Document:

Unassociated Document

    EXECUTIVE
      COPY

     

    WINWIN
      GAMING, INC.

     

    SECURITY
      AGREEMENT

     

    This
      Security Agreement is entered into as of April 21, 2006 (the “Agreement”),
      by
      and among WinWin Gaming, Inc., a Delaware corporation (“Borrower”),
      the
      parties listed on Exhibit A
      hereto
      (the “Secured
      Parties”)
      with
      reference to the following facts:

     

    A.  Concurrently
      herewith, Borrower is selling secured convertible notes and warrants pursuant
      to
      the terms of a Secured Convertible Note and Warrant Purchase Agreement dated
      of
      even date herewith (the “Purchase
      Agreement”)
      by and
      among Borrower and the Secured Parties.

     

    B.  As
      an
      inducement to the Secured Parties to enter into the Purchase Agreement and
      to
      acquire the secured convertible promissory notes provided for thereunder (the
      “Notes”),
      Borrower agreed to secure the repayment of the Notes with a security interest
      in
      certain assets of Borrower.

     

    C.  The
      parties hereto desire that the all of the Secured Parties be pari
      passu
      with one
      another as to the debt represented by the Notes and the security interest
      securing the repayment thereof on the terms and conditions set forth
      herein.

     

    AGREEMENT

     

    Borrower
      and the Secured Parties hereby agree as follows:

     

    1.  Certain
      Definitions.
      For
      purposes of this Agreement, capitalized terms used herein which are not defined
      herein shall have the meanings set forth in the Purchase Agreement. All terms
      used herein which are defined in Division 1 or Division 9 of the UCC (as defined
      below) shall have the meanings given therein unless otherwise defined in this
      Agreement or the Purchase Agreement; provided, however, that if a term is
      defined in Division 9 of the UCC differently than in another Article of the
      UCC,
      the term has the meaning specified in Division 9. In addition, the following
      terms shall have the following meanings:

     

    (a)  “Borrower’s
      Books”
means
      all of Borrower’s books and records including ledgers, records indicating,
      summarizing, or evidencing such Borrower’s properties or assets or liabilities,
      all information relating to Borrower’s business operations or financial
      condition, and all computer programs, disc or tape files, printouts, runs,
      or
      other computer prepared information, and the equipment containing such
      information. 

     

    (b)  “Collateral”
shall
      mean the property described on Exhibit
      B
      annexed
      hereto and made a part hereof to this Agreement. 

     

    (c)  “Copyrights”
means
      all copyrights and applications for copyright, domestic or foreign, together
      with the underlying works of authorship (including titles), whether or not
      the
      underlying works of authorship have been published and whether said copyrights
      are statutory or arise under the common law, and all other rights and works
      of
      authorship, all rights, claims, and demands in any way relating to any such
      copyrights or works, including royalties and rights to sue for past, present,
      or
      future infringement, and all rights of renewal and extension of copyright,
      including, but not limited to, those described on Exhibit
      C
      annexed
      hereto and made a part hereof; and the right to sue for past, present and future
      infringements of any of the foregoing. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)  “Debt”
means
      (a) indebtedness or liability for borrowed money; (b) obligations evidenced
      by
      bonds, debentures, notes, or other similar instruments; (c) obligations for
      the
      deferred purchase price of property or services (including trade obligations);
      (d) obligations as lessee under capital leases; (e) current liabilities in
      respect of unfunded vested benefits under Plans covered by ERISA; (f)
      obligations under letters of credit; (g) obligations under acceptance
      facilities; (h) all contingent obligations to purchase, to provide funds for
      payment, to supply funds to invest in any Person or entity, or otherwise to
      assure a creditor against loss; and (i) obligations secured by any Liens,
      whether or not the obligations have been assumed.

     

    (e)  “Intellectual
      Property Collateral”
means
      the following properties and assets owned or held by Borrower or in which
      Borrower otherwise has any interest, now existing or hereafter acquired or
      arising: (a) all Patents; (b) all Copyrights; (c) all Trademarks; (d) all trade
      secrets, confidential information, customer lists, license rights, advertising
      materials, operating manuals, methods, processes, know how, sales literature,
      drawings, specifications, blue prints, descriptions, inventions, name plates,
      and catalogs; and (e) all licenses of any Patents, Trademarks or Copyrights;
      and
      (f) the entire goodwill of or associated with the businesses now or hereafter
      conducted by Borrower connected with and symbolized by any of the aforementioned
      properties and assets.

     

    (f)  “Lien”
means,
      with respect to any asset: (a) any mortgage, lien, charge, security interest,
      or
      encumbrance of any kind in respect of such asset (or any agreement to give
      any
      of the foregoing, whether or not contingent on the occurrence of any future
      event); or (b) any undertaking (whether or not contingent) by a Person to grant
      any mortgage, lien, pledge, charge, security interest, or encumbrance to another
      Person on such asset. 

     

    (g)  “Obligations”
means
      (a) all obligations of Borrower under the Purchase Agreement and each of the
      Notes, whether for payment of principal, interest (including, without
      limitation, interest accruing after the commencement of any case, proceeding
      or
      other action relating to the bankruptcy, insolvency or reorganization of
      Borrower), fees, breakage costs, indemnities, expenses or otherwise; (b) the
      performance of all obligations of Borrower under the Purchase Agreement and
      each
      of the Notes, whether for payment of principal, interest (including, without
      limitation, interest accruing after the commencement of any case, proceeding
      or
      other action relating to the bankruptcy, insolvency or reorganization of
      Borrower), fees, breakage costs, indemnities, expenses or otherwise; (c) all
      loans, advances, indebtedness, and other obligations owed by Borrower to Secured
      Parties of every description whether now existing or hereafter arising
      (including those owed by Borrower to others and acquired by Secured Parties
      by
      purchase, assignment, or otherwise), whether or not for the payment of money,
      whether or not evidenced by any note or other instrument, whether direct or
      indirect, absolute or contingent, due or to become due, joint or several,
      primary or secondary, liquidated or unliquidated, secured or unsecured, original
      or renewed or extended, whether arising before, during or after the commencement
      of any insolvency proceeding in which Borrower is a debtor, any obligations
      arising pursuant to any letter of credit transactions and any other financial
      accommodations, obligations to perform or forbear from performing acts; (d)
      all
      obligations of Borrower under this Agreement; (e) the repayment of (i) any
      amounts that Secured Parties may advance or spend for the maintenance or
      preservation of the Collateral; and (ii) any other expenditures that Secured
      Parties may make under the provisions of this Agreement or for the benefit
      of
      Borrower; (f) all amounts owed under any modifications, renewals or extensions
      of any of the foregoing obligations; (g) all other amounts now or in the future
      owed by Borrower to Secured Parties whether or not of the same kind or class
      as
      the other obligations owed by Borrower to Secured Parties; and (h) any of the
      foregoing that arises after the filing of a petition by or against Borrower
      under the Bankruptcy Code, even if the obligations do not accrue because of
      the
      automatic stay under Bankruptcy Code §362 or otherwise. 

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (h)  “Patents”
means
      all patents and patent applications, domestic or foreign, all licenses relating
      to any of the foregoing, and all income and royalties with respect to any
      licenses, all rights to sue for past, present or future infringement thereof,
      all rights arising therefrom and pertaining thereto and all reissues, divisions,
      continuations, renewals, extensions, and continuations in part thereof
      including, but not limited to, those described on Exhibit
      D
      annexed
      hereto and made a part hereof; and the right to sue for past, present and future
      infringements of any of the foregoing.

