Document:

GUARANTY

     

     
This Guaranty is made this 24th day of November 2009, by such guarantors listed
on the signature pages hereof (collectively, jointly and severally, “Guarantors,” and each, individually, a “Guarantor”), in favor of Iroquois Master Fund
Ltd. (together with its successors and assigns, “Buyer”).

     

    RECITALS

     

    WHEREAS, pursuant to that
certain Securities Purchase Agreement dated as of November 23, 2009 (as amended,
restated, supplemented, or otherwise modified from time to time, including all
schedules thereto, the “Securities Purchase Agreement”) by and among NACEL ENERGY
CORPORATION, a Wyoming corporation (“Parent”), Buyer, and each of the other
investors listed on the Schedule of Buyers attached thereto (together with
Buyer, “Buyers”), Parent has agreed to
sell, and Buyers have agreed to purchase, severally and not jointly, certain
Notes and Warrants; and

     

    WHEREAS, each Guarantor is a
direct or indirect wholly-owned Subsidiary of Parent and will receive direct and
substantial benefits from the purchase by Buyers of the Notes and Warrants;
and

     

    WHEREAS, in order to induce
Buyers to purchase, severally and not jointly, the Notes and Warrants as
provided for in the Securities Purchase Agreement, Guarantors have agreed to
jointly and severally guaranty all of Parent’s obligations under and with
respect to the Notes and the Securities Purchase Agreement; and

     

    WHEREAS, in connection
herewith, Guarantors, Parent and Buyers have entered into that certain Security
Agreement dated of even date herewith (as amended, restated, supplemented, or
otherwise modified from time to time, including all schedules thereto, the “Security Agreement”), pursuant to which Guarantors and
Parent (Guarantors and Parent, collectively, “Obligors” and each, individually, an “Obligor”) have granted each of the Buyers
continuing security interests in all assets of each Obligor, as more fully set
forth in the Security Agreement.

     

    AGREEMENTS

     

    NOW, THEREFORE, for and in
consideration of the recitals made above and other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, each Guarantor hereby agrees as follows:

     

    1.           Definitions. All
capitalized terms used herein that are not otherwise defined herein shall have
the meanings given them in the Security Agreement.

     

    2.           Guaranteed
Obligations. Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty to Buyer the due and punctual payment in full of all of
the present and future payment and performance obligations of each Obligor
arising under the Securities Purchase
Agreement, any and all Notes payable to Buyer, the Security Agreement, and the
other Transaction Documents, including, without duplication, attorneys’ fees and
expenses and any interest, fees, or expenses that accrue after the filing of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any Insolvency Proceeding (collectively, the “Guaranteed Obligations”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           Guarantors’ Representations
and Warranties. Each Guarantor represents and warrants to Buyer that such
Guarantor expects to derive substantial benefits from the purchase by Buyers of
the Notes and Warrants and the other transactions contemplated hereby and by the
other Transaction Documents. Buyer may rely conclusively on a continuing
warranty, hereby made, that such Guarantor continues to be benefited by this
Guaranty and Buyer shall have no duty to inquire into or confirm the receipt of
any such benefits, and this Guaranty shall be effective and enforceable by Buyer
without regard to the receipt, nature or value of any such
benefits.

     

    4.           Unconditional Nature.
No act or thing need occur to establish any Guarantor’s liability hereunder, and
no act or thing, except full payment and discharge of all of the Guaranteed
Obligations, shall in any way exonerate any Guarantor hereunder or modify,
reduce, limit or release any Guarantor’s liability hereunder. This is an
absolute, unconditional and continuing guaranty of payment of the Guaranteed
Obligations and shall continue to be in force and be binding upon each Guarantor
until all of the Guaranteed Obligations are indefeasibly paid in full and
discharged.

     

    5.           Subrogation. No
Guarantor will exercise or enforce any right of contribution, reimbursement,
recourse or subrogation available to such Guarantor as to any of the Guaranteed
Obligations, or against any Person liable therefor, or as to any collateral
security therefor, unless and until all of the Guaranteed Obligations shall have
been indefeasibly paid in full and discharged.

     

    6.           Enforcement Expenses.
Each Guarantor shall pay or reimburse Buyer for all costs, expenses and
attorneys’ fees paid or incurred by Buyer in endeavoring to collect and enforce
the Guaranteed Obligations and in enforcing this Guaranty.

     

