Common use of Company Representations, Warranties and Covenants Clause in Contracts

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrantswarrants and covenants (and acknowledges that the Subscriber is relying on such representations, covenants warranties and agrees as followscovenants) that, at the Closing Date: 3.1. All Warrant Shares which are issued upon a. the exercise Company is a valid and subsisting corporation duly incorporated and in good standing under the laws of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issueits jurisdiction of incorporation; 3.2. During b. the period within Company is duly registered and licensed to carry on business in the jurisdictions in which this Warrant may be exercised, it carries on business or owns property where so required by the laws of that jurisdiction; c. the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a reserve or set aside sufficient number of shares of common stock in its treasury to issue the Common Stock to provide for the Shares issuable upon exercise of the rights represented by this WarrantWarrants, and all such Securities will upon payment of the recited consideration and issuance be duly and validly issued as fully paid and non-assessable; 3.3. The Company will, from time to time, take all such action as may be required to assure that d. the par value per share issue and sale of the Warrant Shares is at all times equal to or less than Units by the then effective Exercise Price; 3.4. The Company shall notdoes not and will not conflict with, by amendment of its certificate of incorporation or through any reorganizationand does not and will not result in a breach of, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of its incorporating documents or any agreement or instrument to which the Company is a party; e. the Company has complied and will comply fully with the requirements of all applicable corporate and securities laws in all matters relating to the offering of the Securities; f. except as disclosed in the reports the Company files with the United States Securities and Exchange Commission (“SEC”), there are no legal or governmental actions, suits, proceedings or investigations pending or, to the Company’s knowledge, threatened, to which the Company is or may be a party or of which property owned or leased by the Company is or may be the subject, or related to environmental, title, discrimination or other matters, which actions, suits, proceedings or investigations, individually or in the aggregate, could have a material adverse effect on the Company; g. except as disclosed in the reports the Company files with the SEC, there are no judgments against the Company which are unsatisfied, nor is the Company subject to any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body; h. this WarrantSubscription Agreement has been or will be by the Closing Date, duly authorized by all necessary corporate action on the part of the Company, and shall at all times in good faith assist in performing the Company has full corporate power and giving effect authority to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairmentundertake this offering; 3.5. This Warrant i. this Subscription Agreement has been duly authorized authorized, executed and executed delivered by the Company and is constitutes a valid and legally binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or and other laws of general application relating to or affecting the enforcement rights of creditors’ rights; 3.6. The execution creditors generally and delivery except as limited by the application of this Warrant equitable principles when equitable remedies are notsought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law; j. subject to the accuracy of the representations and warranties of the Subscriber contained in this Subscription Agreement, the offer, sale and issuance of the Warrant Shares upon exercise Securities as contemplated by this Subscription Agreement are exempt from the registration requirements of the U.S. Securities Act, from the registration or qualifications requirements of the state securities or “blue sky” laws and regulations of any applicable state or other applicable jurisdiction; k. the Company’s shares of common stock trade on the Financial Industry Regulatory Authority’s Over the Counter Bulletin Board (the “OTCBB”); l. no order ceasing, halting or suspending trading in securities of the Company nor prohibiting the sale of such securities has been issued to and is outstanding against the Company or its directors, officers or promoters, and, to the best of the Company’s knowledge, no investigations or proceedings for such purposes are pending or threatened; m. the Company is a "reporting issuer" under section 12 of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and is not in default of any of the requirements of the 1934 Act; n. as of their respective filing dates, each report, schedule, registration statement and proxy filed by the Company with the SEC (each, an “SEC Report” and collectively, the “SEC Reports”) (and if any SEC Report filed prior to the date of this Warrant Subscription Agreement was amended or superseded by a filing prior to the date of this Subscription Agreement, then also on the date of filing of such amendment or superseding filing), where required, were prepared in all material respects in accordance with the terms hereof will not requirements of the U.S. Securities Act, or the 1934 Act, as the case may be, in violation of and the Company’s certificate of incorporation or bylaws, do not rules and will not contravene any law, governmental rule or regulation, judgment or order regulations promulgated under such Acts applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which such SEC Reports; o. the Company is a party or by which it is bound or require not an "investment company" within the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock meaning of the Investment Company shall consist Act of 1940; p. neither the Company nor any of its affiliates, nor any person acting on its or their behalf (ai) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and has made or will make any “directed selling efforts” (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares as such term is defined in Regulation S of the Company have been duly authorized U.S. Securities Act) in the United States, or (ii) has engaged in or will engage in any form of “general solicitation” or “general advertising” (as such terms are defined in Rule 502 (c) under Regulation D of the U.S. Securities Act) in the United States with respect to offers or sales of the Securities; q. the warranties and validly issued, representations in this section are true and are fully paid correct and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities lawswill remain so as of the Closing Date.