     

    (i)  “Permitted
      Liens”
means:
      (i) Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s
      and mechanics’ liens, or Liens arising out of judgments or awards against
      Borrower with respect to which Borrower at the time shall currently be
      prosecuting an appeal or proceedings for review; (ii) Liens for taxes not
      yet subject to penalties for nonpayment and Liens for taxes the payment of
      which
      is being contested in good faith and by appropriate proceedings and for which,
      to the extent required by generally accepted accounting principles then in
      effect, proper and adequate book reserves relating thereto are established
      by
      Borrower; (iii) Liens (a) upon or in any equipment acquired, licensed,
      leased or held by Borrower to secure the purchase price of such equipment or
      indebtedness incurred solely for the purpose of financing the acquisition of
      such equipment, or (b) existing on such equipment at the time of its
      acquisition, provided
      that the
      Lien is confined solely to the property so acquired and improvements thereon,
      and the proceeds of such equipment and other equipment financed by the holder
      of
      such Lien; (iv) Liens consisting of leases or subleases and licenses and
      sublicenses granted to others in the ordinary course of Borrower’s
      business not interfering in any material respect with the business of Borrower
      and any interest or title of a lessor or licensor under any lease or license,
      as
      applicable; (v) Liens incurred or deposits made in the ordinary course of
      the Borrower’s business in connection with worker’s compensation, unemployment
      insurance, social security and other like laws; (vi) Liens to which the
      holders of a majority of the outstanding principal amount due and owing under
      the Notes (the “Majority
      Note Holders”)
      have
      expressly consented in writing; and (ix) Liens incurred in connection with
      the extension, renewal or refinancing of the indebtedness secured by the Liens
      described in clauses (i) through (iii) hereof provided that any extension,
      renewal or replacement lien shall be limited to the property encumbered by
      the
      existing Lien and the principal amount of the indebtedness being extended,
      renewed or replaced does not increase. 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (j)  “Person”
means
      an individual, partnership, corporation, limited liability company, business
      trust, joint stock company, trust, unincorporated association, joint venture,
      or
      governmental authority. 

     

    (k)  “Trademarks”
means
      all state (including common law), federal and foreign trademarks, service marks,
      and trade names, and applications for registration of such trademarks, service
      marks and trade names, all of the goodwill of the business connected with the
      use of, and symbolized by, each trademark; all licenses relating to any of
      the
      foregoing and all income and royalties with respect to any licenses, whether
      registered or unregistered and wherever registered, all rights to sue for past,
      present, or future infringement or unconsented use thereof, all rights arising
      therefrom and pertaining thereto and all reissues, extensions and renewals
      thereof, including, but not limited to, those described on Exhibit
      E
      annexed
      hereto and made a part hereof; and the right to sue for past, present and future
      infringements of any of the foregoing.

     

    (l)  “UCC”
means
      the Uniform Commercial Code as in effect in the State of New York, as the same
      may be amended from time to time.

     

    2.  Security
      Agreement.
      

     

    (a)  Grant.
      In
      order to secure the payment, performance and observance of the Obligations
      in
      accordance with the terms thereof, Borrower hereby grants to Secured Parties,
      for the benefit of the Secured Parties, a continuing security interest in,
      and a
      right of set off against, as applicable, all right, title and interest of
      Borrower in all personal property of Borrower, whether now owned or existing
      or
      hereafter acquired or arising and regardless of where located including, without
      limitation, the Collateral.

     

    (b)  Relative
      Priorities.
      The
      security interests of the Secured Parties in the Collateral shall rank
pari
      passu
      with one
      another as to all Obligations as defined below. 

     

    (c)  Borrower
      Remains Liable.
      Anything herein to the contrary notwithstanding, (i) Borrower shall remain
      liable under any contracts, agreements and other documents included in the
      Collateral, to the extent set forth therein, to perform all of its duties and
      obligations thereunder to the same extent as if this Agreement had not been
      executed, (ii) the exercise by the Secured Parties of any of the rights
      hereunder shall not release Borrower from any of its duties or obligations
      under
      such contracts, agreements and other documents included in the Collateral,
      and
      (iii) no Secured Party shall have any obligation or liability under any
      contracts, agreements and other documents included in the Collateral by reason
      of this Agreement, nor shall any Secured Party be obligated to perform any
      of
      the obligations or duties of Borrower thereunder or to take any action to
      collect or enforce any such contract, agreement or other document included
      in
      the Collateral.

     

    (d)  Continuing
      Security Interest.
      Borrower agrees that this Agreement shall create a continuing security interest
      in the Collateral which shall remain in effect until the indefeasible payment
      and performance in full of all of the Obligations or the conversion of the
      principal and accrued interest under the Notes into equity securities as
      described in the Notes.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (e)  Other
      Actions as to Any and All Collateral.
      Borrower further agrees, at the request and option of Secured Parties, to take
      any and all other actions Secured Parties may determine to be necessary or
      useful for the attachment, perfection and priority of, and the ability of
      Secured Parties to enforce, Secured Parties’ security interest in any and all of
      the Collateral, including, without limitation, (a) executing, delivering and,
      where appropriate, filing financing statements and amendments relating thereto
      under the UCC, to the extent, if any, that Borrower’s signature thereon is
      required therefor; (b) causing Secured Parties’ name to be noted as secured
      party on any certificate of title for a titled good if such notation is a
      condition to attachment, perfection or priority of, or ability of Secured
      Parties to enforce, Secured Parties’ security interest in such Collateral; (c)
      complying with any provision of any statute, regulation or treaty of the United
      States as to any Collateral if compliance with such provision is a condition
      to
      attachment, perfection or priority of, or ability of Secured Parties to enforce,
      Secured Parties’ security interest in such Collateral; (d) obtaining
      governmental and other third party waivers, consents and approvals in form
      and
      substance satisfactory to Secured Parties, including, without limitation, any
      consent of any licensor, lessor or other person obligated on Collateral; (e)
      obtaining waivers from mortgagees and landlords in form and substance
      satisfactory to Secured Parties; and (f) taking all actions under any earlier
      versions of the UCC or under any other law, as reasonably determined by Secured
      Parties to be applicable in any relevant Uniform Commercial Code or other
      jurisdiction, including any foreign jurisdiction.

     

    (f)  Right
      to Inspect.
      Secured
      Parties (through any of its officers, employees, or agents) shall have the
      right, upon reasonable prior notice, from time to time during Borrower’s usual
      business hours, to inspect Borrower’s Books and to make copies thereof and to
      check, test, and appraise the Collateral in order to verify Borrower’s financial
      condition or the amount, condition of, or any other matter relating to, the
      Collateral.

     

    (g)  Discharge
      Liens.
      In
      order to protect or perfect any security interest which Secured Parties is
      granted hereunder, Secured Parties may, upon an Event of Default, in its sole
      discretion, discharge any lien or encumbrance or bond or the same, pay any
      insurance, maintain guards, warehousemen, or any personnel to protect the
      Collateral, pay any service bureau, or, obtain any records, and all costs for
      the same shall be added to the Secured Obligations and shall be payable on
      demand.

     

    3.  Borrower’s
      Representations, Warranties and Covenants.
      Borrower
      hereby represents, warrants and covenants to the Secured Parties
      that:

     

    (a)  Location.
      Borrower’s principal place of business is the address set forth on the signature
      page to this Agreement, and Borrower keeps its records concerning accounts,
      contract rights and other property at that location. Borrower will promptly
      notify the Secured Parties in writing of the establishment of any new place
      of
      business where any of the Collateral is kept. Borrower is a corporation
      organized under the laws of the State of Delaware. 

     

    (b)  Books
      and Records.
      Borrower
      will at all times keep accurate and complete records of the Collateral and
      will
      keep such Collateral insured to the extent similarly situated companies insure
      their assets of a like type or nature. 

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (c)  Ownership
      and Liens.
      Borrower has title to, or valid leasehold interests in, all of its properties
      and assets, real and personal, including the Collateral and properties and
      assets and leasehold interests reflected in the financial statements delivered
      to Secured Parties pursuant to the Purchase Agreement (other than any properties
      or assets disposed of in the ordinary course of business), and none of the
      properties and assets, real and personal, including the Collateral owned by
      Borrower and none of its leasehold interests is subject to any Lien, except
      for
      Permitted Liens and Liens set forth in Schedule 1.3 to the Purchase
      Agreement.

     

    (d)  Other
      Financing Statements.
      Other
      than financing statements, security agreements, equipment leases and related
      filings, chattel mortgages, assignments, copyright security agreements or
      collateral assignments, patent or trademark security agreements or collateral
      assignments, fixture filings and other agreements or instruments executed,
      delivered, filed or recorded for the purpose of granting or perfecting any
      Lien
      or executed, delivered, filed or recorded in connection with the Notes
      (collectively, “Financing
      Statements”),
      no
      effective Financing Statement naming Borrower as debtor, assignor, grantor,
      mortgagor, pledgor or the like and covering all or any part of the Collateral
      is
      currently on file in any filing or recording office in any jurisdiction, except
      for Financing Statements relating to the Liens set forth in Schedule 1.3 to
      the
      Purchase Agreement. 

     

    (e)  Notices,
      Reports and Information.
      Borrower
      will notify the Secured Parties of any material claim made or asserted against
      the Collateral by any person or entity and of any change in the composition
      of
      the Collateral or other event which could materially adversely affect the value
      of the Collateral or the Secured Parties’ Lien thereon.

