Document:

Employment
        Agreement

      

      

      THIS
        EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of October
        31, 2005 and shall be effective as of July 18, 2005 (the “Effective Date”) by
        and between SurgiCount
        Medical, Inc. (the
        “Company”), a
        California corporation and wholly owned subsidiary of Patient
        Safety Technologies, Inc.
        (“Parent”), a Delaware corporation, both with offices located at 100 Wilshire
        Boulevard, Suite 1500, Santa Monica, California, 90401, and Richard
        Bertran, an
        individual with an address 27631 Sanderling Way, Temecula, California, 92591
        (“Individual”). This Agreement replaces and supercedes that certain Employment
        Agreement entered into as of July 15, 2005 by and between Parent and Individual,
        in its entirety.

      

      WHEREAS,
        the Company is in the business of patient safety products and content; and
        

      

      WHEREAS,
        Individual has had experience in the sales and marketing of businesses in
        the
        surgical sponge and hospital supply sales; and

      

      WHEREAS,
        the Company desires to retain the services of Individual; and

      

      WHEREAS,
        Individual is willing to be employed by the Company.

      

      NOW,
        THEREFORE, in consideration of the mutual covenants contained herein, the
        parties agree as follows:

      

      

      1.
        Employment.
        Individual is hereby employed and engaged to serve the Company as the Executive
        Vice-President of Sales and Marketing of the Company, or such additional
        titles
        as the Company shall specify from time to time, and Individual does hereby
        accept, and Individual hereby agrees to such engagement and employment.

      

      2.
        Duties.
        Individual shall be responsible for the overall sales and marketing of the
        Company. In addition, Individual’s duties shall be such duties and
        responsibilities as the Company shall specify from time to time, and shall
        entail those duties customarily performed by the Executive Vice-President
        of
        Sales and Marketing of a company with a sales volume and number of employees
        commensurate with those of the Company. Individual shall have such authority,
        discretion, power and responsibility, and shall be entitled to office,
        secretarial and other facilities and conditions of employment, as are customary
        or appropriate to his position. Individual shall diligently and faithfully
        execute and perform such duties and responsibilities, subject to the general
        supervision and control of the Company’s Chief Executive Officer and board of
        directors. Individual shall be responsible and report only to the Company’s
        Chief Executive Officer. The Company’s Chief Executive Officer and board of
        directors, in its sole and absolute discretion, shall determine Individual’s
        duties and responsibilities and may assign or reassign Individual to such
        duties
        and responsibilities as it deems in the Company's best interest. Individual
        shall devote his full-time attention, energy, and skill during normal business
        hours to the business and affairs of the Company and shall not, during the
        Employment Term, as that term is defined below, be actively engaged in any
        other
        business activity, except with the prior written consent of the Company’s Chief
        Executive Officer and board of directors. 

      

      Nothing
        in this Agreement shall preclude Individual from devoting reasonable periods
        required for:

      

      
        	 	
                (a)

              	
                serving
                  as a director or member of a committee of any organization or corporation
                  involving no conflict of interest with the interests of the
                  Company;

              

      

       

       

      
        
          
          

        

        
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                (b)

              	
                serving
                  as a consultant in his area of expertise (in areas other than in
                  connection with the business of the Company), to government, industrial,
                  and academic panels where it does not conflict with the interests
                  of the
                  Company; and

              

      

      

      
        	 	
                (c)

              	
                managing
                  his personal investments or engaging in any other non-competing
                  business;
                  provided
                  that such activities do not materially interfere with the regular
                  performance of his duties and responsibilities under this Agreement
                  as
                  determined by the Company.

              

      

      

      3.
        Best Efforts of Individual.
        During
        his employment hereunder, Individual shall, subject to the direction and
        supervision of the Company’s Chief Executive Officer and board of directors,
        devote his full business time, best efforts, business judgment, skill, and
        knowledge to the advancement of the Company's interests and to the discharge
        of
        his duties and responsibilities hereunder. Notwithstanding the foregoing,
        nothing herein shall be construed as preventing Individual from investing
        his
        assets in any business.