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as followsfollows as of the date hereof and as of the Closing: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed has a valid existence and the authorization to transact business as a corporation under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not individually or in the aggregate have a material adverse effect on the business, results of operations or financial condition of the Company (a “Material Adverse Effect”). (2) The Company does not have any subsidiaries. (3) The execution, delivery and performance of this Agreement by the Company and is the consummation of the transactions contemplated hereby are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and this Agreement, when duly executed and delivered by the parties hereto, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to except as enforcement hereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium reorganization or other similar laws of general application or court decisions affecting the enforcement of creditors’ rights;rights generally and except as enforcement hereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 3.6. (4) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated by this Agreement, the Investor Shares will be validly issued, fully paid and nonassessable, and will conform to the description of the Common Stock, the Series A Preferred Stock and Warrants contained in the Prospectus. (5) The Company has reserved from its duly authorized capital stock a number of shares of Common Stock sufficient for issuance of all shares of Common Stock issuable upon the conversion of all shares of Series A Preferred Stock (the “Conversion Shares”) and the exercise of all of the Warrants (the “Warrant Shares”). (6) The execution and delivery of this Warrant are Agreement do not, and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not benot, in violation (i) violate the Certificate of Incorporation (as amended to date) of the Company or the By-Laws (as amended to date) of the Company’s certificate , (ii) result in a breach or violation of incorporation any of the terms or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company is a party or by which it the Company is bound or require the consent to which any of its properties or approval assets are subject, or (iii) result in a violation of, or failure to be in compliance with, any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental, regulatory or self-regulatory agency or body having jurisdiction over the giving Company or any of notice toits properties or assets, except where such breach, violation, default or the failure to be in compliance would not individually or in the aggregate have a Material Adverse Effect or adversely affect the ability of the Company to issue and sell the Investor Shares; and no consent, approval, authorization, order, registration, filing or qualification of or with any such court or governmental, regulatory or self-regulatory agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement or the issuance of the Investor Shares, except for the filing of a Form 8-K, the registration or filing of the Prospectus Supplement, the filing of the Certificate of Designations (which is required to be filed and effective prior to the Closing in accordance with or Section 3(b)(3) hereof), the taking filing of any action in respect a Notification of or byListing of Additional Shares with The NASDAQ Stock Market LLC, any federal, state or local government authority or agency (other than and for such consents, approvals, noticesauthorizations, actions registrations, filings or filings qualifications as have already been obtained may be required under state securities or made); and“blue sky” laws. 3.7(7) The Company meets the requirements for use of Form S-3 under the Securities Act. The authorized capital stock Registration Statement, which covers the Investor Shares, the Conversion Shares and the Warrant Shares, including a form of prospectus and such amendments or supplements to such Registration Statement as may have been required prior to the date of this Agreement, has been prepared by the Company under the provisions of the Securities Act, has been filed with the Commission, has become effective and filed with the Commission and incorporates by reference documents which the Company has filed in accordance with the provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has prepared a Prospectus Supplement to the prospectus included in the Registration Statement referred to above, setting forth the terms of the offering and sale of the Investor Shares, the Conversion Shares and the Warrant Shares and additional information concerning the Company and its business and will promptly file the Prospectus Supplement with the Commission pursuant to Rule 424(b). No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto, or any part thereof, has been issued and served on the Company, and no proceedings for that purpose are pending or, to the knowledge of the Company, threatened by the Commission. The form of prospectus included in the Registration Statement as of the date hereof, as amended or supplemented from time to time (including the Prospectus Supplement), is referred to herein as the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall consist be deemed to refer to and include the documents incorporated (or deemed to be incorporated) by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or Prospectus shall be deemed to refer to and include the filing after the execution hereof of (a) 130,000,000 any document with the Commission deemed to be incorporated by reference therein. As of the close of business on April 15, 2011, at least a number of shares of Common Stock, Series A Preferred Stock and Warrants equal to the number of Investor Shares, Conversion Shares and Warrant Shares were available for issuance pursuant to the Registration Statement, which [29,070,786] shares are issued permits the issuance of the Investor Shares, the Conversion Shares and outstandingthe Warrant Shares in the manner contemplated by this Agreement. Each part of the Registration Statement, when such part became or becomes effective, and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and at the date hereof and the date of the Closing, did or will in all material respects comply with all applicable provisions of the Securities Act and the Exchange Act. Each part of the Registration Statement, when such part became or becomes effective, did not or will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission, did