Document:

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

    

    DRINKS
      AMERICAS HOLDINGS, LTD.

     

     

    Warrant
      Shares: _________     Issue
      Date: December 14, 2007

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, ____________ (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 5 year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Drinks Americas Holdings,
      Ltd., a Delaware corporation (the “Company”),
      up to
      _______ shares (the “Warrant
      Shares”)
      of
      common stock, par value $0.001 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
      December 18, 2007, among the Company and the purchasers signatory
      thereto.

     

    Section
      2. Exercise.

     

    
      
         

      

      
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    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); and, within 3 Trading Days of the date said Notice of Exercise is
      delivered to the Company, 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, in which case,
      the Holder shall surrender this Warrant to the Company for cancellation within
      3
      Trading Days of the date the final Notice of Exercise is delivered to the
      Company. 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. 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 per share of the Common Stock under this Warrant shall be
$0.50,
      subject
      to adjustment hereunder (the “Exercise
      Price”).

     

    c) [INTENTIONALLY
      DELETED].

     

    
      
         

      

      
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    d) Exercise
      Limitations.
      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 as set forth on the applicable Notice of 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
      the Beneficial Ownership Limitation (as defined below).  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 such
      determination 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 Common 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), 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 together with any Affiliates) 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 together with any Affiliates) 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 “Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      exercise of this Warrant. The Beneficial Ownership Limitation 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 to change the Beneficial
      Ownership Limitation to 9.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock upon exercise of this Warrant, and the provisions of this Section 2(d)
      shall continue to apply. Upon such a change by a Holder of the Beneficial
      Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the
      Beneficial Ownership Limitation may not be further waived by such Holder. The
      provisions of this paragraph shall be construed and 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 Beneficial Ownership Limitation herein contained
      or to make changes or supplements necessary or desirable to properly give effect
      to such limitation. The limitations contained in this paragraph shall apply
      to a
      successor holder of this Warrant.

     

    
      
         

      

      
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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 created
      by the Company 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
      is
      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 (or by cashless exercise, if permitted) 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.

     

    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.

     

    
      
         

      

      
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    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) or the Holder’s
      brokerage firm otherwise purchases, 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 and, upon request of
      the
      Company, evidence of the amount of such loss. 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 at
      its
      election, either pay a cash adjustment in respect of such final fraction in
      an
      amount equal to such fraction multiplied by the Exercise Price or round up
      to
      the next whole share.

     

    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.

     

    
      
         

      

      
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    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 upon exercise of 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) [INTENTIONALLY
      DELETED].

     

    c) Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Warrant is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the VWAP at the record date mentioned below, then the
      Exercise Price shall be multiplied by a fraction, of which the denominator
      shall
      be the number of shares of the Common Stock outstanding on the date of issuance
      of such rights or warrants plus the number of additional shares of Common Stock
      offered for subscription or purchase, and of which the numerator shall be the
      number of shares of the Common Stock outstanding on the date of issuance of
      such
      rights or warrants plus the number of shares which the aggregate offering price
      of the total number of shares so offered (assuming receipt by the Company in
      full of all consideration payable upon exercise of such rights, options or
      warrants) would purchase at such VWAP. Such adjustment shall be made whenever
      such rights or warrants are issued, and shall become effective immediately
      after
      the record date for the determination of stockholders entitled to receive such
      rights, options or warrants. 

     

    
      
         

      

      
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    d) 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.

     

    e) 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 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, 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. 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(e) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental Transaction.
      Notwithstanding anything to the contrary, in the event of a Fundamental
      Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction”
as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended,
      or (3) a Fundamental Transaction involving a person or entity not traded on
      a
      national securities exchange, the Nasdaq Global Select Market, the Nasdaq Global
      Market, the Nasdaq Capital Market, the Company or any successor entity shall
      pay
      at the Holder’s option, exercisable at any time concurrently with or within 30
      days after the consummation of the Fundamental Transaction, an amount of cash
      equal to the value of this Warrant as determined in accordance with the
      Black-Scholes option pricing formula using an expected volatility equal to
      the
      100 day historical price volatility obtained from the HVT function on Bloomberg
      Financial Markets as of the trading day immediately prior to the public
      announcement of the Fundamental Transaction.

     

    
      
         

      

      
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    f) 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.

     

    g) 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.

     

    h) Notice
      to Holder.
      

     

    i. Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to any provision of this
      Section 3, the Company shall promptly mail to the 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 enters into a Variable
      Rate
      Transaction (as defined in the Purchase Agreement), 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.

     

    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) 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.

     

    
      
         

      

      
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    Section
      4. Transfer
      of Warrant.

     

    a) Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
      Agreement, this Warrant and all rights hereunder (including, without limitation,
      any registration rights) are transferable, in whole or in part, upon surrender
      of this Warrant at the principal office of the Company or its designated agent,
      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. 

     

    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.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    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, that (i) 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, and
      (ii)
      the Holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company, and (iii) 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) promulgated under the Securities Act.

     

    Section
      5. Miscellaneous.

     

    a) 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 as set forth in Section
      2(e)(ii). 

     

    b) 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.

     

    c) 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 not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    d) 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 certificate 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.

     

    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.

     

    e) 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.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    f) 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.

     

    g) 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.

     

    h) 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.

     

    i) Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant to 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.

     

    j) 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 and not to assert the
      defense in any action for specific performance that a remedy at law would be
      adequate.

     

    k) 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.

     

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

     

    m) 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.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    n) 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.

     

    

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

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized as of the date first above
      indicated.

