Document:

Exhibit 10.23

                              COAL SUPPLY AGREEMENT

     THIS COAL SUPPLY AGREEMENT  ("Agreement") is entered into effective the 1st
day of  January,  2004  between  Vectren  Fuels,  Inc.,  an Indiana  corporation
("Seller"),   whose  principal  business  address  is  20  N.W.  Fourth  Street,
Evansville,  Indiana 47708,  and Vectren Energy Delivery of Indiana,  Inc. a/k/a
Southern Indiana Gas and Electric Company  ("Buyer"),  whose principal  business
address is 20 N.W. Fourth Street, Evansville, Indiana 47708.

                                WITNESSETH, That:

     WHEREAS,  Buyer desires to secure to the extent of the  quantities  and for
the period  hereinafter  stated,  a supply of bituminous  coal or synfuel of the
quality  hereinafter set forth,  for use in its Warrick Unit 4 generating  plant
("Plant"); and

     WHEREAS,  Seller  represents  that  it is  experienced  in  the  commercial
production and preparation of coal and that it owns, has leased, or controls the
hereinafter  mentioned  reserves of  bituminous  coal which are  assigned to its
Prosperity  Mine located near Hazelton,  Indiana (in Gibson  County)  ("Seller's
Mine" or "Mine"),  with the quality and  characteristics  hereinafter set forth;
and

     WHEREAS,  Seller desires to sell coal or synfuel to Buyer and Buyer desires
to buy coal or synfuel from Seller,  upon the terms and  conditions  hereinafter
set forth.

     NOW THEREFORE,  in consideration of the mutual covenants  contained herein,
Seller  agrees to sell and deliver  coal or synfuel to Buyer and Buyer agrees to
purchase and accept  delivery of coal or synfuel  from  Seller,  pursuant to the
terms and conditions set forth as follows:

                                    ARTICLE I
                         AGREEMENT OF SALE AND PURCHASE

     1.1 Sale and  Purchase;  Source  of Coal.  Seller  agrees to sell and Buyer
agrees to purchase,  the  quantity  and quality of coal or synfuel  (hereinafter
collectively  referred to as "coal")  specified herein, on the terms and subject
to the conditions hereinafter set forth. The source of coal to be supplied under
this  Agreement  shall be the Seller's Mine.  Alternate  Source Coal (as defined
hereinafter) may be supplied by Seller, subject to the provisions of Section 6.5
of this Agreement.

     1.2 Dedication of Reserves.  Seller represents that it owns, or has leased,
and will dedicate and set aside for this Agreement, such quality and quantity of
coal reserves in Seller's Mine, as are required for full performance of Seller's
obligations  hereunder.  Seller  represents  and warrants  that it has the legal
right to mine and sell such coal reserves. Seller will not sell, nor contract to
sell to  others,  coal from said  reserves  in such  quantity  as to  jeopardize
Seller's  ability to deliver the total  quantity of coal Seller is  obligated to
deliver to Buyer under this Agreement.

     1.3 Title and Risk of Loss.  The sale of coal  under this  Agreement  shall
occur,  and  ownership  and risk of loss shall pass from  Seller to Buyer,  upon
delivery of the coal at the Plant.

                                   ARTICLE II
                                      TERM

     2.1 Term. The term of this Agreement shall commence on January 1, 2004, and
shall continue until and including December 31, 2004 (the "Term"). No suspension
of an  obligation  under this  Agreement by reason of Force Majeure shall extend
the Term of this Agreement, except upon mutual agreement of Seller and Buyer.

                                   ARTICLE III
                               QUANTITY AND OPTION

     3.1 Quantity.  Seller shall sell and deliver,  and Buyer shall purchase and
accept  delivery  of,  coal at the Plant in the amount of 25,000  tons per month
during each month of the Term of this Agreement. Buyer may adjust the tonnage to
be  delivered  in any month to any amount  within a range from  22,500 to 27,500
tons with fifteen (15) days' advance notice to Seller.  Unless  otherwise agreed
by Buyer at least  twenty-four (24) hours in advance,  no daily delivery of coal
shall exceed 1,500 tons.

     3.2 Option Quantity.  If Seller is able to produce more than 25,000 tons of
coal per month at Seller's Mine that meets the quality  specifications set forth
on Exhibit A, Buyer shall have the option,  but not the obligation,  to purchase
all, or a portion of,  such  additional  production  at the  pricing,  terms and
conditions set forth in this Agreement.  In order to permit Buyer to effectively
exercise such option,  Seller shall provide  reasonable prior notice of any such
anticipated additional production.

                                   ARTICLE IV
                   PRICE AND ADJUSTMENT; INVOICING AND PAYMENT

     4.1 Price. Effective January 1, 2004, the price of coal shall be $23.20 per
ton plus $5.30 per ton for  transportation  charges  to deliver  the coal to the
Plant.  The  transportation  charges  specified  herein  shall be  adjusted on a
monthly  basis to adjust  for  fluctuations  in the price of  diesel  fuel.  The
adjustments  made by  Seller  shall  be  identical  to the  adjustments  made by
Seller's  contract  carrier under the contract  carrier's Coal Hauling  Contract
with Seller.

     4.2 Invoicing.  Seller shall invoice Buyer semi-monthly.  Invoices, without
backup data,  shall be telecopied to Buyer  promptly  after the last shipment of
the pertinent  semi-monthly  period and promptly thereafter the original invoice
shall  be  mailed  along  with   appropriate   backup  data.   As  used  herein,
"semi-monthly  period" means the first fifteen (15) days of a calendar  month or
the days remaining in a calendar month following the 15th day of the month.

     4.3 Payment.  Buyer shall mail payment  within  fifteen (15) days following
Buyer's receipt of Seller's semi-monthly  invoices. In the event that Buyer does
not mail payment in accordance with the terms of this Agreement, then delinquent
payments  shall bear  interest  at the prime rate of  interest  reported  in the
"Money Rates" section of "The Wall Street Journal" (the "Prime Rate"), as of the
first day of any such delinquency.

     4.4 Errors or  Omissions.  In the event that any  Seller's  invoice  can be
demonstrated by Buyer to contain a material error or omission which  unavoidably
delays  Buyer's  ability to process  payment of such invoice in a timely manner,
Seller shall extend the payment due date for the portion of the invoiced  amount
which is  affected,  by the same  number  of days  (from  the time  Buyer  first
notified  Seller of the error or  omission)  as it takes  Seller to provide  the
corrected or additional data required by Buyer.

     4.5 Disputed Amount.  If Buyer disagrees with the amount of any invoice for
reasonable cause, Buyer shall promptly notify Seller by facsimile  transmission,
followed  promptly by written  confirmation  which shall set forth the basis for
such  disagreement,  so that the dispute may be resolved  before the payment due
date.  If any portion of an invoice is not  reconciled  prior to the payment due
date,  the  undisputed  amount shall be paid when due and the  disputed  portion
shall be held in  abeyance  until the  dispute is  resolved.  Buyer may,  at its
option,  pay the disputed  portion of any invoice  without  thereby  waiving its
right to contest such disputed portion of the invoice.  Upon final resolution of
the dispute,  any  adjustment  due either Buyer or Seller shall bear interest at
the Prime Rate in effect as of the date upon which Buyer notifies  Seller of the
existence of a dispute.

                                    ARTICLE V
                                     QUALITY

     5.1 Quality;  Specifications.  The coal supplied under this Agreement shall
meet the  quality  specifications  set forth on  Exhibit  A on an "as  received"
basis. If Moisture %, Ash % or SO2 lb/mmbtu monthly weighted averages  specified
in Exhibit A are not met for any reason, the Buyer shall impose penalties on the
Seller as  outlined  in Exhibit  B. If the  Seller is able to exceed  these same
monthly  weighted  averages,  the Buyer  shall pay a  premium  to the  Seller as
indicated in Exhibit B. The term "as  received"  for purposes of this  Agreement
shall have that meaning  defined in  specifications  promulgated by the American
Society for Testing and Materials.  The coal supplied under this Agreement shall
be washed,  crushed to two (2) inch maximum top size, and shall be substantially
free of impurities,  such as bone,  slate,  rock,  wood,  tramp metal,  and mine
debris. In the event that the coal supplied  hereunder  contains  non-authorized
components,  Seller shall  indemnify,  defend and hold  harmless  Buyer from and
against any and all claims,  liabilities,  damages, fines, penalties,  costs and
expenses,  including  reasonable attorney fees, that Buyer may incur as a result
of any  non-conforming  coal delivered  hereunder.  Such  indemnification  shall
include,  but shall not be limited to, any costs, fines and penalties associated
with environmental remediation incurred by Buyer.

     Seller  recognizes that Buyer must comply with applicable state and federal
environmental regulations,  including sulfur and particulate standards, and that
Buyer  is  required  to  receive  a  substantially  uniform  coal  quality  on a
day-to-day  basis in order to comply  with such  regulations.  Seller  agrees to
carefully  utilize  proper mining  techniques  and  procedures,  and to properly
maintain  and  operate  the  preparation  plant at the Mine,  so as to  minimize
day-to-day deviations in quality.

