Document:

EXHIBIT 10.4

     

    Exhibit
      10.4

    WARRANT
      NO. 2005-2

    

    To
      Purchase Shares of Common Stock

    of

    EQUITEX,
      INC.

    

    This
      Warrant and the Securities issuable upon exercise of this Warrant have not
      been
      registered under the Securities Act of 1933 (the “1933 Act”) or under any state
      securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale, assignment,
      pledge, hypothecation or other disposition of this Warrant or the Securities
      issuable upon exercise of this Warrant or any interest therein may be made
      except (a) pursuant to an effective registration statement under the 1933
      Act and any applicable Blue Sky Laws or (b) if the Corporation has been
      furnished with an opinion of counsel for the holder, which opinion and counsel
      shall be reasonably satisfactory to the Corporation, to the effect that no
      registration is required because of the availability of an exemption from
      registration under the 1933 Act and applicable Blue Sky laws.

    

    THIS
      CERTIFIES THAT,
      for good
      and valuable consideration Pandora
      Select Partners, L.P.,
      a
      British Virgin Islands limited partnership (the “Holder”), or the Holder’s
      registered assigns, is entitled to subscribe for and purchase from Equitex,
      Inc., a Delaware corporation (the “Corporation”), at any time on or after
      September 15, 2005, to and including September 15, 2008, 75,000 fully paid
      and
      nonassessable shares of the Common Stock of the Corporation at the exercise
      price of $6.00 per share (the “Warrant Exercise Price”), subject to the
      anti-dilution and price protection provisions of this Warrant.

    

    The
      shares which may be acquired upon exercise of this Warrant are referred to
      herein as the “Warrant Shares.” As used herein, the term “Holder” means the
      Holder, any party who acquires all or a part of this Warrant as a registered
      transferee of the Holder, or any record holder or holders of the Warrant Shares
      issued upon exercise, whether in whole or in part, of the Warrant. The term
      “Common Stock” means the common stock, $0.01 par value per share, of the
      Corporation.

    

    This
      Warrant is subject to the following provisions, terms and
      conditions:

    

    1. Exercise
      for Cash or on Cashless Basis; Transferability.

    

    (a) The
      rights represented by this Warrant may be exercised by the Holder hereof, in
      whole or in part (but not as to a fractional share of Common Stock), by written
      notice of exercise (in the form attached hereto) delivered to the Corporation
      at
      the principal office of the Corporation prior to the expiration of this Warrant
      and accompanied or preceded by the surrender of this Warrant along with a check
      in payment of the Warrant Exercise Price for such Warrant Shares.

    

    (b) In
      the
      alternative, payment may be made at the option of Holder by instructing the
      Corporation to withhold from the shares of Common Stock to be issued upon
      exercise of this Warrant a number of whole or fractional shares of Common Stock
      equal to the number of shares for which the Warrant is being exercised
      (including any shares to be surrendered) multiplied by the Warrant Exercise
      Price per share, and then divided by the “Market Price” (as defined in Section 8
      below) of a share of
      Common
      Stock.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Except
      as
      provided in Section 7 hereof, this Warrant may not be sold, transferred,
      assigned, hypothecated or divided into two or more Warrants of smaller
      denominations, nor may any Warrant Shares issued pursuant to exercise of this
      Warrant be transferred. In no event may this Warrant be transferred and divided
      (without any exercise hereof) into any denomination(s) of less than 100 Warrant
      Shares.

    

    2. Exchange
      and Replacement.
      Subject
      to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender
      hereof by the Holder to the Corporation at its office for new Warrants of like
      tenor and date representing in the aggregate the right to purchase the number
      of
      Warrant Shares purchasable hereunder, each of such new Warrants to represent
      the
      right to purchase such number of Warrant Shares (not to exceed the aggregate
      total number purchasable hereunder) as shall be designated by the Holder at
      the
      time of such surrender. Upon receipt by the Corporation of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this
      Warrant, and, in case of loss, theft or destruction, of indemnity or security
      reasonably satisfactory to it, and upon surrender and cancellation of this
      Warrant, if mutilated, the Corporation will make and deliver a new Warrant
      of
      like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled
      by
      the Corporation upon the surrender hereof in connection with any exchange or
      replacement. The Corporation shall pay all expenses, taxes (other than stock
      transfer taxes), and other charges payable in connection with the preparation,
      execution, and delivery of Warrants pursuant to this
      Section 2.

    

    3. Issuance
      of the Warrant Shares.

    

    (a) The
      Corporation agrees that the Warrant Shares shall be and are deemed to be issued
      to the Holder as of the close of business on the date on which this Warrant
      shall have been surrendered and the payment made for such Warrant Shares as
      aforesaid. Subject to the provisions of paragraph (b) of this Section 3,
      certificates for the Warrant Shares so purchased shall be delivered to the
      Holder within a reasonable time after the rights represented by this Warrant
      shall have been so exercised, and, unless this Warrant has expired, a new
      Warrant representing the right to purchase the number of Warrant Shares, if
      any,
      with respect to which this Warrant shall not then have been exercised shall
      also
      be delivered to the Holder.

    

    (b) Notwithstanding
      the foregoing, however, the Corporation shall not be required to deliver any
      certificate for Warrant Shares upon exercise of this Warrant except in
      accordance with exemptions from the applicable securities registration
      requirements or registrations under applicable securities laws. Except as
      described in Section 9, nothing herein shall obligate the Corporation to effect
      registrations under federal or state securities laws. If registrations are
      not
      in effect and if exemptions are not available when the Holder seeks to exercise
      the Warrant, the Warrant exercise period will be extended, if need be, to
      prevent the Warrant from expiring, until such time as either registrations
      become effective or exemptions are available, and the Warrant shall then remain
      exercisable for a period of at least 30 calendar days from the date the
      Corporation delivers to the Holder written notice of the availability of such
      registrations or exemptions. The Holder agrees to execute such documents and
      make such representations, warranties and agreements as may be required solely
      to comply with the exemptions relied upon by the Corporation, or the
      registrations made, for the issuance of the Warrant Shares.

    

     

    
      
        
        

      

      
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    4. Covenants
      of the Corporation.
      The
      Corporation covenants and agrees that all Warrant Shares will, upon issuance
      pursuant to the terms hereof, be duly authorized and issued, fully paid,
      non-assessable and free from all taxes, liens and charges with respect to the
      issue thereof. The Corporation further covenants and agrees that during the
      period within which the rights represented by this Warrant may be exercised,
      the
      Corporation will at all times have authorized and reserved for the purpose
      of
      issue or transfer upon exercise of the subscription rights evidenced by this
      Warrant a sufficient number of shares of Common Stock to provide for the
      exercise of the rights represented by this Warrant.

    

    5. Anti-dilution
      Adjustments.
      The
      provisions of this Warrant are subject to adjustment as provided in this
      Section 5. No adjustment shall be made pursuant to this Section 5 if the
      same adjustment has already been made pursuant to another provision of this
      Warrant.

