Document:

Exhibit 4.3 

 

 

GUARANTEE AGREEMENT

by and between

ENTERPRISE FINANCIAL SERVICES
CORP

and

WILMINGTON TRUST
COMPANY

Dated as of December 12, 2008

GUARANTEE
AGREEMENT

     This GUARANTEE AGREEMENT (this
“Guarantee”), dated as of December 12, 2008, is executed and delivered by
Enterprise Financial Services Corp, a Delaware corporation (the “Guarantor”),
and Wilmington Trust Company, a Delaware banking corporation, as trustee (the
“Guarantee Trustee”), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of EFSC Capital Trust
VIII, a Delaware statutory trust (the “Issuer”). 

     WHEREAS, pursuant to an Amended and
Restated Declaration of Trust No. 2 (the “Declaration”), dated as of the date
hereof among Wilmington Trust Company, not in its individual capacity but solely
as institutional trustee, the administrators of the Issuer named therein, the
Guarantor, as sponsor, and the holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing on the date hereof
those undivided beneficial interests, having an aggregate liquidation amount of
$25,000,000.00 (the “Capital Securities”); and 

     WHEREAS, as incentive for the
Holders to purchase the Capital Securities, the Guarantor desires irrevocably
and unconditionally to agree, to the extent set forth in this Guarantee, to pay
to the Holders of Capital Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of
the purchase by each Holder of the Capital Securities, which purchase the
Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee for the benefit of the Holders. 

ARTICLE I 

DEFINITIONS AND INTERPRETATION

     Section 1.1.
Definitions and
Interpretation. In this Guarantee,
unless the context otherwise requires: 

     (a) capitalized terms used in this
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1; 

     (b) a term defined anywhere in this
Guarantee has the same meaning throughout; 

     (c) all references to “the
Guarantee” or “this Guarantee” are to this Guarantee as modified, supplemented
or amended from time to time; 

     (d) all references in this Guarantee
to “Articles” or “Sections” are to Articles or Sections of this Guarantee,
unless otherwise specified; 

     (e) terms defined in the Declaration
as at the date of execution of this Guarantee have the same meanings when used
in this Guarantee, unless otherwise defined in this Guarantee or unless the
context otherwise requires; and 

     (f) a reference to the singular
includes the plural and vice versa.

     “Affiliate” has the same meaning as
given to that term in Rule 405 of the Securities Act of 1933, as amended, or any
successor rule thereunder. 

     “Beneficiaries” means any Person to
whom the Issuer is or hereafter becomes indebted or liable. 

     “Capital Securities” has the meaning
set forth in the recitals to this Guarantee. 

     “Common Securities” means the common
securities issued by the Issuer to the Guarantor pursuant to the Declaration.

     “Corporate Trust Office” means the
office of the Guarantee Trustee at which the corporate trust business of the
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Guarantee is located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600,
Attention: Corporate Trust Administration. 

     “Covered Person” means any Holder of
Capital Securities. 

     “Debentures” means the debt securities
of the Guarantor designated the Convertible Junior Subordinated Deferrable
Interest Debentures due 2038 held by the Institutional Trustee (as defined in
the Declaration) of the Issuer. 

     “Declaration Event of Default” means an
“Event of Default” as defined in the Declaration. 

     “Event of Default” has the meaning set
forth in Section 2.4(a). 

     “Guarantee Payments” means the
following payments or distributions, without duplication, with respect to the
Capital Securities, to the extent not paid or made by the Issuer: (i) any
accrued and unpaid Distributions (as defined in the Declaration) which are
required to be paid on such Capital Securities to the extent the Issuer shall
have funds available therefor, (ii) the Redemption Price to the extent the
Issuer has funds available therefor, with respect to any Capital Securities
called for redemption by the Issuer, (iii) the Redemption Price to the extent
the Issuer has funds available therefor, with respect to Capital Securities
redeemed upon the occurrence of a Special Event, and (iv) upon a voluntary or
involuntary liquidation, dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to the Holders of
the Capital Securities in exchange therefor as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the “Liquidation Distribution”). 

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     “Guarantee Trustee” means Wilmington
Trust Company, until a Successor Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee and thereafter
means each such Successor Guarantee Trustee. 

     “Guarantor” means Enterprise Financial
Services Corp and each of its successors and assigns. 

     “Holder” means any holder, as
registered on the books and records of the Issuer, of any Capital Securities;
provided, however, that, in determining whether the Holders of the requisite
percentage of Capital Securities have given any request, notice, consent or
waiver hereunder,

     “Holder” shall not include the
Guarantor or any Affiliate of the Guarantor. 

     “Indemnified Person” means the
Guarantee Trustee, any Affiliate of the Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee. 

     “Indenture” means the Indenture dated
as of the date hereof between the Guarantor and Wilmington Trust Company, not in
its individual capacity but solely as trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued to the institutional
trustee of the Issuer. 

     “Issuer” has the meaning set forth in
the opening paragraph to this Guarantee. 

     “Liquidation Distribution” has the
meaning set forth in the definition of “Guarantee Payments” herein. 

     “Majority in liquidation amount of the Capital Securities” means Holder(s) of outstanding Capital Securities, voting
together as a class, but separately from the holders of Common Securities, of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Capital Securities then outstanding. 

     “Obligations” means any costs, expenses
or liabilities (but not including liabilities related to taxes) of the Issuer
other than obligations of the Issuer to pay to holders of any Trust Securities
the amounts due such holders pursuant to the terms of the Trust Securities.

     “Officer’s Certificate” means, with
respect to any Person, a certificate signed by one Authorized Officer of such
Person. Any Officer’s Certificate delivered with respect to compliance with a
condition or covenant provided for in this Guarantee shall include: 

     (a) a statement that the officer
signing the Officer’s Certificate has read the covenant or condition and the
definitions relating thereto; 

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     (b) a brief statement of the nature
and scope of the examination or investigation undertaken by the officer in
rendering the Officer’s Certificate; 

     (c) a statement that the officer has
made such examination or investigation as, in such officer’s opinion, is
necessary to enable such officer to express an informed opinion as to whether or
not such covenant or condition has been complied with; and 

     (d) a statement as to whether, in
the opinion of the officer, such condition or covenant has been complied with.

     “Person” means a legal person,
including any individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature. 

     “Redemption Price” has the meaning set
forth in the Indenture. 

     “Responsible Officer” means, with
respect to the Guarantee Trustee, any officer within the Corporate Trust Office
of the Guarantee Trustee including any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer’s knowledge of and familiarity with the particular subject. 

     “Special Event” has the meaning set
forth in the Indenture. 

