Document:

hybridexh10_1.htm

    
      

    

     

    Exhibit
10.1

     

    Letter of
Resignation of Steven Radt

     

    

     

    Steven
Radt

    221
Willow Ave.

    Hoboken,
NJ 07030

    

    

    December
2, 2008

    

    

    Mr. Mark
S. Klein

    Hybrid
Dynamics Corporation

    52-66
Iowa Ave.

    Paterson,
NJ 07502

    

    Dear
Mark,

    

    Please
accept this letter as my resignation as member of the Board of Directors and the
positions of Chief Executive Officer and Treasurer of Hybrid Dynamics
Corporation and its subsidiaries, effective immediately.

    

    

    Sincerely,

    /s/ STEVEN
RADT

    Steven
RadtEXHIBIT
      10.1

    

      NEITHER
        THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
        THE
        SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
        LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
        (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
        LAWS OR (B) AN OPINION OF COUNSEL TO THE HOLDER, IN A FORM REASONABLY ACCEPTABLE
        TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
        UNLESS
        SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
        FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
        ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES,
        IF
        EFFECTED IN COMPLIANCE WITH SAID ACT.

       

      POKERTEK,
        INC.

       

      WARRANT
        TO PURCHASE COMMON STOCK

       

      Warrant
        No.: 2007-2A

      Date
        of
        Issuance: April 26, 2007 (“Issuance
        Date”)

       

      PokerTek,
        Inc., a North Carolina corporation (the “Company”),
        hereby certifies that, for good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, JANUS VENTURE FUND (a series
        of
        Janus Investment Fund), the registered holder hereof or its permitted assigns
        (the “Holder”),
        is
        entitled, subject to the terms set forth below, to purchase from the Company,
        at
        the Exercise Price (as defined below) then in effect, upon exercise of this
        Warrant to Purchase Common Stock (including any Warrants to Purchase Common
        Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
        at
        any time or times on or after the Issuance Date, but not after 11:59 p.m.,
        New
        York time, on the Expiration Date (as defined below), 149,926 fully paid
        and
        nonassessable shares of Common Stock (as defined below) (the “Warrant
        Shares”),
        provided that the number of Warrant Shares shall automatically be increased
        to
        168,992 on the Shareholder Approval Date (as defined in the Securities Purchase
        Agreement). Except as otherwise defined herein, capitalized terms in this
        Warrant shall have the meanings set forth in Section 14. This Warrant is
        the
        amended and restated version of Warrant No.: 2007-2, one of the Warrants
        to
        purchase Common Stock (the “SPA
        Warrants”)
        issued
        pursuant to Section 1 of that certain Securities Purchase Agreement, dated
        as of
        April 23, 2007 (the “Subscription Date”),
        by
        and
        among the Company and the investors (the “Buyers”) referred to therein (the
“Securities
        Purchase Agreement”).
        All
        changes made pursuant to such amendment and restatement shall be deemed to
        have
        been made as of the Issuance Date, as if the wording of this amended and
        restated version was in effect as of the Issuance Date.

       

      1. EXERCISE OF WARRANT.

       

      (a) Mechanics
        of Exercise.
        Subject
        to the terms and conditions hereof (including, without limitation, the
        limitations set forth in Section 1(f)(i)), this Warrant may be exercised
        by

       

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      the
        Holder on any day on or after the Issuance Date, in whole or in part, by
        (i)
        delivery of a written notice, in the form attached hereto as Exhibit
        A
        (the
“Exercise
        Notice”),
        of
        the Holder’s election
        to exercise this Warrant and (ii) (A) payment to the Company of an amount
        equal
        to the then-applicable Exercise Price multiplied by the number of Warrant
        Shares
        as to which this Warrant is being exercised (the “Aggregate
        Exercise Price”)
        in
        cash or wire transfer of immediately available funds or (B) by notifying
        the
        Company that this Warrant is being exercised pursuant to a Cashless Exercise
        (as
        defined in Section 1(d)). The Holder shall not be required to deliver the
        original Warrant in order to effect an exercise hereunder. Execution and
        delivery of the Exercise Notice with respect to less than all of the Warrant
        Shares shall have the same effect as cancellation of the original Warrant
        and
        issuance of a new Warrant evidencing the right to purchase the remaining
        number
        of Warrant Shares. Execution and delivery of the Exercise Notice for all
        of the
        Warrant Shares shall have the same effect as cancellation of the original
        Warrant after delivery of the Warrant Shares in accordance with the terms
        hereof. On or before the first (1st)
        Business Day following the date on which the Company has received each of
        the
        Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
        Exercise), (the “Exercise
        Delivery Documents”),
        the
        Company shall transmit by facsimile an acknowledgment of confirmation of
        receipt
        of the Exercise Delivery Documents to the Holder and the Company’s transfer
        agent (the “Transfer
        Agent”).
        On or
        before the third (3rd)
        Business
        Day following the date on which the Company has received all of the Exercise
        Delivery Documents (the “Share Delivery
        Date”),
        the
        Company shall (X) provided that the Transfer Agent is participating in The
        Depository Trust Company (“DTC”)
        Fast
        Automated Securities Transfer Program, upon the request of the Holder, credit
        such aggregate number of shares of Common Stock to which the Holder is entitled
        pursuant to such exercise to the Holder’s or its designee’s balance account with
        DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
        Transfer Agent is not participating in the DTC Fast Automated Securities
        Transfer Program, issue and deliver to the Holder or, at Holder’s instruction
        pursuant to the Exercise Notice, Holder’s agent or designee, in each case, sent
        by reputable overnight courier to the address as specified in the Exercise
        Notice, a certificate, registered in the Company’s share register in the name of
        the Holder or its designee (as indicated in the Exercise Notice), for the
        number
        of shares of Common Stock to which the Holder is entitled pursuant to such
        exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall
        be
        deemed for all corporate purposes to have become the holder of record of
        the
        Warrant Shares with respect to which this Warrant has been exercised,
        irrespective of the date such Warrant Shares are credited to the Holder’s DTC
        (as defined below) account or the date of delivery of the certificates
        evidencing such Warrant Shares, as the case may be. If this Warrant is submitted
        in connection with any exercise pursuant to this Section 1(a) and the number
        of
        Warrant Shares represented by this Warrant submitted for exercise is greater
        than the number of Warrant Shares being acquired upon an exercise, then the
        Company shall as soon as practicable and in no event later than five
        (5) Business
        Days after any exercise and at its own expense, issue and deliver to the
        Holder
        (or its designee) a new Warrant (in accordance with Section 6(d)) representing
        the right to purchase the number of Warrant Shares purchasable immediately
        prior
        to such exercise under this Warrant, less the number of Warrant Shares with
        respect to which this Warrant is exercised. No fractional shares of Common
        Stock
        are to be issued upon the exercise of this Warrant, but rather the number
        of
        shares of Common Stock to be issued shall be rounded up to the nearest whole
        number. The Company shall pay any and all taxes which may be payable with
        respect to the issuance and delivery of Warrant Shares upon

       

      
        
           

        

        
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      exercise
        of this Warrant, provided that the Company shall not be required to pay any
        tax
        that may be payable in respect of any transfer involved in the issue and
        delivery of any Warrant Shares in any name other than that of the Holder
        or one
        of its affiliates, or any income or transfer tax due by the Holder with respect
        to Warrant Shares issued upon exercise of this Warrant.

       

      (b) Exercise
        Price.
        For
        purposes of this Warrant, “Exercise
        Price”
means
        $0.50, subject to adjustment as provided herein.

       

      (c) Company’s
        Failure to Timely Deliver Securities.
        if
        within three (3) Trading Days of receipt of the Exercise Delivery Documents,
        the
        Company shall fail to issue and deliver a certificate to the Holder. and
        register such shares of Common Stock on the Company’s share register or credit
        the Holder’s balance account with DTC for the number of shares of Common Stock
        to which the Holder is entitled upon such Holder’s exercise hereunder (as the
        case may be), and if on or after such third (3rd) Trading Day the Holder
        purchases (in an open market transaction or otherwise) shares of Common Stock
        to
        deliver in satisfaction of a sale by the Holder of shares of Common Stock
        issuable upon such exercise that the Holder anticipated receiving from the
        Company (a “Buy-In”),
        then,
        in
        addition to all other remedies available to the Holder, the Company shall,
        within three (3) Business Days after the Holder’s request and in the Holder’s
        discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
        total purchase price (including brokerage commissions, if any) for the shares
        of
        Common Stock so purchased (the “Buy-In
        Price”),
        at
        which point the Company’s obligation to deliver such certificate (and to issue
        such shares of Common Stock) shall terminate, or (ii) promptly honor its
        obligation to deliver to the Holder a certificate or certificates representing
        such shares of Common Stock or credit the Holder’s balance account with DTC for
        the number of shares of Common Stock to which the Holder is entitled upon
        such
        Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in
        an amount equal to the excess (if any) of the Buy-In Price over the product
        of
        (A) such number of shares of Common Stock times (B) the VWAP of the Common
        Stock
        for the five (5) Trading
        Day period immediately preceding the date of the Exercise Notice.

       

      (d) Cashless
        Exercise.
        Notwithstanding anything contained herein to the contrary (other than Section
        1(f) below), the Holder may, in its sole discretion, exercise this Warrant
        in
        whole or in part and, in lieu of making the cash payment otherwise contemplated
        to be made to the Company upon such exercise in payment of the Aggregate
        Exercise Price, elect instead to receive upon such exercise the “Net Number” of
        shares of Common Stock determined according to the following formula (a
“Cashless
        Exercise”):

       

      Net
        Number = (A
        x B)
        - (A x C)

      B

       

      For
        purposes of the foregoing formula:

       

      A=
        the
        total number of shares with respect to which this Warrant is then being
        exercised.

       

       

      
        
           

        

        
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      B
        = the
        VWAP of the Common Stock for the five (5) Trading
        Day period immediately preceding the date of the Exercise Notice.

       

      C
        = the
        Exercise Price then in effect for the applicable Warrant Shares at the time
        of
        such exercise.

       

      (e) Disputes.
        In the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the number of Warrant Shares to be issued pursuant
        to
        the terms hereof, the Company shall promptly issue to the Holder the number
        of
        Warrant Shares that are not disputed and resolve such dispute in accordance
        with
        Section 12.

       

      (f) Limitations
        on Exercises.

       

      (i) Beneficial
        Ownership.
        Notwithstanding anything to the contrary contained in this Warrant, this
        Warrant
        shall not be exercisable by the Holder hereof to the extent (but only to
        the
        extent) that, if exercisable by the Holder, the Holder or any of its affiliates
        would beneficially own in excess of 4.90% (the “Maximum
        Percentage”)
        of the
        outstanding shares of Common Stock. To the extent the above limitation applies,
        the determination of whether this Warrant shall be exercisable (vis-a-vis
        other
        convertible, exercisable or exchangeable securities owned by the Holder)
        and of
        which warrants shall be exercisable (as among all warrants owned by the Holder)
        shall, subject to such Maximum Percentage limitation, be determined on the
        basis
        of the first submission to the Company for conversion, exercise or exchange
        (as
        the case may be). No prior inability to exercise this Warrant pursuant to
        this
        paragraph shall have any effect on the applicability of the provisions of
        this
        paragraph with respect to any subsequent determination of exercisability.
        For
        the purposes of this paragraph, beneficial ownership and all determinations
        and
        calculations (including, without limitation, with respect to calculations
        of
        percentage ownership) shall be determined by the Holder in accordance with
        Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement)
        and the rules and regulations promulgated thereunder. The provisions of this
        paragraph shall be implemented in a manner otherwise than in strict conformity
        with the terms this paragraph to correct this paragraph (or any portion hereof)
        which may be defective or inconsistent with the intended Maximum Percentage
        beneficial ownership limitation herein contained or to make changes or
        supplements necessary or desirable to properly give effect to such Maximum
        Percentage limitation. The limitations contained in this paragraph shall
        apply
        to a successor Holder of this Warrant. The holders of Common Stock shall
        be
        third party beneficiaries of this paragraph and the Company may not waive
        this
        paragraph without the consent of holders of a majority of its Common Stock,
        For
        purposes of this Warrant, in determining the number of outstanding shares
        of
        Common Stock, the Holder may rely on the number of outstanding shares of
        Common
        Stock as reflected in (1) the Company’s most recent Form 10-K (or Form 10-KSB),
        Form l0-Q (or Form 10-QSB), Current Report on Form 8-K or other public filing
        with the SEC (as the case may be), (2) a more recent public announcement
        by the
        Company or (3) any other notice by the Company or the Transfer Agent setting
        forth the number of shares of Common Stock outstanding. For any reason at
        any
        time, upon the written or oral request of the Holder, the Company shall within
        one (1) Business Day confirm orally and in writing to the Holder the number
        of
        shares of Common Stock then

       

       

      
        
           

        

        
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      outstanding,
        including by virtue of any prior conversion or exercise of convertible or
        exercisable securities into Common Stock, including, without limitation,
        pursuant to this Warrant or securities issued pursuant to the Securities
        Purchase Agreement.

       

      (ii) Principal
        Market Regulation.
        The
        Company shall not be obligated to issue any shares of Common Stock upon exercise
        of this Warrant if the issuance of such shares of Common Stock would exceed
        that
        number of shares of Common Stock which the Company may issue upon exercise
        of
        this Warrant without breaching the Company’s obligations under the rules or
        regulations of the Principal Market (the “Exchange
        Cap”),
        except that such limitation shall not apply in the event that the Company
        (A)
        obtains the Shareholder Approval (as defined in the Securities Purchase
        Agreement) as required by the applicable rules of the Principal Market for
        issuances of shares of Common Stock in excess of such amount or (B) obtains
        a
        written opinion from outside counsel to the Company that such approval is
        not
        required, which opinion shall be reasonably satisfactory to the Holder. Until
        such approval or written opinion is obtained, no Buyer shall be issued, upon
        exercise of any SPA Warrants, shares of Common Stock in an amount greater
        than
        the product of the Exchange Cap multiplied by a fraction, the numerator of
        which
        is the total number of shares of Common Stock issued to such Buyer pursuant
        to
        the Securities Purchase Agreement on the issuance Date and the denominator
        of
        which is the aggregate number of shares of Common Stock issued to all Buyers
        pursuant to the Securities Purchase Agreement on the Issuance Date (with
        respect
        to each Buyer, the “Exchange
        Cap Allocation”).
        In
        the event that any Buyer shall sell or otherwise transfer any of such Buyer’s
        SPA Warrants, the transferee shall be allocated a pro rata portion of such
        Buyer’s Exchange Cap Allocation, and the restrictions of the prior sentence
        shall apply to such transferee with respect to the portion of the Exchange
        Cap
        Allocation allocated to such transferee. In the event that any holder of
        SPA
        Warrants shall exercise all of such holder’s SPA Warrants into a number of
        shares of Common Stock which, in the aggregate, is less than such holder’s
        Exchange Cap Allocation, then the difference between such holder’s Exchange Cap
        Allocation and the number of shares of Common Stock actually issued to such
        holder shall be allocated to the respective Exchange Cap Allocations of the
        remaining holders of SPA Warrants on a pro rata basis in proportion to the
        shares of Common Stock underlying the SPA Warrants then held by each such
        holder.

       

      (g) Insufficient
        Authorized Shares.
        The
        Company shall at all times keep reserved for issuance under this Warrant
        a
        number of shares of Common Stock as shall he necessary to satisfy the Company’s
        obligation to issue shares of Common Stock hereunder (without regard to any
        limitation otherwise contained herein with respect to the number of shares
        of
        Common Stock that may be acquirable upon exercise of this Warrant). If,
        notwithstanding the foregoing, and not in limitation thereof, at any time
        while
        any of the Warrants remain outstanding the Company does not have a sufficient
        number of authorized and unreserved shares of Common Stock to satisfy its
        obligation to reserve for issuance upon exercise of the SPA Warrants a number
        of
        shares of Common Stock equal to the number of shares of Common Stock as shall
        from time to time be necessary to effect the exercise of all of the SPA Warrants
        then outstanding (the “Required Reserve
        Amount”)
        (an
“Authorized
        Share Failure”),
        then
        the Company shall promptly take all action necessary to increase the Company’s
        authorized shares of Common Stock to an amount sufficient to allow the Company
        to reserve the Required Reserve Amount for all the SPA

       

       

      
        
           

        

        
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      Warrants
        then outstanding. Without limiting the generality of the foregoing sentence,
        as
        soon as practicable after the date of the occurrence of an Authorized Share
        Failure, but in no event later than seventy five (75) days after the occurrence
        of such Authorized Share Failure, the Company shall hold a meeting of its
        stockholders for the approval of an increase in the number of authorized
        shares
        of Common Stock. In connection with such meeting, the Company shall provide
        each
        stockholder with a proxy statement and shall use its best efforts to solicit
        its
        stockholders’ approval of such increase in authorized shares of Common Stock and
        to cause its board of directors to recommend to the stockholders that they
        approve such proposal.

       

      2. ADJUSTMENT
        OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
        The
        Exercise Price and number of Warrant Shares issuable upon exercise of this
        Warrant are subject to adjustment from time to time as set forth in this
        Section
        2.

       

      (a) Stock
        Dividends and Splits.
        If the
        Company. at any time on or after the date of the Securities Purchase Agreement,
        (i) pays a stock dividend on one or more classes of its then outstanding
        shares
        of Common Stock or otherwise makes a distribution on any class of capital
        stock
        that is payable in shares of Common Stock, (ii) subdivides (by any stock
        split,
        stock dividend,, recapitalization or otherwise) one or more classes of its
        then
        outstanding shares of Common Stock into a larger number of shares or (iii)
        combines (by combination, reverse stock split or otherwise) one or more classes
        of its then outstanding shares of Common Stock into a smaller number of shares,
        then in each such case the Exercise Price shall be multiplied by a fraction
        of
        which the numerator shall be the number of shares of Common Stock outstanding
        immediately before such event and of which the denominator shall be the number
        of shares of Common Stock outstanding immediately after such event. Any
        adjustment made pursuant to clause (i) of this paragraph shall become effective
        immediately after the record date for the determination of stockholders entitled
        to receive such dividend or distribution, and any adjustment pursuant to
        clause
        (ii) or (iii) of this paragraph shall become effective immediately after
        the
        effective date of such subdivision or combination. If any event requiring
        an
        adjustment under this paragraph occurs during the period that an Exercise
        Price
        is calculated hereunder, then the calculation of such Exercise Price shall
        be
        adjusted appropriately to reflect such event.

