (y) a more recent public announcement by the Company or (z) any other notice
  by the Company or the Company's Transfer Agent setting forth the number of shares
  of Common Stock outstanding. Upon the written or oral request of the Holder,
  the Company shall within two Trading Days confirm orally and in writing to the
  Holder the number of shares of Common Stock then outstanding. In any case, the
  number of outstanding shares of Common Stock shall be determined after giving
  effect to the conversion or exercise of securities of the Company, including
  this Note, by the Holder or its Affiliates since the date as of which such number
  of outstanding shares of Common Stock was reported. The "Beneficial Ownership
  Limitation" shall be 4.99% of the number of shares of the Common Stock outstanding
  immediately after giving effect to the issuance of shares of Common Stock issuable
  upon conversion of this Note. "The provisions of this Section 4(c) may be waived
  by the Holder, at the election of the Holder, upon not less 

8

than 61 days' prior notice to the Company, and the provisions
  of this Section 4(c) shall continue to apply until such 61st day (or such later
  date, as determined by the Holder, as may be specified in such notice of waiver).
  The provisions of this paragraph shall be construed and implemented in a manner
  otherwise than in strict conformity with the terms of this Section 4(c) to correct
  this paragraph (or any portion hereof) which may be defective or inconsistent
  with the intended Beneficial Ownership Limitation herein contained or to make
  changes or supplements necessary or desirable to properly give effect to such
  limitation. The limitations contained in this paragraph shall apply to a successor
  holder of this Note.

                              (d)
  Mechanics of Conversion.

                                        (i)
  Conversion Shares Issuable Upon Conversion of Principal Amount. The number
  of shares of Common Stock issuable upon a conversion hereunder shall be determined
  by the quotient obtained by dividing (x) the outstanding principal amount of
  this Note to be converted by (y) the Conversion Price.

                                        (ii)
  Delivery of Certificate Upon Conversion. Not later than three Trading
  Days after any Conversion Date, the Company will deliver or cause to be delivered
  to the Holder (A) a certificate or certificates representing the Conversion
  Shares which shall be free of restrictive legends and trading restrictions (other
  than those required by the Purchase Agreement) representing the number of shares
  of Common Stock being acquired upon the conversion of this Note. The Company
  shall, if available and if allowed under applicable securities laws, use its
  best efforts to deliver any certificate or certificates required to be delivered
  by the Company under this Section electronically through the Depository Trust
  Corporation or another established clearing corporation performing similar functions.

                                        (iii)
  Failure to Deliver Certificates. If in the case of any Notice of Conversion
  such certificate or certificates are not delivered to or as directed by the
  applicable Holder by the third Trading Day after a Conversion Date, the Holder
  shall be entitled by written notice to the Company at any time on or before
  its receipt of such certificate or certificates thereafter, to rescind such
  conversion, in which event the Company shall immediately return the certificates
  representing the principal amount of this Note tendered for conversion.

                                        (iv)
  Obligation Absolute; Partial Liquidated Damages. If the Company fails
  for any reason to deliver to the Holder such certificate or certificates pursuant
  to Section 4(d)(ii) by the third Trading Day after the Conversion Date, the
  Company shall pay to such Holder, in cash, as liquidated damages and not as
  a penalty, for each $1,000 of principal amount being converted, $10 per Trading
  Day (increasing to $20 per Trading Day after 5 Trading Days after such damages
  begin to accrue) for each Trading Day after such third Trading Day until such
  certificates are delivered. The Company's obligations to issue and deliver the
  Conversion Shares upon conversion of this Note in accordance with the terms
  hereof are absolute and unconditional, irrespective of any action or inaction
  by the Holder to enforce the same, any waiver or consent with respect to any
  provision hereof, the recovery of any judgment against any Person or any action
  to enforce the same, or any setoff, counterclaim, recoupment, limitation or
  termination, or any breach or alleged breach by the Holder or any other Person
  of any obligation to the Company or any violation or alleged violation of law
  by the Holder or any other person, and irrespective of any other circumstance
  which might otherwise limit such obligation of the Company to the Holder in
  connection with the issuance of such Conversion Shares; provided, however, such
  delivery shall not operate as a waiver by the Company of any such action the
  Company may have against the Holder. In the event the Holder of this Note shall
  elect to convert any or all of the outstanding principal amount hereof, the
  Company may not refuse conversion based on any claim that the Holder or any
  one associated or affiliated with the Holder has been engaged in any violation
  of law, agreement or for any other reason, unless, an injunction from a court,
  on notice, restraining and or enjoining conversion of all or part of this Note
  shall have been sought and obtained and the Company posts a surety bond for

9

the benefit of the Holder in the amount of 150% of the principal
  amount of this Note outstanding, which is subject to the injunction, which bond
  shall remain in effect until the completion of arbitration/litigation of the
  dispute and the proceeds of which shall be payable to such Holder to the extent
  it obtains judgment. In the absence of an injunction precluding the same, the
  Company shall issue Conversion Shares or, if applicable, cash, upon a properly
  noticed conversion. Nothing herein shall limit a Holder's right to pursue actual
  damages or declare an Event of Default pursuant to Section 8 herein for the
  Company's failure to deliver Conversion Shares within the period specified herein
  and such Holder shall have the right to pursue all remedies available to it
  at law or in equity including, without limitation, a decree of specific performance
  and/or injunctive relief. The exercise of any such rights shall not prohibit
  the Holder from seeking to enforce damages pursuant to any other Section hereof
  or under applicable law.

                                        (v)
  Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
  Conversion. In addition to any other rights available to the Holder,
  if the Company fails for any reason to deliver to the Holder such certificate
  or certificates pursuant to Section 4(d)(ii) by the fourth Trading Day after
  the Conversion Date, and if after such fourth Trading Day the Holder is required
  by its brokerage firm to purchase (in an open market transaction or otherwise)
  Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion
  Shares which the Holder anticipated receiving upon such conversion (a "Buy-In"),
  then the Company shall (A) pay in cash to the Holder (in addition to any remedies
  available to or elected by the Holder) the amount by which (x) the Holder's
  total purchase price (including brokerage commissions, if any) for the Common
  Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
  of Common Stock that such Holder anticipated receiving from the conversion at
  issue multiplied by (2) the actual sale price of the Common Stock at the time
  of the sale (including brokerage commissions, if any) giving rise to such purchase
  obligation and (B) at the option of the Holder, either reissue (if surrendered)
  this Note in a principal amount equal to the principal amount of the attempted
  conversion or deliver to the Holder the number of shares of Common Stock that
  would have been issued had the Company timely complied with its delivery requirements
  under Section 4(d)(ii), and thereafter the liquidated damages pursuant to clause
  (v) shall cease to accrue. For example, if the Holder purchases Common Stock
  having a total purchase price of $11,000 to cover a Buy-In with respect to an
  attempted conversion of this Note with respect to which the actual sale price
  of the Conversion Shares at the time of the sale (including brokerage commissions,
  if any) giving rise to such purchase obligation was a total of $10,000 under
  clause (A) of the immediately preceding sentence, the Company shall be required
  to pay the Holder $1,000. The Holder shall provide the Company written notice
  indicating the amounts payable to the Holder in respect of the Buy-In. Notwithstanding
  anything contained herein to the contrary, if a Holder requires the Company
  to make payment in respect of a Buy-In for the failure to timely deliver certificates
  hereunder and the Company timely pays in full such payment, the Company shall
  not be required to pay such Holder liquidated damages under Section 4(d)(iv)
  in respect of the certificates resulting in such Buy-In.

