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    THIRD
      AMENDED AND RESTATED SECURITY
      AGREEMENT

    

      THIS
        THIRD AMENDED AND RESTATED SECURITY AGREEMENT
        (the
“Agreement”), is
        entered into and made effective as of February 10, 2005, by and between
BSI2000,
        INC., a
        Delaware corporation with its principal place of business located at 12600
        West
        Colfax Avenue, B410, Lakewood, CO 80215 (the “Company”),
        and
        the BUYER(S)
        listed
        on Schedule I attached to the Securities Purchase Agreement dated the date
        hereof (the
        “Secured
        Party”).

       

      RECITALS:

       

      WHEREAS,
        the
        Company issued to the Secured Party, as provided in the Securities Purchase
        Agreement dated September 30, 2004 (the “2004
        SPA”)
        between the Company and the Secured Party, and the Secured Party purchased
        One
        Million Two Hundred Fifty Thousand Dollars ($1,250,000) of secured convertible
        debentures plus accrued and unpaid interest, and the Company issued to the
        Secured Party, as provided in the Securities Purchase Agreement dated June
        17,
        2005 (the “June
        2005 SPA”)
        between the Company and the Secured Party, and the Secured Party purchased
        One
        Million Two Hundred Fifty Thousand Dollars ($1,250,000) of secured convertible
        debentures plus accrued and unpaid interest (the convertible debentures issued
        pursuant to both the 2004 SPA and the June 2005 SPA shall collectively be
        referred to as the “Prior
        Debentures”).
        The
        Company hereby expressly reaffirms all of the principal and accrued but unpaid
        interest under the Prior Debentures. 

       

      WHEREAS,
        this
        Agreement shall amend and restate the Second Amended and Restated Security
        Agreement between the parties hereto dated November 3, 2005, the Security
        Agreement between the parties hereto dated September 30, 2004 and shall amend
        and restate the Amended and Restated Security Agreement dated June 17, 2005.
        

       

      WHEREAS,
        the
        Company has requested the Secured Party to make additional financing available
        to the Company. 

       

      WHEREAS,
        the
        Secured Party is willing to provide such additional financing on the condition
        that such additional financing is secured hereunder and under the UCC-1 filed
        on
        October 15, 2004 (#20042113504) filed in connection with the Securities Purchase
        Agreement dated September 30, 2004. 

       

      WHEREAS,
        the
        Company shall issue and sell to the Secured Party, as provided in the Amended
        and Restated Securities Purchase Agreement of even date herewith between
        the
        Company and the Secured Party (the “Securities
        Purchase Agreement”),
        and
        the Secured Party shall purchase up to One Million Dollars ($1,000,000) of
        secured convertible debentures (the “Convertible
        Debentures”),
        which
        shall be convertible into shares of the Company’s common stock, par value $0.001
        (the “Common
        Stock”)
        (as
        converted, the “Conversion
        Shares”)
        in the
        respective amounts set forth opposite each Buyer(s) name on Schedule I
        attached to the Securities Purchase Agreement.

       

      
        
           

        

        
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      WHEREAS,
        to
        induce
        the Secured Party to enter into the transaction contemplated by the Securities
        Purchase Agreement, the Convertible Debentures, the Amended and Restated
        Investor Registration Rights Agreement of even date herewith between the
        Company
        and the Secured Party (the “Investor
        Registration Rights Agreement”),
        the
        Warrants of even date herewith, and the Warrant dated November 3, 2005 and
        the
        Amended and Restated Irrevocable Transfer Agent Instructions among the Company,
        the Secured Party, the Transfer Agent, and David Gonzalez, Esq. (the
“Transfer
        Agent Instructions”)
        (collectively referred to as the “Transaction
        Documents”),
        the
        Company hereby grants to the Secured Party a security interest in and to
        the
        pledged property identified on Exhibit
        A
        hereto
        (collectively referred to as the “Pledged
        Property”)
        until
        the satisfaction of the Obligations, as defined herein below.

       

      NOW,
        THEREFORE, for
        and
        in consideration of the promises and the mutual covenants herein contained,
        and
        for other good and valuable consideration, the adequacy and receipt of which
        are
        hereby acknowledged, the parties hereto hereby agree as follows:

       

      ARTICLE
        1.

      DEFINITIONS
        AND INTERPRETATIONS

       

      Section
        1.1. Recitals.
        

       

      The
        above
        recitals are true and correct and are incorporated herein, in their entirety,
        by
        this reference.

       

      Section
        1.2. Interpretations.
        

       

      Nothing
        herein expressed or implied is intended or shall be construed to confer upon
        any
        person other than the Secured Party any right, remedy or claim under or by
        reason hereof.

       

      Section
        1.3. Obligations
        Secured.

       

      The
        obligations secured hereby are any and all obligations of the Company now
        existing or hereinafter incurred to the Secured Party, whether oral or written
        and whether arising before, on or after the date hereof including, without
        limitation, those obligations of the Company to the Secured Party under this
        Agreement, the Transaction Documents, the Prior Debentures and any other
        amounts
        now or hereafter owed to the Secured Party by the Company thereunder or
        hereunder (collectively, the “Obligations”).

       

      ARTICLE
        2.

      PLEDGED
        COLLATERAL, ADMINISTRATION OF COLLATERAL 

       

      AND
        TERMINATION OF SECURITY INTEREST

       

      Section
        2.1. Pledged
        Property.

       

      (a) Company
        hereby pledges to the Secured Party, and creates in the Secured Party for
        its
        benefit, a security interest for such time until the Obligations are paid
        in
        full, in and to all of the property of the Company as set forth in Exhibit “A”
        attached
        hereto (collectively, the “Pledged
        Property”):

       

      
        
           

        

        
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      The
        Pledged Property, as set forth in Exhibit “A”
        attached
        hereto, and the products thereof and the proceeds of all such items are
        hereinafter collectively referred to as the “Pledged
        Collateral.”

       

      (b) Simultaneously
        with the execution and delivery of this Agreement, the Company shall make,
        execute, acknowledge, file, record and deliver to the Secured Party any
        documents reasonably requested by the Secured Party to perfect its security
        interest in the Pledged Property. Simultaneously with the execution and delivery
        of this Agreement, the Company shall make, execute, acknowledge and deliver
        to
        the Secured Party such documents and instruments, including, without limitation,
        financing statements, certificates, affidavits and forms as may, in the Secured
        Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
        to continue and preserve, the security interest of the Secured Party in the
        Pledged Property, and the Secured Party shall hold such documents and
        instruments as secured party, subject to the terms and conditions contained
        herein.

       

      Section
        2.2. Rights;
        Interests; Etc.

       

      (a) So
        long
        as no Event of Default (as hereinafter defined) shall have occurred and be
        continuing:

       

      (i) the
        Company shall be entitled to exercise any and all rights pertaining to the
        Pledged Property or any part thereof for any purpose not inconsistent with
        the
        terms hereof; and

       

      (ii) the
        Company shall be entitled to receive and retain any and all payments paid
        or
        made in respect of the Pledged Property.

       

      (b) Upon
        the
        occurrence and during the continuance of an Event of Default:

       

      (i) All
        rights of the Company to exercise the rights which it would otherwise be
        entitled to exercise pursuant to Section 2.2(a)(i) hereof and to
        receive payments which it would otherwise be authorized to receive and retain
        pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such
        rights shall thereupon become vested in the Secured Party who shall thereupon
        have the sole right to exercise such rights and to receive and hold as Pledged
        Collateral such payments; provided,
        however,
        that if
        the Secured Party shall become entitled and shall elect to exercise its right
        to
        realize on the Pledged Collateral pursuant to Article 5 hereof, then all
        cash sums received by the Secured Party, or held by Company for the benefit
        of
        the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof,
        shall be applied against any outstanding Obligations; and

       

      (ii) All
        interest, dividends, income and other payments and distributions which are
        received by the Company contrary to the provisions of
        Section 2.2(b)(i) hereof shall be received in trust for the benefit of
        the Secured Party, shall be segregated from other property of the Company
        and
        shall be forthwith paid over to the Secured Party; or 

       

      
        
           

        

        
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      (iii) The
        Secured Party in its sole discretion shall be authorized to sell
        any
        or all of the Pledged Property at public or private sale in order to recoup
        all
        of the outstanding principal plus accrued interest owed pursuant to the
        Convertible Debenture as described herein

       

      (c) An
        “Event
        of Default”
shall
        be deemed to have occurred under this Agreement upon an Event of Default
        under
        the Convertible Debentures.

       

      ARTICLE
        3.

      ATTORNEY-IN-FACT;
        PERFORMANCE

       

      Section
        3.1. Secured
        Party Appointed Attorney-In-Fact.

       

      Upon
        the
        occurrence of an Event of Default, the Company hereby appoints the Secured
        Party
        as its attorney-in-fact, with full authority in the place and stead of the
        Company and in the name of the Company or otherwise, from time to time in
        the
        Secured Party’s discretion to take any action and to execute any instrument
        which the Secured Party may reasonably deem necessary to accomplish the purposes
        of this Agreement, including, without limitation, to receive and collect
        all
        instruments made payable to the Company representing any payments in respect
        of
        the Pledged Collateral or any part thereof and to give full discharge for
        the
        same. The Secured Party may demand, collect, receipt for, settle, compromise,
        adjust, sue for, foreclose, or realize on the Pledged Property as and when
        the
        Secured Party may determine. To facilitate collection, the Secured Party
        may
        notify account debtors and obligors on any Pledged Property or Pledged
        Collateral to make payments directly to the Secured Party.

       

      Section
        3.2. Secured
        Party May Perform.

       

      If
        the
        Company fails to perform any agreement contained herein, the Secured Party,
        at
        its option, may itself perform, or cause performance of, such agreement,
        and the
        expenses of the Secured Party incurred in connection therewith shall be included
        in the Obligations secured hereby and payable by the Company under
        Section 8.3.

       

      ARTICLE
        4.

      REPRESENTATIONS
        AND WARRANTIES

       

      Section
        4.1. Authorization;
        Enforceability.