     5.2 Weights. The weight of the coal delivered hereunder shall be determined
by Buyer on the basis of certified  scales  maintained  at the Plant.  Empty and
full truckload weights shall be ascertained for each truckload delivery of coal.
Buyer shall furnish to Seller the weight of each shipment of coal to be received
by Buyer within twenty-four (24) hours after delivery to the Plant.

     5.3 Sampling and Analysis. Each daily shipment of coal shall be sampled and
analyzed within  twenty-four (24) hours of delivery to the Plant.  Such analysis
of the coal  designated  for delivery to Buyer shall be  undertaken  as a "quick
analysis" by an independent laboratory acceptable to Buyer. Seller shall furnish
the results of such  analysis by  facsimile  transmission  to the Warrick  Power
Plant at (812) 491-4701, within twenty-four (24) hours of delivery to the Plant.
Such analyses shall govern for the purposes of determining  compliance  with the
quality  specifications  required  under  this  Agreement,  except as  otherwise
provided herein below:

     A.   All  sampling  and analysis  shall meet ASTM  Standards.  Seller shall
          retain  sample  splits at  Seller's  Mine for a period of ninety  (90)
          days. Upon Buyer's request, the retained sample split shall be sent to
          an  independent  laboratory  for  analysis  and  the  results  of such
          analysis  shall  govern as to the  quality of the coal  shipment as to
          which such sample pertains.

     B.   Sampling and analysis shall be performed on not greater than 1,500-ton
          batches.

     C.   If it is  determined  that  samples  have been  obtained  incorrectly,
          Seller and Buyer shall  attempt to  determine  the effect,  if any, on
          quality  determinations  as the same may  apply to the  price for coal
          paid by Buyer with  respect to  samples  previously  used by Buyer and
          Seller in their analyses.  If required, a reasonable  adjustment shall
          be made in amounts  invoiced and payments made to  compensate  for any
          differences in the gross calorific value of coal tested versus that of
          the coal which  should  have been  tested.  If it is  determined  that
          sample analyses are in error,  whether due to improper  preparation of
          samples  to  be  analyzed,  faulty  analytical  equipment,  or  faulty
          laboratory methods, an appropriate adjustment shall be made in amounts
          invoiced  and payments  made to correct for errors in gross  calorific
          values  determined  by the sample  analyses.  However,  no  adjustment
          hereunder  shall be retroactive  for a period in excess of ninety (90)
          days prior to either (i) the date that either  party first  questioned
          in writing the correctness of the sampling  procedures or the accuracy
          of the sample analyses, or (ii) the date that the inaccuracy was first
          determined, whichever was the earlier date.

     D.   Coal not complying  with the quality  specifications  set forth herein
          will not be accepted by Buyer unless authorized prior to shipment.  At
          the  option of the Buyer,  acceptance  of  non-conforming  coal may be
          conditioned  upon  reductions  in price  which shall be agreed upon in
          writing prior to delivery of any such non-conforming coal.

     5.4 Limitation of Seller's Warranties.  Seller agrees to fully meet Buyer's
specifications  for all coal provided pursuant to this Agreement.  Provided that
Seller  strictly  complies with Buyer's  specifications,  then Buyer agrees that
Seller makes no other warranty,  express or implied,  including, but not limited
to, warranties of merchantability or of fitness for a particular purpose.

     5.5 Buyer's Extraordinary Termination Rights. If Buyer is suffering damages
at the Plant from (a) unit derating;  (b) increased  forced outage rates; or (c)
other abnormal operating conditions, due to characteristics of the coal supplied
by Seller,  although the coal  supplied by Seller  hereunder  may be meeting the
quality  specifications set forth in Exhibit A, Buyer shall notify Seller of the
nature of the operating problem, and the specific coal characteristic(s) that is
(are) causing such problem. Buyer and Seller shall promptly undertake good faith
efforts  to   determine  if  there  are   practical   methods  to  eliminate  or
substantially  mitigate any such problem and, with mutual agreement by Buyer and
Seller, shall take appropriate  corrective action. If, after a period of one (1)
month from the date Buyer notifies  Seller of a problem with burning the coal of
the quality being supplied,  the parties have not reached agreement and executed
a document  defining a mutually  acceptable  way to eliminate  or mitigate  such
problem, which agreement and execution shall not be unreasonably withheld, Buyer
shall have the option of terminating  this Agreement by giving written notice to
Seller,  with such termination to be effective one (1) month after the giving of
such notice.

                                   ARTICLE VI
                                    DELIVERY

     6.1 Deliveries. Coal conforming to Buyer's specifications shall be supplied
to Buyer at the Plant. Truck delivery will normally be between the hours of 6:00
A.M. and 6:00 P.M., Monday thru Friday,  except during periods when the Plant is
closed due to scheduled vacations, holidays, or periods of Force Majeure, unless
special restricted or extended hours are mutually agreeable to Buyer and Seller.
Seller shall obtain all applicable  tariffs or transportation  contracts for the
truck movement of coal hereunder.  Buyer shall pay all transportation  costs per
the terms  specified in this  Agreement,  and Seller shall bear all risk of loss
until the coal is delivered to the Plant.

     6.2  Rejection.  Buyer  shall have the right to reject  coal which does not
conform to the specifications set forth in Exhibit A, on a per shipment basis. A
"shipment" is the quantity of coal delivered to Buyer on a given day, upon which
ASTM  sampling and analysis  have been  performed.  A shipment  shall not exceed
1,500 tons,  unless  Buyer shall agree to the delivery of  quantities  in excess
thereof.  Any  shipments  rejected  by Buyer  shall be  returned  to Seller,  at
Seller's  expense,  and shall be credited against Buyer's purchase  requirements
hereunder.

     6.3  Redirection of Deliveries.  Buyer shall have the right to redirect the
delivery of coal purchased under this Agreement to any destination other than to
the  Plant,  so long as Buyer  agrees to  reimburse  Seller  for any  additional
transportation   or  handling  costs  incurred  by  Seller  to  effectuate  such
redirected deliveries.

     6.4  Failure of Seller's  Trucks to  Perform.  In the event that any person
retained  by  Seller to  deliver  coal to the Plant  fails to  provide  adequate
equipment and drivers to deliver coal purchased under this  Agreement,  and such
failure to perform  shall  continue for a period of thirty (30) days,  Buyer may
arrange  for an  alternate  trucker  to  provide  trucking  services  to make-up
shortfall  tonnage caused by Seller's  contracted  trucker's failure to perform.
Seller  shall  reimburse  Buyer for  trucking  costs  incurred  to deliver  such
shortfall  tonnage so long as the cost per ton  incurred by Buyer's  alternative
trucker does not exceed the price paid to Seller's contracted trucker.

     6.5 Alternate  Supply Source.  The source of coal subject to this Agreement
shall be Seller's Mine. Seller, with Buyer's prior written approval, may deliver
to Buyer coal conforming to the  specifications  set forth in Exhibit A, from an
alternate  source  ("Alternate  Source  Coal").  Buyer shall retain the right to
revoke such approval at Buyer's  discretion upon providing Seller with seven (7)
days' prior written notification. The Alternate Source Coal will be delivered to
the Plant at the same  delivered  cost per million BTU as the delivered cost per
million  BTU of coal from  Seller's  Mine,  unless  otherwise  mutually  agreed.
Delivered  cost from the  Alternate  Source Coal shall be computed on the actual
monthly  weighted  average BTU per pound of the coal supplied from the Alternate
Source Coal.

                                   ARTICLE VII
                         MINING FACILITIES AND PRACTICES

     7.1  Seller's  Warranty.  Seller  shall  maintain  at the  Mine,  efficient
machinery,  equipment, and other facilities required to produce, prepare, supply
and deliver the quality and  quantity of coal  contemplated  by this  Agreement.
Seller  further  agrees to operate and maintain  the  machinery,  equipment  and
facilities  at the  Mine in  accordance  with  good  mining  practices  so as to
efficiently  produce,  prepare and deliver the coal.  In addition,  Seller shall
conduct all  operations  at the Mine in compliance  with any and all  applicable
federal,  state and local laws, rules and regulations,  and Seller shall observe
and perform all terms and  provisions  of any contract or  agreement  with third
parties relative to the recovery and sale of coal from the reserves dedicated to
this Agreement.

                                  ARTICLE VIII
                                  FORCE MAJEURE

     8.1. Definition.  The term "Force Majeure",  as used herein, shall mean any
causes beyond the control of the party  affected  thereby,  such as acts of God;
acts of the public enemy; insurrections;  riots; strikes; labor disputes; fires;
explosions;  floods; breakdown of or damage to plants,  equipment, or facilities
through  no fault,  error or  omission  of the party  asserting  Force  Majeure;
accidents of navigation;  interruptions to transportation;  embargoes; orders or
acts of military  or civil  authority  (executive,  judicial,  or  legislative),
including,  but not limited to, any  regulation,  direction,  order,  or request
(whether valid or invalid) made by any  governmental  authority or person acting
therefor,  which is  complied  with in good  faith;  or other  such  causes of a
similar  or  dissimilar  nature  which  wholly or  partly  prevent  the  mining,
delivering, and/or loading of the coal by Seller, or the receiving, transporting
and/or  delivering  of the coal by the  carrier of the coal,  or the  accepting,
utilizing and/or unloading of the coal by Buyer. The doctrine of ejusdem generis
shall not be applied to exclude any event  dissimilar to the enumerated  events,
but which is beyond the control of a party.

