Document:

gia_ex102.htm

    Exhibit
10.2

     

    THIS
SENIOR SECURED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.  THIS
NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS NOTE UNDER SUCH ACT
AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.

     

    SENIOR
SECURED PROMISSORY NOTE

     

    
    

     

    
      	Delivered in Fort
      Lauderdale, Florida 	 	$________
	February 26,
      2010	 	 

    

     

     

          

     

    THIS SENIOR SECURED PROMISSORY
NOTE (this “Note”) is issued by GULFSTREAM INTERNATIONAL GROUP,
INC., a Delaware corporation having an executive office located at 3201
Griffin Road, 4th
Floor, Fort Lauderdale, Florida 33312 (the “Borrower”).  Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings given to them in Section 8 of this Note.

     

    1. PROMISE TO PAY.  For
value received, the Borrower promises to pay to the order of
______________________________________________ (the “Lender”) or any subsequent
holder of this Note (together with the “Lender” the “Holder”), in lawful money
of the United States and immediately available funds at any address of the
Lender, the sum of _____________________________ Dollars ($________), or such
lesser amount as may be outstanding from time to time hereunder, plus any
additional principal amount accruing from time to under Section 3(b) of this
Note (collectively, the “Principal Amount”) on December 31, 2010 (the “Maturity
Date”).  As used herein, the term “Holder” shall include the Lender
and any transferee, assignee or successor of the Lender, subject to the
restrictions set forth at the beginning of this Note.

     

    This Note is one of a series of notes
(with this Note, the “Notes”) aggregating One Million Dollars ($1,000,000.00)
that was issued by the Borrower to the Lender and other purchasers of Notes and
warrants of the Borrower pursuant to a purchase agreement, dated as of February
26, 2010 (the “Purchase Agreement”).  Unless otherwise defined herein,
all capitalized terms when used in this Note shall have the same meaning as is
defined in the Purchase Agreement.

     

    2. INTEREST.

     

    (a) Subject
to Section 2(b) of this Note, the Borrower shall pay interest (calculated on the
basis of a 360-day year for the actual number of days of each year) on the
outstanding portion of the Principal Amount (the “Outstanding Principal Amount”)
from and including the date of this Note to but not including the date the
Outstanding Principal Amount is paid in full at a rate each day equal to twelve
percent (12%) per annum.

     

    (b) From and
after the occurrence or existence and during the continuation of any Event of
Default (as defined below), the rate of interest referred to in Section 2(a) of
this Note shall, at the option of the Holder upon written notice to the
Borrower, be increased to eighteen percent (18%) per annum.

     

    
      
        
        

      

      
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    (c) In no
event shall interest payable under this Note be payable at a rate in excess of
the maximum rate permitted by applicable law.  Any amount deemed to be
in excess of such maximum rate of interest under a final judicial interpretation
of applicable law shall be deemed to have been a mistake and automatically
canceled, and, if received by the Holder, shall be refunded to the Borrower, it
being the intention of the Lender and the Borrower that such interest not be
payable at a rate in excess of such maximum rate.

     

    3. PAYMENTS.

     

    (a) Maturity Date:The
Outstanding Principal Amount and all interest and other amounts payable under
this Note and remaining unpaid shall be paid on the Maturity Date.

     

    (b) Interest Payments:
Interest as described in Section 2 of this Note that has accrued on the
Outstanding Principal Amount through the last day of each calendar month shall
be paid in kind and shall be added to the Outstanding Principal Amount on the
first (1st) day
of the succeeding calendar month.

     

    (c) Prepayment. The
Borrower shall have the right to prepay this Note at any time, or from time to
time, in whole or in part without premium or penalty of any kind.

     

    4. SECURITY. Payment of the
principal amount of this Note and all interest accrued hereon is secured by a
priority lien and security interest on all of the accounts receivable of the
Borrower and each Subsidiary of the Borrower and all proceeds from the
collection or sale thereof, pursuant to a security agreement, dated of even date
herewith, among the Borrower, the Lender and Taglich Brothers, Inc., as
collateral agent for the Lender (the “Security Agreement”).

     

    5. INTERCREDITOR AGREEMENT. This
Note is subject to the terms of an intercreditor and subordination agreement
among Lender, Borrower and Shelter Island Opportunity Fund LLC, dated of even
date herewith (the “Intercreditor Agreement”).

     

    6. AMOUNTS IMMEDIATELY
DUE.

     

    (a) Upon or
at any time after the occurrence and during the continuation of any Event of
Default described in Section 6(b)(i), Section 6(b)(v) or Section 6(b)(vi) below,
the Outstanding Principal Amount and all interest and other amounts payable
pursuant to this Note and remaining unpaid shall, so long as no Senior
Indebtedness is outstanding, at the sole option of the Holder and without any
notice, demand, presentment or protest of any kind (each of which is knowingly,
voluntarily, intentionally and irrevocably waived by the Borrower), become
immediately due.  Upon or at any time after the occurrence and during
the continuation of any Event of Default described in Section 6(b)(ii),
Section 6(b)(iii) or Section 6(b)(iv) below, unless such Event of Default shall
be cured within the Outstanding Principal Amount and all such interest and other
amounts shall, so long as no Senior Indebtedness is outstanding, without any
notice, demand, presentment or protest of any kind (each of which is knowingly,
voluntarily, intentionally and irrevocably waived by the Borrower),
automatically become immediately due.