     

    
      	 	 	 
	 	DRINKS
              AMERICAS HOLDINGS, LTD.
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
Name:
	 	Title 

    

     

    
      
        
        

         

      

      
        14

        
          

        

      

      
         

        
        

      

    

     

    NOTICE
      OF EXERCISE

    

    TO: DRINKS
      AMERICAS HOLDINGS, LTD.

    

    (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):

     

    o
      in lawful money of the
      United States; or

     

    o
      [if permitted] 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 DWAC Account Number or by
      physical delivery of a certificate to:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (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:
      ________________________________________________________________________________________

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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, [____] all of or [_______] shares of 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.Exhibit
      4.1

     

    THIS
      COMMON STOCK PURCHASE WARRANT AND THE SECURITIES
      ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION
      OF SUCH
      ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS COMMON
      STOCK
      PURCHASE WARRANT.

     

    Number
      of
      Shares of Common Stock: _________

    Warrant
      No. _____

     

    COMMON
      STOCK PURCHASE WARRANT

     

    To
      Purchase Common Stock of

    ThermoEnergy
      Company

     

    THIS
      IS
      TO
      CERTIFY
      THAT The
      Quercus Trust,
      or its
      registered assign, is entitled, at any time from the Issuance Date (as
      hereinafter defined) to the first to occur of (i) the Expiration Date (as
      hereinafter defined) or (ii) the Early Expiration Date (as hereinafter defined),
      to purchase from ThermoEnergy Company, a Delaware corporation (the “Company”),
      ________ (______) shares of Common Stock (as hereinafter defined and subject
      to
      adjustment as provided herein), in whole or in part, including fractional parts,
      at a purchase price of $1.50 per share (subject to adjustment as provided
      herein, the “Exercise
      Price”),
      all
      on the terms and conditions and pursuant to the provisions hereinafter set
      forth.

     

    This
      Warrant is issued pursuant, and the Holder is entitled to the benefits of,
      to
      that certain Securities Purchase Agreement dated as of December 18, 2007 by
      and
      between The Quercus Trust and the Company (the “Securities
      Purchase Agreement”).
      Capitalized terms used herein without definition are used with the definitions
      assigned thereto in such Securities purchase Agreement.

     

    
      	 	
              1.

            	
              
                
                  DEFINITIONS

                

              

            

    

     

    As
      used
      in this Common Stock Purchase Warrant (this “Warrant”),
      the
      following terms shall have the respective meanings set forth below:

     

    “Business
      Day”
      shall mean any day that is not a Saturday or Sunday or a day on which banks
      in
      New York City, New York are required or permitted to be closed in the City
      of
      New York.

     

    “Issuance
      Date”
      shall mean December 18, 2007.

     

    “Commission”
      shall mean the Securities and Exchange Commission or any other federal agency
      then administering the Securities Act and other federal securities
      laws.

     

    “Common
      Stock”
      shall mean (except where the context otherwise indicates) the Common Stock,
      par
      value $0.001 per share, of the Company as constituted on the Issuance Date,
      and
      any capital stock into which such Common Stock may thereafter be changed, and
      shall also include (i) capital stock of the Company of any other class
      (regardless of how denominated) issued to the holders of shares of Common Stock
      upon any reclassification thereof which is also not preferred as to dividends
      or
      assets over any other class of stock of the Company and which is not subject
      to
      redemption and (ii) shares of common stock of any successor or acquiring Company
      received by or distributed to the holders of Common Stock of the Company in
      the
      circumstances contemplated by Section 4.5.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Convertible
      Securities”
      shall mean options, evidences of indebtedness, shares of stock or other
      securities which are convertible into or exchangeable, with or without payment
      of additional consideration in cash or property, for shares of Common Stock,
      either immediately or upon the occurrence of a specified date or a specified
      event.

     

    “Early
      Expiration Date”
      shall have the meaning set forth in Section 2.4.

     

    “Exchange
      Act”
      shall mean the Securities Exchange Act of 1934, as amended, or any successor
      federal statute, and the rules and regulations of the Commission thereunder,
      all
      as the same shall be in effect from time to time.

     

    “Exercise
      Period”
      shall mean the period during which this Warrant is exercisable pursuant to
      Section 2.1.

     

    “Expiration
      Date”
      shall mean December 31, 2012.

     

    “Fundamental
      Corporate Change”
      shall have the meaning set forth in Section 4.5.

     

    “Holder”
      shall mean the Person in whose name the Warrant or Warrant Shares set forth
      herein is registered on the books of the Company maintained for such purpose.
      

     

    “Market
      Price”
      shall mean, on any date of determination, (i) the closing price of a share
      of
      Common Stock on such day as reported on the principal Trading Market on which
      the Common Stock is listed or traded, or (ii) if the Common Stock is not listed
      on a Trading Market, the closing bid price for a share of Common Stock on such
      day in the over-the-counter market, as reported by the OTC Bulletin Board,
      or
      (iii) if the Common Stock is not then
      listed or quoted on the OTC Bulletin Board,
      the
      closing bid price for a share of Common Stock on such day 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).

     

    “Other
      Property”
      shall have the meaning set forth in Section 4.5.

     

    “Person”
      shall mean any individual, sole proprietorship, partnership, joint venture,
      trust, incorporated organization, association, Company, institution, public
      benefit Company, entity or government (whether federal, state, county, city,
      municipal or otherwise, including, without limitation, any instrumentality,
      division, agency, body or department thereof).

     

    “Securities
      Act”
      shall mean the Securities Act of 1933, as amended, or any successor federal
      statute, and the rules and regulations of the Commission thereunder, all as
      the
      same shall be in effect at the time. 