       

      (b) Adjustment
        Upon Issuance of Shares of Common Stock.
        If and
        whenever on or after the date of the Securities Purchase Agreement, the Company
        issues or sells, or in accordance with this Section 2 is deemed to have issued
        or sold, any shares of Common Stock (including the issuance or sale of shares
        of
        Common Stock owned or held by or for the account of the Company, but excluding
        any Excluded Securities (as defined in the Securities Purchase Agreement),
        for a
        consideration per share (the “New
        Issuance Price”)
        less
        than a
        price
        (the “Applicable
        Price”)
        equal
        to the Exercise Price in effect immediately prior to such issue or sale or
        deemed issuance or sale (the foregoing a “Dilutive
        Issuance”),
        then
        immediately after such Dilutive Issuance, the Exercise Price then in effect
        shall be reduced to an amount equal to the New Issuance Price. For purposes
        of
        determining the adjusted Exercise Price under this Section 2(b), the following
        shall be applicable:

       

      (i) Issuance
        of Options.
        If the
        Company in any manner grants or sells any Options and the lowest price per
        share
        for which one share of Common Stock is issuable upon the exercise of any
        such
        Option or upon conversion, exercise or exchange of any Convertible Securities
        issuable upon exercise of any such Option is less than the

       

       

      
        
           

        

        
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      Applicable
        Price, then such share of Common Stock shall be deemed to be outstanding
        and to
        have been issued and sold by the Company at the time of the granting or sale
        of
        such Option for such price per share. For purposes of this Section 2(b)(i),
        the
“lowest price per share for which one share of Common Stock is issuable upon
        the
        exercise of any such Options or upon conversion, exercise or exchange of
        any
        Convertible Securities issuable upon exercise of any such Option” shall be equal
        to the sum of the lowest amounts of consideration (if any) received or
        receivable by the Company with respect to any one share of Common Stock upon
        the
        granting or sale of the Option, upon exercise of the Option and upon conversion,
        exercise or exchange of any Convertible Security issuable upon exercise of
        such
        Option. Except as contemplated below, no further adjustment of the Exercise
        Price shall be made upon the actual issuance of such shares of Common Stock
        or
        of such Convertible Securities upon the exercise of such Options or upon
        the
        actual issuance of such shares of Common Stock upon conversion, exercise
        or
        exchange of such Convertible Securities.

       

      (ii) Issuance
        of Convertible
        Securities.
        If the
        Company in any manner issues or sells any Convertible Securities and the
        lowest
        price per share for which one share of Common Stock is issuable upon the
        conversion, exercise or exchange thereof is less than the Applicable Price,
        then
        such share of Common Stock shall be deemed to be outstanding and to have
        been
        issued and sold by the Company at the time of the issuance or sale of such
        Convertible Securities for such price per share. For the purposes of this
        Section 2(b)(ii), the “lowest price per share for which one share of Common
        Stock is issuable upon the conversion, exercise or exchange thereof’ shall be
        equal to the sum of the lowest amounts of consideration (if any) received
        or
        receivable by the Company with respect to one share of Common Stock upon
        the
        issuance or sale of the Convertible Security and upon conversion, exercise
        or
        exchange of such Convertible Security. Except as contemplated below, no further
        adjustment of the Exercise Price shall be made upon the actual issuance of
        such
        shares of Common Stock upon conversion, exercise or exchange of such Convertible
        Securities, and if any such issue or sale of such Convertible Securities
        is made
        upon exercise of any Options for which adjustment of this Warrant has been
        or is
        to be made pursuant to other provisions of this Section 2(b), except as
        contemplated below, no further adjustment of the Exercise Price shall be
        made by
        reason of such issue or sale.

       

      (iii) Change
        in Option Price or Rate of Conversion.
        If the
        purchase or exercise price provided for in any Options, the additional
        consideration, if any, payable upon the issue, conversion, exercise or exchange
        of any Convertible Securities, or the rate at which any Convertible Securities
        are convertible into or exercisable or exchangeable for shares of Common
        Stock
        increases or decreases at any time, the Exercise Price in effect at the
        time
        of such increase or decrease shall be adjusted to the Exercise Price which
        would
        have been in effect at such time had such Options or Convertible Securities
        provided for such increased or decreased purchase price, additional
        consideration or increased or decreased conversion rate, as the case may
        be, at
        the time initially granted, issued or sold. For purposes of this Section
        2(b)(iii), if the terms of any Option or Convertible Security that was
        outstanding as of the date of issuance of this Warrant are increased or
        decreased in the manner described in the immediately preceding sentence,
        then
        such Option or Convertible Security and the shares of Common Stock
        deemed

       

       

      
        
           

        

        
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      issuable
        upon exercise. conversion or exchange thereof shall be deemed to have been
        issued as of’ the date of such increase or decrease. No adjustment pursuant to
        this Section 2(h) shall be made if such adjustment would result in an increase
        of the Exercise Price then in effect. 

       

      (iv) Calculation
        of Consideration Received.
        In case
        any Option is issued in connection with the issue or sale of other securities
        of
        the Company, together comprising one integrated transaction in which no specific
        consideration is allocated to such Options by the parties thereto, the Options
        will be deemed to have been issued for a consideration of $0.01. If any shares
        of Common Stock, Options or Convertible Securities are issued or sold or
        deemed
        to have been issued or sold for cash, the consideration received therefor
        will
        be deemed to be the net amount received by the Company therefor. If any shares
        of Common Stock, Options or Convertible Securities are issued or sold for
        a
        consideration other than cash, the amount of such consideration received
        by the
        Company will be the fair value of such consideration, except where such
        consideration consists of securities, in which case the amount of consideration
        received by the Company for each such security will be the VWAP of such security
        for the five (5) Trading Day period immediately preceding the date of receipt.
        If any shares of Common Stock, Options or Convertible Securities are issued
        to
        the owners of the non-surviving entity in connection with any merger in which
        the Company is the surviving entity, the amount of consideration therefor
        will
        be deemed to be the fair value of such portion of the net assets and business
        of
        the non-surviving entity as is attributable to such shares of Common Stock,
        Options or Convertible Securities, as the case may be. The fair value of
        any
        consideration other than cash or securities will be determined by the Board
        of
        Directors of the Company within five (5) days
        after the occurrence of an event requiring valuation (the “Valuation
        Event”).
        If
        the Required Holders disagree with the determination of the Board of Directors
        of the Company and give written notice of such disagreement to the Company
        within ten (10) days after the occurrence of such Valuation Event, the fair
        value of such consideration will be determined within five (5) Trading Days
        after the tenth (10th)
        day
        following such Valuation Event by an independent, reputable appraiser jointly
        selected by the Company and the Required Holders. The determination of such
        appraiser shall be final and binding upon all parties absent manifest error
        and
        the fees and expenses of such appraiser shall be borne by the
        Company.

       

      (v) Record
        Date.
        If the
        Company takes a record of the holders of shares of Common Stock for the purpose
        of entitling them (A) to receive a dividend or other distribution payable
        in
        shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
        for or purchase shares of Common Stock, Options or Convertible Securities,
        then
        such record date will be deemed to be the date of the issue or sale of the
        shares of Common Stock deemed to have been issued or sold upon the declaration
        of such dividend or the making of such other distribution or the date of
        the
        granting of such right of subscription or purchase (as the case may
        be).

       

      (c) Number
        of Warrant Shares.
        Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
        (a) of this Section 2 (but not with respect to any adjustment to the Exercise
        Price pursuant to paragraph (b) of this Section 2), unless waived in writing
        by
        the

       

       

      
        
           

        

        
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      Holder
        with respect to a particular adjustment, the number of Warrant Shares that
        may
        be purchased upon exercise of this Warrant shall be increased or decreased
        proportionately, so that after such adjustment the aggregate Exercise Price
        payable hereunder for the adjusted number of Warrant Shares shall be the
        same as
        the aggregate Exercise Price in effect immediately prior to such adjustment
        (without regard to any limitations on exercise contained herein).

       

      (d) Other
        Events.
        In the
        event that the Company (or any direct or indirect subsidiary thereof) shall
        take
        any action to which the provisions hereof are not strictly applicable, or,
        if
        applicable, would not operate to protect the Holder from dilution or if any
        event occurs of the type contemplated by the provisions of this Section 2
        but
        not expressly provided for by such provisions (including, without limitation,
        the granting of stock appreciation rights, phantom stock rights or other
        rights
        with equity features), then the Company’s Board of Directors shall in good faith
        determine and implement an appropriate adjustment in the Exercise Price and
        the
        number of Warrant Shares (if applicable) so as to protect the rights of the
        Holder; provided that no such adjustment pursuant to this Section 2(d) will
        increase the Exercise Price or decrease the number of Warrant Shares as
        otherwise determined pursuant to this Section 2, provided further that if
        the
        Holder does not accept such adjustments as appropriately protecting its
        interests hereunder against such dilution, then the Company’s Board of Directors
        and the Holder shall agree, in good faith, upon an independent investment
        bank
        of nationally recognized standing to make such appropriate adjustments, whose
        determination shall be final and binding and whose fees and expenses shall
        be
        borne by the Company.

       

      (e) Calculations.
        All
        calculations under this Section 2 shall be made to the nearest cent or the
        nearest 1/100th
        of a
        share, as applicable. The number of shares of Common Stock outstanding at
        any
        given time shall not include shares owned or held by or for the account of
        the
        Company, and the disposition of any such shares shall be considered an issue
        or
        sale of Common Stock.

       

      3. PURCHASE RIGHTS;
        FUNDAMENTAL TRANSACTIONS.

       

      (a) Purchase
        Rights.
        In
        addition to any adjustments pursuant to Section 2 above, if at any time the
        Company grants, issues or sells any Options, Convertible Securities or rights
        to
        purchase stock, warrants, securities or other property pro rata to the record
        holders of any class of shares of Common Stock (the “Purchase
        Rights”),
        then
        the Holder will be entitled to acquire, upon the terms applicable to such
        Purchase Rights, the aggregate Purchase Rights which the Holder could have
        acquired if the Holder had held the number of shares of Common Stock acquirable
        upon complete exercise of this Warrant (without regard to any limitations
        on
        exercise hereof, including without limitation, the Maximum Percentage)
        immediately before the date on which a record is taken for the grant, issuance
        or sale of such Purchase Rights, or, if no such record is taken, the date
        as of
        which the record holders of shares of Common Stock are to be determined for
        the
        grant, issue or sale of such Purchase Rights (provided, however, that to
        the
        extent that the Holder’s right to participate in any such Purchase Right would
        result in the Holder exceeding the Maximum Percentage, then the Holder shall
        not
        be entitled to participate in such Purchase Right to such extent (or beneficial
        ownership of such shares of Common Stock as a result of such Purchase Right
        to
        such extent) and such Purchase Right to such extent shall be held in abeyance
        for the Holder until such time, if ever, as its right thereto would not result
        in the Holder exceeding the Maximum Percentage).

       

       

      
        
           

        

        
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      (b) Fundamental
        Transactions.
        The
        Company shall not enter into or be party to a Fundamental Transaction unless
        the
        Successor Entity assumes in writing all of the obligations of the Company
        under
        this Warrant and the other Transaction Documents (as defined in the Securities
        Purchase Agreement) in accordance with the provisions of this Section 3(b)
        pursuant to written agreements in form and substance satisfactory to the
        Holder
        and approved by the Holder prior to such Fundamental Transaction, including
        agreements to deliver to the Holder in exchange for this Warrant a security
        of
        the Successor Entity evidenced by a written instrument substantially similar
        in
        form and substance to this Warrant, including, without limitation, which
        is
        exercisable for a corresponding number of shares of capital stock equivalent
        to
        the shares of Common Stock acquirable and receivable upon exercise of this
        Warrant (without regard to any limitations on the exercise of this Warrant)
        prior to such Fundamental Transaction, and with an exercise price which applies
        the exercise price hereunder to such shares of capital stock (but taking
        into
        account the relative value of the shares of Common Stock pursuant to such
        Fundamental Transaction and the value of such shares of capital stock, such
        adjustments to the number of shares of capital stock and such exercise price
        being for the purpose of protecting the economic value of this Warrant
        immediately prior to the consummation of such Fundamental Transaction), and
        which is satisfactory in form and substance to the Holder. Upon the occurrence
        of any Fundamental Transaction, the Successor Entity shall succeed to, and
        be
        substituted for (so that from and after the date of such Fundamental
        Transaction, the provisions of this Warrant and the other Transaction Documents
        referring to the “Company” shall refer instead to the Successor Entity), and may
        exercise every right and power of the Company and shall assume all of the
        obligations of the Company under this Warrant and the other Transaction
        Documents with the same effect as if such Successor Entity had been named
        as the
        Company herein. Upon consummation of the Fundamental Transaction, the Successor
        Entity shall deliver to the Holder confirmation that there shall be issued
        upon
        exercise of this Warrant at any time after the consummation of the Fundamental
        Transaction, in lieu of the shares of the Common Stock (or other securities,
        cash, assets or other property (except such items still issuable under Section
        3(a) above, which shall continue to be receivable thereafter)) issuable upon
        the
        exercise of this Warrant prior to such Fundamental Transaction, such shares
        of
        the publicly traded Common Stock (or its equivalent) of the Successor Entity
        (including its Parent Entity) which the Holder would have been entitled to
        receive upon the happening of such Fundamental Transaction had this Warrant
        been
        exercised immediately prior to such Fundamental Transaction (without regard
        to
        any limitations on the exercise of this Warrant), as adjusted in accordance
        with
        the provisions of this Warrant. In addition to and not in substitution for
        any
        other rights hereunder, prior to the consummation of any Fundamental Transaction
        pursuant to which holders of shares of Common Stock are entitled to receive
        securities or other assets with respect to or in exchange for shares of Common
        Stock (a “Corporate
        Event”),
        the
        Company shall make appropriate provision to insure that the Holder will
        thereafter have the right to receive upon an exercise of this Warrant at
        any
        time after the consummation of the Fundamental Transaction but prior to the
        Expiration Date, in lieu of the shares of the Common Stock (or other securities,
        cash, assets or other property (except such items still issuable under Section
        3(a) above, which shall continue to be receivable thereafter)) issuable upon
        the
        exercise of the Warrant prior to such Fundamental Transaction, such shares
        of
        stock, securities, cash, assets or any other property whatsoever (including
        warrants or other purchase or subscription rights) which the Holder would
        have
        been entitled to receive upon the happening of such Fundamental Transaction
        had
        the Warrant been exercised immediately prior to such Fundamental Transaction
        (without regard to any limitations on the

       

       

      
        
           

        

        
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            10 -

          
            

          

        

        
           

        

      

       

      exercise
        of this Warrant). Provision made pursuant to the preceding sentence shall
        he in
        a form and substance reasonably satisfactory to the Holder. The provisions
        of
        this Section 3 shall apply similarly and equally to successive Fundamental
        Transactions and Corporate Events and shall he applied as if this Warrant
        (and
        any such subsequent warrants) were fully exercisable and without regard to
        any
        limitations on the exercise of this Warrant (provided that the Holder shall
        continue to be entitled to the benefit of the Maximum Percentage, applied
        however with respect to shares of capital stock registered under the 1934
        Act
        and thereafter receivable upon exercise of this Warrant (or any such other
        warrant)).

       

      (c) Black
        Scholes Value.
        Notwithstanding the foregoing and the provisions of Section 3(b) above, in
        the
        event of a Fundamental Transaction, if the Holder has not exercised this
        Warrant
        in full prior to the consummation of such Fundamental Transaction, at the
        request of the Holder delivered on or before the date of the consummation
        of
        such Fundamental Transaction. (i) if the fair market value of the consideration
        per share that the Holder would receive with respect to such Fundamental
        Transaction if the Holder exercised this Warrant in full prior to the
        consummation thereof (without regard to any limitations on exercise contained
        herein) exceeds the Exercise Price then in effect on the date of such
        consummation, the Company or the Successor Entity (as the case may be) shall
        purchase this Warrant from the Holder for an amount in cash equal to the
        fair
        market value of such consideration per share multiplied by the number of
        shares
        of Common Stock for which this Warrant is then exercisable (without regard
        to
        any limitations on exercise contained herein) (less the aggregate Exercise
        Price
        which would be payable in connection with such exercise) or (ii) if the fair
        market value of the per share consideration which the Holder would receive
        with
        respect to such Fundamental Transaction if the Holder exercised this Warrant
        in
        full prior to the consummation thereof (without regard to any limitations
        on
        exercise contained herein) is equal to or less than the Exercise Price then
        in
        effect, the Company or the Successor Entity (as the case may be) shall purchase
        this Warrant from the Holder by paying to the Holder, cash in an amount equal
        to
        the Black Scholes Value of the remaining unexercised portion of this Warrant
        on
        the date of the consummation of such Fundamental Transaction. For purposes
        of
        this paragraph, fair market value shall be mutually determined by the Company
        and the Holder. If the Company and the Holder are unable to agree upon fair
        market value, then such dispute shall be resolved in accordance with the
        procedures in Section 12. All such determinations shall be appropriately
        adjusted for any share dividend, share split or other similar transaction
        during
        such period.

       

      4. NONCIRCUMVENTION.
        The
        Company hereby covenants and agrees that the Company will not, by amendment
        of
        its Articles of Incorporation, Bylaws or through any reorganization, transfer
        of
        assets, consolidation, merger, scheme of arrangement, dissolution, issue
        or sale
        of securities, or any other voluntary action, for the principal purpose of
        avoiding or seeking to avoid the observance or performance of any of the
        terms
        of this Warrant, and will at all times in good faith carry out all the
        provisions of this Warrant and take all action as may be required to protect
        the
        rights of the Holder. Without limiting the generality of the foregoing, the
        Company (i) shall not increase the par value of any shares of Common Stock
        receivable upon the exercise of this Warrant above the Exercise Price then
        in
        effect, (ii) shall take all such actions as may be necessary or appropriate
        in
        order that the Company may validly and legally issue fully paid and
        nonassessable shares of Common Stock upon the exercise of this Warrant, and
        (iii) shall, so long as any of the SPA Warrants are outstanding, take all
        action
        necessary to reserve and keep available out of its authorized and unissued
        shares of Common Stock, solely for the purpose of

       

       

      
        
           

        

        
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            11 -

          
            

          

        

        
           

        

      

       

      effecting
        the exercise of the SPA Warrants, the number of shares of Common Stock as
        shall
        from time to time be necessary to effect the exercise of the SPA Warrants
        then
        outstanding (without regard to any limitations on exercise).

       

      5. WARRANT
        HOLDER NOT DEEMED A SHAREHOLDER.
        Except
        as otherwise specifically provided herein, the Holder, solely in such Person’s
        capacity as a holder of this Warrant, shall not be entitled to vote or receive
        dividends or be deemed the holder of share capital of the Company for any
        purpose, nor shall anything contained in this Warrant be construed to confer
        upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
        any of the rights of a shareholder of the Company 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 the Warrant
        Shares
        which such Person 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 the Holder to purchase any securities (upon exercise
        of this Warrant or otherwise) or as a shareholder of the Company, whether
        such
        liabilities are asserted by the Company or by creditors of the Company.
        Notwithstanding this Section 5,
        the
        Company shall provide the Holder with copies of the same notices and other
        information given to the stockholders of the Company generally,
        contemporaneously with the giving thereof to the shareholders.

       

      6. REISSUANCE
        OF WARRANTS.

       

      (a) Transfer
        of Warrant.
        If this
        Warrant is to be transferred, the Holder shall surrender this Warrant to
        the
        Company, whereupon the Company will forthwith issue and deliver upon the
        order
        of the Holder a new Warrant (in accordance with Section 6(d)), registered
        as the
        Holder may request, representing the right to purchase the number of Warrant
        Shares being transferred by the Holder and, if less than the total number
        of
        Warrant Shares then underlying this Warrant is being transferred, a new Warrant
        (in accordance with Section 6(d)) to the Holder representing the right to
        purchase the number of Warrant Shares not being transferred.

       

      (b) Lost,
        Stolen or Mutilated Warrant.
        Upon
        receipt by the Company of evidence reasonably satisfactory to the Company
        of the
        loss, theft, destruction or mutilation of this Warrant, and, in the case
        of
        loss, theft or destruction, of any indemnification undertaking by the Holder
        to
        the Company in customary and reasonable form and, in the case of mutilation,
        upon surrender and cancellation of this Warrant, the Company shall execute
        and
        deliver to the Holder a new Warrant (in accordance with Section 6(d))
        representing the right to purchase the Warrant Shares then underlying this
        Warrant.