    

    (a) Stock
      Splits, Dividends and Combinations.
      The
      otherwise applicable Warrant Exercise Price shall be adjusted from time to
      time
      such that in case the Corporation shall hereafter:

    

    (i)
      pay any
      dividends on any class of stock of the Corporation payable in Common Stock
      or
      securities convertible into Common Stock;

    

    (ii)
      subdivide its then outstanding shares of Common Stock into a greater number
      of
      shares; or

    

    (iii)
      combine
      outstanding shares of Common Stock, by reclassification or
      otherwise;

    

    then,
      in
      any such event, the Warrant Exercise Price in effect immediately prior to such
      event shall (until adjusted again pursuant hereto) be adjusted immediately
      after
      such event to a price (calculated to the nearest full cent) determined by
      dividing (A) the number of shares of Common Stock outstanding immediately
      prior to such event, multiplied by the then existing Warrant Exercise Price,
      by
      (B) the total number of shares of Common Stock outstanding immediately
      after such event (including in each case the maximum number of shares of Common
      Stock issuable in respect of any securities convertible into Common Stock),
      and
      the resulting quotient shall be the adjusted Warrant Exercise Price per share.
      An adjustment made pursuant to this Subsection shall become effective
      immediately after the record date in the case of a dividend or distribution
      and
      shall become effective immediately after the effective date in the case of
      a
      subdivision, combination or reclassification. If, as a result of an adjustment
      made pursuant to this Subsection, the Holder of any Warrant thereafter
      surrendered for exercise shall become entitled to receive shares of two or
      more
      classes of capital stock or shares of Common Stock and other capital stock
      of
      the Corporation, the Board of Directors (whose determination shall be
      conclusive) shall determine the allocation of the adjusted Warrant Exercise
      Price between or among shares of such classes of capital stock or shares of
      Common Stock and other capital stock. All calculations under this Subsection
      shall be made to the nearest cent or to the nearest 1/100 of a share, as the
      case may be. In the event that at any time as a result of an adjustment made
      pursuant to this Subsection, the holder of any Warrant thereafter surrendered
      for exercise shall become entitled to receive any shares of the Corporation
      other than shares of Common Stock, thereafter the Warrant Exercise Price of
      such
      other shares so receivable upon exercise of any Warrant shall be subject to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      practicable to the provisions with respect to Common Stock contained in this
      Section.

     

     

    
      
        
        

      

      
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    (b) Mechanics
      of Adjustment for Stock Splits, Dividends and Combinations.
      Upon
      each adjustment of the Warrant Exercise Price pursuant to Section 5(a)
      above, the Holder of each Warrant shall thereafter (until another such
      adjustment) be entitled to purchase at the adjusted Warrant Exercise Price
      the
      number of shares, calculated to the nearest full share, obtained by multiplying
      the number of shares specified in such Warrant (as adjusted as a result of
      all
      adjustments in the Warrant Exercise Price in effect prior to such adjustment)
      by
      the Warrant Exercise Price in effect prior to such adjustment and dividing
      the
      product so obtained by the adjusted Warrant Exercise Price.

    

    (c) Consolidations,
      Mergers and Reorganization Events.
      In case
      of any consolidation or merger to which the Corporation is a party other than
      a
      merger or consolidation in which the Corporation is the continuing corporation,
      or in case of any sale or conveyance to another corporation of the property
      of
      the Corporation as an entirety or substantially as an entirety, or in the case
      of any statutory exchange of securities with another corporation (including
      any
      exchange effected in connection with a merger of a third corporation into the
      Corporation), there shall be no adjustment under Subsection (a) of this
      Section 5; but the Holder of each Warrant then outstanding shall have the right
      thereafter to convert such Warrant into the kind and amount of shares of stock
      and other securities and property which he would have owned or have been
      entitled to receive immediately after such consolidation, merger, statutory
      exchange, sale or conveyance had such Warrant been converted immediately prior
      to the effective date of such consolidation, merger, statutory exchange, sale
      or
      conveyance and, in any such case, if necessary, appropriate adjustment shall
      be
      made in the application of the provisions set forth in this Section with respect
      to the rights and interests thereafter of any Holders of the Warrant, to the
      end
      that the provisions set forth in this Section shall thereafter correspondingly
      be made applicable, as nearly as may reasonably be, in relation to any shares
      of
      stock and other securities and property thereafter deliverable on the exercise
      of the Warrant. The provisions of this Subsection shall similarly apply to
      successive consolidations, mergers, statutory exchanges, sales or
      conveyances.

     

    (d)
      Adjustments
      for Diluting Issues.
      In
      addition to the adjustments of the Warrant Exercise Price provided above, the
      Warrant Exercise Price shall be subjected to further adjustment from time to
      time as follows (the main operative provision hereof is in Section 5(d)(iii)
      below):

     

     

    
      
        
        

      

      
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    (i) Special
      Definitions:

    

    (A) “Options”
shall
      mean rights, options or warrants (other than as excluded by Section 5(d)(i)(D)
      below) to subscribe for, purchase or otherwise acquire either Common Stock
      or
      Convertible Securities (as defined herein).

     

    (B) “Original
      Issue Date”
shall
      mean the date hereof. 

     

    (C) “Convertible
      Securities”
shall
      mean securities (other than as excluded by Section 5(d)(i)(D) below)
      convertible, either directly or indirectly, into or exchangeable for Common
      Stock.

     

    (D) “Additional
      Shares of Common Stock”
shall
      mean all shares of Common Stock issued (or, deemed to be issued) by the
      Corporation after the Original Issue Date other than shares of Common Stock
      issued (or deemed to be issued):

     

    1. to
      employees, consultants or directors pursuant to stock option, stock grant,
      stock
      purchase or similar plans or arrangements approved by the Corporation's Board
      of
      Directors;

    

    2. as
      a
      dividend or other distribution in connection with which an adjustment to the
      Warrant Exercise Price is made;

    

    3.
      in
      a
      merger, consolidation, acquisition or similar business combination that is
      approved by the Corporation's Board of Directors;

     

    4.
      pursuant
      to credit, lease or other commercial financing arrangements with parties not
      affiliated with the Corporation that are approved by the Corporation's Board
      of
      Directors;

     

    5.
      in
      exchange for technology or other non-cash assets as approved by the
      Corporation's Board of Directors;

     

    6.
      pursuant
      to any rights or agreements outstanding on the Original Issue Date;

     

    7.
      if
      the
      Holder agrees in writing that such shares shall not constitute Additional Shares
      of Common Stock.

     

    (ii) Deemed
      Issue of Additional Shares of Common Stock.
      Except
      as otherwise provided in Section 5(d), in the event the Corporation at any
      time
      or from time to time after the Original Issue Date shall issue any Options
      or
      Convertible Securities or shall fix a record date for the determination of
      any
      holders of any class of securities entitled to receive any such Options or
      Convertible Securities, then the maximum number of shares (as set forth in
      the
      instrument relating thereto without regard to any provisions contained therein
      for a subsequent adjustment of such number) of Common Stock issuable upon the
      exercise of such Options or, in the case of Convertible Securities and Options
      therefor, the conversion or exchange of such Convertible Securities, shall
      be
      deemed to be Additional Shares of Common Stock issued as of the time of such
      issue or, in case such record date shall have been fixed, as of the close of
      business on such record date, provided that in any such case in which Additional
      Shares of Common Stock are deemed to be issued:

     

     

    
      
        
        

      

      
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    (A) no
      further adjustment in the Warrant Exercise Price shall be made upon the
      subsequent issue of such Convertible Securities or shares of Common Stock upon
      the exercise of such Options or conversion or exchange of such Convertible
      Securities;

     

    (B) if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any increase or decrease in the consideration payable
      to
      the Company, or increase or decrease in the number of shares of Common Stock
      issuable upon the exercise, conversion or exchange thereof, the Warrant Exercise
      Price computed upon the original issue thereof or upon the occurrence of a
      record date with respect thereto, and any subsequent adjustments based thereon,
      shall, upon any such increase or decrease becoming effective, be recomputed
      to
      reflect such increase or decrease;