     

    
      
        
        

      

      
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    (b) An “Event
of Default” under this Note shall be deemed to occur or exist, if:

     

    (i) Borrower
defaults in the payment when due of any of the Outstanding Principal Amount or
any interest, late charge or other amount payable pursuant to this;
or

     

    (ii) Borrower
default in its performance of any material obligation on its part to be
performed under the Security Agreement or the Intercreditor Agreement;
or

     

    (iii) the
aggregate outstanding amount of all accounts receivable of the Borrower and its
Subsidiaries as set forth on any A/R Report that are (A) outstanding for ninety
(90) days or less and where the account debtor(s) are not otherwise insolvent or
announcing the discontinuation of operations, and (B) net of any amounts payable
to third parties under airline clearing house receivables, shall be less than
the sum of (x) the then outstanding principal amount of this Note and all other
Notes, and (y) accrued and unpaid interest on this Note and all other Notes;
or

     

    (iv) a
“Shelter Island Debt Default” shall have occurred and shall be continuing under
the “Shelter Island Debt Documents” (as those terms are defined in the
Intercreditor Agreement); or

     

    (v) following
the occurrence and during the continuation of any Shelter Island Debt Default,
Shelter Island shall commence to foreclose on any of the Collateral defined in
the Intercreditor Agreement; or

     

    (vi) there
occurs or exists any Insolvency Event with respect to the Borrower.

     

    7. CERTAIN
DEFINITIONS.

     

    (a) “Insolvency
Event” means, with respect to any Person, the occurrence of any of the
following:  (i) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (ii) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its creditors, (iii) such Person
shall make a general assignment for the benefit of its creditors, or consent to
or acquiesce in the appointment of a receiver, trustee, custodian or liquidator
for a substantial portion of its property, assets or business, (iv) such Person
shall file a voluntary petition under any bankruptcy, insolvency or similar law,
(v) such Person shall take any corporate or similar act in furtherance of any of
the foregoing or (vi) such Person, or a substantial portion of its property,
assets or business shall become the subject of an involuntary proceeding or
petition for (A) its dissolution, liquidation or reorganization or (B) the
appointment of a receiver, trustee, custodian or liquidator, and (I) such
proceeding shall not be dismissed or stayed within sixty days or (II) such
receiver, trustee, custodian or liquidator shall be appointed.

     

    (b) “Person”
means: (i) any individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated association, (ii) any court
or other governmental authority or (iii) any other entity, body
organization or group.

     

    
      
        
        

      

      
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    (c)  “Subsidiary”
means any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Borrower
and/or any of its other subsidiaries.

     

    8. COSTS OF
COLLECTION.  On demand by the Holder, the Borrower shall pay
each reasonable cost and expense (including, but not limited to, the reasonable
and documented fees and disbursements of counsel, whether retained for advice,
litigation or any other purpose) incurred by the Holder in endeavoring to (i)
collect any of the Outstanding Principal Amount or any interest or other amount
payable pursuant to this Note, (ii) preserve or exercise any right or remedy of
the Holder pursuant to this Note or (iii) preserve or exercise any right or
remedy of the Holder relating to, enforce or realize upon any collateral,
subordination, guaranty, endorsement or other security or assurance of payment,
whether now existing or hereafter arising or accruing, that now or hereafter
secures the payment of or is otherwise applicable to any of the Outstanding
Principal Amount or any interest or other amount payable pursuant to this Note
and remaining unpaid (the “Collection Costs”).

     

    9. CHANGES AND
WAIVERS.  No course of conduct pursued, accepted or acquiesced
in, and no oral, written or other agreement or representation made, by or on
behalf of the Holder in the future will change this Note or waive any right or
remedy of the Holder under or arising as a result of this Note.  Any
change in this Note or waiver of any right or remedy of the Holder under or
arising as a result of this Note must be made in a writing signed by or on
behalf of the Holder.

     

    10. GOVERNING LAW.  This
Note shall be governed by and construed, interpreted and enforced in accordance
with the law of the State of Florida and, to the extent applicable thereto, the
federal law of the United States, without regard to the law of any other
jurisdiction.

     

    11. WAIVER OF TRIAL BY
JURY.  THE
BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT
THE BORROWER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION OR OTHER
LEGAL PROCEEDING ARISING OUT OF OR OTHERWISE RELATING TO THIS
NOTE.

     

    [remainder
of this page left blank – signature page follows]

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the Borrower has
duly executed and delivered this Note this 26th day
of February 2010.

     

    
      
        	 	
                GULFSTREAM
      INTERNATIONAL GROUP, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	
                Name:  David
      Hackett

              	 
	 	 	Title:
      President	 

      

    

     

    
      
        
        

      

      
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    IRREVOCABLE
AND UNCONDITIONAL GUARANTY

     

    

     

    The
undersigned, each wholly-owned subsidiaries of Gulfstream International Group,
Inc., do hereby unconditionally and irrevocably guaranty the full payment and
performance of the foregoing senior secured promissory note and all
representations, warranties, covenants and other obligations of the Borrower
under the Purchase Agreement; all in the same manner as though each of the
undersigned were parties signatory to the Purchase Agreement and a Borrower
under the foregoing note.

     

    Dated:  February
26, 2010

     

    GULFSTREAM
INTERNATIONAL AIRLINES, INC.

     

    By:_______________________________________

    Name:

    Title:

     

    GULFSTREAM
TRAINING ACADEMY, INC.

