Document:

Fellows 8K Exhibit 4.2

    

    Exhibit
      4.2

    

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

    

    Original
      Issue Date: September 21, 2005

    Original
      Conversion Price (subject to adjustment herein): $0.75

    

    

    

    CONVERTIBLE
      DEBENTURE

    

    

    THIS
      CONVERTIBLE DEBENTURE is one of a series of duly authorized and issued
      Convertible Debentures of Fellows Energy Ltd., a Nevada corporation, having
      a
      principal place of business at 370 Interlocken Boulevard, Suite 400, Broomfield,
      CO 80021 (the “Company”),
      designated as its Convertible Debenture (this debenture, the “Debenture”
      and
      collectively with the other such series of debentures, the “Debentures”).

    

    FOR
      VALUE
      RECEIVED, the Company promises to pay to ___________ or its registered assigns
      (the “Holder”),
      or
      shall have paid pursuant to the terms hereunder, the principal sum of $
      __________ by December 17, 2007, or such earlier date as this Debenture is
      required or permitted to be repaid as provided hereunder (the “Maturity
      Date”).
      This
      Debenture is subject to the following additional provisions:

    

    Section
      1. Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this Debenture:
      (a) capitalized terms not otherwise defined herein have the meanings given
      to
      such terms in the Purchase Agreement, and (b) the following terms shall have
      the
      following meanings:

    

    “Alternate
      Consideration”
      shall
      have the meaning set forth in Section 5(d).

     

    

    
      
        
        

      

      
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    “Base
      Conversion Price”
      shall
      have the meaning set forth in Section 5(b).

    

    “Business
      Day”
      means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday in the United States or a day on which banking institutions in the
      State
      of New York are authorized or required by law or other government action to
      close.

    

    “Buy-In”
      shall
      have the meaning set forth in Section 4(d)(v).

    

    “Change
      of Control Transaction”
      means
      the occurrence after the date hereof of any of (i) an acquisition after the
      date
      hereof by an individual or legal entity or “group” (as described in Rule
      13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Company, by
      contract or otherwise) of in excess of 33% of the voting securities of the
      Company, or (ii) the Company merges into or consolidates with any other Person,
      or any Person merges into or consolidates with the Company and, after giving
      effect to such transaction, the stockholders of the Company immediately prior
      to
      such transaction own less than 66% of the aggregate voting power of the Company
      or the successor entity of such transaction, or (iii) the Company sells or
      transfers its assets, as an entirety or substantially as an entirety, to another
      Person and the stockholders of the Company immediately prior to such transaction
      own less than 66% of the aggregate voting power of the acquiring entity
      immediately after the transaction, (iv) a replacement at one time or within
      a
      three year period of more than one-half of the members of the Company’s board of
      directors which is not approved by a majority of those individuals who are
      members of the board of directors on the date hereof (or by those individuals
      who are serving as members of the board of directors on any date whose
      nomination to the board of directors was approved by a majority of the members
      of the board of directors who are members on the date hereof), or (v) the
      execution by the Company of an agreement to which the Company is a party or
      by
      which it is bound, providing for any of the events set forth above in (i) or
      (iv).

    

    “Closing
      Price”
      means
      on any particular date (a) the last reported closing bid price per share
      of
      Common Stock on such date on the Trading Market (as reported by Bloomberg L.P.
      at 4:15 PM (New York time), or (b) if there is no such price on such date,
      then
      the closing bid price on the Trading Market on the date nearest preceding such
      date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing
      bid price for regular session trading on such day), or (c) if the Common
      Stock is not then listed or quoted on the Trading Market and if prices for
      the
      Common Stock are then reported in the “pink sheets” published by the Pink
      Sheets, LLC (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent bid price per share of the Common Stock
      so
      reported, or (d) if the shares of Common Stock are not then publicly
      traded
      the fair market value of a share of Common Stock as determined by a qualified
      independent appraiser selected in good faith by the Holders of a majority in
      interest of the outstanding principal amount of the Debentures.

     

    
 

    
      
        
        

      

      
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    “Common
      Stock”
      means
      the common stock, par value $0.001 per share, of the Company and stock of any
      other class of securities into which such securities may hereafter have been
      reclassified or changed into.

    

    “Conversion
      Date”
      shall
      have the meaning set forth in Section 4(a).

    

    “Conversion
      Price”
      shall
      have the meaning set forth in Section 4(b).

    

    “Conversion
      Shares”
      means
      the shares of Common Stock issuable upon conversion of this
      Debenture.

    

    “Debenture
      Register”
      shall
      have the meaning set forth in Section 2(c).

    

    “Dilutive
      Issuance”
      shall
      have the meaning set forth in Section 5(b).

    

    “Dilutive
      Issuance Notice”
      shall
      have the meaning set forth in Section 5(b).

    

    “Effectiveness
      Period”
      shall
      have the meaning given to such term in the Registration Rights Agreement.

    

    “Equity
      Conditions”
      shall
      mean, during the period in question, (i)
      the
      Company shall have duly honored all conversions and redemptions scheduled to
      occur or occurring by virtue of one or more Notice of Conversions of the Holder,
      if any, (ii) all liquidated damages and other amounts owing to the Holder in
      respect of this Debenture shall have been paid; (iii)
      there is an effective Registration Statement pursuant to which the Holder is
      permitted to utilize the prospectus thereunder to resell all of the shares
      issuable pursuant to the Transaction Documents (and the Company believes, in
      good faith, that such effectiveness will continue uninterrupted for the
      foreseeable future), (iv) the Common Stock is trading on the Trading Market
      and
      all of the shares issuable pursuant to the Transaction Documents are listed
      for
      trading on a Trading Market (and the Company believes, in good faith, that
      trading of the Common Stock on a Trading Market will continue uninterrupted
      for
      the foreseeable future), (v) there is a sufficient number of authorized but
      unissued and otherwise unreserved shares of Common Stock for the issuance of
      all
      of the shares issuable pursuant to the Transaction Documents, (vi) there is
      then
      existing no Event of Default or event which, with the passage of time or the
      giving of notice, would constitute an Event of Default, (vii) the issuance
      of
      the shares in question to the Holder would not violate the limitations set
      forth
      in Section 4(c)(i) and Section 4(c)(ii) and (viii)
      no
      public announcement of a pending or proposed Fundamental Transaction, Change
      of
      Control Transaction or acquisition transaction has occurred that has not been
      consummated.

    

    “Event
      of Default”
      shall
      have the meaning set forth in Section 8.

    

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

     

    
 

    
      
        
        

      

      
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      “Forced
        Conversion”
        shall
        have the meaning set forth in Section 6(d).

    

    

    “Forced
      Conversion Notice”
      shall
      have the meaning set forth in Section 6(d).

    

    “Forced
      Conversion Notice Date”
      shall
      have the meaning set forth in Section 6(d).

    

    “Fundamental
      Transaction”
      shall
      have the meaning set forth in Section 5(d).

     

    “Mandatory
      Default Amount”
      shall
      equal the sum of (i) the greater of: (A) 130% of the principal amount of this
      Debenture to be prepaid, or (B) the principal amount of this Debenture to be
      prepaid, divided by the Conversion Price on (x) the date the Mandatory Default
      Amount is demanded or otherwise due or (y) the date the Mandatory Default Amount
      is paid in full, whichever is less, multiplied by the Closing Price on (x)
      the
      date the Mandatory Default Amount is demanded or otherwise due or (y) the date
      the Mandatory Default Amount is paid in full, whichever is greater, and (ii)
      all
      other amounts, costs, expenses and liquidated damages due in respect of this
      Debenture.

    

    “Monthly
      Conversion Period”
      shall
      have the meaning set forth in Section 6(a) hereof.

    

    “Monthly
      Conversion Price”
      shall
      have the meaning set forth in Section 6(a) hereof.