    7.           Obligations Absolute.
Each Guarantor agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other
than the indefeasible payment in full and discharge of the Guaranteed
Obligations. In furtherance of the foregoing and without limiting the generality
thereof, each Guarantor agrees that none of its obligations hereunder shall be
affected or impaired by any of the following acts or things (which Buyer is
expressly authorized to do, omit or suffer from time to time, without consent or
approval by or notice to any Guarantor): (a) any acceptance of collateral
security, guarantors, accommodation parties or sureties for any or all of the
Guaranteed Obligations; (b) one or more extensions or renewals of the Guaranteed
Obligations (whether or not for longer than the original period) or any
modification of the interest rates, maturities, if any, or other contractual
terms applicable to any of the Guaranteed Obligations or any amendment or
modification of any of the terms or provisions of any of the Transaction
Documents; (c) any waiver or indulgence granted to Parent or any other Obligor,
any delay or lack of diligence in the enforcement of the Guaranteed
Obligations, or any failure to institute proceedings, file a claim, give any
required notices or otherwise protect any of the Guaranteed Obligations; (d) any
full or partial release of, compromise or settlement with, or agreement not to
sue, Parent, any other Obligor or any other Person liable in respect of any of
the Guaranteed Obligations; (e) any release, surrender, cancellation or other
discharge of any evidence of the Guaranteed Obligations or the acceptance of any
instrument in renewal or substitution therefor; (f) any failure to obtain
collateral security (including rights of setoff) for the Guaranteed Obligations,
or to see to the proper or sufficient creation and perfection thereof, or to
establish the priority thereof, or to preserve, protect, insure, care for,
exercise or enforce any collateral security; or any modification, alteration,
substitution, exchange, surrender, cancellation, termination, release or other
change, impairment, limitation, loss or discharge of any collateral security;
(g) any collection, sale, lease or disposition of, or any other foreclosure or
enforcement of or realization on, any collateral security; (h) any assignment,
pledge or other transfer of any of the Guaranteed Obligations or any evidence
thereof; or (i) any manner, order or method of application of any payments or
credits upon the Guaranteed Obligations. Each Guarantor waives any and all
defenses and discharges available to a surety, guarantor or accommodation
co-obligor.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    8.           Waivers by
Guarantors. Each Guarantor waives any and all defenses, claims, setoffs
and discharges of Parent, or any other Obligor or Person, pertaining to the
Guaranteed Obligations, except the defense of discharge by indefeasible
satisfaction and discharge in full. Without limiting the generality of the
foregoing, no Guarantor will assert, plead or enforce against any Buyer any
defense of waiver, release, discharge or disallowance in any Insolvency
Proceeding, statute of limitations, res judicata, statute of frauds,
anti-deficiency statute, fraud, incapacity, minority, usury, illegality or
unenforceability which may be available to Parent or any other Obligor or Person
liable in respect of any of the Guaranteed Obligations, or any setoff available
to any Buyer against Parent or any other such Obligor or Person, whether or not
on account of a related transaction. Each Guarantor expressly agrees that such
Guarantor shall be and remain liable for any deficiency remaining after
foreclosure of any mortgage or security interest securing the Guaranteed
Obligations, whether or not the liability of Parent or any other Obligor or
Person for such deficiency is discharged pursuant to statute or judicial
decision. The liability of each Guarantor shall not be affected or impaired by
any voluntary or involuntary liquidation, dissolution, sale or other disposition
of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar event or proceeding affecting, Parent or any of its assets. No Guarantor
will assert, plead or enforce against any Buyer any claim, defense or setoff
available to such Guarantor against Parent. Each Guarantor waives presentment,
demand for payment, notice of dishonor or nonpayment and protest of any
instrument evidencing the Guaranteed Obligations. Buyer shall not be required
first to resort for payment of the Guaranteed Obligations to Parent or any other
Person, or their properties, or first to enforce, realize upon or exhaust any
collateral security for the Guaranteed Obligations, before enforcing this
Guaranty.

     

    9.           If Payments Set Aside,
etc. If any payment applied by Buyer to the Guaranteed Obligations is
thereafter set aside, recovered, rescinded or required to be returned for any
reason (including, without limitation, the bankruptcy, insolvency or
reorganization of Parent or any other Obligor or Person), the Guaranteed
Obligations to which such payment was applied shall for the purpose of this
Guaranty be deemed to have continued in existence, notwithstanding such
application,
and this Guaranty shall be enforceable as to such Guaranteed Obligations as
fully as if such application had never been made.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    10.           Additional Obligation of
Guarantors. Each Guarantor’s liability under this Guaranty is in addition
to and shall be cumulative with all other liabilities of such Guarantor to Buyer
as guarantor, surety, endorser, accommodation co-obligor or otherwise of any of
the Guaranteed Obligations, without any limitation as to amount.

     

    11.           No Duties Owed by
Buyer. Each Guarantor acknowledges and agrees that Buyer (a) has not made
any representations or warranties with respect to, (b) does not assume any
responsibility to such Guarantor for, and (c) has no duty to provide information
to such Guarantor regarding, the enforceability of any of the Guaranteed
Obligations or the financial condition of Parent or any other Obligor or Person.
Each Guarantor has independently determined the creditworthiness of Parent and
the enforceability of the Guaranteed Obligations and until the Guaranteed
Obligations are paid in full will independently and without reliance on Buyer
continue to make such determinations.

     

    12.           Miscellaneous.

     

    (a)           This
Guaranty may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original thereof. Any
party delivering an executed counterpart of this Guaranty by facsimile or other
electronic method of transmission also shall deliver an original executed
counterpart of this Guaranty but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Guaranty.

     

    (b)           Any
provision of this Guaranty which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other
jurisdiction.

     

    (c)           Headings
used in this Guaranty are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.

