Document:

EXHIBIT
      10.2

    

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    To
      Purchase 1,260,000 Shares of Common Stock of

    

    SPECTRE
      GAMING, INC.

    

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, Rockmore Investment Master Fund Ltd. (the
      “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Spectre Gaming, Inc., a
      Minnesota corporation (the “Company”),
      up to
      1,260,000 shares (the “Warrant
      Shares”)
      of
      Common Stock, par value $0.01 per share, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 2(b). 

    

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      October 27, 2005, among the Company and the purchasers signatory
      thereto.

    

    Section
      2. Exercise.

    

    a) Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise Form annexed hereto (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company); 

     

    
      
        
        

      

      
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    provided,
      however,
      within
      5 Trading Days of the date said Notice of Exercise is delivered to the Company,
      if this Warrant is exercised in full, the Holder shall have surrendered this
      Warrant to the Company and the Company shall have received payment of the
      aggregate Exercise Price of the shares thereby purchased by wire transfer or
      cashier’s check drawn on a United States bank. Notwithstanding anything herein
      to the contrary, the Holder shall not be required to physically surrender this
      Warrant to the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in full. Partial
      exercises of this Warrant resulting in purchases of a portion of the total
      number of Warrant Shares available hereunder shall have the effect of lowering
      the outstanding number of Warrant Shares purchasable hereunder in an amount
      equal to the applicable number of Warrant Shares purchased. The Holder and
      the
      Company shall maintain records showing the number of Warrant Shares purchased
      and the date of such purchases. The Company shall deliver any objection to
      any
      Notice of Exercise Form within 2 Business Days of receipt of such notice. In
      the
      event of any dispute or discrepancy, the records of the Holder shall be
      controlling and determinative in the absence of manifest error. The Holder
      and
      any assignee, by acceptance of this Warrant, acknowledge and agree that, by
      reason of the provisions of this paragraph, following the purchase of a portion
      of the Warrant Shares hereunder, the number of Warrant Shares available for
      purchase hereunder at any given time may be less than the amount stated on
      the
      face hereof.

    

    b) Exercise
      Price.
      The
      exercise price of the Common Stock under this Warrant shall be $1.84,
      subject
      to adjustment hereunder (the “Exercise
      Price”).

    

    c) Cashless
      Exercise.
      If at
      any time after one year from the date of issuance of this Warrant there is
      no
      effective Registration Statement registering, or no current prospectus available
      for, the resale of the Warrant Shares by the Holder, then this Warrant may
      also
      be exercised at such time by means of a “cashless exercise” in which the Holder
      shall be entitled to receive a certificate for the number of Warrant Shares
      equal to the quotient obtained by dividing [(A-B) (X)] by (A),
      where:

    

    
      	
            	(A) 
              =	
              the
                VWAP on the Trading Day immediately preceding the date of such
                election;

            

    

    

    
      	
            	(B)  =	
              the
                Exercise Price of this Warrant, as adjusted; and
                

            

    

    

    
      	
            	(X)  =	
              the
                number of Warrant Shares issuable upon exercise of this Warrant in
                accordance with the terms of this Warrant by means of a cash exercise
                rather than a cashless exercise.

            

    

    

    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      2(c).

    

    
      
        
        

      

      
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    d) Holder’s
      Restrictions.
      The
      Company shall not effect any exercise of this Warrant, and a 
      Holder
      shall not have the right to exercise any portion of this Warrant, pursuant
      to
      Section 2(c) or otherwise, to the extent that after giving effect to such
      issuance after exercise, such Holder (together with such Holder’s affiliates,
      and any other person or entity acting as a group together with such Holder
      or
      any of such Holder’s affiliates), as set forth on the applicable Notice of
      Exercise, would beneficially own in excess of 4.99% of the number of shares
      of
      the Common Stock outstanding immediately after giving effect to such
      issuance.  For purposes of the foregoing sentence, the number of shares of
      Common Stock beneficially owned by such 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 sentence is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon (A)
      exercise of the remaining, nonexercised portion of this Warrant beneficially
      owned by such Holder or any of its affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any other Preferred Stock or Warrants) subject
      to a limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by such Holder or any of its affiliates.  Except
      as set forth in the preceding sentence, for purposes of this Section 2(d)(i),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      Exchange Act and the rules and regulations promulgated thereunder, it being
      acknowledged by a Holder that the Company is not representing to such Holder
      that such calculation is in compliance with Section 13(d) of the Exchange Act
      and such Holder is solely responsible for any schedules required to be filed
      in
      accordance therewith. To the extent that the limitation contained in this
      Section 2(d) applies, the determination of whether this Warrant is exercisable
      (in relation to other securities owned by such Holder) and of which a portion
      of
      this Warrant is exercisable shall be in the sole discretion of a Holder, and
      the
      submission of a Notice of Exercise shall be deemed to be each Holder’s
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by such Holder) and of which portion of this Warrant is
      exercisable, in each case subject to such aggregate percentage limitation,
      and
      the Company shall have no obligation to verify or confirm the accuracy of such
      determination. In
      addition, a determination as to any group status as contemplated above shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder. For
      purposes of this Section 2(d), 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 (x) the Company’s most recent Form 10-QSB or Form 10-KSB,
      as the case may be, (y) a more recent public announcement by the Company or
      (z)
      any other notice by the Company or the Company’s Transfer Agent setting forth
      the number of shares of Common Stock outstanding.  Upon the written or oral
      request of a Holder, the Company shall within two Trading Days confirm orally
      and in writing to 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 conversion or exercise of
      securities of the Company, including this Warrant, by such Holder or its
      affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported. The provisions of this Section 2(d) may be waived
      by
      such Holder, at the election of such Holder, upon not less than 61 days’ prior
      notice to the Company, and the provisions of this Section 2(d) shall continue
      to
      apply until such 61st
      day (or
      such later date, as determined by such Holder, as may be specified in such
      notice of waiver). The
      provisions of this paragraph shall be implemented in a manner otherwise than
      in
      strict conformity with the terms of this Section 2(d) to correct this paragraph
      (or any portion hereof) which may be defective or inconsistent with the intended
      4.99% beneficial ownership limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such 4.99%
      limitation. The limitations contained in this paragraph shall apply to a
      successor holder of this Warrant. The holders of Common Stock of the Company
      shall be third party beneficiaries of this Section 2(d) and the Company may
      not
      waive this Section 2(d) without the consent of holders of a majority of its
      Common Stock.

    

    
      
        
        

      

      
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    e) Mechanics
      of Exercise.
      

    

    i. Authorization
      of Warrant Shares.
      The
      Company covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof (other than taxes in respect of any transfer
      occurring contemporaneously with such issue). 

    

    ii. Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission (“DWAC”)
      system
      if the Company is a participant in such system, and otherwise by physical
      delivery to the address specified by the Holder in the Notice of Exercise within
      3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
      surrender of this Warrant (if required) and payment of the aggregate Exercise
      Price as set forth above (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      and properly completed Notice of Exercise Form are received by the Company.
      The
      Warrant Shares shall be deemed to have been issued, and Holder or any other
      person so designated to be named therein shall be deemed to have become a holder
      of record of such shares for all purposes, as of the date the Warrant has been
      exercised by payment to the Company of the Exercise Price and all taxes required
      to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the
      issuance of such shares, have been paid. 

    

    iii. Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the request
      of
      a Holder and upon surrender of this Warrant certificate, at the time of delivery
      of the certificate or certificates representing Warrant Shares, deliver to
      Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
      Warrant Shares called for by this Warrant, which new Warrant shall in all other
      respects be identical with this Warrant.

    

    
      
        
        

      

      
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    iv. Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have
      the right to rescind such exercise.