     

    (f)  Separate
      Obligations and Liens.
      Borrower
      acknowledges and agrees that (i) the Obligations represent separate and
      distinct indebtedness, obligations and liabilities of Borrower to each of the
      Secured Parties, which Borrower is separately obligated to each Secured Party
      to
      pay and perform, in each case regardless of whether or not any indebtedness,
      obligation or liability to any other Secured Party or any other person or
      entity, or any agreement, instrument or guaranty that evidences any such other
      indebtedness, liability or obligation, or any provision thereof, shall for
      any
      reason be or become void, voidable, unenforceable or discharged, whether by
      payment, performance, avoidance or otherwise; (ii) the Lien that secures
      each of the Secured Parties’ respective Obligations (a) is separate and
      distinct from any and all other Liens on the Collateral, and (b) is
      enforceable without regard to whether or not any other Lien shall be or become
      void, voidable or unenforceable or the indebtedness, obligations or liabilities
      secured by any such other Lien shall be discharged, whether by payment,
      performance, avoidance or otherwise. 

     

    (g)  Other
      Agreements.
      Except
      for agreements that the Borrower has entered into with Solidus Networks, Inc.,
      the Borrower is not a party to any indenture, loan, or credit agreement, or
      to
      any lease or other agreement or instrument or subject to any charter or
      corporate restriction which could have a material adverse effect on the
      business, properties, assets, operations, or conditions, financial or otherwise,
      of Borrower, or the ability of Borrower to carry out its obligations under
      this
      Agreement, the Purchase Agreement, or any other agreement by and between Secured
      Parties and Borrower. Borrower is not in default in any respect in the
      performance, observance, or fulfillment of any of the obligations, covenants,
      or
      conditions contained in any agreement or instrument material to its business
      to
      which it is a party. 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (h)  Powers.
      Borrower
      has the right and full power and authority to enter into this Agreement and
      to
      perform its obligations in accordance with the terms of this Agreement, without
      the consent or approval of any other Person, except as already obtained. This
      Agreement is enforceable against Borrower in accordance with its terms, except
      as may be limited by applicable bankruptcy insolvency, moratorium,
      reorganization, or other laws affecting creditor’s rights and remedies
      generally.

     

    (i)  No
      Violation.
      Neither
      the execution, delivery nor performance by Borrower of this Agreement violates
      any provision of law or Borrower’s Certificate of Incorporation or Bylaws, each
      as amended to date, or results in a breach of or constitutes a default under
      any
      contract, obligation, indenture or other instrument to which Borrower is a
      party
      or by which Borrower may be bound.

     

    (j)  Insurance.
      Borrower shall maintain insurance relating to Borrower’s ownership and use of
      the Collateral in amounts and of a type that are reasonable and customary to
      businesses similar to Borrower’s. 

     

    4.  Negative
      Covenants.
      Borrower covenants and agrees that, until the indefeasible payment and
      performance in full of the outstanding Obligations, Borrower will not do any
      of
      the following without the prior written consent of the Majority Note Holders,
      unless required to do so pursuant to the provisions of any senior debt existing
      as of the date hereof:

     

    (a)  Sell,
      lease, assign, transfer, or otherwise dispose of, any of its now owned or
      hereafter acquired material assets (including, without limitation, shares of
      stock and indebtedness of subsidiaries, accounts, and leasehold interests),
      except: (1) inventory disposed of in the ordinary course of business; (2) the
      sale or other disposition of assets no longer used or useful in the conduct
      of
      its business; or (3) that any subsidiary may sell, lease, assign, or otherwise
      transfer its assets to Borrower;

     

    (b)  Wind
      up,
      liquidate or dissolve itself, reorganize, merge or consolidate with or into,
      or
      convey, sell, assign, transfer, lease, or otherwise dispose of (whether in
      one
      transaction or in a series of transactions) all or substantially all of its
      assets (whether now owned or hereafter acquired) to any Person, or acquire
      all
      of substantially all of the assets or the business of any Person, or permit
      any
      subsidiary to do so, except that (1) any subsidiary may merge into or transfer
      assets to Borrower; and (2) any subsidiary may merge into or consolidate with
      or
      transfer assets to any other subsidiary; 

     

    (c)  Create,
      incur, assume or be or remain liable with respect to any Debt, other than (1)
      Debt of Borrower in favor of Secured Parties arising under any agreement by
      and
      between Borrower and Secured Parties; (2) accounts payable to trade creditors
      for goods or services incurred in the ordinary course of business, as presently
      conducted, and paid within the specified time, unless contested in good faith
      and by appropriate proceedings; (3) Debt of Borrower secured by Permitted Liens;
      and (4) Debt set forth on Schedule
      1.3
      of the
      Purchase Agreement; 

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (d)  Create,
      incur, assume or suffer to exist any Lien with respect to any of its assets,
      or
      assign or otherwise convey any right to receive income, including the sale
      of
      any accounts, except for Permitted Liens; and

     

    (e)  Assume,
      guarantee, endorse, or otherwise be or become directly or contingently
      responsible or liable, (including, but not limited to, an agreement to purchase
      any obligation, stock, assets, goods, or services, or to supply or advance
      any
      funds, assets, goods, or services, or an agreement to maintain or cause such
      Person to maintain a minimum working capital or net worth or otherwise to assure
      the creditors of any Person against loss), for obligations of any Person, except
      guaranties by endorsement of negotiable instruments for deposit or collection
      or
      similar transactions in the ordinary course of business.

     

    5.  Financing
      Statements.
      Borrower
      authorizes the Secured Parties to file a financing statement describing the
      Collateral. Borrower shall cooperate with Secured Parties in obtaining control
      with respect to Collateral consisting of: (a) deposit accounts; (b) investment
      property; (c) letter of credit rights; and (d) electronic chattel
      paper.

     

    6.  Borrower’s
      Rights Until Default.
      So long
      as an Event of Default does not exist, Borrower shall have the right to possess
      the Collateral, manage its property, operate its business and sell its inventory
      in the ordinary course of business.

     

    7.  Event
      of Default.
      An Event
      of Default, as defined in the Notes, shall be deemed to be an Event of Default
      hereunder.

     

    8.  Rights
      and Remedies on Event of Default.

     

    (a)  After
      any
      Event of Default shall have occurred and while such Event of Default is
      continuing, the Majority Note Holders, acting on behalf of the Secured Parties,
      shall have the right to any or all of the Collateral, by any available judicial
      procedure, or without judicial process (provided, however, that it is in
      compliance with the UCC), to exercise any and all rights afforded to a secured
      party under the UCC or other applicable law. Without limiting the generality
      of
      the foregoing, the Majority Note Holders, acting on behalf of the Secured
      Parties, shall have the right to sell or otherwise dispose of the Collateral
      (subject to applicable state and federal securities laws), either at public
      or
      private sale, in lots or in bulk, for cash or for credit, with or without
      warranties or representations, and upon such terms and conditions, all as
      Secured Parties, in their sole discretion (as determined by holders of a
      majority of the outstanding principal amount under the Notes), may deem
      advisable, and Secured Parties shall have the right to purchase all or any
      part
      of the Collateral at any such sale; provided that the Majority Note Holders,
      acting on behalf of the Secured Parties, shall give Borrower ten (10) days
      advance notice of such sale. The proceeds of any such sale, or other Collateral
      disposition shall be applied, first to the expenses of retaking, holding,
      storing, processing and preparing for sale, selling, and the like, and to
      reasonable attorneys’ fees and legal expenses for one attorney representing
      Secured Parties, and then to the Obligations and to the payment of any other
      amounts required by applicable law, after which Secured Parties shall account
      to
      Borrower for any surplus proceeds.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (b)  All
      of
      the Secured Parties’ rights and remedies with respect to the Collateral, whether
      established hereby or by any other agreements, instruments or documents or
      by
      law shall be cumulative and may be exercised singly or
      concurrently.