     

    “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, as reported by the OTC Bulletin
      Board, or (iii) if the Common Stock is not then
      quoted on the OTC Bulletin Board, a
      day on
      which the Common Stock 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),
      (ii) and (iii) hereof, then the term “Trading Day” shall mean a Business
      Day.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Trading
      Market”
      means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      Nasdaq National Market, or the Nasdaq Bulletin Board on which the Common Stock
      is listed or quoted for trading on the date in question.

     

    “Transfer”
      shall mean any disposition of any Warrant or Warrant Shares or of any interest
      in either thereof, which would constitute a sale thereof within the meaning
      of
      the Securities Act. 

     

    “Warrant
      Shares”
      shall mean the shares of Common Stock issued or issuable to the Holder of this
      Warrant upon the exercise thereof.

     

    “Warrants”
      shall mean this Warrant and all warrants issued upon transfer, division or
      combination of, or in substitution for, any thereof. All Warrants shall at
      all
      times be identical as to terms and conditions and date, except as to the number
      of shares of Common Stock for which they may be exercised.

     

    
      	 	
              2.

            	
              
                EXERCISE
                  OF WARRANT

              

            

    

     

    
      	 	
              2.1

            	
              Manner
                of Exercise

            

    

     

    From
      and
      after the Issuance Date and until 5:00 p.m., Little Rock time, on the Expiration
      Date, the Holder may exercise this Warrant, on any Business Day, for all or
      any
      part of the number of shares of Common Stock purchasable hereunder.

     

    In
      order
      to exercise this Warrant, in whole or in part, the Holder shall surrender this
      Warrant to the Company at its principal office at 124 West Capitol Avenue,
      Suite
      880, Little Rock, Arkansas 72201 or at the office or agency designated by the
      Company pursuant to Section 12, together with a written notice of the Holder’s
      election to exercise this Warrant, which notice shall specify the number of
      shares of Common Stock to be purchased, and shall be accompanied by payment
      of
      the Exercise Price in cash or wire transfer or cashier’s check drawn on a United
      States bank. Such notice shall be substantially in the form of the subscription
      form appearing at the end of this Warrant as Exhibit A, duly executed by the
      Holder or his agent or attorney. Upon receipt of the items referred to above,
      the Company shall, as promptly as practicable, execute or cause to be executed
      and deliver or cause to be delivered to the Holder a certificate or certificates
      representing the aggregate number of full shares of Common Stock issuable upon
      such exercise, together with cash in lieu of any fraction of a share, as
      hereinafter provided. The stock certificate or certificates so delivered shall
      be, to the extent possible, in such denomination or denominations as the Holder
      shall request in the notice and shall be registered in the name of the Holder
      or, subject to Section 9, such other name as shall be designated in the notice.
      This Warrant shall be deemed to have been exercised and such certificate or
      certificates shall be deemed to have been issued, and the Holder or any other
      Person so designated to be named therein shall be deemed to have become the
      holder of record of such shares for all purposes, as of the date the notice,
      together with the cash or check or wire transfer of funds and this Warrant
      is
      received by the Company as described above and all taxes required to be paid
      by
      the Holder, if any, pursuant to Section 2.2 prior to the issuance of such shares
      have been paid, provided that if the Warrant is exercised in connection with
      a
      merger, reorganization or other Fundamental Corporate Change, such exercise
      may
      be made conditional upon the consummation of such event. If this Warrant shall
      have been exercised in part, the Company shall, at the time of delivery of
      the
      certificate or certificates representing Warrant Shares, deliver to the Holder
      a
      new Warrant evidencing the rights of the Holder to purchase the unpurchased
      shares of Common Stock called for by this Warrant, which new Warrant shall
      in
      all other respects be identical with this Warrant, or, at the request of the
      Holder, appropriate notation may be made on this Warrant and the same returned
      to the Holder. Notwithstanding any provision herein to the contrary, the Company
      shall not be required to register shares in the name of any Person who acquired
      this Warrant (or part hereof) or any Warrant Shares otherwise than in accordance
      with this Warrant.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.2

            	
              Payment
                of Taxes and Charges

            

    

     

    All
      shares of Common Stock issuable upon the exercise of this Warrant pursuant
      to
      the terms hereof shall be validly issued, fully paid and nonassessable, freely
      tradable and without any preemptive rights. The Company shall pay all expenses
      in connection with, and all taxes and other governmental charges that may be
      imposed with respect to, the issuance or delivery thereof, unless such tax
      or
      charge is a tax on income imposed by law upon the Holder, in which case such
      taxes or charges shall be paid by the Holder. 

     

    
      	 	
              2.3

            	
              Fractional
                Shares

            

    

     

    The
      Company shall not be required to issue a fractional share of Common Stock upon
      exercise of any Warrant. As to any fraction of a share which the Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such fraction in an amount equal to the same
      fraction of the Market Price per share of Common Stock as of the date of
      exercise of the Warrant giving rise to such fraction of a share. 

