Document:

stockoptionagreement.htm

    Exhibit
10.4                                           

     

    
 

    Agreement Concerning Stock
Options

     

    This
Agreement Concerning Stock Options (“Agreement”) is made and executed as of the
____ day of ______________, 2008, by and between ____________, an
individual (the “Option Holder”) and 1st
Independence Financial Group, Inc., a Delaware corporation (the
“Company”).

     

    WITNESSETH:

     

    WHEREAS,
the Company has adopted the 2004 Omnibus Stock Option Plan (the “Plan”);
and

     

    WHEREAS,
pursuant to the Plan, the Option Holder has been granted the right to purchase
______ shares of
1st
Independence Common Stock for an exercise price of $______ per share (the
“Options”); and

     

    WHEREAS,
the Company has entered into an Agreement and Plan of Merger, dated as of
February 26, 2008, with MainSource Financial Group, Inc., an Indiana corporation
(“MainSource”) and 1st
Independence Bank, Inc. (the “Merger Agreement”), pursuant to which, among other
things:  (i) the Company will merge with and into MainSource (the
“Merger”); (ii) MainSource will, for each 1st
Independence Stock Option outstanding at the Effective Time of the Merger, pay
cash equal to the amount determined pursuant to Section 2.01(b) of the Merger
Agreement; and (iii) the Company has agreed to use its best efforts to obtain a
written consent from each holder of a 1st
Independence Stock Option agreeing to the disposition of such option in
accordance with the provisions of Section 2.01 of the Merger Agreement
(unless such holder exercises said option prior to the Effective Time in
accordance with the terms thereof) and to accept the consideration provided for
in the Merger Agreement, if any, in exchange for the termination of such stock
options; and

     

    NOW
THEREFORE, in consideration of the recitals and representations contained herein
and other good and valuable consideration the receipt of which is hereby
acknowledged, the parties enter into this agreement as of the date first written
above and agree as follows:

     

    AGREEMENT

     

    1. Capitalized
terms used in this Agreement shall have the meanings set forth in the Merger
Agreement unless otherwise expressly defined herein.

     

    2. Pursuant
to Section 2.01(b) of the Merger Agreement, as of the Effective Time, the
Options for _________ shares of
1st
Independence Common Stock are to be converted into the right to receive a cash
payment in an amount equal to the product of (A) the sum of (i) (x) $5.475,
subject to adjustment as provided in Section 2.02 of the Merger Agreement, plus
(y) the product of the Average Share Price of MainSource Common Stock (as
defined below) multiplied by 0.881036 (which Exchange Ratio may be adjusted as
provided in the Merger Agreement), less (ii) the per share exercise price for
each share of 1st Independence Common Stock subject to such Options, multiplied
by (B) the number of shares of 1st Independence Common Stock

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

       

       subject
to such Options; provided, however, that the payer or its successor may withhold
from such cash payment those taxes required to be withheld by applicable law, if
any.  Upon the receipt of such payment, if any, the Options shall
terminate and be without further force and effect as of the Effective
Time.  The Average Share Price of MainSource Common Stock shall be
equal to the average per share closing prices of a share of MainSource Common
Stock as quoted on the Nasdaq Stock Market during the ten trading days preceding
the fifth (5th) calendar day preceding the Effective Time.

    

     

    3. If the
calculation of the payment due with respect to the Options described in Section
2 above results in a negative number, then the Option Holder agrees the Options
shall still terminate and be without further force and effect as of the
Effective Time, notwithstanding the fact that no payment will be made with
respect thereto pursuant to Section 2 above.  The Option Holder
acknowledges that MainSource and the Company are relying on the Option Holder’s
agreement to the foregoing in connection with the transactions contemplated in
the Merger Agreement and such reliance constitutes adequate consideration for
the termination of the Options.

     

    4. The
Option Holder consents to the actions to be taken with respect to the Options as
described above.  Should the Option Holder desire to exercise any
Options prior to the Effective Time, the Option Holder must do so in accordance
with the terms and conditions of the Options and the Plan and such exercise must
occur no later than the fifth business day prior to the Effective Time of the
Merger.  Any exercise of the Options shall correspondingly reduce the
number of shares subject to the Options and the cash payment, less applicable
withholdings, to otherwise be paid the Option Holder under Section 2 above, if
any.

     

    5. This
Agreement constitutes the entire understanding between the Company and the
Option Holder relating to the Options and their disposition in the Merger and
supersedes any matters to the contrary that may be contained in the Plan or any
other agreement or document relating to the Options.  However, this
Agreement does not otherwise supersede the terms and conditions of the Merger
Agreement, which shall otherwise be controlling.

     

    6. No
amendment or additions to this Agreement shall be binding unless made in writing
and signed by both parties hereto.

     

    7. If for
any reason the Merger is not consummated, this Agreement shall be null and void
and of no force or effect.

     

    8. This
Agreement shall be governed by the laws of the State of Indiana.

     

    [signature
page follows]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and
year first written above.

     

    

    “Company”

    

    1ST
INDEPENDENCE FINANCIAL GROUP, INC.

    

    

    

    By:______________________________

          N.
William White, President and CEO

    

    

    “Option
Holder”

    

    

    

    ______________________________________

    Signature

    

    

    

    ______________________________________

    Print
Name[Exhibit 4.2]

NO SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS WARRANT OR ANY INTEREST THEREIN SHALL BE MADE UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, WITH RESPECT TO SUCH TRANSACTION IS THEN IN EFFECT, OR
THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT
THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THAT ACT.

     This Warrant will be void after 5:00 p.m. New York Time on
October 3, 2012.