     

    (c)  If
      there
      are insufficient funds to pay in full in cash each of the Notes, funds available
      therefor shall be distributed and paid among the Secured Parties in a manner
      so
      that each Secured Party receives his or its Pro Rata Share (as hereinafter
      defined; provided, however, that the foregoing shall in no way offset the
      conversion of the Notes in accordance with their terms, which Notes may be
      converted without regard to conversion of any other Notes) thereof. For purposes
      hereof, “Pro
      Rata Share”
shall
      mean, as to any Secured Party, the aggregate unpaid principal amount, plus
      accrued but unpaid interest, under all Notes held by such Secured Party as
      compared to the aggregate unpaid principal amount, plus accrued but unpaid
      interest, under all Notes held by the Secured Parties. If any Secured Party
      receives any payment under or with respect to such Secured Party’s Notes in
      excess in trust of an amount equal to his or its Pro Rata Share, such Secured
      Party shall be deemed to hold such excess for the benefit of the other Secured
      Parties and shall promptly remit such amount to and among the Secured Parties
      so
      as to ensure all Secured Parties receive their full Pro Rata Share of all cash
      payments, under or with respect to the Notes. 

     

    (d)  Borrower
      hereby assigns, transfers and conveys to Secured Parties, effective upon the
      occurrence and continuance of an Event of Default if Secured Parties so elect,
      and in any event upon the acceleration of the Obligations, all Intellectual
      Property Collateral together with any goodwill associated therewith, all to
      the
      extent necessary to enable Secured Parties to realize on the Collateral and
      any
      successor or assign to enjoy the benefits of the Collateral. This right and
      assignment shall inure to the benefit of all successors, assigns and transferees
      of Secured Parties and its successors, assigns and transferees, whether by
      voluntary conveyance, operation of law, assignment, transfer, foreclosure,
      deed
      in lieu of foreclosure or otherwise. Such right and assignment is and is to
      be
      granted free of charge, without requirement that any monetary payment whatsoever
      (including, without limitation, any royalty or license fee) be made to Borrower
      or any other person by Secured Parties (except that if Secured Parties shall
      receive proceeds from the disposition of any such Collateral, such proceeds
      shall be applied to the Obligations in accordance with the UCC. 

     

    (e)  Upon
      the
      exercise by Secured Parties of any power, right, privilege, or remedy pursuant
      to this Agreement which requires any consent, approval, registration,
      qualification, or authorization of any governmental authority, Borrower agrees
      to execute and deliver, or will cause the execution and delivery of, all
      applications, certificates, instruments, assignments, and other documents and
      papers that Secured Parties or any purchaser of the Collateral may be required
      to obtain for such governmental consent, approval, registration, qualification,
      or authorization.

     

    9.  No
      Waivers by Secured Parties.
      No
      failure to exercise and no delay in exercising any right, power, or remedy
      hereunder shall impair any right, power, or remedy which Secured Parties may
      have, nor shall any such delay be construed to be a waiver of any of such
      rights, powers, or remedies, or any acquiescence in any breach or default
      hereunder; nor shall any waiver by Secured Parties of any breach or default
      by
      Borrower hereunder be deemed a waiver of any default or breach subsequently
      occurring. All rights and remedies granted to Secured Parties hereunder shall
      remain in full force and effect notwithstanding any single or partial exercise
      of, or any discontinuance of action begun to enforce, any such right or remedy.
      The rights and remedies specified herein are cumulative and not exclusive of
      each other or of any rights or remedies which Secured Parties would otherwise
      have.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    10.  Indemnification.
      Borrower hereby agrees to indemnify Secured Parties, any affiliate thereof,
      and
      its directors, officers, employees, agents, counsel, and other advisors (each
      an
“Indemnified
      Person”)
      against, and hold each of them harmless from, any and all liabilities,
      obligations, losses, claims, damages, penalties, actions, judgments, suits,
      costs, expenses, or disbursements of any kind or nature whatsoever, including
      the reasonable fees and disbursements of counsel to an Indemnified Person
      (including allocated costs of internal counsel), which may be imposed on,
      incurred by, or asserted against any Indemnified Person, in any way relating
      to
      or arising out of this Agreement or the transactions contemplated hereby or
      any
      action taken or omitted to be taken by it hereunder (the “Indemnified
      Liabilities”);
      provided that Borrower shall not be liable to any Indemnified Person for any
      portion of such Indemnified Liabilities to the extent they are found by a final
      decision of a court of competent jurisdiction to have resulted from such
      Indemnified Person’s gross negligence or willful misconduct. If and to the
      extent that the foregoing indemnification is for any reason held unenforceable,
      Borrower agrees to make the maximum contribution to the payment and satisfaction
      of each of the Indemnified Liabilities which is permissible under applicable
      law. 

     

    11.  Certain
      Waivers.
      Borrower waives, to the fullest extent permitted by law, (a) any right of
      redemption with respect to the Collateral, whether before or after sale
      hereunder; (b) all rights, if any, of marshalling of the Collateral or other
      collateral or security for the Obligations; (c) any right to require Secured
      Parties (i) to proceed against any Person; (ii) to exhaust any other collateral
      or security for any of the Obligations; (iii) to pursue any remedy in Secured
      Parties’ power; or (iv) to make or give any presentments, demands for
      performance, notices of nonperformance, protests, notices of protests, or
      notices of dishonor in connection with any of the Collateral; (d) all claims,
      damages, and demands against Secured Parties arising out of the repossession,
      retention, sale, or application of the proceeds of any sale of the Collateral;
      and (e) demand, protest, notice of protest, notice of default or dishonor,
      notice of payment and nonpayment, notice of any default, nonpayment at maturity,
      release, compromise, settlement, extension, or renewal of accounts, documents,
      instruments, chattel paper, and guarantees at any time held by Secured Parties
      on which Borrower may in any way be liable. 

     

    12.  General
      Provisions.

     

    (a)  Amendment
      and Waiver.
      Neither
      this Agreement nor any provisions hereof may be changed, waived, discharged
      or
      terminated, nor may any consent to the departure from the terms hereof be given,
      orally (even if supported by new consideration), but only by an instrument
      in
      writing signed by the Majority Note Holders and by Borrower. Any waiver or
      consent so given shall be effective only in the specific instance and for the
      specific purpose for which given.

     

    (b)   Action
      by Majority Note Holders.
      All
      action required or permitted to be taken by the Majority Note Holders, shall
      be
      taken by approval, consent, vote or resolution authorized by the holders of
      the
      Notes representing at least a majority of the principal amount of all then
      outstanding Notes.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (c)  Notices.
      Any
      notice required or permitted under this Agreement shall be given in writing
      and
      in accordance with Section 9.6
      of the
      Purchase Agreement (for purposes of which the term “Purchasers”
shall
      mean the Secured Parties hereunder), except as otherwise expressly provided
      in
      this Agreement, to a Secured Party’s address for notice specified on such
      Secured Party’s signature page hereto.

     

    (d)  Entire
      Agreement.
      This
      Agreement, together with the Purchase Agreement, the Stock Pledge Agreement,
      Investor Rights Agreement, the Notes and the Warrants (as defined in the
      Purchase Agreement), constitutes the entire contract between the Secured Parties
      and Borrower relative to the subject matter hereof. Any previous agreement
      between the Secured Parties and Borrower with respect to the subject matter
      hereof is superceded by this Agreement, the Purchase Agreement, the Stock Pledge
      Agreement, Investor Rights Agreement, the Notes and the Warrants. If and to
      the
      extent of any conflicts between the terms hereof and the provisions in the
      Notes
      regarding the security interest therein granted, the terms of this Agreement
      shall control.

     

    (e)  Successors
      and Assigns.
      Except
      as otherwise expressly provided in this Agreement, the provisions of this
      Agreement shall inure to the benefit of, and be binding upon, the respective
      successors and assigns of the parties hereto. Nothing in this Agreement, express
      or implied, is intended to confer upon any party other than the parties hereto
      or their respective successors and assigns any rights, remedies, obligations
      or
      liabilities under or by reason of this Agreement, except as expressly provided
      in this Agreement. 

     

    (f)  Interpretation.
      This
      Agreement and all agreements relating to the subject matter hereof are the
      product of negotiation and preparation by and among each party and its
      respective attorneys, and shall be construed accordingly. 

     

    (g)  Governing
      Law.
      This
      Agreement and all transactions contemplated hereunder and/or evidenced hereby
      shall be governed by, construed under, and enforced in accordance with the
      internal laws of the State of New York, without regard to its conflicts of
      laws
      principles.

     

    (h)  Choice
      of Venue; Waiver of Right to Jury Trial.