     

    
      	 	
              2.4

            	
              Cashless
                Exercise During Period of
                Default

            

    

    

    Notwithstanding
      any other provision contained herein to the contrary, from and after the first
      anniversary of the Closing Date and so long as the Company is required under
      the
      Registration Rights Agreement to have effected the registration of the Warrant
      Shares for resale to the public pursuant to a Registration Statement (as such
      term is defined in the Registration Rights Agreement), if the Warrant Shares
      may
      not be freely sold to the public due to the failure of the Company to have
      effected the registration of the Warrant Shares or to have a current prospectus
      available for delivery or otherwise, in each case as required by the Securities
      Purchase Agreement, the Holder may elect to receive, without the payment by
      the
      Holder of the aggregate Warrant Price in respect of the shares of Common Stock
      to be acquired, shares of Common Stock of equal value to the value of this
      Warrant, or any specified portion hereof, by the surrender of this Warrant
      (or
      such portion of this Warrant being so exercised) together with a Net Issue
      Election Notice, in the form annexed hereto as Appendix A with appropriate
      modification to reflect such Net Issue Election, duly executed, to the Company.
      Thereupon, the Company shall issue to the Holder such number of fully paid,
      validly issued and nonassessable shares of Common Stock as is computed using
      the
      following formula:

    

    X
      =
Y
      (A -
      B)

        
      A

    

    where 

    

    X
      = the
      number of shares of Common Stock to which the Holder is entitled upon such
      cashless exercise;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Y
      = the
      total
      number of shares of Common Stock covered by this Warrant for which the Holder
      has surrendered purchase rights at such time for cashless exercise (including
      both shares to be issued to the Holder and shares as to which the purchase
      rights are to be canceled as payment therefor);

    

    A
      = the
      Market Price of one share of Common Stock as at the date the net issue election
      is made; and

    

    B
      = the
      Warrant Price in effect under this Warrant at the time the net issue election
      is
      made.

     

    
      	 	
              2.5

            	
              Buy-In

            

    

    

    If
      at any
      time when a Registration Statement is in effect with respect to the Warrant
      Shares, as provided for by the Securities Purchase Agreement, (a) a certificate
      representing the Warrant Shares is not delivered to the Holder within three
      (3)
      Business Days of the due exercise of this Warrant by the Holder and (b) prior
      to
      the time such certificate is received by the Holder, the Holder, or any third
      party on behalf of the Holder or for the Holder’s account, purchases (in an open
      market transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by the Holder of shares represented by such certificate
      (a “Buy-In”), then the Company shall pay in cash to the Holder (for costs
      incurred either directly by such Holder or on behalf of a third party) the
      amount by which the total purchase price paid for Common Stock as a result
      of
      the Buy-In (including brokerage commissions, if any) exceeds the proceeds
      received by such Holder as a result of the sale to which such Buy-In relates.
      The Holder shall provide the Company written notice indicating the amounts
      payable to the Holder in respect of the Buy-In.

     

    
      	 	
              3.

            	
              
                TRANSFER,
                  DIVISION AND
                  COMBINATION

              

            

    

     

    
      	 	
              3.1

            	
              Transfer

            

    

     

    Subject
      to compliance with Section 9, transfer of this Warrant and all rights hereunder,
      in whole or in part, shall be registered on the books of the Company to be
      maintained for such purpose, upon surrender of this Warrant at the principal
      office of the Company referred to in Section 2.1 or the office or agency
      designated by the Company pursuant to Section 12, together with a written
      assignment of this Warrant substantially in the form of Exhibit B hereto duly
      executed by the Holder or his 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, subject to Section 9, execute
      and deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination 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 canceled. A Warrant, if properly
      assigned in compliance with Section 9, may be exercised by a new Holder for
      the
      purchase of shares of Common Stock without having a new warrant
      issued.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.2

            	
              Division
                and Combination

            

    

     

    Subject
      to Section 9, this Warrant may be divided or combined with other Warrants upon
      presentation hereof at the aforesaid office or agency 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 his agent or attorney.
      Subject to compliance with Sections 3.1 and 9, 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.

     

    
      	 	
              3.3

            	
              Expenses

            

    

     

    The
      Company shall prepare, issue and deliver at its own expense (other than transfer
      taxes) the new Warrant or Warrants under this Section 3.

     

    
      	 	
              3.4

            	
              Maintenance
                of Books

            

    

     

    The
      Company agrees to maintain, at its aforesaid office or agency, books for the
      registration and the registration of transfers of the Warrants.

     

    
      	 	
              4.

            	
              
                ADJUSTMENTS

              

            

    

     

    The
      number of shares of Common Stock for which this Warrant is exercisable, or
      the
      price at which such shares may be purchased upon exercise of this Warrant,
      shall
      be subject to adjustment from time to time as set forth in this Section 4.
      The
      Company shall give the Holder notice of any event described below which requires
      an adjustment pursuant to this Section 4 at the time of such event.

     

    
      	 	
              4.1

            	
              Stock
                Dividends, Subdivisions and
                Combinations

            

    

     

    If
      at any
      time the Company shall:

     

    (a) declare
      or pay to the holders of its Common Stock a dividend payable in, or other
      distribution of, shares of Common Stock or in Convertible
      Securities;

     

    (b) subdivide
      its outstanding shares of Common Stock into a larger number of shares of Common
      Stock; or

     

    (c) combine
      its outstanding shares of Common Stock into a smaller number of shares of Common
      Stock;

     

    then
      (i)
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event would own or be entitled to receive after the
      occurrence of such event, and (ii) the then-current Exercise Price shall be
      adjusted to equal (A) the then-current Exercise Price multiplied by the number
      of shares of Common Stock for which this Warrant is exercisable immediately
      prior to the adjustment divided by (B) the number of shares for which this
      Warrant is exercisable immediately after such adjustment.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.2

            	
              Certain
                Other Distributions

            

    

     

    If
      at any
      time the Company shall declare or pay to the holders of its Common Stock any
      dividend or other distribution of:

     

    (a) cash;

     

    (b) any
      evidences of its indebtedness, any shares of its stock or any other securities
      or property of any nature whatsoever (other than cash, Convertible Securities
      or
      additional shares of Common Stock); any warrants or other rights to subscribe
      for or purchase any evidences of its indebtedness, any shares of its stock
      or
      any other securities or property of any nature whatsoever (other than cash,
      Convertible Securities or additional shares of Common Stock);

     

    then,
      upon exercise of this Warrant, the Holder shall be entitled to receive such
      dividend or distribution as if the Holder had exercised this Warrant prior
      to
      the date of such dividend or distribution. A reclassification of the Common
      Stock (other than a change in par value, or from par value to no par value
      or
      from no par value to par value) into shares of Common Stock and shares of any
      other class of stock shall be deemed a distribution by the Company to the
      holders of its Common Stock of such shares of such other class of stock within
      the meaning of this Section 4.2 and, if the outstanding shares of Common Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
      part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4.1. 