    

    “Monthly
      Redemption”
      shall
      mean the redemption of this Debenture pursuant to Section 6(a)
      hereof.

    

    “Monthly
      Redemption Amount”
      shall
      mean, as to a Monthly Redemption, $______

     

    ____________________________________________

     

    1   1/24th
      of Principal Amount of this Debenture on Closing..

     

    
 

    
      
        
        

      

      
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    “Monthly
      Redemption Date”
      means
      the 1st
      of each
      month, commencing on the 91st
      calendar
      day following the Original Issue Date and ending upon the full redemption of
      this Debenture.

    

    “Monthly
      Redemption Notice”
      shall
      have the meaning set forth in Section 6(a) hereof. 

     

    “Monthly
      Redemption Notice Date”
      shall
      have the meaning set forth in Section 6(a) hereof. 

     

    “Monthly
      Redemption Notice Period”
      shall
      have the meaning set forth in Section 6(a) hereof. 

     

    “Monthly
      Redemption Share Amount”
      shall
      have the meaning set forth in Section 6(a) hereof. 

    

    “New
      York Courts”
      shall
      have the meaning set forth in Section 9(d).

    

    “Notice
      of Conversion”
      shall
      have the meaning set forth in Section 4(a).

    

    “Optional
      Redemption”
      shall
      have the meaning set forth in Section 6(b).

    

    “Optional
      Redemption Amount”
      shall
      mean the sum of 110% of the principal amount of the Debenture then outstanding
      and all liquidated damages and other amounts due in respect of the
      Debenture.

    

    “Optional
      Redemption Notice”
      shall
      have the meaning set forth in Section 6(b).

    

    “Optional
      Redemption Notice Date”
      shall
      have the meaning set forth in Section 6(b).

    

    “Original
      Issue Date”
      shall
      mean the date of the first issuance of the Debentures regardless of the number
      of transfers of any Debenture and regardless of the number of instruments which
      may be issued to evidence such Debenture.

    

    “Person”
      means a
      corporation, an association, a partnership, organization, a business, an
      individual, a government or political subdivision thereof or a governmental
      agency.

    

    “Pre-Redemption
      Conversion Shares”
      shall
      have the meaning set forth in Section 6(a) hereof.

    

    “Purchase
      Agreement”
      means
      the Securities Purchase Agreement, dated as of June 17, 2005, to which the
      Company and the original Holder are parties, as amended, modified or
      supplemented from time to time in accordance with its terms.

    

    “Registration
      Rights Agreement”
      means
      the Registration Rights Agreement, dated as of the date of the Purchase
      Agreement, to which the Company and the original Holder are parties, as amended,
      modified or supplemented from time to time in accordance with its
      terms.

    

    “Registration
      Statement”
      means a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement, covering among other things the resale of the Conversion
      Shares and naming the Holder as a “selling stockholder” thereunder.

     

    
 

    
      
        
        

      

      
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    “Securities
      Act”
      means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

    

    “Subsidiary”
      shall
      have the meaning given to such term in the Purchase Agreement.

    

    “Threshold
      Period”
      shall
      have the meaning given to such term in Section 6(d). 

     

    “Trading
      Day”
      means a
      day on which the Common Stock is traded on a Trading Market.

    

    “Trading
      Market”
      means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq SmallCap Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      OTC Bulletin Board.

    

    “Transaction
      Documents”
      shall
      have the meaning set forth in the Purchase Agreement.

    

    
    

    Section
      2. Interest.

     

    
    

    a) No
      Payment of Interest.
      This
      Debenture was issued for an Original Issue Discount. No interest payments shall
      be due and payable to the Holder hereunder. 

     

    b) Prepayment.
      Except
      as otherwise set forth in this Debenture, the Company may not prepay any portion
      of the principal amount of this Debenture without the prior written consent
      of
      the Holder. 

    

    Section
      3.  Registration
      of Transfers and Exchanges.
      

     

    a) Different
      Denominations.
      This
      Debenture is exchangeable for an equal aggregate principal amount of Debentures
      of different authorized denominations, as requested by the Holder surrendering
      the same. No service charge will be made for such registration of transfer
      or
      exchange.

     

    b) Investment
      Representations.
      This
      Debenture has been issued subject to certain investment representations of
      the
      original Holder set forth in the Purchase Agreement and may be transferred
      or
      exchanged only in compliance with the Purchase Agreement and applicable federal
      and state securities laws and regulations. 

    

    c) Reliance
      on Debenture Register.
      Prior
      to due presentment to the Company for transfer of this Debenture, the Company
      and any agent of the Company may treat the Person in whose name this Debenture
      is duly registered on the Debenture Register as the owner hereof for the purpose
      of receiving payment as herein provided and for all other purposes, whether
      or
      not this Debenture is overdue, and neither the Company nor any such agent shall
      be affected by notice to the contrary.

    

     

     

    
      
        
        

      

      
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 Section
        4.  Conversion.

    

     

    b) Conversion
      Price.
      The
      conversion price in effect on any Conversion Date shall be equal to $0.75
      (subject
      to adjustment herein)(the “Conversion
      Price”).

    

    c) Conversion
      Limitations.
      

    

    i. RESERVED.

     

    ii. Holder’s
      Restriction on Conversion.
      The
      Company shall not effect any conversion of this Debenture, and the Holder shall
      not have the right to convert any portion of this Debenture, pursuant to Section
      4(a) or otherwise, to the extent that after giving effect to such conversion,
      the Holder (together with the Holder’s affiliates), as set forth on the
      applicable Notice of Conversion, would beneficially own in excess of 4.99%
      of
      the number of shares of the Common Stock outstanding immediately after giving
      effect to such conversion.  For purposes of the foregoing sentence,
      the
      number of shares of Common Stock beneficially owned by the Holder and its
      affiliates shall include the number of shares of Common Stock issuable upon
      conversion of this Debenture with respect to which the determination of such
      sentence is being made, but shall exclude the number of shares of Common Stock
      which would be issuable upon (A) conversion of the remaining, nonconverted
      portion of this Debenture beneficially owned by the Holder or any of its
      affiliates and (B) exercise or conversion of the unexercised or nonconverted
      portion of any other securities of the Company (including, without limitation,
      any other Debentures or the Warrants) subject to a limitation on conversion
      or
      exercise analogous to the limitation contained herein beneficially owned by
      the
      Holder or any of its affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 4(c)(ii), beneficial ownership shall
      be
      calculated in accordance with Section 13(d) of the Exchange Act. To the extent
      that the limitation contained in this section applies, the determination of
      whether this Debenture is convertible (in relation to other securities owned
      by
      the Holder) and of which a portion of this Debenture is convertible shall be
      in
      the sole discretion of such Holder. To ensure compliance with this restriction,
      the Holder will be deemed to represent to the Company each time it delivers
      a
      Notice of Conversion that such Notice of Conversion has not violated the
      restrictions set forth in this paragraph and the Company shall have no
      obligation to verify or confirm the accuracy of such determination. For purposes
      of this Section 4(c)(ii), in determining the number of outstanding shares of
      Common Stock, the Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB,
      as the case may be, (y) a more recent public announcement by the Company or
      (z)
      any other notice by the Company or the Company’s Transfer Agent setting forth
      the number of shares of Common Stock outstanding.  Upon the written
      or oral
      request of the Holder, the Company shall within two Trading Days confirm orally
      and in writing to the Holder the number of shares of Common Stock then
      outstanding.  In any case, the number of outstanding shares of Common
      Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company, including this Debenture, by the Holder or its
      affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported. The provisions of this Section 4(c) may be waived
      by
      the Holder, at the election of the Holder, upon not less than 61 days’ prior
      notice to the Company, and the provisions of this Section 4(c) shall continue
      to
      apply until such 61st day (or such later date, as determined by the Holder,
      as
      may be specified in such notice of waiver).