                                        (iv)
  Reservation of Shares Issuable Upon Conversion. The Company covenants
  that it will at all times reserve and keep available out of its authorized and
  unissued shares of Common Stock solely for the purpose of issuance upon conversion
  of this Note and payment of interest on this Note, each as herein provided,
  free from preemptive rights or any other actual contingent purchase rights of
  persons other than the Holder (and the other holders of the Notes), not less
  than such number of shares of the Common Stock as shall (subject to the terms
  and conditions set forth in the Purchase Agreement) be issuable (taking into
  account the adjustments and restrictions of Section 5) upon the conversion of
  the outstanding principal amount of this Note. The Company covenants that all
  shares of Common Stock that shall be so issuable shall, upon issue, be duly
  and validly authorized, issued and fully paid, nonassessable and, if the Registration
  Statement is then effective under the Securities Act, registered for public
  sale in accordance with such Registration Statement.

10

                                        (v)
  Fractional Shares. Upon a conversion hereunder the Company shall not
  be required to issue stock certificates representing fractions of shares of
  the Common Stock, but may if otherwise permitted, make a cash payment in respect
  of any final fraction of a share based on the VWAP at such time. If the Company
  elects not, or is unable, to make such a cash payment, the Holder shall be entitled
  to receive, in lieu of the final fraction of a share, one whole share of Common
  Stock.

                                        (vi)
  Transfer Taxes. The issuance of certificates for shares of the Common
  Stock on conversion of this Note shall be made without charge to the Holder
  hereof for any documentary stamp or similar taxes that may be payable in respect
  of the issue or delivery of such certificate, provided that the Company shall
  not be required to pay any tax that may be payable in respect of any transfer
  involved in the issuance and delivery of any such certificate upon conversion
  in a name other than that of the Holder of this Note so converted and the Company
  shall not be required to issue or deliver such certificates unless or until
  the person or persons requesting the issuance thereof shall have paid to the
  Company the amount of such tax or shall have established to the satisfaction
  of the Company that such tax has been paid.

          Section
  5. Certain Adjustments.

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

                                        (b)
  Subsequent Equity Sales. If the Company or any Subsidiary thereof, as
  applicable, at any time while this Note is outstanding, shall offer, sell, grant
  any option to purchase or offer, sell or grant any right to reprice its securities,
  or otherwise dispose of or issue (or announce any offer, sale, grant or any
  option to purchase or other disposition) any Common Stock or Common Stock Equivalents
  entitling any Person to acquire shares of Common Stock, at an effective price
  per share less than the then Conversion Price (such lower price, the "Base Conversion
  Price" and such issuances collectively, a "Dilutive Issuance"), as adjusted
  hereunder (if the holder of the Common Stock or Common Stock Equivalents so
  issued shall at any time, whether by operation of purchase price adjustments,
  reset provisions, floating conversion, exercise or exchange prices or otherwise,
  or due to warrants, options or rights per share which is issued in connection
  with such issuance, be entitled to receive shares of Common Stock at an effective
  price per share which is less than the Conversion Price, such issuance shall
  be deemed to have occurred for less than the Conversion Price on such date of
  the Dilutive Issuance), then the Conversion Price shall be reduced to equal
  the Base Conversion Price. Such adjustment shall be made whenever such Common
  Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing,
  no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance.
  The Company shall notify the Holder in writing, no later than the Business Day
  following the issuance of any Common Stock or Common Stock Equivalents subject
  to this section, indicating therein the applicable issuance price, or of applicable
  reset price, exchange price, conversion 

11

price and other pricing terms (such notice the "Dilutive Issuance
  Notice"). For purposes of clarification, whether or not the Company provides
  a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence
  of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder
  is entitled to receive a number of Conversion Shares based upon the Base Conversion
  Price regardless of whether the Holder accurately refers to the Base Conversion
  Price in the Notice of Conversion.

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

                                        (d)
  Fundamental Transaction. If, at any time while this Note is outstanding,
  (A) the Company effects any merger or consolidation of the Company with or into
  another Person, (B) the Company effects any sale of all or substantially all
  of its assets in one or a series of related transactions, (C) any tender offer
  or exchange offer (whether by the Company or another Person) is completed pursuant
  to which holders of Common Stock are permitted to tender or exchange their shares
  for other securities, cash or property, or (D) the Company effects any reclassification
  of the Common Stock or any compulsory share exchange pursuant to which the Common
  Stock is effectively converted into or exchanged for other securities, cash
  or property (in any such case, a "Fundamental Transaction"), then upon any subsequent
  conversion of this Note, the Holder shall have the right to receive, for each
  Conversion Share that would have been issuable upon such conversion immediately
  prior to the occurrence of such Fundamental Transaction, the same kind and amount
  of securities, cash or property as it would have been entitled to receive upon
  the occurrence of such Fundamental Transaction if it had been, immediately prior
  to such Fundamental Transaction, the holder of one share of Common Stock (the
  "Alternate Consideration"). For purposes of any such conversion, the determination
  of the Conversion Price shall be appropriately adjusted to apply to such Alternate
  Consideration based on the amount of Alternate Consideration issuable in respect
  of one share of Common Stock in such Fundamental Transaction, and the Company
  shall apportion the Conversion Price among the Alternate Consideration in a
  reasonable manner reflecting the relative value of any different components
  of the Alternate Consideration. If holders of Common Stock are given any choice
  as to the securities, cash or property to be received in a Fundamental Transaction,
  then the Holder shall be given the same choice as to the Alternate Consideration
  it receives upon any conversion of this Note following such Fundamental Transaction.
  To the extent necessary to effectuate the foregoing provisions, any successor
  to the Company or surviving entity in such Fundamental Transaction shall issue
  to the Holder a new Note consistent with the foregoing provisions and evidencing
  the Holder's right to convert such Note into Alternate Consideration. The terms
  of any agreement pursuant to which a Fundamental Transaction is effected shall
  include terms requiring any such successor or surviving entity to comply with
  the provisions of this paragraph (d) and insuring that this Note (or any such
  replacement security) will be similarly adjusted upon any subsequent transaction
  analogous to a Fundamental Transaction.

12

                                        (e)
  Calculations. All calculations under this Section 5 shall be made to
  the nearest cent or the nearest 1/100th of a share, as the case may be. For
  purposes of this Section 5, the number of shares of Common Stock deemed to be
  issued and outstanding as of a given date shall be the sum of the number of
  shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

                                        (f)
  Notice to the Holder.

                                                  (i)
  Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
  pursuant to any of this Section 5, the Company shall promptly mail to each Holder
  a notice setting forth the Conversion Price after such adjustment and setting
  forth a brief statement of the facts requiring such adjustment. If the Company
  issues, a variable rate security, despite the prohibition thereon in the Purchase
  Agreement, the Company shall be deemed to have issued Common Stock or Common
  Stock Equivalents at the lowest possible conversion or exercise price at which
  such securities may be converted or exercised in the case of a Variable Rate
  Transaction (as defined in the Purchase Agreement).