       

      (c) Exchangeable
        for Multiple Warrants.
        This
        Warrant is exchangeable. upon the surrender hereof by the Holder at the
        principal office of the Company, for a new Warrant or Warrants (in accordance
        with Section 6(d)) representing in the aggregate the right to purchase the
        number of Warrant Shares then underlying this Warrant, and each such new
        Warrant
        will represent the right to purchase such portion of such Warrant Shares
        as is
        designated by the Holder at the time of such surrender; provided, however,
        that
        no warrants for fractional shares of Common Stock shall be given.

       

       

      
        
           

        

        
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            12 -

          
            

          

        

        
           

        

      

       

      (d) Issuance
        of New Warrants.
        Whenever the Company is required to issue a new Warrant pursuant to the terms
        of
        this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
        (ii) shall represent, as indicated on the face of such new Warrant, the right
        to
        purchase the Warrant Shares then underlying this Warrant (or in the case
        of a
        new Warrant being issued pursuant to Section 6(a) or Section 6(c), the Warrant
        Shares designated by the Holder which, when added to the number of shares
        of
        Common Stock underlying the other new Warrants issued in connection with
        such
        issuance, does not exceed the number of Warrant Shares then underlying this
        Warrant), (iii) shall have an issuance date, as indicated on the face of’ such
        new Warrant which is the same as the Issuance Date, and (iv) shall have the
        same
        rights and conditions as this Warrant.

       

      7. NOTICES.
        Whenever notice is required to be given under this Warrant, unless otherwise
        provided herein, such notice shall be given in accordance with Section 9(f)
        of
        the Securities Purchase Agreement. The Company shall provide the Holder with
        prompt written notice of all actions taken pursuant to this Warrant, including
        in reasonable detail a description of such action and the reason therefore.
        Without limiting the generality of the foregoing, the Company will give written
        notice to the Holder (i) immediately upon each adjustment of the Exercise
        Price
        and the number of Warrant Shares, setting forth in reasonable detail, and
        certifying,
        the
        calculation of such adjustment(s) and (ii) at least fifteen (15) days prior
        to
        the date on which the Company closes its books or takes a record (A) with
        respect to any dividend or distribution upon the shares of Common Stock,
        (B)
        with respect to any grants, issuances or sales of any Options, Convertible
        Securities (other than Excluded Securities) or rights to purchase stock,
        warrants, securities or other property to holders of shares of Common Stock
        or
        (C) for determining rights to vote with respect to any Fundamental Transaction,
        dissolution or liquidation, provided in each case that such information shall
        be
        made known to the public prior to or in conjunction with such notice being
        provided to the Holder and (iii) at least ten (10) Trading Days prior to
        the
        consummation of any Fundamental Transaction. To the extent that any notice
        provided hereunder constitutes, or contains, material, non-public information
        regarding the Company or any of its subsidiaries, the Company shall
        simultaneously file such notice with the SEC pursuant to a Current Report
        on
        Form 8-K.

       

      8. AMENDMENT
        AND WAIVER.
        Except
        as otherwise provided herein, the provisions of this Warrant (other than
        Section
        1 (f)(i)) may be amended and the Company may take any action herein prohibited,
        or omit to perform any act herein required to be performed by it, only if
        the
        Company has obtained the written consent of the Holders. The Holder shall
        be
        entitled, at its option, to the benefit of any amendment of any other similar
        warrant issued under the Securities Purchase Agreement.

       

      9. SEVERABILITY.
        If any
        provision of this Warrant or the application thereof becomes or is declared
        by a
        court of competent jurisdiction to be illegal, void or unenforceable, the
        remainder of the terms of this Warrant will continue in full force and
        effect.

       

      10. GOVERNING
        LAW.
        This
        Warrant shall be governed by and construed and enforced in accordance with,
        and
        all questions concerning the construction, validity, interpretation and
        performance of this Warrant shall be governed by, the internal laws of the
        State
        of New York, without giving effect to any choice of law or conflict of law
        provision or rule (whether of’ the State of New York or any other jurisdictions)
        that would cause the application of’ the laws of

       

      
        
           

        

        
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      any
        jurisdictions other than the State of New York.

       

      11. CONSTRUCTION;
        HEADINGS.
        This
        Warrant shall be deemed to be jointly drafted by the Company and the Holder
        and
        shall not be construed against any Person as the drafter hereof.

       

      The
        headings of this Warrant are for convenience of reference and shall not form
        part of, or affect the interpretation of, this Warrant.

       

      12. DISPUTE
        RESOLUTION.
        In the
        case of a dispute as to the determination of the Exercise Price or fair market
        value or the arithmetic calculation of the Warrant Shares, the Company or
        the
        Holder (as the case may be) shall submit the disputed determinations or
        arithmetic calculations (as the case may be) via facsimile within two (2)
        Business Days of receipt of the applicable notice giving rise to such dispute
        to
        the Company or the Holder (as the case may be). If the Holder and the Company
        are unable to agree upon such determination or calculation of the Exercise
        Price
        or fair market value or the number of Warrant Shares (as the case may be)
        within
        three (3) Business Days of such disputed determination or arithmetic calculation
        being submitted to the Company or the Holder (as the case may be), then the
        Company shall, within two (2) Business Days submit via facsimile (a) the
        disputed determination of the Exercise Price or fair market value to an
        independent, reputable investment bank selected by the Company and approved
        by
        the Holder or (b) the disputed arithmetic calculation of the Warrant Shares
        to
        the Company’s independent, outside accountant. The Company shall cause at its
        expense the investment bank or the accountant (as the case may be) to perform
        the determinations or calculations (as the case may be) and notify the Company
        and the Holder of the results no later than ten (10) Business Days from the
        time
        it receives such disputed determinations or calculations (as the case may
        be).
        Such investment bank’s or accountant’s determination or calculation (as the case
        may be) shall be binding upon all parties absent demonstrable
        error.

       

      13. REMEDIES,
        OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
        The

      remedies
        provided in this Warrant shall be cumulative and in addition to all other
        remedies available under this Warrant and the other Transaction Documents,
        at
        law or in equity (including a decree of specific performance and/or other
        injunctive relief), and nothing herein shall limit the right of the Holder
        to
        pursue actual damages for any failure by the Company to comply with the terms
        of
        this Warrant. The Company acknowledges that a breach by it of its obligations
        hereunder will cause irreparable harm to the Holder and that the remedy at
        law
        for any such breach may be inadequate. The Company therefore agrees that,
        in the
        event of any such breach or threatened breach, the holder of this Warrant
        shall
        be entitled, in addition to all other available remedies, to an injunction
        restraining any breach, without the necessity of showing economic loss and
        without any bond or other security being required.

       

      14. TRANSFER.
        This
        Warrant may be offered for sale, sold, transferred or assigned without the
        consent of the Company, except as may otherwise be required by Section 2(g)
        of
        the Securities Purchase Agreement.

       

      15. CERTAIN
        DEFINITIONS.
        For
        purposes of this Warrant, the following terms shall have the following
        meanings:

       

      (a) “Black
        Scholes Value”
means
        the value of this Warrant based on the Black and

       

       

      
        
           

        

        
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      Scholes
        Option Pricing Model obtained from the “OV” function on Bloomberg determined as
        of the day immediately following the public announcement of the applicable
        Fundamental Transaction and reflecting (i) a risk-free interest rate
        corresponding to the U.S. Treasury rate for a period equal to the remaining
        term
        of this Warrant as of such date and (ii) an expected volatility equal to
        the 100
        day volatility obtained from the HVT function on Bloomberg as of such
        date.

       

      (b) “Bloomberg”
means
        Bloomberg Financial Markets.

       

      (c) “Business
        Day”
means
        any day other than Saturday, Sunday or other day on which commercial banks
        in
        The City of New York are authorized or required by law to remain
        closed.

       

      (d) “Common
        Stock”
means
        (i) the Company’s shares of common stock, no par value per share, and (ii) any
        capital stock into which such common stock shall have been changed or any
        share
        capital resulting from a reclassification of such common stock.

       

      (e) “Convertible
        Securities”
means
        any stock or securities (other than Options) directly or indirectly convertible
        into or exercisable or exchangeable for shares of Common Stock.

       

      (f) “Eligible
        Market”
means
        the New York Stock Exchange, Inc., the Nasdaq Global Select Market or the
        Principal Market.

       

      (g) “Expiration
        Date”
means
        the date that is the fifth (5th)
        anniversary of the Issuance Date or, if such date falls on a day other than
        a
        Business Day or on which trading does not take place on the Principal Market
        (a
“Holiday”),
        the
        next date that is not a Holiday.

       

      (h) “Fundamental
        Transaction”
means
        that the Company shall, directly or indirectly, in one or more related
        transactions, (i) consolidate or merge with or into another Person (unless
        the
        Company is the surviving corporation and the shareholders of the Company
        prior
        to such merger or consolidation continue to hold immediately thereafter a
        majority of the aggregate ordinary voting power represented by the issued
        and
        outstanding Common Stock), or (ii) sell, assign, transfer, convey or otherwise
        dispose of all or substantially all of the properties or assets of the Company
        to another Person, or (iii) allow another Person to make a purchase, tender
        or
        exchange offer that is accepted by the holders of more than the 50% of the
        outstanding shares of Common Stock (not including any shares of Common Stock
        held by the Person or Persons making or party to, or associated or affiliated
        with the Persons making or party to, such purchase, tender or exchange offer),
        or (iv) consummate a stock purchase agreement or other business combination
        (including, without limitation, a reorganization, recapitalization, spin-oft
        or
        scheme of arrangement) with another Person whereby such other Person acquires
        more than the 50% of the outstanding shares of Common Stock (not including
        any
        shares of Common Stock held by the other Person or other Persons making or
        party
        to, or associated or affiliated with the other Persons making or party to,
        such
        stock purchase agreement or other business combination), or (v) reorganize,
        recapitalize or reclassify its Common Stock, or (vi) any “person” or “group” (as
        these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
        Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under
        the

       

      
        
           

        

        
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      Exchange
        Act), directly or indirectly, of 50% of
        the
        aggregate ordinary voting power represented by issued and outstanding Common
        Stock.

       

      (i) “Options”
means
        any rights, warrants or options to subscribe for or purchase shares of Common
        Stock or Convertible Securities. 

       

      (j) “Parent
        Entity”
of
        a
        Person means an entity that, directly or indirectly, controls the applicable
        Person and whose common stock or equivalent equity security is quoted or
        listed
        on an Eligible Market, or, if there is more than one such Person or Parent
        Entity, the Person or Parent Entity with the largest public market
        capitalization as of the date of consummation of the Fundamental
        Transaction.

       

      (k) “Person”
means
        an individual, a limited liability company, a partnership, a joint venture,
        a
        corporation, a trust, an unincorporated organization, any other entity and
        a
        government or any department or agency thereof.

       

      (l) “Principal
        Market”
means
        The Nasdaq Global Market.

       

      (m) “Required
        Holders”
means
        the holders of the SPA Warrants representing at least a majority of shares
        of
        Common Stock underlying the SPA Warrants then outstanding.

       

      (n) “Successor
        Entity”
means
        the Person (or, if so elected by the Holder, the Parent Entity) formed by,
        resulting from or surviving any Fundamental Transaction or the Person (or,
        if so
        elected by the Holder, the Parent Entity) with which such Fundamental
        Transaction shall have been entered into.

       

      (o) “Trading
        Day”
means
        any day on which the Common Stock is traded on the Principal Market, or,
        if the
        Principal Market is not the principal trading market for the Common Stock,
        then
        on the principal securities exchange or securities market on which the Common
        Stock is then traded; provided that “Trading Day” shall not include any day on
        which the Common Stock is scheduled to trade on such exchange or market for
        less
        than 4.5 hours or any day that the Common Stock is suspended from trading
        during
        the final hour of trading on such exchange or market (or if such exchange
        or
        market does not designate in advance the closing time of trading on such
        exchange or market, then during the hour ending at 4:00:00 p.m., New York
        time).

       

      (p) “VWAP”
        means,
        for any security as of any date, the dollar volume-weighted average price
        for
        such security on the Principal Market (or, if the Principal Market is not
        the
        principal trading market for such security, then on the principal securities
        exchange or securities market on which such security is then traded) during
        the
        period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m.,
        New
        York time, as reported by Bloomberg through its “Volume at Price” function or,
        if the foregoing does not apply, the dollar volume-weighted average price
        of
        such security in the over-the-counter market on the electronic bulletin board
        for such security during the period beginning at 9:30:01 a.m., New York time,
        and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or,
        if no
        dollar volume-weighted average price is reported for such security by Bloomberg
        for such hours, the average of the highest closing bid price and the lowest
        closing ask price of any of the market makers for such security as reported
        in
        the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau,
        Inc.). If

       

      
        
           

        

        
          -
            16 -

          
            

          

        

        
           

        

      

       

      VWAP
        cannot be calculated for such security on such date on any of the foregoing
        bases, the VWAP of such security on such date shall be the fair market value
        as
        mutually determined by the Company and the Holder. If the Company and the
        Holder
        are unable to agree upon the fair market value of such security, then such
        dispute shall be resolved in accordance with the procedures in Section 12.
        All
        such determinations shall be appropriately adjusted for any share dividend,
        share split or other similar transaction during such period.

       

      [signature
        page follows]

       

       

      
        
           

        

        
          -
            17 -

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF,
        the
        Company has caused this Warrant to Purchase Common Stock to be duly executed
        as
        of the Issuance Date set out above.

       

      POKERTEK,
        INC.

       

      By: 
        ___________________________ 

      Name:

      Title:

    
      

      
        
           

        

        
          -
            18 -

          
            

          

        

        
           

        

      

      EXHIBIT
        A

       

      EXERCISE
        NOTICE

       

      TO
        BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

      WARRANT
        TO PURCHASE COMMON STOCK

       

      POKERTEK,
        INC.

       

      The
        undersigned holder hereby exercises the right to purchase _________________of
        the shares of Common Stock (“Warrant
        Shares”)
        of
        PokerTek, Inc., a North Carolina corporation (the “Company”), evidenced by the
        attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms
        used herein and not otherwise defined shall have the respective meanings
        set
        forth in the Warrant.

       

      1. Form
        of Exercise Price.
        The
        Holder intends that payment of the Exercise Price shall be made as:

      ____________ a
        “Cash
        Exercise”
with
        respect to __________________

      Warrant
        Shares; and/or

       

      _____________ a
        “Cashless
        Exercise”
with
        respect to _______________

      Warrant
        Shares.

       

      Notwithstanding
        anything to the contrary contained herein, this Exercise Notice shall constitute
        a representation by the undersigned holder of the Warrant submitting this
        Exercise Notice that, immediately following the exercise provided for in
        this
        Exercise Notice, such holder (together with its affiliates) will not have
        beneficial ownership (together with the beneficial ownership of such Person’s
        affiliates) of a number of shares of Common Stock which exceeds the Maximum
        Percentage of the total outstanding shares of Common Stock as determined
        pursuant to the provisions of Section 1(f)(i) of the attached
        Warrant

       

      2. Payment
        of Exercise Price.
        In the
        event that the holder has elected a Cash Exercise with respect to some or
        all of
        the Warrant Shares to be issued pursuant hereto, the holder shall pay the
        Aggregate Exercise Price in the sum of $____________________ to the Company
        in
        accordance with the terms of the Warrant.

       

      3. Delivery
        of Warrant Shares.
        The
        Company shall deliver to holder, or its designee or agent as specified below,
        ___________ Warrant Shares in accordance with the terms of the Warrant. Delivery
        shall be made to holder, or for its benefit, to the following
        address:

       

      ______________________________

      ______________________________

      ______________________________

      ______________________________

       

      Date:_________________,______

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      ___________________________________

       

      Name
        of
        Registered Holder

       

      By: _____________________________

      Name:

      Title:

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      ACKNOWLEDGMENT

       

      The
        Company hereby acknowledges this Exercise Notice and hereby directs
        ________________ to issue the above indicated number of shares of Common
        Stock
        in accordance with the Transfer Agent Instructions dated ______________,
        2007
        from the Company and acknowledged and agreed to by _______________.

       

      POKERTEK,
        INC.

       

      By:_____________________________________

      Name:

      Title:

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
      LAWS OR (B) AN OPINION OF COUNSEL TO THE HOLDER, IN A FORM REASONABLY ACCEPTABLE
      TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
      SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
      FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES, IF
      EFFECTED IN COMPLIANCE WITH SAID ACT.

     

    POKERTEK,
      INC.

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    Warrant
      No.: 2007-3A

    Date
      of
      Issuance: April 26, 2007 (“Issuance
      Date”)

     

    PokerTek,
      Inc., a North Carolina corporation (the “Company”),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, JANUS US VENTURE FUND (a series
      of
      Janus Capital Funds Plc), the registered holder hereof or its permitted assigns
      (the “Holder”),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon exercise of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
      at
      any time or times on or after the Issuance Date, but not after 11:59 p.m.,
      New
      York time, on the Expiration Date (as defined below), 13,341 fully paid and
      nonassessable shares of Common Stock (as defined below) (the “Warrant
      Shares”),
      provided that the number of Warrant Shares shall automatically be increased
      to
      15,345 on the Shareholder Approval Date (as defined in the Securities Purchase
      Agreement). Except as otherwise defined herein, capitalized terms in this
      Warrant shall have the meanings set forth in Section 14. This Warrant is the
      amended and restated version of Warrant No.: 2007-3, one of the Warrants to
      purchase Common Stock (the “SPA
      Warrants”)
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      April 23, 2007 (the “Subscription Date”),
      by
      and
      among the Company and the investors (the “Buyers”) referred to therein (the
“Securities
      Purchase Agreement”).
      All
      changes made pursuant to such amendment and restatement shall be deemed to
      have
      been made as of the Issuance Date, as if the wording of this amended and
      restated version was in effect as of the Issuance Date.