     

     

    
      
        
        

      

      
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    d) Mechanics
      of Conversion

     

    i. Conversion
      Shares Issuable Upon Conversion of Principal Amount.
      The
      number of shares of Common Stock issuable upon a conversion hereunder shall
      be
      determined by the quotient obtained by dividing (x) the outstanding principal
      amount of this Debenture to be converted by (y) the Conversion
      Price.

    

      ii. Delivery
        of Certificate Upon Conversion.
        Not
        later than three Trading Days after any Conversion Date, the Company will
        deliver or cause to be delivered to the Holder a certificate or certificates
        representing the Conversion Shares which shall be free of restrictive legends
        and trading restrictions (other than those required by the Purchase Agreement)
        representing the number of shares of Common Stock being acquired upon the
        conversion of this Debenture. The Company shall, if available and if allowed
        under applicable securities laws, use its best efforts to deliver any
        certificate or certificates required to be delivered by the Company under
        this
        Section electronically through the Depository Trust Corporation or another
        established clearing corporation performing similar functions.

    

     

    iii. Failure
      to Deliver Certificates.
      If in
      the case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the third Trading Day
      after a Conversion Date, the Holder shall be entitled by written notice to
      the
      Company at any time on or before its receipt of such certificate or certificates
      thereafter, to rescind such conversion, in which event the Company shall
      immediately return the certificates representing the principal amount of this
      Debenture tendered for conversion. 

     

    iv. Obligation
      Absolute; Partial Liquidated Damages.
      If the
      Company fails for any reason to deliver to the Holder such certificate or
      certificates pursuant to Section 4(d)(ii) by the third Trading Day after the
      Conversion Date, the Company shall pay to such Holder, in cash, as liquidated
      damages and not as a penalty, for each $1000 of principal amount being
      converted, $10 per Trading Day (increasing to $20 per Trading Day after 5
      Trading Days after such damages begin to accrue) for each Trading Day after
      such
      third Trading Day until such certificates are delivered. The Company’s
      obligations to issue and deliver the Conversion Shares upon conversion of this
      Debenture in accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same, any
      waiver or consent with respect to any provision hereof, the recovery of any
      judgment against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Company or
      any
      violation or alleged violation of law by the Holder or any other person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Company to the Holder in connection with the issuance of
      such
      Conversion Shares; provided,
      however,
      such
      delivery shall not operate as a waiver by the Company of any such action the
      Company may have against the Holder. In the event the Holder of this Debenture
      shall elect to convert any or all of the outstanding principal amount hereof,
      the Company may not refuse conversion based on any claim that the Holder or
      any
      one associated or affiliated with the Holder has been engaged in any violation
      of law, agreement or for any other reason, unless, an injunction from a court,
      on notice, restraining and or enjoining conversion of all or part of this
      Debenture shall have been sought and obtained and the Company posts a surety
      bond for the benefit of the Holder in the amount of 150% of the principal amount
      of this Debenture outstanding, which is subject to the injunction, which bond
      shall remain in effect until the completion of arbitration/litigation of the
      dispute and the proceeds of which shall be payable to such Holder to the extent
      it obtains judgment. In the absence of an injunction precluding the same, the
      Company shall issue Conversion Shares or, if applicable, cash, upon a properly
      noticed conversion. Nothing herein shall limit a Holder’s right to pursue actual
      damages or declare an Event of Default pursuant to Section 8 herein for the
      Company’s failure to deliver Conversion Shares within the period specified
      herein and such Holder shall have the right to pursue all remedies available
      to
      it at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief. The exercise of any such rights shall
      not
      prohibit the Holder from seeking to enforce damages pursuant to any other
      Section hereof or under applicable law.

     

     

    
      
        
        

      

      
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    v. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      In
      addition to any other rights available to the Holder, if the Company fails
      for
      any reason to deliver to the Holder such certificate or certificates pursuant
      to
      Section 4(d)(ii) by the third Trading Day after the Conversion Date, and if
      after such third Trading Day the Holder is required by its brokerage firm to
      purchase (in an open market transaction or otherwise) Common Stock to deliver
      in
      satisfaction of a sale by such Holder of the Conversion Shares which the Holder
      anticipated receiving upon such conversion (a “Buy-In”),
      then
      the Company shall (A) pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (x) the Holder’s
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
      of Common Stock that such Holder anticipated receiving from the conversion
      at
      issue multiplied by (2) the actual sale price of the Common Stock at the time
      of
      the sale (including brokerage commissions, if any) giving rise to such purchase
      obligation and (B) at the option of the Holder, either reissue (if surrendered)
      this Debenture in a principal amount equal to the principal amount of the
      attempted conversion or deliver to the Holder the number of shares of Common
      Stock that would have been issued had the Company timely complied with its
      delivery requirements under Section 4(d)(ii). For example, if the Holder
      purchases Common Stock having a total purchase price of $11,000 to cover a
      Buy-In with respect to an attempted conversion of this Debenture with respect
      to
      which the actual sale price of the Conversion Shares at the time of the sale
      (including brokerage commissions, if any) giving rise to such purchase
      obligation was a total of $10,000 under clause (A) of the immediately preceding
      sentence, the Company shall be required to pay the Holder $1,000. The Holder
      shall provide the Company written notice indicating the amounts payable to
      the
      Holder in respect of the Buy-In. Notwithstanding anything contained herein
      to
      the contrary, if a Holder requires the Company to make payment in respect of
      a
      Buy-In for the failure to timely deliver certificates hereunder and the Company
      timely pays in full such payment, the Company shall not be required to pay
      such
      Holder liquidated damages under Section 4(d)(iv) in respect of the certificates
      resulting in such Buy-In.

     

    vi. Reservation
      of Shares Issuable Upon Conversion.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of this Debenture, free from preemptive rights or
      any
      other actual contingent purchase rights of persons other than the Holder (and
      the other holders of the Debentures), not less than such number of shares of
      the
      Common Stock as shall (subject to the terms and conditions set forth in the
      Purchase Agreement) be issuable (taking into account the adjustments and
      restrictions of Section 5) upon the conversion of the outstanding principal
      amount of this Debenture hereunder. The Company covenants that all shares of
      Common Stock that shall be so issuable shall, upon issue, be duly and validly
      authorized, issued and fully paid, nonassessable and, if the Registration
      Statement is then effective under the Securities Act, registered for public
      sale
      in accordance with such Registration Statement.

     

    
 

    
      
        
        

      

      
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    vii. Fractional
      Shares.
      Upon a
      conversion hereunder the Company shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock, but may
      if
      otherwise permitted, make a cash payment in respect of any final fraction of
      a
      share based on the Closing Price at such time. If the Company elects not, or
      is
      unable, to make such a cash payment, the Holder shall be entitled to receive,
      in
      lieu of the final fraction of a share, one whole share of Common
      Stock.

    

    viii. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Debenture shall be made without charge to the Holder hereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificate, provided that the Company shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of this Debenture so converted and the Company shall not be required
      to issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Company the amount of
      such tax or shall have established to the satisfaction of the Company that
      such
      tax has been paid.

    

    Section
      5. Certain
      Adjustments.