                                                  (ii)
  Notice to Allow Conversion by Holder. If (A) the Company shall declare
  a dividend (or any other distribution) on the Common Stock; (B) the Company
  shall declare a special nonrecurring cash dividend on or a redemption of the
  Common Stock; (C) the Company shall authorize the granting to all holders of
  the Common Stock rights or warrants to subscribe for or purchase any shares
  of capital stock of any class or of any rights; (D) the approval of any stockholders
  of the Company shall be required in connection with any reclassification of
  the Common Stock, any consolidation or merger to which the Company is a party,
  any sale or transfer of all or substantially all of the assets of the Company,
  of any compulsory share exchange whereby the Common Stock is converted into
  other securities, cash or property; (E) the Company shall authorize the voluntary
  or involuntary dissolution, liquidation or winding up of the affairs of the
  Company; then, in each case, the Company shall cause to be filed at each office
  or agency maintained for the purpose of conversion of this Note, and shall cause
  to be mailed to the Holder at its last addresses as it shall appear upon the
  stock books of the Company, at least 20 calendar days prior to the applicable
  record or effective date hereinafter specified, a notice stating (x) the date
  on which a record is to be taken for the purpose of such dividend, distribution,
  redemption, rights or warrants, or if a record is not to be taken, the date
  as of which the holders of the Common Stock of record to be entitled to such
  dividend, distributions, redemption, rights or warrants are to be determined
  or (y) the date on which such reclassification, consolidation, merger, sale,
  transfer or share exchange is expected to become effective or close, and the
  date as of which it is expected that holders of the Common Stock of record shall
  be entitled to exchange their shares of the Common Stock for securities, cash
  or other property deliverable upon such reclassification, consolidation, merger,
  sale, transfer or share exchange; provided that the failure to mail such notice
  or any defect therein or in the mailing thereof shall not affect the validity
  of the corporate action required to be specified in such notice. The Holder
  is entitled to convert this Note during the 20-day period commencing the date
  of such notice to the effective date of the event triggering such notice.

          Section
  6. 

                                        (a)
  Optional Redemption at Election of Company. Subject to the provisions
  of this Section 6, at any time after the Effective Date, the Company may deliver
  a notice to the Holder (an "Optional Redemption Notice" and the date such notice
  is deemed delivered hereunder, the "Optional Redemption Notice Date") of its
  irrevocable election to redeem some or all of the then outstanding Notes, for
  an amount, in cash, equal to the Optional Redemption Amount on the 30th Trading
  Day following the Optional Redemption Notice Date (such date, the "Optional
  Redemption Date" and such redemption, the "Optional Redemption"). The Optional
  Redemption Amount is due in full on the Optional Redemption Date. The Company
  may only effect an Optional Redemption if during the period commencing on the
  Optional Redemption Notice Date through to the Optional Redemption Date and
  through and including 

13

the date such shares of Common Stock are issued to the Holder,
  each of the Equity Conditions shall have been met. If any of the Equity Conditions
  shall cease to be satisfied at any time during the required period, then the
  Holder may elect to nullify the Optional Redemption Notice by notice to the
  Company within 3 Trading Days after the first day on which any such Equity Condition
  has not been met (provided that if, by a provision of the Transaction Documents
  the Company is obligated to notify the Holder of the non-existence of an Equity
  Condition, such notice period shall be extended to the third Trading Day after
  proper notice from the Company) in which case the Optional Redemption Notice
  shall be null and void, ab initio. The Company covenants and agrees that
  it will honor all Notice of Conversions tendered from the time of delivery of
  the Optional Redemption Notice through the date all amounts owing thereon are
  due and paid in full.

                                        (b)
  Monthly Redemption. On each Monthly Redemption Date, the Company shall
  redeem the Monthly Redemption Amount, the sum of all liquidated damages and
  any other amounts then owing to such Holder in respect of this Note (the "Monthly
  Redemption"). The Monthly Redemption Amount due on each Monthly Redemption Date
  shall be paid in cash in an amount equal to 110% of such Monthly Redemption
  Amount; provided, however, as to any Monthly Redemption and upon
  25 Trading Days’ prior written irrevocable notice (the "Monthly Redemption
  Notice" and the 25 Trading Day period immediately following the Monthly Redemption
  Notice, the "Monthly Redemption Period"), in lieu of a cash redemption payment
  the Company may elect to pay all or part of a Monthly Redemption Amount in Conversion
  Shares (such dollar amount to be paid on a Monthly Redemption Date in Conversion
  Shares, the "Monthly Redemption Share Amount") based on a conversion price equal
  to 85% of the average of the 15 VWAPs immediately prior to the applicable Monthly
  Redemption Date (subject to adjustment for any stock dividend, stock split,
  stock combination or other similar event affecting the Common Stock during such
  15 Trading Day period) (the price calculated during the 15 Trading Day period
  immediately prior to the Monthly Redemption Date, the "Monthly Conversion Price"
  and such period, the "Monthly Conversion Period"); provided, further,
  that the Company may not pay the Monthly Redemption Amount in Conversion Shares
  unless (x) from the date the Holder receives the duly delivered Monthly Redemption
  Notice through and until the date such Monthly Redemption is paid in full, the
  Equity Conditions have been satisfied and (y) the average daily dollar volume
  of the Common Stock of the Company exceeds $70,000 during the Monthly Conversion
  Period. The Holder may convert, pursuant to Section 4(a), any principal amount
  of this Note subject to a Monthly Redemption at any time prior to the date that
  the Monthly Redemption Amount and all amounts owing thereon are due and paid
  in full. Unless otherwise indicated by the Holder in the applicable Notice of
  Conversion, any principal amount of this Note converted during the applicable
  Monthly Redemption Period until the date the Monthly Redemption Amount is paid
  in full shall be first applied to the principal amount subject to the Monthly
  Redemption Amount payable in cash and then to the Monthly Redemption Share Amount.
  Any principal amount of this Note converted during the applicable Monthly Redemption
  Period in excess of the Monthly Redemption Amount shall be applied against the
  next principal amount of this Note scheduled to be redeemed hereunder, in time
  order from the date of conversion; provided, however, if any such
  conversion is applied to such Monthly Redemption Amount, the Pre-Redemption
  Conversion Shares, if any were issued in connection with such Monthly Redemption
  or were not already applied to such conversions, shall be first applied against
  such conversion. The Company covenants and agrees that it will honor all Notice
  of Conversions tendered up until such amounts are paid in full. The Company’s
  determination to pay a Monthly Redemption in cash, shares of Common Stock or
  a combination thereof shall be applied ratably to all of the holders of the
  Notes based on their (or their predecessor’s) initial purchases of Notes
  pursuant to the Purchase Agreement.

                                        (c)
  Redemption Procedure. The payment of cash and/or issuance of Common Stock,
  as the case may be, pursuant to a Optional Redemption or Monthly Redemption
  shall be made on the Optional Redemption Date or Monthly Redemption Date, as
  the case may be. If any portion of the cash payment for an Optional Redemption
  or Monthly Redemption shall not be paid by the Company by the 

14

respective due date, interest shall accrue thereon at the rate
  of 18% per annum (or the maximum rate permitted by applicable law, whichever
  is less) until the payment of the Optional Redemption Amount or Monthly Redemption
  Amount, plus all amounts owing thereon, is paid in full. Alternatively, if any
  portion of the Optional Redemption Amount or Monthly Redemption Amount remains
  unpaid after such date, the Holders subject to such redemption may elect, by
  written notice to the Company given at any time thereafter, to invalidate ab
  initio such redemption, notwithstanding anything herein contained to the
  contrary. 