     

    1. EXERCISE OF WARRANT.

     

    (a) Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof (including,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    without
      limitation, the limitations set forth in Section 1(f)(i)), this Warrant may
      be
      exercised by the Holder on any day on or after the Issuance Date, in whole
      or in
      part, by (i) delivery of a written notice, in the form attached hereto as
Exhibit
      A
      (the
“Exercise
      Notice”),
      of
      the Holder’s election
      to exercise this Warrant and (ii) (A) payment to the Company of an amount equal
      to the then-applicable Exercise Price multiplied by the number of Warrant Shares
      as to which this Warrant is being exercised (the “Aggregate
      Exercise Price”)
      in
      cash or wire transfer of immediately available funds or (B) by notifying the
      Company that this Warrant is being exercised pursuant to a Cashless Exercise
      (as
      defined in Section 1(d)). The Holder shall not be required to deliver the
      original Warrant in order to effect an exercise hereunder. Execution and
      delivery of the Exercise Notice with respect to less than all of the Warrant
      Shares shall have the same effect as cancellation of the original Warrant and
      issuance of a new Warrant evidencing the right to purchase the remaining number
      of Warrant Shares. Execution and delivery of the Exercise Notice for all of
      the
      Warrant Shares shall have the same effect as cancellation of the original
      Warrant after delivery of the Warrant Shares in accordance with the terms
      hereof. On or before the first (1st)
      Business Day following the date on which the Company has received each of the
      Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
      Exercise), (the “Exercise
      Delivery Documents”),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company’s transfer
      agent (the “Transfer
      Agent”).
      On or
      before the third (3rd)
      Business
      Day following the date on which the Company has received all of the Exercise
      Delivery Documents (the “Share Delivery
      Date”),
      the
      Company shall (X) provided that the Transfer Agent is participating in The
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer Program, upon the request of the Holder, credit
      such aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder’s or its designee’s balance account with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and deliver to the Holder or, at Holder’s instruction
      pursuant to the Exercise Notice, Holder’s agent or designee, in each case, sent
      by reputable overnight courier to the address as specified in the Exercise
      Notice, a certificate, registered in the Company’s share register in the name of
      the Holder or its designee (as indicated in the Exercise Notice), for the number
      of shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall
      be
      deemed for all corporate purposes to have become the holder of record of the
      Warrant Shares with respect to which this Warrant has been exercised,
      irrespective of the date such Warrant Shares are credited to the Holder’s DTC
      (as defined below) account or the date of delivery of the certificates
      evidencing such Warrant Shares, as the case may be. If this Warrant is submitted
      in connection with any exercise pursuant to this Section 1(a) and the number
      of
      Warrant Shares represented by this Warrant submitted for exercise is greater
      than the number of Warrant Shares being acquired upon an exercise, then the
      Company shall as soon as practicable and in no event later than five
      (5) Business
      Days after any exercise and at its own expense, issue and deliver to the Holder
      (or its designee) a new Warrant (in accordance with Section 6(d)) representing
      the right to purchase the number of Warrant Shares purchasable immediately
      prior
      to such exercise under this Warrant, less the number of Warrant Shares with
      respect to which this Warrant is exercised. No fractional shares of Common
      Stock
      are to be issued upon the exercise of this Warrant, but rather the number of
      shares of Common Stock to be issued shall be rounded up to the nearest whole
      number. The Company shall pay any and all

     

    
      
        
        

      

      
        -
          2 -

        
          

        

      

      
        
        

      

    

    taxes
      which may be payable with respect to the issuance and delivery of Warrant Shares
      upon exercise of this Warrant, provided that the Company shall not be required
      to pay any tax that may be payable in respect of any transfer involved in the
      issue and delivery of any Warrant Shares in any name other than that of the
      Holder or one of its affiliates, or any income or transfer tax due by the Holder
      with respect to Warrant Shares issued upon exercise of this
      Warrant.

     

    (b) Exercise
      Price.
      For
      purposes of this Warrant, “Exercise
      Price”
means
      $0.50, subject to adjustment as provided herein.

     

    (c) Company’s
      Failure to Timely Deliver Securities.
      if
      within three (3) Trading Days of receipt of the Exercise Delivery Documents,
      the
      Company shall fail to issue and deliver a certificate to the Holder. and
      register such shares of Common Stock on the Company’s share register or credit
      the Holder’s balance account with DTC for the number of shares of Common Stock
      to which the Holder is entitled upon such Holder’s exercise hereunder (as the
      case may be), and if on or after such third (3rd) Trading Day the Holder
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by the Holder of shares of Common Stock
      issuable upon such exercise that the Holder anticipated receiving from the
      Company (a “Buy-In”),
      then,
      in
      addition to all other remedies available to the Holder, the Company shall,
      within three (3) Business Days after the Holder’s request and in the Holder’s
      discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
      total purchase price (including brokerage commissions, if any) for the shares
      of
      Common Stock so purchased (the “Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such shares of Common Stock) shall terminate, or (ii) promptly honor its
      obligation to deliver to the Holder a certificate or certificates representing
      such shares of Common Stock or credit the Holder’s balance account with DTC for
      the number of shares of Common Stock to which the Holder is entitled upon such
      Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in
      an amount equal to the excess (if any) of the Buy-In Price over the product
      of
      (A) such number of shares of Common Stock times (B) the VWAP of the Common
      Stock
      for the five (5) Trading
      Day period immediately preceding the date of the Exercise Notice.

     

    (d) Cashless
      Exercise.
      Notwithstanding anything contained herein to the contrary (other than Section
      1(f) below), the Holder may, in its sole discretion, exercise this Warrant
      in
      whole or in part and, in lieu of making the cash payment otherwise contemplated
      to be made to the Company upon such exercise in payment of the Aggregate
      Exercise Price, elect instead to receive upon such exercise the “Net Number” of
      shares of Common Stock determined according to the following formula (a
“Cashless
      Exercise”):

     

    Net
      Number = (A
      x B)
      - (A x C)

    B

     

    For
      purposes of the foregoing formula:

     

    A=
      the
      total number of shares with respect to which this Warrant is then being
exercised.

     

    
      
        
        

      

      
        -
          3 -

        
          

        

      

      
        
        

      

    

     

    B
      = the
      VWAP of the Common Stock for the five (5) Trading
      Day period immediately preceding the date of the Exercise Notice.

     

    C
      = the
      Exercise Price then in effect for the applicable Warrant Shares at the time
      of
      such exercise.

     

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the number of Warrant Shares to be issued pursuant
      to
      the terms hereof, the Company shall promptly issue to the Holder the number
      of
      Warrant Shares that are not disputed and resolve such dispute in accordance
      with
      Section 12.

     

    (f) Limitations
      on Exercises.

     

    (i) Beneficial
      Ownership.
      Notwithstanding anything to the contrary contained in this Warrant, this Warrant
      shall not be exercisable by the Holder hereof to the extent (but only to the
      extent) that, if exercisable by the Holder, the Holder or any of its affiliates
      would beneficially own in excess of 4.90% (the “Maximum
      Percentage”)
      of the
      outstanding shares of Common Stock. To the extent the above limitation applies,
      the determination of whether this Warrant shall be exercisable (vis-a-vis other
      convertible, exercisable or exchangeable securities owned by the Holder) and
      of
      which warrants shall be exercisable (as among all warrants owned by the Holder)
      shall, subject to such Maximum Percentage limitation, be determined on the
      basis
      of the first submission to the Company for conversion, exercise or exchange
      (as
      the case may be). No prior inability to exercise this Warrant pursuant to this
      paragraph shall have any effect on the applicability of the provisions of this
      paragraph with respect to any subsequent determination of exercisability. For
      the purposes of this paragraph, beneficial ownership and all determinations
      and
      calculations (including, without limitation, with respect to calculations of
      percentage ownership) shall be determined by the Holder in accordance with
      Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement)
      and the rules and regulations promulgated thereunder. The provisions of this
      paragraph shall be implemented in a manner otherwise than in strict conformity
      with the terms this paragraph to correct this paragraph (or any portion hereof)
      which may be defective or inconsistent with the intended Maximum Percentage
      beneficial ownership limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such Maximum
      Percentage limitation. The limitations contained in this paragraph shall apply
      to a successor Holder of this Warrant. The holders of Common Stock shall be
      third party beneficiaries of this paragraph and the Company may not waive this
      paragraph without the consent of holders of a majority of its Common Stock,
      For
      purposes of this Warrant, in determining the number of outstanding shares of
      Common Stock, the Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (1) the Company’s most recent Form 10-K (or Form 10-KSB),
      Form l0-Q (or Form 10-QSB), Current Report on Form 8-K or other public filing
      with the SEC (as the case may be), (2) a more recent public announcement by
      the
      Company or (3) any other notice by the Company or the Transfer Agent setting
      forth the number of shares of Common Stock outstanding. For any reason at any
      time, upon the written or

     

    
      
        
        

      

      
        -
          4 -

        
          

        

      

      
        
        

      

    

    oral
      request of the Holder, the Company shall within one (1) Business Day confirm
      orally and in writing to the Holder the number of shares of Common Stock then
      outstanding, including by virtue of any prior conversion or exercise of
      convertible or exercisable securities into Common Stock, including, without
      limitation, pursuant to this Warrant or securities issued pursuant to the
      Securities Purchase Agreement.

     

    (ii) Principal
      Market Regulation.
      The
      Company shall not be obligated to issue any shares of Common Stock upon exercise
      of this Warrant if the issuance of such shares of Common Stock would exceed
      that
      number of shares of Common Stock which the Company may issue upon exercise
      of
      this Warrant without breaching the Company’s obligations under the rules or
      regulations of the Principal Market (the “Exchange
      Cap”),
      except that such limitation shall not apply in the event that the Company (A)
      obtains the Shareholder Approval (as defined in the Securities Purchase
      Agreement) as required by the applicable rules of the Principal Market for
      issuances of shares of Common Stock in excess of such amount or (B) obtains
      a
      written opinion from outside counsel to the Company that such approval is not
      required, which opinion shall be reasonably satisfactory to the Holder. Until
      such approval or written opinion is obtained, no Buyer shall be issued, upon
      exercise of any SPA Warrants, shares of Common Stock in an amount greater than
      the product of the Exchange Cap multiplied by a fraction, the numerator of
      which
      is the total number of shares of Common Stock issued to such Buyer pursuant
      to
      the Securities Purchase Agreement on the issuance Date and the denominator
      of
      which is the aggregate number of shares of Common Stock issued to all Buyers
      pursuant to the Securities Purchase Agreement on the Issuance Date (with respect
      to each Buyer, the “Exchange
      Cap Allocation”).
      In
      the event that any Buyer shall sell or otherwise transfer any of such Buyer’s
      SPA Warrants, the transferee shall be allocated a pro rata portion of such
      Buyer’s Exchange Cap Allocation, and the restrictions of the prior sentence
      shall apply to such transferee with respect to the portion of the Exchange
      Cap
      Allocation allocated to such transferee. In the event that any holder of SPA
      Warrants shall exercise all of such holder’s SPA Warrants into a number of
      shares of Common Stock which, in the aggregate, is less than such holder’s
      Exchange Cap Allocation, then the difference between such holder’s Exchange Cap
      Allocation and the number of shares of Common Stock actually issued to such
      holder shall be allocated to the respective Exchange Cap Allocations of the
      remaining holders of SPA Warrants on a pro rata basis in proportion to the
      shares of Common Stock underlying the SPA Warrants then held by each such
      holder.

     

    (g) Insufficient
      Authorized Shares.
      The
      Company shall at all times keep reserved for issuance under this Warrant a
      number of shares of Common Stock as shall he necessary to satisfy the Company’s
      obligation to issue shares of Common Stock hereunder (without regard to any
      limitation otherwise contained herein with respect to the number of shares
      of
      Common Stock that may be acquirable upon exercise of this Warrant). If,
      notwithstanding the foregoing, and not in limitation thereof, at any time while
      any of the Warrants remain outstanding the Company does not have a sufficient
      number of authorized and unreserved shares of Common Stock to satisfy its
      obligation to reserve for issuance upon exercise of the SPA Warrants a number
      of
      shares of Common Stock equal to the number of shares of Common Stock as shall
      from time to time be necessary to effect the exercise of all of the SPA Warrants
      then outstanding (the “Required Reserve
      Amount”)
      (an
“Authorized
      Share Failure”),
      then
      the Company shall promptly take all

     

    
      
        
        

      

      
        -
          5 -

        
          

        

      

      
        
        

      

    

    action
      necessary to increase the Company’s authorized shares of Common Stock to an
      amount sufficient to allow the Company to reserve the Required Reserve Amount
      for all the SPA Warrants then outstanding. Without limiting the generality
      of
      the foregoing sentence, as soon as practicable after the date of the occurrence
      of an Authorized Share Failure, but in no event later than seventy five (75)
      days after the occurrence of such Authorized Share Failure, the Company shall
      hold a meeting of its stockholders for the approval of an increase in the number
      of authorized shares of Common Stock. In connection with such meeting, the
      Company shall provide each stockholder with a proxy statement and shall use
      its
      best efforts to solicit its stockholders’ approval of such increase in
      authorized shares of Common Stock and to cause its board of directors to
      recommend to the stockholders that they approve such proposal.

     

    2. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
      The
      Exercise Price and number of Warrant Shares issuable upon exercise of this
      Warrant are subject to adjustment from time to time as set forth in this Section
      2.

     

    (a) Stock
      Dividends and Splits.
      If the
      Company. at any time on or after the date of the Securities Purchase Agreement,
      (i) pays a stock dividend on one or more classes of its then outstanding shares
      of Common Stock or otherwise makes a distribution on any class of capital stock
      that is payable in shares of Common Stock, (ii) subdivides (by any stock split,
      stock dividend,, recapitalization or otherwise) one or more classes of its
      then
      outstanding shares of Common Stock into a larger number of shares or (iii)
      combines (by combination, reverse stock split or otherwise) one or more classes
      of its then outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction
      of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clause
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination. If any event requiring an
      adjustment under this paragraph occurs during the period that an Exercise Price
      is calculated hereunder, then the calculation of such Exercise Price shall
      be
      adjusted appropriately to reflect such event.

     

    (b) Adjustment
      Upon Issuance of Shares of Common Stock.
      If and
      whenever on or after the date of the Securities Purchase Agreement, the Company
      issues or sells, or in accordance with this Section 2 is deemed to have issued
      or sold, any shares of Common Stock (including the issuance or sale of shares
      of
      Common Stock owned or held by or for the account of the Company, but excluding
      any Excluded Securities (as defined in the Securities Purchase Agreement),
      for a
      consideration per share (the “New
      Issuance Price”)
      less
      than a
      price
      (the “Applicable
      Price”)
      equal
      to the Exercise Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the New Issuance Price. For purposes
      of
      determining the adjusted Exercise Price under this Section 2(b), the following
      shall be applicable:

     

    (i) Issuance
      of Options.
      If the
      Company in any manner grants or sells any Options and the lowest price per
      share
      for which one share of Common Stock is issuable

     

    
      
        
        

      

      
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    upon
      the
      exercise of any such Option or upon conversion, exercise or exchange of any
      Convertible Securities issuable upon exercise of any such Option is less than
      the Applicable Price, then such share of Common Stock shall be deemed to be
      outstanding and to have been issued and sold by the Company at the time of
      the
      granting or sale of such Option for such price per share. For purposes of this
      Section 2(b)(i), the “lowest price per share for which one share of Common Stock
      is issuable upon the exercise of any such Options or upon conversion, exercise
      or exchange of any Convertible Securities issuable upon exercise of any such
      Option” shall be equal to the sum of the lowest amounts of consideration (if
      any) received or receivable by the Company with respect to any one share of
      Common Stock upon the granting or sale of the Option, upon exercise of the
      Option and upon conversion, exercise or exchange of any Convertible Security
      issuable upon exercise of such Option. Except as contemplated below, no further
      adjustment of the Exercise Price shall be made upon the actual issuance of
      such
      shares of Common Stock or of such Convertible Securities upon the exercise
      of
      such Options or upon the actual issuance of such shares of Common Stock upon
      conversion, exercise or exchange of such Convertible Securities.

     

    (ii) Issuance
      of Convertible
      Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
      Section 2(b)(ii), the “lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange thereof’ shall be
      equal to the sum of the lowest amounts of consideration (if any) received or
      receivable by the Company with respect to one share of Common Stock upon the
      issuance or sale of the Convertible Security and upon conversion, exercise
      or
      exchange of such Convertible Security. Except as contemplated below, no further
      adjustment of the Exercise Price shall be made upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities, and if any such issue or sale of such Convertible Securities is
      made
      upon exercise of any Options for which adjustment of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 2(b), except as
      contemplated below, no further adjustment of the Exercise Price shall be made
      by
      reason of such issue or sale.

     

    (iii) Change
      in Option Price or Rate of Conversion.
      If the
      purchase or exercise price provided for in any Options, the additional
      consideration, if any, payable upon the issue, conversion, exercise or exchange
      of any Convertible Securities, or the rate at which any Convertible Securities
      are convertible into or exercisable or exchangeable for shares of Common Stock
      increases or decreases at any time, the Exercise Price in effect at the
      time
      of such increase or decrease shall be adjusted to the Exercise Price which
      would
      have been in effect at such time had such Options or Convertible Securities
      provided for such increased or decreased purchase price, additional
      consideration or increased or decreased conversion rate, as the case may be,
      at
      the time initially granted, issued or sold. For purposes of this Section
      2(b)(iii), if the terms of any Option or Convertible Security that was
      outstanding as of the date of issuance of this Warrant are

     

    
      
        
        

      

      
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    increased
      or decreased in the manner described in the immediately preceding sentence,
      then
      such Option or Convertible Security and the shares of Common Stock deemed
      issuable upon exercise. conversion or exchange thereof shall be deemed to have
      been issued as of’ the date of such increase or decrease. No adjustment pursuant
      to this Section 2(h) shall be made if such adjustment would result in an
      increase of the Exercise Price then in effect. 

     

    (iv) Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $0.01. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold or deemed
      to have been issued or sold for cash, the consideration received therefor will
      be deemed to be the net amount received by the Company therefor. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold for a
      consideration other than cash, the amount of such consideration received by
      the
      Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company for each such security will be the VWAP of such security
      for the five (5) Trading Day period immediately preceding the date of receipt.
      If any shares of Common Stock, Options or Convertible Securities are issued
      to
      the owners of the non-surviving entity in connection with any merger in which
      the Company is the surviving entity, the amount of consideration therefor will
      be deemed to be the fair value of such portion of the net assets and business
      of
      the non-surviving entity as is attributable to such shares of Common Stock,
      Options or Convertible Securities, as the case may be. The fair value of any
      consideration other than cash or securities will be determined by the Board
      of
      Directors of the Company within five (5) days
      after the occurrence of an event requiring valuation (the “Valuation
      Event”).
      If
      the Required Holders disagree with the determination of the Board of Directors
      of the Company and give written notice of such disagreement to the Company
      within ten (10) days after the occurrence of such Valuation Event, the fair
      value of such consideration will be determined within five (5) Trading Days
      after the tenth (10th)
      day
      following such Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be final and binding upon all parties absent manifest error
      and
      the fees and expenses of such appraiser shall be borne by the
      Company.

     

    (v) Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable in
      shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
      for or purchase shares of Common Stock, Options or Convertible Securities,
      then
      such record date will be deemed to be the date of the issue or sale of the
      shares of Common Stock deemed to have been issued or sold upon the declaration
      of such dividend or the making of such other distribution or the date of the
      granting of such right of subscription or purchase (as the case may
      be).

     

    (c) Number
      of Warrant Shares.
      Simultaneously with any adjustment to the Exercise

     

    
      
        
        

      

      
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    Price
      pursuant to paragraph (a) of this Section 2 (but not with respect to any
      adjustment to the Exercise Price pursuant to paragraph (b) of this Section
      2),
      unless waived in writing by the Holder with respect to a particular adjustment,
      the number of Warrant Shares that may be purchased upon exercise of this Warrant
      shall be increased or decreased proportionately, so that after such adjustment
      the aggregate Exercise Price payable hereunder for the adjusted number of
      Warrant Shares shall be the same as the aggregate Exercise Price in effect
      immediately prior to such adjustment (without regard to any limitations on
      exercise contained herein).

     

    (d) Other
      Events.
      In the
      event that the Company (or any direct or indirect subsidiary thereof) shall
      take
      any action to which the provisions hereof are not strictly applicable, or,
      if
      applicable, would not operate to protect the Holder from dilution or if any
      event occurs of the type contemplated by the provisions of this Section 2 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company’s Board of Directors shall in good faith
      determine and implement an appropriate adjustment in the Exercise Price and
      the
      number of Warrant Shares (if applicable) so as to protect the rights of the
      Holder; provided that no such adjustment pursuant to this Section 2(d) will
      increase the Exercise Price or decrease the number of Warrant Shares as
      otherwise determined pursuant to this Section 2, provided further that if the
      Holder does not accept such adjustments as appropriately protecting its
      interests hereunder against such dilution, then the Company’s Board of Directors
      and the Holder shall agree, in good faith, upon an independent investment bank
      of nationally recognized standing to make such appropriate adjustments, whose
      determination shall be final and binding and whose fees and expenses shall
      be
      borne by the Company.