     

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

     

     

    
      
        
        

      

      
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    b) Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this
      Debenture is outstanding, shall offer, sell, grant any option to purchase or
      offer, sell or grant any right to reprice its securities, or otherwise dispose
      of or issue (or announce any offer, sale, grant or any option to purchase or
      other disposition) any Common Stock or Common Stock Equivalents entitling any
      Person to acquire shares of Common Stock, at an effective price per share less
      than the then Conversion Price (such lower price, the “Base
      Conversion Price”
      and
      such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (if the holder of the Common Stock or Common Stock
      Equivalents so issued shall at any time, whether by operation of purchase price
      adjustments, reset provisions, floating conversion, exercise or exchange prices
      or otherwise, or due to warrants, options or rights per share which is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Conversion Price, such
      issuance shall be deemed to have occurred for less than the Conversion Price
      on
      such date of the Dilutive Issuance), then the Conversion Price shall be reduced
      to equal the Base Conversion Price. Such adjustment shall be made whenever
      such
      Common Stock or Common Stock Equivalents are issued. Notwithstanding
      the foregoing, no adjustment will be made under this Section 5(b) in respect
      of
      an Exempt Issuance.
      The
      Company shall notify the Holder in writing, no later than the Business Day
      following the issuance of any Common Stock or Common Stock Equivalents subject
      to this section, indicating therein the applicable issuance price, or of
      applicable reset price, exchange price, conversion price and other pricing
      terms
      (such notice the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 5(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Conversion Shares based upon the Base Conversion
      Price regardless of whether the Holder accurately refers to the Base Conversion
      Price in the Notice of Conversion. 

     

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

     

     

    
      
        
        

      

      
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    d) Fundamental
      Transaction.
      If, at
      any time while this Debenture is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental
      Transaction”),
      then
      upon any subsequent conversion of this Debenture, the Holder shall have the
      right to receive, for each Conversion Share that would have been issuable upon
      such conversion immediately prior to the occurrence of such Fundamental
      Transaction, the same kind and amount of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of one share of Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Conversion Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Debenture following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new debenture consistent with the foregoing
      provisions and evidencing the Holder’s right to convert such debenture into
      Alternate Consideration. The terms of any agreement pursuant to which a
      Fundamental Transaction is effected shall include terms requiring any such
      successor or surviving entity to comply with the provisions of this paragraph
      (d) and insuring that this Debenture (or any such replacement security) will
      be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    e) Calculations.
      All
      calculations under this Section 5 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      5,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    
 

    
      
        
        

      

      
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    f) Notice
      to the Holder.

    

    i. Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any of this Section 5,
      the
      Company shall promptly mail to each Holder a notice setting forth the Conversion
      Price after such adjustment and setting forth a brief statement of the facts
      requiring such adjustment. If the Company issues a variable rate security,
      despite the prohibition thereon in the Purchase Agreement, the Company shall
      be
      deemed to have issued Common Stock or Common Stock Equivalents at the lowest
      possible conversion or exercise price at which such securities may be converted
      or exercised in the case of a Variable Rate Transaction (as defined in the
      Purchase Agreement).

     

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

     

     

    
      
        
        

      

      
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    Section
      6. Redemption
      and Forced Conversion.

    

    a) Monthly
      Redemption.
      On each
      Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount
      plus the sum of all liquidated damages and any other amounts then owing to
      such
      Holder in respect of this Debenture (the “Monthly
      Redemption”).
      The
      Monthly Redemption Amount due on each Monthly Redemption Date shall be paid
      in
      cash; provided,
      however,
      as to
      any Monthly Redemption Amount paid in cash, the Company shall pay a cash value
      equal to 110% of such Monthly Redemption Amount. Additionally, as to any Monthly
      Redemption and upon prior written irrevocable notice, which notice shall be
      delivered no later than 2 calendar days immediately prior to the applicable
      Monthly Conversion Period (such notice, the “Monthly
      Redemption Notice”,
      the
      date of the Monthly Redemption Notice, the “Monthly
      Redemption Notice Date”
      and
      such period, the “Monthly
      Redemption Notice Period”),
      in
      lieu of a cash redemption payment the Company may elect to pay all or part
      of a
      Monthly Redemption Amount in Conversion Shares (such dollar amount to be paid
      on
      a Monthly Redemption Date in Conversion Shares, the “Monthly
      Redemption Share Amount”)
      based
      on a conversion price equal to the lesser of (i) the then Conversion Price
      and
      (ii) 80% of the average of the 5 Closing Prices immediately prior to the
      applicable Monthly Redemption Date (subject to adjustment for any stock
      dividend, stock split, stock combination or other similar event affecting the
      Common Stock during such 5 Trading Day period)(the price calculated during
      the 5
      Trading Day period immediately prior to the Monthly Redemption Date, the
“Monthly
      Conversion Price”
      and
      such 5 day period, the “Monthly
      Conversion Period”);
      provided,
      however,
      that
      the Company may not pay the Monthly Redemption Amount in Conversion Shares
      unless, (i) from the Monthly Redemption Notice Date through and until the date
      such Monthly Redemption is paid in full, the Equity Conditions, unless waived
      in
      writing by the Holder, have been satisfied, (ii) as to such Monthly Redemption,
      prior to such Monthly Redemption Notice Period (but not more than 5 Trading
      Days
      prior to the commencement of the Monthly Redemption Notice Period), the Company
      shall have delivered to the Holder’s account with The Depository Trust Company a
      number of shares of Common Stock to be applied against such Monthly Redemption
      Share Amount equal to the quotient of (x) the applicable Monthly Redemption
      Share Amount divided by (y) the then Conversion Price (the “Pre-Redemption
      Conversion Shares”),
      and
      (iii) the Monthly Conversion Price is greater than $0.60 per share, unless
      waived in writing by the Company. The Holder may convert, pursuant to Section
      4(a), any principal amount of this Debenture subject to a Monthly Redemption
      at
      any time prior to the date that the Monthly Redemption Amount and all amounts
      owing thereon are due and paid in full. Unless otherwise indicated by the Holder
      in the applicable Notice of Conversion, any principal amount of this Debenture
      converted during the applicable Monthly Redemption Notice Period until the
      date
      the Monthly Redemption Amount is paid in full shall be first applied to the
      principal amount subject to the Monthly Redemption Amount payable in cash and
      then to the Monthly Redemption Share Amount. Any principal amount of this
      Debenture converted during the applicable Monthly Redemption Notice Period
      in
      excess of the Monthly Redemption Amount shall be applied against the last
      principal amount of this Debenture scheduled to be redeemed hereunder, in
      reverse time order from the Maturity Date; provided,
      however,
      if any
      such conversion is applied to such Monthly Redemption Amount, the Pre-Redemption
      Conversion Shares, if any were issued in connection with such Monthly Redemption
      or were not already applied to such conversions, shall be first applied against
      such conversion. The Company covenants and agrees that it will honor all Notice
      of Conversions tendered up until such amounts are paid in full. The Company’s
      determination to pay a Monthly Redemption in cash, shares of Common Stock or
      a
      combination thereof shall be applied ratably to all of the holders of the
      Debentures based on their (or their predecessor’s) initial purchases of
      Debentures pursuant to the Purchase Agreement. At any time the Company delivers
      a notice to the Holder of its election to pay the Monthly Redemption Amount
      in
      shares of Common Stock, the Company shall file a prospectus supplement pursuant
      to Rule 424 disclosing such election.

     

    
 

    
      
        
        

      

      
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    b) Optional
      Redemption at Election of Company.
      At any
      time after the 90 day anniversary of the Effective Date, the Company may deliver
      a notice to the Holders (an “Optional
      Redemption Notice”
      and the
      date such notice is deemed delivered hereunder, the “Optional
      Redemption Notice Date”)
      of its
      irrevocable election to redeem some or all of the then outstanding Debentures,
      for an amount, in cash, equal to the Optional Redemption Amount on the
      20th
      Trading
      Day following the Optional Redemption Notice Date (such date, the “Optional
      Redemption Date”
      and
      such redemption, the “Optional
      Redemption”).
      The
      Optional Redemption Amount is due in full on the Optional Redemption Date.
      The
      Company may only effect an Optional Redemption if during the period commencing
      on the Optional Redemption Notice Date through to the Optional Redemption Date,
      each of the Equity Conditions shall have been met. If any of the Equity
      Conditions shall cease to be satisfied at any time during the required period,
      then the Holder may elect to nullify the Optional Redemption Notice by notice
      to
      the Company within 3 Trading Days after the first day on which any such Equity
      Condition has not been met (provided that if, by a provision of the Transaction
      Documents the Company is obligated to notify the Holder of the non-existence
      of
      an Equity Condition, such notice period shall be extended to the third Trading
      Day after proper notice from the Company) in which case the Optional Redemption
      Notice shall be null and void, ab initio. The Company covenants and agrees
      that
      it will honor all Notice of Conversions tendered from the time of delivery
      of
      the Optional Redemption Notice through the date all amounts owing thereon are
      due and paid in full.