     

    
      	 	
              4.3

            	
              Dilutive
                Issuances

            

    

     

    If
      at any
      time after the Issuance Date the Company shall issue
      or
      sell shares of Common Stock or Convertible Securities (other than (i) securities
      issued or issuable in Excluded Issuances or (ii) shares of Common Stock issued
      as a result of a dividend or other distribution on the Common Stock payable
      in
      Common Stock or (iii) a subdivision of outstanding shares of Common Stock),
      without consideration or for a consideration per share less than $1.00, the
      Exercise Price shall be reduced, concurrently with such issue, as provided
      herein. If such dilutive sale or issuance occurs prior to the date on which
      the
      Registration Statement covering the Warrant Shares is declared effective, the
      Exercise Price shall be reduced to a price equal to one hundred fifty percent
      (150%) of the price at which such shares of Common Stock are issued (or, in
      the
      case of Convertible Securities, the price at which the Common Stock issuable
      upon the exercise. conversion or exchange of such Convertible Securities is
      deemed issued as hereinafter provided). If such dilutive sale or issuance occurs
      on or after to the date on which the Registration Statement covering the Warrant
      Shares is declared effective, the Exercise Price shall be reduced to a price
      (calculated to the nearest cent) (i) determined in accordance with the following
      formula: 

    

      
        	 	
                New
                  Exercise Price =

              	
                P1
                  Q1 + P2 Q2

              	 
	
                Q1
                  + Q2

              

      

    

     

    where:

     

    
      	 	
              P1
                = 

            	
              Applicable
                Exercise Price in effect immediately prior to such new issue or
                sale.

            

    

    
      	 	
              Q1
                =

            	
              Number
                of shares of Common Stock outstanding plus the number of shares of
                Common
                Stock issuable upon conversion or exercise of Convertible Securities
                outstanding immediately prior to such new issue or
                sale.

            

    

    
    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              P2
                =

            	
              150%
                of the weighted average price per share of Common Stock received
                or deemed
                by the Company upon such new issue or
                sale.

            

    

    
      	 	
              Q2
                =

            	
              Number
                of shares of Common Stock issued or sold, or deemed to have been
                issued,
                in the subject transaction.

            

    

    

    For
      purposes of this Section 4.3, upon the sale or issuance of Convertible
      Securities, the maximum number of shares of Common Stock issuable upon the
      exercise, conversion or exchange of such Convertible Securities (as set forth
      in
      the instrument relating thereto without regard to any provisions contained
      therein for a subsequent adjustment of such number) shall be deemed to be issued
      as of the time of such issue or sale and the consideration deemed received
      for
      such shares of Common Stock shall be the consideration actually received by
      the
      Company for the issue of such Convertible Securities plus the minimum additional
      consideration to be received by the Company upon the full exercise, conversion
      or exchange of such Convertible Securities. Insofar as any consideration
      received, or to be received, by the Company consists of property other than
      cash, such consideration shall be computed at the fair value thereof at the
      time
      of such issue or sale, as determined in good faith by the Board.

     

    
      	 	
              4.4

            	
              Other
                Provisions Applicable to Adjustments under this
                Section

            

    

     

    The
      following provisions shall be applicable to the making of adjustments of the
      number of shares of Common Stock for which this Warrant is exercisable and
      the
      current Exercise Price provided for in this Section 4:

     

    (a) When
      Adjustments to be Made.
      The
      adjustments required by this Section 4 shall be made whenever and as often
      as
      any specified event requiring an adjustment shall occur. For the purpose of
      any
      adjustment, any specified event shall be deemed to have occurred at the close
      of
      business on the date of its occurrence.

     

    (b) Fractional
      Interests.
      In
      computing adjustments under this Section 4, fractional interests in Common
      Stock
      shall be taken into account to the nearest 1/10th of a share.

     

    (c) When
      Adjustment not Required.
      If the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or distribution or subscription or
      purchase rights and shall, thereafter and before the distribution to the holders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be rescinded and annulled.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.5

            	
              Reorganization,
                Reclassification, Merger, Consolidation or Disposition of
                Assets

            

    

     