     

    By:_______________________________________

    Name:

    Title:

     

    GULFSTREAM
CONNECTION, INC.

     

    By:_______________________________________

    Name:

    Title:

     

    GIA
HOLDINGS CORP., INC.

     

    By:_______________________________________

    Name:

    Title:

     

    
      
        
        

      

      
        6gia_ex103.htm

    Exhibit 10.3

     

    
 

    NEITHER
THE ISSUANCE AND SALE OF THIS WARRANT REPRESENTED BY THIS CERTIFICATE NOR THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY MAY NOT BE
SOLD, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT WITH RESPECT TO THE SECURITIES  IS EFFECTIVE
AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET, OR (B)
GULFSTREAM INTERNATIONAL GROUP, INC. RECEIVES AN OPINION OF COUNSEL, REASONABLY
ACCEPTABLE TO IT, THAT THE REQUIREMENTS FOR EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT AND FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS HAVE BEEN MET.

    

    WARRANT
TO PURCHASE

    

    SHARES
OF COMMON STOCK

    

    OF

    

    GULFSTREAM
INTERNATIONAL GROUP, INC.

    

    Expires
February 28, 2015

     

    
      	
              No.:
      ______ 

            	Number
      of Shares: _________

    

     

    Date of
Issuance: February 26, 2010

    

    FOR VALUE
RECEIVED, the undersigned, GULFSTREAM INTERNATIONAL GROUP,
INC., a Delaware corporation (together with its successors and assigns,
the “Issuer”), hereby certifies that
GULFSTREAM FUNDING III, LLC
(the “Initial
Holder”) or his or its registered assigns is entitled to subscribe for
and purchase, during the Term (as hereinafter defined), that number of shares of
Warrant Stock of the Issuer as shall be determined by dividing (i) fifty percent
(50%) of the principal amount of the Note purchased by the Initial Holder, by
(ii) the Warrant Price of the Warrants; provided,
however, that if the Note purchased by the Purchaser shall not have
been prepaid in full by June 30, 2010, then and in such event the Warrant Share
Number issuable upon exercise of this Warrant shall be determined by dividing
(i) one hundred percent (100%) of the principal amount of the Note purchased by
such Initial Holder, by (ii) the Warrant Price of the Warrants.  Such
Warrant Price and the Warrant Share Number shall be subject to certain
adjustments as provided in Section
3 hereof.. Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section
7 hereof.

    

    1.          
Term. The term
of this Warrant shall commence on the Date of Issuance hereof and shall expire
at 5:00 p.m., Eastern Standard Time, on February 28, 2015 (such period being the
“Term”).

    

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

       

      
        
          
          

        

        
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    (a)           Time of Exercise. The
purchase rights represented by this Warrant may be exercised in whole or in part
during the Term.

     

    (b)           Method of Exercise.
The Holder hereof may exercise this Warrant, in whole or in part, by the
surrender of this Warrant (with the exercise form attached hereto duly executed)
at the principal office of the Issuer, and by the payment to the Issuer of an
amount of consideration therefor equal to the Warrant Price as in effect on the
date of such exercise multiplied by the number of shares of Warrant Stock with
respect to which this Warrant is then being exercised, payable at such Holder's
election by certified or official bank check or by wire transfer to an account
designated by the Issuer.

     

    (c)           Issuance of Stock
Certificates. In the event of any exercise of this Warrant in accordance
with and subject to the terms and conditions hereof, certificates for the shares
of Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder’s Prime Broker as specified in the Holder’s exercise
form within a reasonable time, not exceeding five (5) Trading Days after such
exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect or that the shares of Warrant Stock are otherwise exempt from
registration), issued and delivered to the Depository Trust Company (“DTC”)
account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
System (“DWAC”)  when
available, within a reasonable time, not exceeding five (5) Trading Days after
such exercise, and the Holder hereof shall be deemed for all purposes to be the
holder of the shares of Warrant Stock so purchased as of the date of such
exercise. Notwithstanding the foregoing to the contrary, the Issuer or its
transfer agent shall only be obligated to issue and deliver the shares to the
DTC on a holder’s behalf via DWAC if such exercise is in connection with a sale
or other exemption from registration by which the shares may be issued without a
restrictive legend and the Issuer and its transfer agent are participating in
DTC through the DWAC system. The Holder shall deliver this original Warrant, or
an indemnification reasonably acceptable to the Issuer undertaking with respect
to such Warrant in the case of its loss, theft or destruction, at such time that
this Warrant is fully exercised. With respect to partial exercises of this
Warrant, the Issuer shall keep written records for the Holder of the number of
shares of Warrant Stock exercised as of each date of exercise.

     

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

     

    (e)           Continuing Rights of
Holder. The Issuer will, at the time of or at any time after each
exercise of this Warrant, upon the request of the Holder hereof, acknowledge in
writing the extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided
that if any such Holder shall fail to make any such request, the failure shall
not affect the continuing obligation of the Issuer to afford such rights to such
Holder.

     

    
      
        
        

      

      
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    (f)           Compliance with Securities
Laws.

     

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

     

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

     

    NEITHER
THE ISSUANCE AND SALE OF THIS WARRANT REPRESENTED BY THIS CERTIFICATE NOR THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY MAY NOT BE
SOLD, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT WITH RESPECT TO THE SECURITIES  IS EFFECTIVE
AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET, OR (B)
GULFSTREAM INTERNATIONAL GROUP, INC. RECEIVES AN OPINION OF COUNSEL, REASONABLY
ACCEPTABLE TO IT, THAT THE REQUIREMENTS FOR EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT AND FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS HAVE BEEN MET.