not or will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing representations and warranties in this Section 4(b)(6) do not apply to any statements or omissions made in reliance on and in conformity with information relating to the Investors furnished in writing to the Company by the Investors specifically for inclusion in the Registration Statement or Prospectus or any amendment or supplement thereto. (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued 8) The consolidated financial statements and outstanding. All issued and outstanding shares financial schedules of the Company included or incorporated by reference in the Registration Statement and the Prospectus have been duly authorized prepared in conformity with generally accepted accounting principles (except, with respect to the unaudited consolidated financial statements, for the footnotes and validly issuedsubject to customary audit adjustments) applied on a consistent basis, are consistent in all material respects with the books and records of the Company, and accurately present in all material respects the consolidated financial position, results of operations and cash flow of the Company as of and for the periods covered thereby. (9) The Company has not sustained since the respective dates of the latest audited financial statements included in the Registration Statement and Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as disclosed in or contemplated by the Registration Statement and Prospectus; and, since the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been any material change in the capital stock or long-term debt of the Company. (10) Other than as disclosed in the Prospectus, there are fully paid no legal, governmental or regulatory proceedings pending to which the Company is a party or of which any material property of the Company is the subject which, taking into account the likelihood of the outcome, the damages or other relief sought and nonassessableother relevant factors, would individually or in the aggregate reasonably be expected to have a Material Adverse Effect or adversely affect the ability of the Company to issue and sell the Investor Shares, and no such shares proceedings are threatened in writing to the Company or, to the Company’s knowledge, have been issued contemplated by governmental or regulatory authorities or threatened by others. (11) The Company has title to all the real property, and owns all other properties and assets, reflected as owned in compliance with the financial statements included in the Registration Statement and the Prospectus, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those, if any, reflected in such financial statements or disclosed in the Company’s Commission filings or exhibits thereto, or which are not material to the Company. The Company holds its respective leased real and personal properties under valid and binding leases, except where the failure to do so would not reasonably be expected to individually or in the aggregate have a Material Adverse Effect. (12) The Company has filed all applicable necessary federal and state income and franchise tax returns and has paid all taxes shown as due thereon or has filed all necessary extensions, and there is no tax deficiency that has been, or to the knowledge of the Company could reasonably be expected to be, asserted against the Company or any of its properties or assets that would in the aggregate or individually reasonably be expected to have a Material Adverse Affect. (13) There are no holders of securities lawsof the Company having preemptive rights to purchase Common Stock. There are no holders or beneficial owners of securities of the Company having rights to registration thereof whose securities have not been previously registered or who have not waived such rights with respect to the registration of the Company’s securities on the Registration Statement, except where the failure to obtain such waiver would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect. (14) The Company is not, and does not intend to conduct its business in a manner in which it would become, an “investment company” as defined in Section 3(a) of the Investment Company Act of 1940, as amended.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing in good standing under the laws of the jurisdiction of its incorporation, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms. (3) The Investor Shares, subject Investor Warrants and Warrant Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby (and, as to applicable bankruptcythe Warrant Shares, insolvencyas contemplated by the Investor Warrants), reorganizationthe Investor Shares, moratorium or other laws Investor Warrants and Warrant Shares will be validly issued, fully paid and nonassessable, free of general application affecting preemptive rights and free from all taxes, liens, charges and security interests in respect of the enforcement of creditors’ rights;issuance thereof. 3.6. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable (i) violate the Articles of Organization (as amended to date) of the Company, and do not and will not conflict with or contravene the By-Laws (as amended to date) of the Company, or (ii) result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets other than a breach or violation that would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Company (a “Material Adverse Effect”); and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice tothe Investor Shares, the registration or filing with Investor Warrants, the Warrant Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as may be required under Federal or state securities or “blue sky” laws or, with respect to requirements applicable to the Investor and except where the failure to obtain such consents, approvals, authorizations, registrations or qualifications would not reasonably be expected to have already been obtained or made); anda Material Adverse Effect. 3.7. (5) The authorized capital stock balance sheets of the Company shall consist of (a) 130,000,000 shares of Common Stockfor the twelve months ended December 31, of which [29,070,786] shares 2007 have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, are issued consistent in all material respects with the books and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares records of the Company have and accurately present in all material respects the financial position of the Company and its subsidiaries as of December 31, 2007. There has been duly authorized and validly issuedno material adverse change in the financial condition or business or results of operations of the Company or its subsidiaries since December 31, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws2007.