    In
      case
      the Company shall reorganize its capital, reclassify its capital stock,
      consolidate or merge with or into another Person (where the Company is not
      the
      survivor or where there is a change in or distribution with respect to the
      Common Stock of the Company), or sell, convey, transfer or otherwise dispose
      of
      all or substantially all its property, assets or business to another Person,
      or
      effectuate a transaction or series of related transactions in which more than
      50% of the voting power of the Company is disposed of (each, a
“Fundamental
      Corporate Change”)
      and, pursuant to the terms of such Fundamental Corporate Change, shares of
      common stock of the successor or acquiring Company, or any cash, shares of
      stock
      or other securities or property of any nature whatsoever (including warrants
      or
      other subscription or purchase rights) in addition to or in lieu of common
      stock
      of the successor or acquiring Company (“Other
      Property”),
      are to be received by or distributed to the holders of Common Stock, then the
      Holder shall have the right thereafter to receive, upon exercise of the Warrant,
      such number of shares of common stock of the successor or acquiring Company
      or
      of the Company, if it is the surviving Company, and Other Property as is
      receivable upon or as a result of such
      Fundamental Corporate Change by a holder of the number of shares of Common
      Stock
      for which this Warrant is exercisable immediately prior to such Fundamental
      Corporate Change. In case of any such Fundamental Corporate Change, the
      successor or acquiring company (if other than the Company) shall expressly
      assume the due and punctual observance and performance of each and every
      covenant and condition of this Warrant to be performed and observed by the
      Company and all the obligations and liabilities hereunder, subject to such
      modifications as may be deemed appropriate (as determined by resolution of
      the
      Board) in order to provide for adjustments of shares of Common Stock for which
      this Warrant is exercisable which shall be as nearly equivalent as practicable
      to the adjustments provided for in this Section 4. For purposes of this Section
      4.5, “common
      stock of the successor or acquiring company”
      shall include stock of such company of any class which is not preferred as
      to
      dividends or assets over any other class of stock of such company and which
      is
      not subject to redemption and shall also include any evidences of indebtedness,
      shares of stock or other securities which are convertible into or exchangeable
      for any such stock, either immediately or upon a specified date or upon the
      happening of a specified event, and any warrants or other rights to subscribe
      for or purchase any such stock. The foregoing provisions of this Section 4.5
      shall similarly apply to any successive Fundamental Corporate Change of the
      successor company. 

     

    
      	 	
              4.6

            	
              Sale
                of the Company for Cash

            

    

     

    Notwithstanding
      the provisions of Section 4.6, in the event of a Fundamental Corporate Change
      in
      which all of the holders of Common Stock of the Company receive cash in exchange
      for their shares of Common Stock, the Holder shall be entitled to receive,
      upon
      surrender and cancellation of this Warrant, (a) cash in an amount equal to
      fair
      market value of this Warrant (determined using Black-Scholes analytic methods)
      immediately prior to the effective time of such Fundamental Corporate Change,
      provided that such payment does not exceed the amount of the exercise price
      of
      the Warrant then in effect, and (b) if the payment contemplated by Subsection
      (a) would exceed the amount of the exercise price of the Warrant than in effect,
      then cash in an amount per share for the number of Shares subject to this
      Warrant equal to the fair market value of one share of Common Stock immediately
      prior to the effective time of such Fundamental Corporate Change, less the
      per
      share Exercise Price then in effect..

     

    
      	 	
              4.7

            	
              Other
                Action Affecting Common
                Stock

            

    

     

    In
      case
      at any time or from time to time the Company shall take any action in respect
      of
      its Common Stock, other than any action described in this Section 4, or any
      other event occurs, which would have a materially adverse effect upon the rights
      of the Holder, the number of shares of Common Stock and/or the purchase price
      thereof shall be adjusted in such manner as may be equitable in the
      circumstances, as determined in good faith by the Board of Directors of the
      Company.

     

    
      	 	
              4.8

            	
              Certain
                Limitations

            

    

     

    Notwithstanding
      anything herein to the contrary, the Company agrees not to enter into any
      transaction which, by reason of any adjustment hereunder, would cause the
      Exercise Price to be less than the par value per share of Common
      Stock.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.

            	
              
                NOTICES
                  TO THE HOLDER

              

            

    

     

    
      	 	
              5.1

            	
              Notice
                of Adjustments

            

    

     

    Whenever
      the number of shares of Common Stock for which this Warrant is exercisable,
      or
      whenever the price at which a share of such Common Stock may be purchased upon
      exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company
      shall forthwith prepare a certificate to be executed by the chief financial
      officer of the Company setting forth, in reasonable detail, the event requiring
      the adjustment and the method by which such adjustment was calculated (including
      a description of the basis on which the Board of Directors of the Company
      determined the fair value of any evidences of indebtedness, shares of stock,
      other securities or property or warrants or other subscription or purchase
      rights referred to in Section 4.2), specifying the number of shares of Common
      Stock for which this Warrant is exercisable and (if such adjustment was made
      pursuant to Section 4.2 or 4.5) describing the number and kind of any other
      shares of stock or Other Property for which this Warrant is exercisable, and
      any
      change in the purchase price or prices thereof, after giving effect to such
      adjustment or change. The Company shall promptly cause a signed copy of such
      certificate to be delivered to the Holder in accordance with Section 14.2.
      The
      Company shall keep, along with the transfer register maintained in accordance
      with Section 3.4, copies of all such certificates and cause the same to be
      available for inspection at said office during normal business hours by the
      Holder or any prospective purchaser of a Warrant designated by the
      Holder.

     

    
      	 	
              5.2

            	
              Notice
                of Corporate Action

            

    

     

    If
      at any
      time:

     

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right;
      or

     

    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      Company; or

     

    (c) there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company;

     

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      10
      days’ prior written notice of the date on which a record date shall be selected
      for such dividend, distribution or right or for determining rights to vote
      in
      respect of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, dissolution, liquidation or winding up, and (ii)
      in
      the case of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, dissolution, liquidation or winding up, at least
      10
      days’ prior written notice of the date when the same shall take place. Such
      notice in accordance with the foregoing clause also shall specify (i) the date
      on which any such record is to be taken for the purpose of such dividend,
      distribution or right, the date on which the holders of Common Stock shall
      be
      entitled to any such dividend, distribution or right, and the amount and
      character thereof, and (ii) the date on which any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      dissolution, liquidation or winding up is to take place and the time, if any
      such time is to be fixed, as of which the holders of Common Stock shall be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up. Each such written notice shall be sufficiently given if addressed to the
      Holder at the last address of the Holder appearing on the books of the Company
      and delivered in accordance with Section 14.2.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.