     

    (iii)           The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above, if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer and demonstrating
that the following conditions are satisfied. Such proposed transfer will not be
effected until: (a) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that the registration of
such securities under the Securities Act is not required in connection with such
proposed transfer, or (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Issuer with the
Securities and Exchange Commission and has become and remains effective under
the Securities Act, or (b) either (i) the Issuer has received an opinion of
counsel, reasonably satisfactory to the Issuer, to the effect that registration
or qualification under the securities or “blue sky” laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or “blue sky” laws has been effected or a valid
exemption exists with respect thereto. The Issuer will respond to any such
notice from a holder within three (3) Trading Days. In the case of any proposed
transfer under this Section
2(f), the Issuer will use reasonable efforts to comply with any such
applicable state securities or “blue sky” laws, but shall in no event be
required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Issuer. The restrictions on transfer
contained in this Section
2(f) shall be in addition to, and not by way of limitation of, any other
restrictions on transfer contained in any other section of this Warrant.
Whenever a certificate representing the Warrant Stock is required to be issued
to the Holder without a legend, in lieu of delivering physical certificates
representing the Warrant Stock, the Issuer shall cause its transfer agent to
electronically transmit the Warrant Stock to the Holder by crediting the account
of the Holder or Holder's Prime Broker with DTC through its DWAC system (to the
extent not inconsistent with any provisions of this Warrant or the Purchase
Agreement).

     

    
      
        
        

      

      
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    (g)           Accredited Investor
Status. At the time of the exercise of this Warrant, the Holder (1) shall
be an “accredited investor” as defined in Regulation D under the Securities Act,
or (2) shall exercise this Warrant by means of a cashless exercise as provided
for in Section 2(c).

    

    3.         
Adjustment of
Warrant. The Warrant shall be subject to adjustment from time to time as
set forth in this Section
3. The Issuer shall give the Holder notice of any event described below
which requires an adjustment pursuant to this Section
3 in accordance with the notice provisions set forth in Section
13.

     

    (a)           Adjustments for Stock
Splits, Combinations, Certain Dividends and Distributions.  If
the Issuer shall, at any time or from time to time after the Original Issue
Date, effect a split of the outstanding Common Stock (or any other subdivision
of its shares of Common Stock into a larger number of shares of Common Stock),
combine the outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or make or issue or set a record date for the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in shares of Common Stock, then, in each event (i) the number of shares
of Common Stock for which this Warrant shall be exercisable immediately after
the occurrence of any such event shall be adjusted to equal the number of shares
of Common Stock that a record holder of the same number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the occurrence
of such event would own or be entitled to receive after the happening of such
event, and (ii) the Warrant Price then in effect shall be adjusted to equal (A)
the Warrant Price then in effect multiplied by the applicable numbers of shares
of Common Stock at each price for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the applicable numbers of shares of
Common Stock at each price for which this Warrant is exercisable immediately
after such adjustment.

     

    (b)           Adjustment for Other
Dividends and Distributions. If the Issuer shall, at any time or from
time to time after the Original Issue Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in (i) cash, (ii) any evidences of indebtedness,
or any other securities of the Company or any property of any nature whatsoever,
other than, in each case, shares of Common Stock; or (iii) any warrants or other
rights to subscribe for or purchase any evidences of indebtedness, or any other
securities of the Company or any property of any nature whatsoever, other than,
in each case, shares of Common Stock, then, and in each event, (A) the number of
shares of Common Stock for which this Warrant shall be exercisable shall be
adjusted to equal the product of the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such adjustment multiplied by a
fraction (1) the numerator of which shall be the Per Share Market Value of
Common Stock at the date of taking such record and (2) the denominator of which
shall be such Per Share Market Value minus the amount allocable to one share of
Common Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board and supported by an opinion from an
investment banking firm mutually agreed upon by the Issuer and the Holder) of
any and all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (B) the Warrant Price then in effect shall be adjusted to equal (1) the
Warrant Price then in effect multiplied by the applicable numbers of shares of
Common Stock for which this Warrant is exercisable at each price immediately
prior to the adjustment divided by (2) the applicable numbers of shares of
Common Stock for which this Warrant is exercisable at each price immediately
after such adjustment. A reclassification of the Common Stock (other than a
change in par value, or from par value to no par value or from no par value to
par value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Issuer to the holders of its Common Stock
of such shares of such other class of stock within the meaning of this Section
3(b) and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section
3(a).

     

    
      
        
        

      

      
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    (c)           Adjustments for
Reclassification, Exchange or Substitution. If the Common Stock for which
this Warrant is exercisable at any time or from time to time after the Original
Issue Date shall be changed to the same or different number of shares of any
class or classes of stock, whether by reclassification, exchange, substitution
or otherwise (other than by way of a stock split or combination of shares or
stock dividends provided for in Section
3(a), Section
3(b), or a reorganization, merger, consolidation, or sale of assets
provided for in Section
3(d)), then, and in each event, an appropriate revision to the Warrant
Price shall be made and provisions shall be made (by adjustments of the Warrant
Price or otherwise) so that, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, in lieu of Warrant Stock, the kind and
amount of shares of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of shares of
Common Stock for which this Warrant was exercisable immediately prior to such
reclassification, exchange, substitution or other change.