       

      Each
        of
        the parties hereto represents and warrants that it has taken all action
        necessary to authorize the execution, delivery and performance of this Agreement
        and the transactions contemplated hereby; and upon execution and delivery,
        this
        Agreement shall constitute a valid and binding obligation of the respective
        party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
        and similar laws affecting creditors’ rights or by the principles governing the
        availability of equitable remedies.

       

      
        
           

        

        
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      Section
        4.2. Ownership
        of Pledged Property.

       

      The
        Company warrants and represents that it is the legal and beneficial owner
        of the
        Pledged Property free and clear of any lien, security interest, option or
        other
        charge or encumbrance except for the security interest created by this
        Agreement.

       

      ARTICLE
        5.

      DEFAULT;
        REMEDIES; SUBSTITUTE COLLATERAL

       

      Section
        5.1. Default
        and Remedies.

       

      (a) If
        an
        Event of Default described in Section 2.2(c)(i) and (ii) occurs,
        then in each such case the Secured Party may declare the Obligations to be
        due
        and payable immediately, by a notice in writing to the Company, and upon
        any
        such declaration, the Obligations shall become immediately due and payable.
        If
        an Event of Default described in Sections 2.2(c)(iii) or
        (iv) occurs and is continuing for the period set forth therein, then the
        Obligations shall automatically become immediately due and payable without
        declaration or other act on the part of the Secured Party.

       

      (b) Upon
        the
        occurrence of an Event of Default, the Secured Party shall: (i) be entitled
        to receive all distributions with respect to the Pledged Collateral,
        (ii) to cause the Pledged Property to be transferred into the name of the
        Secured Party or its nominee, (iii) to dispose of the Pledged Property, and
        (iv) to realize upon any and all rights in the Pledged Property then held
        by the Secured Party.

       

      Section
        5.2. Method
        of Realizing Upon the Pledged Property: Other Remedies.

       

      Upon
        the
        occurrence of an Event of Default, in addition to any rights and remedies
        available at law or in equity, the following provisions shall govern the
        Secured
        Party’s right to realize upon the Pledged Property:

       

      (a) Any
        item
        of the Pledged Property may be sold for cash or other value in any number
        of
        lots at brokers board, public auction or private sale and may be sold without
        demand, advertisement or notice (except that the Secured Party shall give
        the
        Company ten (10) days’ prior written notice of the time and place or
        of the time after which a private sale may be made (the “Sale
        Notice”)),
        which notice period is hereby agreed to be commercially reasonable. At any
        sale
        or sales of the Pledged Property, the Company may bid for and purchase the
        whole
        or any part of the Pledged Property and, upon compliance with the terms of
        such
        sale, may hold, exploit and dispose of the same without further accountability
        to the Secured Party. The Company will execute and deliver, or cause to be
        executed and delivered, such instruments, documents, assignments, waivers,
        certificates, and affidavits and supply or cause to be supplied such further
        information and take such further action as the Secured Party reasonably
        shall
        require in connection with any such sale.

       

      (b) Any
        cash
        being held by the Secured Party as Pledged Collateral and all cash proceeds
        received by the Secured Party in respect of, sale of, collection from, or
        other
        realization upon all or any part of the Pledged Collateral shall be applied
        as
        follows:

       

      
        
           

        

        
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      (i) to
        the
        payment of all amounts due the Secured Party for the expenses reimbursable
        to it
        hereunder or owed to it pursuant to Section 8.3 hereof;

       

      (ii) to
        the
        payment of the Obligations then due and unpaid.

       

      (iii) the
        balance, if any, to the person or persons entitled thereto, including, without
        limitation, the Company.

       

      (c) In
        addition to all of the rights and remedies which the Secured Party may have
        pursuant to this Agreement, the Secured Party shall have all of the rights
        and
        remedies provided by law, including, without limitation, those under the
        Uniform
        Commercial Code.

       

      (i) If
        the
        Company fails to pay such amounts due upon the occurrence of an Event of
        Default
        which is continuing, then the Secured Party may institute a judicial proceeding
        for the collection of the sums so due and unpaid, may prosecute such proceeding
        to judgment or final decree and may enforce the same against the Company
        and
        collect the monies adjudged or decreed to be payable in the manner provided
        by
        law out of the property of Company, wherever situated.

       

      (ii) The
        Company agrees that it shall be liable for any reasonable fees, expenses
        and
        costs incurred by the Secured Party in connection with enforcement, collection
        and preservation of the Transaction Documents, including, without limitation,
        reasonable legal fees and expenses, and such amounts shall be deemed included
        as
        Obligations secured hereby and payable as set forth in Section 8.3
        hereof.

       

      Section
        5.3. Proofs
        of Claim.

       

      In
        case
        of the pendency of any receivership, insolvency, liquidation, bankruptcy,
        reorganization, arrangement, adjustment, composition or other judicial
        proceeding relating to the Company or the property of the Company or of such
        other obligor or its creditors, the Secured Party (irrespective of whether
        the
        Obligations shall then be due and payable as therein expressed or by declaration
        or otherwise and irrespective of whether the Secured Party shall have made
        any
        demand on the Company for the payment of the Obligations), subject to the
        rights
        of Previous Security Holders, shall be entitled and empowered, by intervention
        in such proceeding or otherwise:

       

      (i) to
        file
        and prove a claim for the whole amount of the Obligations and to file such
        other
        papers or documents as may be necessary or advisable in order to have the
        claims
        of the Secured Party (including any claim for the reasonable legal fees and
        expenses and other expenses paid or incurred by the Secured Party permitted
        hereunder and of the Secured Party allowed in such judicial proceeding),
        and

       

      (ii) to
        collect and receive any monies or other property payable or deliverable on
        any
        such claims and to distribute the same; and any custodian, receiver, assignee,
        trustee, liquidator, sequestrator or other similar official in any such judicial
        proceeding is hereby authorized by the Secured Party to make such payments
        to
        the Secured Party and, in the event that the Secured Party shall consent
        to the
        making of such payments directed to the Secured Party, to pay to the Secured
        Party any amounts for expenses due it hereunder.

       

      
        
           

        

        
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      Section
        5.4. Duties
        Regarding Pledged Collateral.

       

      The
        Secured Party shall have no duty as to the collection or protection of the
        Pledged Property or any income thereon or as to the preservation of any rights
        pertaining thereto, beyond the safe custody and reasonable care of any of
        the
        Pledged Property actually in the Secured Party’s possession.

       

      ARTICLE
        6.

      AFFIRMATIVE
        COVENANTS

       

      The
        Company covenants and agrees that, from the date hereof and until the
        Obligations have been fully paid and satisfied, unless the Secured Party
        shall
        consent otherwise in writing (as provided in Section 8.4
        hereof):

       

      Section
        6.1. Existence,
        Properties, Etc.

       

      (a) The
        Company shall do, or cause to be done, all things, or proceed with due diligence
        with any actions or courses of action, that may be reasonably necessary
        (i) to maintain Company’s due organization, valid existence and good
        standing under the laws of its state of incorporation, and (ii) to preserve
        and keep in full force and effect all qualifications, licenses and registrations
        in those jurisdictions in which the failure to do so could have a Material
        Adverse Effect (as defined below); and (b) the Company shall not do, or
        cause to be done, any act impairing the Company’s corporate power or authority
        (i) to carry on the Company’s business as now conducted, and (ii) to
        execute or deliver this Agreement or any other document delivered in connection
        herewith, including, without limitation, any UCC-1 Financing Statements required
        by the Secured Party to which it is or will be a party, or perform any of
        its obligations hereunder or thereunder. For purpose of this Agreement, the
        term
“Material
        Adverse Effect”
shall
        mean any material and adverse affect as determined by Secured Party in its
        sole
        discretion, whether individually or in the aggregate, upon (a) the
        Company’s assets, business, operations, properties or condition, financial or
        otherwise; (b) the Company’s to make payment as and when due of all or any
        part of the Obligations; or (c) the Pledged Property.

       

      Section
        6.2. Financial
        Statements and Reports.

       

      The
        Company shall furnish to the Secured Party within a reasonable time such
        financial data as the Secured Party may reasonably request, including, without
        limitation, the following:

       

      (a) The
        balance sheet of the Company as of the close of each fiscal year, the statement
        of earnings and retained earnings of the Company as of the close of such
        fiscal
        year, and statement of cash flows for the Company for such fiscal year, all
        in
        reasonable detail, prepared in accordance with generally accepted accounting
        principles consistently applied, certified by the chief executive and chief
        financial officers of the Company as being true and correct and accompanied
        by a
        certificate of the chief executive and chief financial officers of the Company,
        stating that the Company has kept, observed, performed and fulfilled each
        covenant, term and condition of this Agreement during such fiscal year and
        that
        no Event of Default hereunder has occurred and is continuing, or if an Event
        of
        Default has occurred and is continuing, specifying the nature of same, the
        period of existence of same and the action the Company proposes to take in
        connection therewith;

       

      
        
           

        

        
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      (b) A
        balance
        sheet of the Company as of the close of each month, and statement of earnings
        and retained earnings of the Company as of the close of such month, all in
        reasonable detail, and prepared substantially in accordance with generally
        accepted accounting principles consistently applied, certified by the chief
        executive and chief financial officers of the Company as being true and correct;
        and

       

      (c) Copies
        of
        all accountants' reports and accompanying financial reports submitted to
        the
        Company by independent accountants in connection with each annual examination
        of
        the Company.

       

      Section
        6.3. Accounts
        and Reports.

       

      The
        Company shall maintain a standard system of accounting in accordance with
        generally accepted accounting principles consistently applied and provide,
        at
        its sole expense, to the Secured Party the following:

       

      (a) as
        soon
        as available, a copy of any notice or other communication alleging any
        nonpayment or other material breach or default, or any foreclosure or other
        action respecting any material portion of its assets and properties, received
        respecting any of the indebtedness of the Company in excess of $15,000 (other
        than the Obligations), or any demand or other request for payment under any
        guaranty, assumption, purchase agreement or similar agreement or arrangement
        respecting the indebtedness or obligations of others in excess of $15,000,
        including any received from any person acting on behalf of the Secured Party
        or
        beneficiary thereof; and

       

      (b) within
        fifteen (15) days after the making of each submission or filing, a copy of
        any report, financial statement, notice or other document, whether periodic
        or
        otherwise, submitted to the shareholders of the Company, or submitted to
        or
        filed by the Company with any governmental authority involving or affecting
        (i)
        the Company that could have a Material Adverse Effect; (ii) the
        Obligations; (iii) any part of the Pledged Collateral; or (iv) any of
        the transactions contemplated in this Agreement or the Loan
        Instruments.