                                        (d)
  Forced Conversion. Notwithstanding anything herein to the contrary, if
  after the Effective Date, each of the VWAPs for any 20 consecutive Trading Days
  (such period commencing only after the Effective Date, such period the "Threshold
  Period")) exceeds $1.00 (subject to adjustment for reverse and forward stock
  splits, stock dividends, stock combinations and other similar transactions of
  the Common Stock that occur after the Original Issue Date), the Company may,
  within 1 Trading Day of the end of any such period, deliver a notice to the
  Holder (a "Forced Conversion Notice" and the date such notice is received by
  the Holder, the "Forced Conversion Notice Date") to cause the Holder to immediately
  convert all or part of the then outstanding principal amount of Notes pursuant
  to Section 4, it being understood that the "Conversion Date" for purposes of
  Section 4 shall be deemed to occur on the third Trading Day following the Forced
  Conversion Notice Date (such third Trading Day being referred to as the "Forced
  Conversion Date"). The Company may not deliver a Forced Conversion Notice, and
  any Forced Conversion Notice delivered by the Company shall not be effective,
  unless all of the Equity Conditions are met on each Trading Day occurring during
  the applicable Threshold Period through and including the later of the Forced
  Conversion Date and the date such Conversion Shares pursuant to such conversion
  are delivered to the Holder. Any Forced Conversion shall be applied ratably
  to all Holders based on their initial purchases of Notes pursuant to the Purchase
  Agreement. For purposes of clarification, a Forced Conversion shall be subject
  to all of the provisions of Section 4, including, without limitation, the provision
  requiring payment of liquidated damages and limitations on conversions.

                                        (e)
  Interim Payments. In addition to the regular payment of the Monthly Redemption
  Amount as described in Section 6(b), additional payments (each an "Interim Payment")
  will be required to be made at the written election of the Holder (a form of
  which is annexed hereto) for each and every day (each a "Determination Date")
  the total reported dollar volume of the Common Stock exceeds $400,000 ("Liquidity
  Benchmark"). The amount of each Interim Payment will be determined by multiplying
  the Monthly Redemption Amount by a fraction the numerator of which is the total
  reported dollar volume of the Common Stock on a Determination Date and the denominator
  of which is the Liquidity Benchmark. The Holder must give written notice to
  the Company within two business days after a Determination Date of Holder's
  election to receive an Interim Payment. If such notice is given, the Company
  must deliver Common Stock valued at eighty-five percent (85%) of the average
  of the 15 VWAPs immediately prior to the date notice is given by the Holder
  of the demand for an Interim Payment. The date of the Holder's notice shall
  be deemed a Conversion Date and the Common Stock must be delivered in the same
  manner and under the same conditions as required in connection with a Notice
  of Conversion. All payments of cash or amounts converted into Common Stock pursuant
  to this Note by the Holder or Company shall be applied first against outstanding
  fees and damages and then to principal amounts of not yet due Monthly Redemption
  Amounts, commencing with the Monthly Redemption Amount next payable and then
  Monthly Redemption Amounts thereafter in reverse chronological order. Any Principal
  Amount and any other amounts arising under the Transaction Documents that remains
  outstanding on the Maturity Date shall be due and payable on the Maturity Date.
  For example, if the Monthly Redemption Amount is $200,000 for January and the
  total dollar volume of the Common Stock in January 1 is $600,000, then the Holder
  may elect to require the Company to make an Interim Payment of $300,000 in cash
  or shares of Common Stock in accordance with the terms of this Section 6(e).

15

          Section
  7. Negative Covenants. So long as any portion of this Note is outstanding,
  the Company will not and will not permit any of its Subsidiaries to directly
  or indirectly:

                                        (a)
  enter into, create, incur, assume guarantee or suffer to exist any indebtedness
  for borrowed money of any kind, including but not limited to, or a guarantee,
  on or with respect to any of its property or assets now owned or hereinafter
  acquired or any interest therein or any income or profits therefrom, other than
  Permitted Indebtedness;

                                        (b)
  other than Permitted Liens, enter into, create, incur or assume or suffer to
  exist any liens of any kind on or with respect to any of the property or assets
  now owned or hereinafter acquired or any interest therein or any income or profits
  therefrom;

                                        (c)
  amend its certificate of incorporation, bylaws or other charter documents so
  as to materially and adversely affect any rights of the Holder; 

                                        (d)
  repay, repurchase or offer to repay, repurchase or otherwise acquire more than
  a de minimis number of shares of its Common Stock or Common Stock Equivalents
  other than as to the Conversion Shares to the extent permitted or required under
  the Transaction Documents or as otherwise permitted by the Transaction Documents;

                                        (e)
  enter into any agreement with respect to any of the foregoing; or

                                        (f)
  pay cash dividends or distributions on any equity securities of the Company.

          Section
  8. Events of Default.

                                        (a)
  "Event of Default", wherever used herein, means any one of the following events
  (whatever the reason and whether it shall be voluntary or involuntary or effected
  by operation of law or pursuant to any judgment, decree or order of any court,
  or any order, rule or regulation of any administrative or governmental body):

                                                  (i)
  any default in the payment of the principal amount of any Note, or liquidated
  damages in respect of, any Note, as and when the same shall become due and payable
  (whether on a Conversion Date, Optional Redemption Date, the Forced Conversion
  Date, or the Maturity Date or by acceleration or otherwise) which default, solely
  in the case of liquidated damages, is not cured, within 3 Trading Days;

                                                  (ii)
  the Company shall fail to observe or perform any other covenant or agreement
  contained in this Note (other than a breach by the Company of its obligations
  to deliver shares of Common Stock to the Holder upon conversion which breach
  is addressed in clause (xi) below) which failure is not cured, if possible to
  cure, within the earlier to occur of (A) 5 Trading Days after notice of such
  default sent by the Holder or by any other Holder and (B) 10 Trading Days after
  the Company shall become or should have become aware of such failure;

                                                  (iii)
  a default or event of default (subject to any grace or cure period provided
  for in the applicable agreement, document or instrument) shall occur under any
  of the Transaction Documents within the earlier to occur of (A) 5 Trading Days
  after notice of such default sent by the Holder or by any other Holder and (B)
  10 Trading Days after the Company shall become or should have been aware of
  such failure;

16

                                                  (iv)
  any representation or warranty made herein, in any other Transaction Documents,
  in any written statement pursuant hereto or thereto, or in any other report,
  financial statement or certificate made or delivered to the Holder or any other
  holder of Notes shall be untrue or incorrect in any material respect as of the
  date when made or deemed made;

                                                  (v)
  (i) the Company or any of its Subsidiaries shall commence a case, as debtor,
  a case under any applicable bankruptcy or insolvency laws as now or hereafter
  in effect or any successor thereto, or the Company or any Subsidiary commences
  any other proceeding under any reorganization, arrangement, adjustment of debt,
  relief of debtors, dissolution, insolvency or liquidation or similar law of
  any jurisdiction whether now or hereafter in effect relating to the Company
  or any Subsidiary thereof or (ii) there is commenced a case against the Company
  or any Subsidiary thereof, under any applicable bankruptcy or insolvency laws,
  as now or hereafter in effect or any successor thereto which remains undismissed
  for a period of 60 days; or (iii) the Company or any Subsidiary thereof is adjudicated
  by a court of competent jurisdiction insolvent or bankrupt; or any order of
  relief or other order approving any such case or proceeding is entered; or (iv)
  the Company or any Subsidiary thereof suffers any appointment of any custodian
  or the like for it or any substantial part of its property which continues undischarged
  or unstayed for a period of 60 days; or (v) the Company or any Subsidiary thereof
  makes a general assignment for the benefit of creditors; or (vi) the Company
  shall fail to pay, or shall state that it is unable to pay, or shall be unable
  to pay, its debts generally as they become due; or (vii) the Company or any
  Subsidiary thereof shall call a meeting of its creditors with a view to arranging
  a composition, adjustment or restructuring of its debts; or (viii) the Company
  or any Subsidiary thereof shall by any act or failure to act expressly indicate
  its consent to, approval of or acquiescence in any of the foregoing; or (ix)
  any corporate or other action is taken by the Company or any Subsidiary thereof
  for the purpose of effecting any of the foregoing;