     

     

    (d)           Adjustments for
Reorganization, Merger, Consolidation or Sales of Assets. If at any time
or from time to time after the Original Issue Date there shall be a capital
reorganization of the Issuer (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section
3(a), and Section
3(b), or a reclassification, exchange or substitution of shares provided
for in Section
3(c)), or a merger or consolidation of the Issuer with or into another
corporation where the holders of the Issuer’s outstanding voting securities
prior to such merger or consolidation do not own over 50% of the outstanding
voting securities of the merged or consolidated entity, immediately after such
merger or consolidation, or the sale of all or substantially all of the Issuer's
properties or assets to any other person (an “Organic
Change”), then as a part of such Organic Change an appropriate revision
to the Warrant Price shall be made if necessary and provision shall be made if
necessary (by adjustments of the Warrant Price or otherwise) so that, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive,
in lieu of Warrant Stock, the kind and amount of shares of stock and other
securities or property of the Issuer or any successor corporation resulting from
the Organic Change. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section
3(d) with respect to the rights of the Holder after the Organic Change to
the end that the provisions of this Section
3(d) (including any adjustment in the Warrant Price then in effect and
the number of shares of stock or other securities deliverable upon exercise of
this Warrant) shall be applied after that event in as nearly an equivalent
manner as may be practicable.  In any such case, the resulting or
surviving corporation (if not the Issuer) shall expressly assume the obligations
to deliver, upon the exercise of this Warrant, such securities or property as
the Holder shall be entitled to receive pursuant to the provisions hereof, and
to make provisions for the protection of the rights of the Holder as provided
above.

     

    
      
        
        

      

      
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    (e)           Adjustments for Issuance of
Additional Shares of Common Stock.  In the event that the
Company shall issue or sell any additional shares of Common Stock (otherwise
than as provided in the foregoing subsections (a) through (d) of this Section 3
or pursuant to (X) Common Stock Equivalents (as hereafter defined) or (Y)
subsection (f) below) (“Additional Shares of Common
Stock”) at a price per share less than the then-applicable Warrant Price
or without consideration, then the Warrant Price upon each such issuance shall
be reduced to that price (rounded to the nearest cent) determined by multiplying
the Warrant Price by a fraction: (1) the numerator of which shall be equal to
the sum of (A) the
number of shares of outstanding Common Stock immediately prior to the issuance
of such Additional Shares of Common Stock plus (B) the number of shares
of Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common Stock so
issued would purchase at a price per share equal to the outstanding Warrant
Price in effect immediately prior to such issuance; and (2) the denominator of
which shall be equal to the number of shares of outstanding Common Stock
immediately after the issuance of such Additional Shares of Common Stock. No
adjustment of the Warrant Price shall be made upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to the exercise of
any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Common Stock Equivalents,
if any such adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Common Stock Equivalents
(or upon the issuance of any warrant or other rights therefore).

     

    (f)           Issuance of Common Stock
Equivalents. The provisions of this Section 3(f) shall apply if the
Company shall (a) issue any securities convertible into or exchangeable for,
directly or indirectly, Common Stock (“Convertible
Securities”), or (b) issue or sell any rights or warrants or options to
purchase any such Common Stock or Convertible Securities (collectively, the
“Common Stock
Equivalents”).  If the price per share for which Additional
Shares of Common Stock may be issuable pursuant to any such Convertible
Securities or Common Stock Equivalent shall be less than the applicable Warrant
Price then in effect, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so amended
shall be less than the applicable Warrant Price in effect at the time of such
amendment or adjustment, then the applicable Warrant Price upon each such
issuance or amendment shall be adjusted as provided in Section 3(e). No
adjustment shall be made to the Warrant Price upon the issuance of any Common
Stock pursuant to the exercise, conversion or exchange of any Convertible
Security or Common Stock Equivalent where an adjustment to the Warrant Price was
made as a result of the issuance or purchase of such Convertible Security or
Common Stock Equivalent.

     

    (g)           Superseding
Adjustment. If, at any time after any adjustment of the Warrant Price
then in effect shall have been made pursuant to Section 3(e) or Section 3(f) as
the result of any issuance of Common Stock Equivalents, and such Common Stock
Equivalents, or the right of conversion or exchange in such Common Stock
Equivalents, shall expire, and all of such or the right of conversion or
exchange with respect to all of such Common Stock Equivalents shall not have
been converted or exercised, then such previous adjustment shall be rescinded
and annulled and the Warrant Price then in effect shall be adjusted to the
Warrant Price in effect immediately prior to the issuance of such Common Stock
Equivalents, subject to any further adjustments pursuant to this Section
3.