     

    (d)           The
pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e)           Unless
the context of this Guaranty or any other Transaction Document clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms “includes” and “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the
phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Guaranty or any other Transaction Document refer to this
Guaranty or such other Transaction Document, as the case may be, as a whole and
not to any particular provision of this Guaranty or such other Transaction
Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Guaranty unless otherwise specified. Any reference
in this Guaranty or in any other Transaction Document to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein or in any other Transaction Document to the satisfaction in
full of the Guaranteed Obligations shall mean the indefeasible payment in full
in cash and discharge, or other satisfaction in accordance with the terms of the
Transaction Documents and discharge, of all Guaranteed Obligations in full. Any
reference herein or in any other Transaction Document to the satisfaction in
full of the Secured Obligations shall mean the indefeasible payment in full in
cash and discharge, or other satisfaction in accordance with the terms of the
Transaction Documents and discharge, of all Secured Obligations in full. Any
reference herein to any Person shall be construed to include such Person’s
successors and assigns.

     

    (f)           This
Guaranty shall be effective upon delivery to Buyer, without further act,
condition or acceptance by Buyer, shall be binding upon each Guarantor and the
successors and assigns of each Guarantor, and shall inure to the benefit of
Buyer and its participants, successors and assigns. This Guaranty may not be
waived, modified, amended, terminated, released or otherwise changed except by a
writing signed by each Guarantor and Buyer.

     

    (g)           The
language used in this Guaranty will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will
be applied against any party. For clarification purposes, the Recitals are part
of this Guaranty.

     

    (h)           All
dollar amounts referred to in this Guaranty and the other Transaction Documents
(as defined in the Securities Purchase Agreement) are in United States Dollars
(“US Dollars”), and all amounts owing under this
Guaranty and all other Transaction Documents shall be paid in US Dollars. All
amounts denominated in other currencies shall be converted in the US Dollar
equivalent amount in accordance with the Exchange Rate on the date of
calculation. “Exchange Rate” means, in relation to any amount of
currency to be converted into US Dollars pursuant to this Guaranty, the US
Dollar exchange rate as published in the Wall Street Journal on the relevant
date of calculation.

     

    13.          Notices. All notices
and other communications provided for hereunder shall be given in the form and
manner, and delivered to such addresses, as specified in the Security
Agreement.
 

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    14.           Governing Law; Jurisdiction;
Service of Process; Jury Trial. The Guarantors hereby agree that pursuant
to 735 Illinois Compiled Statutes 105/5-5 they have chosen that all questions
concerning the construction, validity, enforcement and interpretation of this
Guaranty shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois. Each Guarantor hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Chicago, Illinois, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper; provided, however, any
suit seeking enforcement of this Guaranty may be brought, at Buyer’s option, in
the courts of any jurisdiction where Buyer elects to bring such action. Each
Guarantor hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Guaranty
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Without limitation of the foregoing, each Guarantor
hereby irrevocably appoints Parent as such Guarantor’s agent for purposes of
receiving and accepting any service of process hereunder. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

     

    [signature page follows]

 

    
      
         

      

      
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    IN
WITNESS WHEREOF, this Guaranty has been duly executed by each Guarantor as of
the date set forth above.

    

    
      
        
          
            	 	
                    0758817
      B.C. Ltd., a corporation existing pursuant to

                  
	 	
                    the
      British Columbia Business Corporations Act

                  
	 	
                    By:

                  
	 	
	 	
                    Name:
      Murray
    Fleming

                  
	 	
                    Title:
      Secretary

                  
	 	 
      
	 	
                    BLUE
      CREEK WIND ENERGY FACILITY LLC, a

                  
	 	
                    Texas
      limited liability company

                  
	 	
                    By:

                  
	 	
	 	
                    Name:
      Murray
    Fleming

                  
	 	
                    Title:
      Officer of Sole
      Member

                  

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	 	
                                                CHANNING
      FLATS WIND ENERGY FACILITY

                                              
	 	LLC,
      a
      Texas limited liability company
	 	
                                                By:

                                              
	 	
	 	
                                                Name:
      Murray
    Fleming

                                              
	 	Title:
      Officer
      of Sole Member
	 	 
      
	 	
                                                HEDLEY
      POINTE WIND ENERGY FACILITY

                                              
	 	LLC,
      a
      Texas limited liability company
	 	 
      
	 	
                                                By:

                                              
	 	
	 	
                                                Name:
      Murray
    Fleming

                                              
	 	Title:
      Officer
      of Sole
Member

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

      

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          	 	
                                                                                  LEILA LAKE WIND ENERGY FACILITY
      LLC, a

                                                                                
	 	Texas
      limited
      liability company
	 	
                                                                                  By:

                                                                                
	 	
	 	
                                                                                  Name:
      Murray
    Fleming

                                                                                
	 	Title:
      Officer
      of Sole Member
	 	 
      
	 	
                                                                                  SNOWFLAKE
      WIND ENERGY FACILITY LLC, an

                                                                                
	 	
                                                                                  Arizona
      limited liability company

                                                                                
	 	
                                                                                  By:

                                                                                
	 	
	 	
                                                                                  Name:
      Murray
    Fleming

                                                                                
	 	Title:
      Officer
      of Sole Member
	 	 
      
	 	
                                                                                  SWISHER
      WIND ENERGY FACILITY LLC, a

                                                                                
	 	Texas
      limited
      liability company
	 	
                                                                                  By:

                                                                                
	 	
	 	
                                                                                  Name:
      Murray
    Fleming

                                                                                
	 	Title:
      Officer
      of Sole
Member

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        3Unassociated Document

    THIS WARRANT AND THE SHARES OF COMMON
STOCK ISSUABLE UPON ANY EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED TO ANY
PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (A) A REGISTRATION
STATEMENT WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT, OR
(B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SELECTED BY THE
HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT IS AVAILABLE, AND (2) THERE  SHALL HAVE
BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS. THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON ANY EXERCISE HEREOF MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.