     “Successor Guarantee Trustee” means a
successor Guarantee Trustee possessing the qualifications to act as Guarantee
Trustee under Section 3.1. 

     “Trust Securities” means the Common
Securities and the Capital Securities. 

ARTICLE II

POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE 

     Section 2.1.
Powers and Duties of the
Guarantee Trustee. 

     (a) This Guarantee shall be held by
the Guarantee Trustee for the benefit of the Holders of the Capital Securities,
and the Guarantee Trustee shall not transfer this Guarantee to any Person except
a Holder of Capital Securities exercising his or her rights pursuant to Section
4.4(b) or to a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The
right, title and interest of the Guarantee Trustee shall automatically vest in
any Successor Guarantee Trustee, and such vesting and cessation of title shall
be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.

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     (b) If an Event of Default actually
known to a Responsible Officer of the Guarantee Trustee has occurred and is
continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit
of the Holders of the Capital Securities. 

     (c) The Guarantee Trustee, before
the occurrence of any Event of Default and after curing all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants shall be read
into this Guarantee against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been waived pursuant to Section 2.4) and is actually
known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this Guarantee, and
use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs. 

     (d) No provision of this Guarantee
shall be construed to relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that: 

     (i) prior to the occurrence of any
Event of Default and after the curing or waiving of all such Events of Default
that may have occurred: 

     (A) the duties and obligations of
the Guarantee Trustee shall be determined solely by the express provisions of
this Guarantee, and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Guarantee, and no implied covenants or obligations shall be read into this
Guarantee against the Guarantee Trustee; and 

     (B) in the absence of willful
misconduct or bad faith on the part of the Guarantee Trustee or any Responsible
Officer, the Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of this
Guarantee; 

     (ii) the Guarantee Trustee shall not
be liable for any error of judgment made in good faith by a Responsible Officer
of the Guarantee Trustee, unless it shall be proved that such Responsible
Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made; 

     (iii) the Guarantee Trustee shall
not be liable with respect to any action taken or omitted to be taken by it in
good faith in accordance with the written direction of the Holders of not less
than a Majority in liquidation amount of the Capital Securities relating to the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee, or relating to the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; and 

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     (iv) no provision of this Guarantee
shall require the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Guarantee or security and
indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk
or liability is not reasonably assured to it.

Section 2.2. Certain Rights of Guarantee Trustee. 

     (a) Subject to the provisions of
Section 2.1: 

          (i)
The Guarantee Trustee may conclusively rely, and shall be fully protected in
acting or refraining from acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties. 

          (ii)
Any direction or act of the Guarantor contemplated by this Guarantee shall be
sufficiently evidenced by an Officer’s Certificate. 

          (iii)
Whenever, in the administration of this Guarantee, the Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officer’s Certificate of the
Guarantor which, upon receipt of such request, shall be promptly delivered by
the Guarantor. 

          (iv)
The Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument (or any re-recording, refiling or re-registration
thereof). 

          (v)
The Guarantee Trustee may consult with counsel of its selection, and the advice
or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Guarantee Trustee shall have the right
at any time to seek instructions concerning the administration of this Guarantee
from any court of competent jurisdiction. 

          (vi)
The Guarantee Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against the costs, expenses (including attorneys’ fees and expenses and the
expenses of the Guarantee Trustee’s agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided, however, that nothing contained in this Section
2.2(a)(vi) shall relieve the Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Guarantee. 

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          (vii)
The Guarantee Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit. 

          (viii)
The Guarantee Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder. 

          (ix)
Any action taken by the Guarantee Trustee or its agents hereunder shall bind the
Holders of the Capital Securities, and the signature of the Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such action.
No third party shall be required to inquire as to the authority of the Guarantee
Trustee to so act or as to its compliance with any of the terms and provisions
of this Guarantee, both of which shall be conclusively evidenced by the
Guarantee Trustee’s or its agent’s taking such action. 

          (x)
Whenever in the administration of this Guarantee the Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount of the
Capital Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in conclusively relying on or acting in accordance with such
instructions. 

          (xi)
The Guarantee Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Guarantee. 

     (b) No provision of this Guarantee
shall be deemed to impose any duty or obligation on the Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal or
in which the Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Guarantee Trustee shall be construed to be a duty. 

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     Section 2.3.
Not Responsible for Recitals
or Issuance of Guarantee. The
recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee. 

     Section 2.4.
Events of Default;
Waiver. 

     (a) An Event of Default under this
Guarantee will occur upon the failure of the Guarantor to perform any of its
payment or other obligations hereunder. 

     (b) The Holders of a Majority in
liquidation amount of the Capital Securities may, voting or consenting as a
class, on behalf of the Holders of all of the Capital Securities, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and shall be deemed to have been cured, for every
purpose of this Guarantee, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.

     Section 2.5.
Events of Default;
Notice. 

     (a) The Guarantee Trustee shall,
within 90 days after the occurrence of an Event of Default, transmit by mail,
first class postage prepaid, to the Holders of the Capital Securities and the
Guarantor, notices of all Events of Default actually known to a Responsible
Officer of the Guarantee Trustee, unless such defaults have been cured before
the giving of such notice, provided, however, that the Guarantee Trustee shall
be protected in withholding such notice if and so long as a Responsible Officer
of the Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Capital Securities. 

     (b) The Guarantee Trustee shall not
be deemed to have knowledge of any Event of Default unless the Guarantee Trustee
shall have received written notice from the Guarantor or a Holder of the Capital
Securities (except in the case of a payment default), or any Responsible Officer
of the Guarantee Trustee charged with the administration of this Guarantee shall
have obtained actual knowledge thereof. 

ARTICLE III 

GUARANTEE TRUSTEE 

     Section 3.1.
Guarantee Trustee;
Eligibility. 

     (a) There shall at all times be a
Guarantee Trustee which shall: 

     (i) not be an Affiliate of the
Guarantor, and 

     (ii) be a corporation organized and
doing business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or Person authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this Section 3.1(a)(ii),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. 

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     (b) If at any time the Guarantee
Trustee shall cease to be eligible to so act under Section 3.1(a), the Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 3.2(c).

     (c) If the Guarantee Trustee has or
shall acquire any “conflicting interest” within the meaning of Section 310(b) of
the Trust Indenture Act, the Guarantee Trustee shall either eliminate such
interest or resign to the extent and in the manner provided by, and subject to
this Guarantee. 

     Section 3.2.
Appointment, Removal and
Resignation of Guarantee Trustee.

     (a) Subject to Section 3.2(b), the
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default. 

     (b) The Guarantee Trustee shall not
be removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Guarantee Trustee and delivered to the Guarantor.