    

    c) Redemption
      Procedure.
      The
      payment of cash and/or issuance of Common Stock (other than the Pre-Redemption
      Conversion Shares), as the case may be, pursuant to a Monthly Redemption or
      the
      payment of cash pursuant to an Optional Redemption shall be made on the Monthly
      Redemption Date or the Optional Redemption Date (as applicable). The aggregate
      number of Conversion Shares otherwise issuable to the Holder pursuant to a
      Monthly Redemption on a Monthly Redemption Date shall be reduced by the number
      of Pre-Redemption Conversion Shares issued to the Holder in connection with
      such
      Monthly Redemption (adjusted appropriately for any such shares applied to
      conversion during the Monthly Redemption Period). If any portion of the cash
      payment for a Monthly Redemption or an Optional Redemption, as applicable,
      shall
      not be paid by the Company by the respective due date, interest shall accrue
      thereon at the rate of 18% per annum (or the maximum rate permitted by
      applicable law, whichever is less) until the payment of the Monthly Redemption
      Amount or Optional Redemption Amount, as applicable, plus all amounts owing
      thereon, is paid in full. Alternatively, if any portion of the Monthly
      Redemption Amount or the Optional Redemption Amount, as applicable, remains
      unpaid after such date, the Holder may elect, by written notice to the Company
      given at any time thereafter, to invalidate ab initio such redemption,
      notwithstanding anything herein contained to the contrary, and, with respect
      the
      failure to honor the Optional Redemption, the Company shall have no further
      right to exercise such Optional Redemption. If any Pre-Redemption Conversion
      Shares are issued to the Holder in connection with a Monthly Redemption and
      are
      not applied against either the Monthly Redemption Amount or against voluntary
      conversions during the Monthly Redemption, then the Holder shall promptly return
      such excess shares to the Company. The Holder may elect to convert the
      outstanding principal amount of the Debenture pursuant to Section 4 prior to
      actual payment in cash for any redemption under this Section 6 by fax delivery
      of a Notice of Conversion to the Company.

     

     

    
      
        
        

      

      
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    d) Forced
      Conversion.
      Notwithstanding anything herein to the contrary, if after the Effective Date,
      each of the Closing Prices for any 20 consecutive Trading Days (such 20 day
      period commencing only after the later of the Effective Date, such period the
      “Threshold
      Period”))
      exceeds 250% of the then Conversion Price, the Company may, within 1 Trading
      Day
      of the end of any such Threshold Period, deliver a notice to the Holder (a
      “Forced
      Conversion Notice”
      and the
      date such notice is received by the Holder, the “Forced
      Conversion Notice Date”)
      to
      cause the Holder to immediately convert all or part of the then outstanding
      principal amount of Debentures pursuant to Section 4. The Company may only
      effect a Forced Conversion Notice if all of the Equity Conditions are met
      through the applicable Threshold Period until the date of the applicable Forced
      Conversion and through and including the date such shares of Common Stock are
      issued to the Holder. Any Forced Conversion shall be applied ratably to all
      Holders based on their initial purchases of Debentures pursuant to the Purchase
      Agreement. For purposes of clarification, a Forced Conversion shall be subject
      to all of the provisions of Section 4, including, without limitation, the
      provision requiring payment of liquidated damages and limitations on
      conversions.

    

    Section
      7. Negative
      Covenants.
      So long
      as any portion of this Debenture is outstanding, the Company will not and will
      not permit any of its Subsidiaries to directly or indirectly:

     

    a) enter
      into, create, incur, assume or suffer to exist any liens of any kind, on or
      with
      respect to any of its property or assets now owned or any interest therein
      or
      any income or profits therefrom unless this Debenture is paid off in connection
      with such lien and pursuant to Section 6(b) herein;

     

    
 

    
      
        
        

      

      
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    b) amend
      its
      certificate of incorporation, bylaws or other charter documents so as to
      materially and adversely affect any rights of the Holder;

    

    c) repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a
de
      minimis
      number
      of shares of its Common Stock or Common Stock Equivalents other than as to
      the
      Conversion Shares to the extent permitted or required under the Transaction
      Documents or as otherwise permitted by the Transaction Documents; 

    

    d) enter
      into any agreement with respect to any of the foregoing;
      or

    

    e) pay
      cash
      dividends or distributions on any equity securities of the Company.

     

    Section
      8. Events
      of Default.
      

    

    a) “Event
      of Default”,
      wherever used herein, means any one of the following events (whatever the reason
      and whether it shall be voluntary or involuntary or effected by operation of
      law
      or pursuant to any judgment, decree or order of any court, or any order, rule
      or
      regulation of any administrative or governmental body):

    

    i. any
      default in the payment of (A) the principal amount of any Debenture, or (B)
      liquidated damages in respect of, any Debenture, as and when the same shall
      become due and payable (whether on a Conversion Date or the Maturity Date or
      by
      acceleration or otherwise) which default under clause (B) above, is not cured,
      within 3 Trading Days;

     

    ii. the
      Company shall fail to observe or perform any other covenant or agreement
      contained in this Debenture or any other Debenture (other than a breach by
      the
      Company of its obligations to deliver shares of Common Stock to the Holder
      upon
      conversion which breach is addressed in clause (xi) below) which failure is
      not
      cured, if possible to cure, within the earlier to occur
      of
(A)
      5
Trading
      Days after notice of such default sent by the Holder or by any other
      Holder
      and
      (B)10 Trading Days after the Company shall become or should have become aware
      of
      such failure;

    

    iii. a
      default
      or event of default (subject to any grace or cure period provided for in the
      applicable agreement, document or instrument) shall occur under (A) any of
      the
      Transaction Documents, or (B) any other material agreement, lease, document
      or
      instrument to which the Company or any Subsidiary is bound;

    

    iv. any
      representation or warranty made herein,
      in any
      other Transaction Documents, in any written statement pursuant hereto or
      thereto, or in any other report, financial statement or certificate made or
      delivered to the Holder or any other holder of Debentures shall
      be
      untrue or incorrect in any material respect as of the date when made or deemed
      made;

     

    
 

    
      
        
        

      

      
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    v. (i)
      the
      Company or any of its Subsidiaries shall commence a case, as debtor, a case
      under any applicable bankruptcy or insolvency laws as now or hereafter in effect
      or any successor thereto, or the Company or any Subsidiary commences any other
      proceeding under any reorganization, arrangement, adjustment of debt, relief
      of
      debtors, dissolution, insolvency or liquidation or similar law of any
      jurisdiction whether now or hereafter in effect relating to the Company or
      any
      Subsidiary thereof or (ii) there is commenced a case against the Company or
      any
      Subsidiary thereof, under any applicable bankruptcy or insolvency laws, as
      now
      or hereafter in effect or any successor thereto which remains undismissed for
      a
      period of 60 days; or (iii) the Company or any Subsidiary thereof is adjudicated
      by a court of competent jurisdiction insolvent or bankrupt; or any order of
      relief or other order approving any such case or proceeding is entered; or
      (iv)
      the Company or any Subsidiary thereof suffers any appointment of any custodian
      or the like for it or any substantial part of its property which continues
      undischarged or unstayed for a period of 60 days; or (v) the Company or any
      Subsidiary thereof makes a general assignment for the benefit of creditors;
      or
      (vi) the Company shall fail to pay, or shall state that it is unable to pay,
      or
      shall be unable to pay, its debts generally as they become due; or (vii) the
      Company or any Subsidiary thereof shall call a meeting of its creditors with
      a
      view to arranging a composition, adjustment or restructuring of its debts;
      or
      (viii) the Company or any Subsidiary thereof shall by any act or failure to
      act
      expressly indicate its consent to, approval of or acquiescence in any of the
      foregoing; or (ix) any corporate or other action is taken by the Company or
      any
      Subsidiary thereof for the purpose of effecting any of the
      foregoing;