     

    (i)  THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      DEEMED MADE, EXECUTED, PERFORMED AND CONSTRUED IN ACCORDANCE WITH AND BE
      GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
      WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT MAY BE BROUGHT IN THE
      COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
      DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK,
      AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY IRREVOCABLY
      ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
      UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
      PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
      PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM IN
      ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT
      BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL
      JURISDICTION OVER SUCH PARTY. EACH PARTY FURTHER IRREVOCABLY CONSENTS TO THE
      SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
      OR
      PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
      POSTAGE PREPAID, TO ANY SUCH PARTY AT ITS ADDRESS FOR NOTICES AS PROVIDED
      HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PARTY
      HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
      IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
      COMMENCED HEREUNDER OR UNDER ANY OTHER DOCUMENT THAT SUCH SERVICE OF PROCESS
      WAS
      IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
      THE
      PARTY UNDER THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
      LAW
      OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN
      ANY
      OTHER JURISDICTION.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (ii)  EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
      HAVE
      TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING
      OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENT BROUGHT IN
      THE
      COURTS REFERRED TO IN CLAUSE (i) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES
      AND
      AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
      PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
      FORUM.

     

    (iii)  EACH
      OF
      THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
      BY
      JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
      THIS AGREEMENT, THE OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
      OR
      THEREBY.

     

    (i)  Counterparts.
      This
      Agreement may be signed in any number of counterparts, each of which shall
      be an
      original, with the same effect as if all signatures were upon the same
      instrument. Delivery of an executed counterpart of the signature page to this
      Agreement by facsimile shall be effective as delivery of a manually executed
      counterpart of this Agreement, and any party delivering such an executed
      counterpart of the signature page to this Agreement by facsimile to any other
      party shall thereafter also promptly deliver a manually executed counterpart
      of
      this Agreement to such other party, provided that the failure to deliver such
      manually executed counterpart shall not affect the validity, enforceability,
      or
      binding effect of this Agreement.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (j)  Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    (k)  Severability.
      In the
      event any one or more of the provisions contained in this Agreement is held
      to
      be invalid, illegal or unenforceable in any respect, then such provision shall
      be ineffective only to the extent of such prohibition or invalidity, and the
      validity, legality, and enforceability of the remaining provisions contained
      herein shall not in any way be affected or impaired thereby.

     

    (l)  Further
      Acts.
      Borrower shall, on a continuing basis, make, execute, acknowledge and deliver,
      and file and record in the proper filing and recording places, all such
      Financing Statements and take all such action as may be necessary or advisable
      or may be requested by the Secured Parties to carry out the intent and purposes
      of this Agreement.

     

    

    [REMAINDER
      OF THIS PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      this
      Security Agreement has been executed by the parties hereto as of the date first
      above written.

     

    
      	 	 	 
	 	WINWIN
              GAMING, INC.
	 
 	 
 	 
 
	 	By:  	/s/
              Patrick Rogers
	 	
              
Name:
              Patrick Rogers
	 	Title:
              President & CEO

    

    
      	 	 	 
	 	
              Address
                for Notice: 

              

              8687
                West Sahara, Suite 201

              Las
                Vegas, Nevada 89117

              Attn:
                Patrick Rogers

            
	 	 	 
	 	
            

    

     

    
      
        
        

      

      
        SIGNATURE
          PAGE TO SECURITY AGREEMENT

        
          

        

      

      
        
        

      

    

    

    
 

    SECURED
      PARTY

    COUNTERPART
      SIGNATURE PAGE TO

    SECURITY
      AGREEMENT

     

    
      	 	 	 
	 	SECURED
              PARTY:
	 
 	 
 	 
 
	 	By:  	/s/
              Stephen Rasch
	 	 	
              
 
	 	Print Name:	Patriot
              Capital Limited
	 	 	
              
 
	 	Address: 	
              12/E
                Novel Industrial Building

              850-870
                Lai Chi Kok Road

              Cheung
                Sha Wan, Kowloon

              Hong
                Kong

            
	 	
              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SECURED
      PARTY

    COUNTERPART
      SIGNATURE PAGE TO

    SECURITY
      AGREEMENT

    
       

      
        	 	 	 
	 	SECURED
                PARTY:
	 
 	 
 	 
 
	 	By:  	/s/
                Mark Tunnery
	 	 	
                
 
	 	Print Name:	MLA
                Capital, Inc.
	 	 	
                
 
	 	Address: 	
                11111
                  Santa Monica Blvd.

                Suite
                  1122

                Los
                  Angeles, CA 90025

              
	 	
                

              

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    SECURED
      PARTY

    COUNTERPART
      SIGNATURE PAGE TO

    SECURITY
      AGREEMENT

    
       

      
        	 	 	 
	 	SECURED
                PARTY:
	 
 	 
 	 
 
	 	By:  	/s/
                N.J. Fiore
	 	 	
                
 
	 	Print Name:	Ridgewood
                Ltd.
	 	 	
                
 
	 	Address: 	
                763 Oppen Road

                Ridgewood, NJ 07450

              
	 	
                

              

      

       

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
       

      SECURED
        PARTY

      COUNTERPART
        SIGNATURE PAGE TO

      SECURITY
        AGREEMENT

      
         

        
          	 	 	 
	 	SECURED
                  PARTY:
	 
 	 
 	 
 
	 	By:  	/s/
                  Trevor Colby
	 	 	
                  
 
	 	Print Name:	Trevor
                  Colby
	 	 	
                  
 
	 	Address: 	
                  1512 Montana Avenue

                  Santa Monica, CA 90403

                
	 	
                  

                

        

         

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

      SECURED
        PARTY

      COUNTERPART
        SIGNATURE PAGE TO

      SECURITY
        AGREEMENT

      
         

        
          	 	 	 
	 	SECURED
                  PARTY:
	 
 	 
 	 
 
	 	By:  	/s/
                  Michael Clofine
	 	 	
                  
 
	 	Print Name:	Calico
                  Capital Group
	 	 	
                  
 
	 	Address: 	
                  280 Park Avenue

                  5th Floor Bast.

                  New York, NY 10017EXECUTIVE
      COPY

    
 

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED
      HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
      OR
      AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE
      PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE
      OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF
      TO
      THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

     

    
      	
              No.
                WC- _

            	 	Date: April __,
              2006

    

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    OF

     

    WINWIN
      GAMING, INC.

     

    This
      certifies that, for value received, ________________ or its registered assigns
      (“Holder”)
      is
      entitled, subject to the terms and conditions set forth below, to purchase
      from
WINWIN
      GAMING, INC.,
      a
      Delaware corporation (the “Company”),
      in
      whole or in part a number of fully paid and nonassessable shares (the
“Warrant
      Shares”) of
      common
      stock, $0.01 par value per share, of the Company (“Common
      Stock”),
      equal
      to the quotient obtained by dividing (a) seventy-five percent (75%) of
      $__________ (the original principal amount of the Note (as defined below))
      by
      (b) the Exercise Price (as defined below) then in effect. The number, character
      and Exercise Price of such shares of Common Stock are subject to adjustment
      as
      provided below and all references to “Warrant Shares” and “Exercise Price”
herein shall be deemed to include any such adjustment or series of adjustments.
      The term “Warrant”
as
      used
      herein shall mean this Warrant, and any warrants delivered in substitution
      or
      exchange therefor as provided herein.

     

    This
      Warrant is issued pursuant to that certain Secured Convertible Note and Warrant
      Purchase Agreement, dated as of even date herewith (the “Purchase
      Agreement”),
      by
      and among the Company, the initial holder of this Warrant and the other
      Purchasers party thereto, pursuant to which the initial holder of this Warrant
      purchased a secured convertible promissory note of the Company (the
“Note”,
      and
      together with the other non-transferable secured convertible promissory notes
      issued pursuant to the Purchase Agreement, the “Notes”).
      The
      holder of this Warrant is subject to certain restrictions, and entitled to
      certain rights, as set forth in the Purchase Agreement. The Purchase Agreement
      is incorporated herein by reference as though fully set forth
      herein.

     

    1.  Shares
      Subject to Warrant.
      Subject
      to the terms and conditions set forth herein this Warrant shall be exercisable,
      in whole or in part, at the election of the Holder of this Warrant, to purchase
      a number of fully paid and nonassessable shares of Common Stock at any time
      prior to the Expiration Date (as defined below).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.  Exercise
      Price.
      The
      exercise price under this Warrant (the “Exercise
      Price”)
      shall
      be fifty cents ($0.50) per share of Common Stock, subject to the adjustments
      set
      forth in Section
      12
      hereof.