     (c) The Guarantee Trustee appointed
to office shall hold office until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by an instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor and
the resigning Guarantee Trustee. 

     d) If no Successor Guarantee Trustee
shall have been appointed and accepted appointment as provided in this Section
3.2 within 60 days after delivery of an instrument of removal or resignation,
the Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee. 

     (e) No Guarantee Trustee shall be
liable for the acts or omissions to act of any Successor Guarantee Trustee.

     (f) Upon termination of this
Guarantee or removal or resignation of the Guarantee Trustee pursuant to this
Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing
to the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such
termination, removal or resignation. 

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ARTICLE IV 

GUARANTEE

     Section 4.1.
Guarantee. 

     (a) The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer), as and when
due, regardless of any defense (except the defense of payment by the Issuer),
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders. 

     (b) The Guarantor hereby also agrees
to assume any and all Obligations of the Issuer and in the event any such
Obligation is not so assumed, subject to the terms and conditions hereof, the
Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary
the full payment, when and as due, of any and all Obligations to such
Beneficiaries. This Guarantee is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof. 

     Section 4.2.
Waiver of Notice and
Demand. The Guarantor hereby waives
notice of acceptance of this Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands. 

     Section 4.3.
Obligations Not
Affected. The obligations,
covenants, agreements and duties of the Guarantor under this Guarantee shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following: 

     (a) the release or waiver, by
operation of law or otherwise, of the performance or observance by the Issuer of
any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer; 

     (b) the extension of time for the
payment by the Issuer of all or any portion of the Distributions, Redemption
Price, Liquidation Distribution or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of or in connection with, the Capital Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension of
any interest payment period on the Debentures or any extension of the maturity
date of the Debentures permitted by the Indenture); 

     (c) any failure, omission, delay or
lack of diligence on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders pursuant to the terms
of the Capital Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind; 

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     (d) the voluntary or involuntary
liquidation, dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;

     (e) any invalidity of, or defect or
deficiency in, the Capital Securities; 

     (f) the settlement or compromise of
any obligation guaranteed hereby or hereby incurred; or 

     (g) any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a guarantor, it being the intent of this Section 4.3 that the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances. 

     There shall be no obligation of the
Holders to give notice to, or obtain consent of, the Guarantor with respect to
the happening of any of the foregoing. 

     Section 4.4.
Rights of
Holders. 

     (a) The Holders of a Majority in
liquidation amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under this Guarantee;
provided, however, that (subject to Section 2.1) the Guarantee Trustee shall
have the right to decline to follow any such direction if the Guarantee Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Guarantee Trustee in good faith by its board
of directors or trustees, executive committees or a trust committee of directors
or trustees and/or Responsible Officers shall determine that the action or
proceedings so directed would involve the Guarantee Trustee in personal
liability. 

     (b) Any Holder of Capital Securities
may institute a legal proceeding directly against the Guarantor to enforce the
Guarantee Trustee’s rights under this Guarantee, without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other Person.
The Guarantor waives any right or remedy to require that any such action be
brought first against the Issuer, the Guarantee Trustee or any other Person
before so proceeding directly against the Guarantor. 

     Section 4.5.
Guarantee of
Payment. This Guarantee creates a
guarantee of payment and not of collection. 

     Section 4.6.
Subrogation. The
Guarantor shall be subrogated to all (if any) rights of the Holders of Capital
Securities against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Guarantee; provided, however, that the Guarantor shall
not (except to the extent required by mandatory provisions of law) be entitled
to enforce or exercise any right that it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee, if, after giving effect to any such payment, any
amounts are due and unpaid under this Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders. 

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     Section 4.7.
Independent
Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 4.3
hereof. 

     Section 4.8.
Enforcement by a
Beneficiary. A Beneficiary may
enforce the obligations of the Guarantor contained in Section 4.1(b) directly
against the Guarantor and the Guarantor waives any right or remedy to require
that any action be brought against the Issuer or any other person or entity
before proceeding against the Guarantor. The Guarantor shall be subrogated to
all rights (if any) of any Beneficiary against the Issuer in respect of any
amounts paid to the Beneficiaries by the Guarantor under this Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee, if at
the time of any such payment, and after giving effect to such payment, any
amounts are due and unpaid under this Guarantee. 

ARTICLE V 

LIMITATION OF TRANSACTIONS;
SUBORDINATION 

     Section 5.1.
Limitation of
Transactions. So long as any Capital
Securities remain outstanding, if (a) there shall have occurred and be
continuing an Event of Default or a Declaration Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor shall not and shall not permit any Affiliate to
(x) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Guarantor’s
or such Affiliate’s capital stock (other than payments of dividends or
distributions to the Guarantor or payments of dividends from direct or indirect
subsidiaries of the Guarantor to their parent corporations, which also shall be
direct or indirect subsidiaries of the Guarantor) or make any guarantee payments
with respect to the foregoing or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor or any Affiliate that rank pari passu in all
respects with or junior in interest to the Debentures (other than, with respect
to clauses (x) and (y) above, (i) repurchases, redemptions or other acquisitions
of shares of capital stock of the Guarantor in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Guarantor (or securities convertible into
or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default,
Declaration Event of Default or Extension Period, as applicable, (ii) as a
result of any exchange or conversion of any class or series of the Guarantor’s
capital stock (or any capital stock of a subsidiary of the Guarantor) for any
class or series of the Guarantor’s capital stock or of any class or series of
the Guarantor’s indebtedness for any class or series of the Guarantor’s capital
stock, (iii) the purchase of fractional interests in shares of the Guarantor’s
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) any declaration of a
dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other property under any stockholders’ rights plan, or the
redemption or repurchase of rights pursuant thereto, (v) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, or (vi) payments under this Guarantee).

12

     Section 5.2.
Ranking. This
Guarantee will constitute an unsecured obligation of the Guarantor and will rank
subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance
thereof, each Holder of Capital Securities agrees to the foregoing provisions of
this Guarantee and the other terms set forth herein.

     The right of the Guarantor to
participate in any distribution of assets of any of its subsidiaries upon any
such subsidiary’s liquidation or reorganization or otherwise is subject to the
prior claims of creditors of that subsidiary, except to the extent the Guarantor
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Guarantor’s obligations under this Guarantee will be effectively subordinated to
all existing and future liabilities of the Guarantor’s subsidiaries, and
claimants should look only to the assets of the Guarantor for payments
hereunder. This Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Guarantor, including Senior Indebtedness of the
Guarantor, under any indenture that the Guarantor may enter into in the future
or otherwise. 

ARTICLE VI 

TERMINATION 

     Section 6.1.
Termination. This
Guarantee shall terminate as to the Capital Securities (i) upon full payment of
the Redemption Price of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee. 