       

      Section
        6.4. Maintenance
        of Books and Records; Inspection.

       

      The
        Company shall maintain its books, accounts and records in accordance with
        generally accepted accounting principles consistently applied, and permit
        the
        Secured Party, its officers and employees and any professionals designated
        by
        the Secured Party in writing, at any time to visit and inspect any of its
        properties (including but not limited to the collateral security described
        in
        the Transaction Documents and/or the Loan Instruments), corporate books and
        financial records, and to discuss its accounts, affairs and finances with
        any
        employee, officer or director thereof.

       

      
        
           

        

        
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      Section
        6.5. Maintenance
        and Insurance.

       

      (a) The
        Company shall maintain or cause to be maintained, at its own expense, all
        of its
        assets and properties in good working order and condition, making all necessary
        repairs thereto and renewals and replacements thereof.

       

      (b) The
        Company shall maintain or cause to be maintained, at its own expense, insurance
        in form, substance and amounts (including deductibles), which the Company
        deems
        reasonably necessary to the Company’s business, (i) adequate to insure all
        assets and properties of the Company, which assets and properties are of
        a
        character usually insured by persons engaged in the same or similar business
        against loss or damage resulting from fire or other risks included in an
        extended coverage policy; (ii) against public liability and other tort
        claims that may be incurred by the Company; (iii) as may be required by the
        Transaction Documents and/or applicable law and (iv) as may be reasonably
        requested by Secured Party, all with adequate, financially sound and reputable
        insurers.

       

      Section
        6.6. Contracts
        and Other Collateral.

       

      The
        Company shall perform all of its obligations under or with respect to each
        instrument, receivable, contract and other intangible included in the Pledged
        Property to which the Company is now or hereafter will be party on a timely
        basis and in the manner therein required, including, without limitation,
        this
        Agreement.

       

      Section
        6.7. Defense
        of Collateral, Etc.

       

      The
        Company shall defend and enforce its right, title and interest in and to
        any
        part of: (a) the Pledged Property; and (b) if not included within the
        Pledged Property, those assets and properties whose loss could have a Material
        Adverse Effect, the Company shall defend the Secured Party’s right, title and
        interest in and to each and every part of the Pledged Property, each against
        all
        manner of claims and demands on a timely basis to the full extent permitted
        by
        applicable law.

       

      Section
        6.8. Payment
        of Debts, Taxes, Etc.

       

      The
        Company shall pay, or cause to be paid, all of its indebtedness and other
        liabilities and perform, or cause to be performed, all of its obligations
        in
        accordance with the respective terms thereof, and pay and discharge, or cause
        to
        be paid or discharged, all taxes, assessments and other governmental charges
        and
        levies imposed upon it, upon any of its assets and properties on or before
        the
        last day on which the same may be paid without penalty, as well as pay all
        other
        lawful claims (whether for services, labor, materials, supplies or
        otherwise) as and when due

       

      Section
        6.9. Taxes
        and Assessments; Tax Indemnity.

       

      The
        Company shall (a) file all tax returns and appropriate schedules thereto
        that are required to be filed under applicable law, prior to the date of
        delinquency, (b) pay and discharge all taxes, assessments and governmental
        charges or levies imposed upon the Company, upon its income and profits or
        upon
        any properties belonging to it, prior to the date on which penalties attach
        thereto, and (c) pay all taxes, assessments and governmental charges or
        levies that, if unpaid, might become a lien or charge upon any of its
        properties; provided,
        however,
        that
        the Company in good faith may contest any such tax, assessment, governmental
        charge or levy described in the foregoing clauses (b) and (c) so long as
        appropriate reserves are maintained with respect thereto. 

       

      
        
           

        

        
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      Section
        6.10. Compliance
        with Law and Other Agreements.
        

       

      The
        Company shall maintain its business operations and property owned or used
        in
        connection therewith in compliance with (a) all applicable federal, state
        and local laws, regulations and ordinances governing such business operations
        and the use and ownership of such property, and (b) all agreements,
        licenses, franchises, indentures and mortgages to which the Company is a
        party
        or by which the Company or any of its properties is bound. Without limiting
        the
        foregoing, the Company shall pay all of its indebtedness promptly in accordance
        with the terms thereof.

       

      Section
        6.11. Notice
        of Default.
        

       

      The
        Company shall give written notice to the Secured Party of the occurrence
        of any
        default or Event of Default under this Agreement, the Transaction Documents
        or
        any other Loan Instrument or any other agreement of Company for the payment
        of
        money, promptly upon the occurrence thereof.

       

      Section
        6.12. Notice
        of Litigation.

       

      The
        Company shall give notice, in writing, to the Secured Party of (a) any
        actions, suits or proceedings wherein the amount at issue is in excess of
        $50,000, instituted by any persons against the Company, or affecting any
        of the
        assets of the Company, and (b) any dispute, not resolved within fifteen
        (15) days of the commencement thereof, between the Company on the one hand
        and
        any governmental or regulatory body on the other hand, which might reasonably
        be
        expected to have a Material Adverse Effect on the business operations or
        financial condition of the Company.

       

      ARTICLE
        7.

      NEGATIVE
        COVENANTS

       

      The
        Company covenants and agrees that, from the date hereof until the Obligations
        have been fully paid and satisfied, the Company shall not, unless the Secured
        Party shall consent otherwise in writing:

       

      Section
        7.1. Indebtedness.

       

      The
        Company shall not directly or indirectly permit, create, incur, assume, permit
        to exist, increase, renew or extend on or after the date hereof any indebtedness
        on its part, including commitments, contingencies and credit availabilities,
        or
        apply for or offer or agree to do any of the foregoing (excluding any
        indebtedness of the Company to the Secured Party, trade accounts payable
        and
        accrued expenses incurred in the ordinary course of business and the endorsement
        of negotiable instruments payable to the Company, respectively for deposit
        or
        collection in the ordinary course of business).

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      Section
        7.2. Liens
        and Encumbrances.

       

      The
        Company shall not directly or indirectly make, create, incur, assume or permit
        to exist any assignment, transfer, pledge, mortgage, security interest or
        other
        lien or encumbrance of any nature in, to or against any part of the Pledged
        Property or of the Company’s capital stock, or offer or agree to do so, or own
        or acquire or agree to acquire any asset or property of any character subject
        to
        any of the foregoing encumbrances (including any conditional sale contract
        or
        other title retention agreement), or assign, pledge or in any way transfer
        or
        encumber its right to receive any income or other distribution or proceeds
        from
        any part of the Pledged Property or the Company’s capital stock; or enter into
        any sale-leaseback financing respecting any part of the Pledged Property
        as
        lessee, or cause or assist the inception or continuation of any of the
        foregoing.

       

      Section
        7.3. Certificate
        of Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and
        Sales.

       

      Without
        the prior express written consent of the Secured Party, the Company shall
        not:
        (a) Amend its Certificate of Incorporation or By-Laws; (b) issue or sell
        its stock, stock options, bonds, notes or other corporate securities or
        obligations; (c) be a party to any merger, consolidation or corporate
        reorganization, (d) purchase or otherwise acquire all or substantially all
        of the assets or stock of, or any partnership or joint venture interest in,
        any
        other person, firm or entity, (e) sell, transfer, convey, grant a security
        interest in or lease all or any substantial part of its assets, nor
        (f) create any subsidiaries nor convey any of its assets to any
        subsidiary.

       

      Section
        7.4. Management,
        Ownership.

       

      The
        Company shall not materially change its ownership, executive staff or management
        without the prior written consent of the Secured Party. The ownership, executive
        staff and management of the Company are material factors in the Secured Party's
        willingness to institute and maintain a lending relationship with the
        Company.

       

      Section
        7.5. Dividends,
        Etc.

       

      The
        Company shall not declare or pay any dividend of any kind, in cash or in
        property, on any class of its capital stock, nor purchase, redeem, retire
        or
        otherwise acquire for value any shares of such stock, nor make any distribution
        of any kind in respect thereof, nor make any return of capital to shareholders,
        nor make any payments in respect of any pension, profit sharing, retirement,
        stock option, stock bonus, incentive compensation or similar plan (except
        as
        required or permitted hereunder), without the prior written consent of the
        Secured Party.

       

      Section
        7.6. Guaranties;
        Loans.

       

      The
        Company shall not guarantee nor be liable in any manner, whether directly
        or
        indirectly, or become contingently liable after the date of this Agreement
        in
        connection with the obligations or indebtedness of any person or persons,
        except
        for (i) the indebtedness currently secured by the liens identified on the
        Pledged Property identified on Exhibit A hereto and (ii) the endorsement
        of
        negotiable instruments payable to the Company for deposit or collection in
        the
        ordinary course of business. The Company shall not make any loan, advance
        or
        extension of credit to any person other than in the normal course of its
        business.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      Section
        7.7. Conduct
        of Business.

       

      The
        Company will continue to engage, in an efficient and economical manner, in
        a
        business of the same general type as conducted by it on the date of this
        Agreement.

       

      Section
        11.8. Places
        of Business.

       

      The
        location of the Company’s chief place of business is 12600 West Colfax Avenue,
        B410, Lakewood, CO 80215. The Company shall not change the location of its
        chief
        place of business, chief executive office or any place of business disclosed
        to
        the Secured Party or move any of the Pledged Property from its current location
        without thirty (30) days' prior written notice to the Secured Party in each
        instance. 

       

      ARTICLE
        8.

      MISCELLANEOUS

       

      Section
        8.1. Notices.