     

    (C) upon
      the
      expiration of any such Option or any rights of conversion or exchange under
      such
      Convertible Securities which shall not have been exercised, the Warrant Exercise
      Price computed upon the original issue thereof or upon occurrence of a record
      date with respect thereto, and any subsequent adjustments based thereon, shall,
      upon such expiration:

     

    1. in
      the
      case of Convertible Securities or Options for Common Stock, be recomputed as
      though the only Additional Shares of Common Stock issued were shares of Common
      Stock, if any, actually issued upon the exercise of such Options or the
      conversion or exchange of such Convertible Securities, and the consideration
      received therefor was the consideration actually received by the Company for
      the
      issue of all such Options, whether or not exercised, plus the consideration
      actually received by the Company upon such exercise, or for the issue of all
      such Convertible Securities, whether or not converted or exchanged, plus the
      additional consideration, if any, actually received by the Company upon such
      conversion or exchange; and

    

    2. in
      the
      case of Options for Convertible Securities, be recomputed as though only the
      Convertible Securities, if any, actually issued upon the exercise thereof were
      issued at the time of issue of such Options and the consideration received
      by
      the Company for the Additional Shares of Common Stock deemed to have been then
      issued was the consideration actually received by the Company for the issue
      of
      all such Options, whether or not exercised, plus the consideration deemed to
      have been received by the Company upon the issue of the Convertible Securities
      with respect to which such Options were actually exercised.

    

    (D) no
      readjustment pursuant to Section 5(d) shall have the effect of increasing the
      Warrant Exercise Price to an amount which exceeds the Warrant Exercise Price
      existing immediately prior to the original adjustment with respect to the
      issuance of such Options or Convertible Securities, as adjusted for any
      Additional Shares of Common Stock issued (or deemed to be issued) between such
      original adjustment date and such readjustment date; and

     

     

    
      
        
        

      

      
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    (E) in
      the
      case of any Option or Convertible Security with respect to which the maximum
      number of shares of Common Stock issuable upon exercise or conversion or
      exchange thereof is not determinable, no adjustment to the Warrant Exercise
      Price shall be made until such number becomes determinable.

     

    (iii) Adjustments
      for Issuance of Additional Shares of Common Stock.
      If the
      Company, at any time after the issuance of this Warrant, shall issue any
      Additional Shares of Common Stock (otherwise than as provided in the Sections
      5(a) and 5(c) above) at a price per share less than the applicable Warrant
      Exercise Price then in effect or without consideration, then the applicable
      Warrant Exercise Price upon each such issuance shall be adjusted to that price
      (rounded to the nearest cent) determined by multiplying the applicable Warrant
      Exercise Price then in effect by a fraction, (i) the numerator of which shall
      be
      equal to the sum of (A) the number of shares of Common Stock outstanding
      immediately prior to the issuance of such Additional Shares of Common Stock
      plus
      (B) the
      number of shares of Common Stock (rounded to the nearest whole share) which
      the
      aggregate consideration for the total number of such Additional Shares of Common
      Stock so issued would purchase at a price per share equal to the applicable
      Warrant Exercise Price then in effect, and (ii) the denominator of which shall
      be equal to the number of shares of Common Stock outstanding immediately after
      the issuance of such Additional Shares of Common Stock.

    

    In
      addition to the other limitations provided herein, the provisions of this
      Section 5(d)(iii) shall not apply under any of the circumstances for which
      an
      adjustment is provided in Sections 5(a), 5(b) or 5(c) above. No adjustment
      of
      the applicable Warrant Exercise Price shall be made under this Section 5(d)
      upon
      the issuance of any Additional Shares of Common Stock which are issued pursuant
      to any Options or Convertible Securities if upon the issuance of such Options
      or
      Convertible Securities (x) any adjustment shall have been made pursuant to
      Section 5(d)(ii) above or (y) no adjustment was required pursuant to this
      Section 5(d)(iii). No adjustment of the applicable Warrant Exercise Price shall
      be made under this Section 5(d)(iii) in an amount less than $.01 per share,
      but
      any such lesser adjustment shall be carried forward and shall be made at the
      time and together with the next subsequent adjustment, if any, which together
      with any adjustments so carried forward shall amount to $.01 per share or more;
      provided,
      however,
      that
      upon any adjustment of the applicable Warrant Exercise Price as a result of
      any
      dividend or distribution payable in Common Stock or Convertible Securities
      or
      the reclassification, subdivision or combination of Common Stock into a greater
      or smaller number of shares, the foregoing figure of $.01 per share (or such
      figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
      proportion to the adjustment in the applicable Warrant Exercise
      Price.

    

    (iv) Determination
      of Consideration.
      For
      purposes of this Section 5(d), the consideration received by the Corporation
      for
      any Additional Shares of Common Stock issued (or deemed to be issued) shall
      be
      computed as follows:

    

    (A) Cash
      and Property.
      Such
      consideration shall:

    

    (i) insofar
      as it consists of cash, be computed at the aggregate amount of cash received
      by
      the Corporation;

     

     

    
      
        
        

      

      
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    (ii) insofar
      as it consists of securities and the value of such securities is not
      determinable by reference to a separate agreement, (A) if the securities are
      then traded on a national securities exchange or the Nasdaq Stock Market (or
      a
      similar national quotation system), then the value shall be computed based
      on
      the average of the closing prices of the securities on such exchange or system
      over the thirty (30)-day period ending on the date of receipt by the
      Corporation, (B) if the securities are actively traded over-the-counter, then
      the value shall be computed based on the average of the closing bid prices
      over
      the thirty (30) day ending on the date of receipt by the Corporation, and (C)
      if
      there is no active public market, then the value shall be computed based on
      the
      fair market value thereof on the date of receipt by the Corporation, as
      determined in good faith by the Board of Directors;

    

    (iii) insofar
      as it consists of property other than cash and securities, be computed at the
      fair market value thereof at the time of such issuance, as determined in good
      faith by the Board of Directors; and

    

    (iv) if
      Additional Shares of Common Stock are issued (or deemed to be issued) together
      with other shares or securities or other assets of the Corporation for
      consideration which cover both, by the proportion of such consideration so
      received, computed as provided in the immediately preceding Sections
      5(d)(iv)(A)(i), 5(d)(iv)(A)(ii) and 5(d)(iv)(A)(iii), as determined in good
      faith by the Board of Directors.

    

    (B) Options
      and Convertible Securities.
      The
      consideration received by the Corporation for Additional Shares of Common Stock
      deemed to have been issued pursuant to Section 5(d) relating to Option and
      Convertible Securities, shall be the sum of (x) the total amount, if any,
      received or receivable by the Corporation as consideration for the issue of
      such
      Options or Convertible Securities, plus (y) the minimum aggregate amount of
      additional consideration (as set forth in the instruments relating thereto,
      without regard to any provision contained therein for a subsequent adjustment
      of
      such consideration) payable to the Corporation upon the exercise of such Options
      or the conversion or exchange of such Convertible Securities, or in the case
      of
      Options for Convertible Securities, the exercise of such Options for Convertible
      Securities and the conversion or exchange of such Convertible Securities.