     

    vi. the
      Company or any Subsidiary shall default in any of its obligations under any
      mortgage, credit agreement or other facility, indenture agreement, factoring
      agreement or other instrument under which there may be issued, or by which
      there
      may be secured or evidenced any indebtedness for borrowed money or money due
      under any long term leasing or factoring arrangement of the Company in an amount
      exceeding $150,000, whether such indebtedness now exists or shall hereafter
      be
      created and such default shall result in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable; 

    

    vii. the
      Common Stock shall not be eligible for quotation on or quoted for trading on
      a
      Trading Market and shall not again be eligible for and quoted or listed for
      trading thereon within five Trading Days;

    

    viii. the
      Company shall be a party to any Change of Control Transaction or Fundamental
      Transaction, shall agree to sell or dispose of all or in excess of 33% of its
      assets in one or more transactions (whether or not such sale would constitute
      a
      Change of Control Transaction) or shall redeem or repurchase more than a de
      minimis number of its outstanding shares of Common Stock or other equity
      securities of the Company (other than redemptions of Conversion Shares and
      repurchases of shares of Common Stock or other equity securities of departing
      officers and directors of the Company; provided such repurchases shall not
      exceed $100,000, in the aggregate, for all officers and directors during the
      term of this Debenture);

    

    ix. a
      Registration Statement shall not have been declared effective by the Commission
      on or prior to the 180th calendar
      day after the Closing Date; 

    

    x. if,
      during the Effectiveness Period (as defined in the Registration Rights
      Agreement), the effectiveness of the Registration Statement lapses for any
      reason or the Holder shall not be permitted to resell Registrable Securities
      (as
      defined in the Registration Rights Agreement) under the Registration Statement,
      in either case, for more than 10 consecutive Trading Days or 15 non-consecutive
      Trading Days during any 12 month period; provided,
      however,
      that in
      the event that the Company
      is negotiating a merger, consolidation, acquisition or sale of all or
      substantially all of its assets or a similar transaction and in the written
      opinion of counsel to the Company, the Registration Statement, would be required
      to be amended to include information concerning such transactions or the parties
      thereto that is not available or may not be publicly disclosed at the time,
      the
      Company shall be permitted an additional 10 consecutive Trading Days during
      any
      12 month period relating to such an event; and

    

    xi. the
      Company shall fail for any reason to deliver certificates to a Holder prior
      to
      the fifth Trading Day after a Conversion Date or any Forced Conversion Date
      pursuant to and in accordance with Section 4(d) or the Company shall provide
      notice to the Holder, including by way of public announcement, at any time,
      of
      its intention not to comply with requests for conversions of any Debentures
      in
      accordance with the terms hereof. 

     

    
    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    

    b) Remedies
      Upon Event of Default.
      If any
      Event of Default occurs, the full principal amount of this Debenture, together
      with other amounts owing in respect thereof, to the date of acceleration shall
      become, at the Holder’s election, immediately due and payable in cash. The
      aggregate amount payable upon an Event of Default shall be equal to the
      Mandatory Default Amount. Commencing 5 days after the occurrence of any Event
      of
      Default that results in the eventual acceleration of this Debenture, the
      interest rate on this Debenture shall accrue at the rate of 18% per annum,
      or
      such lower maximum amount of interest permitted to be charged under applicable
      law. Upon the payment in full of the Mandatory Default Amount on this entire
      Debenture, the Holder shall promptly surrender this Debenture to or as directed
      by the Company. The Holder need not provide and the Company hereby waives any
      presentment, demand, protest or other notice of any kind, and the Holder may
      immediately and without expiration of any grace period enforce any and all
      of
      its rights and remedies hereunder and all other remedies available to it under
      applicable law. Such declaration may be rescinded and annulled by Holder at
      any
      time prior to payment hereunder and the Holder shall have all rights as a
      Debenture holder until such time, if any, as the full payment under this Section
      shall have been received by it. No such rescission or annulment shall affect
      any
      subsequent Event of Default or impair any right consequent thereon.

              
      

    
      
        Section
          9. Miscellaneous

        
        

             
        a) Notices.
        Any and
        all notices or other communications or deliveries to be provided by the Holder
        hereunder, including, without limitation, any Notice of Conversion, shall
        be in
        writing and delivered personally, by facsimile, sent by a nationally recognized
        overnight courier service, addressed to the Company, at the address set forth
        above, facsimile number 303.327.1526,
        Attn: George Young or
        such
        other address or facsimile number as the Company may specify for such purposes
        by notice to the Holder delivered in accordance with this Section. Any and
        all
        notices or other communications or deliveries to be provided by the Company
        hereunder shall be in writing and delivered personally, by facsimile, sent
        by a
        nationally recognized overnight courier service addressed to each Holder
        at the
        facsimile telephone number or address of such Holder appearing on the books
        of
        the Company, or if no such facsimile telephone number or address appears,
        at the
        principal place of business of the Holder. Any notice or other communication
        or
        deliveries hereunder shall be deemed given and effective on the earliest
        of (i)
        the date of transmission, if such notice or communication is delivered via
        facsimile at the facsimile telephone number specified in this Section prior
        to
        5:30 p.m. (New York City time), (ii) the date after the date of transmission,
        if
        such notice or communication is delivered via facsimile at the facsimile
        telephone number specified in this Section later than 5:30 p.m. (New York
        City
        time) on any date and earlier than 11:59 p.m. (New York City time) on such
        date,
        (iii) the second Business Day following the date of mailing, if sent by
        nationally recognized overnight courier service, or (iv) upon actual receipt
        by
        the party to whom such notice is required to be given.

    

     

    b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Debenture shall alter or
      impair the obligation of the Company, which is absolute and unconditional,
      to
      pay the principal of and liquidated damages (if any) on, this Debenture at
      the
      time, place, and rate, and in the coin or currency, herein prescribed. This
      Debenture is a direct debt obligation of the Company. This Debenture ranks
      pari passu
      with all
      other Debentures now or hereafter issued under the terms set forth
      herein.  

     

    c) Lost
      or Mutilated Debenture.
      If this
      Debenture shall be mutilated, lost, stolen or destroyed, the Company shall
      execute and deliver, in exchange and substitution for and upon cancellation
      of a
      mutilated Debenture, or in lieu of or in substitution for a lost, stolen or
      destroyed Debenture, a new Debenture for the principal amount of this Debenture
      so mutilated, lost, stolen or destroyed but only upon receipt of evidence of
      such loss, theft or destruction of such Debenture, and of the ownership hereof,
      and indemnity, if requested, all reasonably satisfactory to the
      Company.

     

    
 

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    d) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Debenture shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by any of the Transaction Documents (whether brought
      against a party hereto or its respective affiliates, directors, officers,
      shareholders, employees or agents) shall be commenced in the state and federal
      courts sitting in the City of New York, Borough of Manhattan (the “New
      York Courts”).
      Each
      party hereto hereby irrevocably submits to the exclusive jurisdiction of the
      New
      York Courts for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein
      (including with respect to the enforcement of any of the Transaction Documents),
      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, or such New York Courts are improper or inconvenient venue
      for
      such proceeding. 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 via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Debenture 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 hereto hereby irrevocably waives,
      to
      the fullest extent permitted by applicable law, any and all right to trial
      by
      jury in any legal proceeding arising out of or relating to this Debenture or
      the
      transactions contemplated hereby. If either party shall commence an action
      or
      proceeding to enforce any provisions of this Debenture, then the prevailing
      party in such action or proceeding shall be reimbursed by the other party for
      its attorneys fees and other costs and expenses incurred with the investigation,
      preparation and prosecution of such action or proceeding.