       

      All
        notices or other communications required or permitted to be given pursuant
        to
        this Agreement shall be in writing and shall be considered as duly given
        on:
        (a) the date of delivery, if delivered in person, by nationally recognized
        overnight delivery service or (b) five (5) days after mailing if
        mailed from within the continental United States by certified mail, return
        receipt requested to the party entitled to receive the same:

       

      
        	
                If
                  to the Secured Party:

              	
                Cornell
                  Capital Partners, LP

              
	 	
                101
                  Hudson Street-Suite 3700 

              
	 	
                Jersey
                  City, New Jersey 07302 

              
	 	
                Attention: Mark
                  Angelo

              
	 	
                                   
                  Portfolio Manager

              
	 	
                Telephone: (201)
                  986-8300

              
	 	
                Facsimile: (201)
                  985-8266

              
	 	 
	
                With
                  a copy to:

              	
                David
                  Gonzalez, Esq.

              
	 	
                101
                  Hudson Street, Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone: (201)
                  985-8300

              
	 	
                Facsimile: (201)
                  985-8266

              

      

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      
        	
                And
                  if to the Company:

              	
                BSI2000,
                  INC.

              
	 	
                12600
                  West Colfax Avenue, B410

              
	 	
                Lakewood,
                  CO 80215

              
	 	
                Attention: Jack
                  Harper, CEO

              
	 	
                Telephone: (303)
                  231-9095

              
	 	
                Facsimile: (303)
                  231-9002

              
	 	 
	
                With
                  a copy to:

              	
                Kirkpatrick
                  & Lockhart Nicholson Graham, LLP

              
	 	
                201
                  South Biscayne Boulevard, Suite 2000

              
	 	
                Miami,
                  Florida 33131

              
	 	
                Attention: Clayton
                  E. Parker, Esq.

              
	 	
                Telephone: (305)
                  539-3306

              
	 	
                Facsimile: (305)
                  328-7095

              

      

      

      Any
        party
        may change its address by giving notice to the other party stating its new
        address. Commencing on the tenth (10th) day
        after the giving of such notice, such newly designated address shall be such
        party’s address for the purpose of all notices or other communications required
        or permitted to be given pursuant to this Agreement.

       

      Section
        8.2. Severability.

       

      If
        any
        provision of this Agreement shall be held invalid or unenforceable, such
        invalidity or unenforceability shall attach only to such provision and shall
        not
        in any manner affect or render invalid or unenforceable any other severable
        provision of this Agreement, and this Agreement shall be carried out as if
        any
        such invalid or unenforceable provision were not contained herein.

       

      Section
        8.3. Expenses.

       

      In
        the
        event of an Event of Default, the Company will pay to the Secured Party the
        amount of any and all reasonable expenses, including the reasonable fees
        and
        expenses of its counsel, which the Secured Party may incur in connection
        with:
        (i) the custody or preservation of, or the sale, collection from, or other
        realization upon, any of the Pledged Property; (ii) the exercise or
        enforcement of any of the rights of the Secured Party hereunder or
        (iii) the failure by the Company to perform or observe any of the
        provisions hereof.

       

      Section
        8.4. Waivers,
        Amendments, Etc.

       

      The
        Secured Party’s delay or failure at any time or times hereafter to require
        strict performance by Company of any undertakings, agreements or covenants
        shall
        not waiver, affect, or diminish any right of the Secured Party under this
        Agreement to demand strict compliance and performance herewith. Any waiver
        by
        the Secured Party of any Event of Default shall not waive or affect any other
        Event of Default, whether such Event of Default is prior or subsequent thereto
        and whether of the same or a different type. None of the undertakings,
        agreements and covenants of the Company contained in this Agreement, and
        no
        Event of Default, shall be deemed to have been waived by the Secured Party,
        nor
        may this Agreement be amended, changed or modified, unless such waiver,
        amendment, change or modification is evidenced by an instrument in writing
        specifying such waiver, amendment, change or modification and signed by the
        Secured Party.

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      Section
        8.5. Continuing
        Security Interest.

       

      This
        Agreement shall create a continuing security interest in the Pledged Property
        and shall: (i) remain in full force and effect until payment in full of the
        Obligations; and (ii) be binding upon the Company and its successors and
        heirs and (iii) inure to the benefit of the Secured Party and its
        successors and assigns. Upon the payment or satisfaction in full of the
        Obligations, the Company shall be entitled to the return, at its expense,
        of
        such of the Pledged Property as shall not have been sold in accordance with
        Section 5.2 hereof or otherwise applied pursuant to the terms
        hereof.

       

      Section
        8.6. Independent
        Representation.

       

      Each
        party hereto acknowledges and agrees that it has received or has had the
        opportunity to receive independent legal counsel of its own choice and that
        it
        has been sufficiently apprised of its rights and responsibilities with regard
        to
        the substance of this Agreement.

       

      Section
        8.7. Applicable
        Law: Jurisdiction.

       

      This
        Agreement shall be governed by and interpreted in accordance with the laws
        of
        the State of New Jersey without regard to the principles of conflict of laws.
        The parties further agree that any action between them shall be heard in
        Hudson
        County, New Jersey, and expressly consent to the jurisdiction and venue of
        the
        Superior Court of New Jersey, sitting in Hudson County and the United States
        District Court for the District of New Jersey sitting in Newark, New Jersey
        for
        the adjudication of any civil action asserted pursuant to this
        Paragraph.

       

      Section
        8.8. Waiver
        of Jury Trial.

       

      AS
        A
        FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND
        TO
        MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
        ANY
        RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
        AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.
        

       

      Section
        8.9. Entire
        Agreement.

       

      This
        Agreement constitutes the entire agreement among the parties and supersedes
        any
        prior agreement or understanding among them with respect to the subject matter
        hereof.

       

      [SIGNATURE
        PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY BLANK]

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

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

       

      
        	 	 	 
	 	
                
                  COMPANY:

                

                BSI2000,
                  INC.

              
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Jack
                Harper
	 	President
&
                CEO

      

       

      
        	 	 	 
	 	
                SECURED
                  PARTY

                
                  CORNELL
                    CAPITAL PARTNERS, LP

                

              
	 	 	 
	 	By: 	Yorkville Advisors, LLC
	 	Its:	General Partner
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Mark
                Angelo
	 	Portfolio
                Manager

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      
         

        EXHIBIT
          A

         

         

        DEFINITION
          OF PLEDGED PROPERTY

         

         

        For
          the
          purpose of securing prompt and complete payment and performance by the
          Company
          of all of the Obligations, the Company unconditionally and irrevocably
          hereby
          grants to the Secured Party a continuing security interest in and to, and
          lien
          upon, the following Pledged Property of the Company:

         

         

        (a) all
          goods
          of the Company, including, without limitation, machinery, equipment, furniture,
          furnishings, fixtures, signs, lights, tools, parts, supplies and motor
          vehicles
          of every kind and description, now or hereafter owned by the Company or
          in which
          the Company may have or may hereafter acquire any interest, and all
          replacements, additions, accessions, substitutions and proceeds thereof,
          arising
          from the sale or disposition thereof, and where applicable, the proceeds
          of
          insurance and of any tort claims involving any of the foregoing;

         

         

        (b) all
          inventory of the Company, including, but not limited to, all goods, wares,
          merchandise, parts, supplies, finished products, other tangible personal
          property, including such inventory as is temporarily out of Company’s custody or
          possession and including any returns upon any accounts or other proceeds,
          including insurance proceeds, resulting from the sale or disposition of
          any of
          the foregoing;

         

         

        (c) all
          contract rights and general intangibles of the Company, including, without
          limitation, goodwill, trademarks, trade styles, trade names, leasehold
          interests, partnership or joint venture interests, patents and patent
          applications, copyrights, deposit accounts whether now owned or hereafter
          created;

         

         

        (d) all
          documents, warehouse receipts, instruments and chattel paper of the Company
          whether now owned or hereafter created;

         

         

        (e) all
          accounts and other receivables, instruments or other forms of obligations
          and
          rights to payment of the Company (herein collectively referred to as
“Accounts”),
          together with the proceeds thereof, all goods represented by such Accounts
          and
          all such goods that may be returned by the Company’s customers, and all proceeds
          of any insurance thereon, and all guarantees, securities and liens which
          the
          Company may hold for the payment of any such Accounts including, without
          limitation, all rights of stoppage in transit, replevin and reclamation
          and as
          an unpaid vendor and/or lienor, all of which the Company represents and
          warrants
          will be bona fide and existing obligations of its respective customers,
          arising
          out of the sale of goods by the Company in the ordinary course of
          business;

         

         

        (f) to
          the
          extent assignable, all of the Company’s rights under all present and future
          authorizations, permits, licenses and franchises issued or granted in connection
          with the operations of any of its facilities;

         

         

        (g) all
          products and proceeds (including, without limitation, insurance proceeds)
          from
          the above-described Pledged Property.

         

        
          
             

          

          
            A-1Unassociated Document

     

    WARRANT

     

    THE
      SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
      SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
      SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
      SAID
      ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT.

     

    BSI2000,
      INC.