    

    v. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the Warrant
      Share Delivery Date, and if after such date the Holder is required by its broker
      to purchase (in an open market transaction or otherwise) shares of Common Stock
      to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
      the Holder anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Shares for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Company shall be required to pay the Holder
      $1,000. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In, together with applicable
      confirmations and other evidence reasonably requested by the Company. Nothing
      herein shall limit a Holder’s right to pursue any other remedies available to it
      hereunder, at law or in equity including, without limitation, a decree of
      specific performance and/or injunctive relief with respect to the Company’s
      failure to timely deliver certificates representing shares of Common Stock
      upon
      exercise of the Warrant as required pursuant to the terms hereof.

    

    vi. No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price.

    

    
      
        
        

      

      
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    vii. Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

    

    viii. Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

    

    Section
      3. Certain Adjustments.

    

    a) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company pursuant to this Warrant), (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or re-classification.

    

    b) Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall offer, sell, grant any option to purchase or offer, sell
      or grant any right to reprice its securities, or otherwise dispose of or issue
      (or announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any Person
      to acquire shares of Common Stock, at an effective price per share less than
      the
      then Exercise Price (such lower price, the “Base
      Share Price”
and
      such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (if the holder of the Common Stock or Common Stock
      Equivalents so issued shall at any time, whether by operation of purchase

     

    
      
        
        

      

      
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    price
      adjustments, reset provisions, floating conversion, exercise or exchange prices
      or otherwise, or due to warrants, options or rights per share which is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Exercise Price, such
      issuance shall be deemed to have occurred for less than the Exercise Price
      on
      such date of the Dilutive Issuance), then the Exercise Price shall be reduced
      and only reduced to equal the Base Share Price and the number of Warrant Shares
      issuable hereunder shall be increased such that the aggregate Exercise Price
      payable hereunder, after taking into account the decrease in the Exercise Price,
      shall be equal to the aggregate Exercise Price prior to such adjustment. Such
      adjustment shall be made whenever such Common Stock or Common Stock Equivalents
      are issued. Notwithstanding the foregoing, no adjustments shall be made, paid
      or
      issued under this Section 3(b) in respect of an Exempt Issuance. The Company
      shall notify the Holder in writing, no later than 2 Trading Days following
      the
      issuance of any Common Stock or Common Stock Equivalents subject to this
      section, indicating therein the applicable issuance price, or of applicable
      reset price, exchange price, conversion price and other pricing terms (such
      notice the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Warrant Shares based upon the Base Share Price
      regardless of whether the Holder accurately refers to the Base Share Price
      in
      the Notice of Exercise. 

    

    c) Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common Stock (which
      shall be subject to Section 3(b)), then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the VWAP
      determined as of the record date mentioned above, and of which the numerator
      shall be such VWAP on such record date less the then per share fair market
      value
      at such record date of the portion of such assets or evidence of indebtedness
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith. In either case the
      adjustments shall be described in a statement provided to the Holder of the
      portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common Stock. Such adjustment
      shall be made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

    

    d) Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any 

     

    
      
        
        

      

      
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    compulsory
      share exchange pursuant to which the Common Stock is effectively converted
      into
      or exchanged for other securities, cash or property (in any such case, a
“Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, at the
      option of the Holder, (a) upon exercise of this Warrant, the number of shares
      of
      Common Stock of the successor or acquiring corporation or of the Company, if
      it
      is the surviving corporation, and any additional consideration (the
“Alternate
      Consideration”)
      receivable upon or as a result of such reorganization, reclassification, merger,
      consolidation or disposition of assets by a Holder of the number of shares
      of
      Common Stock for which this Warrant is exercisable immediately prior to such
      event or (b) if the Company is acquired in an all cash transaction, cash equal
      to the value of this Warrant as determined in accordance with the Black-Scholes
      option pricing formula. For purposes of any such exercise, the determination
      of
      the Exercise Price shall be appropriately adjusted to apply to such Alternate
      Consideration based on the amount of Alternate Consideration issuable in respect
      of one share of Common Stock in such Fundamental Transaction, and the Company
      shall apportion the Exercise Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different components
      of
      the Alternate Consideration. If holders of Common Stock are given any choice
      as
      to the securities, cash or property to be received in a Fundamental Transaction,
      then the Holder shall be given the same choice as to the Alternate Consideration
      it receives upon any exercise of this Warrant following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this Section 3(d) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental
      Transaction.

    

    e) Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

    

    f) Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

    

    g) Notice
      to Holders.
      

    

    i. Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. If the Company issues a variable rate security, despite the
      prohibition thereon in the Purchase Agreement, the Company shall be deemed
      to
      have issued Common Stock or Common Stock Equivalents at the lowest possible
      conversion or exercise price at which such securities may be converted or
      exercised in the case of a Variable Rate Transaction (as defined in the Purchase
      Agreement).

    

    
      
        
        

      

      
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    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Company shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Company is a party, any sale or transfer of all or substantially all of
      the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; (E) the Company shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Company; then, in each case, the Company shall cause to
      be
      mailed to the Holder at its last address as it shall appear upon the Warrant
      Register of the Company, at least 20 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      20-day period commencing on the date of such notice to the effective date of
      the
      event triggering such notice.

    

    Section
      4. Transfer
      of Warrant.

    

    a) Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the
      Purchase Agreement, this Warrant and all rights hereunder are transferable,
      in
      whole or in part, upon surrender of this Warrant at the principal office of
      the
      Company, together with a written assignment of this Warrant substantially in
      the
      form attached hereto duly executed by the Holder or its agent or attorney and
      funds sufficient to pay any transfer taxes payable upon the making of such
      transfer. Upon such surrender and, if required, such payment, the Company shall
      execute and deliver a new Warrant or Warrants in the name of the assignee or
      assignees and in the denomination or denominations specified in such instrument
      of assignment, and shall issue to the assignor a new Warrant evidencing the
      portion of this Warrant not so assigned, and this Warrant shall promptly be
      cancelled. A Warrant, if properly assigned, may be exercised by a new holder
      for
      the purchase of Warrant Shares without having a new Warrant issued.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    b) New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

    

    c) Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

    

    d) Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company a written opinion of counsel
      (which opinion shall be in form, substance and scope customary for opinions
      of
      counsel in comparable transactions) to the effect that such transfer may be
      made
      without
      registration under
      the
      Securities Act and under applicable state securities or blue sky laws, (ii)
      that
      the holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company and (iii) that the transferee
      be
      an “accredited
      investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities Act.

    

    Section
      5. Miscellaneous.

    

    a) Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 4 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    b) No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price (or by means of
      a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be
      issued to such Holder as the record owner of such shares as of the close of
      business on the later of the date of such surrender or payment.

    

    c) Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

    

    d) Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

    

    e) Authorized
      Shares.
      

    

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      

    

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending 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 of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

    

    f) Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Purchase Agreement.

    

    g) Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

    

    h) Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

    

    i) Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

    

    j) Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    k) Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive the defense in any action
      for specific performance that a remedy at law would be adequate.

    

    l) Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

    

    m) Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

    

    n) Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

    

    o) Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

    

    6. Piggy-Back
      Registrations.
      If at
      any time prior to the Termination Date there is not an effective registration
      statement covering all of the Warrant Shares and the Company shall determine
      to
      prepare and file with the Commission a registration statement relating to an
      offering for its own account or the account of others under the Securities
      Act
      of any of its equity securities, other than on Form S-4 or Form S-8 (each as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with the stock
      option or other employee benefit plans, then the Company shall send to the
      Holder a written notice of such determination and, if within fifteen days after
      the date of such notice, the Holder shall so request in writing, the Company
      shall include in such registration statement all or any part of such Warrant
      Shares the Holder requests to be registered.

    

    

    ********************

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    

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

    

    

    Dated:
      July 7, 2006

     

     

    
      	 	
              SPECTRE
                GAMING, INC.