     

    e) Waiver.
      Any
      waiver by the Company or the Holder of a breach of any provision of this
      Debenture shall not operate as or be construed to be a waiver of any other
      breach of such provision or of any breach of any other provision of this
      Debenture. The failure of the Company or the Holder to insist upon strict
      adherence to any term of this Debenture on one or more occasions shall not
      be
      considered a waiver or deprive that party of the right thereafter to insist
      upon
      strict adherence to that term or any other term of this Debenture. Any waiver
      must be in writing.

     

    f) Severability.
      If any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any person or circumstance, it shall nevertheless remain applicable to all
      other
      persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder violates applicable laws governing usury,
      the applicable rate of interest due hereunder shall automatically be lowered
      to
      equal the maximum permitted rate of interest. The Company covenants (to the
      extent that it may lawfully do so) that it shall not at any time insist upon,
      plead, or in any manner whatsoever claim or take the benefit or advantage of,
      any stay, extension or usury law or other law which would prohibit or forgive
      the Company from paying all or any portion of the principal of or interest
      on
      this Debenture as contemplated herein, wherever enacted, now or at any time
      hereafter in force, or which may affect the covenants or the performance of
      this
      indenture, and the Company (to the extent it may lawfully do so) hereby
      expressly waives all benefits or advantage of any such law, and covenants that
      it will not, by resort to any such law, hinder, delay or impeded the execution
      of any power herein granted to the Holder, but will suffer and permit the
      execution of every such as though no such law has been enacted.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    g) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

    

    h) Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Debenture and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    i) Assumption. 
      Any successor to the Company or surviving entity in a Fundamental Transaction
      shall (i) assume in writing all of the obligations of the Company under this
      Debenture and the other Transaction Documents pursuant to written agreements
      in
      form and substance satisfactory to the Holder (such approval not to be
      unreasonably withheld or delayed) prior to such Fundamental Transaction and
      (ii)
      to issue to the Holder a new debenture of such successor entity evidenced by
      a
      written instrument substantially similar in form and substance to this
      Debenture, including, without limitation, having a principal amount and interest
      rate equal to the principal amounts and the interest rates of the Debentures
      held by the Holder and having similar ranking to this Debenture, and
      satisfactory to the Holder (any such approval not to be unreasonably withheld
      or
      delayed).  The provisions of this Section 9(i) shall apply similarly
      and
      equally to successive Fundamental Transactions and shall be applied without
      regard to any limitations of this Debenture.

    

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

    
    

    

    
       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    

    

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

    

    

    
      	
              FELLOWS
                ENERGY LTD.

               

            
	
                                                                                                                                              By:_________________________________________

                                                                                                                                            
                 Name:

                                                                                                                                            
                 Title:Fellows 8K Exhibit 4.3

    

      Exhibit
        4.3

      

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

      

      

      COMMON
        STOCK PURCHASE WARRANT

      

      To
        Purchase __________ Shares of Common Stock of

      

      FELLOWS
        ENERGY LTD.

      

      THIS
        COMMON STOCK PURCHASE WARRANT (the “Warrant”)
        certifies that, for value received, _____________ (the “Holder”),
        is
        entitled, upon the terms and subject to the limitations on exercise and the
        conditions hereinafter set forth, at any time on or after the date hereof
        (the
“Initial
        Exercise Date”)
        and on
        or prior to the close of business on the three year anniversary of the Initial
        Exercise Date (the “Termination
        Date”)
        but
        not thereafter, to subscribe for and purchase from Fellows Energy Ltd., a
        Nevada
        corporation (the “Company”),
        up to
        ______ shares (the “Warrant
        Shares”)
        of
        Common Stock, par value $0.001 per share, of the Company (the “Common
        Stock”).
        The
        purchase price of one share of Common Stock under this Warrant shall be equal
        to
        the Exercise Price, as defined in Section 2(b). 

      

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

      

      Section
        2. Exercise.

      

      a) Exercise
        of Warrant.
        Exercise of the purchase rights represented by this Warrant may be made,
        in
        whole or in part, at any time or times on or after the Initial Exercise Date
        and
        on or before the Termination Date by delivery to the Company of a duly executed
        facsimile copy of the Notice of Exercise Form annexed hereto (or such other
        office or agency of the Company as it may designate by notice in writing
        to the
        registered Holder at the address of such Holder appearing on the books of
        the
        Company); provided,
        however,
        within
        5 Trading Days of the date said Notice of Exercise is delivered to the Company,
        the Holder shall have surrendered this Warrant to the Company and the Company
        shall have received payment of the aggregate Exercise Price of the shares
        thereby purchased by wire transfer or cashier’s check drawn on a United States
        bank. 

      

      b) Exercise
        Price.
        The
        exercise price of the Common Stock under this Warrant shall be $0.80, subject
        to
        adjustment hereunder (the “Exercise
        Price”).

       

       

      
 

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

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

      

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

      

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

      

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

      

      d) Exercise
        Limitations;
        Holder’s
        Restrictions.
        A
        Holder shall not have the right to exercise any portion of this Warrant,
        pursuant to Section 2(c) or otherwise, to the extent that after giving effect
        to
        such issuance after exercise, such Holder (together with such Holder’s
        affiliates), as set forth on the applicable Notice of Exercise, would
        beneficially own in excess of 4.99% of the number of shares of the Common
        Stock
        outstanding immediately after giving effect to such issuance.  For
        purposes
        of the foregoing sentence, the number of shares of Common Stock beneficially
        owned by such Holder and its affiliates shall include the number of shares
        of
        Common Stock issuable upon exercise of this Warrant with respect to which
        the
        determination of such sentence is being made, but shall exclude the number
        of
        shares of Common Stock which would be issuable upon (A) exercise of the
        remaining, nonexercised portion of this Warrant beneficially owned by such
        Holder or any of its affiliates and (B) exercise or conversion of the
        unexercised or nonconverted portion of any other securities of the Company
        (including, without limitation, any other shares of Debentures or Warrants)
        subject to a limitation on conversion or exercise analogous to the limitation
        contained herein beneficially owned by such Holder or any of its
        affiliates.  Except as set forth in the preceding sentence, for purposes
        of
        this Section 2(d), beneficial ownership shall be calculated in accordance
        with
        Section 13(d) of the Exchange Act, it being acknowledged by a Holder that
        the
        Company is not representing to such Holder that such calculation is in
        compliance with Section 13(d) of the Exchange Act and such Holder is solely
        responsible for any schedules required to be filed in accordance therewith.
        To
        the extent that the limitation contained in this Section 2(d) applies, the
        determination of whether this Warrant is exercisable (in relation to other
        securities owned by such Holder) and of which a portion of this Warrant is
        exercisable shall be in the sole discretion of a Holder, and the submission
        of a
        Notice of Exercise shall be deemed to be each Holder’s determination of whether
        this Warrant is exercisable (in relation to other securities owned by such
        Holder) and of which portion of this Warrant is exercisable, in each case
        subject to such aggregate percentage limitation, and the Company shall have
        no
        obligation to verify or confirm the accuracy of such determination. For purposes
        of this Section 2(d), in determining the number of outstanding shares of
        Common
        Stock, a Holder may rely on the number of outstanding shares of Common Stock
        as
        reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the
        case may be, (y) a more recent public announcement by the Company or (z)
        any
        other notice by the Company or the Company’s Transfer Agent setting forth the
        number of shares of Common Stock outstanding.  Upon the written or
        oral
        request of a Holder, the Company shall within two Trading Days confirm orally
        and in writing to such Holder the number of shares of Common Stock then
        outstanding.  In any case, the number of outstanding shares of Common
        Stock
        shall be determined after giving effect to the conversion or exercise of
        securities of the Company, including this Warrant, by such Holder or its
        affiliates since the date as of which such number of outstanding shares of
        Common Stock was reported. The provisions of this Section 2(d) may be waived
        by
        such Holder, at the election of such Holder, upon not less than 61 days’ prior
        notice to the Company, and the provisions of this Section 2(d) shall continue
        to
        apply until such 61st
        day (or
        such later date, as determined by such Holder, as may be specified in such
        notice of waiver).