13

ARTICLE VII

INDEMNIFICATION 

     Section 7.1.
Exculpation.

     (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Person’s negligence or willful misconduct with respect to such
acts or omissions. 

     (b) An Indemnified Person shall be
fully protected in relying in good faith upon the records of the Issuer or the
Guarantor and upon such information, opinions, reports or statements presented
to the Issuer or the Guarantor by any Person as to matters the Indemnified
Person reasonably believes are within such other Person’s professional or expert
competence and who, if selected by such Indemnified Person, has been selected
with reasonable care by such Indemnified Person, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Capital Securities might
properly be paid. 

     Section 7.2.
Indemnification. 

     (a) The Guarantor agrees to
indemnify each Indemnified Person for, and to hold each Indemnified Person
harmless against, any and all loss, liability, damage, claim or expense incurred
without negligence or willful misconduct on the part of the Indemnified Person,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including, but not limited to, the costs and expenses
(including reasonable legal fees and expenses) of the Indemnified Person
defending itself against, or investigating, any claim or liability in connection
with the exercise or performance of any of the Indemnified Person’s powers or
duties hereunder. The obligation to indemnify as set forth in this Section 7.2
shall survive the resignation or removal of the Guarantee Trustee and the
termination of this Guarantee. 

     (b) Promptly after receipt by an
Indemnified Person under this Section 7.2 of notice of the commencement of any
action, such Indemnified Person will, if a claim in respect thereof is to be
made against the Guarantor under this Section 7.2, notify the Guarantor in
writing of the commencement thereof; but the failure so to notify the Guarantor
(i) will not relieve the Guarantor from liability under paragraph (a) above
unless and to the extent that the Guarantor did not otherwise learn of such
action and such failure results in the forfeiture by the Guarantor of
substantial rights and defenses and (ii) will not, in any event, relieve the
Guarantor from any obligations to any Indemnified Person other than the
indemnification obligation provided in paragraph (a) above. 

14

The Guarantor shall be entitled to
appoint counsel of the Guarantor’s choice at the Guarantor’s expense to
represent the Indemnified Person in any action for which indemnification is
sought (in which case the Guarantor shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the Indemnified Person or
Persons except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the Indemnified Person. Notwithstanding the
Guarantor’s election to appoint counsel to represent the Guarantor in an action,
the Indemnified Person shall have the right to employ separate counsel
(including local counsel), and the Guarantor shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel chosen by
the Guarantor to represent the Indemnified Person would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the Indemnified Person and the
Guarantor and the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it and/or other Indemnified Person(s) which
are different from or additional to those available to the Guarantor, (iii) the
Guarantor shall not have employed counsel satisfactory to the Indemnified Person
to represent the Indemnified Person within a reasonable time after notice of the
institution of such action or (iv) the Guarantor shall authorize the Indemnified
Person to employ separate counsel at the expense of the Guarantor. The Guarantor
will not, without the prior written consent of the Indemnified Persons, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Persons are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such claim, action,
suit or proceeding. 

     Section 7.3.
Compensation; Reimbursement
of Expenses. The Guarantor agrees:

     (a) to pay to the Guarantee Trustee
from time to time such compensation for all services rendered by it hereunder as
the parties shall agree to from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust); and 

     (b) except as otherwise expressly
provided herein, to reimburse the Guarantee Trustee upon request for all
reasonable expenses, disbursements and advances incurred or made by it in
accordance with any provision of this Guarantee (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct. 

     For purposes of clarification, this
Section 7.3 does not contemplate the payment by the Guarantor of acceptance or
annual administration fees owing to the Guarantee Trustee for services to be
provided by the Guarantee Trustee under this Guarantee or the fees and expenses
of the Guarantee Trustee’s counsel in connection with the closing of the
transactions contemplated by this Guarantee. The provisions of this Section 7.3
shall survive the resignation or removal of the Guarantee Trustee and the
termination of this Guarantee. 

15

ARTICLE VIII

MISCELLANEOUS 

     Section 8.1.
Successors and
Assigns. All guarantees and
agreements contained in this Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Capital Securities then outstanding. Except in
connection with any merger, consolidation, reorganization, acquisition or
transfer of the Guarantor with or into another entity or any sale, transfer or
lease of the Guarantor’s assets to another entity, in each case, to the extent
permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of at least a Majority in liquidation amount of the Capital Securities.

     Section 8.2.
Amendments. Except
with respect to any changes that do not adversely affect the powers,
preferences, rights or interests of Holders of the Capital Securities in any
material respect (in which case no consent of Holders will be required), this
Guarantee may be amended only with the prior approval of the Holders of not less
than a Majority in liquidation amount of the Capital Securities. The provisions
of the Declaration with respect to amendments thereof apply to the giving of
such approval. 

     Section 8.3.
Notices. All notices
provided for in this Guarantee shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by first class
mail, as follows: 

     (a) If given to the Guarantee
Trustee, at the Guarantee Trustee’s mailing address set forth below (or such
other address as the Guarantee Trustee may give notice of to the Holders of the
Capital Securities and the Guarantor): 

Wilmington Trust Company
Rodney
Square North
1100 North Market Street
Wilmington, Delaware
19890-1600
Attention: Corporate Trust Administration
Telecopy:
302-636-4140 

     (b) If given to the Guarantor, at
the Guarantor’s mailing address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Capital Securities and to the
Guarantee Trustee): 

Enterprise Financial Services
Corp
1281 N. Warson Road St. Louis
Missouri 63132
Attention: Deborah N.
Barstow
Telecopy: 314-812-1506 

     (c) If given to any Holder of the
Capital Securities, at the address set forth on the books and records of the
Issuer. 

16

     All such notices shall be deemed to
have been given when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid, except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address
of which no notice was given, such notice or other document shall be deemed to
have been delivered on the date of such refusal or inability to deliver.

     Section 8.4.
Benefit. This
Guarantee is solely for the benefit of the Beneficiaries and, subject to Section
2.1(a), is not separately transferable from the Capital Securities. 

     Section 8.5.
Governing
Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). 

     Section 8.6.
Counterparts. This
Guarantee may be executed in one or more counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
instrument. 

     Section 8.7.
Separability. In case
one or more of the provisions contained in this Guarantee shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Guarantee, but this Guarantee shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein. 

Signatures appear on the following
page 

17

     THIS
GUARANTEE is executed as of the day and year first above written. 

	
      ENTERPRISE FINANCIAL SERVICES CORP.
      