            
	 	 
	 	 
	 	
              By:
                /s/
                Kevin M.
                Greer                     
                 

            
	 	
                    
                Name: Kevin M. Greer

            
	 	
                    
                Title:   Chief Financial
                Officer

            

    

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF EXERCISE

    

    TO: SPECTRE
      GAMING, INC.

    

    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

    

    (2) Payment
      shall take the form of (check applicable box):

    

    [
      ] in
      lawful money of the United States; or

    

    [
      ] the
      cancellation of such number of Warrant Shares as is necessary, in accordance
      with the formula set forth in subsection 2(c), to exercise this Warrant with
      respect to the maximum number of Warrant Shares purchasable pursuant to the
      cashless exercise procedure set forth in subsection 2(c).

    

    (3) Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

    

    _______________________________

     

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      _______________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      _______________________________________________________________________________________

    

    

    

    [Common
      Stock Purchase Warrant for 1,260,000

    Shares
      of
      Common Stock, dated July ___, 2006]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

    

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

     

    
 

    
      	Holder’s Signature:	_____________________________
	 	 
	Holder’s
              Address:  	_____________________________
	 	 
	 	_____________________________

    

    
 

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    

    

    

    

    

    [Common
      Stock Purchase Warrant for 1,260,000

    Shares
      of
      Common Stock, dated July ___, 2006]THE
      WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE
      HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND, UNLESS SO REGISTERED,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
      TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT
      AND ANY APPLICABLE STATE SECURITIES LAWS.

    

    THE
      TRANSFER OF THIS WARRANT IS 

    RESTRICTED
      AS DESCRIBED HEREIN.

    

    

    CLEVELAND
      BIOLABS, INC.

    

    Warrant
      for the Purchase of Shares of Common Stock,

    par
      value
      $0.005 per Share

    

    No.
      _____          _______
      Shares

    

    

    THIS
      CERTIFIES that, for receipt in hand of [$50.00] ($0.005 per share of underlying
      Common Stock) and other value received, [SUNRISE SECURITIES CORP./ROTH CAPITAL
      PARTNERS, LLP] or their respective designees (the "Holder"),
      is
      entitled to subscribe for and purchase from CLEVELAND BIOLABS, INC., a Delaware
      corporation (the "Company"),
      upon
      the terms and conditions set forth herein, at any time or from time to time
      after July ___, 2007, and before 5:00 P.M. on July ___, 2011, New York time
      (the
      "Exercise
      Period"),
      _________ shares of the Company's Common Stock, par value $0.005 per share
      ("Common
      Stock"),
      at a
      price of $_______ per share [145%
      of the initial public offering price]
      (the
      "Exercise
      Price").
      This
      Warrant is the warrant or one of the warrants (collectively, including any
      warrants issued upon the exercise or transfer of any such warrants in whole
      or
      in part, the "Warrants")
      issued
      pursuant to the Underwriting Agreement, dated July ___, 2006, between Sunrise
      Securities Corp., as representative of the several Underwriters named therein,
      and the Company. As used herein, the term "this Warrant" shall mean and include
      this Warrant and any Warrant or Warrants hereafter issued as a consequence
      of
      the exercise or transfer of this Warrant in whole or in part. This Warrant
      shall
      be noncallable. This Warrant may not be sold, transferred, assigned, pledged
      or
      hypothecated, or be the subject of any hedging, short sale, derivative, put
      or
      call transaction that would result in the effective economic disposition of
      the
      securities until January ___, 2007, except that it may be transferred, in whole
      or in part, to (i) one or more officers, members or employees of the Holder
      (or
      the officers, members or employees of any such member); (ii) any other
      underwriting firm or member of the selling group which participated in the
      public offering of Common Stock (the "Offering")
      which
      commenced on July ___, 2006 (or the officers, members or employees of any such
      firm); (iii) a successor to the Holder, or the officers, members or employees
      of
      such successor; (iv) a purchaser of substantially all of the assets of the
      Holder; or (v) by operation of law; and the term the "Holder" as used herein
      shall include any transferee to whom this Warrant has been transferred in
      accordance with the above.

    The
      number of shares of Common Stock issuable upon exercise of the Warrants (the
      "Warrant
      Shares")
      and
      the Exercise Price may be adjusted from time to time as hereinafter set
      forth.

    

    1.
       This
      Warrant may be exercised during the Exercise Period, as to the whole or any
      lesser number of whole Warrant Shares, by the surrender of this Warrant (with
      the election form at the end hereof duly executed) to the Company at its office
      at 11000 Cedar Avenue, Suite 290, Cleveland, Ohio 44106, or at such other place
      as is designated in writing by the Company, together with a certified or bank
      cashier's check payable to the order of the Company in an amount equal to the
      Exercise Price multiplied by the number of Warrant Shares for which this Warrant
      is being exercised (the "Stock
      Purchase Price").

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.
       (a)
       In
      lieu
      of the payment of the Stock Purchase Price, the Holder shall have the right
      (but
      not the obligation), to require the Company to convert this Warrant, in whole
      or
      in part, into shares of Common Stock (the "Conversion
      Right")
      as
      provided for in this Section 2. Upon exercise of the Conversion Right, the
      Company shall deliver to the Holder (without payment by the Holder of any of
      the
      Stock Purchase Price) that number of shares of Common Stock (the "Conversion
      Shares")
      equal
      to the quotient obtained by dividing (x) the value of this Warrant (or portion
      thereof as to which the Conversion Right is being exercised if the Conversion
      Right is being exercised in part) at the time the Conversion Right is exercised
      (determined by subtracting the aggregate Stock Purchase Price of the shares
      of
      Common Stock as to which the Conversion Right is being exercised in effect
      immediately prior to the exercise of the Conversion Right from the aggregate
      Current Market Price (as defined in Section 6(c) hereof) of the shares of Common
      Stock as to which the Conversion Right is being exercised immediately prior
      to
      the exercise of the Conversion Right) by (y) the Current Market Price of one
      share of Common Stock immediately prior to the exercise of the Conversion
      Right.

    

    (b)
       The
      Conversion Rights provided under this Section 2 may be exercised, in whole
      or in
      part, at any time and from time to time, while any Warrants remain outstanding
      and during the Exercise Period. In order to exercise the Conversion Right,
      the
      Holder shall surrender to the Company, at its offices, this Warrant with the
      Cashless Exercise Form (attached hereto) duly executed. The presentation and
      surrender shall be deemed a waiver of the Holder's obligation to pay all or
      any
      portion of the aggregate purchase price payable for the shares of Common Stock
      as to which such Conversion Right is being exercised. This Warrant (or so much
      thereof as shall have been surrendered for conversion) shall be deemed to have
      been converted immediately prior to the close of business on the day of
      surrender of such Warrant for conversion (the “Notice
      Date”)
      in
      accordance with the foregoing provisions.

    

    3.
       Upon
      each
      exercise of the Holder's rights to purchase Warrant Shares or Conversion Shares,
      the Holder shall be deemed to be the holder of record of the Warrant Shares
      or
      Conversion Shares issuable upon such exercise or conversion, notwithstanding
      that the transfer books of the Company shall then be closed or certificates
      representing such Warrant Shares or Conversion Shares shall not then have been
      actually delivered to the Holder. Within three (3) business days after each
      such
      exercise or conversion of this Warrant, the Company
      shall
      issue and deliver to the Holder a certificate or certificates for the Warrant
      Shares or Conversion Shares issuable upon such exercise or conversion,
      registered in the name of the Holder or its designee or if such Warrant Shares
      or Conversion Shares are to be held in book-entry form, evidence that such
      Warrant Shares or Conversion Shares have been recorded in such form. If this
      Warrant should be exercised or converted in part only, the Company shall, upon
      surrender of this Warrant for cancellation, execute and deliver a new Warrant
      evidencing the right of the Holder to purchase the balance of the Warrant Shares
      (or portions thereof) subject to purchase hereunder.