     

    Warrant
      To Purchase Common Stock

     

    
      	Warrant No.: CCP-004	
              Number
                of Shares:
                15,000,000

            

    

    

    Date
      of
      Issuance: February 10, 2006

    

    BSI2000,
      Inc., a Delaware corporation (the “Company”),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, Cornell
      Capital Partners, LP
      (“Cornell”),
      the
      registered holder hereof or its permitted assigns, is entitled, subject to
      the
      terms set forth below, to purchase from the Company upon surrender of this
      Warrant, at any time or times on or after the date hereof, but not after
      11:59 P.M. Eastern Time on the Expiration Date (as defined herein) Fifteen
      Million (15,000,000) fully paid and nonassessable shares of Common Stock (as
      defined herein) of the Company (the “Warrant
      Shares”)
      at the
      exercise price per share provided in Section 1(b) below or as subsequently
      adjusted; provided, however, that in no event shall the holder be entitled
      to
      exercise this Warrant for a number of Warrant Shares in excess of that number
      of
      Warrant Shares which, upon giving effect to such exercise, would cause the
      aggregate number of shares of Common Stock beneficially owned by the holder
      and
      its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
      following such exercise, except within sixty (60) days of the Expiration Date
      (however, such restriction may be waived by Cornell (but only as to itself
      and
      not to any other holder) upon not less than 65 days prior notice to the Company
      and any other holders shall be unaffected by any such waiver). For purposes
      of
      the foregoing proviso, the aggregate number of shares of Common Stock
      beneficially owned by the holder and its affiliates shall include the number
      of
      shares of Common Stock issuable upon exercise of this Warrant with respect
      to
      which the determination of such proviso is being made, but shall exclude shares
      of Common Stock which would be issuable upon (i) exercise of the remaining,
      unexercised Warrants beneficially owned by the holder and its affiliates and
      (ii) exercise or conversion of the unexercised or unconverted portion of
      any other securities of the Company beneficially owned by the holder and its
      affiliates (including, without limitation, any convertible notes or preferred
      stock) subject to a limitation on conversion or exercise analogous to the
      limitation contained herein. Except as set forth in the preceding sentence,
      for
      purposes of this paragraph, beneficial ownership shall be calculated in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended. For purposes of this Warrant, in determining the number of outstanding
      shares of Common Stock a holder may rely on the number of outstanding shares
      of
      Common Stock as reflected in (1) the Company’s most recent Form 10-QSB or Form
      10-KSB, as the case may be, (2) a more recent public announcement by the Company
      or (3) any other notice by the Company or its transfer agent setting forth
      the
      number of shares of Common Stock outstanding. Upon the written request of any
      holder, the Company shall promptly, but in no event later than one (1) Business
      Day following the receipt of such notice, confirm in writing to any such holder
      the number of shares of Common Stock then outstanding. In any case, the number
      of outstanding shares of Common Stock shall be determined after giving effect
      to
      the exercise of Warrants (as defined below) by such holder and its affiliates
      since the date as of which such number of outstanding shares of Common Stock
      was
      reported.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Section
      1.  

     

    (a)  This
      Warrant is the common stock purchase warrant (the “Warrant”)
      issued
      pursuant to the Amended and Restated Securities Purchase Agreement
      (“Securities
      Purchase Agreement”)
      dated
      the date hereof between the Company and the Buyers listed on Schedule I
      thereto.

     

    (b)  Definitions.
      The
      following words and terms as used in this Warrant shall have the following
      meanings:

     

    (i)  “Approved
      Stock Plan”
means
      any employee benefit plan which has been approved by the Board of Directors
      of
      the Company, pursuant to which the Company’s securities may be issued to any
      employee, officer or director for services provided to the Company.

     

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

     

    (iii)  “Closing
      Bid Price”
means
      the closing bid price of Common Stock as quoted on the Principal Market (as
      reported by Bloomberg Financial Markets (“Bloomberg”)
      through its “Volume at Price” function).

     

    (iv)  “Common
      Stock”
means
      (i) the Company’s common stock, par value $0.001 per share, and
      (ii) any capital stock into which such Common Stock shall have been changed
      or any capital stock resulting from a reclassification of such Common
      Stock.

     

    (v)  “Event
      of Default”
means
      an event of default under the Securities Purchase Agreement or the Convertible
      Debentures issued in connection therewith.

     

    (vi)  “Excluded
      Securities”
means,
      provided such security is issued at a price which is greater than or equal
      to
      the arithmetic average of the Closing Bid Prices of the Common Stock for the
      ten
      (10) consecutive trading days immediately preceding the date of issuance, any
      of
      the following: (a) any issuance by the Company of securities in connection
      with
      a strategic partnership or a joint venture (the primary purpose of which is
      not
      to raise equity capital), (b) any issuance by the Company of securities as
      consideration for a merger or consolidation or the acquisition of a business,
      product, license, or other assets of another person or entity and (c) options
      to
      purchase shares of Common Stock, provided (I) such options are issued after
      the
      date of this Warrant to employees of the Company within thirty (30) days of
      such
      employee’s starting his employment with the Company, and (II) the exercise price
      of such options is not less than the Closing Bid Price of the Common Stock
      on
      the date of issuance of such option.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (vii)  “Expiration
      Date”
means
      the date five (5) years from the Issuance Date of this Warrant or, if such
      date
      falls on a Saturday, Sunday or other day on which banks are required or
      authorized to be closed in the City of New York or the State of New York or
      on
      which trading does not take place on the Principal Exchange or automated
      quotation system on which the Common Stock is traded (a “Holiday”),
      the
      next date that is not a Holiday.

     

    (viii)  “Issuance
      Date”
means
      the date hereof.

     

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

     

    (x)  “Other
      Securities”
means
      (i) those options and warrants of the Company issued prior to, and
      outstanding on, the Issuance Date of this Warrant, (ii) the shares of Common
      Stock issuable on exercise of such options and warrants, provided such options
      and warrants are not amended after the Issuance Date of this Warrant and
      (iii) the shares of Common Stock issuable upon exercise of this Warrant.

     

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

     

    (xii)  “Principal
      Market”
means
      the New York Stock Exchange, the American Stock Exchange, the Nasdaq National
      Market, the Nasdaq SmallCap Market, whichever is at the time the principal
      trading exchange or market for such security, or the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg or,
      if
      no bid or sale information is reported for such security by Bloomberg, then
      the
      average of the bid prices of each of the market makers for such security as
      reported in the “pink sheets” by the National Quotation Bureau,
      Inc.

     

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

     

    (xiv)  “Warrant”
means
      this Warrant and all Warrants issued in exchange, transfer or replacement
      thereof. 

     

    (xv)  “Warrant
      Exercise Price”
shall
      be $0.01 or as subsequently adjusted as provided in Section 8 hereof.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (xvi)  “Warrant
      Shares”
means
      the shares of Common Stock issuable at any time upon exercise of this Warrant.
      

     

    (c)  Other
      Definitional Provisions. 

     

    (i)  Except
      as
      otherwise specified herein, all references herein (A) to the Company shall
      be deemed to include the Company’s successors and (B) to any applicable law
      defined or referred to herein shall be deemed references to such applicable
      law
      as the same may have been or may be amended or supplemented from time to time.
      

     

    (ii)  When
      used
      in this Warrant, the words “herein”,
      “hereof”,
      and
“hereunder”
      and
      words of similar import, shall refer to this Warrant as a whole and not to
      any
      provision of this Warrant, and the words “Section”,
      “Schedule”,
      and
“Exhibit”
shall
      refer to Sections of, and Schedules and Exhibits to, this Warrant unless
      otherwise specified. 

     

    (iii)  Whenever
      the context so requires, the neuter gender includes the masculine or feminine,
      and the singular number includes the plural, and vice versa. 

     

    Section
      2.  Exercise
      of Warrant.
      

     

    (a)  Subject
      to the terms and conditions hereof, this Warrant may be exercised by the holder
      hereof then registered on the books of the Company, pro rata as hereinafter
      provided, at any time on any Business Day on or after the opening of business
      on
      such Business Day, commencing with the first day after the date hereof, and
      prior to 11:59 P.M. Eastern Time on the Expiration Date (i) by delivery of
      a written notice, in the form of the subscription notice attached as
Exhibit
      A
      hereto
      (the “Exercise
      Notice”),
      of
      such holder’s election to exercise this Warrant, which notice shall specify the
      number of Warrant Shares to be purchased, payment to the Company of an
      amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares
      being purchased, multiplied by the number of Warrant Shares (at the
      applicable Warrant Exercise Price) as to which this Warrant is being
      exercised (plus any applicable issue or transfer taxes) (the “Aggregate
      Exercise Price”)
      in
      cash or wire transfer of immediately available funds and the surrender of this
      Warrant (or an indemnification undertaking with respect to this Warrant in
      the
      case of its loss, theft or destruction) to a common carrier for overnight
      delivery to the Company as soon as practicable following such date
      (“Cash
      Basis”)
      or
      (ii) if at the time of exercise, the Warrant Shares are not subject to an
      effective registration statement or if an Event of Default has occurred, by
      delivering an Exercise Notice and in lieu of making payment of the Aggregate
      Exercise Price in cash or wire transfer, elect instead to receive upon such
      exercise the “Net Number” of shares of Common Stock determined according to the
      following formula (the “Cashless
      Exercise”):
      

     

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

                 
B

    

    For
      purposes of the foregoing formula: 

    

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    B
      = the
      Closing Bid Price of the Common Stock on the date of exercise of the
      Warrant.

    

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

    

    In
      the
      event of any exercise of the rights represented by this Warrant in compliance
      with this Section 2, the Company shall on or before the fifth (5th)
      Business Day following the date of receipt of the Exercise Notice, the Aggregate
      Exercise Price and this Warrant (or an indemnification undertaking with respect
      to this Warrant in the case of its loss, theft or destruction) and the receipt
      of the representations of the holder specified in Section 6 hereof, if requested
      by the Company (the “Exercise
      Delivery Documents”),
      and
      if the Common Stock is DTC eligible, credit such aggregate number of shares
      of
      Common Stock to which the holder shall be entitled to the holder’s or its
      designee’s balance account with The Depository Trust Company; provided, however,
      if the holder who submitted the Exercise Notice requested physical delivery
      of
      any or all of the Warrant Shares, or, if the Common Stock is not DTC eligible
      then the Company shall, on or before the fifth (5th)
      Business Day following receipt of the Exercise Delivery Documents, issue and
      surrender to a common carrier for overnight delivery to the address specified
      in
      the Exercise Notice, a certificate, registered in the name of the holder, for
      the number of shares of Common Stock to which the holder shall be entitled
      pursuant to such request. Upon delivery of the Exercise Notice and Aggregate
      Exercise Price referred to in clause (i) or (ii) above the holder of this
      Warrant shall be deemed for all corporate purposes to have become the holder
      of
      record of the Warrant Shares with respect to which this Warrant has been
      exercised. In the case of a dispute as to the determination of the Warrant
      Exercise Price, the Closing Bid Price or the arithmetic calculation of the
      Warrant Shares, the Company shall promptly issue to the holder the number of
      Warrant Shares that is not disputed and shall submit the disputed determinations
      or arithmetic calculations to the holder via facsimile within one (1) Business
      Day of receipt of the holder’s Exercise Notice. 