                ORDINARY SHARE PURCHASE WARRANT

WARRANT NO. 1

        To Subscribe for and Purchase Ordinary Shares of

               SIX DIAMOND RESORTS INTERNATIONAL

  (Transferability Restricted as Provided in Section 2 Below)

          THIS CERTIFIES THAT, for value received, FORDHAM
FINANCIAL MANAGEMENT, INC., or registered assigns, is entitled to
subscribe for and purchase from SIX DIAMOND RESORTS INTERNATIONAL
(f/k/a as Matador Acquisition Corporation), a Cayman Island
corporation (the "Company"), 542,839 fully paid and non-
                  -------
assessable ordinary shares of the Company at the Warrant Price
during the period hereinafter set forth, subject, however, to the
provisions and upon the terms and conditions hereinafter set
forth. This Warrant is one of an issue of the Company's Ordinary
Share purchase warrants (herein called the "Warrants"), identical
                                            --------
in all respects except as to the number of ordinary shares
purchasable thereunder, and issued pursuant to the Placement
Agent Agreement.

     1.   As used herein:

          (a)  "Ordinary Shares" shall initially refer to the
                ---------------
Company's Ordinary Shares, $.00320375  par value per share, as
more fully set forth in Section 5 hereof.

          (b)  "Warrant Price" shall be $1.75 which is subject to
                -------------
adjustment pursuant to Section 4 hereof.

          (c)  "Placement Agent" shall refer to FORDHAM FINANCIAL
                ---------------
MANAGEMENT, INC.

          (d)  "Placement Agent Agreement" shall refer to the
                -------------------------
Placement Agent Agreement dated as of August  15, 2007 between
the Company and the Placement Agent.

<PAGE>

          (e)  "Warrants" shall refer to warrants to purchase
                --------
Ordinary Shares issued to the Placement Agent or its designees by
the Company pursuant to the Placement Agent Agreement, as such
may be adjusted from time to time pursuant to the terms of
Section 4 and including any Warrants represented by any
certificate issued from time to time in connection with the
transfer, partial exercise, exchange of any Warrants or in
connection with a lost, stolen, mutilated or destroyed Warrant
certificate, if any, or to reflect an adjusted number of Ordinary
Shares.

          (f)  "Underlying Securities" or "Warrant Shares" shall
                ---------------------      --------------
refer to and include the Ordinary Shares issuable or issued upon
exercise of the Warrants.

          (g)  "Holders" shall mean the registered holder of such
                -------
Warrants or any issued Underlying Securities.

          (h)  "Memorandum" shall mean the Company's Confidential
                ----------
Private Placement Memorandum dated August 15, 2007, which is
being used (or was used) in connection with the private offering
of Series 1 Preference Shares pursuant to the Placement Agent
Agreement.

          (i)  "Placement Agent Securities" shall refer and mean
                --------------------------
the Warrants and Ordinary Shares issued and/or issuable upon
exercise of the Warrants.

          (j)  "Offering" means the private offering of the
                --------
Company's Series 1 Convertible Preference Shares in accordance
with the Memorandum.

          (k)  "Series 1 Preference Shares" means the Company's
                --------------------------
Series 1 Convertible Preference Shares, par value $.00320375 per
share.

     2.   Exercise and Payment. The purchase rights represented
by this Warrant may be exercised by the holder hereof, in whole
or in part at any time, and from time to time, during the period
commencing the date hereof (the "Commencement Date") until
                                 -----------------
October 3, 2012 (the "Warrant Exercise Term"), by the
                      ---------------------
presentation of this Warrant, with the purchase form attached
duly executed, at the Company's office (or such office or agency
of the Company as it may designate in writing to the Holder
hereof by notice pursuant to Section 14 hereof), and upon payment
by the Holder to the Company in cash, or by certified check or
bank draft of the Warrant Price for the Ordinary Shares.  At the
option of the Holder of this Warrant, the Warrant Price may be
paid through a cashless exercise of this Warrant.  The purchase
price of the Ordinary Shares issuable pursuant to the Warrants,
shall be payable in cash, by certified bank check and/or in lieu
of cash, a warrant holder may exercise its Warrants through a
cashless exercise. In this respect, at any time during the
Warrant Exercise Term, the Holder may, at its option, exchange
the Warrants, in whole or in part (a "Warrant Exchange"), into
                                      ----------------
the number of fully paid and non-assessable Warrant Shares
determined in accordance with this Section 2, by surrendering the
placement agent warrants which shall represent the right to
subscribe for and acquire the number of Warrant Shares (rounded
to the next highest integer) equal to (A) the number of Warrant
Shares specified by the Holder in its Notice of Exchange (the
"Total Share Number") less (B) the number of Warrant Shares equal
 ------------------
to the quotient obtained by dividing (i) the product of the Total
Share Number and the existing Exercise Price (i.e. $1.75 per
share) per Share by (ii) the Market Price (as hereafter defined)

                           2
<PAGE>

of an Ordinary Share.  All documentation and procedures to be
followed in connection with such "cashless exercise" shall be
approved in advance by the Company, which approval shall be
expeditiously provided and not unreasonably withheld.