	 
 
	By:  	 
	Its:  	 

	
      WILMINGTON TRUST COMPANY, as the
      Institutional Trustee 

	 
	By:  	 
	Its:  	 

18f10q1008ex10iv_prevention.htm

     

    
      Divestiture
of Quick Pay

    

     

    SECURITIES
PURCHASE AGREEMENT

    

    THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”) is made effective the 8th day of October,
2008 by and between, Prevention Insurance.com, Inc., a Nevada corporation (the
“Company”) and Paragon Capital LP, a Delaware limited partnership
(“Paragon”).

    

    RECITAL

    

    WHEREAS, Paragon is willing to
advance the Company ten thousand dollars ($10,000) for corporate purposes, and
the Company is willing to issue warrants exercisable into shares of common
stock.

    

    AGREEMENT

    

    NOW, THEREFORE, in
consideration of the foregoing recital and the mutual promises hereinafter set
forth, and, other good and valuable consideration, the parties hereto agree as
follows:

     

    1. Issuance of Warrants
Paragon hereby agrees to advance to the Company $10,000 (the “Advance”) for the
purpose of paying administrative expenses including making required filings with
the SEC and paying other legal expenses.  The Company will execute a
warrant agreement (the “Warrant”) which is attached.

     

    2.           Authorization

     

    (a)           Corporate
Action  All corporate action on the part of the Company necessary for
the sale of the warrants and warrant shares upon exercise of the Warrant and the
performance of the Company's actions
hereunder will be taken by the Company at the appropriate time prior to
exercise. This Agreement constitutes a valid and legally binding obligation of
the Company, enforceable in accordance with its terms.

     

    (b)           Valid
Issuance  Upon an exercise, the warrant shares, when
transferred in compliance with the provisions of this Agreement will be duly
authorized, validly issued, fully paid and non-assessable, and will be free of
any liens or encumbrances caused or created by the Company.  This
transaction is deemed to be an arms length transaction.

     

    (c)           No Preemptive Rights
Except as provided herein, no person currently has or will have any right of
first refusal or any preemptive rights in connection with the transfer of the
warrant shares upon an exercise, or any future issuance of securities by the
Company.

     

    3.           All
notices, requests and instructions hereunder shall be in writing and delivered
to each party as may from time to time be designated by a party
hereto.

     

    4.           In
the event that any term, covenant, condition, or other provision contained
herein is held to be invalid, void or otherwise unenforceable by any court of
competent jurisdiction, the invalidity of any such term, covenant, condition,
provision or agreement shall in no way affect any other term, covenant,
condition or provision or agreement contained herein, which shall remain in full
force and effect.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    5.           This
Agreement contains all of the terms agreed upon by the parties with respect to
the subject matter hereof.  This Agreement has been entered into after
full investigation.

    

    6.           This
Agreement shall be construed in accordance with and governed by the laws of the
State of New York applicable to agreements made and to be performed within the
State of New York without giving the effect to the conflict of law principals
thereof.

    

    7.           No
amendments or additions to this Agreement shall be binding unless in writing,
signed by both parties, except as herein otherwise provided.

    

    

    
      	
               
      

            	
              Please
      sign below to acknowledge the acceptance of the terms of this
      Agreement.

            

    

    

    
      	
              PARAGON
      CAPITAL LP

            	
              PREVENTION
      INSURANCE.COM, INC.

            

    

    

    
      	
              By:___________________________

            	
              By:
      _________________________

            

    

    
      	
               
      

            	
              ALAN
      DONENFELD

            

    

    
      	
               
      

            	
              Managing
      Member of Paragon Capital Advisors
LLC,

            

    

    
      	
               
      

            	
              General
      Partner of Paragon Capital LP

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
 

    EXHIBIT 1

    

    NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

    

    PREVENTION INSURANCE.COM,
INC.

    

    Warrant to Purchase Common
Stock

    

    Warrant No.: A-3

    Number of Shares of Common Stock:
10,000,000

    Date of Issuance: October 8, 2008

    

             PREVENTION INSURANCE.COM,
INC., a Nevada corporation
(the "Company"), hereby certifies that, for $10,000, the receipt and sufficiency of which
are hereby acknowledged, Paragon Capital LP and/or its affiliates and/or
designees, the registered holder hereof or its permitted assigns (the "Holder"),
is entitled, subject to the terms set forth below, to purchase from the Company,
at the Exercise Price (as defined below) then in effect, upon surrender of this
Warrant, to purchase Common Stock (including any warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the "Warrant"), at any
time or times on or after the date hereof, but not after 11:59 p.m., New York
time, on the Expiration Date (as defined below), 10,000,000 fully paid nonassessable shares of
Common Stock (as defined below) (the "Warrant Shares"). Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set
forth in Section 17. This Warrant is the Warrant to purchase Common Stock issued
pursuant to a Consulting Agreement dated as of October 8, 2008 (the "Closing Date"), by and between
the Company and the Holder (the "Agreement").

    

             Section
1. Exercise of Warrant.

    

                (a)
Mechanics of Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)), this Warrant may
be exercised by the Holder on any day on or after the date hereof, in whole or
in part, by (i) delivery of a written notice, in the form attached hereto as
Exhibit A (the "Exercise Notice"), of the Holder's election to exercise this
Warrant and (ii) (A) payment to the Company of an amount equal to the applicable Exercise
Price multiplied by the number of Warrant Shares as to which this Warrant is
being exercised (the "Aggregate Exercise Price") in cash or wire transfer of
immediately available funds or (B) by notifying the Company that this Warrant is
being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)).
The Holder shall not be required to deliver the original Warrant in order to
effect an exercise hereunder. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. On or before the
first Business Day following the date on which the Company has received each of
the Exercise Notice and the Aggregate Exercise Price (or notice of a

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    Cashless Exercise) (the "Exercise
Delivery Documents"), the Company shall transmit an acknowledgment of
confirmation of receipt of the Exercise Delivery Documents to the Holder and the
Company's transfer agent (the "Transfer Agent"). On or before the third Business
Day following the date on which the Company has received all of the Exercise
Delivery Documents, the Company shall (X) issue and deliver to the address
specified in the Exercise Notice, a certificate, registered in the name of the
holder of this Warrant or its designee, for the number of shares of Common Stock
to which the holder of this Warrant is entitled pursuant to such exercise, or
(Y) provided that the Transfer Agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, upon the request of
the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in
clause (ii)(A) above or notification to the Company of a Cashless Exercise
referred to in Section 1(d), the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date of delivery
of the certificates evidencing such Warrant Shares. If this Warrant is submitted
in connection with any exercise pursuant to this Section 1(a) and the number of
Warrant Shares represented by this Warrant submitted for exercise is greater
than the number of Warrant Shares being acquired upon an exercise, then the
Company shall as soon as practicable and in no event later than three Business
Days after any exercise and at its own expense, issue a new Warrant (in
accordance with Section 8(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number. The Company shall pay
any and all taxes which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.