     

    

               Date
of Issuance: November 20, 2009

     

    
      	No. ____________ 	 	
              For the
      Purchase

            
	 	 	
              of [______]
      shares

            
	 	 	
              of Common
      Stock

            

    

     

     WARRANT
TO PURCHASE

    COMMON
STOCK

    OF

    ZOO
ENTERTAINMENT, INC.

    (A
DELAWARE CORPORATION)

    

    

    ZOO
ENTERTAINMENT, INC., a Delaware corporation (the “Company”), for value received,
hereby certifies that [Terren Peizer] (including any designee, successor, or
assignee, the “Holder”), is entitled, subject to the terms set forth herein, to
purchase from the Company, at any time or from time to time on or after the date
hereof (the “Initial Exercise Date”) and at or before 5:00 p.m. New York
City time on November [ 
], 2014 (the “Expiration Date”), [______] shares of
Common Stock, par value $0.001 per share, of the Company (the “Common Stock”),
at a purchase price per share equal to $[0.01] per share (the
“Exercise Price”), as adjusted upon the occurrence of certain events as set
forth in this Warrant. The shares of stock issuable upon exercise of this
Warrant, and the purchase price per share, are hereinafter referred to as the
“Warrant Stock” or “Warrant Shares”, and the “Purchase Price,”
respectively.

     

    This
Warrant is being issued pursuant to a Securities Purchase Agreement and a
Registration Rights Agreement between the Company and the initial Holder, each
dated as of the date hereof (together with this Warrant and the other documents
contemplated hereby and thereby, collectively, the “Transaction
Documents”).  Capitalized terms used and not defined herein shall have
the meanings set forth in the Purchase Agreement or the Registration Rights
Agreement as applicable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           Exercise.

     

    1.1           Manner of Exercise; Payment
in Cash.  This Warrant may be exercised by the Holder, 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 the purchase form
(the “Purchase Form”) appended hereto as Exhibit A duly
executed by the Holder, at the principal office of the Company, or at such other
place as the Company may designate, and, within three (3) Trading Days of the
date that such Purchase Form is delivered to the Company, the Company shall have
received the payment of the aggregate Purchase Price payable in respect of the
number of shares of Warrant Stock purchased upon such
exercise.  Payment of the Purchase Price shall be in cash or by
certified or official bank check payable to the order of the Company or by wire
transfer of immediately available funds, unless the exercise is cashless
pursuant to Section 1.4(a). Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Purchase Form is delivered to the
Company.  Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased.  The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases.  The Company shall deliver any objection to any Purchase
Form within three (3) Trading Days of receipt of such notice.  In
the event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error. The Holder and
any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this Section 1.1, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on
the face hereof.

     

    1.2           Effectiveness.  Each
exercise of this Warrant shall be deemed to have been effected immediately prior
to the close of business on the day on which the Purchase Form is delivered to
the Company as provided in Section 1.1 above.  At such time, the
Person or Persons in whose name or names any certificates for Warrant Stock
shall be issuable upon such exercise as provided in Section 1.3 below shall
be deemed to have become the holder or holders of record of the Warrant Stock
represented by such certificates.

     

    1.3           Exercise and Delivery of
Certificates.  As soon as practicable after the exercise of
this Warrant in full or in part, and in any event within ten (10) Business Days
thereafter, the Company, at its sole expense, will cause to be issued in the
name of, and delivered to, the Holder, or, subject to the terms and conditions
hereof, as such Holder (upon payment by such Holder of any applicable transfer
taxes) may direct:

     

    (a)           A
certificate or certificates for the number of full shares of Warrant Stock to
which such Holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which such Holder would otherwise be entitled, cash in an
amount determined pursuant to Section 1.5 hereof; and

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (b)           In
case such exercise is in part only, the Company’s records shall be adjusted as
provided in Section 1.1 above to reflect that this Warrant represents the
right to acquire the number of such shares called for on the face of this
Warrant minus the number of such shares purchased by the Holder upon such
exercise together with any previous exercise.

     

    (c)           In
lieu of delivering physical certificates for the Warrant Shares, provided the
Company’s Transfer Agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer (“FAST”) program and that any legend
upon the certificates for the Warrant Shares shall have been removed pursuant to
the Purchase Agreement, upon request of the Holder, the Company shall use
commercially reasonable best efforts to cause its transfer agent to
electronically transmit such Warrant Shares to the Holder’s Deposit/Withdrawal
at Custodian (DWAC) account with DTC.