     

    (e) Calculations.
      All
      calculations under this Section 2 shall be made to the nearest cent or the
      nearest 1/100th
      of a
      share, as applicable. The number of shares of Common Stock outstanding at any
      given time shall not include shares owned or held by or for the account of
      the
      Company, and the disposition of any such shares shall be considered an issue
      or
      sale of Common Stock.

     

    3. PURCHASE RIGHTS;
      FUNDAMENTAL TRANSACTIONS.

     

    (a) Purchase
      Rights.
      In
      addition to any adjustments pursuant to Section 2 above, if at any time the
      Company grants, issues or sells any Options, Convertible Securities or rights
      to
      purchase stock, warrants, securities or other property pro rata to the record
      holders of any class of shares of Common Stock (the “Purchase
      Rights”),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant (without regard to any limitations on
      exercise hereof, including without limitation, the Maximum Percentage)
      immediately before the date on which a record is taken for the grant, issuance
      or sale of such Purchase Rights, or, if no such record is taken, the date as
      of
      which the record holders of shares of Common Stock are to be determined for
      the
      grant, issue or sale of such Purchase Rights (provided, however, that to the
      extent that the Holder’s right to participate in any such Purchase Right would
      result in the Holder exceeding the Maximum Percentage, then the Holder shall
      not
      be entitled to participate in such Purchase Right to such extent (or beneficial
      ownership of such shares of Common Stock as a result of such Purchase Right
      to
      such extent) and such Purchase Right to such extent shall be

     

    
      
        
        

      

      
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    held
      in
      abeyance for the Holder until such time, if ever, as its right thereto would
      not
      result in the Holder exceeding the Maximum Percentage).

     

    (b) Fundamental
      Transactions.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      the
      Successor Entity assumes in writing all of the obligations of the Company under
      this Warrant and the other Transaction Documents (as defined in the Securities
      Purchase Agreement) in accordance with the provisions of this Section 3(b)
      pursuant to written agreements in form and substance satisfactory to the Holder
      and approved by the Holder prior to such Fundamental Transaction, including
      agreements to deliver to the Holder in exchange for this Warrant a security
      of
      the Successor Entity evidenced by a written instrument substantially similar
      in
      form and substance to this Warrant, including, without limitation, which is
      exercisable for a corresponding number of shares of capital stock equivalent
      to
      the shares of Common Stock acquirable and receivable upon exercise of this
      Warrant (without regard to any limitations on the exercise of this Warrant)
      prior to such Fundamental Transaction, and with an exercise price which applies
      the exercise price hereunder to such shares of capital stock (but taking into
      account the relative value of the shares of Common Stock pursuant to such
      Fundamental Transaction and the value of such shares of capital stock, such
      adjustments to the number of shares of capital stock and such exercise price
      being for the purpose of protecting the economic value of this Warrant
      immediately prior to the consummation of such Fundamental Transaction), and
      which is satisfactory in form and substance to the Holder. Upon the occurrence
      of any Fundamental Transaction, the Successor Entity shall succeed to, and
      be
      substituted for (so that from and after the date of such Fundamental
      Transaction, the provisions of this Warrant and the other Transaction Documents
      referring to the “Company” shall refer instead to the Successor Entity), and may
      exercise every right and power of the Company and shall assume all of the
      obligations of the Company under this Warrant and the other Transaction
      Documents with the same effect as if such Successor Entity had been named as
      the
      Company herein. Upon consummation of the Fundamental Transaction, the Successor
      Entity shall deliver to the Holder confirmation that there shall be issued
      upon
      exercise of this Warrant at any time after the consummation of the Fundamental
      Transaction, in lieu of the shares of the Common Stock (or other securities,
      cash, assets or other property (except such items still issuable under Section
      3(a) above, which shall continue to be receivable thereafter)) issuable upon
      the
      exercise of this Warrant prior to such Fundamental Transaction, such shares
      of
      the publicly traded Common Stock (or its equivalent) of the Successor Entity
      (including its Parent Entity) which the Holder would have been entitled to
      receive upon the happening of such Fundamental Transaction had this Warrant
      been
      exercised immediately prior to such Fundamental Transaction (without regard
      to
      any limitations on the exercise of this Warrant), as adjusted in accordance
      with
      the provisions of this Warrant. In addition to and not in substitution for
      any
      other rights hereunder, prior to the consummation of any Fundamental Transaction
      pursuant to which holders of shares of Common Stock are entitled to receive
      securities or other assets with respect to or in exchange for shares of Common
      Stock (a “Corporate
      Event”),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant at any
      time after the consummation of the Fundamental Transaction but prior to the
      Expiration Date, in lieu of the shares of the Common Stock (or other securities,
      cash, assets or other property (except such items still issuable under Section
      3(a) above, which shall continue to be receivable thereafter)) issuable upon
      the
      exercise of the Warrant prior to such Fundamental Transaction, such shares
      of
      stock, securities, cash, assets or any other property whatsoever (including
      warrants or other purchase or subscription rights) which the Holder would have
      been entitled to receive

     

    
      
        
        

      

      
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    upon
      the
      happening of such Fundamental Transaction had the Warrant been exercised
      immediately prior to such Fundamental Transaction (without regard to any
      limitations on the exercise of this Warrant). Provision made pursuant to the
      preceding sentence shall he in a form and substance reasonably satisfactory
      to
      the Holder. The provisions of this Section 3 shall apply similarly and equally
      to successive Fundamental Transactions and Corporate Events and shall he applied
      as if this Warrant (and any such subsequent warrants) were fully exercisable
      and
      without regard to any limitations on the exercise of this Warrant (provided
      that
      the Holder shall continue to be entitled to the benefit of the Maximum
      Percentage, applied however with respect to shares of capital stock registered
      under the 1934 Act and thereafter receivable upon exercise of this Warrant
      (or
      any such other warrant)).

     

    (c) Black
      Scholes Value.
      Notwithstanding the foregoing and the provisions of Section 3(b) above, in
      the
      event of a Fundamental Transaction, if the Holder has not exercised this Warrant
      in full prior to the consummation of such Fundamental Transaction, at the
      request of the Holder delivered on or before the date of the consummation of
      such Fundamental Transaction. (i) if the fair market value of the consideration
      per share that the Holder would receive with respect to such Fundamental
      Transaction if the Holder exercised this Warrant in full prior to the
      consummation thereof (without regard to any limitations on exercise contained
      herein) exceeds the Exercise Price then in effect on the date of such
      consummation, the Company or the Successor Entity (as the case may be) shall
      purchase this Warrant from the Holder for an amount in cash equal to the fair
      market value of such consideration per share multiplied by the number of shares
      of Common Stock for which this Warrant is then exercisable (without regard
      to
      any limitations on exercise contained herein) (less the aggregate Exercise
      Price
      which would be payable in connection with such exercise) or (ii) if the fair
      market value of the per share consideration which the Holder would receive
      with
      respect to such Fundamental Transaction if the Holder exercised this Warrant
      in
      full prior to the consummation thereof (without regard to any limitations on
      exercise contained herein) is equal to or less than the Exercise Price then
      in
      effect, the Company or the Successor Entity (as the case may be) shall purchase
      this Warrant from the Holder by paying to the Holder, cash in an amount equal
      to
      the Black Scholes Value of the remaining unexercised portion of this Warrant
      on
      the date of the consummation of such Fundamental Transaction. For purposes
      of
      this paragraph, fair market value shall be mutually determined by the Company
      and the Holder. If the Company and the Holder are unable to agree upon fair
      market value, then such dispute shall be resolved in accordance with the
      procedures in Section 12. All such determinations shall be appropriately
      adjusted for any share dividend, share split or other similar transaction during
      such period.

     

    4. NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Articles of Incorporation, Bylaws or through any reorganization, transfer
      of
      assets, consolidation, merger, scheme of arrangement, dissolution, issue or
      sale
      of securities, or any other voluntary action, for the principal purpose of
      avoiding or seeking to avoid the observance or performance of any of the terms
      of this Warrant, and will at all times in good faith carry out all the
      provisions of this Warrant and take all action as may be required to protect
      the
      rights of the Holder. Without limiting the generality of the foregoing, the
      Company (i) shall not increase the par value of any shares of Common Stock
      receivable upon the exercise of this Warrant above the Exercise Price then
      in
      effect, (ii) shall take all such actions as may be necessary or appropriate
      in
      order that the Company may validly and legally issue fully paid and

     

    
      
        
        

      

      
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    nonassessable
      shares of Common Stock upon the exercise of this Warrant, and (iii) shall,
      so
      long as any of the SPA Warrants are outstanding, take all action necessary
      to
      reserve and keep available out of its authorized and unissued shares of Common
      Stock, solely for the purpose of effecting the exercise of the SPA Warrants,
      the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of the SPA Warrants then outstanding (without regard to
      any
      limitations on exercise).

     

    5. WARRANT
      HOLDER NOT DEEMED A SHAREHOLDER.
      Except
      as otherwise specifically provided herein, the Holder, solely in such Person’s
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
      any of the rights of a shareholder of the Company 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 the Warrant Shares
      which such Person 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 the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a shareholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 5,
      the
      Company shall provide the Holder with copies of the same notices and other
      information given to the stockholders of the Company generally,
      contemporaneously with the giving thereof to the shareholders.

     

    6. REISSUANCE
      OF WARRANTS.

     

    (a) Transfer
      of Warrant.
      If this
      Warrant is to be transferred, the Holder shall surrender this Warrant to the
      Company, whereupon the Company will forthwith issue and deliver upon the order
      of the Holder a new Warrant (in accordance with Section 6(d)), registered as
      the
      Holder may request, representing the right to purchase the number of Warrant
      Shares being transferred by the Holder and, if less than the total number of
      Warrant Shares then underlying this Warrant is being transferred, a new Warrant
      (in accordance with Section 6(d)) to the Holder representing the right to
      purchase the number of Warrant Shares not being transferred.

     

    (b) Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary and reasonable form and, in the case of mutilation,
      upon surrender and cancellation of this Warrant, the Company shall execute
      and
      deliver to the Holder a new Warrant (in accordance with Section 6(d))
      representing the right to purchase the Warrant Shares then underlying this
      Warrant.

     

    (c) Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable. upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 6(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the

     

    
      
        
        

      

      
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    Holder
      at
      the time of such surrender; provided, however, that no warrants for fractional
      shares of Common Stock shall be given.

     

    (d) Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 6(a) or Section 6(c), the Warrant
      Shares designated by the Holder which, when added to the number of shares of
      Common Stock underlying the other new Warrants issued in connection with such
      issuance, does not exceed the number of Warrant Shares then underlying this
      Warrant), (iii) shall have an issuance date, as indicated on the face of’ such
      new Warrant which is the same as the Issuance Date, and (iv) shall have the
      same
      rights and conditions as this Warrant.

     

    7. NOTICES.
      Whenever notice is required to be given under this Warrant, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Warrant, including
      in reasonable detail a description of such action and the reason therefore.
      Without limiting the generality of the foregoing, the Company will give written
      notice to the Holder (i) immediately upon each adjustment of the Exercise Price
      and the number of Warrant Shares, setting forth in reasonable detail, and
      certifying,
      the
      calculation of such adjustment(s) and (ii) at least fifteen (15) days prior
      to
      the date on which the Company closes its books or takes a record (A) with
      respect to any dividend or distribution upon the shares of Common Stock, (B)
      with respect to any grants, issuances or sales of any Options, Convertible
      Securities (other than Excluded Securities) or rights to purchase stock,
      warrants, securities or other property to holders of shares of Common Stock
      or
      (C) for determining rights to vote with respect to any Fundamental Transaction,
      dissolution or liquidation, provided in each case that such information shall
      be
      made known to the public prior to or in conjunction with such notice being
      provided to the Holder and (iii) at least ten (10) Trading Days prior to the
      consummation of any Fundamental Transaction. To the extent that any notice
      provided hereunder constitutes, or contains, material, non-public information
      regarding the Company or any of its subsidiaries, the Company shall
      simultaneously file such notice with the SEC pursuant to a Current Report on
      Form 8-K.

     

    8. AMENDMENT
      AND WAIVER.
      Except
      as otherwise provided herein, the provisions of this Warrant (other than Section
      1 (f)(i)) may be amended and the Company may take any action herein prohibited,
      or omit to perform any act herein required to be performed by it, only if the
      Company has obtained the written consent of the Holders. The Holder shall be
      entitled, at its option, to the benefit of any amendment of any other similar
      warrant issued under the Securities Purchase Agreement.

     

    9. SEVERABILITY.
      If any
      provision of this Warrant or the application thereof becomes or is declared
      by a
      court of competent jurisdiction to be illegal, void or unenforceable, the
      remainder of the terms of this Warrant will continue in full force and
      effect.

     

    10. GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed and enforced in accordance with,
      and
      all questions concerning the construction, validity, interpretation
      and

     

    
      
        
        

      

      
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    performance
      of this Warrant shall be governed by, the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of’ the State of New York or any other jurisdictions) that would
      cause the application of’ the laws of any jurisdictions other than the State of
      New York.

     

    11. CONSTRUCTION;
      HEADINGS.
      This
      Warrant shall be deemed to be jointly drafted by the Company and the Holder
      and
      shall not be construed against any Person as the drafter hereof.

     

    The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant.

     

    12. DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Exercise Price or fair market
      value or the arithmetic calculation of the Warrant Shares, the Company or the
      Holder (as the case may be) shall submit the disputed determinations or
      arithmetic calculations (as the case may be) via facsimile within two (2)
      Business Days of receipt of the applicable notice giving rise to such dispute
      to
      the Company or the Holder (as the case may be). If the Holder and the Company
      are unable to agree upon such determination or calculation of the Exercise
      Price
      or fair market value or the number of Warrant Shares (as the case may be) within
      three (3) Business Days of such disputed determination or arithmetic calculation
      being submitted to the Company or the Holder (as the case may be), then the
      Company shall, within two (2) Business Days submit via facsimile (a) the
      disputed determination of the Exercise Price or fair market value to an
      independent, reputable investment bank selected by the Company and approved
      by
      the Holder or (b) the disputed arithmetic calculation of the Warrant Shares
      to
      the Company’s independent, outside accountant. The Company shall cause at its
      expense the investment bank or the accountant (as the case may be) to perform
      the determinations or calculations (as the case may be) and notify the Company
      and the Holder of the results no later than ten (10) Business Days from the
      time
      it receives such disputed determinations or calculations (as the case may be).
      Such investment bank’s or accountant’s determination or calculation (as the case
      may be) shall be binding upon all parties absent demonstrable
      error.

     

    13. REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
      The

    remedies
      provided in this Warrant shall be cumulative and in addition to all other
      remedies available under this Warrant and the other Transaction Documents,
      at
      law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      to
      pursue actual damages for any failure by the Company to comply with the terms
      of
      this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    14. TRANSFER.
      This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2(g)
      of
      the Securities Purchase Agreement.

     

    15. CERTAIN
      DEFINITIONS.
      For
      purposes of this Warrant, the following terms shall have

     

    
      
        
        

      

      
        -
          14 -

        
          

        

      

      
        
        

      

    

    the
      following meanings:

     

    (a) “Black
      Scholes Value”
means
      the value of this Warrant based on the Black and Scholes Option Pricing Model
      obtained from the “OV” function on Bloomberg determined as of the day
      immediately following the public announcement of the applicable Fundamental
      Transaction and reflecting (i) a risk-free interest rate corresponding to the
      U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as
      of such date and (ii) an expected volatility equal to the 100 day volatility
      obtained from the HVT function on Bloomberg as of such date.

     

    (b) “Bloomberg”
means
      Bloomberg Financial Markets.

     

    (c) “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (d) “Common
      Stock”
means
      (i) the Company’s shares of common stock, no par value per share, and (ii) any
      capital stock into which such common stock shall have been changed or any share
      capital resulting from a reclassification of such common stock.

     

    (e) “Convertible
      Securities”
means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock.

     

    (f) “Eligible
      Market”
means
      the New York Stock Exchange, Inc., the Nasdaq Global Select Market or the
      Principal Market.

     

    (g) “Expiration
      Date”
means
      the date that is the fifth (5th)
      anniversary of the Issuance Date or, if such date falls on a day other than
      a
      Business Day or on which trading does not take place on the Principal Market
      (a
“Holiday”),
      the
      next date that is not a Holiday.

     

    (h) “Fundamental
      Transaction”
means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into another Person (unless
      the
      Company is the surviving corporation and the shareholders of the Company prior
      to such merger or consolidation continue to hold immediately thereafter a
      majority of the aggregate ordinary voting power represented by the issued and
      outstanding Common Stock), or (ii) sell, assign, transfer, convey or otherwise
      dispose of all or substantially all of the properties or assets of the Company
      to another Person, or (iii) allow another Person to make a purchase, tender
      or
      exchange offer that is accepted by the holders of more than the 50% of the
      outstanding shares of Common Stock (not including any shares of Common Stock
      held by the Person or Persons making or party to, or associated or affiliated
      with the Persons making or party to, such purchase, tender or exchange offer),
      or (iv) consummate a stock purchase agreement or other business combination
      (including, without limitation, a reorganization, recapitalization, spin-oft
      or
      scheme of arrangement) with another Person whereby such other Person acquires
      more than the 50% of the outstanding shares of Common Stock (not including
      any
      shares of Common Stock held by the other Person or other Persons making or
      party
      to, or associated or affiliated with the other Persons making or party to,
      such
      stock purchase agreement or other business combination), or (v) reorganize,
      recapitalize or reclassify its Common Stock, or (vi) any

     

    
      
        
        

      

      
        -
          15 -

        
          

        

      

      
        
        

      

    

    “person”
      or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
      the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
      13d-3 under the Exchange Act), directly or indirectly, of 50% of
      the
      aggregate ordinary voting power represented by issued and outstanding Common
      Stock.

     

    (i) “Options”
means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities. 

     

    (j) “Parent
      Entity”
of
      a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    (k) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

     

    (l) “Principal
      Market”
means
      The Nasdaq Global Market.

     

    (m) “Required
      Holders”
means
      the holders of the SPA Warrants representing at least a majority of shares
      of
      Common Stock underlying the SPA Warrants then outstanding.

     

    (n) “Successor
      Entity”
means
      the Person (or, if so elected by the Holder, the Parent Entity) formed by,
      resulting from or surviving any Fundamental Transaction or the Person (or,
      if so
      elected by the Holder, the Parent Entity) with which such Fundamental
      Transaction shall have been entered into.

     

    (o) “Trading
      Day”
means
      any day on which the Common Stock is traded on the Principal Market, or, if
      the
      Principal Market is not the principal trading market for the Common Stock,
      then
      on the principal securities exchange or securities market on which the Common
      Stock is then traded; provided that “Trading Day” shall not include any day on
      which the Common Stock is scheduled to trade on such exchange or market for
      less
      than 4.5 hours or any day that the Common Stock is suspended from trading during
      the final hour of trading on such exchange or market (or if such exchange or
      market does not designate in advance the closing time of trading on such
      exchange or market, then during the hour ending at 4:00:00 p.m., New York
      time).