     8.2 Excuse of  Performance.  If,  because of Force  Majeure,  either  party
hereto is  reasonably  prevented  from  performing  its  obligations  under this
Agreement,  or Buyer is reasonably  prevented  from  receiving or utilizing that
coal at the Plant, and if such party promptly gives to the other party notice of
the Force  Majeure,  the  obligations  of the party  giving such notice shall be
excused as of the commencement of the Force Majeure event to the extent affected
by the Force  Majeure  and its  continuance,  provided  the effect of such Force
Majeure is eliminated  insofar as possible  with all  reasonable  dispatch.  Any
deficiencies  in  deliveries  of coal  hereunder,  which  are  excused  by Force
Majeure,  shall not be made up except by mutual written  consent of the parties.
Nothing herein shall be construed as requiring  either party to settle any labor
dispute or as requiring Buyer to treat or alter the  characteristics of the coal
or blend the coal with any  other  fuel  including  other  coal,  or to make any
modifications  to the Plant to utilize  such coal,  or to change  Seller's  then
existing arrangements for transportation.

     8.3 Notice.  Notice of a Force  Majeure  event must be confirmed in writing
within fifteen (15) days of the  commencement  of the Force Majeure  event,  and
shall  specify the nature of the event and include a good-faith  estimate of the
period of time for which, and the degree to which, performance will be affected.
During the estimated period of time, the other party may make other arrangements
to sell or purchase the estimated quantity of coal so affected for the estimated
time period.

     8.4 Allocation in Event of Reduced Capability.  If Force Majeure occurs and
results in, or is  projected  to result in, (i) a  reduction  or  limitation  of
Seller's  ability to supply coal from  Seller's  Mine or (ii) the  inability  of
Buyer to accept or utilize coal at the Plant, then in the case of Seller, Seller
shall allocate available supplies of coal from Seller's Mine on a pro-rata basis
among its  customers,  or others as  required  by law,  to the  extent  that its
contracts  with  other  customers  give  Seller  the right to reduce  its supply
obligations  as a result of the  Force  Majeure.  In the case of Buyer,  it will
spread its reduced  ability to accept or utilize coal at the Plant among all its
suppliers to the Plant,  committed at the time the Force Majeure occurred,  on a
pro-rata basis to the extent that its contracts with other  suppliers give Buyer
the right to reduce purchase  obligations as a result of the Force Majeure.  Any
such  allocation  shall be determined on the basis of the number of tons of coal
which  Seller is  obligated  to deliver to its  committed  customers or Buyer is
obligated to receive from its committed  suppliers at the time the Force Majeure
occurred.

                                   ARTICLE IX
               RIGHT TO TERMINATE AGREEMENT; SPECIFIC PERFORMANCE

     9.1 Non-Exclusive Remedy. The rights of one party or the other, or of both,
to terminate this Agreement without liability,  which are specifically stated in
this Article and other parts of this  Agreement,  are not exclusive,  but are in
addition to any other rights  recognized at law or in equity which may accrue to
one party or the other by reason of circumstances  and conditions not dealt with
in these specific provisions.

     9.2 Force  Majeure.  If a Force  Majeure  event  prevents  the  delivery or
purchase  of more than fifty  percent  (50%) of the  minimum  tons of coal to be
supplied or received during a one (1) month period or longer, then the party not
suffering the Force Majeure,  may, on fifteen (15) days written notice terminate
this Agreement;  provided, that if the event of Force Majeure on which the right
of  termination  was  based  is  eliminated  prior  to  the  effective  date  of
termination, the termination right is voided.

     9.3  Change in  Regulations.  In the event that  Buyer  determines  that it
either is or will be at a future  date  unable to burn the coal  supplied  under
this Agreement due to the quality of the coal and legally  imposed  regulations,
Buyer  shall  promptly  notify  Seller in writing.  The parties  agree to make a
good-faith  effort to resolve the problem in a manner to allow Buyer to continue
using  Seller's  coal.  If after  thirty (30) days the parties  have not reached
agreement on a mutually acceptable solution,  then Buyer shall have the right by
written  notice  given as early as possible to terminate  this  Agreement on the
future date after which it cannot legally burn coal from Seller's Mine.  Nothing
herein  shall be construed as  requiring  Buyer to incur any  significant  added
expense  or   significant   capital   investment  to  (i)  treat  or  alter  the
characteristics  of the coal,  (ii) blend the coal with any other fuel including
other coal,  or (iii) make any  modifications  to the Plant to utilize  Seller's
coal.

     9.4 Default.  Subject to the  provisions of Article XX, in the event of the
failure  of  either  party  to  comply  with  any  material  obligation  of this
Agreement,  either party shall have the right to terminate this Agreement at any
time by  giving  to the other  fifteen  (15)  days'  notice  in  writing  of its
intention to so terminate,  specifying  in  reasonable  detail the nature of the
default.  At the  expiration  of said  fifteen  (15)  days,  unless the party in
default shall have cured such  default,  the party not in default shall have the
right at its  election to  terminate  this  Agreement  forthwith.  Such right to
terminate  shall be in addition to any other  remedies at law or equity that the
non-defaulting party may have against the defaulting party.

     9.5 Specific Performance. It is expressly recognized and understood between
the parties that prompt and full  deliveries  by the Seller in  accordance  with
this  Agreement  are  essential to Buyer.  Therefore,  the parties agree that in
addition to, and not in limitation of, any and all other remedies to which Buyer
may be  entitled  by law,  Buyer  shall  have  the  right  to  require  specific
performance of this Agreement by the Seller,  and Buyer shall have the right, if
necessary,  to enter any appropriate  judicial forum and,  without bond or other
security,  to obtain injunctions or other appropriate remedies against Seller to
prevent  deliveries  of any coal by the Seller to any third parties while Seller
is in default of or threatens  default in the delivery of coal in quantities and
of a quality conforming to the specifications provided in this Agreement.

                                    ARTICLE X
                                 INDEMNIFICATION

     10.1 Scope.  The Seller agrees to  indemnify,  defend and hold harmless the
Buyer, its affiliates,  and their agents and employees from any claims, demands,
loss,  cost,  damages,  expense or  liability  of any kind or nature,  including
attorneys' fees,  resulting from the performance of this Agreement or arising in
any manner from any product  supplied  or activity  required by this  Agreement,
unless such claim, demand, loss, cost, damage, or liability arises from the sole
negligence or intentional misconduct of the Buyer.

     10.2 Effect of Release. If the Seller obtains a release from any person for
damages  resulting from the performance of this  Agreement,  it shall not affect
the Buyer's rights nor the Seller's obligations herein.

     10.3 Notice. The Seller agrees to immediately notify the Buyer in the event
any accident,  injury, or damage occurs during the course of performance of this
Agreement,  or in the event that anyone  makes any claim for damages  alleged to
have resulted from the performance or nonperformance of this Agreement,  or from
the negligence of the Seller, its agents, or employees.

                                   ARTICLE XI
                                    RESERVED

                                   ARTICLE XII
                                     NOTICES

     12.1 Notices.  Any official notice,  request for approval or other document
required to be given under this Agreement shall be in writing,  unless otherwise
provided herein,  and shall be deemed to have been sufficiently given (i) on the
date of delivery  in person or  transmitted  by  facsimile  or other  electronic
media,  (ii) one business day after delivery to an established  mail service for
overnight delivery,  or (iii) two (2) business days after dispatch in the United
States mail,  postage  prepaid,  for mailing by certified  mail,  return receipt
requested, and addressed as follows:

If the notice is to Seller:

Randy Beck
Vectren Fuels, Inc.
20 N.W. Fourth Street
Evansville, IN 47708

If the notice is to Buyer:

Vectren Energy Delivery of Indiana, Inc.
Attention:  Ron Jochum
20 N. W. Fourth Street
Evansville, IN   47741

With a copy to:
Ronald E. Christian
Executive Vice President, General Counsel and Secretary
Vectren Corporation
20 N.W. Fourth Street
Evansville, IN  47741

                                  ARTICLE XIII
                              GOVERNING LAW; FORUM

     13.1  Governing  Law.  This  Agreement  and any  questions  concerning  its
validity, construction or performance shall be governed by the laws of the State
of Indiana without  reference to any choice of law provisions.  Any action which
may be  commenced  based  upon  this  Agreement,  shall be  brought  only in the
Vanderburgh Superior Court or Circuit Court, in Evansville,  Vanderburgh County,
Indiana.

                                   ARTICLE XIV
                           RELATIONSHIP OF THE PARTIES

     14.1  Relationship.  The Seller, and any person or entity performing on its
behalf, shall not be an employee of the Buyer, but shall operate as and have the
status  solely as that of a vendor.  The Buyer shall not be required to withhold
or pay FICA tax, unemployment,  workers' compensation, or other insurance or tax
on behalf of the Seller,  its agents or  employees.  The Seller shall not at any
time hold  itself out as an  employee  of the  Buyer.  This  Agreement  does not
create,  nor shall it be deemed  to  create,  as  between  Seller  and Buyer any
relationship other than that of vendor and purchaser.