     

    
      
        
        

      

      
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    (h)           Consideration for
Stock. In case any shares of Common Stock or Convertible Securities, or
any rights or warrants or options to purchase any such Common Stock or
Convertible Securities, shall be issued or sold:

     

    (i)           in
connection with any merger or consolidation in which the Company is the
surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed to
or exchanged for the stock or other securities of another corporation), the
amount of consideration therefore shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board, of such portion of the
assets and business of the non-surviving corporation as the Board may determine
to be attributable to such shares of Common Stock, Convertible Securities,
rights or warrants or options, as the case may be; or

     

    (ii)           in
the event of any consolidation or merger of the Company in which the Company is
not the surviving corporation or in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the stock or
other securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Company for stock or other securities of
any corporation, the Company shall be deemed to have issued a number of shares
of its Common Stock for stock or securities or other property of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. If any such calculation results in adjustment
of the applicable Warrant Price, or the number of shares of Common Stock for
which this Warrant is exercisable, the determination of the applicable Warrant
Price or the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such merger, consolidation or sale, shall be
made after giving effect to such adjustment of the number of shares of Common
Stock for which this Warrant is exercisable. In the event any consideration
received by the Company for any securities consists of property other than cash,
the fair market value thereof at the time of issuance or as otherwise applicable
shall be as determined in good faith by the Board. In the event Common Stock is
issued with other shares or securities or other assets of the Company for
consideration which covers both, the consideration computed as provided in this
Section 3(h) shall be allocated among such securities and assets as determined
in good faith by the Board.

     

    (i)           Record Date. In case
the Company shall take record of the holders of its Common Stock or any other
preferred stock for the purpose of entitling them to subscribe for or purchase
Common Stock or Convertible Securities, then the date of the issue or sale of
the shares of Common Stock shall be deemed to be such record date.

     

    (j)           Certain Issues
Excepted. Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment to the Warrant Price upon or in
connection with the issuance of any shares of Common Stock or other securities
issued pursuant to Common Stock Equivalents that are: (i) issued pursuant to a
bona fide acquisition of another business entity or business segment of any such
entity by the Company pursuant to a merger, purchase of substantially all the
assets or any type of reorganization (each an “Acquisition”)
provided that (A) the Company will own more than twenty-five percent (25%) of
the voting power of such business entity or business segment of such entity and
(B) such Acquisition is approved by the Board; (ii) issued in connection with
bona fide strategic license agreements or other partnering arrangements so long
as such issuances are not solely for the purpose of raising capital; (iii)
issued under grants of options to purchase Common Stock pursuant to equity
incentive plans that are adopted by the Board; and (iv) issued to any
underwriter, placement agent and their respective designees for the transactions
contemplated by a private placement or public offering of securities of the
Company; (vi issued to advisors or consultants (including, without limitation,
financial advisors and investor relations firms) in connection with any
engagement letter or consulting agreement, provided that any such issuance is
approved by the Board; (vi) issued to financial institutions or lessors in
connection with reasonable commercial credit arrangements, equipment financings
or similar transactions, provided that any such issue is approved by the Board
of Directors; (vii) issued to vendors or customers or to other persons in
similar commercial situations as the Company, provided that any such issue is
approved by the Board of Directors; and (viii) issued in connection with any
recapitalization.

     

    
      
        
        

      

      
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    (k)           No Impairment. The
Issuer shall not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 3 and in the taking of all such action as may be
necessary or appropriate in order to protect against impairment the right of the
Holder to exercise this Warrant. In the event the Holder shall elect to exercise
this Warrant, in whole or in part, as provided herein, the Issuer cannot refuse
exercise based on any claim that the Holder or anyone associated or affiliated
with such holder has been engaged in any violation of law, unless (i) the Issuer
receives an order from the Securities and Exchange Commission prohibiting such
exercise or (ii) an injunction from a court, on notice, restraining and/or
adjoining exercise of this
Warrant.

     

    (l)           Certificates as to
Adjustments. Upon occurrence of each adjustment or readjustment of the
Warrant Price or number of shares of Common Stock for which this Warrant is
exercisable pursuant to this Section 3, the Issuer at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to the Holder a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Issuer shall, upon written request of the Holder, at
any time, furnish or cause to be furnished to the Holder a like certificate
setting forth such adjustments and readjustments, the Warrant Price in effect at
the time, and the number of shares of Common Stock and the amount, if any, of
other securities or property which at the time would be received upon the
exercise of this Warrant. Notwithstanding the foregoing, the Issuer shall not be
obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted amount; if the
Issuer so postpones delivering a certificate, such prior adjustment shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 3 and not previously made, would result in
an adjustment of one percent or more.

     

    (m)           Issue Taxes. The
Issuer shall pay any and all issue and other taxes, excluding federal, state or
local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on exercise of this Warrant; provided, however, that the
Issuer shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such
conversion.

     

    (n)           Fractional Shares. No
fractional shares of Common Stock shall be issued upon exercise of this Warrant.
In lieu of any fractional shares to which the Holder would otherwise be
entitled, the Holder shall round the number of shares to be issued upon exercise
up to the nearest whole number of shares.

     

    (o)           Reservation of Common
Stock. The Issuer shall, during the period within which this Warrant may
be exercised, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the exercise of this Warrant,
such number of shares of Common Stock equal to at least one hundred ten percent
(120%) of the aggregate number of shares of Common Stock as shall from time to
time be sufficient to effect the exercise of this Warrant.

     

    
      
        
        

      

      
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    (p)           Retirement of this
Warrant. Exercise of this Warrant shall be deemed to have been effected
on the date of exercise hereof. Upon exercise of this Warrant only in part, the
Issuer shall issue and deliver to the Holder, at the expense of the Issuer, a
new Warrant covering the unexercised balance of the Warrant Shares.

     

    (q)           Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose
of exercise of this Warrant require registration or listing with or approval of
any governmental authority, stock exchange or other regulatory body under any
federal or state law or regulation or otherwise before such shares may be
validly issued or delivered upon conversion, the Issuer shall, at its sole cost
and expense, in good faith and as expeditiously as possible, endeavor to secure
such registration, listing or approval, as the case may be.