    

    4.
       Any
      Warrants issued upon the transfer or exercise or conversion in part of this
      Warrant shall be numbered and shall be registered in a Warrant Register as
      they
      are issued. The Company shall be entitled to treat the registered holder of
      any
      Warrant on the Warrant Register as the owner in fact thereof for all purposes
      and shall not be bound to recognize any equitable or other claim to or interest
      in such Warrant on the part of any other person, and shall not be liable for
      any
      registration or transfer of Warrants which are registered or to be registered
      in
      the name of a fiduciary or the nominee of a fiduciary unless made with the
      actual knowledge that a fiduciary or nominee is committing a breach of trust
      in
      requesting such registration or transfer, or with the knowledge of such facts
      that its participation therein amounts to bad faith. This Warrant shall be
      transferable only on the books of the Company upon delivery thereof duly
      endorsed by the Holder or by his duly authorized attorney or representative,
      or
      accompanied by proper evidence of succession, assignment, or authority to
      transfer along with the Form of Assignment (attached hereto) duly completed
      and
      signed. In all cases of transfer by an attorney, executor, administrator,
      guardian, or other legal representative, duly authenticated evidence of his
      or
      its authority shall be produced. Upon any registration of transfer, the Company
      shall deliver a new Warrant or Warrants to the person entitled thereto. This
      Warrant may be exchanged, at the option of the Holder thereof, for another
      Warrant, or other Warrants of different denominations, of like tenor and
      representing in the aggregate the right to purchase a like number of Warrant
      Shares (or portions thereof), upon surrender to the Company or its duly
      authorized agent. Notwithstanding the foregoing, the Company shall have no
      obligation to cause Warrants to be transferred on its books to any person if,
      in
      the written opinion of counsel to the Company, obtained at the Company’s sole
      expense, such transfer does not comply with the provisions of the Securities
      Act
      of 1933, as amended (the "Act"),
      and
      the rules and regulations thereunder.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5.
       The
      Company shall at all time reserve and keep available out of its authorized
      and
      unissued Common Stock, solely for the purpose of providing for the exercise
      of
      the rights to purchase all Warrant Shares and/or Conversion Shares granted
      pursuant to the Warrants, such number of shares of Common Stock as shall, from
      time to time, be sufficient therefor. The Company covenants that all shares
      of
      Common Stock issuable upon exercise of this Warrant, upon receipt by the Company
      of the full Exercise Price therefor, and all shares of Common Stock issuable
      upon conversion of this Warrant, shall be validly issued, fully paid and
      nonassessable, without any personal liability attaching to the ownership
      thereof, and will not be issued in violation of any preemptive rights of
      stockholders, optionholders, warrantholders and any other persons and the
      Holders will receive good title to the securities purchased by them,
      respectively, free and clear of all liens, security interests, pledges, charges,
      encumbrances, stockholders' agreements and voting trusts which might be created
      by acts or omissions to act of the Company.

    

    6.
       (a)
       In
      case
      the Company shall at any time after the date the Warrants were first issued
      (i)
      declare a dividend on the outstanding Common Stock payable in shares of its
      capital stock, (ii) subdivide the outstanding Common Stock into a greater number
      of shares, (iii) combine the outstanding Common Stock into a smaller number
      of
      shares, or (iv) issue any shares of its capital stock by reclassification of
      the
      Common Stock (including any such reclassification in connection with a
      consolidation or merger in which the Company is the continuing corporation),
      then, in each case, the Exercise Price, and the number and kind of securities
      issuable upon exercise or conversion of this Warrant, in effect at the time
      of
      the record date for such dividend or of the effective date of such subdivision,
      combination or reclassification, shall be proportionately adjusted so that
      the
      Holder after such time shall be entitled to receive the aggregate number and
      kind of shares which, if such Warrant had been exercised or converted
      immediately prior to such time, the Holder would have owned upon such exercise
      or conversion and been entitled to receive by virtue of such dividend,
      subdivision, combination or reclassification. Such adjustment shall be made
      successively whenever any event listed above shall occur.

    

    (b)
       In
      case
      the Company shall distribute to all holders of Common Stock (including any
      such
      distribution made to the stockholders of the Company in connection with a
      consolidation or merger in which the Company is the continuing corporation),
      evidences of its indebtedness, cash or assets (other than distributions and
      dividends payable in shares of Common Stock), or rights, options, or warrants
      to
      subscribe for or purchase Common Stock), or securities convertible into or
      exchangeable for shares of Common Stock, then, in each case, the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date for the determination of stockholders entitled to receive
      such distribution by a fraction, the numerator of which shall be the Current
      Market Price per share of Common Stock on such record date, less the fair market
      value (as determined in good faith by the board of directors of the Company)
      of
      the portion of the evidences of indebtedness or assets so to be distributed,
      or
      of such rights, options, or warrants or convertible or exchangeable securities,
      or the amount of such cash, applicable to one share, and the denominator of
      which shall be such Current Market Price per share of Common Stock. Such
      adjustment shall be made successively whenever any such distribution is made,
      and shall become effective on the record date for the determination of
      stockholders entitled to receive such distribution.

    

    (c)
       For
      the
      purpose of any computation under this Section 6, the term "Current
      Market Price"
      per
      share of Common Stock on any date shall be deemed to be the greater of (i)
      the
      Closing Price for the Trading Day immediately preceding (but not including)
      the
      record date or the Notice Date, as the case may be, (ii) the average of the
      Closing Prices for the 10 Trading Days immediately preceding (but not including)
      the record date or the Notice Date, as the case may be, and (iii) if applicable,
      the average of the Closing Prices for the 90 Trading Days immediately following
      the date on which a Registration Statement covering the resale of the Warrant
      Shares or Conversion Shares is declared effective (or, if the record date or
      the
      Notice Date, as the case may be, is less than 90 Trading Days following such
      effective date, then such shorter period). As used herein, the term “Closing
      Price”
      means,
      for any Trading Day, the price determined by the first of the following clauses
      that applies: (A) if the Common Stock is then listed or quoted on New York
      Stock
      Exchange, the American Stock Exchange, the NASDAQ
      National
      Market, the NASDAQ
      Capital
      Market or the OTC Bulletin Board or any successor to any of the foregoing,
      the
      closing price per share of the Common Stock for such date on the primary market
      or exchange on which the Common Stock is then listed or quoted; (B) if
      prices for the Common Stock are then reported in the “Pink Sheets” published by
      the National Quotation Bureau Incorporated (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent closing bid
      price per share of the Common Stock so reported; or (C) in all other cases,
      the fair market value of a share of Common Stock as determined in good faith
      by
      the Board, after giving consideration to the Company’s most recent equity
      financing or other valuation. As used herein, "Trading
      Day"
      means
      (i) a day on which the Common Stock is traded on a Trading Market, or (ii)
      if
      the Common Stock is not listed on a Trading Market, a day on which the Common
      Stock is traded in the over-the-counter market is quoted in the over-the-counter
      market as reported by the National Quotation Bureau Incorporated (or any similar
      organization or agency succeeding to its functions of reporting prices);
      provided, that in the event that the Common Stock is not listed or quoted as
      set
      forth in (i) or (ii) hereof, then Trading Day shall mean a Business Day;
      "Trading
      Market"
      means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      NASDAQ National Market, the NASDAQ Capital Market, the Over-The-Counter Bulletin
      Board or the “Pink Sheets” published by the National Quotation Bureau
      Incorporated Sheets on which the Common Stock is listed or quoted for trading
      on
      the date in question; and "Business
      Day"
      means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday or a day on which banking institutions in the State of New York are
      authorized or required by law or other governmental action to
      close.

     

    
      
        
        

      

      
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    (d)
       All
      calculations under this Section 6 shall be made to the nearest cent or to the
      nearest one-thousandth of a share, as the case may be.