                                   ARTICLE XV
                                   ASSIGNMENT

     15.1  Assignment.  Either  party may assign this  Agreement  and its rights
hereunder to its parent  company,  or any  affiliate or subsidiary of its parent
company or of itself, and only to such a party, without the consent of the other
party. Otherwise, this Agreement may not be assigned wholly or in part by either
party without the written consent of the other party, which consent shall not be
unreasonably  withheld.  No  assignment  shall  release  the  assignor  from its
financial responsibility hereunder, unless expressly agreed to in writing by the
other party. Subject to the foregoing limitations, all of the provisions of this
Agreement  shall inure to the benefit of and be binding upon the parties hereto,
their successors, and assigns. Nothing stated herein shall be construed to limit
Buyer's  unilateral  right to resell,  transfer,  pledge or assign the  delivery
right to any coal  delivered  under  this  Agreement  after  Buyer  takes  title
thereto.

                                   ARTICLE XVI
                            BUYER'S INSPECTION RIGHTS

     16.1  Inspection.  The Buyer and it duly authorized  representatives  shall
have the right during regular  business hours to make reasonable  inspections of
the Seller's records pertaining to this Agreement,  which shall include Seller's
records  pertaining to the quantity and quality of the coal supplied  hereunder,
along with shipping records relating to said coal. Buyer and its duly authorized
representatives  shall also at all reasonable times have the right and privilege
to inspect the Mine and its facilities.  The Buyer shall provide the Seller with
reasonable notice before exercising any of the foregoing inspection rights.

                                  ARTICLE XVII
                     COMPLETE AGREEMENT AND CONFIDENTIALITY

     17.1 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto,  and no alteration or modification  thereof shall be binding
unless in writing and signed by Buyer and Seller. The titles of the Articles and
Sections in this  Agreement  have been inserted as a matter of  convenience  for
reference  only and shall not control or affect the meaning or  construction  of
the terms and provisions thereof.

     17.2  Confidentiality.  Buyer and Seller agree to use reasonable efforts to
maintain this  Agreement  (including  attachments)  as  confidential  and not to
disclose, without the consent of the other party, the terms of this Agreement to
any third  parties  (other than  consultants,  legal  counsel,  and  accountants
retained by a party)  except in  response  to or to avoid the  issuance of legal
process;  provided that the parties may, without the consent of the other party,
disclose this Agreement, with the request that it be treated as confidential, in
connection  with securing or maintaining  any permits or license,  in connection
with  any  financing  of   securities,   complying   with  reporting  or  filing
requirements with any local,  state, or federal  agencies,  or responding to any
inquiries or requests by any state,  local, or federal  agencies,  Neither party
shall incur any  monetary  damage or liability to the other party for failure of
or breach of the provisions of this Section 17.2.

                                  ARTICLE XVIII
                                    HEADINGS

     18.1 Headings.  The headings of the Articles and Sections of this Agreement
are included  only as reference  and shall not limit or alter the meaning or any
of the terms and conditions of this Agreement.

                                   ARTICLE XIX
                                  SEVERABILITY

     19.1 Severability.  The provisions of this Agreement are severable, and the
invalidity or  unenforceability of any one or more provision shall not affect or
limit the validity of the remaining provisions.  Should any particular provision
be held to be unreasonable or unenforceable for any reason,  then such provision
shall be given effect and enforced to whatever  extent would be  reasonable  and
enforceable under the applicable law.

                                   ARTICLE XX
                         DISPUTE RESOLUTION; TERMINATION

     20.1 Moratorium on Actions. Except as otherwise specifically provided in or
permitted  by  this  Agreement,   all  disputes,   differences  of  opinion,  or
controversies arising in connection with this Agreement shall be resolved first,
by the use in good faith for a period of ten (10) days,  of mutual best  efforts
to arrive at an agreeable resolution.

     IN WITNESS  WHEREOF,  Seller and Buyer have  caused  this  Agreement  to be
signed in their respective  corporate names by their respective proper corporate
officer.

Vectren Fuels, Inc.

By: /s/ Randy L. Beck
    -----------------------------------------
    Randy L. Beck

Its: President
    -----------------------------------------
         (Printed Name and Title)

VECTREN ENERGY DELIVERY OF INDIANA, INC.

By:  /s/ Ronald G. Jochum
     ----------------------------------------
     Ronald G. Jochum

Its: Vice President, Power Supply for SIGECO
    -----------------------------------------
         (Printed Name and Title)

<PAGE>

<TABLE>
<CAPTION>

                                    EXHIBIT A

                           COAL QUALITY SPECIFICATIONS

         The following coal quality specifications must be met with respect to
each shipment of coal prepared for daily shipment during the Term of this
Agreement. All of the following specifications are on an "as received" basis.

                                               Specifications             Monthly                  Shipment
                                                                         Weighted                 Rejection
            COAL CHARACTERISTICS                                          Average                   Limits
---------------------------------------------- ------------------------- -------------------- --------------------
<S>                                                 <C>                  <C>                     <C>
Calorific value, as received                   Min. 10,750 BTU/lb        11,400 BTU/lb          <10,750 BTU/lb
% Moisture, as received                        Max. 15.0%                15.0%                       >15.0%
% Ash, as received                             Max. 10.5%                10%                         >10.5%
SO2 (lb/mmBTU)                                 Max. 4.0 lb SO2/mmbtu     3.85 lb/mmbtu          >4.0 lb SO2/mmbtu
Ash Fusion, softening, H=W red                 Min. 2100 deg, F          2200 deg, F                <2100 deg, F
Hardgrove Grindability Index                   Min. 55                   55                           <55
Slagging Index                                 Max. 2.0                  1.0                          >2.0
Nominal Size                                   Max. 2" x 0"              2" x 0"                      >2" x 0"
Percent passing 1/4 inch screen                Max. 45%                  45%                          >45%
Mineral Analysis of Ash:
           Ferric Oxide, Fe203                 Max. 25%                  18%                         >25%
Coal Seam:                                                               #5
County coal mined in:                          Pike
</TABLE>

The above coal quality  specifications must be met with respect to each shipment
of coal prepared for daily shipment  against this Agreement  with, such shipment
not to exceed 1,500 tons.

<PAGE>

<TABLE>
<CAPTION>

                                    EXHIBIT B

Penalties:

                                                                           Penalty per Unit for Exceedance
                                                                           or any portion thereof (Penalty
      Monthly Weighted Average                Unit of Exceedance                      per MMBTU)
------------------------------------- ----------------------------------- -----------------------------------
<S>                                                   <C>                                <C>
             Moisture %                               1%                                 $.01
               Ash %                                  1%                                 $.01
            SO2 lb/MMBTU                            .1 lb                                $.01

Premiums:

                                                                              Premium per Unit for
                                                                            Overachievance or any portion
      Monthly Weighted Average             Unit of Overachievance           thereof (Premium per MMBTU)
------------------------------------- ----------------------------------- -----------------------------------
             Moisture %                               1%                                $.005
               Ash %                                  1%                                $.005
            SO2 lb/MMBTU                            .1 lb                               $.005

</TABLE>

<TABLE>
<CAPTION>
                   EXAMPLE OF HOW PENALTIES WILL BE CALCULATED

                                                 1 - Moisture            2 - Ash               3 - SO2
----------------------- --------------------- -------------------- --------------------- --------------------
 Hypothetical Monthly
<S>                              <C>                 <C>                  <C>                   <C>
   Weighted Average              A                   15.4%                10.2%                 4.05#
       Monthly
 Weighted Average Per            B                   15.0%                 10%                  3.85#
      Exhibit A
      Exceedance               A - B                  .4%                  .2%                   .2#
# of Exceedance Units
  or Portion Thereof             C                    .4                    .2                    2
     Penalty Per
   Exceedance Units              D                    .01                  .01                   .01
  Penalty Per MMBTU
                               C x D                 .004                  .002                  .02
   Penalty on 3,000
 tons (assumes 11,400                               $273.60              $136.80              $1368.00
     BTUs per lb)

               EXAMPLE OF WHEN & HOW PREMIUMS WILL BE CALCULATED

                                                 1 - Moisture            2 - Ash               3 - SO2

----------------------- --------------------- -------------------- --------------------- --------------------
 Hypothetical Monthly
   Weighted Average              A                   14.6%                 9.8%                 3.65#
   Monthly Weighted
Average Per Exhibit A            B                   15.0%                10.0%                 3.85#
    Overachievance             B - A                  .4%                  .2%                   .2#
 # of Overachievance
   Units or Portion              C                    .4                    .2                    2
       Thereof
     Premium Per
 Overachievance Units            D                   .005                  .005                 .005
  Premium Per MMBTU
                               C x D                 .002                  .001                  .01
Premium on 3,000 tons
 (assumes 11,400 BTUs                               $136.80               $68.40               $684.00
       per lb)

</TABLE><PAGE>

                                                                     EXHIBIT 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR GLOWPOINT, INC. SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                               WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                                 GLOWPOINT, INC.

                             Expires August 17, 2009

No.: W-04- __                                     Number of Shares: ___________
Date of Issuance: February 17, 2004

         FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, Glowpoint, Inc., a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. Capitalized
terms used in this Warrant and not otherwise defined herein shall have the
respective meanings specified in Section 9 hereof.