     

    3.  Term
      of Warrant.
      Subject
      to the terms and conditions set forth herein, this Warrant shall be exercisable,
      in whole or in part, during the term (the “Exercise
      Period”)
      commencing on the date hereof and ending at 5:00 p.m., Eastern standard time,
      on
      the five (5) year anniversary of the date hereof and shall be void thereafter.
      

     

    4.  Exercise
      of Warrant.

     

    (a)  Cash
      Exercise.
      This
      Warrant may be exercised by the Holder during the Exercise Period by (i) the
      surrender of this Warrant to the Company, with the Notice of Exercise annexed
      hereto duly completed and executed on behalf of the Holder, at the office of
      the
      Company (or such other office or agency of the Company as it may designate
      by
      notice in writing to the Holder at the address of the Holder appearing on the
      books of the Company) and (ii) the delivery of payment to the Company, for
      the
      account of the Company, by cash, wire transfer of immediately available funds
      to
      a bank account specified by the Company, certified or bank cashier’s check,
      cancellation of indebtedness, or by any combination of the foregoing, of the
      Exercise Price for the number of Warrant Shares specified in the Notice of
      Exercise in lawful money of the United States of America. The Company agrees
      that such Warrant Shares shall be deemed to be issued to the Holder as the
      record holder of such Warrant Shares as of the close of business on the date
      on
      which this Warrant shall have been surrendered and payment made for the Warrant
      Shares as aforesaid. A stock certificate or certificates for the Warrant Shares
      specified in the Exercise Form shall be delivered to the Holder as promptly
      as
      practicable thereafter. If this Warrant shall have been exercised only in part,
      the Company shall, at the time of delivery of the stock certificate or
      certificates, deliver to the Holder a new Warrant evidencing the rights to
      purchase the remaining Warrant Shares, which new Warrant shall in all other
      respects be identical with this Warrant. No adjustments shall be made on Warrant
      Shares issuable on the exercise of this Warrant for any dividends or
      distributions paid or payable to holders of record of Common Stock prior to
      the
      date as of which the Holder shall be deemed to be the record holder of such
      Warrant Shares.

     

    (b)  Cashless
      Exercise.
      In lieu
      of exercising this Warrant pursuant to Section 4(a),
      this
      Warrant may be exercised by the Holder by the surrender of this Warrant to
      the
      Company, with a duly executed Notice of Exercise marked to reflect a
“Cashless
      Exercise”
and
      specifying the number of shares of Common Stock to be purchased, during normal
      business hours on any Business Day (as defined below) during the Exercise
      Period. The Company agrees that such shares of Common Stock, as applicable,
      shall be deemed to be issued to the Holder as the record holder of such shares
      of Common Stock, as applicable, as of the close of business on the date on
      which
      this Warrant shall have been surrendered as aforesaid. Upon such exercise,
      the
      Holder shall be entitled to receive shares equal to the value of this Warrant
      (or the portion thereof being canceled) by surrender of this Warrant to the
      Company together with notice of such election in which event the Company shall
      issue to Holder a number of shares of Common Stock, as applicable, computed
      as
      of the date of surrender of this Warrant to the Company using the following
      formula:

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    X
      =
Y
      (A-B)

                                 A

     

    
      	 	
              Where

            	
              X
                =

            	
              the
                number of shares of Common Stock, as applicable, to be issued to
                Holder
                under this Section
                4(b);

            

    

    
      	 	 	
              Y
                =

            	
              the
                number of shares of Common Stock, as applicable, otherwise purchasable
                under this Warrant (as adjusted to the date of such
                calculation);

            

    

    
      	 	 	
              A
                =

            	
              the
                fair market value of one share of the Common Stock, as applicable,
                at the
                date of such calculation;

            

    

    
      	 	 	
              B
                =

            	
              the
                Exercise Price (as adjusted to the date of such
                calculation).

            

    

     

    (c)  Fair
      Market Value.
      For
      purposes of the above calculation, fair market value of one share of Common
      Stock, as applicable, shall be determined by the Company’s Board of Directors in
      good faith; provided,
      however, that where there exists a public market for the Company’s Common Stock
      at the time of such exercise, the fair market value per share of Common Stock
      shall be the average of the closing bid and asked prices of the Common Stock
      quoted in the Over-The-Counter Market Summary or the last reported sale price
      of
      the Common Stock or the closing price quoted on the Nasdaq National Market
      or
      any exchange on which the Common Stock is listed, whichever is applicable,
      as
      published in the Western Edition of The Wall Street Journal for the five (5)
      trading days prior to the date of determination of fair market value (which
      date
      shall be the date of receipt of the notice of exercise from the Holder).

     

    (d)  This
      Warrant shall be deemed to have been exercised immediately prior to the close
      of
      business on the date of its surrender for exercise as provided above, and the
      person entitled to receive the shares of Common Stock issuable upon such
      exercise shall be treated for all purposes as the holder of record of such
      shares as of the close of business on such date. As promptly as practicable
      on
      or after such date, the Company at its expense shall issue and deliver to the
      person or persons entitled to receive the same a certificate or certificates
      for
      the number of shares issuable upon such exercise. In the event that this Warrant
      is exercised in part, the Company at its expense will execute and deliver a
      new
      Warrant of like tenor exercisable for the number of shares for which this
      Warrant may then be exercised.

     

    5.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. In lieu of any fractional share to which the
      Holder would otherwise be entitled, the Company shall make a cash payment equal
      to the Exercise Price multiplied by such fraction.

     

    6.  Replacement
      of Warrant.
      On
      receipt 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, on delivery of an indemnity agreement reasonably satisfactory
      in
      form and substance to the Company or, in the case of mutilation, on surrender
      and cancellation of this Warrant, the Company at its expense shall execute
      and
      deliver, in lieu of this Warrant, a new warrant of like tenor and
      amount.

     

    7.  Rights
      of Stockholders.
      Subject
      to Sections
      10
      and
12
      of this
      Warrant, the Holder shall not be entitled to vote or receive dividends or be
      deemed the holder of Common Stock for any purpose, and nothing contained herein
      shall be construed to confer upon the Holder, as such, any of the rights of
      a
      stockholder of the Company or any right to vote for the election of directors
      or
      upon any matter submitted to stockholders at any meeting thereof, or to give
      or
      withhold consent to any corporate action (whether upon any recapitalization,
      issuance of stock, reclassification of stock, change of par value, or change
      of
      stock to no par value, consolidation, merger, conveyance or otherwise) or to
      receive notice of meetings, or to receive dividends or subscription rights
      or
      otherwise until the Warrant shall have been exercised as provided
      herein.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    8.  Transfer
      of Warrant.

     

    (a)  Warrant
      Register.
      The
      Company will maintain a register (the “Warrant
      Register”)
      containing the names and addresses of the Holder or Holders. Any Holder of
      this
      Warrant or any portion thereof may change such Holder’s address as shown on the
      Warrant Register by written notice to the Company requesting such change. Any
      notice or written communication required or permitted to be given to the Holder
      may be delivered or given by mail to such Holder as shown on the Warrant
      Register and at the address shown on the Warrant Register. Until this Warrant
      is
      transferred on the Warrant Register of the Company, the Company may treat the
      Holder as shown on the Warrant Register as the absolute owner of this Warrant
      for all purposes, notwithstanding any notice to the contrary.

     

    (b)  Warrant
      Agent.
      The
      Company may, by written notice to the Holder, appoint an agent for the purpose
      of maintaining the Warrant Register referred to in Section
      8(a)
      above,
      issuing the Warrant Shares or other securities then issuable upon the exercise
      of this Warrant, exchanging this Warrant, replacing this Warrant or any or
      all
      of the foregoing. Thereafter, any such registration, issuance, exchange or
      replacement, as the case may be, shall be made at the office of such
      agent.

     

    (c)  Transferability
      and Nonnegotiability of Warrant.
      This
      Warrant may not be transferred or assigned in whole or in part without
      compliance with all applicable federal and state securities laws by the
      transferor and the transferee (including the delivery of investment
      representation letters, legal opinions and market standoff agreements reasonably
      satisfactory to the Company, if such are requested by the Company).
      Notwithstanding the foregoing, no investment representation letter or opinion
      of
      counsel shall be required for any transfer of this Warrant (or any portion
      thereof) or any shares of Common Stock issued upon exercise hereof in compliance
      with Rule 144 of the Securities Act of 1933, as amended (the “Act”);
      provided
      that in
      each case the transferee agrees in writing to be subject to the terms of this
      Warrant (including, without limitation, this Section
      8(c)).
      Subject to the provisions of this Warrant with respect to compliance with the
      Act, title to this Warrant may be transferred by endorsement (by the Holder
      executing the Assignment Form annexed hereto) and delivery in the same manner
      as
      a negotiable instrument transferable by endorsement and delivery.