                                                  (vi)
  the Company or any Subsidiary shall default in any of its obligations under
  any mortgage, credit agreement or other facility, indenture agreement, factoring
  agreement or other instrument under which there may be issued, or by which there
  may be secured or evidenced any indebtedness for borrowed money or money due
  under any long term leasing or factoring arrangement of the Company in an amount
  exceeding $100,000 whether such indebtedness now exists or shall hereafter be
  created and such default shall result in such indebtedness becoming or being
  declared due and payable prior to the date on which it would otherwise become
  due and payable;

                                                  (vii)
  the Company shall be a party to any Change of Control Transaction or Fundamental
  Transaction, shall agree to sell or dispose of all or in excess of 33% of its
  assets in one or more transactions (whether or not such sale would constitute
  a Change of Control Transaction) or shall redeem or repurchase more than a de
  minimis number of its outstanding shares of Common Stock or other equity securities
  of the Company (other than redemptions of Conversion Shares ;

                                                  (viii)
  a Registration Statement shall not have been declared effective by the Commission
  on or prior to the 180th calendar day after the Closing Date;

                                                  (ix)
  if, during the Effectiveness Period (as defined in the Registration Rights Agreement),
  the effectiveness of the Registration Statement lapses for any reason or the
  Holder shall not be permitted to resell Registrable Securities (as defined in
  the Registration Rights Agreement) under the Registration Statement, in either
  case, for more than 20 consecutive Trading Days or 30 non-consecutive Trading
  Days during any 12 month period; provided, however, that in the event that the
  Company is negotiating a merger, consolidation, acquisition or sale of all or
  substantially all of its assets or a similar transaction and in the written
  opinion of counsel to the Company, the Registration Statement, would be required
  to be amended to include information concerning such transactions or the parties
  thereto that is 

17

not available or may not be publicly disclosed at the time, the
  Company shall be permitted an additional 10 consecutive Trading Days during
  any 12 month period relating to such an event;

                                                  (x)
  the Company shall fail for any reason to deliver certificates to a Holder prior
  to the third Trading Day after a Conversion Date or Forced Conversion Date pursuant
  to and in accordance with Section 4(d) or the Company shall provide notice to
  the Holder including by way of public announcement at any time, of its intention
  not to comply with requests for conversions of any Notes in accordance with
  the terms hereof;

                                        (b)
  Remedies Upon Event of Default. If any Event of Default occurs, the full principal
  amount of this Note, together with other amounts owing in respect thereof, to
  the date of acceleration shall become, at the Holder's election (except with
  respect to Section 8(a)(v) which shall become immediately due and payable without
  notice by the Holder upon an occurrence), immediately due and payable in cash.
  The aggregate amount payable upon an Event of Default shall be equal to the
  Mandatory Default Amount. Commencing 5 days after the occurrence of any Event
  of Default that results in the eventual acceleration of this Note, interest
  shall accrue on this Note at the rate of 18% per annum, or such lower maximum
  amount of interest permitted to be charged under applicable law. Upon the payment
  in full of the Mandatory Default Amount on this entire Note the Holder shall
  promptly surrender this Note to or as directed by the Company. The Holder need
  not provide and the Company hereby waives any presentment, demand, protest or
  other notice of any kind, and the Holder may immediately and without expiration
  of any grace period enforce any and all of its rights and remedies hereunder
  and all other remedies available to it under applicable law. Such declaration
  may be rescinded and annulled by Holder at any time prior to payment hereunder
  and the Holder shall have all rights as a Note holder until such time, if any,
  as the full payment under this Section shall have been received by it. No such
  rescission or annulment shall affect any subsequent Event of Default or impair
  any right consequent thereon.

          Section
  9. Miscellaneous.

                                        (a)
  Notices. Any and all notices or other communications or deliveries to
  be provided by the Holder hereunder, including, without limitation, any Notice
  of Conversion, shall be in writing and delivered personally, by facsimile, sent
  by a nationally recognized overnight courier service, addressed to the Company,
  at the address set forth above, facsimile number (604) 681-2993, Attn: John
  Robertson or such other address or facsimile number as the Company may specify
  for such purposes by notice to the Holder delivered in accordance with this
  Section. Any and all notices or other communications or deliveries to be provided
  by the Company hereunder shall be in writing and delivered personally, by facsimile,
  sent by a nationally recognized overnight courier service addressed to each
  Holder at the facsimile telephone number or address of such Holder appearing
  on the books of the Company, or if no such facsimile telephone number or address
  appears, at the principal place of business of the Holder. Any notice or other
  communication or deliveries hereunder 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 5:30 p.m. (New York City time), (ii) the date after the date
  of transmission, if such notice or communication is delivered via facsimile
  at the facsimile telephone number specified in this Section later than 5:30
  p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
  City time) on such date, (iii) the second 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.

                                        (b)
  Absolute Obligation. Except as expressly provided herein, no provision
  of this Note shall alter or impair the obligation of the Company, which is absolute
  and unconditional, to pay the principal of, interest and liquidated damages
  (if any) on, this Note at the time, place, and rate, and in the 

18

coin or currency, herein prescribed. This Note is a direct debt
  obligation of the Company. This Note ranks pari passu with all other Notes now
  or hereafter issued under the terms set forth herein.

                                        (c)
  Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen
  or destroyed, the Company shall execute and deliver, in exchange and substitution
  for and upon cancellation of a mutilated Note, or in lieu of or in substitution
  for a lost, stolen or destroyed Note, a new Note for the principal amount of
  this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence
  of such loss, theft or destruction of such Note, and of the ownership hereof,
  and indemnity, if requested, all reasonably satisfactory to the Company.

                                        (d)
  Governing Law. All questions concerning the construction, validity, enforcement
  and interpretation of this Note shall be governed by and construed and enforced
  in accordance with the internal laws of the State of New York, without regard
  to the principles of conflicts of law thereof. Each party agrees that all legal
  proceedings concerning the interpretations, enforcement and defense of the transactions
  contemplated by any of the Transaction Documents (whether brought against a
  party hereto or its respective affiliates, directors, officers, shareholders,
  employees or agents) shall be commenced in the state and federal courts sitting
  in the City of New York, Borough of Manhattan (the "New York Courts"). Each
  party hereto hereby irrevocably submits to the exclusive jurisdiction of the
  New York Courts for the adjudication of any dispute hereunder or in connection
  herewith or with any transaction contemplated hereby or discussed herein (including
  with respect to the enforcement of any of the Transaction Documents), and hereby
  irrevocably waives, and agrees not to assert in any suit, action or proceeding,
  any claim that it is not personally subject to the jurisdiction of any such
  court, or such New York Courts are improper or inconvenient venue for such proceeding.
  Each party hereby irrevocably waives personal service of process and consents
  to process being served in any such suit, action or proceeding by mailing a
  copy thereof via registered or certified mail or overnight delivery (with evidence
  of delivery) to such party at the address in effect for notices to it under
  this Note and agrees that such service shall constitute good and sufficient
  service of process and notice thereof. Nothing contained herein shall be deemed
  to limit in any way any right to serve process in any manner permitted by law.
  Each party hereto hereby irrevocably waives, to the fullest extent permitted
  by applicable law, any and all right to trial by jury in any legal proceeding
  arising out of or relating to this Note or the transactions contemplated hereby.
  If either party shall commence an action or proceeding to enforce any provisions
  of this Note, then the prevailing party in such action or proceeding shall be
  reimbursed by the other party for its attorneys fees and other costs and expenses
  incurred with the investigation, preparation and prosecution of such action
  or proceeding.