    

                (b)
Exercise Price. For purposes of this Warrant, "Exercise Price" means
$0.005, subject to adjustment as provided
herein.

    

                (c)
Company's Failure to Timely Deliver Securities. If the Company shall fail for
any reason or for no reason to issue to the Holder within three Business Days of
receipt of the Exercise Delivery Documents, a certificate for the number of
shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company's share register or to credit the Holder's
balance account with DTC for such number of shares of Common Stock to which the
Holder is entitled upon the Holder's exercise of this Warrant, and if on or after such
Business Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of
shares of Common Stock issuable upon such exercise that the Holder anticipated
receiving from the Company, then the Company shall, within three Business Days
after the Holder's request and in the Holder's discretion, either (i) pay cash
to the Holder in an amount equal to the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased (the
"Buy-In Price"), at which point the Company's obligation to deliver such
certificate (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a certificate or
certificates representing such shares of Common Stock and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on
the date of exercise.

    

                (d)
Cashless Exercise. Notwithstanding anything contained herein to the contrary,
the Holder may, in its sole discretion, exercise this Warrant in whole or in
part and, in lieu of making the cash payment otherwise contemplated to be made
to the Company upon such exercise in payment of the Aggregate Exercise Price (a
"Cash Exercise"), elect instead to receive upon such exercise the "Net Number"
of shares of Common Stock determined according to the following formula (a
"Cashless Exercise"):

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

      

     

                                       
(A x B) - (A x C)

        Net Number =
    -------------------------

                                                   
B

    

                   For
purposes of the foregoing formula:

    

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

    

                         B
= the Closing Sale Price of the shares of Common Stock (as
reported by Bloomberg) on the date immediately preceding the date of the
Exercise Notice.

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

    

                (e)
Disputes. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Warrant Shares, the Company shall promptly
issue to the Holder the number of Warrant Shares that are not disputed and
resolve such dispute in accordance with Section 14.

    

                (f)
Limitations on Exercise; Beneficial Ownership. The Holder shall not have any restriction on
exercise of this Warrant.

    

             Section
2. Adjustment of Exercise Price and Number of Warrant Shares. The Exercise Price
and the number of Warrant Shares shall be adjusted from time to time as
follows:

    

                (a)
Adjustment upon Issuance of shares of Common Stock. If and whenever on or after
the Closing Date the Company issues or sells, or in accordance with this Section
2 is deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding shares of Common Stock deemed to have been issued
or sold by the Company in connection with any Excluded Security) for a
consideration per share (the "New Issuance Price") less than a price (the
"Applicable Price") equal to the Exercise Price in effect immediately prior to
such issue or sale or deemed issuance or sale (the foregoing a "Dilutive
Issuance"), then immediately after such Dilutive Issuance, the Exercise Price
then in effect shall be reduced to an amount equal to the New Issuance Price.
Upon each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares shall be adjusted to the number of shares of Common Stock determined by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares acquirable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment. For purposes of determining the
adjusted Exercise Price under this Section 2(a), the following shall be
applicable:

    

                         (i)
Issuance of Options. If the Company in any manner grants any Options and the
lowest price per share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is less than
the Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 2(a)(i), the "lowest price per share for which one share of Common Stock
is issuable upon exercise of such Options or upon conversion, exercise or
exchange of such Convertible Securities" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale of the
Option, upon exercise of the Option and upon conversion, exercise or exchange of

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    any Convertible Security issuable upon
exercise of such Option. No further adjustment of the Exercise Price shall be
made upon the actual issuance of such shares of Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange of
such Convertible Securities.

    

                         (ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells
any Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon the conversion, exercise or exchange thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such Convertible Securities for such price per share.
For the purposes of this Section 2(a)(ii), the "lowest price per share for which
one share of Common Stock is issuable upon the conversion, exercise or exchange"
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of Common Stock
upon the issuance or sale of the Convertible Security. No further adjustment of
the Exercise Price shall be made upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for which adjustment of this Warrant has been or is
to be made pursuant to other provisions of this Section 2(a), no further
adjustment of the Exercise Price shall be made by reason of such issue or
sale.

    

                         (iii)
Change in Option Price or Rate of Conversion. If the purchase price provided for
in any Options, the additional consideration, if any, payable upon the issue,
conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or
exchangeable for shares of Common Stock increases or decreases at any time, the
Exercise Price and the number of Warrant Shares in effect at the time of such
increase or decrease shall be adjusted to the Exercise Price and the number of
Warrant Shares which would have been in effect at such time had such Options or
Convertible Securities provided for such increased or decreased purchase price,
additional consideration or increased or decreased conversion rate, as the case
may be, at the time initially granted, issued or sold. For purposes of this
Section 2(a)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are increased or
decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No adjustment pursuant
to this Section 2(a) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect or a decrease in the number of
Warrant Shares.

    

                         (iv)
Calculation of Consideration Received. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Options will be deemed to
have been issued for a consideration of $0.01. If any shares of Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefore will be deemed to be the net amount
received by the Company therefore. If any shares of Common Stock, Options
or Convertible Securities are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company will be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the Closing Sale Price of such security on the date of receipt. If any
shares of Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration
therefore will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    securities will be determined jointly by
the Company and the Holder. If such parties are unable to reach agreement within
ten days after the occurrence of an event requiring valuation (the "Valuation
Event"), the fair value of such consideration will be determined within five
Business Days after the tenth day following the Valuation Event by an
independent, reputable appraiser selected by the Holder and approved by the
Company. The determination of such appraiser shall be final and binding upon all
parties absent manifest error and the fees and expenses of such appraiser shall
be borne by the Company.

    

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

    

               (b)
Adjustment upon Subdivision or Combination of shares of Common Stock. If the
Company at any time on or after the Closing Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Closing Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 2(b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.

    

                (c)
Other Events. If any event occurs of the type contemplated by the provisions of
this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company's Board of
Directors will make an appropriate adjustment in the Exercise Price so as to
protect the rights of the Holder; provided that no such adjustment pursuant to
this Section 2(c) will increase the Exercise Price or decrease the number of
Warrant Shares as otherwise determined pursuant to this Section
2.