    

    (e) Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment of the Warrant Exercise Price
      or the number of Warrants covered hereby pursuant to this Section 5, the
      Corporation, at its expense, shall promptly compute such adjustment or
      readjustment in accordance with the terms hereof and furnish to the Holder
      a
      certificate setting forth such adjustment or readjustment and showing in detail
      the facts upon which such adjustment or readjustment is based. The Corporation
      shall, upon the written request at any time of the Holder, furnish or cause
      to
      be furnished to the Holder a like certificate setting forth (i) such
      adjustments and readjustments, (ii) the Warrant Exercise Price at the time
      in effect, and (iii) the number of shares of Common Stock and the amount,
      if any, of other property which at the time would be received upon the exercise
      of this Warrant. 

     

     

    
      
        
        

      

      
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    6. No
      Voting Rights.
      This
      Warrant shall not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Corporation.

    

    7. Notice
      of Transfer of Warrant or Resale of the Warrant Shares; Assumption upon
      Merger.

    

    (a) Subject
      to the sale, assignment, hypothecation or other transfer restrictions set forth
      in Section 3 hereof, the Holder, by acceptance hereof, agrees to give
      written notice to the Corporation before transferring this Warrant or
      transferring any Warrant Shares of such Holder's intention to do so, describing
      briefly the manner of any proposed transfer. Promptly upon receiving such
      written notice, the Corporation shall present copies thereof to the
      Corporation's counsel. If in the opinion of such counsel the proposed transfer
      may be effected without registration or qualification (under any federal or
      state securities laws), the Corporation, as promptly as practicable, shall
      notify the Holder of such opinion, whereupon the Holder shall be entitled to
      transfer this Warrant or to dispose of Warrant Shares received upon the previous
      exercise of this Warrant, all in accordance with the terms of the notice
      delivered by the Holder to the Corporation; provided that an appropriate legend
      may be endorsed on this Warrant or the certificates for such Warrant Shares
      respecting restrictions upon transfer thereof necessary or advisable in the
      opinion of counsel and satisfactory to the Corporation to prevent further
      transfers which would be in violation of Section 5 of the 1933 Act and
      applicable state securities laws; and provided further that the prospective
      transferee or purchaser shall execute such documents and make such
      representations, warranties and agreements as may be required solely to comply
      with the exemptions relied upon by the Corporation for the transfer or
      disposition of the Warrant or Warrant Shares.

    

    (b) If,
      in
      the opinion of the Corporation’s counsel, the proposed transfer or disposition
      of this Warrant or such Warrant Shares described in the written notice given
      pursuant to this Section 7 may not be effected without registration or
      qualification of this Warrant or such Warrant Shares, the Corporation shall
      promptly give written notice thereof to the Holder, and the Holder will limit
      its activities in respect to such transfer or disposition as, in the opinion
      of
      such counsel, are permitted by law.

    

    8. Fractional
      Shares.
      Fractional shares shall not be issued upon the exercise of this Warrant, but
      in
      any case where the holder would, except for the provisions of this Section,
      be
      entitled under the terms hereof to receive a fractional share, the Corporation
      shall, upon the exercise of this Warrant for the largest number of whole shares
      then called for, pay a sum in cash equal to the sum of (a) the excess, if
      any, of the Market Price of such fractional share over the proportional part
      of
      the Warrant Exercise Price represented by such fractional share, plus
      (b) the proportional part of the Warrant Exercise Price represented by such
      fractional share. For purposes of this Section and Section 1(b) above, the
      term
“Market Price” with respect to shares of Common Stock of any class or series
      means the last reported sale price or, if none, the average of the last reported
      closing bid and asked prices on any national or regional securities exchange
      or
      quoted in the National Association of Securities Dealers, Inc.'s Automated
      Quotations System (“Nasdaq”), or if not listed on a national or regional
      securities exchange or quoted in Nasdaq, the closing bid price as reported
      by
      bigcharts.com (or if this service is discontinued, such other reporting service
      acceptable to the Holder), or if no quotations in such Common Stock are
      available, the fair market value of the shares as determined in good faith
      by
      the Board of Directors of the Corporation.

     

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    9.  Registration
      Rights.
      Holder
      shall have registration rights for the Warrant Shares as described in
      the Registration
      Rights Agreement of this same date.

    

    10. Limitations
      on Exercise. Notwithstanding
      anything to the contrary contained herein, the number of Warrant Shares that
      may
      be acquired by the Holder upon any exercise of this Warrant (or otherwise in
      respect hereof) shall be limited to the extent necessary to insure that,
      following such exercise (or other issuance), the total number of shares of
      Common Stock then beneficially owned by such Holder and its affiliates and
      any
      other persons whose beneficial ownership of Common Stock would be aggregated
      with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
      exceed 4.99% of the total number of issued and outstanding shares of Common
      Stock (including for such purpose the shares of Common Stock issuable upon
      such
      exercise). For such purposes, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. This provision shall not restrict the number of shares
      of Common Stock which a Holder may receive or beneficially own in order to
      determine the amount of securities or other consideration that such Holder
      may
      receive in the event of a merger, sale, exchange or other transaction as
      contemplated in Section 5(c) of this Warrant. By written notice to the Company,
      the Holder may waive the provisions of this Section 10 as to itself, but any
      such waiver will not be effective until the 61st
      day
      after delivery thereof.

    
      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       
IN
      WITNESS WHEREOF,
      Equitex,
      Inc. has caused this Warrant to be signed by its duly authorized officer and
      this Warrant to be dated September 15, 2005.

    

    
      	 	 	 
	 	EQUITEX,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Henry
              Fong
	 	
              
Henry
              Fong, President
	 	 

    

     

    

     

     

    
 

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

        
        

      

    

    EXERCISE
      FORM

    

    (To
      Be
      Executed by the Registered Holder in Order to Exercise the Warrant)

    

    To:  Equitex,
      Inc.

    

    The
      undersigned hereby irrevocably elects to exercise the attached Warrant to
      purchase for cash, ________________ of the shares issuable upon the exercise
      of
      such Warrant, and requests that certificates for such shares (together with
      a
      new Warrant to purchase the number of shares, if any, with respect to which
      this
      Warrant is not exercised) shall be issued in the name of:

    

    

      
        	 	 	 
	 	
                NAME:

              	
                ________________________________

              
	 	 	 
	 	
                SOC.
                  SEC. or 

              	 
	 	
                TAX
                  I.D. NO.

              	
                ________________________________

              
	 	 	 
	 	 	 
	 	
                ADDRESS:

              	
                ________________________________

              
	 	 	 
	 	 	 
	 	 	
                ________________________________

              
	 	 	 
	 	 	 
	 	 	 
	
                Date:
                  _________, 20      .

              	 	
                ________________________________

              
	 	 	
                Signature
                  *

              

      

    

     

    
      	
              *

            	
              The
                signature on the Notice of Exercise of Warrant must correspond to
                the name
                as written upon the face of the Warrant in every particular without
                alteration or enlargement or any change whatsoever. When signing
                on behalf
                of a corporation, partnership, trust or other entity, please indicate
                your
                position(s) and title(s) with such
                entity.

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    

    (To
      be
      Executed by the Registered Holder in Order to Transfer the Warrant)

    

    To:       
       Equitex,
      Inc.

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns, and transfers unto
      _________________________________ the right to purchase the securities of
      Equitex, Inc. to which the within Warrant relates and appoints
      _______________________, attorney, to transfer said right on the books of
      Equitex, Inc. with full power of substitution in the premises.

     

    
      
        	
                Dated:
                  ______________20       

              	
                
                  ________________________________

                

              
	 	
                (Signature)

              
	 	 
	 	
                Address:

              
	 	 
	 	
                
                  ________________________________

                

              
	 	 
	 	
                
                  ________________________________EXHIBIT 10.5

     

    Exhibit
      10.5

    WARRANT
      NO. 2005-1

    

    To
      Purchase Shares of Common Stock

    of

    EQUITEX,
      INC.