     

    (d)           In
addition to any other rights available to the Holder, if the Company fails to
deliver to the Holder a certificate representing Warrant Shares by the third
Trading Day after the date on which delivery of such certificate is required by
this Warrant, and if after such third Trading Day the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares that the Holder
anticipated receiving from the Company (a “Buy-In”), then the Company shall,
within three Trading Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Common Stock) shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Common Stock and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In Price over the
product of (A) such number of shares of Common Stock, times (B) the closing bid
price on the date of the event giving rise to the Company’s obligation to
deliver such certificate.

     

    1.4           Right to Convert Warrant
into Stock: Net Issuance.

     

    (a)           Right to
Convert.  In addition to and without limiting the rights of the
Holder under the terms of this Warrant, if at any time or from time to
time the Warrant Stock is not registered pursuant to an effective
registration statement, then from such time and continuing until the Warrant
Stock is so registered, the Holder shall have the right to convert this Warrant
or any portion thereof (the “Conversion Right”) into shares of Warrant Stock as
provided in this Section 1.4 at any time or from time to time during the
term of this Warrant. Upon exercise of the Conversion Right with respect to a
particular number of shares subject to this Warrant (the “Converted Warrant
Shares”), the Company shall deliver to the Holder (without payment by the Holder
of any Purchase Price or any cash or other consideration) that number of shares
of fully paid and nonassessable Warrant Stock equal to the quotient obtained by
dividing (X) the value of this Warrant (or the specified portion hereof) on the
Conversion Date (as defined in Section 1.4(c) hereof), which value shall be
determined by subtracting (A) the aggregate Purchase Price of the Converted
Warrant Shares immediately prior to the exercise of the Conversion Right from
(B) the aggregate fair market value of the Converted Warrant Shares
issuable upon exercise of this Warrant (or the specified portion hereof) on the
Conversion Date by (Y) the fair market value of one share of Warrant Stock
on the Conversion Date.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    Expressed
as a formula, such conversion shall be computed as follows:

     

    X           =           B-A

                 Y

    

    where:

     

    X  =           the
number of shares of Warrant Stock that may be issued to Holder

     

    Y  =           the
fair market value (FMV) of one share of Warrant Stock

     

    A  =           the
aggregate Warrant Price (i.e., Converted Warrant Shares x Purchase
Price)

     

    B  =           the
aggregate FMV (i.e., FMV x Converted Warrant Shares)

     

    No
fractional shares shall be issuable upon exercise of the Conversion Right, and,
if the number of shares to be issued determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the fair market value of the resulting fractional share
on the Conversion Date.

     

    (b)           Method of
Exercise.  If there is no registration statement then effective
under the Securities Act, the Conversion Right may be exercised by the Holder by
delivery of the Purchase Form in the form attached hereto as Exhibit A duly
completed and executed and indicating the number of shares subject to this
Warrant which are being surrendered (referred to in
Section 1.4(a) hereof as the Converted Warrant Shares) in exercise of
the Conversion Right.  Such conversion shall be effective upon receipt
by the Company of the aforesaid Purchase Form, or on such later date as is
specified on the Purchase Form (the “Conversion Date”), and, at the election of
the Holder hereof, may be made contingent upon the occurrence of any Fundamental
Transaction (as defined in Section 2.4 hereof).  Certificates for the
shares issuable upon exercise of the Conversion Right shall be issued as of the
Conversion Date and shall be delivered to the Holder within ten (10) Business
Days following the Conversion Date.

     

    (c)           Determination of Fair Market
Value.  For purposes of this Section 1.4, “fair market
value” of a share of Warrant Stock as of a particular date (the “Determination
Date”) shall be determined as follows:

     

    (1)           If
the Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) Stock
Market, then the closing bid price on the day before the Determination Date;
or

     

    (2)           If
the Common Stock is not traded on an exchange or on the NASDAQ Stock Market but
is traded in the over-the-counter market, then the closing bid price on the day
before the Determination Date; or

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (3)           In
the event that the Determination Date is the date of a liquidation, dissolution
or winding up, or any event deemed to be a liquidation, dissolution or winding
up with respect to the Common Stock under the Company’s Certificate of
Incorporation, then the fair market value per share of the Warrant Stock shall
be determined by aggregating all amounts to be payable per share to holders of
the Common Stock in the event of such liquidation, dissolution or winding up,
plus all other amounts to be payable per share in respect of the Warrant Stock
in liquidation, assuming for the purposes of this subsection (3) that all
of the shares of Warrant Stock issuable upon exercise of all of the Warrants are
outstanding at the Determination Date; or

     

    (4)           In
all other cases, the fair market value per share of the Warrant Stock shall be
determined in good faith by the Company’s Board of Directors upon review of
relevant factors.

     

    1.5           Fractional
Shares.  The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the fair market value of the Warrant Stock
reasonably determined by The Board of Directors of the Company (and, in the case
of a conversion of this Warrant, in accordance with
Section 1.4(c)).