     

    (p) “VWAP”
      means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market (or, if the Principal Market is not the
      principal trading market for such security, then on the principal securities
      exchange or securities market on which such security is then traded) during
      the
      period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m.,
      New
      York time, as reported by Bloomberg through its “Volume at Price” function or,
      if the foregoing does not apply, the dollar volume-weighted average price of
      such security in the over-the-counter market on the electronic bulletin board
      for such security during the period beginning at 9:30:01 a.m., New York time,
      and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
      no
      dollar volume-weighted average price is reported for such security by Bloomberg
      for such hours, the average of the highest closing bid

     

    
      
        
        

      

      
        -
          16 -

        
          

        

      

      
        
        

      

    

    price
      and
      the lowest closing ask price of any of the market makers for such security
      as
      reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If VWAP cannot be calculated for such security on
      such
      date on any of the foregoing bases, the VWAP of such security on such date
      shall
      be the fair market value as mutually determined by the Company and the Holder.
      If the Company and the Holder are unable to agree upon the fair market value
      of
      such security, then such dispute shall be resolved in accordance with the
      procedures in Section 12. All such determinations shall be appropriately
      adjusted for any share dividend, share split or other similar transaction during
      such period.

     

    [signature
      page follows]

     

    
      
        
        

      

      
        -
          17 -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to Purchase Common Stock to be duly executed
      as
      of the Issuance Date set out above.

     

    POKERTEK,
      INC.

     

    By:
      __________________________

    Name:

    Title:

     

     

    
      
        
        

      

      
        -
          18 -

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    EXERCISE
      NOTICE

     

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

     

    POKERTEK,
      INC.

     

    The
      undersigned holder hereby exercises the right to purchase _________________of
      the shares of Common Stock (“Warrant
      Shares”)
      of
      PokerTek, Inc., a North Carolina corporation (the “Company”), evidenced by the
      attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms
      used herein and not otherwise defined shall have the respective meanings set
      forth in the Warrant.

     

    1. Form
      of Exercise Price.
      The
      Holder intends that payment of the Exercise Price shall be made as:

    ____________ a
      “Cash
      Exercise”
with
      respect to __________________

    Warrant
      Shares; and/or

     

    _____________ a
      “Cashless
      Exercise”
with
      respect to _______________

    Warrant
      Shares.

     

    Notwithstanding
      anything to the contrary contained herein, this Exercise Notice shall constitute
      a representation by the undersigned holder of the Warrant submitting this
      Exercise Notice that, immediately following the exercise provided for in this
      Exercise Notice, such holder (together with its affiliates) will not have
      beneficial ownership (together with the beneficial ownership of such Person’s
      affiliates) of a number of shares of Common Stock which exceeds the Maximum
      Percentage of the total outstanding shares of Common Stock as determined
      pursuant to the provisions of Section 1(f)(i) of the attached
      Warrant

     

    2. Payment
      of Exercise Price.
      In the
      event that the holder has elected a Cash Exercise with respect to some or all
      of
      the Warrant Shares to be issued pursuant hereto, the holder shall pay the
      Aggregate Exercise Price in the sum of $____________________ to the Company
      in
      accordance with the terms of the Warrant.

     

    3. Delivery
      of Warrant Shares.
      The
      Company shall deliver to holder, or its designee or agent as specified below,
      ___________ Warrant Shares in accordance with the terms of the Warrant. Delivery
      shall be made to holder, or for its benefit, to the following
      address:

     

    ______________________________

    ______________________________

    ______________________________

    ______________________________

     

    Date:_________________,______

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ___________________________________

     

    Name
      of
      Registered Holder

     

    By: _____________________________

    Name:

    Title:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

       

       

      ACKNOWLEDGMENT

    

     

    The
      Company hereby acknowledges this Exercise Notice and hereby directs
      ________________ to issue the above indicated number of shares of Common Stock
      in accordance with the Transfer Agent Instructions dated ______________, 2007
      from the Company and acknowledged and agreed to by _______________.

     

    POKERTEK,
      INC.

     

    By:_____________________________________

    Name:

    Title:

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
      LAWS OR (B) AN OPINION OF COUNSEL TO THE HOLDER, IN A FORM REASONABLY ACCEPTABLE
      TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
      SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
      FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES, IF
      EFFECTED IN COMPLIANCE WITH SAID ACT.

    
       

      POKERTEK,
        INC.

       

      WARRANT
        TO PURCHASE COMMON STOCK

       

      Warrant
        No.: 2007-4A

      Date
        of
        Issuance: April 26, 2007 (“Issuance
        Date”)

       

      PokerTek,
        Inc., a North Carolina corporation (the “Company”),
        hereby certifies that, for good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, SMALL CAP GROWTH PORTFOLIO
        (a
        series of Ohio National Fund Inc.), the registered holder hereof or its
        permitted assigns (the “Holder”),
        is
        entitled, subject to the terms set forth below, to purchase from the Company,
        at
        the Exercise Price (as defined below) then in effect, upon exercise of this
        Warrant to Purchase Common Stock (including any Warrants to Purchase Common
        Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
        at
        any time or times on or after the Issuance Date, but not after 11:59 p.m.,
        New
        York time, on the Expiration Date (as defined below), 2,172 fully paid and
        nonassessable shares of Common Stock (as defined below) (the “Warrant
        Shares”),
        provided that the number of Warrant Shares shall automatically be increased
        to
        2,498 on the Shareholder Approval Date (as defined in the Securities Purchase
        Agreement). Except as otherwise defined herein, capitalized terms in this
        Warrant shall have the meanings set forth in Section 14. This Warrant is
        the
        amended and restated version of Warrant No.: 2007-4, one of the Warrants
        to
        purchase Common Stock (the “SPA
        Warrants”)
        issued
        pursuant to Section 1 of that certain Securities Purchase Agreement, dated
        as of
        April 23, 2007 (the “Subscription Date”),
        by
        and
        among the Company and the investors (the “Buyers”) referred to therein (the
“Securities
        Purchase Agreement”).
        All
        changes made pursuant to such amendment and restatement shall be deemed to
        have
        been made as of the Issuance Date, as if the wording of this amended and
        restated version was in effect as of the Issuance Date.

       

      1. EXERCISE OF WARRANT.

       

      (a) Mechanics
        of Exercise.
        Subject
        to the terms and conditions hereof (including,

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      without
        limitation, the limitations set forth in Section 1(f)(i)), this Warrant may
        be
        exercised by the Holder on any day on or after the Issuance Date, in whole
        or in
        part, by (i) delivery of a written notice, in the form attached hereto as
        Exhibit
        A
        (the
“Exercise
        Notice”),
        of
        the Holder’s election
        to exercise this Warrant and (ii) (A) payment to the Company of an amount
        equal
        to the then-applicable Exercise Price multiplied by the number of Warrant
        Shares
        as to which this Warrant is being exercised (the “Aggregate
        Exercise Price”)
        in
        cash or wire transfer of immediately available funds or (B) by notifying
        the
        Company that this Warrant is being exercised pursuant to a Cashless Exercise
        (as
        defined in Section 1(d)). The Holder shall not be required to deliver the
        original Warrant in order to effect an exercise hereunder. Execution and
        delivery of the Exercise Notice with respect to less than all of the Warrant
        Shares shall have the same effect as cancellation of the original Warrant
        and
        issuance of a new Warrant evidencing the right to purchase the remaining
        number
        of Warrant Shares. Execution and delivery of the Exercise Notice for all
        of the
        Warrant Shares shall have the same effect as cancellation of the original
        Warrant after delivery of the Warrant Shares in accordance with the terms
        hereof. On or before the first (1st)
        Business Day following the date on which the Company has received each of
        the
        Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
        Exercise), (the “Exercise
        Delivery Documents”),
        the
        Company shall transmit by facsimile an acknowledgment of confirmation of
        receipt
        of the Exercise Delivery Documents to the Holder and the Company’s transfer
        agent (the “Transfer
        Agent”).
        On or
        before the third (3rd)
        Business
        Day following the date on which the Company has received all of the Exercise
        Delivery Documents (the “Share Delivery
        Date”),
        the
        Company shall (X) provided that the Transfer Agent is participating in The
        Depository Trust Company (“DTC”)
        Fast
        Automated Securities Transfer Program, upon the request of the Holder, credit
        such aggregate number of shares of Common Stock to which the Holder is entitled
        pursuant to such exercise to the Holder’s or its designee’s balance account with
        DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
        Transfer Agent is not participating in the DTC Fast Automated Securities
        Transfer Program, issue and deliver to the Holder or, at Holder’s instruction
        pursuant to the Exercise Notice, Holder’s agent or designee, in each case, sent
        by reputable overnight courier to the address as specified in the Exercise
        Notice, a certificate, registered in the Company’s share register in the name of
        the Holder or its designee (as indicated in the Exercise Notice), for the
        number
        of shares of Common Stock to which the Holder is entitled pursuant to such
        exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall
        be
        deemed for all corporate purposes to have become the holder of record of
        the
        Warrant Shares with respect to which this Warrant has been exercised,
        irrespective of the date such Warrant Shares are credited to the Holder’s DTC
        (as defined below) account or the date of delivery of the certificates
        evidencing such Warrant Shares, as the case may be. If this Warrant is submitted
        in connection with any exercise pursuant to this Section 1(a) and the number
        of
        Warrant Shares represented by this Warrant submitted for exercise is greater
        than the number of Warrant Shares being acquired upon an exercise, then the
        Company shall as soon as practicable and in no event later than five
        (5) Business
        Days after any exercise and at its own expense, issue and deliver to the
        Holder
        (or its designee) a new Warrant (in accordance with Section 6(d)) representing
        the right to purchase the number of Warrant Shares purchasable immediately
        prior
        to such exercise under this Warrant, less the number of Warrant Shares with
        respect to which this Warrant is exercised. No fractional shares of Common
        Stock
        are to be issued upon the exercise of this Warrant, but rather the number
        of
        shares of Common Stock to be issued shall be rounded up to the nearest whole
        number. The Company shall pay any and all

       

      
        
           

        

        
          -
            2 -

          
            

          

        

        
           

        

      

      taxes
        which may be payable with respect to the issuance and delivery of Warrant
        Shares
        upon exercise of this Warrant, provided that the Company shall not be required
        to pay any tax that may be payable in respect of any transfer involved in
        the
        issue and delivery of any Warrant Shares in any name other than that of the
        Holder or one of its affiliates, or any income or transfer tax due by the
        Holder
        with respect to Warrant Shares issued upon exercise of this
        Warrant.

       

      (b) Exercise
        Price.
        For
        purposes of this Warrant, “Exercise
        Price”
means
        $0.50, subject to adjustment as provided herein.

       

      (c) Company’s
        Failure to Timely Deliver Securities.
        if
        within three (3) Trading Days of receipt of the Exercise Delivery Documents,
        the
        Company shall fail to issue and deliver a certificate to the Holder. and
        register such shares of Common Stock on the Company’s share register or credit
        the Holder’s balance account with DTC for the number of shares of Common Stock
        to which the Holder is entitled upon such Holder’s exercise hereunder (as the
        case may be), and if on or after such third (3rd) Trading Day the Holder
        purchases (in an open market transaction or otherwise) shares of Common Stock
        to
        deliver in satisfaction of a sale by the Holder of shares of Common Stock
        issuable upon such exercise that the Holder anticipated receiving from the
        Company (a “Buy-In”),
        then,
        in
        addition to all other remedies available to the Holder, the Company shall,
        within three (3) Business Days after the Holder’s request and in the Holder’s
        discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
        total purchase price (including brokerage commissions, if any) for the shares
        of
        Common Stock so purchased (the “Buy-In
        Price”),
        at
        which point the Company’s obligation to deliver such certificate (and to issue
        such shares of Common Stock) shall terminate, or (ii) promptly honor its
        obligation to deliver to the Holder a certificate or certificates representing
        such shares of Common Stock or credit the Holder’s balance account with DTC for
        the number of shares of Common Stock to which the Holder is entitled upon
        such
        Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in
        an amount equal to the excess (if any) of the Buy-In Price over the product
        of
        (A) such number of shares of Common Stock times (B) the VWAP of the Common
        Stock
        for the five (5) Trading
        Day period immediately preceding the date of the Exercise Notice.

       

      (d) Cashless
        Exercise.
        Notwithstanding anything contained herein to the contrary (other than Section
        1(f) below), the Holder may, in its sole discretion, exercise this Warrant
        in
        whole or in part and, in lieu of making the cash payment otherwise contemplated
        to be made to the Company upon such exercise in payment of the Aggregate
        Exercise Price, elect instead to receive upon such exercise the “Net Number” of
        shares of Common Stock determined according to the following formula (a
“Cashless
        Exercise”):

       

      Net
        Number = (A
        x B)
        - (A x C)

      B

       

      For
        purposes of the foregoing formula:

       

      A=
        the
        total number of shares with respect to which this Warrant is then
        being

       

      
        
           

        

        
          -
            3 -

          
            

          

        

        
           

        

      

      exercised.

       

      B
        = the
        VWAP of the Common Stock for the five (5) Trading
        Day period immediately preceding the date of the Exercise Notice.

       

      C
        = the
        Exercise Price then in effect for the applicable Warrant Shares at the time
        of
        such exercise.

       

      (e) Disputes.
        In the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the number of Warrant Shares to be issued pursuant
        to
        the terms hereof, the Company shall promptly issue to the Holder the number
        of
        Warrant Shares that are not disputed and resolve such dispute in accordance
        with
        Section 12.

       

      (f) Limitations
        on Exercises.

       

      (i) Beneficial
        Ownership.
        Notwithstanding anything to the contrary contained in this Warrant, this
        Warrant
        shall not be exercisable by the Holder hereof to the extent (but only to
        the
        extent) that, if exercisable by the Holder, the Holder or any of its affiliates
        would beneficially own in excess of 4.90% (the “Maximum
        Percentage”)
        of the
        outstanding shares of Common Stock. To the extent the above limitation applies,
        the determination of whether this Warrant shall be exercisable (vis-a-vis
        other
        convertible, exercisable or exchangeable securities owned by the Holder)
        and of
        which warrants shall be exercisable (as among all warrants owned by the Holder)
        shall, subject to such Maximum Percentage limitation, be determined on the
        basis
        of the first submission to the Company for conversion, exercise or exchange
        (as
        the case may be). No prior inability to exercise this Warrant pursuant to
        this
        paragraph shall have any effect on the applicability of the provisions of
        this
        paragraph with respect to any subsequent determination of exercisability.
        For
        the purposes of this paragraph, beneficial ownership and all determinations
        and
        calculations (including, without limitation, with respect to calculations
        of
        percentage ownership) shall be determined by the Holder in accordance with
        Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement)
        and the rules and regulations promulgated thereunder. The provisions of this
        paragraph shall be implemented in a manner otherwise than in strict conformity
        with the terms this paragraph to correct this paragraph (or any portion hereof)
        which may be defective or inconsistent with the intended Maximum Percentage
        beneficial ownership limitation herein contained or to make changes or
        supplements necessary or desirable to properly give effect to such Maximum
        Percentage limitation. The limitations contained in this paragraph shall
        apply
        to a successor Holder of this Warrant. The holders of Common Stock shall
        be
        third party beneficiaries of this paragraph and the Company may not waive
        this
        paragraph without the consent of holders of a majority of its Common Stock,
        For
        purposes of this Warrant, in determining the number of outstanding shares
        of
        Common Stock, the Holder may rely on the number of outstanding shares of
        Common
        Stock as reflected in (1) the Company’s most recent Form 10-K (or Form 10-KSB),
        Form l0-Q (or Form 10-QSB), Current Report on Form 8-K or other public filing
        with the SEC (as the case may be), (2) a more recent public announcement
        by the
        Company or (3) any other notice by the Company or the Transfer Agent setting
        forth the number of shares of Common Stock outstanding. For any reason at
        any
        time, upon the written or

       

      
        
           

        

        
          -
            4 -

          
            

          

        

        
           

        

      

      oral
        request of the Holder, the Company shall within one (1) Business Day confirm
        orally and in writing to the Holder the number of shares of Common Stock
        then
        outstanding, including by virtue of any prior conversion or exercise of
        convertible or exercisable securities into Common Stock, including, without
        limitation, pursuant to this Warrant or securities issued pursuant to the
        Securities Purchase Agreement.

       

      (ii) Principal
        Market Regulation.
        The
        Company shall not be obligated to issue any shares of Common Stock upon exercise
        of this Warrant if the issuance of such shares of Common Stock would exceed
        that
        number of shares of Common Stock which the Company may issue upon exercise
        of
        this Warrant without breaching the Company’s obligations under the rules or
        regulations of the Principal Market (the “Exchange
        Cap”),
        except that such limitation shall not apply in the event that the Company
        (A)
        obtains the Shareholder Approval (as defined in the Securities Purchase
        Agreement) as required by the applicable rules of the Principal Market for
        issuances of shares of Common Stock in excess of such amount or (B) obtains
        a
        written opinion from outside counsel to the Company that such approval is
        not
        required, which opinion shall be reasonably satisfactory to the Holder. Until
        such approval or written opinion is obtained, no Buyer shall be issued, upon
        exercise of any SPA Warrants, shares of Common Stock in an amount greater
        than
        the product of the Exchange Cap multiplied by a fraction, the numerator of
        which
        is the total number of shares of Common Stock issued to such Buyer pursuant
        to
        the Securities Purchase Agreement on the issuance Date and the denominator
        of
        which is the aggregate number of shares of Common Stock issued to all Buyers
        pursuant to the Securities Purchase Agreement on the Issuance Date (with
        respect
        to each Buyer, the “Exchange
        Cap Allocation”).
        In
        the event that any Buyer shall sell or otherwise transfer any of such Buyer’s
        SPA Warrants, the transferee shall be allocated a pro rata portion of such
        Buyer’s Exchange Cap Allocation, and the restrictions of the prior sentence
        shall apply to such transferee with respect to the portion of the Exchange
        Cap
        Allocation allocated to such transferee. In the event that any holder of
        SPA
        Warrants shall exercise all of such holder’s SPA Warrants into a number of
        shares of Common Stock which, in the aggregate, is less than such holder’s
        Exchange Cap Allocation, then the difference between such holder’s Exchange Cap
        Allocation and the number of shares of Common Stock actually issued to such
        holder shall be allocated to the respective Exchange Cap Allocations of the
        remaining holders of SPA Warrants on a pro rata basis in proportion to the
        shares of Common Stock underlying the SPA Warrants then held by each such
        holder.

       

      (g) Insufficient
        Authorized Shares.
        The
        Company shall at all times keep reserved for issuance under this Warrant
        a
        number of shares of Common Stock as shall he necessary to satisfy the Company’s
        obligation to issue shares of Common Stock hereunder (without regard to any
        limitation otherwise contained herein with respect to the number of shares
        of
        Common Stock that may be acquirable upon exercise of this Warrant). If,
        notwithstanding the foregoing, and not in limitation thereof, at any time
        while
        any of the Warrants remain outstanding the Company does not have a sufficient
        number of authorized and unreserved shares of Common Stock to satisfy its
        obligation to reserve for issuance upon exercise of the SPA Warrants a number
        of
        shares of Common Stock equal to the number of shares of Common Stock as shall
        from time to time be necessary to effect the exercise of all of the SPA Warrants
        then outstanding (the “Required Reserve
        Amount”)
        (an
“Authorized
        Share Failure”),
        then
        the Company shall promptly take all

       

      
        
           

        

        
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      action
        necessary to increase the Company’s authorized shares of Common Stock to an
        amount sufficient to allow the Company to reserve the Required Reserve Amount
        for all the SPA Warrants then outstanding. Without limiting the generality
        of
        the foregoing sentence, as soon as practicable after the date of the occurrence
        of an Authorized Share Failure, but in no event later than seventy five (75)
        days after the occurrence of such Authorized Share Failure, the Company shall
        hold a meeting of its stockholders for the approval of an increase in the
        number
        of authorized shares of Common Stock. In connection with such meeting, the
        Company shall provide each stockholder with a proxy statement and shall use
        its
        best efforts to solicit its stockholders’ approval of such increase in
        authorized shares of Common Stock and to cause its board of directors to
        recommend to the stockholders that they approve such proposal.