                                        (e)
  Waiver. Any waiver by the Company or the Holder of a breach of any provision
  of this Note shall not operate as or be construed to be a waiver of any other
  breach of such provision or of any breach of any other provision of this Note.
  The failure of the Company or the Holder to insist upon strict adherence to
  any term of this Note on one or more occasions shall not be considered a waiver
  or deprive that party of the right thereafter to insist upon strict adherence
  to that term or any other term of this Note. Any waiver must be in writing.

                                        (f)
  Severability. If any provision of this Note is invalid, illegal or unenforceable,
  the balance of this Note shall remain in effect, and if any provision is inapplicable
  to any person or circumstance, it shall nevertheless remain applicable to all
  other persons and circumstances. If it shall be found that any interest or other
  amount deemed interest due hereunder violates applicable laws governing usury,
  the applicable rate of interest due hereunder shall automatically be lowered
  to equal the maximum permitted rate of interest. The Company covenants (to the
  extent that it may lawfully do so) that it shall not at any time insist upon,
  plead, or in any manner whatsoever claim or take the benefit or advantage of,
  any stay, extension or usury law or other law which would prohibit or forgive
  the Company from paying all or any portion of the principal of or interest on
  this Note as contemplated herein, wherever enacted, 

19

now or at any time hereafter in force, or which may affect the
  covenants or the performance of this indenture, and the Company (to the extent
  it may lawfully do so) hereby expressly waives all benefits or advantage of
  any such law, and covenants that it will not, by resort to any such law, hinder,
  delay or impede the execution of any power herein granted to the Holder, but
  will suffer and permit the execution of every such as though no such law has
  been enacted.

                                        (g)
  Next Business Day. Whenever any payment or other obligation hereunder
  shall be due on a day other than a Business Day, such payment shall be made
  on the next succeeding Business Day.

                                        (h)
  Headings. The headings contained herein are for convenience only, do
  not constitute a part of this Note and shall not be deemed to limit or affect
  any of the provisions hereof.

                                        (i)
  Assumption. Any successor to the Company or surviving entity in a Fundamental
  Transaction shall (i) assume in writing all of the obligations of the Company
  under this Note and the other Transaction Documents pursuant to written agreements
  in form and substance satisfactory to the Holder (such approval not to be unreasonably
  withheld or delayed) prior to such Fundamental Transaction and (ii) to issue
  to the Holder a new Note of such successor entity evidenced by a written instrument
  substantially similar in form and substance to this Note, including, without
  limitation, having a principal amount and interest rate equal to the principal
  amounts and the interest rates of the Notes held by the Holder and having similar
  ranking to this Note, and satisfactory to the Holder (any such approval not
  to be unreasonably withheld or delayed). The provisions of this Section 9(i)
  shall apply similarly and equally to successive Fundamental Transactions and
  shall be applied without regard to any limitations of this Note.

          IN
  WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly
  authorized officer as of the date first above indicated.

	 	LINUX GOLD, CORP. 
	 	  
	 	  
	 	  
	 	By: ________________________________________
	 	       Name: 
	 	       Title: 

20

ANNEX A

NOTICE OF CONVERSION

          The
  undersigned hereby elects to convert principal under the Senior Secured Convertible
  Discount Notes of Linux Gold, Corp. a British Columbia corporation (the "Company"),
  due on November 8, 2007 into shares of common stock, no par value (the "Common
  Stock"), of the Company according to the conditions hereof, as of the date written
  below. If shares are to be issued in the name of a person other than the undersigned,
  the undersigned will pay all transfer taxes payable with respect thereto and
  is delivering herewith such certificates and opinions as reasonably requested
  by the Company in accordance therewith. No fee will be charged to the holder
  for any conversion, except for such transfer taxes, if any.

          By
  the delivery of this Notice of Conversion the undersigned represents and warrants
  to the Company that its ownership of the Common Stock does not exceed the amounts
  determined in accordance with Section 13(d) of the Exchange Act, specified under
  Section 4 of this Debenture.

          The
  undersigned agrees to comply with the prospectus delivery requirements under
  the applicable securities laws in connection with any transfer of the aforesaid
  shares of Common Stock.

Conversion calculations:

                                        Date
  to Effect Conversion: 

Principal Amount of Debenture to be Converted: 

Number of shares of Common Stock to be issued:

	 	Signature: _____________________________
	 	 
	 	Name: ________________________________
	 	 
	 	Address: ______________________________

21

Schedule 1

CONVERSION SCHEDULE

          The
  Senior Secured Convertible Discount Notes due on November 8, 2007, in the aggregate
  principal amount of $_______ issued by Linux Gold, Corp. a British Columbia
  corporation. This Conversion Schedule reflects conversions made under Section
  4 of the above referenced Debenture.

Dated:

	  	  	Aggregate Principal 	  
	  	  	Amount Remaining 	  
	Date of Conversion 	  	Subsequent to Conversion 	  
	(or for first entry, 	Amount of 	(or Original Principal 	  
	Original Issue Date) 	Conversion 	Amount)                                   
      	Company Attest 

DEMAND FOR INTERIM PAYMENT

The undersigned holder of a Note issued by Linux Gold, Corp.
  on May 8, 2006 hereby demands the payment of an Interim Payment pursuant to
  the following:

_________ Determination Date (the date dollar-volume trading
  exceeded the Liquidity Benchmark)

$ ___________ Total dollar-volume trading on the Determination
  Date.

$___________ Liquidity Multiple (Total dollar-volume trading
  on Determination Date divided by Liquidity Benchmark).

$ ___________ Monthly Redemption Amount payable on each Monthly
  Redemption Date.

$ ___________ Interim Payment Amount (Monthly Redemption Amount
  multiplied by Liquidity Multiple).

|_| Demand is made that _________shares of Common Stock be delivered
  in satisfaction of the Interim Payment Amount with such shares valued at 85%
  of the VWAP for the 15 trading days preceding the date of this Demand For Interim
  Payment is given to the Company.

Number of Shares of Common Stock Beneficially Owned on the Conversion
  Date: Less than 5% of the outstanding Common Stock of Linux Gold, Corp. 

Shares To Be Delivered: _________________________________________________________

Signature: ____________________________________________________________________

                    Print
  Name: 

Address: _____________________________________________________________________

  

                 ______________________________________________________________________

Delivery Instructions: _________________________________________________________

  

  ______________________________________________________________________________

__________________________________________________

2Filed by Automated Filing Services Inc. (604) 609-0244 - Linux Gold Corp. - Exhibit 4.3

Exhibit 4.3

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

SERIES A COMMON STOCK PURCHASE WARRANT

          To
  Purchase ___________________Shares of Common Stock of

LINUX GOLD, CORP.