     

    1.6           Limitations on
Exercise.  For so long as Holder or any of its Affiliates hold
any Preferred Shares, Warrants, Warrant Shares, or shares of Common Stock,
neither Holder nor any Affiliate will engage or participate in any actions,
plans or proposals which relate to or would result in the acquiring by Holder or
any Affiliate of additional securities of the Company, alone or together with
any other Person, which would result in Holder or any Affiliate beneficially
owning or controlling more than 9.99% of the total outstanding Common Stock or
other voting securities of the Company.  To comply with this
restriction, the aggregate number of Warrant Shares issuable upon exercise of
the Warrant on any exercise date, when aggregated with all other shares of
Common Stock deemed beneficially owned by the Holder and its Affiliates (whether
acquired in connection with the transactions contemplated by the Transaction
Documents or otherwise), shall not result in the Holder or any Affiliate
beneficially owning or controlling more than 9.99% of all Common Stock
outstanding on such exercise date, as determined in accordance with Section
13(d) of the Exchange Act.  In addition, as of any date, the aggregate
number of shares of Common Stock with respect to which this Warrant is
exercisable within 61 days, together with all other shares of Common Stock then
beneficially owned (as such term is defined in Rule 13(d) under the Exchange
Act) by Holder and its Affiliates, shall not exceed 9.99% of the total
outstanding shares of Common Stock of the Company as of such date.

     

    2.           Certain
Adjustments.  The Purchase Price and the number of shares of
Warrant Stock deliverable upon exercise of the Warrant shall be subject to
adjustment from time to time as follows:

     

    2.1           Subdivision, Consolidation,
Reclassification or Change in Common Stock.  In the event of
any subdivision, combination, consolidation, reclassification or other change of
the Common Stock into a greater or lesser number or different class or classes
of stock, the number of shares of Warrant Stock deliverable upon exercise of
this Warrant shall be determined in accordance with the terms of the Certificate
of Incorporation or other document effecting or otherwise determining such
change, and the Purchase Price for such Warrant Stock shall be proportionately
reduced. Any adjustment made pursuant to this Section 2.1 shall become
effective immediately after the effective date in the case of a subdivision,
combination, consolidation, reclassification or other change.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    2.2           Subdivision, Consolidation,
Reclassification or Change in Warrant Stock.  In the event of
any subdivision, combination, consolidation, reclassification or other change of
the Warrant Stock into a lesser number or different class or classes of stock,
the number of shares of Warrant Stock deliverable upon exercise of this Warrant
shall be proportionally decreased and the Purchase Price for such Warrant Stock
shall be proportionately increased.  In the event of any subdivision,
combination, consolidation, reclassification or other change of the Warrant
Stock into a greater number or different class or classes of stock, the number
of shares of Warrant Stock deliverable upon exercise of this Warrant shall be
proportionally increased and the Purchase Price for such Warrant Stock shall be
proportionately reduced. Any adjustment made pursuant to this Section 2.2
shall become effective immediately after the effective date in the case of a
subdivision, combination, consolidation, reclassification or other
change.

     

    2.3           Dividends or Other
Distributions.

     

    (a)           In
the event that the Company issues additional shares of Common Stock as a
dividend or other distribution with respect to the Common Stock, the number of
shares of Warrant Stock deliverable upon exercise of this Warrant shall be
determined in accordance with the terms of the Certificate of Incorporation or
other document effecting or otherwise determining such change, and the Purchase
Price for such Warrant Stock shall be proportionately reduced.  Any
adjustment made pursuant to this Section 2.3(a) shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution.

     

    (b)           If
the Company, at any time while this Warrant is outstanding, distributes to
holders of Common Stock (i) evidences of its indebtedness, (ii) any security
(other than a distribution of Common Stock covered by Section 2.3(a) above),
(iii) rights or warrants to subscribe for or purchase any security, or (iv) any
other asset (in each case, “Distributed Property”), then in each such case the
Holder shall be entitled upon any partial or complete exercise of this Warrant
to receive the amount of Distributed Property which would have been payable to
the Holder had such Holder been the holder of such Warrant Shares on the record
date for the determination of stockholders entitled to receive the Distributed
Property.  The Company will at all times set aside in escrow and keep
available for distribution to such holder upon exercise of this Warrant a
portion of the Distributed Property to satisfy the distribution to which such
Holder is entitled pursuant to this Section 2.3(b).  Any adjustment
made pursuant to this Section 2.3(b) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution.

     

    2.4           Fundamental
Transactions.

     

    (a)           If,
at any time while this Warrant is outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any direct or indirect purchase
offer, tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property, or such
offer is proposed and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or
recapitalization 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, (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination) (each of the foregoing events described in clauses
(i)-(v), 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, the
number of shares of Common Stock of the successor or acquiring corporation (the
“Successor Entity”) or of the Company, if it is the surviving corporation, and
any additional consideration (the “Alternate Consideration”) receivable as a
result of such Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
Fundamental Transaction. 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.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (b)           The
Company shall cause any Successor Entity to assume in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents in accordance with the provisions of this Section 2.5(b) and
shall, at the option of the Holder of this Warrant, deliver or cause to be
delivered to the Holder in exchange for this Warrant a security of the Successor
Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and with an exercise price which
applies the exercise price hereunder to such shares of capital stock (but taking
into account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction).