     The Market Price of any Ordinary Shares to purchase shares
so surrendered shall be based upon the value of the Ordinary
Shares at the close of business on the day before exercise based
upon the following:  (i) if the Ordinary Shares are not listed
and traded upon a recognized securities exchange and there is no
report of stock prices with respect to the Ordinary Shares
published by a recognized stock quotation service, by the Board
of Directors of the Company in its reasonable discretion, it
being understood that the Market Price per share shall not be
less than the most recent sale of Ordinary Shares by the Company
in an arms-length transaction occurring no more than six (6)
months prior to the exercise in question; or (ii) if the Ordinary
Shares are not then listed and traded upon a recognized
securities exchange or quoted on the NASDAQ Stock Market, and
there are reports of stock prices by a recognized quotation
service, upon the basis of the last reported sale or transaction
price of such stock as reported by a recognized quotation
service, or, if there is no last reported sale or transaction
price on the day before exercise, then upon the basis of the mean
of the last reported closing bid and closing asked prices for
such stock on the date nearest preceding that day; or (iii) if
the Ordinary Shares shall be then listed and traded upon a
recognized securities exchange or quoted on the NASDAQ Stock
Market, upon the basis of the last reported sale or transaction
price at which Ordinary Shares were traded on such recognized
securities exchange or NASDAQ Stock Market or, if the Ordinary
Shares were not traded on the day before exercise, upon the basis
of the last reported sale or transaction price on the date
nearest preceding that date.  In the event the Company is
acquired for either stock, notes, securities, cash or any
combination thereof, the holders of the Warrants shall have the
option to use the per share buyout price as the Market Price of
the Ordinary Shares.  The Company agrees that the Holder of the
Warrants shall be deemed the record owner of such Ordinary Shares
as of the close of business on the date on which the Warrants
shall have been presented and payment made for such Ordinary
Shares as aforesaid. Certificates for the Ordinary Shares so
purchased shall be delivered to the Holder of the Warrants within
a reasonable time, not exceeding five (5) days, after the rights
represented by the Warrants shall have been so exercised. If the
Warrants shall be exercised in part only, the Company shall, upon
surrender of the Warrants for cancellation, deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the
balance of the Ordinary Shares which such Holder is entitled to
purchase hereunder.  Exercise in full of the rights represented
by the Warrants shall not extinguish the registration rights
under Section 9 hereof and Section 2 of the Placement Agent
Agreement.

     3.   Subject to the provisions of Section 8 hereof, (i) this
Warrant is exchangeable at the option of the Holder at the
aforesaid office of the Company for other Warrants of different
denominations entitling the Holder thereof to purchase in the
aggregate the same number of Ordinary Shares as are purchasable
hereunder; and (ii) this Warrant may, at the reasonable request
of the Holder, be reasonably divided or combined with other
Warrants which carry the same rights, in either case, upon
presentation hereof at the aforesaid office of the Company
together with a written notice, signed by the Holder hereof,
specifying the names and denominations in which new Warrants are
to be issued, and the payment of any transfer tax due in
connection therewith.

                           3
<PAGE>

     4.   Subject and pursuant to the provisions of this Section
4, the Warrant Price and number of Ordinary Shares subject to
this Warrant shall be subject to adjustment from time to time as
set forth hereinafter in this Section 4.
                              ---------

          (a)  In case the Company shall sell or issue either any
of its Ordinary Shares or any rights, options, warrants or
obligations or securities containing the right to subscribe for
or purchase any Ordinary Shares ("Options") or exchangeable for
                                  -------
or convertible into Ordinary Shares ("Convertible Securities"),
                                      ----------------------
at a price per share, as determined pursuant to Section 4(b),
less than the Warrant Price then in effect on the date of such
sale or issuance, then the number of Ordinary Shares purchasable
upon exercise of this Warrant shall be determined by multiplying
the number of Ordinary Shares theretofore purchasable upon
exercise of this Warrant by a fraction, (a) the numerator of
which shall be the number of Ordinary Shares outstanding on the
date of issuance of such Ordinary Shares, Options or Convertible
Securities and (b) the denominator of which shall be the number
of Ordinary Shares outstanding on the date prior to the date of
issuance of such Ordinary Shares or Convertible Securities plus
the number of Ordinary Shares which the aggregate consideration
received by the Company upon such issuance would purchase on such
date at the Warrant Price then in effect.

          (b)  The following provisions, in addition to other
provisions of this Section 4, shall be applicable in determining
                   ---------
any adjustment under Section 4(a):
                     ------------

               (1)  In case of the issuance or sale of Ordinary
Shares part or all of which shall be for cash, the cash
consideration received by the Company therefor shall be deemed to
be the amount of cash proceeds of such sale of shares less any
compensation paid or discount allowed in the sale, underwriting
or purchase thereof by underwriters or dealers or others
performing similar services or any expenses incurred in
connection therewith, plus the amounts, if any, determined as
provided in Section 4(b)(2).

               (2)  In case of the issuance or sale of Ordinary
Shares wholly or partly for a consideration other than cash, the
amount of the consideration other than cash received by the
Company for such shares shall be deemed to be the fair value of
such consideration as determined by a resolution adopted by the
Board of Directors of the Company acting in good faith, less any
compensation paid or incurred by the Company for any underwriting
of, or otherwise in connection with such issuance; provided,
                                                   --------
however, the amount of such consideration other than cash shall
-------
in no event exceed the cost thereof as recorded on the books of
the Company. In case of the issuance or sale of Ordinary Shares
(otherwise than upon conversion or exchange) together with other
stock or securities or other assets of the Company for a
consideration which is received for both such Ordinary Shares and
other securities or assets, the Board of Directors of the Company
acting in good faith shall determine what part of the
consideration so received is to be deemed to be the consideration
for the issuance of such Ordinary Shares, less any compensation
paid or incurred by the Company for any underwriting of, or
otherwise in connection with such issuance, provided, however,
the amount of such consideration other than cash shall in no
event exceed the cost thereof as recorded on the books of the
Company. In case at any time the Company shall declare a dividend
or make any other distribution upon any stock of the Company
payable in Ordinary Shares, then such Ordinary Shares issuable in
payment of such dividend or distribution shall be deemed to have
been issued or sold without consideration.

                           4
<PAGE>

               (3)  The price per share of any Ordinary Share
sold or issued by the Company (other than pursuant to Options or
Convertible Securities shall be equal to a price calculated by
dividing (A) the amount of the consideration received by the
Company, as determined pursuant to Section 4(b)(1) and
                                   ---------------
Section 4(b)(2), upon such sale of issuance by (B) the number of
---------------
Ordinary Shares sold or issued.