      

      4.
        Employment Term.
        Unless
        terminated pursuant to Section 12 of this Agreement, the term of this Agreement
        shall commence as of the Effective Date of this Agreement and shall continue
        for
        a term of thirty-six (36) months (the “Initial Term”), and shall be
        automatically renewed for successive one (1) year terms (the “Renewal Term”)
        unless a party hereto delivers to the other party written notice of at least
        thirty (30) days. 

      

      5.
        Compensation of Individual. 

      

      
        	(a)  	
                Base
                  Compensation.
                  As
                  compensation for the services provided by Individual under this
                  Agreement,
                  the Company shall pay Individual an annual salary of Two Hundred
                  Thousand
                  Dollars ($200,000) ("Base Compensation").

              

      

      

      
        	(b)  	
                Stock
                  and Stock Options.
                  Individual shall also be eligible to receive shares of Parent’s authorized
                  stock options to purchase shares of Parent’s authorized stock from time to
                  time as determined by the board of directors and detailed herein:
                  Individual will receive Two Hundred Thousand (200,000) stock options,
                  vesting equally per year over three (3) years (i.e.,
                  66,667
                  shares on July 18, 2006; 66,667 shares on July 18, 2007; and 66,666
                  on
                  July 18, 2008) at a strike price of $5.00. Further, Individual
                  will
                  receive Ten Thousand (10,000) shares in a restricted stock grant
                  as a
                  signing bonus, payable within thirty (30) days of the Effective
                  Date.

              

      

      

      
        	(c)  	
                Milestones
                  Options. In
                  addition to the Base Compensation, Individual shall be eligible
                  to receive
                  a milestone bonus determined by the Chief Executive Officer and
                  board of
                  directors, based on the performance of the Company, as detailed
                  herein:

              

      

      

      
        	(i)  	
                Individual
                  will be granted Fifty Thousand (50,000) stock options of Parent
                  when
                  Individual reaches Five Million Dollars ($5,000,000) in sales for
                  SurgiCount Medical, Inc, vested at grant
                  date.

              

      

      
        	(ii)  	
                Individual
                  will be granted Fifty Thousand (50,000) stock options of Parent
                  when
                  Individual obtains a certain mutually agreed milestone as set by
                  Chief
                  Executive Officer, Individual and Health West Marketing, together,
                  vested
                  at grant date. 

              

      

      

      6.
        Benefits. Individual
        shall also be entitled to participate in any and all Company benefit plans,
        from
        time to time in effect for employees of the Company. Such participation shall
        be
        subject to the terms of the applicable plan documents and generally applicable
        Company policies. Individual shall also receive an automobile allowance of
        $10,000 per year (given that Individual adheres to Company policy on auto
        allowance) and use of a Company cellular telephone, paid for by
        Company.

      

      
        
          
          

        

        
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      7.
        Vacation, Sick Leave and Holidays.
        Individual shall be entitled to two (2) weeks of paid vacation annually,
        with
        such vacation to be scheduled and taken in accordance with the Company's
        standard vacation policies. In addition, Individual shall be entitled to
        such
        sick leave and holidays at full pay in accordance with the Company's policies
        established and in effect from time to time.

      

      8.
        Business Expenses.
        The
        Company shall promptly reimburse Individual for all reasonable out-of-pocket
        business expenses incurred in performing Individual’s duties and
        responsibilities hereunder in accordance with the Company's policies, provided
        Individual promptly furnishes to the Company adequate records of each such
        business expense.

      

      9.
        Location of Individual's Activities. Individual’s
        principal place of business in the performance of his duties and obligations
        under this Agreement shall be at a place to be determined by the Chief Executive
        Officer. Notwithstanding the preceding sentence, Individual will engage in
        such
        travel and spend such time in other places as may be necessary or appropriate
        in
        furtherance of his duties hereunder. 

      

      10.
        Confidentiality.
        Individual recognizes that the Company has and will have business affairs,
        products, future plans, trade secrets, customer lists, and other vital
        information (collectively "Confidential Information") that are valuable assets
        of the Company. Individual agrees that he shall not at any time or in any
        manner, either directly or indirectly, divulge, disclose, or communicate
        in any
        manner any Confidential Information to any third party without the prior
        written
        consent of the Company’s board of directors. Individual will use his best
        efforts to protect the Confidential Information and treat it as strictly
        confidential.