     

    (c)           Upon
the occurrence of any Fundamental Transaction, the Successor Entity, if any,
shall succeed to and be substituted for the Company (so that from and after the
date of such Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents referring to the “Company” shall refer instead to
the Successor Entity), and may exercise every right and power of the Company,
and shall assume all of the obligations of the Company, under this Warrant and
the other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein.

     

    2.5           Certificate of
Adjustment.  When any adjustment is required to be made in the
Purchase Price, the Company shall promptly provide to the Holder (pursuant to
the notice provisions of Section 9 hereof) a certificate setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.  Delivery of such certificate shall
be deemed to be a final and binding determination with respect to such
adjustment unless challenged by the Holder within ten (10) Business Days of
receipt thereof.  Such certificate shall also set forth the kind and
amount of stock or other securities or property into which this Warrant shall be
exercisable following the occurrence of any of the events specified in this
Section 2.

     

    3.           Compliance
with Securities Act.

     

    3.1           Unregistered
Securities.  The Holder acknowledges that this Warrant and the
Warrant Stock have not been registered under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any successor legislation
(the “Securities Act”), and agrees not to sell, pledge, distribute, offer for
sale, transfer or otherwise dispose of this Warrant or any Warrant Stock in the
absence of (i) an effective registration statement under the Securities Act
covering this Warrant or such Warrant Stock and registration or qualification of
this Warrant or such Warrant Stock under any applicable “blue sky” or state
securities law then in effect, or (ii) an opinion of counsel selected by
the Holder that such registration and qualification are not
required.  The Company may reasonably delay issuance of the Warrant
Stock until completion of any action or obtaining of any consent, which the
Company reasonably deems necessary under any applicable law (including without
limitation state securities or “blue sky” laws).

     

    3.2           Investment
Compliance.  The Holder, by the acceptance hereof, represents
and warrants that it is acquiring this Warrant and, upon any exercise hereof,
will acquire the Warrant Shares issuable upon such exercise, for its own account
and not with a view to or for distributing or reselling such Warrant Shares or
any part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act, without prejudice, however, to the Holder’s right at all times
to sell or otherwise dispose of all or any part of such Warrant or Warrant
Shares in compliance with applicable federal and state securities
laws.  Subject to the immediately preceding sentence, nothing
contained in this Section 3.2 shall be deemed a representation or warranty by
the Holder of any intent to hold the Warrant or Warrant Shares for any period of
time.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    3.3           Legend.  Certificates
delivered to the Holder pursuant to Section 1.3 shall bear the following
legend or a legend in substantially similar form and the Company shall have the
obligation to remove such legend as set forth in Section 4.1 of the
Purchase Agreement:

     

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND THEY MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT
OR AN OPINION OF COUNSEL SELECTED BY HOLDER THAT AN EXEMPTION FROM REGISTRATION
IS THEN AVAILABLE. THE SHARES REPRESENTED BY THIS CETIFICATE MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.”

     

    4.           Reservation
of Stock.  The Company does not and will not have a sufficient
number of shares of Common Stock authorized for the issuance of all Warrant
Shares issuable upon exercise of this Warrant until such time as the
effectiveness of the filing of an amendment to the Company’s Certificate of
Incorporation authorizing a sufficient number of shares of Common Stock to
permit such issuance.  This Warrant cannot be exercised until the
prior effectiveness of the filing of such an amendment.  The Company
covenants and agrees that, upon and subsequent to such effectiveness and until
the Expiration Date, the Company will at all times have authorized and in
reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of Warrant Stock and other securities and
properties as from time to time shall be issuable upon the exercise of this
Warrant, free and clear of all restrictions on sale or transfer and free and
clear of all preemptive rights and rights of first refusal or any other
contingent purchase rights of persons other than the Holder. The Company will
take all such action as may be necessary to assure that the Warrant Shares may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any Trading Market upon which the Common
Stock may be listed or quoted.

     

    5.           Replacement
of Warrants.  Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in standard form and in an amount
reasonably satisfactory to the Company, or (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will issue, in lieu
thereof, a new Warrant of like tenor.

     

    6.           Covenants
and Obligations of Company.

     

    6.1           The
Company covenants that all Warrant Shares shall, upon issuance and the payment
of the applicable Exercise Price in accordance with the terms hereof, be duly
and validly authorized and issued and fully paid and nonassessable.

     

    6.2           The
Company’s obligations to issue and deliver Warrant Shares 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 Warrant Shares; provided, however, that the
Company shall be under no obligation to issue and deliver Warrant Shares to any
transferee of the Holder if the transferee is a Person to whom the Warrant or
Warrant Shares could not be sold under applicable securities laws or an
exemption therefrom.  Nothing herein shall limit a Holder’s right to
pursue any other remedies available to the Holder hereunder, at law or in
equity.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    6.3           The
Company will not, by amendment of 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 action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment.

     

    7.           Transferability.  Subject
to compliance with any applicable securities laws and the conditions set forth
herein, 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 or
its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto as Exhibit B 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, as
applicable, 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.  The Warrant, if properly assigned in
accordance herewith, may be exercised by a new Holder for the purchase of
Warrant Shares without having a new Warrant issued.