     

    (b)  If
      the
      holder and the Company are unable to agree upon the determination of the Warrant
      Exercise Price or arithmetic calculation of the Warrant Shares within one (1)
      day of such disputed determination or arithmetic calculation being submitted
      to
      the holder, then the Company shall immediately submit via facsimile (i) the
      disputed determination of the Warrant Exercise Price or the Closing Bid Price
      to
      an independent, reputable investment banking firm or (ii) the disputed
      arithmetic calculation of the Warrant Shares to its independent, outside
      accountant. The Company shall cause the investment banking firm or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the holder of the results no later than forty-eight
      (48) hours from the time it receives the disputed determinations or
      calculations. Such investment banking firm’s or accountant’s determination or
      calculation, as the case may be, shall be deemed conclusive absent manifest
      error.

     

    (c)  Unless
      the rights represented by this Warrant shall have expired or shall have been
      fully exercised, the Company shall, as soon as practicable and in no event
      later
      than five (5) Business Days after any exercise and at its own expense, issue
      a
      new Warrant identical in all respects to this Warrant exercised except it shall
      represent rights to purchase the number of Warrant Shares purchasable
      immediately prior to such exercise under this Warrant exercised, less the number
      of Warrant Shares with respect to which such Warrant is exercised.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)  No
      fractional Warrant Shares are to be issued upon any pro rata exercise of this
      Warrant, but rather the number of Warrant Shares issued upon such exercise
      of
      this Warrant shall be rounded up or down to the nearest whole
      number.

     

    (e)  If
      the
      Company or its Transfer Agent shall fail for any reason or for no reason to
      issue to the holder within ten (10) days of receipt of the Exercise
      Delivery Documents, a certificate for the number of Warrant Shares to which
      the
      holder is entitled or to credit the holder’s balance account with The Depository
      Trust Company for such number of Warrant Shares to which the holder is entitled
      upon the holder’s exercise of this Warrant, the Company shall, in addition to
      any other remedies under this Warrant or the Placement Agent Agreement or
      otherwise available to such holder, pay as additional damages in cash to such
      holder on each day the issuance of such certificate for Warrant Shares is not
      timely effected an amount equal to 0.025% of the product of (A) the sum of
      the
      number of Warrant Shares not issued to the holder on a timely basis and to
      which
      the holder is entitled, and (B) the Closing Bid Price of the Common Stock for
      the trading day immediately preceding the last possible date which the Company
      could have issued such Common Stock to the holder without violating this
      Section 2.

     

    (f)  If
      within
      ten (10) days after the Company’s receipt of the Exercise Delivery Documents,
      the Company fails to deliver a new Warrant to the holder for the number of
      Warrant Shares to which such holder is entitled pursuant to Section 2 hereof,
      then, in addition to any other available remedies under this Warrant or the
      Placement Agent Agreement, or otherwise available to such holder, the Company
      shall pay as additional damages in cash to such holder on each day after such
      tenth (10th)
      day
      that such delivery of such new Warrant is not timely effected in an amount
      equal
      to 0.25% of the product of (A) the number of Warrant Shares represented by
      the portion of this Warrant which is not being exercised and (B) the
      Closing Bid Price of the Common Stock for the trading day immediately preceding
      the last possible date which the Company could have issued such Warrant to
      the
      holder without violating this Section 2.

     

    Section
      3.  Covenants
      as to Common Stock.
      The
      Company hereby covenants and agrees as follows:

     

    (a)  This
      Warrant is, and any Warrants issued in substitution for or replacement of this
      Warrant will upon issuance be, duly authorized and validly issued.

     

    (b)  All
      Warrant Shares which may be issued upon the exercise of the rights represented
      by this Warrant will, upon issuance, be validly issued, fully paid and
      nonassessable and free from all taxes, liens and charges with respect to the
      issue thereof.

     

    (c)  During
      the period within which the rights represented by this Warrant may be exercised,
      the Company will at all times have authorized and reserved at least one hundred
      percent (100%) of the number of shares of Common Stock needed to provide for
      the
      exercise of the rights then represented by this Warrant and the par value of
      said shares will at all times be less than or equal to the applicable Warrant
      Exercise Price. If at any time the Company does not have a sufficient number
      of
      shares of Common Stock authorized and available, then the Company shall call
      and
      hold a special meeting of its stockholders within sixty (60) days of that
      time for the sole purpose of increasing the number of authorized shares of
      Common Stock.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (d)  If
      at any
      time after the date hereof the Company shall file a registration statement,
      the
      Company shall include the Warrant Shares issuable to the holder, pursuant to
      the
      terms of this Warrant and shall maintain, so long as any other shares of Common
      Stock shall be so listed, such listing of all Warrant Shares from time to time
      issuable upon the exercise of this Warrant; and the Company shall so list on
      each national securities exchange or automated quotation system, as the case
      may
      be, and shall maintain such listing of, any other shares of capital stock of
      the
      Company issuable upon the exercise of this Warrant if and so long as any shares
      of the same class shall be listed on such national securities exchange or
      automated quotation system.

     

    (e)  The
      Company will not, by amendment of its Articles of Incorporation or through
      any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed by
      it
      hereunder, but will at all times in good faith assist in the carrying out of
      all
      the provisions of this Warrant and in the taking of all such action as may
      reasonably be requested by the holder of this Warrant in order to protect the
      exercise privilege of the holder of this Warrant against dilution or other
      impairment, consistent with the tenor and purpose of this Warrant. The Company
      will not increase the par value of any shares of Common Stock receivable upon
      the exercise of this Warrant above the Warrant Exercise Price then in effect,
      and (ii) will take all such actions as may be necessary or appropriate in
      order that the Company may validly and legally issue fully paid and
      nonassessable shares of Common Stock upon the exercise of this
      Warrant.

     

    (f)  This
      Warrant will be binding upon any entity succeeding to the Company by merger,
      consolidation or acquisition of all or substantially all of the Company’s
      assets.

     

    Section
      4.  Taxes.
      The
      Company shall pay any and all taxes, except any applicable withholding, which
      may be payable with respect to the issuance and delivery of Warrant Shares
      upon
      exercise of this Warrant.

     

    Section
      5.  Warrant
      Holder Not Deemed a Stockholder.
      Except
      as otherwise specifically provided herein, no holder, as such, of this Warrant
      shall be entitled to vote or receive dividends or be deemed the holder of shares
      of capital stock of the Company for any purpose, nor shall anything contained
      in
      this Warrant be construed to confer upon the holder hereof, as such, any of
      the
      rights of a stockholder of the Company or any right to vote, give or withhold
      consent to any corporate action (whether any reorganization, issue of stock,
      reclassification of stock, consolidation, merger, conveyance or otherwise),
      receive notice of meetings, receive dividends or subscription rights, or
      otherwise, prior to the issuance to the holder of this Warrant of the Warrant
      Shares which he or she is then entitled to receive upon the due exercise of
      this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on such holder to purchase any securities (upon
      exercise of this Warrant or otherwise) or as a stockholder of the Company,
      whether such liabilities are asserted by the Company or by creditors of the
      Company. Notwithstanding this Section 5, the Company will provide the holder
      of
      this Warrant with copies of the same notices and other information given to
      the
      stockholders of the Company generally, contemporaneously with the giving thereof
      to the stockholders.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Section
      6.  Representations
      of Holder.
      The
      holder of this Warrant, by the acceptance hereof, represents that it is
      acquiring this Warrant and the Warrant Shares for its own account for investment
      only and not with a view towards, or for resale in connection with, the public
      sale or distribution of this Warrant or the Warrant Shares, except pursuant
      to
      sales registered or exempted under the Securities Act; provided, however, that
      by making the representations herein, the holder does not agree to hold this
      Warrant or any of the Warrant Shares for any minimum or other specific term
      and
      reserves the right to dispose of this Warrant and the Warrant Shares at any
      time
      in accordance with or pursuant to a registration statement or an exemption
      under
      the Securities Act. The holder of this Warrant further represents, by acceptance
      hereof, that, as of this date, such holder is an “accredited investor” as such
      term is defined in Rule 501(a)(1) of Regulation D promulgated by the
      Securities and Exchange Commission under the Securities Act (an “Accredited
      Investor”).
      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 and that such holder is an Accredited Investor. If such
      holder cannot make such representations because they would be factually
      incorrect, it shall be a condition to such holder’s exercise of this Warrant
      that the Company receive such other representations as the Company considers
      reasonably necessary to assure the Company that the issuance of its securities
      upon exercise of this Warrant shall not violate any United States or state
      securities laws.

     

    Section
      7.  Ownership
      and Transfer.

     

    (a)  The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee. The Company may treat the person in whose
      name any Warrant is registered on the register as the owner and holder thereof
      for all purposes, notwithstanding any notice to the contrary, but in all events
      recognizing any transfers made in accordance with the terms of this
      Warrant.