         1. Term. The term of this Warrant shall commence on February 17, 2004
and shall expire at 5:00 p.m., eastern time, on August 17, 2009 (such period
being the "Term").

2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange.

         (a) Time of Exercise. The purchase rights represented by this Warrant
may be exercised in whole or in part during the Term commencing on August 17,
2004 and expiring on August 17, 2009.

                                      -1-
<PAGE>

         (b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

         (c) Cashless Exercise. Notwithstanding any provisions herein to the
contrary and commencing one (1) year following the Original Issue Date, if (i)
the Per Share Market Value of one share of Common Stock is greater than the
Warrant Price (at the date of calculation as set forth below) and (ii) a
registration statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect, in lieu of exercising this Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless exercise and
shall receive the number of shares of Common Stock equal to an amount (as
determined below) by surrender of this Warrant at the principal office of the
Issuer together with the properly endorsed Notice of Exercise in which event the
Issuer shall issue to the Holder a number of shares of Common Stock computed
using the following formula:

        X = Y - (A)(Y)
                ------
                  B

Where   X =    the number of shares of Common Stock to be issued to the Holder.

        Y      = the number of shares of Common Stock purchasable
               upon exercise of all of the Warrant or, if only a
               portion of the Warrant is being exercised, the
               portion of the Warrant being exercised.

        A =    the Warrant Price.

        B =    the Per Share Market Value of one share of Common Stock.

         (d) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three (3) Trading Days after such
exercise or, at the request of the Holder (provided that a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect), issued and delivered to the Depository Trust Company ("DTC")
account on the Holder's behalf via the Deposit Withdrawal Agent Commission
System ("DWAC") within a reasonable time, not exceeding three (3) Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the holder of the shares of Warrant Stock so purchased as of the date of such
exercise and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.

                                      -2-
<PAGE>

         (e) Transferability of Warrant. Subject to Section 2(f), this Warrant
may be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph and subject to the provisions of subsection (f) of
this Section 2, this Warrant may be transferred on the books of the Issuer by
the Holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant at the principal office of the Issuer, properly endorsed (by the
Holder executing an assignment in the form attached hereto) and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants to purchase the same aggregate number of shares of Warrant Stock, each
new Warrant to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant hereto.

         (f) Compliance with Securities Laws.

                  (i) The Holder of this Warrant, by acceptance hereof,
         acknowledges that this Warrant or the shares of Warrant Stock to be
         issued upon exercise hereof are being acquired solely for the Holder's
         own account and not as a nominee for any other party, and for
         investment, and that the Holder will not offer, sell or otherwise
         dispose of this Warrant or any shares of Warrant Stock to be issued
         upon exercise hereof except pursuant to an effective registration
         statement, or an exemption from registration, under the Securities Act
         and any applicable state securities laws.

                  (ii) Except as provided in paragraph (iii) below, this Warrant
         and all certificates representing shares of Warrant Stock issued upon
         exercise hereof shall be stamped or imprinted with a legend in
         substantially the following form:

                  THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
                  EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
                  SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
                  DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
                  UNDER APPLICABLE STATE SECURITIES LAWS OR GLOWPOINT, INC.
                  SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF
                  SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
                  PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
                  REQUIRED.

                                      -3-
<PAGE>

                  (iii) The Issuer agrees to reissue this Warrant or
         certificates representing any of the Warrant Stock, without the legend
         set forth above if at such time, prior to making any transfer of any
         such securities, the Holder shall give written notice to the Issuer
         describing the manner and terms of such transfer and removal as the
         Issuer may reasonably request. Such proposed transfer and removal will
         not be effected until: (a) either (i) the Issuer has received an
         opinion of counsel reasonably satisfactory to the Issuer, to the effect
         that the registration of such securities under the Securities Act is
         not required in connection with such proposed transfer, (ii) a
         registration statement under the Securities Act covering such proposed
         disposition has been filed by the Issuer with the Securities and
         Exchange Commission and has become effective under the Securities Act,
         (iii) the Issuer has received other evidence reasonably satisfactory to
         the Issuer that such registration and qualification under the
         Securities Act and state securities laws are not required, or (iv) the
         Holder provides the Issuer with reasonable assurances that such
         security can be sold pursuant to Rule 144 under the Securities Act; and
         (b) either (i) the Issuer has received an opinion of counsel reasonably
         satisfactory to the Issuer, to the effect that registration or
         qualification under the securities or "blue sky" laws of any state is
         not required in connection with such proposed disposition, or (ii)
         compliance with applicable state securities or "blue sky" laws has been
         effected or a valid exemption exists with respect thereto. The Issuer
         will respond to any such notice from a holder within five (5) business
         days. In the case of any proposed transfer under this Section 2(f), the
         Issuer will use reasonable efforts to comply with any such applicable
         state securities or "blue sky" laws, but shall in no event be required,
         (x) to qualify to do business in any state where it is not then
         qualified, (y) to take any action that would subject it to tax or to
         the general service of process in any state where it is not then
         subject, or (z) to comply with state securities or "blue sky" laws of
         any state for which registration by coordination is unavailable to the
         Issuer. The restrictions on transfer contained in this Section 2(f)
         shall be in addition to, and not by way of limitation of, any other
         restrictions on transfer contained in any other section of this
         Warrant. Whenever a certificate representing the Warrant Stock is
         required to be issued to a the Holder without a legend, in lieu of
         delivering physical certificates representing the Warrant Stock,
         provided the Issuer's transfer agent is participating in the Depository
         Trust Company ("DTC") Fast Automated Securities Transfer program, the
         Issuer shall use its reasonable best efforts to cause its transfer
         agent to electronically transmit the Warrant Stock to the Holder by
         crediting the account of the Holder's Prime Broker with DTC through its
         Deposit Withdrawal Agent Commission ("DWAC") system (to the extent not
         inconsistent with any provisions of this Warrant or the Purchase
         Agreement).

                                      -4-
<PAGE>

         3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

         (a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges created by or through the Issuer. The Issuer further covenants and
agrees that during the period within which this Warrant may be exercised, the
Issuer will at all times have authorized and reserved for the purpose of the
issue upon exercise of this Warrant a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.

         (b) Reservation. If any shares of Common Stock required to be reserved
for issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its reasonable best efforts at its expense to cause such shares
to be duly registered or qualified. If the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act then in
effect), and, to the extent permissible under the applicable securities exchange
rules, all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so listed. The Issuer
will also so list on each securities exchange or market, and will maintain such
listing of, any other securities which the Holder of this Warrant shall be
entitled to receive upon the exercise of this Warrant if at the time any
securities of the same class shall be listed on such securities exchange or
market by the Issuer.

         (c) Covenants. The Issuer shall not by any action including, without
limitation, amending the Certificate of Incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other 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 the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect the rights of the Holders of
the Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its reasonable best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be reasonably necessary to enable the Issuer to perform its
obligations under this Warrant.

                                      -5-
<PAGE>

         (d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

         4. Adjustment of Warrant Price and Warrant Share Number. The number of
shares of Common Stock for which this Warrant is exercisable, and the price at
which such shares may be purchased upon exercise of this Warrant, shall be
subject to adjustment from time to time as set forth in this Section 4. The
Issuer shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with Section 5.
Notwithstanding anything contained herein to the contrary, the Warrant Price
shall not be adjusted pursuant to Section 4(d), (e) and (f) hereof to a price
that is less than the Per Share Market Value on the Original Issue Date.

         (a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.

                  (i) In case the Issuer after the Original Issue Date shall do
         any of the following (each, a "Triggering Event"): (a) consolidate with
         or merge into any other Person and the Issuer shall not be the
         continuing or surviving corporation of such consolidation or merger, or
         (b) permit any other Person to consolidate with or merge into the
         Issuer and the Issuer shall be the continuing or surviving Person but,
         in connection with such consolidation or merger, any Capital Stock of
         the Issuer shall be changed into or exchanged for Securities of any
         other Person or cash or any other property, or (c) transfer all or
         substantially all of its properties or assets to any other Person, or
         (d) effect a capital reorganization or reclassification of its Capital
         Stock, then, and in the case of each such Triggering Event, proper
         provision shall be made so that, upon the basis and the terms and in
         the manner provided in this Warrant, the Holder of this Warrant shall
         be entitled upon the exercise hereof at any time after the consummation
         of such Triggering Event, to the extent this Warrant is not exercised
         prior to such Triggering Event, to receive at the Warrant Price in
         effect at the time immediately prior to the consummation of such
         Triggering Event in lieu of the Common Stock issuable upon such
         exercise of this Warrant prior to such Triggering Event, the
         Securities, cash and property to which such Holder would have been
         entitled upon the consummation of such Triggering Event if such Holder
         had exercised the rights represented by this Warrant immediately prior
         thereto, subject to adjustments (subsequent to such corporate action)
         as nearly equivalent as possible to the adjustments provided for
         elsewhere in this Section 4.