               (4)  In case the Company shall at any time after
the date hereof issue any Options or Convertible Securities the
following provisions shall apply in making any adjustment
pursuant to this Section 4:

                    (i) The price per share for which Ordinary
Shares are issuable upon the exercise of the Options or upon
conversion or exchange of the Convertible Securities shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the issuance of
such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to
the Company upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, by (B) the aggregate
maximum number of Ordinary Shares issuable upon the exercise of
such Option or upon the conversion or exchange of such
Convertible Securities.

                    (ii) In determining the price per share for
which Ordinary Shares are issuable upon exercise of the Options
or conversion or exchange of the Convertible Securities as set
forth in Section 4(b)(4)(i) and in computing any adjustment
         -----------------
pursuant to Section 4(a): (A) the aggregate maximum number of
Ordinary Shares issuable upon the exercise of such Convertible
Securities shall be considered to be outstanding at the time such
Options or Convertible Securities were issued and to have been
issued for such price per share as determined pursuant to Section
                                                          -------
4(b)(4)(i) and (B) the consideration for the issuance of such
----------
Options or Convertible Securities and the amount of additional
consideration payable to the Company upon exercise of such
Options or upon the conversion or exchange of such Convertible
Securities shall be determined in the same manner as the
consideration received upon the issuance or sale of Ordinary
Shares as provided in Section 4(b)(1) and Section 4(b)(2).
                      ---------------     ---------------

                    (iii)  On the expiration of such Options or
the termination of any right to convert or exchange any
Convertible Securities, the number of Ordinary Shares subject to
this Warrant shall forthwith be readjusted to such number of
Ordinary Shares as would have obtained had the adjustments made
upon the issuance of such Options or Convertible Securities been
made upon the basis of the delivery of only the number of
Ordinary Shares actually delivered upon the exercise of such
Options or upon conversion or exchange of such Convertible
Securities.

                    (iv) If the minimum purchase price per
Ordinary Share provided for in any Option or the rate at which
any Convertible Securities are convertible into or exchangeable
for Ordinary Shares shall change or a different purchase price or
rate shall become effective at any time or from time to time
(other than pursuant to any anti-dilution provisions of such
Options or Convertible Securities) then, upon such change
becoming effective, the number of Ordinary Shares subject to this
Warrant shall forthwith be increased or decreased to such number
of shares as would have been obtained had the adjustments made
upon the granting or issuance of such Options or Convertible

                           5
<PAGE>

Securities been made upon the basis of (l) the issuance of the
number of Ordinary Shares theretofore actually delivered upon the
exercise of such Options or upon the conversion or exchange of
such Convertible Securities, and the total consideration received
therefor, and (2) the granting or issuance at the time of such
change of any such Options or Convertible Securities then still
outstanding for the consideration, if any, received by the
Company therefor and to be received on the basis of such changed
price or rate of exchange or conversion.

               (5)  Except as otherwise specifically provided
herein the date of issuance or sale of Ordinary Shares shall be
deemed to be the date the Company is legally obligated to issue
such Ordinary Shares, or pursuant to paragraph 4(b)(4), the date
the Company is legally obligated to issue any Option or
Convertible Security.  In case at any time the Company shall take
a record date for the purpose of determining the Holders of
Ordinary Shares entitled (i) to receive a dividend or other
distribution payable in Ordinary Shares or in Options or
Convertible Securities or (ii) to subscribe for or purchase
Ordinary Shares, Options or Convertible Securities then such
record date shall be deemed to be the date of issue or sale of
the Ordinary Shares, Options or Convertible Securities deemed to
have been issued or sold upon the declaration of such dividend or
the making of such distribution or the granting of such right of
subscription or purchase, as the case may be.

               (6)  The number of Ordinary Shares outstanding at
any given time shall not include treasury shares and the
disposition of any such treasury shares shall be considered an
issue or sale of Ordinary Shares for the purposes of this Section
4.

               (7)  Anything hereinabove to the contrary
notwithstanding, no adjustment shall be made pursuant to Section
4(a) to the Warrant Price, or to the number of Underlying
Securities upon:

                    (i)  The issuance or sale by the Company of
any Ordinary Shares, Series 1 Preference Shares (or Ordinary
Shares issuable upon conversion of such Series 1 Preference
Shares), Options or Convertible Securities pursuant to (A) the
Warrants, (B) the Offering, (C) the Placement Agent Agreement,
(D) dividends on Series 1 Preference Shares payable in shares of
Series 1 Preference Shares (including the issuance of Ordinary
Shares issuable upon the conversion of such Series 1 Preference
Shares), (E) the conversion or exchange of any security which is
outstanding (and/or contemplated to be issued) on any closing
date of the Offering which is convertible or exchangeable into
Ordinary Shares, or (F) the exercise of any right, warrant or
option which is outstanding on or about any closing date of the
Offering or otherwise as described in the Memorandum (G) stock
option plans which have been approved by the Company's Board of
Directors (the "Board"), (H) any merger, acquisition, business
                -----
combination, joint ventures and/or technology and/or product
acquisitions by the Company and/or any of its subsidiaries,
(I) commercial leasing or debt financing transactions approved by
the Board with banks, equipment lessors or other financial
institutions.

                    (ii) The issuance or sale of Ordinary Shares
pursuant to the exercise of Options or conversion or exchange of
Convertible Securities hereinafter issued for which an adjustment
has been made (or was not required to be made) pursuant to the
provisions of Section 4 hereof.

                           6
<PAGE>

                    (iii)  The increase in the number of Ordinary
Shares subject to any Option or Convertible Security referred to
in subsections (i) and (ii) hereof pursuant to the provisions of
such Option or Convertible Securities designed to protect against
dilution.