     

    (d)  Exchange
      of Warrant Upon a Transfer.
      On
      surrender of this Warrant for exchange, properly endorsed on the Assignment
      Form
      and subject to the provisions of this Warrant with respect to compliance with
      the Act and with the limitations on assignments and transfers and contained
      in
      this Section
      8,
      the
      Company at its expense shall issue to or on the order of the Holder a new
      warrant or warrants of like tenor, in the name of the Holder or as the Holder
      (on payment by the Holder of any applicable transfer taxes) may direct, for
      the
      number of shares issuable upon exercise hereof.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (e)  Compliance
      with Securities Laws.

     

    (i)  The
      Holder of this Warrant, by acceptance hereof, acknowledges that the Holder
      is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D
      promulgated under the Act, and this Warrant and the Warrant Shares 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 Warrant Shares
      to be issued upon exercise hereof except under circumstances that will not
      result in a violation of the Act or any applicable state securities laws. Upon
      exercise of this Warrant, the Holder shall, if requested by the Company, confirm
      in writing, in a form satisfactory to the Company, that the Warrant Shares
      so
      purchased are being acquired solely for the Holder’s own account and not as a
      nominee for any other party, for investment, and not with a view toward
      distribution or resale.

     

    (ii)  This
      Warrant and all Warrant Shares issued upon exercise hereof shall be stamped
      or
      imprinted with a legend in substantially the following form (in addition to
      any
      legend required by state securities laws):

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED
      HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
      OR
      AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE
      PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE
      OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF
      TO
      THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

     

    (iii)  The
      Company agrees to remove promptly, upon the request of the holder of this
      Warrant and Warrant Shares issuable upon exercise of the Warrant, the legend
      set
      forth in Section
      8(e)(ii)
      above
      from the documents/certificates for such securities upon full compliance with
      this Agreement and Rule 144.

     

    9.  Reservation
      of Stock.
      The
      Company covenants to take all such necessary action to authorize and reserve
      a
      sufficient number of shares of Common Stock to provide for the issuance of
      Common Stock upon exercise of this Warrant. The Company further covenants that
      all shares that may be issued upon the exercise of rights represented by this
      Warrant and payment of the Exercise Price, all as set forth herein, will be
      free
      from all taxes, liens and charges in respect of the issue thereof (other than
      taxes in respect of any transfer occurring contemporaneously or otherwise
      specified herein).

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    10.  Notices.

     

    (a)  Whenever
      the Exercise Price or number of shares purchasable hereunder shall be adjusted
      pursuant to Section
      12
      hereof,
      the Company shall issue a certificate signed by an executive officer setting
      forth, in reasonable detail, the event requiring the adjustment, the amount
      of
      the adjustment, the method by which such adjustment was calculated, and the
      Exercise Price and number of shares purchasable hereunder after giving effect
      to
      such adjustment, and shall cause a copy of such certificate to be mailed (by
      first-class mail, postage prepaid) to the Holder of this Warrant.

     

    (b)  In
      case:

     

    (i)  the
      Company shall take a record of the holders of its Common Stock (or other stock
      or securities at the time receivable upon the exercise of this Warrant) for
      the
      purpose of entitling them to receive any dividend or other distribution, or
      any
      right to subscribe for or purchase any shares of stock of any class or any
      other
      securities, or to receive any other right;

     

    (ii)  of
      any
      capital reorganization of the Company, any reclassification of the capital
      stock
      of the Company, any consolidation or merger of the Company with or into another
      corporation, or any conveyance of all or substantially all of the assets of
      the
      Company to another corporation;

     

    (iii)  of
      any
      voluntary dissolution, liquidation or winding-up of the Company; or

     

    (iv)  of
      any
      redemption or conversion of all outstanding Common Stock;

     

    then,
      and
      in each such case, the Company will mail or cause to be mailed to the Holder
      or
      Holders a notice specifying, as the case may be, (A) the date on which a record
      is to be taken for the purpose of such dividend, distribution or right, and
      stating the amount and character of such dividend, distribution or right, or
      (B)
      the date on which such reorganization, reclassification, consolidation, merger,
      conveyance, dissolution, liquidation, winding-up, redemption or conversion
      is to
      take place, and the time, if any is to be fixed, as of which the holders of
      record of Common Stock shall be entitled to exchange their shares of Common
      Stock for securities or other property deliverable upon such reorganization,
      reclassification, consolidation, merger, conveyance, dissolution, liquidation
      or
      winding-up. Such notice shall be mailed at least ten (10) days prior to the
      date
      therein specified.

     

    (c)  All
      such
      notices, advices and communications shall be delivered tot he address of the
      Holder on record with the Company and shall be deemed to have been received
      (i)
      in the case of personal delivery, on the date of such delivery and (ii) in
      the
      case of mailing, on the third (3rd) business day following the date of such
      mailing.

     

    11.  Amendments.
      Subject
      to Section
      13(d)
      below,
      this Warrant and any term hereof may be changed, waived, discharged or
      terminated only by an instrument in writing signed by the party against which
      enforcement of such change, waiver, discharge or termination is sought.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    12.  Adjustments.
      The
      Exercise Price and the number of shares purchasable hereunder are subject to
      adjustment from time to time as follows:

     

    (a)  Additional
      Shares of Common Stock.
      In the
      event the Company shall at any time after the Closing (as defined in the
      Purchase Agreement) issue Additional Shares of Common Stock (defined herein),
      without consideration or for a consideration per share less than the applicable
      Exercise Price in effect immediately prior to such issue (“Dilutive
      Issuance”),
      then
      the Exercise Price shall be adjusted to a price determined by multiplying the
      applicable Exercise Price in effect immediately prior to the Dilutive Issuance
      by a fraction:

     

    (i)  the
      numerator of which shall be (1) the number of shares of Common Stock issued
      or
      issuable on exercise of all outstanding options, warrants and convertible
      securities outstanding immediately prior to the Dilutive Issuance, plus (2)
      the
      number of shares of Common Stock that the aggregate consideration, if any,
      received by the Company in connection with the Dilutive Issuance would purchase
      at such Exercise Price, and

     

    (ii)  the
      denominator of which shall be (1) the number of shares of Common Stock issued
      or
      issuable on exercise of all outstanding options, warrants and convertible
      securities outstanding immediately prior to the Dilutive Issuance, plus (2)
      the
      number of shares of Common Stock issued or deemed issued in the Dilutive
      Issuance;

     

    provided
      that
      if such
      issuance or deemed issuance was without consideration, then the Company shall
      be
      deemed to have received an aggregate of one tenth of one cent ($.001) of
      consideration for all such Additional Shares of Common Stock issued or deemed
      to
      be issued. For purposes of the foregoing paragraph, “Additional
      Shares of Common Stock”
shall
      mean any issuances of equity securities (or securities convertible into equity
      securities) of the Company, other than the following: 

    

    (A) shares
      of
      Common Stock issued or issuable by reason of a dividend, stock split, split-up
      or other distribution of shares of Common Stock as described in Section
      12(b), (c) or (d)
      hereof;

    

    (B) up
      to
      Thirteen Million Six Hundred Eighty-Nine Thousand Seven Hundred Seventeen
      (13,689,717) shares of Common Stock actually issued upon the exercise of stock
      options; 

    (C) shares
      of
      Common Stock actually issued upon conversion of convertible securities
      outstanding as of the date hereof and as set forth on Schedule 4.2 of the
      Purchase Agreement, in each case provided such issuance is pursuant to the
      terms
      of such option or convertible security;

    

    (D) shares
      of
      Common Stock issuable upon conversion of the Notes and upon exercise of the
      Warrants; or

    

    (E) securities
      in connection with a transaction where all of the Holders have indicated in
      writing that the transaction should be exempt from the anti-dilution adjustment
      provisions hereof.

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (b)  Reclassification,
      etc.
      If the
      Company, at any time while this Warrant or any portion thereof remains
      outstanding and unexpired, by reclassification of securities or otherwise,
      shall
      change any of the securities as to which purchase rights under this Warrant
      exist into the same or a different number of securities of any other class
      or
      classes, this Warrant shall thereafter represent the right to acquire such
      number and kind of securities as would have been issuable as the result of
      such
      change with respect to the securities that were subject to the purchase rights
      under this Warrant immediately prior to such reclassification or other change
      and the Exercise Price therefor shall be appropriately adjusted, all subject
      to
      further adjustment as provided in this Section
      12.