    

    (e)
       In
      any
      case in which this Section 6 shall require that an adjustment in the Exercise
      Price be made effective as of a record date for a specified event, the Company
      may elect to defer, until the occurrence of such event, issuing to the Holder,
      if the Holder exercised or converted this Warrant after such record date, the
      shares of Common Stock, if any, issuable upon such exercise or conversion over
      and above the shares of Common Stock, if any, issuable upon such exercise or
      conversion on the basis of the Exercise Price in effect prior to such
      adjustment; provided,
      however,
      that
      the Company shall deliver to the Holder a due bill or other appropriate
      instrument evidencing the Holder's right to receive such additional shares
      upon
      the occurrence of the event requiring such adjustment.

    

    (f)
       Upon
      each
      adjustment of the Exercise Price as a result of the calculations made in Section
      6(a) or 6(b) hereof, this Warrant shall thereafter evidence the right to
      purchase, at the adjusted Exercise Price, that number of shares (calculated
      to
      the nearest thousandth) obtained by dividing (i) the product obtained in
      multiplying the number of shares purchasable upon exercise of this Warrant
      prior
      to adjustment of the number of shares by the Exercise Price in effect prior
      to
      adjustment of the Exercise Price, by (ii) the Exercise Price in effect after
      such adjustment of the Exercise Price.

    

       (g)
       Whenever
      there shall be an adjustment as provided in this Section 6, the Company shall
      promptly cause written notice thereof to be sent by registered mail, postage
      prepaid, to the Holder, at its address as it shall appear in the Warrant
      Register, which notice shall be accompanied by an officer's certificate setting
      forth the number of Warrant Shares purchasable upon the exercise of this Warrant
      and the Exercise Price after such adjustment and setting forth a brief statement
      of the facts requiring such adjustment and the computation thereof.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (h)
       The
      Company shall not be required to issue fractions of shares of Common Stock
      or
      other capital stock of the Company upon the exercise or conversion of this
      Warrant. If any fraction of a share would be issuable on the exercise or
      conversion of this Warrant (or specified portions thereof) but for the preceding
      sentence, the Company shall
      purchase
      such fraction for an amount in cash equal to the same fraction of the Current
      Market Price of such share of Common Stock on the date of exercise or conversion
      of this Warrant.

    

    
      7.(a)
         In
        case
        of any consolidation with or merger of the Company with or into another
        corporation (other than a merger or consolidation in which the Company is
        the
        surviving or continuing corporation), or in case of any sale, lease or
        conveyance to another corporation of the property and assets of any nature
        of
        the Company as an entirety or substantially as an entirety, such successor,
        leasing or purchasing corporation, as the case may be, shall (i) execute
        with
        the Holder an agreement providing that the Holder shall have the right
        thereafter to receive upon exercise or conversion of this Warrant solely
        the
        kind and amount of shares of stock and other securities, property, cash,
        or any
        combination thereof receivable from such other corporation upon such
        consolidation, merger, sale, lease, or conveyance by a holder of the number
        of
        shares of Common Stock for which this Warrant would have been exercisable
        or
        into which this Warrant could have been converted immediately prior to such
        consolidation, merger, sale, lease or conveyance, and (ii) make effective
        provision in its certificate of incorporation or otherwise, if necessary,
        to
        effect such agreement. Such agreement shall provide for adjustments which
        shall
        be as nearly equivalent as practicable to the adjustments in Section 6
        hereof.

    

    

      (b)
       In
      case
      of any reclassification or change of the shares of Common Stock issuable upon
      exercise or conversion of this Warrant (other than a change in par value or
      from
      a specified par value to no par value, or as a result of a subdivision or
      combination, but including any change in the shares into two or more classes
      or
      series of shares), or in case of any consolidation or merger of another
      corporation into the Company in which the Company is the continuing corporation
      and in which there is a reclassification or change (including a change to the
      right to receive cash or other property) of the shares of Common Stock (other
      than a change in par value, or from a specified par value to no par value,
      or as
      a result of a subdivision or combination, but including any change in the shares
      into two or more classes or series of shares), the Holder shall have the right
      thereafter to receive upon exercise or conversion of this Warrant solely the
      kind and amount of shares of stock and other securities, property, cash, or
      any
      combination thereof receivable upon such reclassification, change,
      consolidation, or merger by a holder of the number of shares of Common Stock
      for
      which this Warrant would have been exercisable or into which this Warrant could
      have been converted immediately prior to such reclassification, change,
      consolidation or merger. Thereafter, appropriate provision shall be made for
      adjustments which shall be as nearly equivalent as practicable to the
      adjustments in Section 6.

    

      (c)
       The
      above
      provisions of this Section 7 shall similarly apply to successive
      reclassifications and changes of shares of Common Stock and to successive
      consolidations, mergers, sales, leases or conveyances.

    

      8.
       In
      case
      at any time the Company shall propose (i) to pay any dividend or make any
      distribution on shares of Common Stock in shares of Common Stock or make any
      other distribution
      (other
      than regularly scheduled cash dividends which are not in a greater amount per
      share than the most recent such dividend) to all holders of Common Stock; or
      (ii) to issue any rights, warrants or other securities to all holders of Common
      Stock entitling them to purchase any additional shares of Common Stock or any
      other rights, warrants or other securities; or (iii) to effect any
      reclassification or change of outstanding shares of Common Stock, or any
      consolidation, merger, sale, lease or conveyance of property, described in
      Section 7; or (iv) to effect any liquidation, dissolution or winding-up of
      the
      Company; or (v) to take any other action which would cause an adjustment to
      the
      Exercise Price; then, and in any one or more of such cases, the Company shall
      give written notice thereof, by registered mail, postage prepaid, to each Holder
      at the address for such Holder as it shall appear in the Warrant Register,
      mailed at least 15 days prior to (i) the date as of which the holders of record
      of shares of Common Stock to be entitled to receive any such dividend,
      distribution, rights, warrants, other securities are to be determined, (ii)
      the
      date on which any such reclassification, change of outstanding shares of Common
      Stock, consolidation, merger, sale, lease, conveyance of property, liquidation,
      dissolution or winding-up is expected to become effective, and the date as
      of
      which it is expected that holders of record of shares of Common Stock shall
      be
      entitled to exchange their shares for securities or other property, if any,
      deliverable upon such reclassification, change of outstanding shares,
      consolidation, merger, sale, lease, conveyance of property, liquidation,
      dissolution or winding-up, or (iii) the date of such action which would require
      an adjustment to the Exercise Price.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

      9. The
      issuance of any shares or other securities upon the exercise or conversion
      of
      this Warrant, and the delivery of certificates or other instruments representing
      such shares or other securities, shall be made without charge to the Holder
      for
      any tax or other charge in respect of such issuance. The Company shall not,
      however, be required to pay any tax which may be payable in respect of any
      transfer involved in the issue and delivery of any certificate in a name other
      than that of the Holder and the Company shall not be required to issue or
      deliver any such certificate unless and until the person or persons requesting
      the issue thereof shall have paid to the Company the amount of such tax or
      shall
      have established to the satisfaction of the Company that such tax has been
      paid.