       

      2. ADJUSTMENT
        OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
        The
        Exercise Price and number of Warrant Shares issuable upon exercise of this
        Warrant are subject to adjustment from time to time as set forth in this
        Section
        2.

       

      (a) Stock
        Dividends and Splits.
        If the
        Company. at any time on or after the date of the Securities Purchase Agreement,
        (i) pays a stock dividend on one or more classes of its then outstanding
        shares
        of Common Stock or otherwise makes a distribution on any class of capital
        stock
        that is payable in shares of Common Stock, (ii) subdivides (by any stock
        split,
        stock dividend,, recapitalization or otherwise) one or more classes of its
        then
        outstanding shares of Common Stock into a larger number of shares or (iii)
        combines (by combination, reverse stock split or otherwise) one or more classes
        of its then outstanding shares of Common Stock into a smaller number of shares,
        then in each such case the Exercise Price shall be multiplied by a fraction
        of
        which the numerator shall be the number of shares of Common Stock outstanding
        immediately before such event and of which the denominator shall be the number
        of shares of Common Stock outstanding immediately after such event. Any
        adjustment made pursuant to clause (i) of this paragraph shall become effective
        immediately after the record date for the determination of stockholders entitled
        to receive such dividend or distribution, and any adjustment pursuant to
        clause
        (ii) or (iii) of this paragraph shall become effective immediately after
        the
        effective date of such subdivision or combination. If any event requiring
        an
        adjustment under this paragraph occurs during the period that an Exercise
        Price
        is calculated hereunder, then the calculation of such Exercise Price shall
        be
        adjusted appropriately to reflect such event.

       

      (b) Adjustment
        Upon Issuance of Shares of Common Stock.
        If and
        whenever on or after the date of the Securities Purchase Agreement, the Company
        issues or sells, or in accordance with this Section 2 is deemed to have issued
        or sold, any shares of Common Stock (including the issuance or sale of shares
        of
        Common Stock owned or held by or for the account of the Company, but excluding
        any Excluded Securities (as defined in the Securities Purchase Agreement),
        for a
        consideration per share (the “New
        Issuance Price”)
        less
        than a
        price
        (the “Applicable
        Price”)
        equal
        to the Exercise Price in effect immediately prior to such issue or sale or
        deemed issuance or sale (the foregoing a “Dilutive
        Issuance”),
        then
        immediately after such Dilutive Issuance, the Exercise Price then in effect
        shall be reduced to an amount equal to the New Issuance Price. For purposes
        of
        determining the adjusted Exercise Price under this Section 2(b), the following
        shall be applicable:

       

      (i) Issuance
        of Options.
        If the
        Company in any manner grants or sells any Options and the lowest price per
        share
        for which one share of Common Stock is issuable

       

      
        
           

        

        
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      upon
        the
        exercise of any such Option or upon conversion, exercise or exchange of any
        Convertible Securities issuable upon exercise of any such Option is less
        than
        the Applicable Price, then such share of Common Stock shall be deemed to
        be
        outstanding and to have been issued and sold by the Company at the time of
        the
        granting or sale of such Option for such price per share. For purposes of
        this
        Section 2(b)(i), the “lowest price per share for which one share of Common Stock
        is issuable upon the exercise of any such Options or upon conversion, exercise
        or exchange of any Convertible Securities issuable upon exercise of any such
        Option” shall be equal to the sum of the lowest amounts of consideration (if
        any) received or receivable by the Company with respect to any one share
        of
        Common Stock upon the granting or sale of the Option, upon exercise of the
        Option and upon conversion, exercise or exchange of any Convertible Security
        issuable upon exercise of such Option. Except as contemplated below, no further
        adjustment of the Exercise Price shall be made upon the actual issuance of
        such
        shares of Common Stock or of such Convertible Securities upon the exercise
        of
        such Options or upon the actual issuance of such shares of Common Stock upon
        conversion, exercise or exchange of such Convertible Securities.

       

      (ii) Issuance
        of Convertible
        Securities.
        If the
        Company in any manner issues or sells any Convertible Securities and the
        lowest
        price per share for which one share of Common Stock is issuable upon the
        conversion, exercise or exchange thereof is less than the Applicable Price,
        then
        such share of Common Stock shall be deemed to be outstanding and to have
        been
        issued and sold by the Company at the time of the issuance or sale of such
        Convertible Securities for such price per share. For the purposes of this
        Section 2(b)(ii), the “lowest price per share for which one share of Common
        Stock is issuable upon the conversion, exercise or exchange thereof’ shall be
        equal to the sum of the lowest amounts of consideration (if any) received
        or
        receivable by the Company with respect to one share of Common Stock upon
        the
        issuance or sale of the Convertible Security and upon conversion, exercise
        or
        exchange of such Convertible Security. Except as contemplated below, no further
        adjustment of the Exercise Price shall be made upon the actual issuance of
        such
        shares of Common Stock upon conversion, exercise or exchange of such Convertible
        Securities, and if any such issue or sale of such Convertible Securities
        is made
        upon exercise of any Options for which adjustment of this Warrant has been
        or is
        to be made pursuant to other provisions of this Section 2(b), except as
        contemplated below, no further adjustment of the Exercise Price shall be
        made by
        reason of such issue or sale.

       

      (iii) Change
        in Option Price or Rate of Conversion.
        If the
        purchase or exercise price provided for in any Options, the additional
        consideration, if any, payable upon the issue, conversion, exercise or exchange
        of any Convertible Securities, or the rate at which any Convertible Securities
        are convertible into or exercisable or exchangeable for shares of Common
        Stock
        increases or decreases at any time, the Exercise Price in effect at the
        time
        of such increase or decrease shall be adjusted to the Exercise Price which
        would
        have been in effect at such time had such Options or Convertible Securities
        provided for such increased or decreased purchase price, additional
        consideration or increased or decreased conversion rate, as the case may
        be, at
        the time initially granted, issued or sold. For purposes of this Section
        2(b)(iii), if the terms of any Option or Convertible Security that was
        outstanding as of the date of issuance of this Warrant are

       

      
        
           

        

        
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      increased
        or decreased in the manner described in the immediately preceding sentence,
        then
        such Option or Convertible Security and the shares of Common Stock deemed
        issuable upon exercise. conversion or exchange thereof shall be deemed to
        have
        been issued as of’ the date of such increase or decrease. No adjustment pursuant
        to this Section 2(h) shall be made if such adjustment would result in an
        increase of the Exercise Price then in effect. 

       

      (iv) Calculation
        of Consideration Received.
        In case
        any Option is issued in connection with the issue or sale of other securities
        of
        the Company, together comprising one integrated transaction in which no specific
        consideration is allocated to such Options by the parties thereto, the Options
        will be deemed to have been issued for a consideration of $0.01. If any shares
        of Common Stock, Options or Convertible Securities are issued or sold or
        deemed
        to have been issued or sold for cash, the consideration received therefor
        will
        be deemed to be the net amount received by the Company therefor. If any shares
        of Common Stock, Options or Convertible Securities are issued or sold for
        a
        consideration other than cash, the amount of such consideration received
        by the
        Company will be the fair value of such consideration, except where such
        consideration consists of securities, in which case the amount of consideration
        received by the Company for each such security will be the VWAP of such security
        for the five (5) Trading Day period immediately preceding the date of receipt.
        If any shares of Common Stock, Options or Convertible Securities are issued
        to
        the owners of the non-surviving entity in connection with any merger in which
        the Company is the surviving entity, the amount of consideration therefor
        will
        be deemed to be the fair value of such portion of the net assets and business
        of
        the non-surviving entity as is attributable to such shares of Common Stock,
        Options or Convertible Securities, as the case may be. The fair value of
        any
        consideration other than cash or securities will be determined by the Board
        of
        Directors of the Company within five (5) days
        after the occurrence of an event requiring valuation (the “Valuation
        Event”).
        If
        the Required Holders disagree with the determination of the Board of Directors
        of the Company and give written notice of such disagreement to the Company
        within ten (10) days after the occurrence of such Valuation Event, the fair
        value of such consideration will be determined within five (5) Trading Days
        after the tenth (10th)
        day
        following such Valuation Event by an independent, reputable appraiser jointly
        selected by the Company and the Required Holders. The determination of such
        appraiser shall be final and binding upon all parties absent manifest error
        and
        the fees and expenses of such appraiser shall be borne by the
        Company.

       

      (v) Record
        Date.
        If the
        Company takes a record of the holders of shares of Common Stock for the purpose
        of entitling them (A) to receive a dividend or other distribution payable
        in
        shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
        for or purchase shares of Common Stock, Options or Convertible Securities,
        then
        such record date will be deemed to be the date of the issue or sale of the
        shares of Common Stock deemed to have been issued or sold upon the declaration
        of such dividend or the making of such other distribution or the date of
        the
        granting of such right of subscription or purchase (as the case may
        be).

       

      (c) Number
        of Warrant Shares.
        Simultaneously with any adjustment to the Exercise

       

      
        
           

        

        
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      Price
        pursuant to paragraph (a) of this Section 2 (but not with respect to any
        adjustment to the Exercise Price pursuant to paragraph (b) of this Section
        2),
        unless waived in writing by the Holder with respect to a particular adjustment,
        the number of Warrant Shares that may be purchased upon exercise of this
        Warrant
        shall be increased or decreased proportionately, so that after such adjustment
        the aggregate Exercise Price payable hereunder for the adjusted number of
        Warrant Shares shall be the same as the aggregate Exercise Price in effect
        immediately prior to such adjustment (without regard to any limitations on
        exercise contained herein).

       

      (d) Other
        Events.
        In the
        event that the Company (or any direct or indirect subsidiary thereof) shall
        take
        any action to which the provisions hereof are not strictly applicable, or,
        if
        applicable, would not operate to protect the Holder from dilution or if any
        event occurs of the type contemplated by the provisions of this Section 2
        but
        not expressly provided for by such provisions (including, without limitation,
        the granting of stock appreciation rights, phantom stock rights or other
        rights
        with equity features), then the Company’s Board of Directors shall in good faith
        determine and implement an appropriate adjustment in the Exercise Price and
        the
        number of Warrant Shares (if applicable) so as to protect the rights of the
        Holder; provided that no such adjustment pursuant to this Section 2(d) will
        increase the Exercise Price or decrease the number of Warrant Shares as
        otherwise determined pursuant to this Section 2, provided further that if
        the
        Holder does not accept such adjustments as appropriately protecting its
        interests hereunder against such dilution, then the Company’s Board of Directors
        and the Holder shall agree, in good faith, upon an independent investment
        bank
        of nationally recognized standing to make such appropriate adjustments, whose
        determination shall be final and binding and whose fees and expenses shall
        be
        borne by the Company.

       

      (e) Calculations.
        All
        calculations under this Section 2 shall be made to the nearest cent or the
        nearest 1/100th
        of a
        share, as applicable. The number of shares of Common Stock outstanding at
        any
        given time shall not include shares owned or held by or for the account of
        the
        Company, and the disposition of any such shares shall be considered an issue
        or
        sale of Common Stock.

       

      3. PURCHASE RIGHTS;
        FUNDAMENTAL TRANSACTIONS.

       

      (a) Purchase
        Rights.
        In
        addition to any adjustments pursuant to Section 2 above, if at any time the
        Company grants, issues or sells any Options, Convertible Securities or rights
        to
        purchase stock, warrants, securities or other property pro rata to the record
        holders of any class of shares of Common Stock (the “Purchase
        Rights”),
        then
        the Holder will be entitled to acquire, upon the terms applicable to such
        Purchase Rights, the aggregate Purchase Rights which the Holder could have
        acquired if the Holder had held the number of shares of Common Stock acquirable
        upon complete exercise of this Warrant (without regard to any limitations
        on
        exercise hereof, including without limitation, the Maximum Percentage)
        immediately before the date on which a record is taken for the grant, issuance
        or sale of such Purchase Rights, or, if no such record is taken, the date
        as of
        which the record holders of shares of Common Stock are to be determined for
        the
        grant, issue or sale of such Purchase Rights (provided, however, that to
        the
        extent that the Holder’s right to participate in any such Purchase Right would
        result in the Holder exceeding the Maximum Percentage, then the Holder shall
        not
        be entitled to participate in such Purchase Right to such extent (or beneficial
        ownership of such shares of Common Stock as a result of such Purchase Right
        to
        such extent) and such Purchase Right to such extent shall be

       

      
        
           

        

        
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      held
        in
        abeyance for the Holder until such time, if ever, as its right thereto would
        not
        result in the Holder exceeding the Maximum Percentage).

       

      (b) Fundamental
        Transactions.
        The
        Company shall not enter into or be party to a Fundamental Transaction unless
        the
        Successor Entity assumes in writing all of the obligations of the Company
        under
        this Warrant and the other Transaction Documents (as defined in the Securities
        Purchase Agreement) in accordance with the provisions of this Section 3(b)
        pursuant to written agreements in form and substance satisfactory to the
        Holder
        and approved by the Holder prior to such Fundamental Transaction, including
        agreements to deliver to the Holder in exchange for this Warrant a security
        of
        the Successor Entity evidenced by a written instrument substantially similar
        in
        form and substance to this Warrant, including, without limitation, which
        is
        exercisable for a corresponding number of shares of capital stock equivalent
        to
        the shares of Common Stock acquirable and receivable upon exercise of this
        Warrant (without regard to any limitations on the exercise of this Warrant)
        prior to such Fundamental Transaction, and with an exercise price which applies
        the exercise price hereunder to such shares of capital stock (but taking
        into
        account the relative value of the shares of Common Stock pursuant to such
        Fundamental Transaction and the value of such shares of capital stock, such
        adjustments to the number of shares of capital stock and such exercise price
        being for the purpose of protecting the economic value of this Warrant
        immediately prior to the consummation of such Fundamental Transaction), and
        which is satisfactory in form and substance to the Holder. Upon the occurrence
        of any Fundamental Transaction, the Successor Entity shall succeed to, and
        be
        substituted for (so that from and after the date of such Fundamental
        Transaction, the provisions of this Warrant and the other Transaction Documents
        referring to the “Company” shall refer instead to the Successor Entity), and may
        exercise every right and power of the Company and shall assume all of the
        obligations of the Company under this Warrant and the other Transaction
        Documents with the same effect as if such Successor Entity had been named
        as the
        Company herein. Upon consummation of the Fundamental Transaction, the Successor
        Entity shall deliver to the Holder confirmation that there shall be issued
        upon
        exercise of this Warrant at any time after the consummation of the Fundamental
        Transaction, in lieu of the shares of the Common Stock (or other securities,
        cash, assets or other property (except such items still issuable under Section
        3(a) above, which shall continue to be receivable thereafter)) issuable upon
        the
        exercise of this Warrant prior to such Fundamental Transaction, such shares
        of
        the publicly traded Common Stock (or its equivalent) of the Successor Entity
        (including its Parent Entity) which the Holder would have been entitled to
        receive upon the happening of such Fundamental Transaction had this Warrant
        been
        exercised immediately prior to such Fundamental Transaction (without regard
        to
        any limitations on the exercise of this Warrant), as adjusted in accordance
        with
        the provisions of this Warrant. In addition to and not in substitution for
        any
        other rights hereunder, prior to the consummation of any Fundamental Transaction
        pursuant to which holders of shares of Common Stock are entitled to receive
        securities or other assets with respect to or in exchange for shares of Common
        Stock (a “Corporate
        Event”),
        the
        Company shall make appropriate provision to insure that the Holder will
        thereafter have the right to receive upon an exercise of this Warrant at
        any
        time after the consummation of the Fundamental Transaction but prior to the
        Expiration Date, in lieu of the shares of the Common Stock (or other securities,
        cash, assets or other property (except such items still issuable under Section
        3(a) above, which shall continue to be receivable thereafter)) issuable upon
        the
        exercise of the Warrant prior to such Fundamental Transaction, such shares
        of
        stock, securities, cash, assets or any other property whatsoever (including
        warrants or other purchase or subscription rights) which the Holder would
        have
        been entitled to receive

       

      
        
           

        

        
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      upon
        the
        happening of such Fundamental Transaction had the Warrant been exercised
        immediately prior to such Fundamental Transaction (without regard to any
        limitations on the exercise of this Warrant). Provision made pursuant to
        the
        preceding sentence shall he in a form and substance reasonably satisfactory
        to
        the Holder. The provisions of this Section 3 shall apply similarly and equally
        to successive Fundamental Transactions and Corporate Events and shall he
        applied
        as if this Warrant (and any such subsequent warrants) were fully exercisable
        and
        without regard to any limitations on the exercise of this Warrant (provided
        that
        the Holder shall continue to be entitled to the benefit of the Maximum
        Percentage, applied however with respect to shares of capital stock registered
        under the 1934 Act and thereafter receivable upon exercise of this Warrant
        (or
        any such other warrant)).

       

      (c) Black
        Scholes Value.
        Notwithstanding the foregoing and the provisions of Section 3(b) above, in
        the
        event of a Fundamental Transaction, if the Holder has not exercised this
        Warrant
        in full prior to the consummation of such Fundamental Transaction, at the
        request of the Holder delivered on or before the date of the consummation
        of
        such Fundamental Transaction. (i) if the fair market value of the consideration
        per share that the Holder would receive with respect to such Fundamental
        Transaction if the Holder exercised this Warrant in full prior to the
        consummation thereof (without regard to any limitations on exercise contained
        herein) exceeds the Exercise Price then in effect on the date of such
        consummation, the Company or the Successor Entity (as the case may be) shall
        purchase this Warrant from the Holder for an amount in cash equal to the
        fair
        market value of such consideration per share multiplied by the number of
        shares
        of Common Stock for which this Warrant is then exercisable (without regard
        to
        any limitations on exercise contained herein) (less the aggregate Exercise
        Price
        which would be payable in connection with such exercise) or (ii) if the fair
        market value of the per share consideration which the Holder would receive
        with
        respect to such Fundamental Transaction if the Holder exercised this Warrant
        in
        full prior to the consummation thereof (without regard to any limitations
        on
        exercise contained herein) is equal to or less than the Exercise Price then
        in
        effect, the Company or the Successor Entity (as the case may be) shall purchase
        this Warrant from the Holder by paying to the Holder, cash in an amount equal
        to
        the Black Scholes Value of the remaining unexercised portion of this Warrant
        on
        the date of the consummation of such Fundamental Transaction. For purposes
        of
        this paragraph, fair market value shall be mutually determined by the Company
        and the Holder. If the Company and the Holder are unable to agree upon fair
        market value, then such dispute shall be resolved in accordance with the
        procedures in Section 12. All such determinations shall be appropriately
        adjusted for any share dividend, share split or other similar transaction
        during
        such period.