     

    (c)  Split,
      Subdivision or Combination of Shares.
      If the
      Company, at any time while this Warrant or any portion thereof remains
      outstanding and unexpired, shall split, subdivide or combine the outstanding
      shares of Common Stock into a different number of shares of Common Stock, as
      applicable, then (i) in the case of a split or subdivision, the Exercise Price
      for such securities shall be proportionately decreased and the Warrant Shares
      issuable upon exercise of this Warrant shall be proportionately increased,
      and
      (ii) in the case of a combination, the Exercise Price for such Warrant Shares
      shall be proportionately increased and the securities issuable upon exercise
      of
      this Warrant shall be proportionately decreased.

     

    (d)  Adjustments
      for Dividends in Stock or Other Securities or Property.
      If,
      while this Warrant or any portion hereof remains outstanding and unexpired,
      the
      holders of Common Stock, as applicable, shall have received, or, on or after
      the
      record date fixed for the determination of eligible stockholders, shall have
      become entitled to receive, without payment therefor, additional shares of
      Common Stock, as applicable, by way of dividend, then and in each case, this
      Warrant shall represent the right to acquire, in addition to the number of
      shares of the security receivable upon exercise of this Warrant, and without
      payment of any additional consideration therefor, the amount of such additional
      shares of Common Stock, as applicable, that such holder would hold on the date
      of such exercise had it been the holder of record of that number of shares
      of
      Common Stock, as applicable, receivable upon exercise of this Warrant on the
      date hereof and had thereafter, during the period from the date hereof to and
      including the date of such exercise, retained such shares and/or all other
      additional stock available by it as aforesaid during such period, giving effect
      to all adjustments called for during such period by the provisions of this
      Section
      12.

     

    (e)  Registration
      Statement.
      Pursuant to Section
      2.4(b)
      of the
      Investor Rights Agreement, in the event that the registration statement required
      to be filed by the Company thereunder is not declared effective within one
      hundred eighty (180) days following the Closing, the Exercise Price shall be
      reduced by $0.025 per share for each thirty (30) day period that the
      effectiveness of the registration statement is delayed, but in no event shall
      this provision cause the Exercise Price to be reduced below $0.40 per
      share.

     

    (f)  No
      Impairment.
      The
      Company will not, by any voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed hereunder by
      the
      Company, but will at all times in good faith assist in the carrying out of
      all
      the provisions of this Section
      12
      and in
      the taking of all such action as may be necessary or appropriate in order to
      protect the rights of the Holder of this Warrant against
      impairment.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    13.  Miscellaneous.

     

    (a)  This
      Warrant shall be governed by the laws of the State of New York as applied to
      agreements entered into in the State of New York by and among residents of
      the
      State of New York.

     

    (b)  Choice
      of Venue; Waiver of Right to Jury Trial.

     

    (i) THIS
      WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE DEEMED
      MADE, EXECUTED, PERFORMED AND CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
      BY
      THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
      TO
      THIS WARRANT OR ANY OTHER DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
      OF
      NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN
      EACH
      CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY
      OF THIS WARRANT, EACH PARTY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
      OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION
      OF THE AFORESAID COURTS. EACH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
      THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES
      NOT
      TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS WARRANT
      OR ANY OTHER DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH
      COURT
      LACKS PERSONAL JURISDICTION OVER SUCH PARTY. EACH PARTY FURTHER IRREVOCABLY
      CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS
      IN
      ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
      OR
      CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PARTY AT ITS ADDRESS FOR NOTICES
      AS
      PROVIDED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS
      AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION
      OR
      PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER DOCUMENT THAT SUCH SERVICE
      OF
      PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT
      THE
      RIGHT OF THE PARTY UNDER THIS WARRANT TO SERVE PROCESS IN ANY OTHER MANNER
      PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
      ANY PARTY IN ANY OTHER JURISDICTION.

     

    (ii) EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
      HAVE
      TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING
      OUT OF OR IN CONNECTION WITH THIS WARRANT OR ANY OTHER DOCUMENT BROUGHT IN
      THE
      COURTS REFERRED TO IN CLAUSE (i) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES
      AND
      AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
      PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
      FORUM.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (iii) EACH
      OF
      THE PARTIES TO THIS WARRANT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
      BY
      JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
      THIS WARRANT, THE OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
      THEREBY.

     

    (c)  In
      the
      event of a dispute with regard to the interpretation of this Warrant, the
      prevailing party shall be entitled to collect the cost of attorney’s fees,
      litigation expenses or such other expenses as may be incurred in the enforcement
      of the prevailing party’s rights hereunder.

     

    (d)  This
      Warrant shall be exercisable as provided for herein, except that if the
      expiration date of this Warrant shall fall on a day other than a Business Day,
      the expiration date for this Warrant shall be extended to 5:00 p.m. Eastern
      standard time on the next following Business Day. For purposes of this Warrant,
      “Business
      Day”
shall
      mean any day except a Saturday, Sunday or other day on which commercial banks
      in
      New York, New York or Las Vegas, Nevada are authorized by law to
      close.

     

    (e)  This
      Warrant shall only be amended with the prior written consent of the Company
      and
      the Holder hereof.

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
 

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

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

    
      	 	 	 
	 	COMPANY:
	 	 
	 	WINWIN GAMING, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:

    

     

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    EXECUTIVE
      COPY

    NOTICE
      OF EXERCISE

     

    To: WINWIN
      GAMING, INC.

     

    (1) The
      undersigned hereby:

     

    
      	 	__________ 	 	
              elects
                to purchase __________ shares of Common Stock of WINWIN GAMING, INC.
                pursuant to the terms of the attached
                Warrant.

            

    

     

    (2) The
      undersigned hereby:

     

    
      	 	__________ 	 	
              elects
                to purchase such securities by tender herewith of payment of the
                purchase
                for such shares in full; or

            

    

     

    
      	 	__________ 	 	
              elects
                to exercise the Cashless Exercise features of the attached Warrant
                with
                respect to such securities pursuant to the terms of such
                Warrant.

            

    

     

    (3) In
      exercising this Warrant, the undersigned hereby confirms and acknowledges that
      the securities being issued hereby are being acquired solely for the account
      of
      the undersigned and not as a nominee for any other party, or for investment,
      and
      that the undersigned will not offer, sell or otherwise dispose of any such
      securities, except under circumstances that will not result in a violation
      of
      the Securities Act of 1933, as amended, or any applicable state securities
      laws.

     

    (4) Please
      issue a certificate or certificates representing said securities in the name
      of
      the undersigned:

     

    
      	 	 	 
	 	 	
              (Name)

            

    

     

     

    (5) Please
      issue a new Warrant for the unexercised portion of the attached Warrant in
      the
      name of the undersigned:

    
       

      
        	 	 	 
	 	 	
                (Name)

              

      

       

    

     

    (6) Capitalized
      terms used herein shall have the meanings ascribed to them in the
      Note.

     

    
       

      
        	 	 	 
	
                (Date)

              	 	(Signature
                of Registered Holder)
	 	 	 
	 	 	(Name of Registered
                Holder)

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    EXECUTIVE
      COPY

    

 

    ASSIGNMENT
      FORM

    

    (To
      be
      signed only upon assignment of Warrants)

    

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto the assignee
      named below all of the rights of the undersigned represented by the attached
      Warrant with respect to the number of Warrant Shares covered by the Warrant
      set
      forth below:

    

    (Name
      and
      Address of Assignee Must Be Printed or Typewritten)

     

    
 

    
      	
              Name
                of Assignee

            	 	
              Social
                Security No. 

              or
                Tax I.D. No.

            	 	
              Address

            	
               

            	
              No.
                of Shares

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

     

     

    and
      does
      hereby irrevocably constitute and appoint  
      Attorney
      to transfer said Warrants on the books of the Company, with full power of
      substitution in the premises.

    

    Dated:
      ________

    

    ________________________________________________

    Signature
      of Registered Holder

    

    Note: The
      signature on this assignment must correspond with the names as it appears upon
      the face of the Warrant to Purchase Common Stock in every particular, without
      alteration or enlargement or any change whatever.

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