     

    8.           No Rights
as Stockholder.  Until the exercise of this Warrant, the Holder
shall not have or exercise any rights by virtue hereof as a stockholder of the
Company including, without limitation, any voting rights.

     

    9.           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section 9 prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section 9
on a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
on any Trading Day, (c) the Trading Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given.  The
address for all notices and communications shall be: (1) if to the Company: Zoo
Entertainment, Inc., c/o Zoo Publishing, Inc., 3805 Edwards Road, Suite 605,
Cincinnati, Ohio 45209, Facsimile No.: 513-278-0111, Attn: Mark Seremet, or such
other address as the Company shall so notify the Holder, and (2) if to the
Holder, to the most recent address and facsimile number furnished to the Company
in writing by the Holder.  All notices, requests and other
communications hereunder shall be deemed to have been given (i) by hand, at
the time of the delivery thereof to the receiving party at the address of such
party described above, (ii) if made by facsimile transmission, at the time
that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the next Business Day
following the day such notice is delivered to the courier service, or
(iv) if sent by registered mail, on the fifth Business Day following the
day such mailing is made.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    10.           Amendment,
Modification and Waiver.  This Warrant may be amended or
modified with the written consent of the Company and the Holder.  Any
waiver or consent hereunder must be in writing and shall be effective only in
the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.

     

    11.           Assignment.  This
Warrant may not be assigned by the Company except to a Successor Entity in the
event of a Fundamental Transaction.  This Warrant shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.  Subject to the preceding sentence, nothing in
this Warrant shall be construed to give to any Person other than the Company and
the Holder any legal or equitable right, remedy or cause of action under this
Warrant.  This Warrant may be amended only in writing signed by the
Company and the Holder or their respective successors and assigns, as
applicable.

     

    12.           Rescission
and Withdrawal Right.  Notwithstanding anything to the contrary
contained herein or in any of the other Transaction Documents, whenever Holder
exercises a right, election, demand or option owed to Holder by the Company
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided (including any applicable cure
period), then, prior to the performance by the Company of the Company’s related
obligation, Holder may rescind or withdraw, in its sole discretion from time to
time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and
rights.

     

    13.           Headings.  The
headings in this Warrant are for convenience of reference only and shall in no
way modify or affect the meaning or construction of any of the terms or
provisions of this Warrant.

     

    14.           Governing
Law.  This Warrant will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
the conflict of law principles thereof.  The Company agrees that all
Proceedings concerning this Warrant or the transactions contemplated hereby may
be commenced exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan (the “New York Courts”) and 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 and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that the Company
is not personally subject to the jurisdiction of any such New York Court or that
such Proceeding has been commenced in an improper or inconvenient
forum.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

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

     

     

    
      
        
          
            
              
                	 	ZOO
      ENTERTAINMENT, INC.
	 	 
	 	 	 
	
                         

                      	
                        By:
      

                      	 
      
	 	Name:	 
      
	 	Title:	 
      
	 	 	 

              

            

          

        

      

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

                                                   

    EXHIBIT A

     

    PURCHASE
FORM

     

    To:           ZOO
ENTERTAINMENT, INC.

     

    The
undersigned pursuant to the provisions set forth in the attached Warrant
(No. W-____), hereby irrevocably elects to (check one):

     

    
      	
               
      

            	
              _____

            	
              (A)

            	
              purchase
      ___ shares of Common Stock, par value $0.001 per share (the “Common
      Stock”) of ZOO ENTERTAINMENT, INC., covered by such Warrant and herewith
      makes payment of $_____________, representing the full purchase price for
      such shares at the price per share provided for in such Warrant;
      or

            

    

     

    
      	
               
      

            	
              _____

            	
              (B)

            	
              convert
      ___ Converted Warrant Shares into that number of shares of fully paid and
      nonassessable shares of Common Stock, determined pursuant to the
      provisions of Section 1.4 of the
Warrant.

            

    

     

    

     

    Desired
Conversion Date:   _______________

     

    
      
        
          
            
              
                	 	 	 	 
	
                         

                      	
                        By:

                      	 
      	 
	 	 	Print
      Name:	 
	 	 	 	 
	 	Dated:	 
       	 

              

            

          

        

      

     

     

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    EXHIBIT B

     

    ASSIGNMENT
FORM

     

    (To
assign the foregoing Warrant, execute this form and supply required
information.  Do not use this form to purchase shares.)

     

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

     

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 	 	 	 	 
	
                                        Name:

                                      	 	 	
                                          
      

                                      	 
	
                                         

                                      	 	 	
                                        (Please
      Print)

                                      	 
	 	 	 	 	 
	
                                        Address:

                                      	 	 	
                                         
      

                                      	 
	 	 	 	 	 
	Dated:
      _________  , 200_	 	 	      
                                        (Please
      Print)

                                      	 
	 	 	 	 	 
	Holder’s
      Signature:  ______________________________	 	 	 	 
	 	 	 	 	 
	Holder’s
      Address:  _______________________________	 	 	 	 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatever, unless this Warrant has previously been transferred in which case the
Holder named above must be the prior transferee and current
Holder.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]