            	
              
                
                  NO
                    IMPAIRMENT

                

              

            

    

     

    The
      Company shall not by any action, including, without limitation, amending its
      certificate of incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issuance or sale of securities or 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 the Holder against impairment.
      Without limiting the generality of the foregoing, the Company will (a) not
      increase the par value of any shares of Common Stock receivable upon the
      exercise of this Warrant 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 shares of Common Stock upon the exercise
      of
      this Warrant, and (c) use its best 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.

     

    Upon
      the
      request of the Holder, the Company will at any time during the period this
      Warrant is outstanding acknowledge in writing, in form satisfactory to the
      Holder, the continuing validity of this Warrant and the obligations of the
      Company hereunder.

     

    
      	 	
              7.

            	
              
                RESERVATION
                  AND AUTHORIZATION OF COMMON
                  STOCK

              

            

    

     

    From
      and
      after the Issuance Date, the Company shall at all times reserve and keep
      available for issuance upon the exercise of Warrants such number of its
      authorized but unissued shares of Common Stock as will be sufficient to permit
      the exercise in full of all outstanding Warrants. All shares of Common Stock
      which shall be so issuable, when issued upon exercise of any Warrant and payment
      therefor in accordance with the terms of such Warrant, shall be duly and validly
      issued and fully paid and nonassessable and not subject to preemptive
      rights.

     

    Before
      taking any action which would cause an adjustment reducing the then-current
      Exercise Price below the then par value, if any, of the shares of Common Stock
      issuable upon exercise of the Warrants, the Company shall take any corporate
      action which may be necessary in order that the Company may validly and legally
      issue fully paid and nonassessable shares of such Common Stock at such adjusted
      Exercise Price.

     

    Before
      taking any action which would result in an adjustment in the number of shares
      of
      Common Stock for which this Warrant is exercisable or in the then-current
      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.

     

    
      	 	
              8.

            	
              
                TAKING
                  OF RECORD; STOCK AND WARRANT TRANSFER
                  BOOKS

              

            

    

     

    In
      the
      case of all dividends or other distributions by the Company to the holders
      of
      its Common Stock with respect to which any provision of Section 4 refers to
      the
      taking of record of such holders, the Company will in each case take such a
      record and will take such record as of the close of business on a Business
      Day.
      The Company will not at any time, except upon dissolution, liquidation or
      winding up of the Company, close its stock transfer books or Warrant transfer
      books so as to result in preventing or delaying the exercise or transfer of
      any
      Warrant.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.

            	
              
                RESTRICTIONS
                  ON TRANSFERABILITY

              

            

    

     

    The
      Warrants and the Warrant Shares shall not be transferred, hypothecated or
      assigned before satisfaction of the conditions specified in the legend affixed
      to the first page of this Warrant, which conditions are intended, in part,
      to
      ensure compliance with the provisions of the Securities Act with respect to
      the
      Transfer of any Warrant or any Warrant Shares. The Holder, by acceptance of
      this
      Warrant, agrees to be bound by the provisions of this Section 9.

     

    
      	 	
              10.

            	
              
                SUPPLYING
                  INFORMATION

              

            

    

     

    The
      Company shall cooperate with the Holder in supplying such information as may
      be
      reasonably necessary for the Holder to complete and file any information
      reporting forms presently or hereafter required by the Commission as a condition
      to the availability of an exemption from the Securities Act for the sale of
      any
      Warrant or Warrant Shares.

     

    
      	 	
              11.

            	
              
                LOSS
                  OR MUTILATION

              

            

    

     

    Upon
      receipt by the Company from the Holder of evidence reasonably satisfactory
      to it
      of the ownership of and the loss, theft, destruction or mutilation of this
      Warrant and indemnity reasonably satisfactory to it (it being understood that
      the written agreement of the Holder shall be sufficient indemnity), and in
      case
      of mutilation upon surrender and cancellation hereof, the Company will execute
      and deliver in lieu hereof a new Warrant of like tenor to the Holder;
provided,
      in the
      case of mutilation no indemnity shall be required if this Warrant in
      identifiable form is surrendered to the Company for cancellation.

     

    
      	 	
              12.

            	
              
                OFFICE
                  OF THE COMPANY

              

            

    

     

    As
      long
      as any of the Warrants remain outstanding, the Company shall maintain an office
      or agency (which may be the principal executive offices of the Company) where
      the Warrants may be presented for exercise, registration of transfer, division
      or combination as provided in this Warrant.

     

    
      	 	
              13.

            	
              
                LIMITATION
                  OF LIABILITY

              

            

    

     

    No
      provision hereof, in the absence of affirmative action by the Holder to purchase
      shares of Common Stock, and no enumeration herein of the rights or privileges
      of
      the Holder hereof, shall give rise to any liability of the 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.
      Nothing in the foregoing shall be construed in any manner to limit or deny
      the
      liability of a Holder in any other capacity, including, without limitation,
      as a
      director of the Company. 

     

    
      	 	
              14.