      

      11.
        Non-Competition.
        Individual acknowledges that he has gained, and will gain extensive knowledge
        in
        the business conducted by the Company, and has had, and will have, extensive
        contacts with customers and vendors of the Company. Accordingly, Individual
        agrees that he shall not compete directly or indirectly with the Company,
        set
        forth specifically as surgical dressings that are machine identified, during
        the
        Employment Term and shall not, during such period, make public statements
        in
        derogation of the Company. For the purposes of this Section 11, competing
        directly or indirectly with the Company shall mean engaging, directly or
        indirectly, as principle owner, officer, partner, consultant, advisor, investor,
        or otherwise, either alone or in association with others, in the operation
        of
        any entity engaged in a business similar to that of the Company’s. Individual
        further agrees that following termination of his employment with the Company,
        he
        shall not use the Company's Confidential Information, contacts, and vendors
        to
        compete, directly or indirectly, with the Company or against the interests
        of
        the Company. 

      

      12.
        Termination.
        Notwithstanding any other provisions hereof to the contrary, Individual’s
        employment hereunder shall terminate under the following
        circumstances:

      

      
        	(a)  	
                Voluntary
                  Termination by Individual.
                  Individual shall have the right to voluntarily terminate this Agreement
                  and his employment hereunder at any time during the Employment
                  Term.
                  

              

      

      

      
        	(b)  	
                Voluntary
                  Termination by the Company. The
                  Company shall have the right to voluntarily terminate this Agreement
                  and
                  Individual’s employment hereunder at any time during the Employment Term.
                  

              

      

      

      
        	(c)  	
                Termination
                  for Cause.
                  The Company shall have the right to terminate this Agreement and
                  Individual’s employment hereunder at any time for cause. As used in this
                  Agreement, "cause" shall mean (i) refusal by Individual
                  to implement
                  or adhere to a written directive of the Company’s Chief Executive Officer
                  or board of directors other than a directive that would result
                  in illegal
                  or unethical conduct; (ii) material breach of a material
                  term or
                  representation of this Agreement, (iii) Individual’s conviction of a
                  felony, (iv) dishonesty, gross negligence, or other act
                  by Individual
                  materially detrimental to the Company or its good will, or materially
                  damaging to its relationships with its customers, suppliers, or
                  employees;
                  (v)  breach of fiduciary duty, or (vi) misappropriation
                  by
                  Individual of funds from or resources of the Company. Cause shall
                  not be
                  deemed to exist unless the Company shall have first given Individual
                  a
                  written notice thereof specifying in reasonable detail the facts
                  and
                  circumstances alleged to constitute "cause" and ten (10) days after
                  such
                  notice such conduct has, or such circumstances have, as the case
                  may be,
                  not entirely ceased and not been entirely
                  remedied.

              

      

       

       

      
        
          
          

        

        
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        	(d)  	
                Termination
                  Upon Death or for Disability.
                  This Agreement and Individual’s employment hereunder, shall automatically
                  terminate upon Individual’s death or upon written notice to Individual and
                  certification of Individual’s disability by a qualified physician or a
                  panel of qualified physicians if Individual becomes disabled beyond
                  a
                  period of twelve (12) months and is unable to perform the duties
                  contain
                  in this Agreement. 

              

      

      

      
        	(e)  	
                Effect
                  of Termination.
                  In
                  the event that this Agreement and Individual’s employment is voluntarily
                  terminated by Individual pursuant to Section 12(a), or in the event
                  the
                  Company terminates this Agreement for cause pursuant to Section
                  12(c), all
                  obligations of the Company and all duties, responsibilities and
                  obligations of Individual under this Agreement, except for those
                  obligations set forth in Sections 8, 10, 11 and 17 hereof, shall
                  cease and
                  all unvested stock options and/or unearned milestone bonuses, will
                  be
                  forfeited.

              

      

      

      Upon
        termination pursuant to Section 12(b), where the Company voluntarily terminates
        this Agreement, the Company shall (i) pay Individual as severance compensation
        a
        cash sum equal to fifteen (15) months' of the Base Compensation, plus award
        the
        milestone option grants under Section 5(c) hereof, to the extent such milestones
        are met within the Employment Term, and (ii) automatically vest all unvested
        stock options granted pursuant to Section 5(b) had the Agreement not been
        terminated. However, if termination pursuant to Section 12(b) occurs within
        the
        final fifteen (15) months of the Employment Term, then Individual will receive
        whatever Base Compensation as would have been payable for the remaining
        Employment Term of this Agreement, or through July 18, 2008.