          (c)  If the Company shall at any time subdivide its
outstanding Ordinary Shares by recapitalization, reclassification
or split-up thereof, the number of Ordinary Shares subject to
this Warrant immediately prior to such subdivision shall be
proportionately increased, and if the Company shall at any time
combine the outstanding Ordinary Shares by recapitalization,
reclassification or combination thereof, the number of Ordinary
Shares subject to this Warrant immediately prior to such
combination shall be proportionately decreased. Any such
adjustment to the Warrant Price pursuant to this Section shall
become effective at the close of business on the record date for
such recapitalization, reclassification, subdivision or
combination.

          (d)  If the Company after the date hereof shall
distribute to all of the holders of its Ordinary Shares any
securities or other assets (other than a distribution of Ordinary
Shares or a cash distribution made as a dividend payable out of
earnings or out of any earned surplus legally available for
dividends under the laws of the State of Delaware), the Board of
Directors of the Company shall be required to make such equitable
adjustment in the Warrant Price in effect immediately prior to
the record date of such distribution as may be necessary to
preserve to the Holder of this Warrant rights substantially
proportionate to those enjoyed hereunder by such Holder
immediately prior to the happening of such distribution. Any such
adjustment made in good faith by the Board of Directors shall be
final and binding upon the Holders and shall become effective as
of the record date for such distribution.

          (e)  No adjustment in the number of Ordinary Shares
subject to this Warrant shall be required under this Section 4
hereof unless such adjustment would require an increase or
decrease in such number of shares of at least 1% of the then
adjusted number of Ordinary Shares issuable upon exercise of this
Warrant, provided, however, that any adjustments which by reason
of the foregoing are not required at the time to be made shall be
carried forward and taken into account and included in
determining the amount of any subsequent adjustment; and provided
further, however, that in case the Company shall at any time
subdivide or combine the outstanding Ordinary Shares or issue any
additional Ordinary Shares as a dividend, said percentage shall
forthwith be proportionately increased in the case of a
combination or decreased in the case of a subdivision or dividend
of Ordinary Shares so as to appropriately reflect the same. If
the Company shall make a record of the Holders of its Ordinary
Shares for the purpose of entitling them to receive any dividend
or distribution and legally abandon its plan to pay or deliver
such dividend or distribution then no adjustment in the number of
Ordinary Shares subject to the Warrant shall be required by
reason of the making of such record.

          (f) Whenever the number of Ordinary Shares purchasable
upon the exercise of this Warrant is adjusted, as provided in
Section 4, the Warrant Price shall be adjusted (to the nearest
one tenth of a cent by multiplying such Warrant Price immediately
prior to such adjustment by a fraction, the numerator of which
shall be the number of Ordinary Shares purchasable upon the
exercise of this Warrant immediately prior to such adjustment,
and the denominator of which shall be the number of Ordinary
Shares so purchasable immediately thereafter.

                           7
<PAGE>

          (g)  In case of any reclassification of the outstanding
Ordinary Shares (other than a change covered by Section 4(c)
hereof or which solely affects the par value of such Ordinary
Shares) or in the case of any merger or consolidation of the
Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or
capital reorganization of the outstanding Ordinary Shares), or in
the case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an
entirety in connection with which the Company is dissolved, the
Holder of this Warrant shall have the right thereafter (until the
expiration of the right of exercise of this Warrant) to receive
upon the exercise hereof, for the same aggregate Warrant Price
payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property
receivable upon such reclassification, capital reorganization,
merger or consolidation, or upon the dissolution following any
sale or other transfer, by a Holder of the number of Ordinary
Shares of the Company obtainable upon the exercise of this
Warrant immediately prior to such event; and if any
reclassification also results in a change in Ordinary Shares
covered by Section 4(c), the such adjustment shall be made
pursuant to both this Section 4(g) and Section 4(c). The
provisions of this Section 4(g) shall similarly apply to
successive re-classifications, or capital reorganizations,
mergers or consolidations, sales or other transfers.

          (h)  (1)  Upon occurrence of each event requiring an
adjustment of the Warrant Price and of the number of Ordinary
Shares obtainable upon exercise of this Warrant in accordance
with, and as required by, the terms of this Section 4, the
Company shall forthwith employ a firm of certified public
accountants (who may be the regular accountants for the Company)
who shall compute the adjusted Warrant Price and the adjusted
number of Ordinary Shares purchasable at such adjusted Warrant
Price by reason of such event in accordance with the provisions
of this Section 4. The Company shall mail forthwith to the Holder
of this Warrant a copy of such computation which shall be
conclusive and shall be binding upon such Holder unless contested
by such Holder by written notice to the Company within thirty
(30) days after receipt thereof by such Holder.

               (2)  In case the Company after the date hereof
shall propose (i) to pay any dividend payable in stock to the
Holders of its Ordinary Shares or to make any other distribution
(other than cash dividends) to the Holders of its Ordinary
Shares, (ii) grant rights to subscribe to or purchase any
additional shares of any class or any other rights or options, or
(iii) to effect any reclassification of Ordinary Shares (other
than a reclassification involving merely the subdivision or
combination of outstanding Ordinary Shares) or (iv) any capital
reorganization or any consolidation or merger, or any sale,
transfer or other disposition of its property, assets and
business substantially as an entirety, or the liquidation,
dissolution or winding up of the Company, then in each such case,
the Company shall obtain the computation described in Section
                                                      -------
4(h)(1) hereof and if an adjustment to the Warrant Price is
-------
required under this Section 4, the Company shall notify the
                    ---------
registered Holder of this Warrant of such proposed action, which
shall specify the record date for any such action or if no record
date is established with respect thereto, the date on which such
action shall occur or commence, or the date of participation
therein by the Holders of Ordinary Shares if any such date is to
be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect
of such action on the Warrant Price and the number, or kind, or
class of shares or other securities or property obtainable upon
exercise of this Warrant after giving affect to any adjustment
which will be required as a result of such action.  Such notice
shall be given at least ten (10) days prior to the record date

                           8
<PAGE>

for determining Holders of the Ordinary Shares for purposes of
any such action, and in the case of any action for which a record
date is not established then such notice shall be mailed at least
ten (10) days prior to the taking of such proposed action.