     

    Section
      8.  Adjustment
      of Warrant Exercise Price and Number of Shares.
      The
      Warrant Exercise Price and the number of shares of Common Stock issuable upon
      exercise of this Warrant shall be adjusted from time to time as
      follows:

     

    (a)  Adjustment
      of Warrant Exercise Price and Number of Shares upon Issuance of Common
      Stock.
      If and
      whenever on or after the Issuance Date of this Warrant, the Company issues
      or
      sells, or is deemed to have issued or sold, any shares of Common
      Stock (other than (i) Excluded Securities and (ii) shares of Common Stock
      which are issued or deemed to have been issued by the Company in connection
      with
      an Approved Stock Plan or upon exercise or conversion of the Other Securities)
      for a consideration per share less than a price (the “Applicable
      Price”)
      equal
      to the Warrant Exercise Price in effect immediately prior to such issuance
      or
      sale, then immediately after such issue or sale the Warrant Exercise Price
      then
      in effect shall be reduced to an amount equal to such consideration per share.
      Upon each such adjustment of the Warrant Exercise Price hereunder, the number
      of
      Warrant Shares issuable upon exercise of this Warrant shall be adjusted to
      the
      number of shares determined by multiplying the Warrant Exercise Price in effect
      immediately prior to such adjustment by the number of Warrant Shares issuable
      upon exercise of this Warrant immediately prior to such adjustment and dividing
      the product thereof by the Warrant Exercise Price resulting from such
      adjustment.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b)  Effect
      on Warrant Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Warrant Exercise Price under Section 8(a)
      above, the following shall be applicable:

     

    (i)  Issuance
      of Options.
      If
      after the date hereof, the Company in any manner grants any Options and the
      lowest price per share for which one share of Common Stock is issuable upon
      the
      exercise of any such Option or upon conversion or exchange of any convertible
      securities issuable upon exercise of any such Option is less than the Applicable
      Price, then such share of Common Stock shall be deemed to be outstanding and
      to
      have been issued and sold by the Company at the time of the granting or sale
      of
      such Option for such price per share. For purposes of this Section 8(b)(i),
      the
      lowest price per share for which one share of Common Stock is issuable upon
      exercise of such Options or upon conversion or exchange of such Convertible
      Securities shall be equal to the sum of the lowest amounts of consideration
      (if
      any) received or receivable by the Company with respect to any one share of
      Common Stock upon the granting or sale of the Option, upon exercise of the
      Option or upon conversion or exchange of any convertible security issuable
      upon
      exercise of such Option. No further adjustment of the Warrant Exercise Price
      shall be made upon the actual issuance of such Common Stock or of such
      convertible securities upon the exercise of such Options or upon the actual
      issuance of such Common Stock upon conversion or exchange of such convertible
      securities.

     

    (ii)  Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any convertible securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion or exchange thereof is less than the Applicable Price, then such
      share of Common Stock shall be deemed to be outstanding and to have been issued
      and sold by the Company at the time of the issuance or sale of such convertible
      securities for such price per share. For the purposes of this
      Section 8(b)(ii), the lowest price per share for which one share of Common
      Stock is issuable upon such conversion or exchange shall be equal to the sum
      of
      the lowest amounts of consideration (if any) received or receivable by the
      Company with respect to one share of Common Stock upon the issuance or sale
      of
      the convertible security and upon conversion or exchange of such convertible
      security. No further adjustment of the Warrant Exercise Price shall be made
      upon
      the actual issuance of such Common Stock upon conversion or exchange of such
      convertible securities, and if any such issue or sale of such convertible
      securities is made upon exercise of any Options for which adjustment of the
      Warrant Exercise Price had been or are to be made pursuant to other provisions
      of this Section 8(b), no further adjustment of the Warrant Exercise Price shall
      be made by reason of such issue or sale. 

     

    (iii)  Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion or exchange of any convertible
      securities, or the rate at which any convertible securities are convertible
      into
      or exchangeable for Common Stock changes at any time, the Warrant Exercise
      Price
      in effect at the time of such change shall be adjusted to the Warrant Exercise
      Price which would have been in effect at such time had such Options or
      convertible securities provided for such changed purchase price, additional
      consideration or changed conversion rate, as the case may be, at the time
      initially granted, issued or sold and the number of Warrant Shares issuable
      upon
      exercise of this Warrant shall be correspondingly readjusted. For purposes
      of
      this Section 8(b)(iii), if the terms of any Option or convertible security
      that
      was outstanding as of the Issuance Date of this Warrant are changed in the
      manner described in the immediately preceding sentence, then such Option or
      convertible security and the Common Stock deemed issuable upon exercise,
      conversion or exchange thereof shall be deemed to have been issued as of the
      date of such change. No adjustment pursuant to this Section 8(b) shall be
      made if such adjustment would result in an increase of the Warrant Exercise
      Price then in effect.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c)  Effect
      on Warrant Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Warrant Exercise Price under
      Sections 8(a) and 8(b), the following shall be applicable:

     

    (i)  Calculation
      of Consideration Received.
      If any
      Common Stock, Options or convertible securities are issued or sold or deemed
      to
      have been issued or sold for cash, the consideration received therefore will
      be
      deemed to be the net amount received by the Company therefore. If any Common
      Stock, Options or convertible securities are issued or sold for a consideration
      other than cash, the amount of such consideration received by the Company will
      be the fair value of such consideration, except where such consideration
      consists of marketable securities, in which case the amount of consideration
      received by the Company will be the market price of such securities on the
      date
      of receipt of such securities. If any Common Stock, Options or convertible
      securities are issued to the owners of the non-surviving entity in connection
      with any merger in which the Company is the surviving entity, the amount of
      consideration therefore will be deemed to be the fair value of such portion
      of
      the net assets and business of the non-surviving entity as is attributable
      to
      such Common Stock, Options or convertible securities, as the case may be. The
      fair value of any consideration other than cash or securities will be determined
      jointly by the Company and the holders of Warrants representing at least
      two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants
      then
      outstanding. If such parties are unable to reach agreement within ten (10)
      days after the occurrence of an event requiring valuation (the “Valuation
      Event”),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the holders of Warrants representing at least
      two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants
      then
      outstanding. The determination of such appraiser shall be final and binding
      upon
      all parties and the fees and expenses of such appraiser shall be borne jointly
      by the Company and the holders of Warrants.

     

    (ii)  Integrated
      Transactions.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $0.01.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (iii)  Treasury
      Shares.
      The
      number of shares of Common Stock outstanding at any given time does not include
      shares owned or held by or for the account of the Company, and the disposition
      of any shares so owned or held will be considered an issue or sale of Common
      Stock.

     

    (iv)  Record
      Date.
      If the
      Company takes a record of the holders of Common Stock for the purpose of
      entitling them (1) to receive a dividend or other distribution payable in
      Common Stock, Options or in convertible securities or (2) to subscribe for
      or purchase Common Stock, Options or convertible securities, then such record
      date will be deemed to be the date of the issue or sale of the shares of Common
      Stock deemed to have been issued or sold upon the declaration of such dividend
      or the making of such other distribution or the date of the granting of such
      right of subscription or purchase, as the case may be.

     

    (d)  Adjustment
      of Warrant Exercise Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time after the date of issuance of this Warrant subdivides (by
      any stock split, stock dividend, recapitalization or otherwise) one or more
      classes of its outstanding shares of Common Stock into a greater number of
      shares, any Warrant Exercise Price in effect immediately prior to such
      subdivision will be proportionately reduced and the number of shares of Common
      Stock obtainable upon exercise of this Warrant will be proportionately
      increased. If the Company at any time after the date of issuance of this Warrant
      combines (by combination, reverse stock split or otherwise) one or more classes
      of its outstanding shares of Common Stock into a smaller number of shares,
      any
      Warrant Exercise Price in effect immediately prior to such combination will
      be
      proportionately increased and the number of Warrant Shares issuable upon
      exercise of this Warrant will be proportionately decreased. Any adjustment
      under
      this Section 8(d) shall become effective at the close of business on the
      date the subdivision or combination becomes effective.

     

    (e)  Distribution
      of Assets.
      If the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of Common Stock, by way of return
      of capital or otherwise (including, without limitation, any distribution of
      cash, stock or other securities, property or options by way of a dividend,
      spin
      off, reclassification, corporate rearrangement or other similar transaction)
      (a
“Distribution”),
      at
      any time after the issuance of this Warrant, then, in each such
      case:

     

    (i)  any
      Warrant Exercise Price in effect immediately prior to the close of business
      on
      the record date fixed for the determination of holders of Common Stock
      entitled to
      receive the Distribution shall be reduced, effective as of the close of business
      on such record date, to a price determined by multiplying such Warrant Exercise
      Price by a fraction of which (A) the numerator shall be the Closing Sale Price
      of the Common Stock on the trading day immediately preceding such record date
      minus the value of the Distribution (as determined in good faith by the
      Company’s Board of Directors) applicable to one share of Common Stock, and (B)
      the denominator shall be the Closing Sale Price of the Common Stock on the
      trading day immediately preceding such record date; and

     

    (ii)  either
      (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall
      be increased to a number of shares equal to the number of shares of Common
      Stock
      obtainable immediately prior to the close of business on the record date fixed
      for the determination of holders of Common Stock entitled to receive the
      Distribution multiplied by the reciprocal of the fraction set forth in the
      immediately preceding clause (i), or (B) in the event that the Distribution
      is
      of common stock of a company whose common stock is traded on a national
      securities exchange or a national automated quotation system, then the holder
      of
      this Warrant shall receive an additional warrant to purchase Common Stock,
      the
      terms of which shall be identical to those of this Warrant, except that such
      warrant shall be exercisable into the amount of the assets that would have
      been
      payable to the holder of this Warrant pursuant to the Distribution had the
      holder exercised this Warrant immediately prior to such record date and with
      an
      exercise price equal to the amount by which the exercise price of this Warrant
      was decreased with respect to the Distribution pursuant to the terms of the
      immediately preceding clause (i).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (f)  Certain
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 8
      but not expressly provided for by such provisions (including, without
      limitation, the granting of stock appreciation rights, phantom stock rights
      or
      other rights with equity features), then the Company’s Board of Directors will
      make an appropriate adjustment in the Warrant Exercise Price and the number
      of
      shares of Common Stock obtainable upon exercise of this Warrant so as to protect
      the rights of the holders of the Warrants; provided, except as set forth in
      section 8(d),that no such adjustment pursuant to this Section 8(f) will increase
      the Warrant Exercise Price or decrease the number of shares of Common Stock
      obtainable as otherwise determined pursuant to this Section 8.

     

    (g)  Notices.

     

    (i)  Immediately
      upon any adjustment of the Warrant Exercise Price, the Company will give written
      notice thereof to the holder of this Warrant, setting forth in reasonable
      detail, and certifying, the calculation of such adjustment.