      

      In
        addition, if Individual voluntarily terminates, all unvested stock options
        and/or unearned milestone bonuses, will be forfeited. In the event of a sale
        of
        the Company, to the extent not already vested, all 200,000 of Individual’s stock
        options shall automatically vest. In the event of a merger, consolidation,
        sale,
        or change of control, the Company's rights hereunder shall be assigned to
        the
        surviving or resulting company, which company shall then honor this Agreement
        with Individual.

      

      The
        obligations set forth in Sections 8, 10, 11, 12 and 17 of this Agreement
        are
        intended to survive the termination of Individual's employment with Company.
        

      

      13.
        Resignation as Officer.
        In the
        event that Individual’s employment with the Company is terminated for any reason
        whatsoever, Individual agrees to immediately resign as an Officer and/or
        Director of the Company, if applicable, and any related entities. For the
        purposes of this Section 13, the term the "Company" shall be deemed to include
        subsidiaries, parents, and affiliates of the Company. 

      

      14.
        Governing Law, Jurisdiction and Venue.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of California without giving effect to any applicable conflicts of
        law
        provisions.

      

      
        
          
          

        

        
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      15.
        Business Opportunities.
        During
        the Employment Term, Individual agrees to bring to the attention of the
        Company’s board of directors all written business proposals that come to
        Individual’s attention and all business or investment opportunities of whatever
        nature that are created or devised by Individual and that relate to areas
        in
        which the Company conducts business and might reasonably be expected to be
        of
        interest to the Company or any of its subsidiaries.

      

      16.
        Employee’s Representations and Warranties.
        Individual hereby represents and warrants that he is not under any contractual
        obligation to any other company, entity or individual that would prohibit
        or
        impede Individual from performing his duties and responsibilities under this
        Agreement and that he is free to enter into and perform the duties and
        responsibilities required by this Agreement. Individual hereby agrees to
        indemnify and hold the Company and its officers, directors, employees,
        shareholders and agents harmless in connection with the representations and
        warranties made by Individual in this Section 16.

      

      17.
        Indemnification.

      

      
        	(a)  	
                The
                  Company agrees that if Individual is made a party, or is threatened
                  to be
                  made a party, to any action, suit or proceeding, whether civil,
                  criminal,
                  administrative or investigative (a "Proceeding"), by reason of
                  the fact
                  that he is or was a director, officer or employee of the Company
                  or is or
                  was serving at the request of the Company as a director, officer,
                  member,
                  employee or agent of another corporation, partnership, joint venture,
                  trust or other enterprise, including service with respect to employee
                  benefit plans, whether or not the basis of such Proceeding is Individual’s
                  alleged action in an official capacity while serving as a director,
                  officer, member, employee or agent, Individual shall be indemnified
                  and
                  held harmless by the Company to the fullest extent permitted or
                  authorized
                  by the Company's certificate of incorporation or bylaws or, if
                  greater, by
                  the laws of the State of California, against all cost, expense,
                  liability
                  and loss (including, without limitation, attorney's fees, judgments,
                  fines, ERISA excise taxes or penalties and amounts paid or to be
                  paid in
                  settlement) reasonably incurred or suffered by Individual in connection
                  therewith, and such indemnification shall continue as to Individual
                  even
                  if he has ceased to be a director, member, employee or agent of
                  the
                  Company or other entity and shall inure to the benefit of Individual’s
                  heirs, executors and administrators. The Company shall advance
                  to
                  Individual to the extent permitted by law all reasonable costs
                  and
                  expenses incurred by him in connection with a Proceeding within
                  20 days
                  after receipt by the Company of a written request, with appropriate
                  documentation, for such advance. Such request shall include an
                  undertaking
                  by Individual to repay the amount of such advance if it shall ultimately
                  be determined that he is not entitled to be indemnified against
                  such costs
                  and expenses.