               (3)  Failure to file any certificate or notice or
to mail any notice, or any defect in any certificate or notice,
or any defect in any certificate or notice, pursuant to this
Section 4(h), shall not effect the legality or validity of the
adjustment in the Warrant Price or in the number, or kind, or
class or shares or other securities or property obtainable upon
exercise of this Warrant or of any transaction giving rise
thereto.

          (i)  The Company shall not be required to issue
fractional Ordinary Shares upon any exercise of this Warrant.  As
to any final fraction of an Ordinary Share which the Holder of
this Warrant would otherwise be entitled to purchase upon such
exercise, the Company shall pay the Holder the cash equivalent of
such fraction of an Ordinary Share.

          (j)  Irrespective of any adjustments pursuant to this
Section 4 in the Warrant Price or in the number, or kind, or
class of shares or other securities or other property obtainable
upon exercise of this Warrant, this Warrant may continue to
express the Warrant Price and the number of Ordinary Shares
obtainable upon exercise at the same price and number of Ordinary
Shares as are stated herein.

     5.   For the purposes of this Warrant, the terms "Ordinary
                                                       --------
Shares" or "Warrant Shares" shall mean (i) the class of stock
------      --------------
designated as Ordinary Shares, $.00320375 par value, of the
Company on the date set forth on the first page hereof or (ii)
any other class of stock resulting from successive changes or
reclassifications of such Ordinary Shares consisting solely of
changes in par value, or from no par value to par value, or from
par value to no par value. If at any time, as a result of an
adjustment made pursuant to Section 4, the securities or other
                            ---------
property obtainable upon exercise of this Warrant shall include
shares or other securities of the Company other than Ordinary
Shares or securities of another corporation or other property,
thereafter, the number of such other shares or other securities
or property so obtainable shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Ordinary Shares
contained in Section 4 and all other provisions of this Warrant
             ---------
with respect to Ordinary Shares shall apply on like terms to any
such other shares or other securities or property. Subject to the
foregoing, and unless the context requires otherwise, all
references herein to Ordinary Shares shall, in the event of an
adjustment pursuant to Section 4, be deemed to refer also to any
                       ---------
other securities or property then obtainable as a result of such
adjustments.

     6.   The Company covenants and agrees that:

          (a) During the period within which the rights
represented by the Warrant may be exercised, the Company shall,
at all times, reserve and keep available out of its authorized
capital stock, solely for the purposes of issuance upon exercise
of this Warrant, such number of its Ordinary Shares as shall be
issuable upon the exercise of this Warrant; and if at any time
the number of authorized Ordinary Shares shall not be sufficient
to effect the exercise of this Warrant, the Company will take
such corporate action as may be necessary to increase its
authorized but unissued Ordinary Shares to such number of shares
as shall be sufficient for such purpose; the Company shall have

                           9
<PAGE>

analogous obligations with respect to any other securities or
property issuable upon exercise of this Warrant;

          (b)  All Ordinary Shares which may be issued upon
exercise of the rights represented by this Warrant will, upon
issuance be validly issued, fully paid, nonassessable and free
from all taxes, liens and charges with respect to the issuance
thereof; and

          (c)  All original issue taxes payable in respect of the
issuance of Ordinary Shares upon the exercise of the rights
represented by this Warrant shall be borne by the Company but in
no event shall the Company be responsible or liable for income
taxes or transfer taxes upon the transfer of any Warrants.

     7.   Until exercised, this Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a
stockholder of the Company.

     8.   In no event shall this Warrant be sold, transferred,
assigned or hypothecated except in conformity with the applicable
provisions of the Act of 1933, as amended and as then in force
(the "Act"), or any similar Federal statute then in force, and
all applicable "Blue Sky" laws.

     9.   The Holder of this Warrant, by acceptance hereof,
agrees that, prior to the disposition of this Warrant or of any
Ordinary Shares theretofore purchased upon the exercise hereof,
under circumstances that might require registration of such
securities under the Act, or any similar Federal statute then in
force, such Holder will give written notice to the Company
expressing such Holder's intention of effecting such disposition,
and describing briefly such Holder's intention as to the
disposition to be made of this Warrant and/or the securities
theretofore issued upon exercise hereof.  Such notice shall be
given at least ten (10) days prior to the date of such
disposition.  Promptly upon receiving such notice, the Company
shall present copies thereof to its counsel and the provisions of
the following subdivisions shall apply:

          (a)  If, in the opinion of such counsel, the proposed
disposition does not require registration under the Act or
qualification pursuant to Regulation A promulgated under the Act,
or any similar Federal statute then in force, of this Warrant
and/or the securities issuable or issued upon the exercise of
this Warrant, the Company shall, as promptly as practicable,
notify the Holder hereof of such opinion, whereupon such Holder
shall be entitled to dispose of this Warrant and/or such Ordinary
Shares theretofore issued upon the exercise hereof, all in
accordance with the terms of the notice delivered by such Holder
to the Company.

          (b)  If, in the opinion of such counsel, such proposed
disposition requires such registration or qualification under the
Act, or similar Federal statute then in effect, of this Warrant
and/or the Ordinary Shares issuable or issued upon the exercise
of this Warrant, the Company shall promptly give written notice
to the Holder of the Warrant, at the address thereof shown on the
books of the Company.