    

    This
      Warrant and the Securities issuable upon exercise of this Warrant have not
      been
      registered under the Securities Act of 1933 (the “1933 Act”) or under any state
      securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale, assignment,
      pledge, hypothecation or other disposition of this Warrant or the Securities
      issuable upon exercise of this Warrant or any interest therein may be made
      except (a) pursuant to an effective registration statement under the 1933
      Act and any applicable Blue Sky Laws or (b) if the Corporation has been
      furnished with an opinion of counsel for the holder, which opinion and counsel
      shall be reasonably satisfactory to the Corporation, to the effect that no
      registration is required because of the availability of an exemption from
      registration under the 1933 Act and applicable Blue Sky laws.

    

    THIS
      CERTIFIES THAT,
      for good
      and valuable consideration Whitebox
      Hedged High Yield Partners, L.P.,
      a
      British Virgin Islands limited partnership (the “Holder”), or the Holder’s
      registered assigns, is entitled to subscribe for and purchase from Equitex,
      Inc., a Delaware corporation (the “Corporation”), at any time on or after
      September 15, 2005, to and including September 15, 2008, 50,000 fully paid
      and
      nonassessable shares of the Common Stock of the Corporation at the exercise
      price of $6.00 per share (the “Warrant Exercise Price”), subject to the
      anti-dilution and price protection provisions of this Warrant.

    

    The
      shares which may be acquired upon exercise of this Warrant are referred to
      herein as the “Warrant Shares.” As used herein, the term “Holder” means the
      Holder, any party who acquires all or a part of this Warrant as a registered
      transferee of the Holder, or any record holder or holders of the Warrant Shares
      issued upon exercise, whether in whole or in part, of the Warrant. The term
      “Common Stock” means the common stock, $0.01 par value per share, of the
      Corporation.

    

    This
      Warrant is subject to the following provisions, terms and
      conditions:

    

    1. Exercise for Cash or on Cashless Basis;
      Transferability.

    

    (a) The
      rights represented by this Warrant may be exercised by the Holder hereof, in
      whole or in part (but not as to a fractional share of Common Stock), by written
      notice of exercise (in the form attached hereto) delivered to the Corporation
      at
      the principal office of the Corporation prior to the expiration of this Warrant
      and accompanied or preceded by the surrender of this Warrant along with a check
      in payment of the Warrant Exercise Price for such Warrant Shares.

     

    (b) In
      the
      alternative, payment may be made at the option of Holder by instructing the
      Corporation to withhold from the shares of Common Stock to be issued upon
      exercise of this Warrant a number of whole or fractional shares of Common Stock
      equal to the number of shares for which the Warrant is being exercised
      (including any shares to be surrendered) multiplied by the Warrant Exercise
      Price per share, and then divided by the “Market Price” (as defined in Section 8
      below) of a share of
      Common
      Stock.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) Except
      as
      provided in Section 7 hereof, this Warrant may not be sold, transferred,
      assigned, hypothecated or divided into two or more Warrants of smaller
      denominations, nor may any Warrant Shares issued pursuant to exercise of this
      Warrant be transferred. In no event may this Warrant be transferred and divided
      (without any exercise hereof) into any denomination(s) of less than 100 Warrant
      Shares.

    

    2. Exchange
      and Replacement.
      Subject
      to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender
      hereof by the Holder to the Corporation at its office for new Warrants of like
      tenor and date representing in the aggregate the right to purchase the number
      of
      Warrant Shares purchasable hereunder, each of such new Warrants to represent
      the
      right to purchase such number of Warrant Shares (not to exceed the aggregate
      total number purchasable hereunder) as shall be designated by the Holder at
      the
      time of such surrender. Upon receipt by the Corporation of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this
      Warrant, and, in case of loss, theft or destruction, of indemnity or security
      reasonably satisfactory to it, and upon surrender and cancellation of this
      Warrant, if mutilated, the Corporation will make and deliver a new Warrant
      of
      like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled
      by
      the Corporation upon the surrender hereof in connection with any exchange or
      replacement. The Corporation shall pay all expenses, taxes (other than stock
      transfer taxes), and other charges payable in connection with the preparation,
      execution, and delivery of Warrants pursuant to this
      Section 2.

    

    3. Issuance
      of the Warrant Shares.

    

    (a) The
      Corporation agrees that the Warrant Shares shall be and are deemed to be issued
      to the Holder as of the close of business on the date on which this Warrant
      shall have been surrendered and the payment made for such Warrant Shares as
      aforesaid. Subject to the provisions of paragraph (b) of this Section 3,
      certificates for the Warrant Shares so purchased shall be delivered to the
      Holder within a reasonable time after the rights represented by this Warrant
      shall have been so exercised, and, unless this Warrant has expired, a new
      Warrant representing the right to purchase the number of Warrant Shares, if
      any,
      with respect to which this Warrant shall not then have been exercised shall
      also
      be delivered to the Holder.

    

    (b) Notwithstanding
      the foregoing, however, the Corporation shall not be required to deliver any
      certificate for Warrant Shares upon exercise of this Warrant except in
      accordance with exemptions from the applicable securities registration
      requirements or registrations under applicable securities laws. Except as
      described in Section 9, nothing herein shall obligate the Corporation to effect
      registrations under federal or state securities laws. If registrations are
      not
      in effect and if exemptions are not available when the Holder seeks to exercise
      the Warrant, the Warrant exercise period will be extended, if need be, to
      prevent the Warrant from expiring, until such time as either registrations
      become effective or exemptions are available, and the Warrant shall then remain
      exercisable for a period of at least 30 calendar days from the date the
      Corporation delivers to the Holder written notice of the availability of such
      registrations or exemptions. The Holder agrees to execute such documents and
      make such representations, warranties and agreements as may be required solely
      to comply with the exemptions relied upon by the Corporation, or the
      registrations made, for the issuance of the Warrant Shares.

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    4. Covenants
      of the Corporation.
      The
      Corporation covenants and agrees that all Warrant Shares will, upon issuance
      pursuant to the terms hereof, be duly authorized and issued, fully paid,
      non-assessable and free from all taxes, liens and charges with respect to the
      issue thereof. The Corporation further covenants and agrees that during the
      period within which the rights represented by this Warrant may be exercised,
      the
      Corporation will at all times have authorized and reserved for the purpose
      of
      issue or transfer upon exercise of the subscription rights evidenced by this
      Warrant a sufficient number of shares of Common Stock to provide for the
      exercise of the rights represented by this Warrant.

    

    5. Anti-dilution
      Adjustments.
      The
      provisions of this Warrant are subject to adjustment as provided in this
      Section 5. No adjustment shall be made pursuant to this Section 5 if the
      same adjustment has already been made pursuant to another provision of this
      Warrant.