       

       

      
 

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      e) Mechanics
        of Exercise.
        

      

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

      

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

      

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

      

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

       

      
 

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

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

      

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

      

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

      

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

       

      
 

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      f) Call
        Provision.
        Subject
        to the provisions of Section 2(d) and this Section 2(f), if, after the Effective
        Date, the Closing Price for each of 20 consecutive Trading Days (the
“Measurement
        Period”,
        which
        20 Trading Day period shall not have commenced until after the Effective
        Date)
        exceeds 250% of the then Exercise Price (subject to adjustment for forward
        and
        reverse stock splits, recapitalizations, stock dividends and the like after
        the
        Initial Exercise Date) (the “Threshold
        Price”),
        then
        the Company may, within one Trading Day of the end of such period, call for
        cancellation of all or any portion of this Warrant for which a Notice of
        Exercise has not yet been delivered (such right, a “Call”).
        To
        exercise this right, the Company must deliver to the Holder an irrevocable
        written notice (a “Call
        Notice”),
        indicating therein the portion of unexercised portion of this Warrant to
        which
        such notice applies. If the conditions set forth below for such Call are
        satisfied from the period from the date of the Call Notice through and including
        the Call Date (as defined below), then any portion of this Warrant subject
        to
        such Call Notice for which a Notice of Exercise shall not have been received
        by
        the Call Date will be cancelled at 6:30 p.m. (New York City time) on the
        30th
        Trading
        Day after the date the Call Notice is received by the Holder (such date,
        the
“Call
        Date”).
        Any
        unexercised portion of this Warrant to which the Call Notice does not pertain
        will be unaffected by such Call Notice. In furtherance thereof, the Company
        covenants and agrees that it will honor all Notices of Exercise with respect
        to
        Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m.
        (New
        York City time) on the Call Date. The parties agree that any Notice of Exercise
        delivered following a Call Notice shall first reduce to zero the number of
        Warrant Shares subject to such Call Notice prior to reducing the remaining
        Warrant Shares available for purchase under this Warrant. For example, if
        (x)
        this Warrant then permits the Holder to acquire 100 Warrant Shares, (y) a
        Call
        Notice pertains to 75 Warrant Shares, and (z) prior to 6:30 p.m. (New York
        City
        time) on the Call Date the Holder tenders a Notice of Exercise in respect
        of 50
        Warrant Shares, then (1) on the Call Date the right under this Warrant to
        acquire 25 Warrant Shares will be automatically cancelled, (2) the Company,
        in
        the time and manner required under this Warrant, will have issued and delivered
        to the Holder 50 Warrant Shares in respect of the exercises following receipt
        of
        the Call Notice, and (3) the Holder may, until the Termination Date, exercise
        this Warrant for 25 Warrant Shares (subject to adjustment as herein provided
        and
        subject to subsequent Call Notices). Subject again to the provisions of this
        Section 2(f), the Company may deliver subsequent Call Notices for any portion
        of
        this Warrant for which the Holder shall not have delivered a Notice of Exercise.
        Notwithstanding anything to the contrary set forth in this Warrant, the Company
        may not deliver a Call Notice or require the cancellation of this Warrant
        (and
        any Call Notice will be void), unless, from the beginning of the 20th
        consecutive Trading Days used to determine whether the Common Stock has achieved
        the Threshold Price through the Call Date, (i) the Company shall have honored
        in
        accordance with the terms of this Warrant all Notices of Exercise delivered
        by
        6:30 p.m. (New York City time) on the Call Date, (ii) the Registration Statement
        shall be effective as to all Warrant Shares and the prospectus thereunder
        available for use by the Holder for the resale of all such Warrant Shares
        and
        (iii) the Common Stock shall be listed or quoted for trading on the Trading
        Market, and (iv) there is a sufficient number of authorized shares of Common
        Stock for issuance of all Securities under the Transaction Documents, and
        (v)
        the issuance of the shares shall be in accordance with Section 2(d) herein.
        The
        Company’s right to Call the Warrant shall be exercised ratably among the Holders
        based on each Holder’s initial purchase of Common Stock.

      

      Section
        3. Certain Adjustments.

      

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

       

      
 

      
        
          
          

        

        
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      b) Subsequent
        Equity Sales.
        If the
        Company or any Subsidiary thereof, as applicable, at any time while this
        Warrant
        is outstanding, shall offer, sell, grant any option to purchase or offer,
        sell
        or grant any right to reprice its securities, or otherwise dispose of or
        issue
        (or announce any offer, sale, grant or any option to purchase or other
        disposition) any Common Stock or Common Stock Equivalents entitling any Person
        to acquire shares of Common Stock, at an effective price per share less than
        the
        then Exercise Price (such lower price, the “Base
        Share Price”
        and
        such issuances collectively, a “Dilutive
        Issuance”),
        as
        adjusted hereunder (if the holder of the Common Stock or Common Stock
        Equivalents so issued shall at any time, whether by operation of purchase
        price
        adjustments, reset provisions, floating conversion, exercise or exchange
        prices
        or otherwise, or due to warrants, options or rights per share which is issued
        in
        connection with such issuance, be entitled to receive shares of Common Stock
        at
        an effective price per share which is less than the Exercise Price, such
        issuance shall be deemed to have occurred for less than the Exercise Price
        on
        such date of the Dilutive Issuance), then, the Exercise Price shall be reduced
        and only reduced to equal the Base Share Price and the number of Warrant
        Shares
        issuable hereunder shall be increased such that the aggregate Exercise Price
        payable hereunder, after taking into account the decrease in the Exercise
        Price,
        shall be equal to the aggregate Exercise Price prior to such adjustment.
        Such
        adjustment shall be made whenever such Common Stock or Common Stock Equivalents
        are issued. Notwithstanding the foregoing, no adjustments shall be made,
        paid or
        issued under this Section 3(b) in respect of an Exempt Issuance. The Company
        shall notify the Holder in writing, no later than the Trading Day following
        the
        issuance of any Common Stock or Common Stock Equivalents subject to this
        section, indicating therein the applicable issuance price, or of applicable
        reset price, exchange price, conversion price and other pricing terms (such
        notice the “Dilutive
        Issuance Notice”).
        For
        purposes of clarification, whether or not the Company provides a Dilutive
        Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
        Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
        entitled to receive a number of Warrant Shares based upon the Base Share
        Price
        regardless of whether the Holder accurately refers to the Base Share Price
        in
        the Notice of Exercise. 

      

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

       

      
 

      
        
          
          

        

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

      

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

      

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

      

      g) Notice
        to Holders.
        

      

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

       

      
 

      
        
          
          

        

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

      

      Section
        4. Transfer
        of Warrant.

      

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

      

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

       

      
 

      
        
          
          

        

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

      

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

      

      Section
        5. Miscellaneous.

      

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

      

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

      

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

      

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

       

      
 

      
        
          
          

        

        
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      e) Authorized
        Shares.
        

      

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

      

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

      

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

      

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

      

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

      

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

       

      
 

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      

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

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      
      

      

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

      

      

      Dated:
        September __, 2005

       

      
        	
                FELLOWS
                  ENERGY LTD.

                 

              
	
                                                                                                                                                           
                  By:__________________________________________

                                                                                                                                                           
                  Name:

                                                                                                                                                          
                   Title:

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