     

    4.           No Preemptive Rights.
The Holder shall not be entitled to rights to subscribe for, purchase or receive
any part of any new or additional shares of any class, whether now or
hereinafter authorized, or of bonds or debentures, or other evidences of
indebtedness convertible into or exchangeable for shares of any class, but all
such new or additional shares of any class, or any bond, debentures or other
evidences of indebtedness convertible into or exchangeable for shares, may be
issued and disposed of by the Board on such terms and for such consideration (to
the extent permitted by law), and to such person or persons as the Board in its
absolute discretion may deem advisable.

     

    5.           Exercise Restriction.
Notwithstanding anything to the contrary set forth in this Warrant, at no time
may the Holder exercise this Warrant, in whole or in part, if the number of
shares of Common Stock to be issued pursuant to such exercise would cause the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates at such time, when aggregated with all other shares of Common Stock
beneficially owned by the Holder and its affiliates at such time, result in the
Holder beneficially owning (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules thereunder) in
excess of 9.99% of the then issued and outstanding shares of Common Stock
outstanding at such time; provided, however, that upon
the Holder providing the Issuer with sixty-one (61) days notice (pursuant to
Section
13 hereof) (the "Waiver
Notice") that the Holder would like to waive Section
5 of this Warrant with regard to any or all shares of Common Stock for
which this Warrant is exercisable, this Section
5 shall be of no force or effect with regard to those shares referenced
in the Waiver Notice.

    

    6.           Registration
Rights.The
Holder of this Warrant is entitled to the benefit of certain registration rights
with respect to the shares of Warrant Stock issuable upon the exercise of this
Warrant, pursuant to that certain Registration Rights Agreement, of even date
herewith, by and among the Issuer and Persons listed on Schedule I thereto (the
“Registration
Rights Agreement”) and the registration rights with respect to the shares
of Warrant Stock issuable upon the exercise of this Warrant by any subsequent
Holder may only be assigned in accordance with the terms and provisions of the
Registrations Rights Agreement.

     

    
      
        
        

      

      
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    7.           Net
Exercise.  In lieu of exercising this Warrant for cash, and
unless the Warrant Shares are registered pursuant to an effective registration
statement within twelve (12) months from the Final Closing Date, the Holder may
elect to exchange this Warrant for shares of Common Stock equal to the value of
the Warrant by surrender of the Warrant, together with notice of such election,
at the principal office of the Issuer, in which event the Issuer shall issue to
the holder a number of shares of Common Stock determined by the following
formula:

    

    X = Y(A-B)

                A

    Where

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

    Y = the number of shares purchasable
under this Warrant a the relevant Warrant Price

    A = value per share of one share of
Common Stock determined in accordance with this Warrant.

    B = the relevant Warrant Price (as
adjusted).

    

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

    

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

    

    “Board”
means the Board of Directors of the Issuer.

    

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

    

     “Common
Stock” means the Common Stock, $0.001 par value per share, of the Issuer
and any other Capital Stock into which such stock may hereafter be
changed.

    

    “Convertible
Securities” means
any evidences of indebtedness, shares or other securities directly or indirectly
convertible or exchangeable for Common Stock, but excluding
Options.

    

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

    

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

    

    “Option” means any right, option or
warrant to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities.

    

    “Original
Issue Date” means the Issuance Date of this Warrant.

    

    “AMEX”
means the NYSE Amex Stock Exchange

    

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

     

    
      
        
        

      

      
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    “Outstanding
Common Stock” means, at any given time, the aggregate amount of
outstanding shares of Common Stock, assuming full exercise, conversion or
exchange (as applicable) of all Common Stock Equivalents that are outstanding at
such time.

    

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

    

    “Per Share
Market Value” means on any particular date (a) the last closing bid price
per share of the Common Stock on such date on the AMEX or another registered
national stock exchange on which the Common Stock is then listed, or if there is
no such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the AMEX or any registered national stock exchange,
the last closing bid price for a share of Common Stock in the market, as
reported by the National Quotation Bureau Incorporated or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (c) if the Common Stock is not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the five (5) Trading Days preceding such date of
determination, or (d) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by the Board.

    

    “Purchase
Agreement” means the Purchase Agreement for Senior Subordinated
Debentures and Warrants dated as of February 26, 2010, among the Issuer and the
Purchasers.

    

    “Purchasers”
means the Initial Holder and the other purchasers of the Common Stock and the
Warrants issued by the Issuer pursuant to the Purchase Agreement.

    

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

    

    “Securities
Act” means the Securities Act of 1933, as amended.

    

    

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

    

    “Term”
has the meaning specified in Section
1 hereof.

     

    
      
        
        

      

      
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    “Trading
Day” means (a) a day on which the Common Stock is traded on the NYSE:
American Stock Exchange, or (b) if the Common Stock is not traded on the NYSE:
American Stock Exchange a day on which the Common Stock is quoted in the
over-the-counter market as reported by National Quotation Bureau Incorporated
(or any similar organization or agency succeeding its functions of reporting
prices); provided,
however,
that in the event that the Common Stock is not listed or quoted as set forth in
(a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday
and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

    

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

    

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

    

    “Warrant
Price” initially means $1.22 per share, representing 100% of the closing
price of the Company’s Common Stock on the trading day immediately prior to but
not including the Closing Date.