              

      

      

      
        	(b)  	
                Neither
                  the failure of the Company (including its board of directors, independent
                  legal counsel or stockholders) to have made a determination prior
                  to the
                  commencement of any Proceeding concerning payment of amounts claimed
                  by
                  Individual that indemnification of Individual is proper because
                  he has met
                  the applicable standard of conduct, nor a determination by the
                  Company
                  (including its board of directors, independent legal counsel or
                  stockholders) that Individual has not met such applicable standard
                  of
                  conduct, shall create a presumption that Individual has not met
                  the
                  applicable standard of conduct.

              

      

      

      
        	(c)  	
                The
                  Company agrees to continue and maintain a directors' and officers'
                  liability insurance policy covering Individual to the extent the
                  Company
                  provides such coverage for its other executive
                  officers.

              

      

       

       

      
        
          
          

        

        
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        	(d)  	
                Promptly
                  after receipt by Individual of notice of any claim or the commencement
                  of
                  any action or proceeding with respect to which Individual is entitled
                  to
                  indemnity hereunder, Individual shall notify the Company in writing
                  of
                  such claim or the commencement of such action or proceeding, and
                  the
                  Company shall (i) assume the defense of such action or proceeding,
                  (ii)
                  employ counsel reasonably satisfactory to Individual, and (iii)
                  pay the
                  reasonable fees and expenses of such counsel. Notwithstanding the
                  preceding sentence, Individual shall be entitled to employ counsel
                  separate from counsel for the Company and from any other party
                  in such
                  action if Individual reasonably determines that a conflict of interest
                  exists which makes representation by counsel chosen by the Company
                  not
                  advisable. In such event, the reasonable fees and disbursements
                  of such
                  separate counsel for Individual shall be paid by the Company to
                  the extent
                  permitted by law.

              

      

      

      
        	(e)  	
                After
                  the termination of this Agreement and upon the request of Individual,
                  the
                  Company agrees to reimburse Individual for all reasonable travel,
                  legal
                  and other out-of-pocket expenses related to assisting the Company
                  to
                  prepare for or defend against any action, suit, proceeding or claim
                  brought or threatened to be brought against the Company or to prepare
                  for
                  or institute any action, suit, proceeding or claim to be brought
                  or
                  threatened to be brought against a third party arising out of or
                  based
                  upon the transactions contemplated herein and in providing evidence,
                  producing documents or otherwise participating in any such action,
                  suit,
                  proceeding or claim. In the event Individual is required to appear
                  after
                  termination of this Agreement at a judicial or regulatory hearing
                  in
                  connection with Individual's employment hereunder, or Individual's
                  role in
                  connection therewith, the Company agrees to pay Individual a sum,
                  to be
                  mutually agreed upon by Individual and the Company, per diem for
                  each day
                  of his appearance and each day of preparation
                  therefor.

              

      

      

      18.
        Notices.
        All
        demands, notices, and other communications to be given hereunder, if any,
        shall
        be in writing and shall be sufficient for all purposes if personally delivered,
        sent by facsimile or sent by United States mail to the address below or such
        other address or addresses as such party may hereafter designate in writing
        to
        the other party as herein provided.

      
 

      
        	
                 Company
                  or Parent:

              	 100 Wilshire Blvd., Suite
                1500	
                 Individual:

              	 Richard Bertran
	 	 Santa Monica, CA
                90401	 	 27631 Sanderling
                Way
	 	 Fax: (310) 752-1486	 	 Temecula, CA
                92591
	 	 Phone: (310)
                752-1416 	 	 Phone: (951)
                699-7255
	 	 	 	 Cell: (951)
                217-8331

      

          

           

      19.
        Entire Agreement.
        This
        Agreement contains the entire agreement of the parties and there are no other
        promises or conditions in any other agreement, whether oral or written. This
        Agreement supersedes any prior written or oral agreements between the parties.
        This Agreement may be modified or amended, if the amendment is made in writing
        and is signed by both parties. This Agreement is for the unique personal
        services of Individual and is not assignable or delegable, in whole or in
        part,
        by Individual. This Agreement may be assigned or delegated, in whole or in
        part,
        by the Company and, in such case, shall be assumed by and become binding
        upon
        the person, firm, company, corporation or business organization or entity
        to
        which this Agreement is assigned. The headings contained in this Agreement
        are
        for reference only and shall not in any way affect the meaning or interpretation
        of this Agreement. If any provision of this Agreement shall be held to be
        invalid or unenforceable for any reason, the remaining provisions shall continue
        to be valid and enforceable. The failure of either party to enforce any
        provision of this Agreement shall not be construed as a waiver or limitation
        of
        that party's right to subsequently enforce and compel strict compliance with
        every provision of this Agreement. This Agreement may be executed in two
        or more
        counterparts, each of which shall be deemed an original, but all of which
        together shall constitute one and the same instrument and, in pleading or
        proving any provision of this Agreement, it shall not be necessary to produce
        more than one of such counterparts.