            	
              
                MISCELLANEOUS

              

            

    

     

    
      	 	
              14.1

            	
              Nonwaiver
                

            

    

     

    No
      course
      of dealing or any delay or failure to exercise any right hereunder on the part
      of the Holder shall operate as a waiver of such right or otherwise prejudice
      the
      Holder’s rights, powers or remedies. No waiver by the Holder of any right
      hereunder on any one occasion shall operate as a waiver of such right on any
      other occasion.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	 	
              14.2

            	
              Notice
                Generally

            

    

    

    Except
      as
      may be otherwise provided herein, any and all notices or other communications
      or
      deliveries required or permitted to be provided hereunder shall be in writing
      and shall be deemed given and effective on the earliest of (a) the date of
      transmission, if such notice or communication is delivered via facsimile
      (provided the sender receives a machine-generated confirmation of successful
      transmission) at the facsimile number specified in this Section prior to 6:30
      p.m. (Little Rock time) on a Business Day, (b) the next Business Day after
      the
      date of transmission, if such notice or communication is delivered via facsimile
      at the facsimile number specified in this Section on a day that is not a
      Business Day or later than 6:30 p.m. (Little Rock time) on any Business Day,
      (c)
      the Business Day following the date of transmission, if sent by a nationally
      recognized overnight courier service, or (d) upon actual receipt by the party
      to
      whom such notice is required to be given. The address for such notices and
      communications shall be the same as provided in the Securities Purchase
      Agreement; or such other address as may be designated in writing hereafter,
      in
      the same manner, by such addressee.

     

    
      	 	
              14.3

            	
              Remedies

            

    

     

    The
      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 Section 2 of 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 Section 2 of this Warrant and hereby agrees to waive
      the defense in any action for specific performance that a remedy at law would
      be
      adequate.

     

    
      	 	
              14.4

            	
              Successors
                and Assigns

            

    

     

    Subject
      to the provisions of Sections 3.1 and 9, this Warrant and the rights evidenced
      hereby shall inure to the benefit of and be binding upon the successors of
      the
      Company and the successors and assigns of the Holder. The provisions of this
      Warrant are intended to be for the benefit of all Holders from time to time
      of
      this Warrant and, with respect to Section 9 hereof, the holders of Warrant
      Shares, and shall be enforceable by any such holder or the holder of Warrant
      Shares.

     

    
      	 	
              14.5

            	
              Amendment

            

    

     

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

     

    
      	 	
              14.6

            	
              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 only be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Warrant.

     

    
      	 	
              14.7

            	
              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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	
              14.8

            	
              Governing
                Law

            

    

     

    This
      Warrant shall be governed by the laws of the State of Delaware, without regard
      to the provisions thereof relating to conflicts of law.

     

    
      	 	
              14.9

            	
              Disputes

            

    

     

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the securities or other property deliverable upon
      exercise of this Warrant, the Company shall promptly issue and deliver to the
      Holder the securities or other properties that are not in dispute..

     

     

    In
      Witness Whereof,
      the
      Company has caused this Warrant to be duly executed by its duly authorized
      Chief
      Financial Officer.

     

    
      
        	
                Dated:

              	 	 	 

      

    

    

    
      	 	
              ThermoEnergy
                Corporation

            
	 	 
	 	 
	 	
              By:

            	 	 
	 	 	
              Andrew
                T. Melton

            
	 	 	
              Executive
                Vice President and

            
	 	 	
              Chief
                Financial Officer

            

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    SUBSCRIPTION
      FORM

     

    [To
      be
      executed only upon exercise of Warrant]

     

    The
      undersigned registered owner of this Warrant irrevocably exercises this Warrant
      for the purchase of __________ shares of Common Stock of ThermoEnergy
      Corporation and herewith makes payment therefor, all at the price and on the
      terms and conditions specified in this Warrant and requests that certificates
      for the shares of Common Stock hereby purchased (and any securities or other
      property issuable upon such exercise) be issued in the name of and delivered
      to

     

    
      

    

     

    whose
      address is

     

    
      
        

      

    

    and,
      if
      such shares of Common Stock shall not include all of the shares of Common Stock
      issuable as provided in this Warrant, that a new Warrant of like tenor and
      date
      for the balance of the shares of Common Stock issuable hereunder be delivered
      to
      the undersigned.

     

    
      	 	 
	 	
              (Name
                of Registered Owner)

            
	 	 
	 	 
	 	 
	 	
              (Signature
                of Registered Owner)

            
	 	 
	 	 
	 	 
	 	
              (Street
                Address)

            
	 	 
	 	 
	 	 
	 	
              (City)
                           (State)
                           (Zip
                Code)

            
	 	 
	 	
              Notice:
                The signature on this subscription must correspond with the name
                as
                written upon the face of the within Warrant in every particular,
                without
                alteration or enlargement or any change
                whatsoever.

            

    

    

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    ASSIGNMENT
      FORM

     

    FOR
      VALUE
      RECEIVED
      the
      undersigned registered owner of this Warrant hereby sells, assigns and transfers
      unto the Assignee named below all of the rights of the undersigned under this
      Warrant, with respect to the number of shares of Common Stock set forth
      below:

     

    
      	
              Name
                and Address of Assignee

            	 	
              No.
                of Shares of

              Common
                Stock

            
	 	 	 
	 	 	 
	 	 	 

    

     

    and
      does
      hereby irrevocably constitute and appoint

     

    
      
        

      

    

     

    attorney-in-fact
      to register such transfer on the books of ThermoEnergy Corporation maintained
      for the purpose, with full power of substitution in the premises.

     

    
      	
              Dated:

            	 	 	 
	 	 	 	 
	 	 
	 	
              (Name
                of Registered Owner)

            
	 	 
	 	 
	 	 
	 	
              (Signature
                of Registered Owner)

            
	 	 
	 	
              Notice:
                The signature on this assignment must correspond with the name as
                written
                upon the face of the within Warrant in every particular, without
                alteration or enlargement or any change
                whatsoever.

            

    

    

    
      
        
        

      

      
        B-1

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