    

    (a) Stock
      Splits, Dividends and Combinations.
      The
      otherwise applicable Warrant Exercise Price shall be adjusted from time to
      time
      such that in case the Corporation shall hereafter:

    

    (i)
      pay any
      dividends on any class of stock of the Corporation payable in Common Stock
      or
      securities convertible into Common Stock;

    

    (ii)
      subdivide its then outstanding shares of Common Stock into a greater number
      of
      shares; or

    

    (iii)
      combine
      outstanding shares of Common Stock, by reclassification or
      otherwise;

     

    
      then,
        in
        any such event, the Warrant Exercise Price in effect immediately prior to
        such
        event shall (until adjusted again pursuant hereto) be adjusted immediately
        after
        such event to a price (calculated to the nearest full cent) determined by
        dividing (A) the number of shares of Common Stock outstanding immediately
        prior to such event, multiplied by the then existing Warrant Exercise Price,
        by
        (B) the total number of shares of Common Stock outstanding immediately
        after such event (including in each case the maximum number of shares of
        Common
        Stock issuable in respect of any securities convertible into Common Stock),
        and
        the resulting quotient shall be the adjusted Warrant Exercise Price per share.
        An adjustment made pursuant to this Subsection shall become effective
        immediately after the record date in the case of a dividend or distribution
        and
        shall become effective immediately after the effective date in the case of
        a
        subdivision, combination or reclassification. If, as a result of an adjustment
        made pursuant to this Subsection, the Holder of any Warrant thereafter
        surrendered for exercise shall become entitled to receive shares of two or
        more
        classes of capital stock or shares of Common Stock and other capital stock
        of
        the Corporation, the Board of Directors (whose determination shall be
        conclusive) shall determine the allocation of the adjusted Warrant Exercise
        Price between or among shares of such classes of capital stock or shares
        of
        Common Stock and other capital stock. All calculations under this Subsection
        shall be made to the nearest cent or to the nearest 1/100 of a share, as
        the
        case may be. In the event that at any time as a result of an adjustment made
        pursuant to this Subsection, the holder of any Warrant thereafter surrendered
        for exercise shall become entitled to receive any shares of the Corporation
        other than shares of Common Stock, thereafter the Warrant Exercise Price
        of such
        other shares so receivable upon exercise of any Warrant shall be subject
        to
        adjustment from time to time in a manner and on terms as nearly equivalent
        as
        practicable to the provisions with respect to Common Stock contained in this
        Section.

       

       

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (b) Mechanics
      of Adjustment for Stock Splits, Dividends and Combinations.
      Upon
      each adjustment of the Warrant Exercise Price pursuant to Section 5(a)
      above, the Holder of each Warrant shall thereafter (until another such
      adjustment) be entitled to purchase at the adjusted Warrant Exercise Price
      the
      number of shares, calculated to the nearest full share, obtained by multiplying
      the number of shares specified in such Warrant (as adjusted as a result of
      all
      adjustments in the Warrant Exercise Price in effect prior to such adjustment)
      by
      the Warrant Exercise Price in effect prior to such adjustment and dividing
      the
      product so obtained by the adjusted Warrant Exercise Price.

    

    (c) Consolidations,
      Mergers and Reorganization Events.
      In case
      of any consolidation or merger to which the Corporation is a party other than
      a
      merger or consolidation in which the Corporation is the continuing corporation,
      or in case of any sale or conveyance to another corporation of the property
      of
      the Corporation as an entirety or substantially as an entirety, or in the case
      of any statutory exchange of securities with another corporation (including
      any
      exchange effected in connection with a merger of a third corporation into the
      Corporation), there shall be no adjustment under Subsection (a) of this
      Section 5; but the Holder of each Warrant then outstanding shall have the right
      thereafter to convert such Warrant into the kind and amount of shares of stock
      and other securities and property which he would have owned or have been
      entitled to receive immediately after such consolidation, merger, statutory
      exchange, sale or conveyance had such Warrant been converted immediately prior
      to the effective date of such consolidation, merger, statutory exchange, sale
      or
      conveyance and, in any such case, if necessary, appropriate adjustment shall
      be
      made in the application of the provisions set forth in this Section with respect
      to the rights and interests thereafter of any Holders of the Warrant, to the
      end
      that the provisions set forth in this Section shall thereafter correspondingly
      be made applicable, as nearly as may reasonably be, in relation to any shares
      of
      stock and other securities and property thereafter deliverable on the exercise
      of the Warrant. The provisions of this Subsection shall similarly apply to
      successive consolidations, mergers, statutory exchanges, sales or
      conveyances.

     

    
      (d)
        Adjustments
        for Diluting Issues.
        In
        addition to the adjustments of the Warrant Exercise Price provided above,
        the
        Warrant Exercise Price shall be subjected to further adjustment from time
        to
        time as follows (the main operative provision hereof is in Section 5(d)(iii)
        below):

       

       

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (i) Special
      Definitions:

    

    (A) “Options”
shall
      mean rights, options or warrants (other than as excluded by Section 5(d)(i)(D)
      below) to subscribe for, purchase or otherwise acquire either Common Stock
      or
      Convertible Securities (as defined herein).

     

    (B) “Original
      Issue Date”
shall
      mean the date hereof. 

     

    (C) “Convertible
      Securities”
shall
      mean securities (other than as excluded by Section 5(d)(i)(D) below)
      convertible, either directly or indirectly, into or exchangeable for Common
      Stock.

     

    (D) “Additional
      Shares of Common Stock”
shall
      mean all shares of Common Stock issued (or, deemed to be issued) by the
      Corporation after the Original Issue Date other than shares of Common Stock
      issued (or deemed to be issued):

     

    1. to
      employees, consultants or directors pursuant to stock option, stock grant,
      stock
      purchase or similar plans or arrangements approved by the Corporation's Board
      of
      Directors;

    

    2. as
      a
      dividend or other distribution in connection with which an adjustment to the
      Warrant Exercise Price is made;

    

    3.
      in
      a
      merger, consolidation, acquisition or similar business combination that is
      approved by the Corporation's Board of Directors;

     

    4.
      pursuant
      to credit, lease or other commercial financing arrangements with parties not
      affiliated with the Corporation that are approved by the Corporation's Board
      of
      Directors;

     

    5.
      in
      exchange for technology or other non-cash assets as approved by the
      Corporation's Board of Directors;

     

    6.
      pursuant
      to any rights or agreements outstanding on the Original Issue Date;

     

    7.
      if
      the
      Holder agrees in writing that such shares shall not constitute Additional Shares
      of Common Stock.

     

    (ii) Deemed
      Issue of Additional Shares of Common Stock.
      Except
      as otherwise provided in Section 5(d), in the event the Corporation at any
      time
      or from time to time after the Original Issue Date shall issue any Options
      or
      Convertible Securities or shall fix a record date for the determination of
      any
      holders of any class of securities entitled to receive any such Options or
      Convertible Securities, then the maximum number of shares (as set forth in
      the
      instrument relating thereto without regard to any provisions contained therein
      for a subsequent adjustment of such number) of Common Stock issuable upon the
      exercise of such Options or, in the case of Convertible Securities and Options
      therefor, the conversion or exchange of such Convertible Securities, shall
      be
      deemed to be Additional Shares of Common Stock issued as of the time of such
      issue or, in case such record date shall have been fixed, as of the close of
      business on such record date, provided that in any such case in which Additional
      Shares of Common Stock are deemed to be issued:

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (A) no
      further adjustment in the Warrant Exercise Price shall be made upon the
      subsequent issue of such Convertible Securities or shares of Common Stock upon
      the exercise of such Options or conversion or exchange of such Convertible
      Securities;

     

    (B) if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any increase or decrease in the consideration payable
      to
      the Company, or increase or decrease in the number of shares of Common Stock
      issuable upon the exercise, conversion or exchange thereof, the Warrant Exercise
      Price computed upon the original issue thereof or upon the occurrence of a
      record date with respect thereto, and any subsequent adjustments based thereon,
      shall, upon any such increase or decrease becoming effective, be recomputed
      to
      reflect such increase or decrease;