    

    10.
       (a)
       If,
      at
      any time during the period commencing upon July ___, 2006 and ending July ___,
      2012, the Company shall file a registration statement (other than on Form S-4,
      Form S-8 or any successor form) with the Securities and Exchange Commission
      (the
      "Commission")
      while
      any Underwriters' Securities (as hereinafter defined) are outstanding, the
      Company shall give all the then holders of any Underwriters' Securities (the
      "Eligible
      Holders")
      at
      least 30
      days
      prior written notice of the filing of such registration statement. If requested
      by any Eligible Holder in writing within 20 days after receipt of any such
      notice, the Company shall, at the Company's sole expense (excluding fees and
      expenses of Holder's counsel and any underwriting or selling commissions),
      register or qualify all or, at each Eligible Holder's option, any portion of
      the
      Underwriters' Securities of any Eligible Holder who shall have made such
      request, concurrently with the registration of such other securities, all to
      the
      extent required to permit the public offering and sale of the Underwriters'
      Securities through the facilities of all appropriate securities exchanges and
      the over-the-counter market, and will use its best efforts through its officers,
      directors, auditors and counsel to cause such registration statement to become
      effective as promptly as practicable. Notwithstanding the foregoing, if the
      managing underwriter of any such offering shall advise the Company in writing
      that, in its opinion, the distribution of all or a portion of the Underwriters'
      Securities requested by the Eligible Holders to be included in the registration
      concurrently with the securities being registered by the Company would
      materially adversely affect the distribution of such securities by the Company
      for its own account, then any Eligible Holder who shall have requested
      registration of his or its Underwriters' Securities shall delay the offering
      and
      sale of such Underwriters' Securities (or the portions thereof so designated
      by
      such managing underwriter) for such period, not to exceed 90 days (the
      "Delay
      Period"),
      as
      the managing underwriter shall request, provided that no such delay shall be
      required as to any Underwriters' Securities if any securities of the Company
      are
      included in such registration statement and eligible for sale during the Delay
      Period for the account of any person other than the Company and any Eligible
      Holder unless the securities included in such registration statement and
      eligible for sale during the Delay Period for such other person shall have
      been
      reduced pro rata to the reduction of the Underwriters' Securities which were
      requested to be included and eligible for sale during the Delay Period in such
      registration. As used herein, "Underwriters'
      Securities"
      shall
      mean the Warrants and the Warrant Shares and the Conversion Shares which, in
      each case, have not been previously sold pursuant to a registration statement
      or
      Rule 144 promulgated under the Act.

    

    (b)
       If,
      at
      any time during the period commencing upon July ___, 2006 and ending July ___,
      2010, the Company shall receive a written request, from Eligible Holders who
      in
      the aggregate own (or upon exercise of all Warrants then outstanding would
      own)
      a majority of the total number of shares of Common Stock then included (or
      upon
      such exercise would be included) in the Underwriters' Securities (the
      "Majority
      Holders"),
      to
      register the sale of all or part of such Underwriters' Securities, the Company
      shall, as promptly as practicable and at the Company’s sole expense (excluding
      fees and expenses of Holder's counsel and any underwriting or selling
      commissions), prepare and file with the Commission a registration statement
      sufficient to permit the public offering and sale of the Underwriters'
      Securities through the facilities of all appropriate securities exchanges and
      the over-the counter market (including, for purposes hereof, the Capital Market
      System of the Nasdaq Stock Market, Inc.), and will cause such registration
      statement to become effective as promptly as practicable; provided,
      however,
      that
      only one (1) demand registration request pursuant to this Section 10(b) shall
      be
      at the Company’s expense.
      Within
      three business days after receiving any request contemplated by this Section
      10(b), the Company shall give written notice to all the other Eligible Holders,
      advising each of them that the Company is proceeding with such registration
      and
      offering to include therein all or any portion of any such other Eligible
      Holder's Underwriters' Securities, provided that the Company receives a written
      request to do so from such Eligible Holder within 20 days after receipt by
      him
      or it of the Company's notice. 

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c)
       In
      addition to the rights granted pursuant to Section 10(a) and 10(b) above, at
      any
      time during the period commencing upon July ___, 2006 and ending July ___,
      2010,
      any Eligible Holder shall have a one-time right to
      request the Company to register for resale under the Securities Act all or
      any
      portion of the Underwriters'
      Securities
      held by
      such Holder. The
      Company shall, as promptly as practicable and at such Holder’s sole expense,
      prepare and file with the Commission a registration statement sufficient to
      permit the public offering and sale of such Underwriters' Securities through
      the
      facilities of all appropriate securities exchanges and the over-the counter
      market (including, for purposes hereof, the Capital Market System of the Nasdaq
      Stock Market, Inc.), and will cause such registration statement to become
      effective as promptly as practicable. Such registration statement shall not
      include any Common Stock or other securities for the account of any other holder
      without the prior written consent of such Holder.

    

    (d)
       In
      the
      event of a registration pursuant to the provisions of this Section 10, the
      Company shall use its best efforts to cause the Underwriters' Securities so
      registered to be registered or qualified for sale under the securities or blue
      sky laws of such jurisdictions as the Holder or Holders may reasonably request;
      provided,
      however,
      that
      the Company shall not for any such purpose be required to (A) qualify generally
      to do business as a foreign corporation in any jurisdiction wherein it is not
      otherwise required to be so qualified, (B) subject itself to taxation in any
      jurisdiction wherein it is not so subject or (C) consent to general service
      of
      process in any such jurisdiction or otherwise take action that would subject
      it
      to the general jurisdiction of the courts of any jurisdiction to which it is
      not
      so subject.

    

    (e)
       The
      Company shall keep effective any registration or qualification contemplated
      by
      this Section 10 and shall from time to time amend or supplement each applicable
      registration statement, preliminary prospectus, final prospectus, application,
      document and communication for such period of time as shall be required to
      permit the Eligible Holders to complete the offer and sale of the Underwriters'
      Securities covered thereby.

    

       (f)
       In
      the
      event of a registration pursuant to the provisions of this Section 10, the
      Company shall furnish to each Eligible Holder such number of copies of the
      registration statement and of each amendment and supplement thereto (in each
      case, including all exhibits), such reasonable number of copies of each
      prospectus contained in such registration statement and each supplement or
      amendment thereto (including each preliminary prospectus), all of which shall
      conform to the requirements of the Act and the rules and regulations thereunder,
      and such other documents, as any Eligible Holder may reasonable request to
      facilitate the disposition of the Underwriters' Securities included in such
      registration.

    

       (g)
       In
      the
      event of a registration pursuant to the provisions of this Section 10, the
      Company shall furnish each Eligible Holder of any Underwriters' Securities
      so
      registered with an opinion of its counsel (reasonably acceptable to the Eligible
      Holders) to the effect that (i) the registration statement has become effective
      under the Act and no order suspending the effectiveness of the registration
      statement, preventing or suspending the use of the registration statement,
      any
      preliminary prospectus, any final prospectus or any amendment or supplement
      thereto has been issued, nor has the Commission or any securities or blue sky
      authority of any jurisdiction instituted or threatened to institute any
      proceedings with respect to such an order, (ii) the registration statement
      and
      each prospectus forming a part thereof (including each preliminary prospectus),
      and any amendment or supplement, thereto, complies
      as to
      form with the Act and the rules and regulations thereunder, and (iii) such
      counsel has no knowledge of any material misstatement or omission in such
      registration statement or any prospectus, as amended or supplemented. Such
      opinion shall also state the jurisdictions in which the Underwriters' Securities
      have been registered or qualified for sale pursuant to the provisions of Section
      10(d).

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

       (h)
       In
      the
      event of a registration pursuant to the provision of this Section 10, the
      Company shall enter into a cross-indemnity agreement and a contribution
      agreement, each in customary form, with each underwriter, if any, and, if
      requested, enter into an underwriting agreement containing conventional
      representations, warranties, allocation of expenses, and customary closing
      conditions, including, but not limited to, opinions of counsel and accountants'
      cold comfort letters, with any underwriter who acquires any Underwriters'
      Securities.

    

    (i)
       The
      Company covenants and agrees that, until all the Underwriters' Securities have
      been sold under a registration statement or pursuant to Rule 144 under the
      Act,
      it shall keep current in filing all reports, statements and other materials
      required to be filed with the Commission to permit holders of the Underwriters'
      Securities to sell such securities under Rule 144.