       

      4. NONCIRCUMVENTION.
        The
        Company hereby covenants and agrees that the Company will not, by amendment
        of
        its Articles of Incorporation, Bylaws or through any reorganization, transfer
        of
        assets, consolidation, merger, scheme of arrangement, dissolution, issue
        or sale
        of securities, or any other voluntary action, for the principal purpose of
        avoiding or seeking to avoid the observance or performance of any of the
        terms
        of this Warrant, and will at all times in good faith carry out all the
        provisions of this Warrant and take all action as may be required to protect
        the
        rights of the Holder. Without limiting the generality of the foregoing, the
        Company (i) shall not increase the par value of any shares of Common Stock
        receivable upon the exercise of this Warrant above the Exercise Price then
        in
        effect, (ii) shall take all such actions as may be necessary or appropriate
        in
        order that the Company may validly and legally issue fully paid and

       

      
        
           

        

        
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      nonassessable
        shares of Common Stock upon the exercise of this Warrant, and (iii) shall,
        so
        long as any of the SPA Warrants are outstanding, take all action necessary
        to
        reserve and keep available out of its authorized and unissued shares of Common
        Stock, solely for the purpose of effecting the exercise of the SPA Warrants,
        the
        number of shares of Common Stock as shall from time to time be necessary
        to
        effect the exercise of the SPA Warrants then outstanding (without regard
        to any
        limitations on exercise).

       

      5. WARRANT
        HOLDER NOT DEEMED A SHAREHOLDER.
        Except
        as otherwise specifically provided herein, the Holder, solely in such Person’s
        capacity as a holder of this Warrant, shall not be entitled to vote or receive
        dividends or be deemed the holder of share capital of the Company for any
        purpose, nor shall anything contained in this Warrant be construed to confer
        upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
        any of the rights of a shareholder of the Company 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 the Warrant
        Shares
        which such Person 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 the Holder to purchase any securities (upon exercise
        of this Warrant or otherwise) or as a shareholder of the Company, whether
        such
        liabilities are asserted by the Company or by creditors of the Company.
        Notwithstanding this Section 5,
        the
        Company shall provide the Holder with copies of the same notices and other
        information given to the stockholders of the Company generally,
        contemporaneously with the giving thereof to the shareholders.

       

      6. REISSUANCE
        OF WARRANTS.

       

      (a) Transfer
        of Warrant.
        If this
        Warrant is to be transferred, the Holder shall surrender this Warrant to
        the
        Company, whereupon the Company will forthwith issue and deliver upon the
        order
        of the Holder a new Warrant (in accordance with Section 6(d)), registered
        as the
        Holder may request, representing the right to purchase the number of Warrant
        Shares being transferred by the Holder and, if less than the total number
        of
        Warrant Shares then underlying this Warrant is being transferred, a new Warrant
        (in accordance with Section 6(d)) to the Holder representing the right to
        purchase the number of Warrant Shares not being transferred.

       

      (b) Lost,
        Stolen or Mutilated Warrant.
        Upon
        receipt by the Company of evidence reasonably satisfactory to the Company
        of the
        loss, theft, destruction or mutilation of this Warrant, and, in the case
        of
        loss, theft or destruction, of any indemnification undertaking by the Holder
        to
        the Company in customary and reasonable form and, in the case of mutilation,
        upon surrender and cancellation of this Warrant, the Company shall execute
        and
        deliver to the Holder a new Warrant (in accordance with Section 6(d))
        representing the right to purchase the Warrant Shares then underlying this
        Warrant.

       

      (c) Exchangeable
        for Multiple Warrants.
        This
        Warrant is exchangeable. upon the surrender hereof by the Holder at the
        principal office of the Company, for a new Warrant or Warrants (in accordance
        with Section 6(d)) representing in the aggregate the right to purchase the
        number of Warrant Shares then underlying this Warrant, and each such new
        Warrant
        will represent the right to purchase such portion of such Warrant Shares
        as is
        designated by the

       

      
        
           

        

        
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      Holder
        at
        the time of such surrender; provided, however, that no warrants for fractional
        shares of Common Stock shall be given.

       

      (d) Issuance
        of New Warrants.
        Whenever the Company is required to issue a new Warrant pursuant to the terms
        of
        this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
        (ii) shall represent, as indicated on the face of such new Warrant, the right
        to
        purchase the Warrant Shares then underlying this Warrant (or in the case
        of a
        new Warrant being issued pursuant to Section 6(a) or Section 6(c), the Warrant
        Shares designated by the Holder which, when added to the number of shares
        of
        Common Stock underlying the other new Warrants issued in connection with
        such
        issuance, does not exceed the number of Warrant Shares then underlying this
        Warrant), (iii) shall have an issuance date, as indicated on the face of’ such
        new Warrant which is the same as the Issuance Date, and (iv) shall have the
        same
        rights and conditions as this Warrant.

       

      7. NOTICES.
        Whenever notice is required to be given under this Warrant, unless otherwise
        provided herein, such notice shall be given in accordance with Section 9(f)
        of
        the Securities Purchase Agreement. The Company shall provide the Holder with
        prompt written notice of all actions taken pursuant to this Warrant, including
        in reasonable detail a description of such action and the reason therefore.
        Without limiting the generality of the foregoing, the Company will give written
        notice to the Holder (i) immediately upon each adjustment of the Exercise
        Price
        and the number of Warrant Shares, setting forth in reasonable detail, and
        certifying,
        the
        calculation of such adjustment(s) and (ii) at least fifteen (15) days prior
        to
        the date on which the Company closes its books or takes a record (A) with
        respect to any dividend or distribution upon the shares of Common Stock,
        (B)
        with respect to any grants, issuances or sales of any Options, Convertible
        Securities (other than Excluded Securities) or rights to purchase stock,
        warrants, securities or other property to holders of shares of Common Stock
        or
        (C) for determining rights to vote with respect to any Fundamental Transaction,
        dissolution or liquidation, provided in each case that such information shall
        be
        made known to the public prior to or in conjunction with such notice being
        provided to the Holder and (iii) at least ten (10) Trading Days prior to
        the
        consummation of any Fundamental Transaction. To the extent that any notice
        provided hereunder constitutes, or contains, material, non-public information
        regarding the Company or any of its subsidiaries, the Company shall
        simultaneously file such notice with the SEC pursuant to a Current Report
        on
        Form 8-K.

       

      8. AMENDMENT
        AND WAIVER.
        Except
        as otherwise provided herein, the provisions of this Warrant (other than
        Section
        1 (f)(i)) may be amended and the Company may take any action herein prohibited,
        or omit to perform any act herein required to be performed by it, only if
        the
        Company has obtained the written consent of the Holders. The Holder shall
        be
        entitled, at its option, to the benefit of any amendment of any other similar
        warrant issued under the Securities Purchase Agreement.

       

      9. SEVERABILITY.
        If any
        provision of this Warrant or the application thereof becomes or is declared
        by a
        court of competent jurisdiction to be illegal, void or unenforceable, the
        remainder of the terms of this Warrant will continue in full force and
        effect.

       

      10. GOVERNING
        LAW.
        This
        Warrant shall be governed by and construed and enforced in accordance with,
        and
        all questions concerning the construction, validity, interpretation
        and

       

      
        
           

        

        
          -
            13 -

          
            

          

        

        
           

        

      

      performance
        of this Warrant shall be governed by, the internal laws of the State of New
        York, without giving effect to any choice of law or conflict of law provision
        or
        rule (whether of’ the State of New York or any other jurisdictions) that would
        cause the application of’ the laws of any jurisdictions other than the State of
        New York.

       

      11. CONSTRUCTION;
        HEADINGS.
        This
        Warrant shall be deemed to be jointly drafted by the Company and the Holder
        and
        shall not be construed against any Person as the drafter hereof.

       

      The
        headings of this Warrant are for convenience of reference and shall not form
        part of, or affect the interpretation of, this Warrant.

       

      12. DISPUTE
        RESOLUTION.
        In the
        case of a dispute as to the determination of the Exercise Price or fair market
        value or the arithmetic calculation of the Warrant Shares, the Company or
        the
        Holder (as the case may be) shall submit the disputed determinations or
        arithmetic calculations (as the case may be) via facsimile within two (2)
        Business Days of receipt of the applicable notice giving rise to such dispute
        to
        the Company or the Holder (as the case may be). If the Holder and the Company
        are unable to agree upon such determination or calculation of the Exercise
        Price
        or fair market value or the number of Warrant Shares (as the case may be)
        within
        three (3) Business Days of such disputed determination or arithmetic calculation
        being submitted to the Company or the Holder (as the case may be), then the
        Company shall, within two (2) Business Days submit via facsimile (a) the
        disputed determination of the Exercise Price or fair market value to an
        independent, reputable investment bank selected by the Company and approved
        by
        the Holder or (b) the disputed arithmetic calculation of the Warrant Shares
        to
        the Company’s independent, outside accountant. The Company shall cause at its
        expense the investment bank or the accountant (as the case may be) to perform
        the determinations or calculations (as the case may be) and notify the Company
        and the Holder of the results no later than ten (10) Business Days from the
        time
        it receives such disputed determinations or calculations (as the case may
        be).
        Such investment bank’s or accountant’s determination or calculation (as the case
        may be) shall be binding upon all parties absent demonstrable
        error.

       

      13. REMEDIES,
        OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
        The

      remedies
        provided in this Warrant shall be cumulative and in addition to all other
        remedies available under this Warrant and the other Transaction Documents,
        at
        law or in equity (including a decree of specific performance and/or other
        injunctive relief), and nothing herein shall limit the right of the Holder
        to
        pursue actual damages for any failure by the Company to comply with the terms
        of
        this Warrant. The Company acknowledges that a breach by it of its obligations
        hereunder will cause irreparable harm to the Holder and that the remedy at
        law
        for any such breach may be inadequate. The Company therefore agrees that,
        in the
        event of any such breach or threatened breach, the holder of this Warrant
        shall
        be entitled, in addition to all other available remedies, to an injunction
        restraining any breach, without the necessity of showing economic loss and
        without any bond or other security being required.

       

      14. TRANSFER.
        This
        Warrant may be offered for sale, sold, transferred or assigned without the
        consent of the Company, except as may otherwise be required by Section 2(g)
        of
        the Securities Purchase Agreement.

       

      15. CERTAIN
        DEFINITIONS.
        For
        purposes of this Warrant, the following terms shall have

       

      
        
           

        

        
          -
            14 -

          
            

          

        

        
           

        

      

      the
        following meanings:

       

      (a) “Black
        Scholes Value”
means
        the value of this Warrant based on the Black and Scholes Option Pricing Model
        obtained from the “OV” function on Bloomberg determined as of the day
        immediately following the public announcement of the applicable Fundamental
        Transaction and reflecting (i) a risk-free interest rate corresponding to
        the
        U.S. Treasury rate for a period equal to the remaining term of this Warrant
        as
        of such date and (ii) an expected volatility equal to the 100 day volatility
        obtained from the HVT function on Bloomberg as of such date.

       

      (b) “Bloomberg”
means
        Bloomberg Financial Markets.

       

      (c) “Business
        Day”
means
        any day other than Saturday, Sunday or other day on which commercial banks
        in
        The City of New York are authorized or required by law to remain
        closed.

       

      (d) “Common
        Stock”
means
        (i) the Company’s shares of common stock, no par value per share, and (ii) any
        capital stock into which such common stock shall have been changed or any
        share
        capital resulting from a reclassification of such common stock.

       

      (e) “Convertible
        Securities”
means
        any stock or securities (other than Options) directly or indirectly convertible
        into or exercisable or exchangeable for shares of Common Stock.

       

      (f) “Eligible
        Market”
means
        the New York Stock Exchange, Inc., the Nasdaq Global Select Market or the
        Principal Market.

       

      (g) “Expiration
        Date”
means
        the date that is the fifth (5th)
        anniversary of the Issuance Date or, if such date falls on a day other than
        a
        Business Day or on which trading does not take place on the Principal Market
        (a
“Holiday”),
        the
        next date that is not a Holiday.

       

      (h) “Fundamental
        Transaction”
means
        that the Company shall, directly or indirectly, in one or more related
        transactions, (i) consolidate or merge with or into another Person (unless
        the
        Company is the surviving corporation and the shareholders of the Company
        prior
        to such merger or consolidation continue to hold immediately thereafter a
        majority of the aggregate ordinary voting power represented by the issued
        and
        outstanding Common Stock), or (ii) sell, assign, transfer, convey or otherwise
        dispose of all or substantially all of the properties or assets of the Company
        to another Person, or (iii) allow another Person to make a purchase, tender
        or
        exchange offer that is accepted by the holders of more than the 50% of the
        outstanding shares of Common Stock (not including any shares of Common Stock
        held by the Person or Persons making or party to, or associated or affiliated
        with the Persons making or party to, such purchase, tender or exchange offer),
        or (iv) consummate a stock purchase agreement or other business combination
        (including, without limitation, a reorganization, recapitalization, spin-oft
        or
        scheme of arrangement) with another Person whereby such other Person acquires
        more than the 50% of the outstanding shares of Common Stock (not including
        any
        shares of Common Stock held by the other Person or other Persons making or
        party
        to, or associated or affiliated with the other Persons making or party to,
        such
        stock purchase agreement or other business combination), or (v) reorganize,
        recapitalize or reclassify its Common Stock, or (vi) any

       

      
        
           

        

        
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            15 -

          
            

          

        

        
           

        

      

      “person”
        or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
        the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
        13d-3 under the Exchange Act), directly or indirectly, of 50% of
        the
        aggregate ordinary voting power represented by issued and outstanding Common
        Stock.

       

      (i) “Options”
means
        any rights, warrants or options to subscribe for or purchase shares of Common
        Stock or Convertible Securities. 

       

      (j) “Parent
        Entity”
of
        a
        Person means an entity that, directly or indirectly, controls the applicable
        Person and whose common stock or equivalent equity security is quoted or
        listed
        on an Eligible Market, or, if there is more than one such Person or Parent
        Entity, the Person or Parent Entity with the largest public market
        capitalization as of the date of consummation of the Fundamental
        Transaction.

       

      (k) “Person”
means
        an individual, a limited liability company, a partnership, a joint venture,
        a
        corporation, a trust, an unincorporated organization, any other entity and
        a
        government or any department or agency thereof.

       

      (l) “Principal
        Market”
means
        The Nasdaq Global Market.

       

      (m) “Required
        Holders”
means
        the holders of the SPA Warrants representing at least a majority of shares
        of
        Common Stock underlying the SPA Warrants then outstanding.

       

      (n) “Successor
        Entity”
means
        the Person (or, if so elected by the Holder, the Parent Entity) formed by,
        resulting from or surviving any Fundamental Transaction or the Person (or,
        if so
        elected by the Holder, the Parent Entity) with which such Fundamental
        Transaction shall have been entered into.

       

      (o) “Trading
        Day”
means
        any day on which the Common Stock is traded on the Principal Market, or,
        if the
        Principal Market is not the principal trading market for the Common Stock,
        then
        on the principal securities exchange or securities market on which the Common
        Stock is then traded; provided that “Trading Day” shall not include any day on
        which the Common Stock is scheduled to trade on such exchange or market for
        less
        than 4.5 hours or any day that the Common Stock is suspended from trading
        during
        the final hour of trading on such exchange or market (or if such exchange
        or
        market does not designate in advance the closing time of trading on such
        exchange or market, then during the hour ending at 4:00:00 p.m., New York
        time).

       

      (p) “VWAP”
        means,
        for any security as of any date, the dollar volume-weighted average price
        for
        such security on the Principal Market (or, if the Principal Market is not
        the
        principal trading market for such security, then on the principal securities
        exchange or securities market on which such security is then traded) during
        the
        period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m.,
        New
        York time, as reported by Bloomberg through its “Volume at Price” function or,
        if the foregoing does not apply, the dollar volume-weighted average price
        of
        such security in the over-the-counter market on the electronic bulletin board
        for such security during the period beginning at 9:30:01 a.m., New York time,
        and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or,
        if no
        dollar volume-weighted average price is reported for such security by Bloomberg
        for such hours, the average of the highest closing bid

       

      
        
           

        

        
          -
            16 -

          
            

          

        

        
           

        

      

      price
        and
        the lowest closing ask price of any of the market makers for such security
        as
        reported in the “pink sheets” by Pink Sheets LLC (formerly the National
        Quotation Bureau, Inc.). If VWAP cannot be calculated for such security on
        such
        date on any of the foregoing bases, the VWAP of such security on such date
        shall
        be the fair market value as mutually determined by the Company and the Holder.
        If the Company and the Holder are unable to agree upon the fair market value
        of
        such security, then such dispute shall be resolved in accordance with the
        procedures in Section 12. All such determinations shall be appropriately
        adjusted for any share dividend, share split or other similar transaction
        during
        such period.

       

      [signature
        page follows]

       

      
        
           

        

        
          -
            17 -

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF,
        the
        Company has caused this Warrant to Purchase Common Stock to be duly executed
        as
        of the Issuance Date set out above.

       

      POKERTEK,
        INC.

       

      By: 
        _________________________

      Name:

      Title:

       

       

      
        
           

        

        
          -
            18 -

          
            

          

        

        
           

        

      

      EXHIBIT
        A

       

      EXERCISE
        NOTICE

       

      TO
        BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

      WARRANT
        TO PURCHASE COMMON STOCK

       

      POKERTEK,
        INC.

       

      The
        undersigned holder hereby exercises the right to purchase _________________of
        the shares of Common Stock (“Warrant
        Shares”)
        of
        PokerTek, Inc., a North Carolina corporation (the “Company”), evidenced by the
        attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms
        used herein and not otherwise defined shall have the respective meanings
        set
        forth in the Warrant.

       

      1. Form
        of Exercise Price.
        The
        Holder intends that payment of the Exercise Price shall be made as:

      ____________ a
        “Cash
        Exercise”
with
        respect to __________________

      Warrant
        Shares; and/or

       

      _____________ a
        “Cashless
        Exercise”
with
        respect to _______________

      Warrant
        Shares.

       

      Notwithstanding
        anything to the contrary contained herein, this Exercise Notice shall constitute
        a representation by the undersigned holder of the Warrant submitting this
        Exercise Notice that, immediately following the exercise provided for in
        this
        Exercise Notice, such holder (together with its affiliates) will not have
        beneficial ownership (together with the beneficial ownership of such Person’s
        affiliates) of a number of shares of Common Stock which exceeds the Maximum
        Percentage of the total outstanding shares of Common Stock as determined
        pursuant to the provisions of Section 1(f)(i) of the attached
        Warrant

       

      2. Payment
        of Exercise Price.
        In the
        event that the holder has elected a Cash Exercise with respect to some or
        all of
        the Warrant Shares to be issued pursuant hereto, the holder shall pay the
        Aggregate Exercise Price in the sum of $____________________ to the Company
        in
        accordance with the terms of the Warrant.

       

      3. Delivery
        of Warrant Shares.
        The
        Company shall deliver to holder, or its designee or agent as specified below,
        ___________ Warrant Shares in accordance with the terms of the Warrant. Delivery
        shall be made to holder, or for its benefit, to the following
        address:

       

      ______________________________

      ______________________________

      ______________________________

      ______________________________

       

      Date:_________________,______

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      ___________________________________

       

      Name
        of
        Registered Holder

       

      By: _____________________________

      Name:

      Title:

       

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

         

         

         

        ACKNOWLEDGMENT

      

       

      The
        Company hereby acknowledges this Exercise Notice and hereby directs
        ________________ to issue the above indicated number of shares of Common
        Stock
        in accordance with the Transfer Agent Instructions dated ______________,
        2007
        from the Company and acknowledged and agreed to by _______________.

       

      POKERTEK,
        INC.

       

      By:_____________________________________

      Name:

      Title:

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