                                      -6-
<PAGE>

                  (ii) Notwithstanding anything contained in this Warrant to the
         contrary, a Triggering Event shall not be deemed to have occurred if,
         prior to the consummation thereof, each Person (other than the Issuer)
         which may be required to deliver any Securities, cash or property upon
         the exercise of this Warrant as provided herein shall assume, by
         written instrument delivered to, and reasonably satisfactory to, the
         Holder of this Warrant, (A) the obligations of the Issuer under this
         Warrant (and if the Issuer shall survive the consummation of such
         Triggering Event, such assumption shall be in addition to, and shall
         not release the Issuer from, any continuing obligations of the Issuer
         under this Warrant) and (B) the obligation to deliver to such Holder
         such Securities, cash or property as, in accordance with the foregoing
         provisions of this subsection (a), such Holder shall be entitled to
         receive, and such Person shall have similarly delivered to such Holder
         an opinion of counsel for such Person, which counsel shall be
         reasonably satisfactory to such Holder, or in the alternative, a
         written acknowledgement executed by the President or Chief Financial
         Officer of the Issuer, stating that this Warrant shall thereafter
         continue in full force and effect and the terms hereof (including,
         without limitation, all of the provisions of this subsection (a)) shall
         be applicable to the Securities, cash or property which such Person may
         be required to deliver upon any exercise of this Warrant or the
         exercise of any rights pursuant hereto.

                  (b) Stock Dividends, Subdivisions and Combinations. If at any
         time the Issuer shall:

                           (i) take a record of the holders of its Common Stock
         for the purpose of entitling them to receive a dividend payable in, or
         other distribution of, shares of Common Stock,

                           (ii) subdivide its outstanding shares of Common Stock
         into a larger number of shares of Common Stock, or

                                      -7-
<PAGE>

                           (iii) combine its outstanding shares of Common Stock
         into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

         (c) Certain Other Distributions. If at any time the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

                           (i) cash (other than a cash dividend payable out of
         earnings or earned surplus legally available for the payment of
         dividends under the laws of the jurisdiction of incorporation of the
         Issuer),

                           (ii) any evidences of its indebtedness, any shares of
         stock of any class or any other securities or property of any nature
         whatsoever (other than cash, Common Stock Equivalents or Additional
         Shares of Common Stock), or

                           (iii) any warrants or other rights to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property of any nature whatsoever
         (other than cash, Common Stock Equivalents or Additional Shares of
         Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer) of any and all such evidences of indebtedness, shares of stock, other
securities or property or warrants or other subscription or purchase rights so
distributable, and (2) the Warrant Price then in effect shall be adjusted to
equal (A) the Warrant Price then in effect multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such adjustment. A reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and shares
of any other class of stock shall be deemed a distribution by the Issuer to the
holders of its Common Stock of such shares of such other class of stock within
the meaning of this Section 4(c) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4(b).

         (d) Issuance of Additional Shares of Common Stock.

                  (i) Subject to the third sentence of the first paragraph of
Section 4 hereof, in the event the Issuer shall at any time issue any Additional
Shares of Common Stock (otherwise than as provided in the foregoing subsections
(b) through (c) of this Section 4), at a price per share less than the Warrant
Price then in effect or without consideration, then the Warrant Price upon each
such issuance shall be adjusted to that price determined by multiplying the
Warrant Price then in effect by a fraction:

                           (A) the numerator of which shall be equal to the sum
                  of (x) the number of shares of Outstanding Common Stock
                  immediately prior to the issuance of such Additional Shares of
                  Common Stock plus (y) the number of shares of Common Stock
                  which the aggregate consideration for the total number of such
                  Additional Shares of Common Stock so issued would purchase at
                  a price per share equal to the Warrant Price then in effect,
                  and

                                      -8-
<PAGE>

                           (B) the denominator of which shall be equal to the
                  number of shares of Outstanding Common Stock immediately after
                  the issuance of such Additional Shares of Common Stock.

                  (ii) The provisions of paragraph (i) of Section 4(d) shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4(b) or 4(c). No adjustment of the number
of shares of Common Stock for which this Warrant shall be exercisable shall be
made under paragraph (i) of Section 4(d) upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any Common
Stock Equivalents, if any such adjustment shall previously have been made upon
the issuance of such Common Stock Equivalents (or upon the issuance of any
warrant or other rights therefor) pursuant to Section 4(e) or Section 4(f).

         (e) Issuance of Warrants or Other Rights. If at any time the Issuer
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Issuer is the surviving
corporation) issue or sell, any Common Stock Equivalents (or issue any warrant
or other rights therefor), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Common Stock Equivalents (or any
warrant or other rights therefor) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the number of shares
for which this Warrant is exercisable and the Warrant Price then in effect shall
be adjusted as provided in Section 4(d) on the basis that the maximum number of
Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents (or upon the issuance of any warrant or other rights therefor) shall
be deemed to have been issued and outstanding and the Issuer shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights. No adjustments of the Warrant Price
then in effect or the number of Warrant Shares for which this Warrant is
exercisable shall be made upon the actual issue of such Common Stock or of such
Common Stock Equivalents upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or exchange of such
Common Stock Equivalents.

         (f) Issuance of Common Stock Equivalents. If at any time the Issuer
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Issuer is the surviving
corporation) issue or sell, any Common Stock Equivalents, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Warrant Price in effect immediately prior to the
time of such issue or sale, then the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be
adjusted as provided in Section 4(d) on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or exchange
of all such Common Stock Equivalents shall be deemed to have been issued and
outstanding and the Issuer shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Common Stock
Equivalents. No further adjustment of the number of shares of Common Stock for
which this Warrant is exercisable and the Warrant Price then in effect shall be
made under this Section 4(f) upon the issuance of any Common Stock Equivalents
which are issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to Section
4(e). No further adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be made
upon the actual issue of such Common Stock upon conversion or exchange of such
Common Stock Equivalents.

                                      -9-
<PAGE>

         (g) Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall have been made pursuant to Section 4(e) or
Section 4(f) as the result of any issuance of warrants, other rights or Common
Stock Equivalents, and (i) such warrants or other rights, or the right of
conversion or exchange in such other Common Stock Equivalents, shall expire, and
all or a portion of such warrants or other rights, or the right of conversion or
exchange with respect to all or a portion of such other Common Stock
Equivalents, as the case may be shall not have been exercised, or (ii) the
consideration per share for which shares of Common Stock are issuable pursuant
to such Common Stock Equivalents, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event, then for each
outstanding Warrant such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Upon the occurrence of an event set forth in this Section 4(g)
above, there shall be a recomputation made of the effect of such Common Stock
Equivalents on the basis of: (i) treating the number of Additional Shares of
Common Stock or other property, if any, theretofore actually issued or issuable
pursuant to the previous exercise of any such warrants or other rights or any
such right of conversion or exchange, as having been issued on the date or dates
of any such exercise and for the consideration actually received and receivable
therefor, and (ii) treating any such Common Stock Equivalents which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for which shares of Common Stock or
other property are issuable under such Common Stock Equivalents; whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and annulled.

         (h) Purchase of Common Stock by the Issuer. If the Issuer at any time
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value, then
the Warrant Price upon each such purchase, redemption or acquisition shall be
adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Outstanding
Common Stock immediately prior to such purchase, redemption or acquisition minus
the number of shares of Common Stock which the aggregate consideration for the
total number of such shares of Common Stock so purchased, redeemed or acquired
would purchase at the Per Share Market Value; and (ii) the denominator of which
shall be the number of shares of Outstanding Common Stock immediately after such
purchase, redemption or acquisition. For the purposes of this subsection (h),
the date as of which the Per Share Market Price shall be computed shall be the
earlier of (x) the date on which the Issuer shall enter into a firm contract for
the purchase, redemption or acquisition of such Common Stock, or (y) the date of
actual purchase, redemption or acquisition of such Common Stock. For the
purposes of this subsection (h), a purchase, redemption or acquisition of a
Common Stock Equivalent shall be deemed to be a purchase of the underlying
Common Stock, and the computation herein required shall be made on the basis of
the full exercise, conversion or exchange of such Common Stock Equivalent on the
date as of which such computation is required hereby to be made, whether or not
such Common Stock Equivalent is actually exercisable, convertible or
exchangeable on such date.

                                      -10-
<PAGE>

         (i) Other Provisions applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect provided for in this Section 4:

                  (i) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents (or any
warrants or other rights therefor) shall be issued for cash consideration, the
consideration received by the Issuer therefor shall be the amount of the cash
received by the Issuer therefor, or, if such Additional Shares of Common Stock
or Common Stock Equivalents are offered by the Issuer for subscription, the
subscription price, or, if such Additional Shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or accrued
dividends and without taking into account any compensation, discounts or
expenses paid or incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof). To the extent that such
issuance shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the Issuer. In case any
Additional Shares of Common Stock or any Common Stock Equivalents (or any
warrants or other rights therefor) shall be issued in connection with any merger
in which the Issuer issues any securities, the amount of consideration therefor
shall be deemed to be the fair value, as determined in good faith by the Board
of Directors of the Issuer, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Common Stock
Equivalents, or any warrants or other rights therefor, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Issuer for issuing such warrants or other rights
plus the additional consideration payable to the Issuer upon exercise of such
warrants or other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Common Stock Equivalents shall be
the consideration received by the Issuer for issuing warrants or other rights to
subscribe for or purchase such Common Stock Equivalents, plus the consideration
paid or payable to the Issuer in respect of the subscription for or purchase of
such Common Stock Equivalents, plus the additional consideration, if any,
payable to the Issuer upon the exercise of the right of conversion or exchange
in such Common Stock Equivalents. In case of the issuance at any time of any
Additional Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividends upon any class of stock other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such
dividend so paid or satisfied.