    

    11.
       (a)
       Subject
      to the conditions set forth below, the Company agrees to indemnify and hold
      harmless each Eligible Holder, its officers, directors, members, employees,
      agents and counsel, and each person, if any, who controls any such person within
      the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
      Act of 1934, as amended (the "Exchange
      Act"),
      from
      and against any and all loss, liability, charge, claim, damage and expense
      whatsoever (which shall include, for all purposes of this Section 11, but not
      be
      limited to, reasonable attorneys' fees and any and all reasonable expense
      whatsoever incurred in investigating, preparing or defending against any
      litigation, commenced or threatened, or any claim whatsoever, and any and all
      amounts paid in settlement of any claim or litigation), as and when incurred,
      arising out of, based upon, or in connection with (i) any untrue statement
      or
      alleged untrue statement of a material fact contained (A) in any registration
      statement, preliminary prospectus or final prospectus (as from time to time
      amended and supplemented), or any amendment or supplement thereto, or any free
      writing prospectus, relating to the sale of any of the Underwriters' Securities,
      or (B) in any application or other document or communication (in this Section
      11
      collectively called an "Application")
      executed by or on behalf of the Company or based upon written information
      furnished by or on behalf of the Company filed in any jurisdiction in order
      to
      register or qualify any of the Underwriters' Securities under the securities
      or
      blue sky laws thereof or filed with the Commission or any securities exchange;
      or
      any
      omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading, unless
      such
      statement or omission was made in reliance upon and in conformity with written
      information furnished to the Company with respect to such Eligible Holder by
      or
      on behalf of such person expressly for inclusion in any registration statement,
      preliminary prospectus or final prospectus, any amendment or supplement thereto,
      any free writing prospectus, or in any Application, as the case may be, or
      (ii)
      any breach of any representation, warranty, covenant or agreement of the Company
      contained in this Warrant. The foregoing agreement to indemnify shall be in
      addition to any liability the Company may otherwise have, including liabilities
      arising under this Warrant.

    

    If
      any
      action is brought against any Eligible Holder or any of its officers, directors,
      members, employees, agents or counsel, or any controlling persons of such person
      (an "Indemnified
      Party")
      in
      respect of which indemnity may be sought against the Company pursuant to the
      foregoing paragraph, such indemnified party or parties shall promptly notify
      the
      Company in writing of the institution of such action (provided that the failure
      so to notify shall not relieve the Company from any liability pursuant to this
      Section 11(a), but shall only reduce the amount of the indemnification if any
      to
      the extent that the Company is materially prejudiced by such delay) and the
      Company shall promptly assume the defense of such action, including the
      employment of counsel (reasonably satisfactory to such indemnified party or
      parties) and payment of expenses. Such indemnified party or parties shall have
      the right to employ its or their own counsel in any such case, but the fees
      and
      expenses of such counsel shall be at the expense of such indemnified party
      or
      parties unless the employment of such counsel shall have been authorized in
      writing by the Company in connection with the defense of such action or the
      Company shall not have promptly employed counsel reasonably satisfactory to
      such
      indemnified party or parties to have charge of the defense of such action or
      such indemnified party or parties shall have reasonably concluded that there
      may
      be a conflict of interest between the indemnified party or parties and the
      Company in the conduct of the defense of such action in any of which events
      such
      fees and expenses shall be borne by the Company and the Company shall not have
      the right to direct the defense of such action on behalf of the indemnified
      party or parties. Anything in this Section 11 to the contrary notwithstanding,
      the Company shall not be liable for any settlement of any such claim or action
      effected without its written consent, which shall not be unreasonably withheld.
      The Company shall not, without the prior written consent of each indemnified
      party that is not released as described in this sentence, settle or compromise
      any action, or permit a default or consent to the entry of judgment in or
      otherwise seek to terminate any pending or threatened action, in respect of
      which indemnity may be sought hereunder (whether or not any indemnified party
      is
      a party thereto), unless such settlement, compromise, consent or termination
      includes an unconditional release of each indemnified party from all liability
      in respect of such action. The Company agrees promptly to notify the Eligible
      Holders of the commencement of any litigation or proceedings against the Company
      or any of its Securities or any preliminary prospectus, prospectus, registration
      statement, or amendment or supplement thereto, or any free writing prospectus,
      or any Application relating to any sale of any Underwriters'
      Securities.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (b)
       The
      Holder agrees to indemnify and hold harmless the Company, each director of
      the
      Company, each officer of the Company who shall have signed any registration
      statement covering Underwriters' Securities held by the Holder, each other
      person, if any, who controls the Company within the meaning of Section 15 of
      the
      Act or Section 20(a) of the Exchange Act, and its or their respective counsel,
      to the same extent as the foregoing indemnity from the Company to the Holder
      in
      Section 11(a), but only with respect to statements or omissions, if any, made
      in
      any registration statement, preliminary prospectus or final prospectus (as
      from
      time to time amended and supplemented), or any amendment or supplement thereto,
      or any free writing prospectus, or in any Application, in reliance upon and
      in
      conformity with written information furnished to the Company with respect to
      the
      Holder by or on behalf of the Holder expressly for inclusion in any such
      registration statement, preliminary prospectus or final prospectus, or any
      amendment or supplement thereto, or in any application, as the case may be.
      If
      any action shall be brought against the Company or any other person so
      indemnified based on any such registration statement, preliminary prospectus
      or
      final prospectus, or any amendment or supplement thereto, or any free writing
      prospectus, or in any Application, and in respect of which indemnity may be
      sought against the Holder pursuant to this Section 11(b), the Holder shall
      have
      the rights and duties given to the Company, and the Company and each other
      person so indemnified shall have the rights and duties given to the indemnified
      parties, by the provisions of Section 11(a).

    