     

    (ii)  The
      Company will give written notice to the holder of this Warrant at least ten
      (10)
      days prior to the date on which the Company closes its books or takes a record
      (A) with respect to any dividend or distribution upon the Common Stock,
      (B) with respect to any pro rata subscription offer to holders of Common
      Stock or (C) for determining rights to vote with respect to any Organic
      Change (as defined below), dissolution or liquidation, provided that such
      information shall be made known to the public prior to or in conjunction with
      such notice being provided to such holder.

     

    (iii)  The
      Company will also give written notice to the holder of this Warrant at least
      ten
      (10) days prior to the date on which any Organic Change, dissolution or
      liquidation will take place, provided that such information shall be made known
      to the public prior to or in conjunction with such notice being provided to
      such
      holder.

     

    Section
      9.  Purchase
      Rights; Reorganization, Reclassification, Consolidation, Merger or
      Sale.

     

    (a)  In
      addition to any adjustments pursuant to Section 8 above, if at any time the
      Company grants, issues or sells any Options, Convertible Securities or rights
      to
      purchase stock, warrants, securities or other property pro rata to the record
      holders of any class of Common Stock (the “Purchase
      Rights”),
      then
      the holder of this Warrant will be entitled to acquire, upon the terms
      applicable to such Purchase Rights, the aggregate Purchase Rights which such
      holder could have acquired if such holder had held the number of shares of
      Common Stock acquirable upon complete exercise of this Warrant immediately
      before the date on which a record is taken for the grant, issuance or sale
      of
      such Purchase Rights, or, if no such record is taken, the date as of which
      the
      record holders of Common Stock are to be determined for the grant, issue or
      sale
      of such Purchase Rights.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (b)  Any
      recapitalization, reorganization, reclassification, consolidation, merger,
      sale
      of all or substantially all of the Company’s assets to another Person or other
      transaction in each case which is effected in such a way that holders of Common
      Stock are entitled to receive (either directly or upon subsequent liquidation)
      stock, securities or assets with respect to or in exchange for Common Stock
      is
      referred to herein as an “Organic
      Change.”
Prior
      to the consummation of any (i) sale of all or substantially all of the Company’s
      assets to an acquiring Person or (ii) other Organic Change following which
      the
      Company is not a surviving entity, the Company will secure from the Person
      purchasing such assets or the successor resulting from such Organic Change
      (in
      each case, the “Acquiring
      Entity”)
      a
      written agreement (in form and substance satisfactory to the holders of Warrants
      representing at least two-thirds (iii) of the Warrant Shares issuable upon
      exercise of the Warrants then outstanding) to deliver to each holder of Warrants
      in exchange for such Warrants, a security of the Acquiring Entity evidenced
      by a
      written instrument substantially similar in form and substance to this Warrant
      and satisfactory to the holders of the Warrants (including an adjusted warrant
      exercise price equal to the value for the Common Stock reflected by the terms
      of
      such consolidation, merger or sale, and exercisable for a corresponding number
      of shares of Common Stock acquirable and receivable upon exercise of the
      Warrants without regard to any limitations on exercise, if the value so
      reflected is less than any Applicable Warrant Exercise Price immediately prior
      to such consolidation, merger or sale). Prior to the consummation of any other
      Organic Change, the Company shall make appropriate provision (in form and
      substance satisfactory to the holders of Warrants representing a
      majority of
      the
      Warrant Shares issuable upon exercise of the Warrants then outstanding) to
      insure that each of the holders of the Warrants will thereafter have the right
      to acquire and receive in lieu of or in addition to (as the case may be) the
      Warrant Shares immediately theretofore issuable and receivable upon the exercise
      of such holder’s Warrants (without regard to any limitations on exercise),
      such shares of stock, securities or assets that would have been issued or
      payable in such Organic Change with respect to or in exchange for the number
      of
      Warrant Shares which would have been issuable and receivable upon the exercise
      of such holder’s Warrant as of the date of such Organic Change (without taking
      into account any limitations or restrictions on the exercisability of this
      Warrant).

     

    Section
      10.  Lost,
      Stolen, Mutilated or Destroyed Warrant.
      If this
      Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly,
      on
      receipt of an indemnification undertaking (or, in the case of a mutilated
      Warrant, the Warrant), issue a new Warrant of like denomination and tenor as
      this Warrant so lost, stolen, mutilated or destroyed.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Section
      11.  Notice.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Warrant must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally;
      (ii) upon receipt, when sent by facsimile (provided confirmation of receipt
      is received by the sending party transmission is mechanically or electronically
      generated and kept on file by the sending party); or (iii) one Business Day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    
      	
              If
                to Cornell:

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Attention: Mark
                A. Angelo

            
	 	
              Telephone: (201)
                985-8300

            
	 	
              Facsimile: (201)
                985-8266

            
	 	 
	
              With
                Copy to:

            	
              David
                Gonzalez, Esq.

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Telephone: (201)
                985-8300

            
	 	
              Facsimile: (201)
                985-8266

            
	 	 
	
              If
                to the Company, to:

            	
              BSI2000,
                INC.

            
	 	
              12600
                West Colfax Avenue, B410

            
	 	
              Lakewood,
                CO 80215

            
	 	
              Attention: Jack
                Harper, CEO

            
	 	
              Telephone: (303)
                231-9095

            
	 	
              Facsimile: (303)
                231-9002

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Nicholson Graham, LLP

            
	 	
              201
                South Biscayne Boulevard, Suite 2000

            
	 	
              Miami,
                Florida 33131

            
	 	
              Attention: Clayton
                E. Parker, Esquire

            
	 	
              Telephone: (305)
                539-3306 

            
	 	
              Facsimile: (305)
                358-7095 

            

    

    

    If
      to a
      holder of this Warrant, to it at the address and facsimile number set forth
      on
Exhibit C
      hereto,
      with copies to such holder’s representatives as set forth on Exhibit C,
      or at
      such other address and facsimile as shall be delivered to the Company upon
      the
      issuance or transfer of this Warrant. Each party shall provide five days’ prior
      written notice to the other party of any change in address or facsimile number.
      Written confirmation of receipt (A) given by the recipient of such notice,
      consent, facsimile, waiver or other communication, (or (B) provided by a
      nationally recognized overnight delivery service shall be rebuttable evidence
      of
      personal service, receipt by facsimile or receipt from a nationally recognized
      overnight delivery service in accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    Section
      12.  Date.
      The
      date of this Warrant is set forth on page 1 hereof. This Warrant, in all
      events, shall be wholly void and of no effect after the close of business on
      the
      Expiration Date, except that notwithstanding any other provisions hereof, the
      provisions of Section 8(b) shall continue in full force and effect after
      such date as to any Warrant Shares or other securities issued upon the exercise
      of this Warrant.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      13.  Amendment
      and Waiver.
      Except
      as otherwise provided herein, the provisions of the Warrants may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the holders of Warrants representing at least two-thirds
      of
      the Warrant Shares issuable upon exercise of the Warrants then outstanding;
      provided that, except for Section 8(d), no such action may increase the Warrant
      Exercise Price or decrease the number of shares or class of stock obtainable
      upon exercise of any Warrant without the written consent of the holder of such
      Warrant.

     

    Section
      14.  Descriptive
      Headings; Governing Law.
      The
      descriptive headings of the several sections and paragraphs of this Warrant
      are
      inserted for convenience only and do not constitute a part of this Warrant.
      The
      corporate laws of the State of New Jersey shall govern all issues concerning
      the
      relative rights of the Company and its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdictions) that would
      cause
      the application of the laws of any jurisdictions other than the State of New
      Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in Hudson County and the United States
      District Court for the District of New Jersey, for the adjudication of any
      dispute hereunder or in connection herewith or therewith, or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof to
      such
      party at the address for such notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. 

     

    Section
      15.  Waiver
      of Jury Trial.
      AS
      A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
      PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
      RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
      ASSOCIATED WITH THIS TRANSACTION.

    
 

    [SIGNATURE
      PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY BLANK]

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be signed as of the date first set forth
      above.

     

    
      	 	 	 
	 	
              BSI2000,
                INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Jack
              Harper
	 	President
&
              CEO

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A TO WARRANT

     

    EXERCISE
      NOTICE

     

    TO
      BE EXECUTED 

    BY
      THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

     

    BSI2000,
      INC.

     

    The
      undersigned holder hereby exercises the right to purchase ______________ of
      the
      shares of Common Stock (“Warrant
      Shares”)
      of
      BSI2000, Inc. (the “Company”),
      evidenced by the attached Warrant (the “Warrant”).
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

     

    Specify
      Method of exercise by check mark:

     

    1.
      ___ Cash
      Exercise

     

    (a)
      Payment
      of Warrant Exercise Price.
      The
      holder shall pay the Aggregate Exercise Price of $______________ to the Company
      in accordance with the terms of the Warrant. 

     

    (b)
      Delivery
      of Warrant Shares.
      The
      Company shall deliver to the holder _________
      Warrant
      Shares in accordance with the terms of the Warrant. 

     

    

     

    2.
      ___ Cashless
      Exercise

     

    (a)
      Payment
      of Warrant Exercise Price.
      In lieu
      of making payment of the Aggregate Exercise Price, the holder elects to receive
      upon such exercise the Net Number of shares of Common Stock determined in
      accordance with the terms of the Warrant. 

     

    (b)
      Delivery
      of Warrant Shares.
      The
      Company shall deliver to the holder _________
      Warrant
      Shares in accordance with the terms of the Warrant. 

     

     

    
      	 Date:	 
	 	 
	Name of Registered
              Holder
	 	 
	By:	 
	Name:	 
	Title:	 

    

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B TO WARRANT

     

    FORM
      OF WARRANT POWER

     

    FOR
      VALUE RECEIVED,
      the
      undersigned does hereby assign and transfer to ________________, Federal
      Identification No. __________, a warrant to purchase ____________ shares of
      the capital stock of BSI2000, Inc. represented by warrant certificate
      no. _____, standing in the name of the undersigned on the books of said
      corporation. The undersigned does hereby irrevocably constitute and appoint
      ______________, attorney to transfer the warrants of said corporation, with
      full
      power of substitution in the premises.

     

     

    
      	 Dated:	 	 	 
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title:	 

    

     

    
      
        
        

      

      
        B-1

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