    

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

    

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

                 (b)
the number of Warrant Shares shall be increased to a number of shares equal to
the number of shares of Common Stock obtainable immediately prior to the close
of business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding paragraph (a); provided that in
the event that the Distribution is of shares of or common stock ("Other Shares
of Common Stock") of a company whose common shares are traded on a national
securities exchange or a national automated quotation system, then the Holder
may elect to receive a warrant to purchase Other Shares of Common Stock, the
terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the number of shares of Other Shares of Common
Stock that would have been payable to the Holder pursuant to the Distribution
had the Holder exercised this Warrant immediately prior to such record date and
with an aggregate exercise price equal to the product of the amount by which the
exercise price of this Warrant was decreased with respect to the Distribution
pursuant to the terms of the immediately preceding paragraph (a), and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

    

             Section
4. Purchase Rights; Fundamental Transactions.

    

                (a)
Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if
at any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the
"Purchase Rights"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

    

                (b)
Fundamental Transactions. If the Company enters into or is party to a
Fundamental Transaction, then the Holder shall have the right to either (A)
purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, such shares of stock, securities or assets
(including cash) as would have been issuable or payable with respect to or in
exchange for a number of Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, had such
Fundamental Transaction not taken place or (B) require the repurchase of this
Warrant for a purchase price, payable in cash within five Business Days after
such request, equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of such request. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity and Holder to comply with the
provisions of this Section 4(b). The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and shall be
applied without regard to any limitations on the exercise of this
Warrant.

    

             Section
5. Noncircumvention. The Company hereby covenants and agrees that the Company
will not, by amendment of its Articles of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, 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, and will at all times in good faith carry out all the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as this Warrant is outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the exercise of this Warrant,
the number of shares of Common Stock as shall from time to time be necessary to
effect the exercise of this Warrant then outstanding (without regard to any
limitations on exercise).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

             Section
6. Reservation of Authorized Shares.

    

                (a)
Initial Reservation. Within
60 days of a written demand by the Holder, the Company shall reserve out of its
authorized and unissued Common Stock the number of shares of Common Stock needed
to satisfy a full exercise of this Warrant and provide to the Holder evidence
thereof in form and substance satisfactory to the Holder.

    

                (b)
Ongoing Reservation. So long as this Warrant is outstanding, the Company shall
take all actions necessary to reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the exercise of this Warrant, the number of shares of Common Stock as
shall at all times after 60
days from a written demand by the Holder and from time to time thereafter as necessary to effect the exercise of
this Warrant; provided that at no time shall the number of shares of Common
Stock so reserved be less than the number of shares required to be reserved by
Section 6(a) hereof (without regard to any limitations on conversions) (the
"Required Reserve Amount").

    

                (c)
Insufficient Authorized Shares. If, at any time after 60 days of a written demand by the
Holder while this Warrant
remain outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance  upon the exercise of this Warrant at least a number of
shares of Common Stock equal to the Required Reserve Amount (an "Authorized
Share Failure"), then the Company shall immediately take all action necessary to increase the
Company's authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant. Without
limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later
than 60 days after the occurrence of such Authorized Share Failure, the Company
shall hold a meeting of its stockholders for the approval of an increase in the
number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement and shall use
its best efforts to solicit its stockholders' approval of such increase in
authorized shares of Common Stock and to cause its Board of Directors to
recommend to the stockholders that they approve such
proposal.

    

             Section
7. Warrant Holder not Deemed a Stockholder. Except as otherwise specifically
provided herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in such
Person's capacity as the Holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a
shareholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 7, the Company
shall provide the Holder with copies of the same notices and other information
given to the shareholders of the Company generally, contemporaneously with the
giving thereof to the shareholders.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

             Section
8. Reissuance of Warrants.

    

                (a)
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 8(d)), registered as the Holder may request.

    

                (b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Warrant,
the Company shall execute and deliver to the Holder a new Warrant (in accordance
with Section 8(d)).

    

                (c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 8(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no Warrants for fractional shares of
Common Stock shall be given.

    

                (d)
Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 8(a)
or Section 8(c), the Warrant Shares designated by the Holder which,  when added to the
number of shares of Common Stock  underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant
Shares then  underlying  this Warrant),  (iii)
shall have an issuance date,  as  indicated  on
the face of such new  Warrant  which is the same as the
Closing  Date,  and (iv)  shall  have
the same  rights  and  conditions  as
this Warrant.

    

             Section
9. Notices. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section
7 of the Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Warrant, including in reasonable
detail a description of such action and the reason therefor. Without limiting
the generality of the foregoing, the Company will give written notice to the
Holder (i) immediately upon any adjustment of the Exercise Price, setting forth
in reasonable detail, and certifying, the calculation of such adjustment and
(ii) at least fifteen days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon
the shares of Common Stock, (B) with respect to any grants, issuances or sales
of any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be
made known to the public prior to or in conjunction with such notice being
provided to the Holder.

    

             Section
10. Amendment and Waiver. Except as otherwise provided herein, the provisions of
this Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the prior written consent of the Holder;
provided that no such action may increase the Exercise Price of this Warrant or
decrease the number of shares or class of stock obtainable upon exercise of this
Warrant.

    

             Section
11. Severability. If any provision of this Warrant or the application thereof
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of the terms of this Warrant will continue in
full force and effect.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

             Section
12. Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
ANY TRANSACTION CONTEMPLATED HEREBY.

    

             Section
13. Construction; Headings. This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant.

    

             Section
14. Dispute Resolution. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall submit the disputed determinations or arithmetic calculations within two
Business Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within one Business Day of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within one Business Day submit (a) the disputed determination of the Exercise
Price to an independent, reputable investment bank selected by the Holder and
approved by the Company or (b) the disputed arithmetic calculation of the
Warrant Shares to an independent, reputable accounting firm selected by the
Holder and approved by the Company. The Company shall cause, at its expense, the
investment bank or the accounting firm, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than five Business Days from the date it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.

    

             Section
15. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to seek actual damages for any failure by
the Company to comply with the terms of this Warrant. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

             Section
16. Transfer. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company.

    

             Section
17.  Certain  Definitions.  For purposes of this
Warrant, the following terms shall have the following
meanings:

    

              "Affiliate"
means, as to any Person, any other Person which directly or indirectly controls,
is controlled by, or is under common control with such Person. For purposes of
this definition, "control" of a Person includes (A) the power, direct or
indirect, (i) to vote or direct the voting of 10% or more of the outstanding
shares of Voting Stock of such Person, or (ii) to direct or cause the direction
of the management and policies of such Person (whether by ownership of Capital
Stock, by contract or otherwise) or (B) the ownership of Capital Stock or other
securities representing 10% or more of the total economic interests of such
Person; provided, that the Holder shall be deemed to be an Affiliate of the
Company.

    

                "Aggregate
Exercise Price" has the meaning set forth in Section 1(a).