    (c)
       To
      provide for just and equitable contribution, if (i) an indemnified party makes
      a
      claim for indemnification pursuant to Section 11(a) or 11(b) (subject to the
      limitations thereof) but it is found in a final judicial determination, not
      subject to further appeal, that such indemnification may not be enforced in
      such
      case, even though this Agreement expressly provides for indemnification in
      such
      case, or (ii) any indemnified or indemnifying party seeks contribution under
      the
      Act, the Exchange Act or otherwise, then the Company (including for this purpose
      any contribution made by or on behalf of any director of the Company, any
      officer of the Company who signed any such registration statement, any
      controlling person of the Company, and its or their respective counsel), as
      one
      entity, and the Eligible Holders of the Underwriters' Securities included in
      such registration in the aggregate (including for this purpose any contribution
      by or on behalf of an indemnified party), as a second entity, shall contribute
      to the losses, liabilities, claims, damages and expenses whatsoever to which
      any
      of them may be subject, on the basis of relevant equitable considerations such
      as the relative fault of the Company and such Eligible Holders in connection
      with the facts which resulted in such losses, liabilities, claims, damages
      and
      expenses. The relative fault, in the case of an untrue statement, alleged untrue
      statement, omission or alleged omission, shall be determined by, among other
      things, whether such statement, alleged statement, omission or alleged omission
      relates to information supplied by the Company or by such Eligible Holders,
      and
      the parties' relative intent, knowledge, access to information and opportunity
      to correct or prevent such statement, alleged statement, omission or alleged
      omission. The Company and the Holder agree that it would be unjust and
      inequitable if the respective obligations of the Company and the Eligible
      Holders for contribution were determined by pro rata or per capita allocation
      of
      the aggregate losses, liabilities, claims, damages and expenses (even if the
      Holder and the other indemnified parties were treated as one entity for such
      purpose) or by any other method of allocation that does not
      reflect
      the equitable considerations referred to in this Section 11(c). In no case
      shall
      any Eligible Holder be responsible for a portion of the contribution obligation
      imposed on all Eligible Holders in excess of its pro rata share based on the
      number of shares of Common Stock owned by it (or which would be owned by it
      upon
      exercise of all Underwriters' Securities) and included in such registration
      as
      compared to the number of shares of Common Stock owned by it (or which would
      be
      owned by it upon exercise of all Underwriters' Securities by all Eligible
      Holders) and included in such registration. No person guilty of a fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Act) shall be
      entitled to contribution from any person who is not guilty of such fraudulent
      misrepresentation. For purposes of this Section 11(c), each person, if any,
      who
      controls any Eligible Holder within the meaning of Section 15 of the Act or
      Section 20(a) of the Exchange Act and each officer, director, member, employee,
      agent and counsel of each such Eligible Holder or control person shall have
      the
      same rights to contribution as such Eligible Holder or control person and each
      person, if any, who controls the Company within the meaning of Section 15 of
      the
      Act or Section 20(a) of the Exchange Act, each officer of the Company who shall
      have signed any such registration statement, each director of the Company,
      and
      its or their respective counsel shall have the same rights to contribution
      as
      the Company, subject in each case to the provisions of this Section 11(c).
      Anything in this Section 11(c) to the contrary notwithstanding, no party shall
      be liable for contribution with respect to the settlement of any claim or action
      effected without its written consent. This Section 11(c) is intended to
      supersede any right to contribution under the Act, the Exchange Act or
      otherwise.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    12.
       (a) Notwithstanding
      anything to the contrary contained herein, at
      any
      time that any of the Company’s equity securities are registered under Section 12
      of the Securities and
      Exchange
      Act of 1934, as amended (the “Exchange
      Act”), the
      number of shares of Common Stock 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 4.999% (the “5%
      Maximum Percentage”)
      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); provided,
      that this Section 12(a) shall not apply to any Holder whose beneficial
      ownership, prior to the any exercise of this Warrant (or otherwise in respect
      hereof), had already exceeded the 5% Maximum Percentage. 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. The Company
      shall, instead of issuing shares of Common Stock in excess of the limitation
      referred to in this Section 12(a), suspend its obligation to issue shares in
      excess of the foregoing limitation until such time, if any, as such shares
      of
      Common Stock may be issued in compliance with such limitation. Additionally,
      by written
      notice to the Company, the Holder may waive the provisions of this Section
      12(a)
      or increase or decrease the 5% Maximum Percentage to any other percentage
      specified in such notice; provided, that any such waiver or increase or decrease
      will apply only to the Holder and not to any other holder of
      Warrants.
      As used
      herein, the term "Affiliate"
      means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144; and "Person"
      means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

    

    (b) Notwithstanding
      anything to the contrary contained herein and regardless of whether the
      restrictions contained in Section 12(a) are waived as provided therein, the
      number of shares of Common Stock 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 9.999% (the “10%
      Maximum Percentage”)
      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);
provided,
      that this Section 12(b) shall not apply to any Holder whose beneficial
      ownership, prior to the any exercise of this Warrant (or otherwise in respect
      hereof), had already exceeded the 10% Maximum Percentage.
      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. The Company shall, instead of issuing shares of Common Stock in
      excess of the limitation referred to in this Section 12(b), suspend its
      obligation to issue shares in excess of the foregoing limitation until such
      time, if any, as such shares of Common Stock may be issued in compliance with
      such limitation.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (c) This
      Section 12 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 or may become
      entitled to pursuant to the terms of this Warrant. In addition, this provision
      shall not in any way limit any other adjustment to be made herein.

    

    13. Unless
      registered pursuant to the provisions of Section 10 hereof, the Warrant Shares
      or Conversion Shares issued upon exercise or conversion of the Warrants shall
      be
      subject to a stop transfer order and the certificate or certificates evidencing
      such Warrant Shares shall bear the following legend:

    

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
      SECURITIES LAWS AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD EXCEPT
      PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
      REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS."

    

    14.
       Upon
      receipt of evidence satisfactory to the Company of the loss, theft, destruction
      or mutilation of any Warrant (and upon surrender of any Warrant if mutilated),
      and upon reimbursement of the Company's reasonable incidental expenses, the
      Company shall execute and deliver to the Holder thereof a new Warrant of like
      date, tenor and denomination.

    

    15.
       The
      Holder of any Warrant shall not have, solely on account of such status, any
      rights of a stockholder of the Company, either at law or in equity, or to any
      notice of meetings of stockholders or of any other proceedings of the Company,
      except as provided in this Warrant.

    

    16.
       This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York applicable to contracts made and performed within such State,
      without regard to the principles thereof respecting conflicts of
      law.

    

    

    Dated:
      July ___, 2006

     

    
      	 	 	 
	 	CLEVELAND
              BIOLABS,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Title:

            
	 	 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

        

    

    FORM
      OF ASSIGNMENT

    

    

    (To
      be
      executed by the registered holder if such holder desires to transfer the
      attached Warrant.)

    

    FOR
      VALUE
      RECEIVED, _______________________ hereby sells, assigns and transfers unto
      __________________ a Warrant to purchase ______ shares of Common Stock, par
      value $.0005 per share, of Cleveland BioLabs, Inc. (the "Company"), together
      with all right, title and interest therein, and does hereby irrevocably
      constitute and appoint ________________ attorney to transfer such Warrant on
      the
      books of the Company, with full power of substitution.

    

    Dated:_____________________

    

          Signature
      ___________________________

    

    

    

    NOTICE

    

    The
      Signature on the foregoing Assignment must correspond to the name as written
      upon the fact of this Warrant in every particular, without alteration or
      enlargement or any change whatsoever.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    To:
       Cleveland
      BioLabs, Inc.

    1100
      Cedar Avenue

    Suite
      290

    Cleveland,
      OHIO 44106

     

    

    ELECTION
      TO EXERCISE

    

    The
      undersigned hereby exercises his or its rights to purchase _______ Warrant
      Shares covered by the within Warrant and tenders payment herewith in the amount
      of $________ in accordance with the terms thereof, and requests that
      certificates for such securities be issued in the name of, and delivered
      to:

    

    

    --------------------------------------------------------------------------------

    

    --------------------------------------------------------------------------------

    

    --------------------------------------------------------------------------------

    (Print
      Name, Address and Social Security

    or
      Tax
      Identification Number)

    

    and,
      if
      such number of Warrant Shares shall not be all the Warrant Shares covered by
      the
      within Warrant, that a new Warrant for the balance of the Warrant Shares covered
      by the within Warrant be registered in the name of, and delivered to, the
      undersigned at the address stated below.

    

    

    Dated:_________________________
      Name __________________________________

         (Print)

    

    

    Address:________________________________________________________________________

    

    

    

        __________________________________

         (Signature)

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    To:
       Cleveland
      BioLabs, Inc.

    1100
      Cedar Avenue

    Suite
      290

    Cleveland,
      OHIO 44106

    

    CASHLESS
      EXERCISE FORM

    (To
      be
      executed upon conversion of the attached Warrant)

    

    The
      undersigned hereby irrevocably elects to surrender its Warrant for the number
      of
      shares of Common Stock as shall be issuable pursuant to the cashless exercise
      provisions set forth in Section 2 of the within Warrant, in respect of ____
      shares of Common Stock underlying the within Warrant, and requests that
      certificates for such securities be issued in the name of and delivered
      to:

    

    

    --------------------------------------------------------------------------------

    

    --------------------------------------------------------------------------------

    

    --------------------------------------------------------------------------------

    (Print,
      Name, Address and Social Security

    or
      Tax
      Identification Number)

    

    and,
      if
      such number of shares shall not be all the shares exchangeable or purchasable
      under the within Warrant, that a new Warrant for the balance of the Warrant
      Shares covered by the within Warrant be registered in the name of, and delivered
      to, the undersigned at the address stated below.

    

    

    Dated:_________________________
      Name __________________________________

         (Print)

    

    

    Address:________________________________________________________________________

    

    

    

        __________________________________

         (Signature)

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