          THIS
  COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value received,
  ___________________(the "Holder"), is entitled, upon the terms and subject to
  the limitations on exercise and the conditions hereinafter set forth, at any
  time on or after the date hereof (the "Initial Exercise Date") and on or prior
  to the close of business on May 8, 2011 (the "Termination Date") but not thereafter,
  to subscribe for and purchase from LINUX GOLD, CORP., a British Columbia corporation
  (the "Company"), up to __________shares (the "Warrant Shares") of Common Stock,
  no par value, of the Company (the "Common Stock"). The purchase price of one
  share of Common Stock under this Warrant shall be equal to the Exercise Price,
  as defined in Section 2(b).

          Section
  1. Definitions. Capitalized terms used and not otherwise defined herein
  shall have the meanings set forth in that certain Securities Purchase Agreement
  (the "Purchase Agreement"), dated May 8, 2006, among the Company and the purchasers
  signatory thereto.

          Section
  2. Exercise. 

                                        (a)
  Exercise of Warrant. Exercise of the purchase rights represented by this
  Warrant may be made, in whole or in part, at any time or times on or after the
  Initial Exercise Date and on or before the Termination Date by delivery to the
  Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
  hereto (or such other office or agency of the Company as it may designate by
  notice in writing to the registered Holder at the address of such Holder appearing
  on the books of the Company); provided, however, within 5 Trading Days of the
  date said Notice of Exercise is delivered to the Company, if this Warrant is
  exercised in full, the Holder shall have surrendered this Warrant to the Company
  and the Company shall have received payment of the aggregate Exercise Price
  of the shares thereby purchased by wire transfer or cashier’s check drawn
  on a United States bank. Notwithstanding anything herein to the contrary, the
  Holder shall not be required to physically surrender this Warrant to the Company
  until the Holder has purchased all of the Warrant Shares available hereunder
  and the Warrant has been exercised in full. Partial exercises of this Warrant
  resulting in purchases of a portion of the total number of Warrant Shares available
  hereunder shall have the effect of lowering the outstanding 

3

number of Warrant Shares purchasable hereunder in an amount equal
  to the applicable number of Warrant Shares purchased. The Holder and the Company
  shall maintain re cords showing the number of Warrant shares purchased and the
  date of such purchases. The Company shall deliver any objection to any Notice
  of Exercise Form within 1 Business Day of receipt of such notice. In the event
  of any dispute or discrepancy, the re cords of the Holder shall be controlling
  and determinative in the absence of manifest error. The Holder and any assignee,
  by acceptance of this Warrant, acknowledge and agree that, by reason of the
  provisions of this paragraph, following the purchase of a portion of the Warrant
  Shares hereunder, the number of Warrant Shares available for purchase hereunder
  at any given time may be less than the amount stated on the face hereof.

                                        (b)
  Exercise Price. The exercise price of the Common Stock under this Warrant
  shall be $0.50, subject to adjustment hereunder (the "Exercise Price").

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

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

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

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

          For
  purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
  and acknowledged that the Warrant Shares issued in a cashless exercise transaction
  shall be deemed to have been acquired by the Holder, and the holding period
  for the Warrant Shares shall be deemed to have commenced, on the date this Warrant
  was originally issued pursuant to the Purchase Agreement. Notwithstanding anything
  herein to the contrary, on the Termination Date, this Warrant shall be automatically
  exercised via cashless exercise pursuant to this Section 2(c).

                                        (d)
  Exercise Limitations.

                                                  (i)
  Holder’s Restrictions. The Company shall not effect any exercise
  of this Warrant, and the Holder shall not have the right to exercise any portion
  of this Warrant, pursuant to Section 2(a) or otherwise, to the extent that after
  giving effect to such exercise , the Holder (together with the Holder's Affiliates),
  as set forth on the applicable Notice of Exercise, would beneficially own in
  excess of the Beneficial Ownership Limitation. For purposes of the foregoing
  sentence, the number of shares of Common Stock beneficially owned by the Holder
  and its Affiliates shall include the number of shares of Common Stock issuable
  upon exercise of this Warrant with respect to which the determination of such
  sentence is being made, but shall exclude the number of shares of Common Stock
  which would be issuable upon (A) exercise of the remaining, non-exercised portion
  of this Warrant beneficially owned by the Holder or any of its Affiliates and
  (B) exercise or conversion of the unexercised or nonconverted portion of any
  other securities of the Company (including, without limitation, any Notes or
  Warrants) subject to a limitation on conversion or exercise analogous to the
  limitation contained herein beneficially owned by the Holder or any of its Affiliates.
  Except as set forth in the preceding sentence, for purposes of this Section
  2(d), beneficial ownership shall be calculated in accordance with Section 13(d)
  of the Exchange Act and the rules and regulations promulgated thereunder. To
  the extent that the limitation 

4

contained in this section applies, the determination of whether
  this Warrant is exercise (in relation to other securities owned by the Holder)
  and of which a portion of this Warrant is exercise shall be in the sole discretion
  of such Holder. To ensure compliance with this restriction, the Holder will
  be deemed to represent to the Company each time it delivers a Notice of Exercise
  that such Notice of Exercise has not violated the restrictions set forth in
  this paragraph and the Company shall have no obligation to verify or confirm
  the accuracy of such determination. In addition, a determination as to any group
  status as contemplated above shall be determined in accordance with Section
  13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
  For purposes of this Section 2(d), in determining the number of outstanding
  shares of Common Stock, the Holder may rely on the number of outstanding shares
  of Common Stock as reflected in (x) the Company's most recent Form 20-F, (y)
  a more recent public announcement by the Company or (z) any other notice by
  the Company or the Company's Transfer Agent setting forth the number of shares
  of Common Stock outstanding. Upon the written or oral request of the Holder,
  the Company shall within two Trading Days confirm orally and in writing to the
  Holder the number of shares of Common Stock then outstanding. In any case, the
  number of outstanding shares of Common Stock shall be determined after giving
  effect to the conversion or exercise of securities of the Company, including
  this Warrant, by the Holder or its Affiliates since the date as of which such
  number of outstanding shares of Common Stock was reported. The "Beneficial Ownership
  Limitation" shall be 4.99% of the number of shares of the Common Stock outstanding
  immediately after giving effect to the issuance of shares of Common Stock issuable
  upon exercise of this Warrant. The provisions of this Section 2(d) may be waived
  by the Holder, at the election of the Holder, upon not less than 61 days' prior
  notice to the Company, and the provisions of this Section 2(d) shall continue
  to apply until such 61st day (or such later date, as determined by the Holder,
  as may be specified in such notice of waiver). The provisions of this paragraph
  shall be construed and implemented in a manner otherwise than in strict conformity
  with the terms of this Section 2(d) to correct this paragraph (or any portion
  hereof) which may be defective or inconsistent with the intended Beneficial
  Ownership Limitation herein contained or to make changes or supplements necessary
  or desirable to properly give effect to such limitation. The limitations contained
  in this paragraph shall apply to a successor holder of this Debenture.

                                        (e)
  Mechanics of Exercise.

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

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

5

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

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

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

                                        (vi)
  No Fractional Shares or Scrip. No fractional shares or scrip representing
  fractional shares shall be issued upon the exercise of this Warrant. As to any
  fraction of a share which Holder would otherwise be entitled to purchase upon
  such exercise, the Company shall pay a cash adjustment in respect of such final
  fraction in an amount equal to such fraction multiplied by the Exercise Price.

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

6

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

          Section
  3. Certain Adjustments.

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

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

7

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

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

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

8

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

                                        (g)
  Notice to Holders.