    

                "Applicable
Price" has the meaning set forth in Section 2(a).

    

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

    

                "Authorized  Share  Failure"  has
the  meaning  set forth in Section 6(b).

    

                "Black
Scholes Value" means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the "OV" function on Bloomberg determined as
of the day immediately following the public announcement of the applicable
Fundamental Transaction and reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of this Warrant as of such date of request is 2.5% and (ii) an expected volatility equal to
60%.

    

                "Bloomberg"
means Bloomberg Financial Markets.

    

                "Business
Day" means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York, New York are authorized or required by law to
remain closed.

    

                "Buy-In
Price" has the meaning set forth in Section 1(c).

    

                "Capital
Stock" means and includes, with respect to any Person (a) any and all shares,
interests, participations or other equivalents of or interests in (however
designated) corporate stock, including shares of preferred or preference stock
of such Person, (b) all partnership interests (whether general or limited) in
such Person which is a partnership, (c) all membership interests or limited
liability company interests in such Person which is a limited liability company,
(d) any interest or participation that confers on a Person the right to receive
a share of the profits and/or losses of, or distributions of assets of such
Person, and (e) all equity or ownership interests in such Person of any other
type, and any and all warrants, rights or options to purchase any of the
foregoing.

    

                "Cash
Exercise" has the meaning set forth in Section 1(d).

    

                "Cashless
Exercise" has the meaning set forth in Section 1(d).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

                 "Closing
Bid Price" and "Closing Sale Price" means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such
security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the
closing bid price or the closing trade price, as the case may be, then the last
bid price or last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if the Principal Market is
not the principal securities exchange or trading market for such security, the
last closing bid price or last trade price, respectively, of such security on
the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply, the
last closing bid price or last trade price, respectively, of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid
prices, or the ask prices, respectively, of any market makers for such security
as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
in the same manner as the disputes described in Section 14. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.

    

                "Closing
Date" has the meaning set forth in the preamble to this
Warrant.

    

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

    

                "Company"
has the meaning set forth in the preamble to this Warrant.

    

                "Convertible
Securities" means any stock or securities (other than Options) directly or
indirectly convertible into or exercisable or exchangeable for shares of Common
Stock.

    

                "Dilutive
Issuance" has the meaning set forth in Section 2(a).

    

                "Distribution"
has the meaning set forth in Section 3.

    

                "DTC"
has the meaning set forth in Section 1(a).

    

                "Excluded
Security" means any Common Stock issued or issuable: (i) in connection with any
Approved Stock Plan; (ii) upon conversion of any Preferred Stock or this
exercise of the Warrant; and (iii) upon conversion of any Options or Convertible
Securities which are outstanding on the day immediately preceding the Closing
Date, provided that the terms of each such Options or Convertible Securities are
not amended, modified or changed on or after the Closing
Date.

    

                "Exercise
Delivery Documents" has the meaning set forth in Section
1(a).

    

                "Exercise
Price" has the meaning set forth in Section 1(b).

    

                "Exercise
Notice" has the meaning set forth in Section 1(a).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

                "Expiration
Date" means the date three year after the Closing Date or, if such
date falls on a day other than a Business Day or on which trading does not take
place on the Principal Market (a "Holiday"), the next date that is not a
Holiday.

    

                "Fundamental
Transaction" means that the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Person, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of either the outstanding shares of Common Stock
(not including any shares of Common Stock held by the Person or Persons making
or party to, or associated or affiliated with the Persons making or party to,
such purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganize, recapitalize or
reclassify its Common Stock.

    

                "Holder"
has the meaning set forth in the preamble to this Warrant.

    

                "New
Issuance Price" has the meaning set forth in Section 2(a).

    

                "Maximum
Percentage" has the meaning set forth in Section 1(f).

    

                "Consulting
Agreement" has the meaning set forth in the preamble to this
Warrant.

    

                "Options"
means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

    

                "Other
Shares of Common Stock" has the meaning set forth in Section
3(b).

    

                 "Person"
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

    

                "Principal
Market" means the NASD OTC Bulletin Board.

    

                "Purchase
Rights" has the meaning set forth in Section 4(a).

    

                "Registration
Rights Agreement" means that certain Registration Rights Agreement, dated as of
even date herewith, by and among the Company and the Holder.

    

                "Required
Reserve Amount" has the meaning set forth in Section 6(a).

    

                "Transfer
Agent" has the meaning set forth in Section 1(a).

    

                "Valuation
Event" has the meaning set forth in Section 2(a)(iv).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

                "Voting
Stock" means, with respect to any Person, the Capital Stock of such Person of
any class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of members of the Board of
Directors (or Persons performing similar functions) of such
Person.

    

                "Warrant"
has the meaning set forth in the preamble to this Warrant.

    

                "Warrant
Shares" has the meaning set forth in the preamble to this
Warrant.

    

    

    

                                [Signature
Page Follows]

    

    

    
 

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    

             IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to
be duly executed as of the Date of Issuance set out above.

    

    PREVENTION INSURANCE.COM,
INC.

    

    By:  __________________________                                                        

    Name: Alan P. Donenfeld                                                          

    Title:  CEO

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
 

    EXHIBIT A

    

    EXERCISE NOTICE

    TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS

    WARRANT TO PURCHASE COMMON
STOCK

    

    PREVENTION INSURANCE.COM,
INC.

    

     The undersigned holder hereby
exercises the right to purchase _________________ of the shares of Common Stock
("Warrant Shares") of PREVENTION INSURANCE.COM,
INC., a Nevada corporation
(the "Company"), evidenced by the attached Warrant to Purchase Common Stock (the
"Warrant"). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.

    

             1.
Form of Exercise  Price.  The Holder intends that payment of
the Exercise Price shall be made as:

    

                ____________
a "Cash Exercise" with respect to _________________ Warrant Shares;
and/or

    

                ____________
a "Cashless Exercise" with respect to ____________ Warrant
Shares.

    

              2.
Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.

    

             3.
Delivery of Warrant Shares. The Company shall deliver to the holder __________
Warrant Shares in accordance with the terms of the Warrant.

    

    Date: _______________ __,
______

    

     ________________________________

    Name
of  Holder

    

    By:______________________________

    

    Name:____________________________

    

    Title:___________________________

    

    

    

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    ACKNOWLEDGMENT

    

              The
Company hereby acknowledges this Exercise Notice and hereby directs OTR to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions from the Company and acknowledged and
agreed to by OTR.

    

                                                                                   
PREVENTION INSURANCE.COM,
INC.

    

    By: __________________________

    Name: Alan P. Donenfeld

    Title:  CEO

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