      

      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, the parties have executed this Agreement as of the day and
        year
        first above written.

       

       

      
 

      
        	 Company:                    	 Individual:	 
	 SurgiCount Medical, Inc.	 	 
	 	 	 
	 	 	 
	 By: 
                /s/ Milton Ault	 /s/ Richard Bertran	 
	 Name: Milton
                C. Ault, III    	 Richard Bertran	 
	 Title: Chairman
                and CEO 	 	 
	 	 	 
	 Parent:	 	 
	 Patient Safety Technologies,
                Inc.	 	 
	 	 	 
	 By: 
                /s/ Milton Ault	 	 
	 Name: Milton
                C. Ault, III	 	 
	 Title: Chairman
                and CEO	 	 
	 	 	 

      

                                          
        

      

      
        
          
          

        

        
          7WARRANT

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.

                            NETFABRIC HOLDINGS, INC.

                        Warrant To Purchase Common Stock

Warrant No.: CCP-002                                   Number of Shares: 560,000

Date of Issuance: October 27, 2005

NetFabric Holdings, 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) Two Hundred
Thousand (200,000) 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

<PAGE>

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.

      Section 1.

            (a) This Warrant is the common stock purchase warrant (the
"Warrant") issued pursuant to the Securities Purchase Agreement dated the date
hereof by and between the Company and Cornell.

            (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
Convertible Debenture, or any other related agreements hereunder between the
Company and Cornell of even date herewith which is not cured by the Company by
any applicable cure period therein.

                                       2
<PAGE>

                  (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.

                  (vii) "Expiration Date" means the date three (3) 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.

                                       3
<PAGE>

                  (xv) "Warrant Exercise Price" shall be $0.50 or as
subsequently adjusted as provided in Section 8 hereof.

                  (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:

                                       4
<PAGE>

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

            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 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

                                       5
<PAGE>

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.

            (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
<PAGE>

            (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
<PAGE>

      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

                                       8
<PAGE>

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.

            (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.

                                       9
<PAGE>

                  (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.

            (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 $.01.

                                       10
<PAGE>

                  (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

                                       11
<PAGE>

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).

            (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

                                       12
<PAGE>

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.

            (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.

      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

                                       13
<PAGE>

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:                   Troy Rillo, Esq.
                                101 Hudson Street - Suite 3700
                                Jersey City, NJ 07302
                                Telephone: (201) 985-8300
                                Facsimile: (201) 985-8266

If to the Company, to:          NetFabric Holdings, Inc.
                                67 Federal Road, Building A
                                Suite 300
                                Brookfield, CT 06804
                                Telephone: (203) 775-1178
                                Facsimile: (203)

With a copy to:                 Kirkpatrick & Lockhart Nicholson Graham LLP
                                201 South Biscayne Blvd. Suite 2000
                                Miami, Fl 33131
                                Attention: Clay E. Parker, Esq.
                                Telephone: (305) 539-3300
                                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
<PAGE>

      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 Nevada 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.

                   [REMAINDER OF PAGE INTENTIALLY LEFT BLANK]

                                       15
<PAGE>

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

                                        NETFABRIC HOLDINGS, INC.

                                        By:  /s/ Jeff Robinson
                                            ------------------------------------
                                        Name:  Jeff Robinson
                                        Title: Chief Executive Officer

                                       16
<PAGE>

                              EXHIBIT A TO WARRANT

                                 EXERCISE NOTICE

                                 TO BE EXECUTED
                BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

                            NETFABRIC HOLDINGS, INC.

      The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of NetFabric
Holdings, Inc., a Delaware corporation (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
<PAGE>

                              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 NetFabric Holdings, Inc., a Delaware
corporation, 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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