     

    (C) upon
      the
      expiration of any such Option or any rights of conversion or exchange under
      such
      Convertible Securities which shall not have been exercised, the Warrant Exercise
      Price computed upon the original issue thereof or upon occurrence of a record
      date with respect thereto, and any subsequent adjustments based thereon, shall,
      upon such expiration:

     

    1. in
      the
      case of Convertible Securities or Options for Common Stock, be recomputed as
      though the only Additional Shares of Common Stock issued were shares of Common
      Stock, if any, actually issued upon the exercise of such Options or the
      conversion or exchange of such Convertible Securities, and the consideration
      received therefor was the consideration actually received by the Company for
      the
      issue of all such Options, whether or not exercised, plus the consideration
      actually received by the Company upon such exercise, or for the issue of all
      such Convertible Securities, whether or not converted or exchanged, plus the
      additional consideration, if any, actually received by the Company upon such
      conversion or exchange; and

    

    2. in
      the
      case of Options for Convertible Securities, be recomputed as though only the
      Convertible Securities, if any, actually issued upon the exercise thereof were
      issued at the time of issue of such Options and the consideration received
      by
      the Company for the Additional Shares of Common Stock deemed to have been then
      issued was the consideration actually received by the Company for the issue
      of
      all such Options, whether or not exercised, plus the consideration deemed to
      have been received by the Company upon the issue of the Convertible Securities
      with respect to which such Options were actually exercised.

     

    
      (D) no
        readjustment pursuant to Section 5(d) shall have the effect of increasing
        the
        Warrant Exercise Price to an amount which exceeds the Warrant Exercise Price
        existing immediately prior to the original adjustment with respect to the
        issuance of such Options or Convertible Securities, as adjusted for any
        Additional Shares of Common Stock issued (or deemed to be issued) between
        such
        original adjustment date and such readjustment date; and

       

       

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

    (E) in
      the
      case of any Option or Convertible Security with respect to which the maximum
      number of shares of Common Stock issuable upon exercise or conversion or
      exchange thereof is not determinable, no adjustment to the Warrant Exercise
      Price shall be made until such number becomes determinable.

     

    (iii) Adjustments
      for Issuance of Additional Shares of Common Stock.
      If the
      Company, at any time after the issuance of this Warrant, shall issue any
      Additional Shares of Common Stock (otherwise than as provided in the Sections
      5(a) and 5(c) above) at a price per share less than the applicable Warrant
      Exercise Price then in effect or without consideration, then the applicable
      Warrant Exercise Price upon each such issuance shall be adjusted to that price
      (rounded to the nearest cent) determined by multiplying the applicable Warrant
      Exercise Price then in effect by a fraction, (i) the numerator of which shall
      be
      equal to the sum of (A) the number of shares of Common Stock outstanding
      immediately prior to the issuance of such Additional Shares of Common Stock
      plus
      (B) the
      number of shares of Common Stock (rounded to the nearest whole share) which
      the
      aggregate consideration for the total number of such Additional Shares of Common
      Stock so issued would purchase at a price per share equal to the applicable
      Warrant Exercise Price then in effect, and (ii) the denominator of which shall
      be equal to the number of shares of Common Stock outstanding immediately after
      the issuance of such Additional Shares of Common Stock.

    

    In
      addition to the other limitations provided herein, the provisions of this
      Section 5(d)(iii) shall not apply under any of the circumstances for which
      an
      adjustment is provided in Sections 5(a), 5(b) or 5(c) above. No adjustment
      of
      the applicable Warrant Exercise Price shall be made under this Section 5(d)
      upon
      the issuance of any Additional Shares of Common Stock which are issued pursuant
      to any Options or Convertible Securities if upon the issuance of such Options
      or
      Convertible Securities (x) any adjustment shall have been made pursuant to
      Section 5(d)(ii) above or (y) no adjustment was required pursuant to this
      Section 5(d)(iii). No adjustment of the applicable Warrant Exercise Price shall
      be made under this Section 5(d)(iii) in an amount less than $.01 per share,
      but
      any such lesser adjustment shall be carried forward and shall be made at the
      time and together with the next subsequent adjustment, if any, which together
      with any adjustments so carried forward shall amount to $.01 per share or more;
      provided,
      however,
      that
      upon any adjustment of the applicable Warrant Exercise Price as a result of
      any
      dividend or distribution payable in Common Stock or Convertible Securities
      or
      the reclassification, subdivision or combination of Common Stock into a greater
      or smaller number of shares, the foregoing figure of $.01 per share (or such
      figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
      proportion to the adjustment in the applicable Warrant Exercise
      Price.

     

    (iv) Determination
      of Consideration.
      For
      purposes of this Section 5(d), the consideration received by the Corporation
      for
      any Additional Shares of Common Stock issued (or deemed to be issued) shall
      be
      computed as follows:

    

    (A) Cash
      and Property.
      Such
      consideration shall:

    

    (i) insofar
      as it consists of cash, be computed at the aggregate amount of cash received
      by
      the Corporation;

     

    

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

    

     

    (ii) insofar
      as it consists of securities and the value of such securities is not
      determinable by reference to a separate agreement, (A) if the securities are
      then traded on a national securities exchange or the Nasdaq Stock Market (or
      a
      similar national quotation system), then the value shall be computed based
      on
      the average of the closing prices of the securities on such exchange or system
      over the thirty (30)-day period ending on the date of receipt by the
      Corporation, (B) if the securities are actively traded over-the-counter, then
      the value shall be computed based on the average of the closing bid prices
      over
      the thirty (30) day ending on the date of receipt by the Corporation, and (C)
      if
      there is no active public market, then the value shall be computed based on
      the
      fair market value thereof on the date of receipt by the Corporation, as
      determined in good faith by the Board of Directors;

    

    (iii) insofar
      as it consists of property other than cash and securities, be computed at the
      fair market value thereof at the time of such issuance, as determined in good
      faith by the Board of Directors; and

    

    (iv) if
      Additional Shares of Common Stock are issued (or deemed to be issued) together
      with other shares or securities or other assets of the Corporation for
      consideration which cover both, by the proportion of such consideration so
      received, computed as provided in the immediately preceding Sections
      5(d)(iv)(A)(i), 5(d)(iv)(A)(ii) and 5(d)(iv)(A)(iii), as determined in good
      faith by the Board of Directors.

    

    (B) Options
      and Convertible Securities.
      The
      consideration received by the Corporation for Additional Shares of Common Stock
      deemed to have been issued pursuant to Section 5(d) relating to Option and
      Convertible Securities, shall be the sum of (x) the total amount, if any,
      received or receivable by the Corporation as consideration for the issue of
      such
      Options or Convertible Securities, plus (y) the minimum aggregate amount of
      additional consideration (as set forth in the instruments relating thereto,
      without regard to any provision contained therein for a subsequent adjustment
      of
      such consideration) payable to the Corporation upon the exercise of such Options
      or the conversion or exchange of such Convertible Securities, or in the case
      of
      Options for Convertible Securities, the exercise of such Options for Convertible
      Securities and the conversion or exchange of such Convertible Securities.