          It should be noted that Section 2 of the Placement
                                  ---------
Agent Agreement provides for the following registration rights:

                           10
<PAGE>

               The Placement Agent Warrants shall also
          contain one demand registration right and
          unlimited piggy-back registration rights with
          respect to the Warrant Shares, which right shall
          become effective after the expiration of 12 months
          after the completion of the Minimum Offering, and
          which right shall terminate 48 months thereafter.
          The demand registration right of the Warrant
          Shares, may be exercised by either the Placement
          Agent or a majority of the then holders of the
          Placement Agent Warrants and/or Warrant Shares.
          Any exercise of the demand and/or piggyback
          registration rights shall be at the sole expense
          of the Company except that the Company shall not
          be responsible for the sales or underwriters fees
          or commissions relating to the sale of the Warrant
          Shares.

     10.  The Company agrees to indemnify, defend and hold
harmless the holder of this Warrant, or of Underlying Securities
issuable or issued upon the exercise hereof, from and against any
claims and liabilities caused by any untrue statement of a
material fact, or omission to state a material fact required to
be stated, in any such registration statement, prospectus,
notification or offering circular under Regulation A, except
insofar as such claims or liabilities are caused by any such
untrue statement or omission based on information furnished in
writing to the Company by such holder, or by any other such
holder affiliated with the holder who seeks indemnification, as
to which the holder hereof, by acceptance hereof, agrees to
indemnify, defend and hold harmless the Company.

     11. If this Warrant, or any of the Underlying Securities
issuable pursuant hereto, require qualification or registration
with, or approval of, any governmental official or authority
(other than registration under the Act, or any similar Federal
statute at the time in force), before such shares may be issued
on the exercise hereof, the Company, at its expense, will take
all requisite action in connection with such qualification, and
will use its best efforts to cause such securities to be duly
registered or approved, as may be required.

     12. This Warrant is exchangeable, upon its surrender by the
registered holder at such office or agency of the Company as may
be designated by the Company, for new Warrants of like tenor,
representing, in the aggregate, the right to subscribe for and
purchase the number of Ordinary Shares that may be subscribed for
and purchased hereunder, each of such new Warrants to represent
the right to subscribe for and purchase such number of Ordinary
Shares as shall be designated by the registered holder at the
time of such surrender.  Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of any such loss, theft or destruction,
upon delivery of a bond of indemnity satisfactory to the Company,
or in the case of such mutilation, upon surrender or cancellation
of this Warrant, the Company will issue to the registered holder
a new Warrant of like tenor, in lieu of this Warrant,
representing the right to subscribe for and purchase the number
of Ordinary Shares that may be subscribed for and purchased
hereunder. Nothing herein is intended to authorize the transfer
of this Warrant except as permitted by applicable law.

     13.  Every Holder hereof, by accepting the same, agrees with
any subsequent Holder hereof and with the Company that this
Warrant and all rights hereunder are issued and shall be held

                           11
<PAGE>

subject to all of the terms, conditions, limitations and
provisions set forth in this Warrant, and further agrees that the
Company and its transfer agent may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for all
purposes and shall not be affected by any notice to the contrary.

     14.  All notices required hereunder shall be given by
first-class mail, postage prepaid; if given by the holder hereof,
addressed to the Company at 700 Gemini, Suite 100, Houston, TX
77056, with a copy to Morse & Morse PLLC, 1400 Old Country Road,
Westbury, New York 11590, or such other address as the Company
may designate in writing to the holder hereof; and if given by
the Company, addressed to the holder at the address of the holder
shown on the books of the Company.

     15.  The Company will not merge or consolidate with or into
any other corporation, or sell or otherwise transfer its property
assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or
consolidation (if not the Company), or such transferee
corporation, as the case may be, shall expressly assume, by
supplemental agreement satisfactory in form to the Placement
Agent, the due and punctual performance and observance of each
and even covenant and condition of this Warrant to be performed
and observed by the Company.

     16.  (a)  The Placement Agent is an accredited investor as
such term is defined in the Securities Act of 1933, as amended
(the "Act"), or Regulation D promulgated by the Securities and
      ---
Exchange Commission thereunder, and under applicable state
securities laws.  The Placement Agent is an accredited investor
because it meets one or more of the following criteria:

               (1)  It is a bank as defined in Section 3(a)(2) of
the Act, whether acting in its individual or fiduciary capacity.

               (2)  It is a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act, whether
acting in its individual or fiduciary capacity.

               (3)  It is a broker or dealer registered under
Section 15 of the Securities Exchange Act of 1934, as amended.

               (4)  It is an insurance company as defined in
Section 2(13) of the Act.

               (5)  It is an investment company registered under
the Investment Company Act of 1940, as amended, or a business
development company as defined in section 2(a)(48) of that Act.

               (6)  It is a Small Business Investment Company
licensed by the U.S. Small Business Administration under section
301(c) or (d) of the Small Business Investment Act of 1958.

                           12
<PAGE>

               (7)  It is a plan established by a state, its
political subdivisions or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its
employees, and that such plan has total assets in excess of
$5,000,000.

               (8)  (i) It is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974, with the investment decisions being made by a plan
fiduciary, as defined in section 3(21) of such Act, and the plan
fiduciary is either a bank, insurance company, or registered
investment adviser, or (ii) it is an employee benefit plan that
has total assets in excess of $5,000,000, or (iii) it is a self-
directed employee benefit plan and the investment decisions are
made solely by persons that are accredited investors.

               (9)  It is a private business development company
as defined in section 202(a)(22) of the Investment Advisors Act
of 1940, as amended.

               (10) It is an organization described in Section
501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.

               (11) It is a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of Regulation D.

               (12) It is an entity in which all the equity
owners are accredited investors.