    

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

    

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

    

    10.          Other Notices. In
case at any time:

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

    

    then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer's transfer books are closed
in respect thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

    

    9.           Amendment and Waiver.
Any term, covenant, agreement or condition in this Warrant may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by a written instrument or written
instruments executed by (a) the Issuer, (b) the Initial Holder (assuming the
Initial Holder still owns all or part of this Warrant), and (c) the Holders of
twenty-five percent (25%) of the Warrants, the calculation of which shall
include the Initial Holder’s percentage of ownership of the Warrants; provided,
however,
that no such amendment or waiver shall reduce the Warrant Share Number, increase
the Warrant Price, shorten the period during which this Warrant may be exercised
or modify any provision of this Section
11 without the consent of the Holder of this Warrant. No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of this Warrant unless the same consideration is
also offered to all holders of the Warrants.

    

    10.           Governing Law;
Jurisdiction. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This Warrant shall
not be interpreted or construed with any presumption against the party causing
this Warrant to be drafted. The Issuer and the Holder agree that venue for any
dispute arising under this Warrant will lie exclusively in the state or federal
courts located in New York County, New York, and the parties irrevocably waive
any right to raise forum non
conveniens or any other argument that New York is not the proper venue.
The Issuer and the Holder irrevocably consent to personal jurisdiction in the
state and federal courts of the state of New York. The Issuer and the Holder
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section
12 shall affect or limit any right to serve process in any other manner
permitted by law. The Issuer and the Holder hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to this
Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party. The parties hereby waive
all rights to a trial by jury.

     

    
      
        
        

      

      
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    11.           Notices. All notices
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by facsimile or three (3) business days following
being mailed by certified or registered mail, postage prepaid, return-receipt
requested, addressed to the holder of record at its address appearing on the
books of the Issuer. The Issuer will give written notice to the Holder at least
twenty (20) calendar days prior to the date on which the Issuer closes its books
or takes a record (a) with respect to any dividend or distribution upon the
Common Stock, (b) with respect to any pro rata subscription offer to holders of
Common Stock or (c) for determining rights to vote with respect to any Organic
Change, dissolution, liquidation or winding-up and in no event shall such notice
be provided to such holder prior to such information being made known to the
public. The Issuer will also give written notice to the Holder at least twenty
(20) days prior to the date on which any Organic Change, dissolution,
liquidation or winding-up will take place and in no event shall such notice be
provided to such holder prior to such information being made known to the
public. The addresses for such communications shall be as is set forth in the
Purchase Agreement. Any party hereto may from time to time change its address
for notices by giving written notice of such changed address to the other party
hereto.

     

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

     

    13.           Flight
Benefits.                                
The Holder of this Warrant and members of the immediate family (parents,
children and spouse) of the Holder of this Warrant shall be entitled to receive
the same complimentary flight benefits on flights operated by the Borrower or
any Subsidiary of the Borrower as are conferred upon employees of the Borrower
or any airline Subsidiary of the Borrower.

    

    14.           Lost or Stolen
Warrant. Upon receipt by the Company of evidence 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 and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver new Warrant
of like tenor and date; provided, however, that the
Company shall not be obligated to re-issue warrant(s) if the Holder
contemporaneously exercise this Warrant to purchase shares of Common
Stock.

    

    15.           Remedies, Characterizations,
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, at law or in equity (including a decree of
specific performance and/or other injunctive relief), no remedy contained herein
shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit a Holder's right to pursue actual damages
for any failure by the Company to comply with the terms of this Warrant. Amounts
set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the
Holder thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). 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 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

        
          

        

      

      
        
        

      

    

    

    16.           Specific Shall Not Limit
General; Construction. No specific provision contained in this Warrant
shall limit or modify any more general provision contained herein. This Warrant
shall be deemed to be jointly drafted by the Company and all initial purchasers
of the Warrant and shall not be construed against any person as the drafter
hereof.

    

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

    

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

    

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

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

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

    

    
      
        	 	
                GULFSTREAM
      INTERNATIONAL GROUP, INC

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name:
      David
      Hackett	 
	 	 	Title:    Preside	 
	 	 	 	 

      

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    EXERCISE
FORM

     

    WARRANT

     

    GULFSTREAM
INTERNATIONAL GROUP, INC.

    

    The
undersigned _______________, pursuant to the provisions of the accompanying
Warrant, hereby elects to purchase _____ shares of Common Stock of GULFSTREAM
INTERNATIONAL GROUP, INC. covered by the accompanying Warrant.

     

    
      	
              Dated:
      _________________                                                               

            	Signature                   ___________________________

               

              Address                     ___________________________

               

                      ___________________________

            

    

     

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________

    

    The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.o
Yeso No

     

    The
Holder shall pay the sum of $________ by certified or official bank check (or
via wire transfer) to the Issuer in accordance with the terms of the
Warrant.

     

     

     

    
      
        
        

      

      
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    ASSIGNMENT

    

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

    

    
      	
              Dated:
      _________________                                                               

            	Signature                  ___________________________

               

              Address                    ___________________________

               

                      ___________________________

            

    

     

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    PARTIAL
ASSIGNMENT

    

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

    

    
      	
              Dated:
      _________________                                                               

            	Signature                  ___________________________

               

              Address                    ___________________________

               

                      ___________________________

            

    FOR
USE BY THE ISSUER ONLY:

    

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

     

     

     

    
      
        
        

      

      
        19

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