    

      (e) Certificate
        as to Adjustments.
        Upon
        the occurrence of each adjustment or readjustment of the Warrant Exercise
        Price
        or the number of Warrants covered hereby pursuant to this Section 5, the
        Corporation, at its expense, shall promptly compute such adjustment or
        readjustment in accordance with the terms hereof and furnish to the Holder
        a
        certificate setting forth such adjustment or readjustment and showing in
        detail
        the facts upon which such adjustment or readjustment is based. The Corporation
        shall, upon the written request at any time of the Holder, furnish or cause
        to
        be furnished to the Holder a like certificate setting forth (i) such
        adjustments and readjustments, (ii) the Warrant Exercise Price at the time
        in effect, and (iii) the number of shares of Common Stock and the amount,
        if any, of other property which at the time would be received upon the exercise
        of this Warrant. 

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    6. No
      Voting Rights.
      This
      Warrant shall not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Corporation.

    

    7. Notice
      of Transfer of Warrant or Resale of the Warrant Shares; Assumption upon
      Merger.

    

    (a) Subject
      to the sale, assignment, hypothecation or other transfer restrictions set forth
      in Section 3 hereof, the Holder, by acceptance hereof, agrees to give
      written notice to the Corporation before transferring this Warrant or
      transferring any Warrant Shares of such Holder's intention to do so, describing
      briefly the manner of any proposed transfer. Promptly upon receiving such
      written notice, the Corporation shall present copies thereof to the
      Corporation's counsel. If in the opinion of such counsel the proposed transfer
      may be effected without registration or qualification (under any federal or
      state securities laws), the Corporation, as promptly as practicable, shall
      notify the Holder of such opinion, whereupon the Holder shall be entitled to
      transfer this Warrant or to dispose of Warrant Shares received upon the previous
      exercise of this Warrant, all in accordance with the terms of the notice
      delivered by the Holder to the Corporation; provided that an appropriate legend
      may be endorsed on this Warrant or the certificates for such Warrant Shares
      respecting restrictions upon transfer thereof necessary or advisable in the
      opinion of counsel and satisfactory to the Corporation to prevent further
      transfers which would be in violation of Section 5 of the 1933 Act and
      applicable state securities laws; and provided further that the prospective
      transferee or purchaser shall execute such documents and make such
      representations, warranties and agreements as may be required solely to comply
      with the exemptions relied upon by the Corporation for the transfer or
      disposition of the Warrant or Warrant Shares.

    

    (b) If,
      in
      the opinion of the Corporation’s counsel, the proposed transfer or disposition
      of this Warrant or such Warrant Shares described in the written notice given
      pursuant to this Section 7 may not be effected without registration or
      qualification of this Warrant or such Warrant Shares, the Corporation shall
      promptly give written notice thereof to the Holder, and the Holder will limit
      its activities in respect to such transfer or disposition as, in the opinion
      of
      such counsel, are permitted by law.

    

    8. Fractional
      Shares.
      Fractional shares shall not be issued upon the exercise of this Warrant, but
      in
      any case where the holder would, except for the provisions of this Section,
      be
      entitled under the terms hereof to receive a fractional share, the Corporation
      shall, upon the exercise of this Warrant for the largest number of whole shares
      then called for, pay a sum in cash equal to the sum of (a) the excess, if
      any, of the Market Price of such fractional share over the proportional part
      of
      the Warrant Exercise Price represented by such fractional share, plus
      (b) the proportional part of the Warrant Exercise Price represented by such
      fractional share. For purposes of this Section and Section 1(b) above, the
      term
“Market Price” with respect to shares of Common Stock of any class or series
      means the last reported sale price or, if none, the average of the last reported
      closing bid and asked prices on any national or regional securities exchange
      or
      quoted in the National Association of Securities Dealers, Inc.'s Automated
      Quotations System (“Nasdaq”), or if not listed on a national or regional
      securities exchange or quoted in Nasdaq, the closing bid price as reported
      by
      bigcharts.com (or if this service is discontinued, such other reporting service
      acceptable to the Holder), or if no quotations in such Common Stock are
      available, the fair market value of the shares as determined in good faith
      by
      the Board of Directors of the Corporation.

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    9. Registration
      Rights.
      Holder
      shall have registration rights for the Warrant Shares as described in
      the Registration
      Rights Agreement of this same date.

    

    10. Limitations
      on Exercise. Notwithstanding
      anything to the contrary contained herein, the number of Warrant Shares that
      may
      be acquired by the Holder upon any exercise of this Warrant (or otherwise in
      respect hereof) shall be limited to the extent necessary to insure that,
      following such exercise (or other issuance), the total number of shares of
      Common Stock then beneficially owned by such Holder and its affiliates and
      any
      other persons whose beneficial ownership of Common Stock would be aggregated
      with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
      exceed 4.99% of the total number of issued and outstanding shares of Common
      Stock (including for such purpose the shares of Common Stock issuable upon
      such
      exercise). For such purposes, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. This provision shall not restrict the number of shares
      of Common Stock which a Holder may receive or beneficially own in order to
      determine the amount of securities or other consideration that such Holder
      may
      receive in the event of a merger, sale, exchange or other transaction as
      contemplated in Section 5(c) of this Warrant. By written notice to the Company,
      the Holder may waive the provisions of this Section 10 as to itself, but any
      such waiver will not be effective until the 61st
      day
      after delivery thereof.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    
IN
      WITNESS WHEREOF,
      Equitex,
      Inc. has caused this Warrant to be signed by its duly authorized officer and
      this Warrant to be dated September 15, 2005.

    

    
      	 	 	 
	 	EQUITEX,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Henry
              Fong
	 	
              
Henry
              Fong, President
	 	 

    

     

    

     

     

    
 

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

        
        

      

    

    EXERCISE
      FORM

    

    (To
      Be
      Executed by the Registered Holder in Order to Exercise the Warrant)

    

    To:  Equitex,
      Inc.

    

    The
      undersigned hereby irrevocably elects to exercise the attached Warrant to
      purchase for cash, ________________ of the shares issuable upon the exercise
      of
      such Warrant, and requests that certificates for such shares (together with
      a
      new Warrant to purchase the number of shares, if any, with respect to which
      this
      Warrant is not exercised) shall be issued in the name of:

    

    

      
        	 	 	 
	 	
                NAME:

              	
                ________________________________

              
	 	 	 
	 	
                SOC.
                  SEC. or 

              	 
	 	
                TAX
                  I.D. NO.

              	
                ________________________________

              
	 	 	 
	 	 	 
	 	
                ADDRESS:

              	
                ________________________________

              
	 	 	 
	 	 	 
	 	 	
                ________________________________

              
	 	 	 
	 	 	 
	 	 	 
	
                Date:
                  _________, 20      .

              	 	
                ________________________________

              
	 	 	
                Signature
                  *

              

      

    

     

    
      	
              *

            	
              The
                signature on the Notice of Exercise of Warrant must correspond to
                the name
                as written upon the face of the Warrant in every particular without
                alteration or enlargement or any change whatsoever. When signing
                on behalf
                of a corporation, partnership, trust or other entity, please indicate
                your
                position(s) and title(s) with such
                entity.

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    

    (To
      be
      Executed by the Registered Holder in Order to Transfer the Warrant)

    

    To:       
       Equitex,
      Inc.

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns, and transfers unto
      _________________________________ the right to purchase the securities of
      Equitex, Inc. to which the within Warrant relates and appoints
      _______________________, attorney, to transfer said right on the books of
      Equitex, Inc. with full power of substitution in the premises.

     

    
      
        	
                Dated:
                  ______________20       

              	
                
                  ________________________________

                

              
	 	
                (Signature)

              
	 	 
	 	
                Address:

              
	 	 
	 	
                
                  ________________________________

                

              
	 	 
	 	
                
                  ________________________________

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