          (a)  The Placement Agent has no present intention to sell the
Warrant that it received as compensation in the Offering, nor a
present arrangement (whether or not legally binding) or intention
to effect any distribution of any part of the Warrant, or the
Underlying Securities, to or through any person or entity;
provided, however, that by making the representations herein, the
--------  -------
Placement Agent does not agree to hold the Warrant or the
Underlying Securities for any minimum or other specific term and
reserves the right to dispose of the Warrant or the Underlying
Securities at any time in accordance with Federal and state
securities laws applicable to such disposition.  The Placement
Agent acknowledges that it (i) has such knowledge and experience
in financial and business matters such that the Placement Agent
is capable of evaluating the merits and risks of its investment
in the Company, (ii) is able to bear the financial risks
associated with an investment in the Warrant and the Underlying
Securities and (iii) has been given full access to such records
of the Company and to the officers of the Company and the
Subsidiaries as it has deemed necessary or appropriate to conduct
its due diligence investigation.

(b)  The Placement Agent understands that the Warrants and the
Underlying Securities must be held indefinitely unless such
securities are registered under the Act or an exemption from
registration is available.  The Placement Agent acknowledges that
it is familiar with Rule 144 under the Act ("Rule 144"), and that
                                             --------
the Placement Agent has been advised that Rule 144 permits
resales only under certain circumstances.  The Placement Agent
understands that to the extent that Rule 144 is not available,
the Placement Agent will be unable to sell any Warrants or
Underlying Securities without either registration under the Act
or the existence of another exemption from such registration
requirement.

                           13
<PAGE>

(c)  The Placement Agent understands that the Warrants and the
Underlying Securities are being offered and sold in reliance on a
transactional exemption from the registration requirements of
federal and state securities laws and the Company is relying upon
the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Placement
Agent set forth herein in order to determine the applicability of
such exemptions and the suitability of the Placement Agent to
acquire the Warrants and the Underlying Securities.  The
Placement Agent understands that no United States federal or
state agency or any government or governmental agency has passed
upon or made any recommendation or endorsement of the Warrants or
the Underlying Securities.

(d)  The Placement Agent acknowledges that the Warrants and the
Underlying Securities were not offered to the Placement Agent by
means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or
other communication published in any newspaper, magazine, or
similar media, or broadcast over television or radio, or (ii) any
seminar or meeting to which the Placement Agent was invited by
any of the foregoing means of communications.  The Placement
Agent, in making the decision to purchase the Warrants and the
Underlying Securities, has relied upon independent investigation
made by it and has not relied on any information or
representations made by third parties.

     17.  The validity, construction and enforcement of this
Warrant shall be governed by the laws of the State of New York
and jurisdiction is hereby vested in the Courts of said State in
the event of the institution of any legal action under this
Warrant.

                           14
<PAGE>

     IN WITNESS WHEREOF, SIX DIAMOND RESORTS INTERNATIONAL has
caused this Warrant to be signed by its duly authorized officers
under its corporate seal, on October 3, 2007.

                              SIX DIAMOND RESORTS INTERNATIONAL

                              By:______________________________
                                 Frank DeLape, Chairman

<PAGE>

                         PURCHASE FORM
                         To Be Executed
     Upon Exercise of Warrant, except for Cashless Exercise

The undersigned hereby exercises the right to purchase _______
Ordinary Shares evidenced by the within Warrant No. ___,
according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full.  The undersigned requests
that certificates for such shares shall be issued in the name set
forth below.

Dated:___________________, 200__
                                        Signature

                                        -----------------------------
                                        Print Name of Signatory

                                        Name to whom certificates are
                                        to be issued if different
                                        from above

                                        Address:

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

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

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

                                        -----------------------------
                                        Social Security No.
                                        or other identifying number

     If said number of shares shall not be all the shares
purchasable under the within Warrant, the undersigned requests
that a new Warrant for the unexercised portion shall be
registered in the name of:

                                        -----------------------------
                                        (Please Print)

                                        Address:

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

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

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

                                        -----------------------------
                                        Social Security No.
                                        or other identifying number

                                        -----------------------------
                                                Signature

<PAGE>

                          PURCHASE FORM
                      To Be Executed Upon
               Cashless Exercise of this Warrant

     The undersigned hereby exercises the right to purchase
_______ Ordinary Shares evidenced by the within Warrant No. __
according to the terms and conditions thereof and the undersigned
hereby submits warrants to purchase ________ Ordinary Shares as
evidenced by the within Warrant No. ___ to be in full payment of
the _______ Ordinary Shares exercised and purchased herein.  The
undersigned represents that certificates for such purchased
shares shall be issued in the name set forth below:

Dated:___________________, 200__
                                        Signature

                                        -----------------------------
                                        Print Name of Signatory

                                        Name to whom certificates are
                                        to be issued if different
                                        from above

                                        Address:

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

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

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

                                        -----------------------------
                                        Social Security No.
                                        or other identifying number

     If said number of shares shall not be all the shares
purchasable under the within Warrant, the undersigned requests
that a new Warrant for the unexercised portion shall be
registered in the name of :

                                        -----------------------------
                                        (Please Print)

                                        Address:

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

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

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

                                        -----------------------------
                                        Social Security No.
                                        or other identifying number

                                        -----------------------------
                                                Signature

<PAGE>

                      FORM OF ASSIGNMENT

     FOR VALUE RECEIVED__________________________, hereby
Sells, assigns and transfers to ____________________ , Soc. Sec.
No._______________________
[____________] the within Warrant, together with all rights,
title and interest therein, and does hereby irrevocably
constitute and appoint _____________________ attorney to transfer
such Warrant on the register of the within named Company, with
full power of substitution.

                                        -----------------------------
                                                Signature

Dated:____________, 200__

Signature Guaranteed:

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

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