                                      -11-
<PAGE>

                  (ii) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4(b)) up
to, but not beyond the date of exercise if such adjustment either by itself or
with other adjustments not previously made adds or subtracts less than one
percent (1%) of the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount (except as aforesaid) which is
postponed shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose of
any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

                  (iii) Fractional Interests. In computing adjustments under
this Section 4, fractional interests in Common Stock shall be taken into account
to the nearest one one-hundredth (1/100th) of a share.

                  (iv) When Adjustment Not Required. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.

         (j) Form of Warrant after Adjustments. The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

         (k) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Stock, but prior to the occurrence of the event for
which such record is taken, and the Holder exercises this Warrant, any shares of
Common Stock issuable upon exercise by reason of such adjustment shall be deemed
the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for the Holder by the Issuer to be issued
to the Holder upon and to the extent that the event actually takes place, upon
payment of the current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.

                                      -12-
<PAGE>

         5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Absent manifest error, such certificate shall be
final and binding on the parties hereto.

         6. Fractional Shares. No fractional shares of Warrant Stock will be
issued in connection with any exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.

         7. Ownership Cap and Certain Exercise Restrictions. (a) Notwithstanding
anything to the contrary set forth in this Warrant, at no time may a Holder of
this Warrant exercise this Warrant if the number of shares of Common Stock to be
issued pursuant to such exercise would exceed, when aggregated with all other
shares of Common Stock owned by such Holder at such time, the number of shares
of Common Stock which would result in such Holder owning more than 4.999% of all
of the Common Stock outstanding at such time; provided, however, that upon a
holder of this Warrant providing the Issuer with sixty-one (61) days notice
(pursuant to Section 13 hereof) (the "Waiver Notice") that such Holder would
like to waive this Section 7(a) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(a) will be of no force or
effect with regard to all or a portion of the Warrant referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect (i) during the sixty-one (61) days immediately preceding the expiration
of the term of this Warrant or (ii) upon the Holder's receipt of a Call Notice
(as defined in Section 8 hereof).

                  (b) The Holder may not exercise the Warrant hereunder to the
extent such exercise would result in the Holder beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act and the rules
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon exercise of the Warrant held by the
Holder after application of this Section; provided, however, that upon a holder
of this Warrant providing the Issuer with a Waiver Notice that such holder would
like to waive this Section 7(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(b) shall be of no force
or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect (i) during the sixty-one (61) days immediately preceding the expiration
of the term of this Warrant or (ii) upon the Holder's receipt of a Call Notice.

                                      -13-
<PAGE>

         8. Call. Notwithstanding anything herein to the contrary, the Issuer,
at its option, may call up to one hundred percent (100%) of this Warrant by
providing the Holder of this Warrant written notice pursuant to Section 13 (the
"Call Notice") if (a) the Issuer completes a bona fide underwritten public
offering during the Term resulting in gross proceeds to the Issuer of at least
$40,000,000 and, commencing six months and one day following the Original Issue
Date, the Per Share Market Value of the Common Stock is greater than $5.50 (as
may be adjusted for any stock splits or combinations of the Common Stock) for a
period of ten (10) consecutive Trading Days immediately prior to the date of
delivery of the Call Notice, or (b) commencing twelve (12) months following the
Original Issue Date, the Per Share Market Value of the Common Stock is greater
than $7.50 (as may be adjusted for any stock splits or combinations of the
Common Stock) for a period of ten (10) consecutive Trading Days immediately
prior to the date of delivery of the Call Notice; provided, that (i) a
registration statement under the Securities Act providing for the resale of the
Warrant Stock and the Common Stock issued pursuant to the Purchase Agreement is
then in effect and has been effective, without lapse or suspension of any kind,
for a period of 60 consecutive calendar days, (ii) trading in the Common Stock
shall not have been suspended by the Securities and Exchange Commission or
Nasdaq and (iii) the Issuer is in material compliance with the terms and
conditions of this Warrant and the other Transaction Documents (as defined in
the Purchase Agreement); provided, further, that a registration statement under
the Securities Act providing for the resale of the Warrant Stock and the Common
Stock issued pursuant to the Purchase Agreement is in effect from the date of
delivery of the Call Notice until the date which is the later of (A) the date
the Holder exercises the Warrant pursuant to the Call Notice and (B) the 10th
Trading Day after the Holder receives the Call Notice (the "Early Termination
Date"). The rights and privileges granted pursuant to this Warrant with respect
to the shares of Warrant Stock subject to the Call Notice (the "Called Warrant
Shares") shall expire on the Early Termination Date if this Warrant is not
exercised with respect to such Called Warrant Shares prior to such Early
Termination Date. In the event this Warrant is not exercised with respect to the
Called Warrant Shares, the Issuer shall remit to the Holder of this Warrant (1)
$.10 per Called Warrant Share and (2) a new Warrant representing the number of
shares of Warrant Stock, if any, which shall not have been subject to the Call
Notice upon the Holder tendering to the Issuer the applicable Warrant
certificate.

         9. Definitions. For the purposes of this Warrant, the following terms
have the following meanings:

                  "Additional Shares of Common Stock" means all shares of Common
         Stock issued by the Issuer after the Original Issue Date, and all
         shares of Other Common, if any, issued by the Issuer after the Original
         Issue Date, except: (i) the Issuer's issuance of Common Stock and
         warrants therefore in connection with a merger and/or acquisition,
         consolidation, sale or disposition of all or substantially all of the
         Issuer's assets; provided that the Warrant Price shall be adjusted in
         accordance with Section 4(a)(i), (ii) the issuance of shares of Common
         Stock or warrants therefore in connection with strategic agreements so
         long as such issuances are not for the purpose of raising capital,
         (iii) the Issuer's issuance of Common Stock or the issuance or grants
         of options to purchase Common Stock pursuant to the Issuer's stock
         option plans and employee stock purchase plans as they now exist, (iv)
         the Issuer's issuance of Common Stock or the issuance or grants of
         options to purchase Common Stock pursuant to any future stock option
         plan or employee stock purchase plan which is approved by the Board or
         any amendment to the Issuer's existing stock option plans and employee
         stock purchase plans which is approved by the Board so long as such
         issuances in the aggregate do not exceed 6,500,000 shares of Common
         Stock, (v) any issuances of securities or Common Stock pursuant to
         Issuer 401(k) matches, (vi) any issuances of securities to consultants,
         financial advisers, public relations consultants or secured lenders to
         the Issuer so long as such issuances to such secured lenders do not in
         the aggregate exceed ten percent (10%) of the Issuer's issued and
         outstanding shares of Common Stock as of the date hereof, (vii) the
         payment of any dividends on the Issuer's Series B Convertible Preferred
         Stock, (viii) securities issued pursuant to a bona fide firm
         underwritten public offering of the Issuer's securities and (ix) the
         issuance of Common Stock upon the exercise or conversion of any
         securities described in clauses (i) through (viii) above.

                                      -14-
<PAGE>

                  "Board" shall mean the Board of Directors of the Issuer.

                  "Capital Stock" means and includes (i) any and all shares,
         interests, participations or other equivalents of or interests in
         (however designated) corporate stock, including, without limitation,
         shares of preferred or preference stock, (ii) all partnership interests
         (whether general or limited) in any Person which is a partnership,
         (iii) all membership interests or limited liability company interests
         in any limited liability company, and (iv) all equity or ownership
         interests in any Person of any other type.

                  "Certificate of Incorporation" means the Certificate of
         Incorporation of the Issuer as in effect on the Original Issue Date,
         and as hereafter from time to time amended, modified, supplemented or
         restated in accordance with the terms hereof and thereof and pursuant
         to applicable law.

                  "Common Stock" means the Common Stock, par value $.0001 per
         share, of the Issuer and any other Capital Stock into which such stock
         may hereafter be changed.

                  "Common Stock Equivalent" means any Convertible Security or
         warrant, option or other right to subscribe for or purchase any
         Additional Shares of Common Stock or any Convertible Security.

                  "Convertible Securities" means evidences of Indebtedness,
         shares of Capital Stock or other Securities which are or may be at any
         time convertible into or exchangeable for Additional Shares of Common
         Stock. The term "Convertible Security" means one of the Convertible
         Securities.

                  "Governmental Authority" means any governmental, regulatory or
         self-regulatory entity, department, body, official, authority,
         commission, board, agency or instrumentality, whether federal, state or
         local, and whether domestic or foreign.

                  "Holders" mean the Persons who shall from time to time own any
         Warrant. The term "Holder" means one of the Holders.

                  "Independent Appraiser" means a nationally recognized or major
         regional investment banking firm or firm of independent certified
         public accountants of recognized standing (which may be the firm that
         regularly examines the financial statements of the Issuer) that is
         regularly engaged in the business of appraising the Capital Stock or
         assets of corporations or other entities as going concerns, and which
         is not affiliated with either the Issuer or the Holder of any Warrant.

                                      -15-
<PAGE>

                  "Issuer" means Glowpoint, Inc., a Delaware corporation, and
         its successors.