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

                                                  (ii)
  Notice to Allow Exercise by Holder. If (A) the Company shall declare
  a dividend (or any other distribution) on the Common Stock; (B) the Company
  shall declare a special nonrecurring cash dividend on or a redemption of the
  Common Stock; (C) the Company shall authorize the granting to all holders of
  the Common Stock rights or warrants to subscribe for or purchase any shares
  of capital stock of any class or of any rights; (D) the approval of any stockholders
  of the Company shall be required in connection with any reclassification of
  the Common Stock, any consolidation or merger to which the Company is a party,
  any sale or transfer of all or substantially all of the assets of the Company,
  of any compulsory share exchange whereby the Common Stock is converted into
  other securities, cash or property; (E) the Company shall authorize the voluntary
  or involuntary dissolution, liquidation or winding up of the affairs of the
  Company; then, in each case, the Company shall cause to be mailed to the Holder
  at its last address as it shall appear upon the Warrant Register of the Company,
  at least 20 calendar days prior to the applicable record or effective date hereinafter
  specified, a notice stating (x) the date on which a record is to be taken for
  the purpose of such dividend, distribution, redemption, rights or warrants,
  or if a record is not to be taken, the date as of which the holders of the Common
  Stock of record to be entitled to such dividend, distributions, redemption,
  rights or warrants are to be determined or (y) the date on which such reclassification,
  consolidation, merger, sale, transfer or share exchange is expected to become
  effective or close, and the date as of which it is expected that holders of
  the Common Stock of record shall be entitled to exchange their shares of the
  Common Stock for securities, cash or other property deliverable upon such reclassification,
  consolidation, merger, sale, transfer or share exchange; provided that the failure
  to mail such notice or any defect therein or in the mailing thereof shall not
  affect the validity of the corporate action required to be specified in such
  notice. The Holder is entitled to exercise this Warrant during the 20-day period
  commencing on the date of such notice to the effective date of the event triggering
  such notice.

          Section
  4. Transfer of Warrant.

                                        (a)
  Transferability. Subject to compliance with any applicable securities
  laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the
  provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights
  hereunder are transferable, in whole or in part, upon surrender of this Warrant
  at the principal office of the Company, together with a written assignment of
  this Warrant substantially in the form attached hereto duly executed by the
  Holder or its agent or attorney and funds sufficient to pay any transfer taxes
  payable upon the making of such transfer. Upon such surrender and, if required,
  such payment, the Company shall execute and deliver a new Warrant or Warrants
  in the name of the assignee or assignees and in the denomination or denominations
  specified in such instrument of assignment, and shall issue to the assignor
  a new Warrant evidencing the portion of this Warrant not so assigned, and this
  Warrant shall promptly be cancelled. A Warrant, if properly 

9

assigned, may be exercised by a new holder for the purchase of
  Warrant Shares without having a new Warrant issued.

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

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

                                        (d)
  Transfer Restrictions. If, at the time of the surrender of this Warrant
  in connection with any transfer of this Warrant, the transfer of this Warrant
  shall not be registered pursuant to an effective registration statement under
  the Securities Act and under applicable state securities or blue sky laws, the
  Company may require, as a condition of allowing such transfer (i) that the Holder
  or transferee of this Warrant, as the case may be, furnish to the Company a
  written opinion of counsel (which opinion shall be in form, substance and scope
  customary for opinions of counsel in comparable transactions) to the effect
  that such transfer may be made without registration under the Securities Act
  and under applicable state securities or blue sky laws, (ii) that the holder
  or transferee execute and deliver to the Company an investment letter in form
  and substance acceptable to the Company and (iii) that the transferee be an
  "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7),
  or (a)(8) promulgated under the Securities Act or a qualified institutional
  buyer as defined in Rule 144A(a) under the Securities Act.

          Section
  5. Miscellaneous.

                                        (a)
  Title to Warrant. Prior to the Termination Date and subject to compliance
  with applicable laws and Section 4 of this Warrant, this Warrant and all rights
  hereunder are transferable, in whole or in part, at the office or agency of
  the Company by the Holder in person or by duly authorized attorney, upon surrender
  of this Warrant together with the Assignment Form annexed hereto properly endorsed.
  The transferee shall sign an investment letter in form and substance reasonably
  satisfactory to the Company.

                                        (b)
  No Rights as Shareholder Until Exercise. This Warrant does not entitle
  the Holder to any voting rights or other rights as a shareholder of the Company
  prior to the exercise hereof. Upon the surrender of this Warrant and the payment
  of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant
  Shares so purchased shall be and be deemed to be issued to such Holder as the
  record owner of such shares as of the close of business on the later of the
  date of such surrender or payment.

                                        (c)
  Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
  that upon receipt by the Company of evidence reasonably satisfactory to it of
  the loss, theft, destruction or mutilation of this Warrant or any stock certificate
  relating to the Warrant Shares, and in case of loss, theft or destruction, of
  indemnity or security reasonably satisfactory to it (which, in the case of the
  Warrant, shall not include the posting of any bond), and upon surrender and
  cancellation of such Warrant or stock 

10

certificate, if mutilated, the Company will make and deliver
  a new Warrant or stock certificate of like tenor and dated as of such cancellation,
  in lieu of such Warrant or stock certificate.

                                        (d)
  Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
  taking of any action or the expiration of any right required or granted herein
  shall be a Saturday, Sunday or a legal holiday, then such action may be taken
  or such right may be exercised on the next succeeding day not a Saturday, Sunday
  or legal holiday.

                                        (e)
  Authorized Shares.

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

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

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

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

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

                                        (h)
  Nonwaiver and Expenses. No course of dealing or any delay or failure
  to exercise any right hereunder on the part of Holder shall operate as a waiver
  of such right or otherwise prejudice Holder’s rights, powers or remedies,
  notwithstanding the fact that all rights hereunder terminate on the Termination
  Date. If the Company willfully and knowingly fails to comply with any provision
  of 

11

this Warrant, which results in any material damages to the Holder,
  the Company shall pay to Holder such amounts as shall be sufficient to cover
  any costs and expenses including, but not limited to, reasonable attorneys’
  fees, including those of appellate proceedings, incurred by Holder in collecting
  any amounts due pursuant hereto or in otherwise enforcing any of its rights,
  powers or remedies hereunder.

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

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

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

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

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

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

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

(signature page to follow)

12

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

	 	LINUX GOLD, CORP. 
	 	  
	 	  
	 	  
	 	By: _____________________________________________________
	 	       Name: John Robertson
    
	 	       Title: President 

Dated: May 8, 2006

13

NOTICE OF EXERCISE

TO:.

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

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

                    [  
  ] in lawful money of the United States; or

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

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

                    _________________________________________

                    The
  Warrant Shares shall be delivered to the following:

                    __________________________________________

  

                      __________________________________________

  

                      __________________________________________

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

14

SIGNATURE OF HOLDER

Name of Investing Entity: __________________________________________

Signature of Authorized Signatory of Investing Entity: _______________________________

  

  Name of Authorized Signatory: __________________________________________

  

  Title of Authorized Signatory: ___________________________________________

  

  Date: _______________________

15

ASSIGNMENT FORM

(To assign the foregoing warrant, execute 

  this form and supply required information. 

  Do not use this form to exercise the warrant.)

          FOR
  VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
  assigned to whose address is ________________________________________________

  ____________________________________________________________________________

                              Dated:
  _____________________

	 	Holder’s Signature: _________________________

      Holder’s Address: _________________________

        

                                          _________________________

        

                                          _________________________

      

Signature Guaranteed: _____________________________

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

16

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