                  "Majority Holders" means at any time the Holders of Warrants
         exercisable for a majority of the shares of Warrant Stock issuable
         under the Warrants at the time outstanding.

                  "Nasdaq" means the Nasdaq National Market.

                  "Original Issue Date" means February 17, 2004.

                  "OTC Bulletin Board" means the over-the-counter electronic
         bulletin board.

                  "Other Common" means any other Capital Stock of the Issuer of
         any class which shall be authorized at any time after the date of this
         Warrant (other than Common Stock) and which shall have the right to
         participate in the distribution of earnings and assets of the Issuer
         without limitation as to amount.

                  "Outstanding Common Stock" means, at any given time, the
         aggregate amount of outstanding shares of Common Stock, assuming full
         exercise, conversion or exchange (as applicable) of all options,
         warrants and other Securities which are convertible into or exercisable
         or exchangeable for, and any right to subscribe for, shares of Common
         Stock that are outstanding at such time.

                  "Person" means an individual, corporation, limited liability
         company, partnership, joint stock company, trust, unincorporated
         organization, joint venture, Governmental Authority or other entity of
         whatever nature.

                  "Per Share Market Value" means on any particular date (a) the
         closing sale price per share of the Common Stock on such date on Nasdaq
         or another registered national stock exchange on which the Common Stock
         is then listed, or if there is no such price on such date, then the
         closing sale price on such exchange or quotation system on the date
         nearest preceding such date, or (b) if the Common Stock is not listed
         then on Nasdaq or any registered national stock exchange, the closing
         sale price for a share of Common Stock in the over-the-counter market,
         as reported by the OTC Bulletin Board or in the National Quotation
         Bureau Incorporated or similar organization or agency succeeding to its
         functions of reporting prices) at the close of business on such date,
         or (c) if the Common Stock is not then reported by the OTC Bulletin
         Board or the National Quotation Bureau Incorporated (or similar
         organization or agency succeeding to its functions of reporting
         prices), then the average of the "Pink Sheet" quotes for the relevant
         conversion period, as determined in good faith by the holder, or (d) if
         the Common Stock is not then publicly traded the fair market value of a
         share of Common Stock as determined by an Independent Appraiser
         selected in good faith by the Majority Holders; provided, however, that
         the Issuer, after receipt of the determination by such Independent
         Appraiser, shall have the right to select an additional Independent
         Appraiser, in which case, the fair market value shall be equal to the
         average of the determinations by each such Independent Appraiser; and
         provided, further that all determinations of the Per Share Market Value
         shall be appropriately adjusted for any stock dividends, stock splits
         or other similar transactions during such period. The determination of
         fair market value by an Independent Appraiser shall be based upon the
         fair market value of the Issuer determined on a going concern basis as
         between a willing buyer and a willing seller and taking into account
         all relevant factors determinative of value, and shall be final and
         binding on all parties.

                                      -16-
<PAGE>

                  "Purchase Agreement" means the Common Stock Purchase Agreement
         dated as of February 17, 2004, among the Issuer and the Purchasers.

                  "Purchasers" means the purchasers of Common Stock and Warrants
         issued by the Issuer pursuant to the Purchase Agreement.

                  "Securities" means any debt or equity securities of the
         Issuer, whether now or hereafter authorized, any instrument convertible
         into or exchangeable for Securities or a Security, and any option,
         warrant or other right to purchase or acquire any Security. "Security"
         means one of the Securities.

                  "Securities Act" means the Securities Act of 1933, as amended,
         or any similar federal statute then in effect.

                  "Subsidiary" means any corporation at least 50% of whose
         outstanding Voting Stock shall at the time be owned directly or
         indirectly by the Issuer or by one or more of its Subsidiaries, or by
         the Issuer and one or more of its Subsidiaries.

                  "Term" has the meaning specified in Section 1 hereof.

                  "Trading Day" means (a) a day on which the Common Stock is
         traded on Nasdaq, or (b) if the Common Stock is not listed on Nasdaq, a
         day on which the Common Stock is traded on any other registered
         national stock exchange, or (c) if the Common Stock is not traded on
         any other registered national stock exchange, a day on which the Common
         Stock is traded on the OTC Bulletin Board, or (d) if the Common Stock
         is not traded on the OTC Bulletin Board, a day on which the Common
         Stock is quoted in the over-the-counter market as reported by the
         National Quotation Bureau Incorporated (or any similar organization or
         agency succeeding its functions of reporting prices); provided,
         however, that in the event that the Common Stock is not listed or
         quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall
         mean any day except Saturday, Sunday and any day which shall be a legal
         holiday 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.

                                      -17-
<PAGE>

                  "Voting Stock" means, as applied to the Capital Stock of any
         corporation, Capital Stock of any class or classes (however designated)
         having ordinary voting power for the election of a majority of the
         members of the Board of Directors (or other governing body) of such
         corporation, other than Capital Stock having such power only by reason
         of the happening of a contingency.

                  "Warrants" means the Warrants issued and sold pursuant to the
         Purchase Agreement, including, without limitation, this Warrant, and
         any other warrants of like tenor issued in substitution or exchange for
         any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
         hereof or of any of such other Warrants.

                  "Warrant Price" initially means U.S. $2.75, as such price may
         be adjusted from time to time as shall result from the adjustments
         specified in this Warrant, including Section 4 hereto.

                  "Warrant Share Number" means at any time the aggregate number
         of shares of Warrant Stock which may at such time be purchased upon
         exercise of this Warrant, after giving effect to all prior adjustments
         and increases to such number made or required to be made under the
         terms hereof.

                  "Warrant Stock" means Common Stock issuable upon exercise of
         any Warrant or Warrants or otherwise issuable pursuant to any Warrant
         or Warrants.

         10. Other Notices. In case at any time:

                                    (A)     the Issuer shall make any
                                            distributions to the holders of
                                            Common Stock; or

                                    (B)     the Issuer shall authorize the
                                            granting to all holders of its
                                            Common Stock of rights to subscribe
                                            for or purchase any shares of
                                            Capital Stock of any class or other
                                            rights; or

                                    (C)     there shall be any reclassification
                                            of the Capital Stock of the Issuer;
                                            or

                                    (D)     there shall be any capital
                                            reorganization by the Issuer; or

                                    (E)     there shall be any (i) consolidation
                                            or merger involving the Issuer or
                                            (ii) sale, transfer or other
                                            disposition of all or substantially
                                            all of the Issuer's property, assets
                                            or business (except a merger or
                                            other reorganization in which the
                                            Issuer shall be the surviving
                                            corporation and its shares of
                                            Capital Stock shall continue to be
                                            outstanding and unchanged and except
                                            a consolidation, merger, sale,
                                            transfer or other disposition
                                            involving a wholly-owned
                                            Subsidiary); or

                                      -18-
<PAGE>

                                    (F)     there shall be a voluntary or
                                            involuntary dissolution, liquidation
                                            or winding-up of the Issuer or any
                                            partial liquidation of the Issuer or
                                            distribution to holders of Common
                                            Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer's transfer books are closed
in respect thereto. Except as otherwise specifically provided herein, no holder,
as such, of this Warrant shall be entitled to vote or receive dividends or be
deemed the holder of shares of the Issuer for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Issuer or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on such holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Issuer,
whether such liabilities are asserted by the Issuer or by creditors of the
Issuer. Notwithstanding this Section 10, the Issuer will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Issuer generally, contemporaneously with the giving thereof
to the stockholders. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

         11. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 10 without the consent of the Holder of this Warrant.

         12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.

                                      -19-
<PAGE>

         13. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service or
(iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Stock issued pursuant hereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:

                               Glowpoint, Inc.
                               225 Long Avenue
                               Hillside, New Jersey 07205
                               Attention: Chief Executive Officer and President
                               Tel. No.: (973) 282-2000
                               Fax No.: (973) 391-9776

with copies (which copies
shall not constitute notice
to the Issuer) to:             Morrison & Foerster LLP
                               1290 Avenue of the Americas
                               New York, New York 10104
                               Attention: Michael J.W. Rennock
                               Tel. No.: (212) 468-8000
                               Fax No.: (212) 468-7999

Copies of notices to the Holder shall be sent to Jenkens & Gilchrist Parker
Chapin LLP, 405 Lexington Avenue, New York, New York 10174, Attention:
Christopher S. Auguste, Facsimile No.: (212) 704-6288. Any party hereto may from
time to time change its address for notices by giving at least ten (10) days
written notice of such changed address to the other party hereto.

         14. Warrant Agent. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

         15. Remedies. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.

                                      -20-
<PAGE>

         16. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.

         17. Modification and Severability. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

         18. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

                                      -21-
<PAGE>

         IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.

                              GLOWPOINT, INC.

                              By:
                                 --------------------------------------------
                                    Name:
                                    Title:

                                      -22-
<PAGE>

                                  EXERCISE FORM

                                 GLOWPOINT, INC.

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Glowpoint,
Inc. covered by the within Warrant.

Dated: _________________           Signature  ___________________________

                                   Address    ___________________________

                                              ___________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________           Signature  ___________________________

                                   Address    ___________________________

                                              ___________________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________           Signature  ___________________________

                                   Address    ___________________________

                                              ___________________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                      -23-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}]]