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing in good standing under the laws of the jurisdiction of its incorporation, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms. (3) The Investor Shares, subject Investor Warrants and Warrant Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby (and, as to applicable bankruptcythe Warrant Shares, insolvencyas contemplated by the Investor Warrants), reorganizationthe Investor Shares, moratorium or other laws Investor Warrants and Warrant Shares will be validly issued, fully paid and nonassessable, free of general application affecting preemptive rights and free from all taxes, liens, charges and security interests in respect of the enforcement of creditors’ rights;issuance thereof. 3.6. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable (i) violate the Articles of Organization (as amended to date) of the Company, and do not and will not conflict with or contravene the By-Laws (as amended to date) of the Company, or (ii) result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets other than a breach or violation that would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Company (a “Material Adverse Effect”); and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice tothe Investor Shares, the registration or filing with Investor Warrants, the Warrant Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as may be required under Federal or state securities or “blue sky” laws or, with respect to requirements applicable to the Investor and except where the failure to obtain such consents, approvals, authorizations, registrations or qualifications would not reasonably be expected to have already been obtained or made); anda Material Adverse Effect. 3.7. (5) The authorized capital stock balance sheets of the Company shall consist of (a) 130,000,000 shares of Common Stockfor the twelve months ended December 31, of which [29,070,786] shares 2004 have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, are issued consistent in all material respects with the books and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares records of the Company have and accurately present in all material respects the financial position of the Company and its subsidiaries as of December 31, 2004. There has been duly authorized and validly issuedno material adverse change in the financial condition or business or results of operations of the Company or its subsidiaries since December 31, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws2004.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoffspin-off, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairmenthereof; 3.5. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ ' rights; 3.6. The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s 's certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or mademade and to the extent that stockholder approval may be required pursuant to the rules of The New York Stock Exchange, Inc. (the "NYSE") for the issuance of a number of Warrant Shares, together with common stock issuable upon conversion or exercise of the Series B Convertible Preferred Stock under the Certificate of Designations, Preferences and Rights of the Series B Convertible Preferred Stock of Midway Games Inc., dated May 21, 2001 (the "Certificate of Designations") and the related warrants, greater than 19.99% of the number of shares of Common Stock outstanding immediately prior to the date hereof (the "19.99% Rule")); and 3.7. The authorized capital stock of the Company shall consist consists of (a) 130,000,000 100,000,000 shares of Common Stock, of which [29,070,786] 37,723,693 shares are issued and outstandingoutstanding and 1,178,500 shares are held in treasury, and (b) 60,000,000 5,000,000 shares of Preferred Stock, par value $0.01 .01 per share, none of which [37,614,799] shares are issued and outstanding, except the preferred shares being issued on the date hereof. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby Little Squaw represents, warrantswarrants and covenants that, covenants at the Closing Date (and agrees acknowledges that the Subscriber is relying on such representations, warranties and covenants): a. each of Little Squaw and each of its subsidiaries is a valid and subsisting corporation duly incorporated and in good standing under the laws of its jurisdiction of incorporation, and Little Squaw has no subsidiaries other than as follows:set forth in the Company’s annual report on Form 10-K for the year ended December 31, 2004; 3.1. All Warrant b. each of Little Squaw and each of its subsidiaries is duly registered and licensed to carry on business in the jurisdictions in which it carries on business or owns property where so required by the laws of that jurisdiction; c. Little Squaw and its subsidiaries own, possess or has obtained, and is operating in compliance with, all governmental, administrative and third party licenses, permits, certificates, registrations, approvals, consents and other authorizations (collectively, “Permits”) necessary to own or lease (as the case may be) and operate its properties, and to conduct its businesses or operations as currently conducted, except such Permits the failure of which to obtain would not have a material adverse effect on the business, properties, operations, financial condition or results of operations of Little Squaw, and neither Little Squaw nor any of its subsidiaries has received any notice of proceedings relating to the revocation, modification or suspension of any Permits), if such proceedings would have a material adverse effect on Little Squaw, or any circumstance which would lead it to believe that such proceedings are reasonably likely; d. the business and operations of Little Squaw and its subsidiaries have been conducted in accordance with all applicable laws, rules and regulations of all governmental authorities, except for such violations which would not, individually or in the aggregate, have a material adverse effect on the financial condition or business of Little Squaw and its subsidiaries; e. the authorized capital of Little Squaw consists of (i) 10,000,000 shares of preferred stock, of which no shares were issued and outstanding and (ii) 200,000,000 shares of common stock, of which there were (A) 16,833,420 shares issued and outstanding as of October 31, 2005 as fully paid and non-assessable shares and (B) options and/or warrants to purchase up to 1,520,000 shares of common stock were outstanding as of October 31, 2005; f. Little Squaw will reserve or set aside sufficient shares of common stock in its treasury to issue the Common Shares which are issued issuable upon conversion of the Debentures and exercise of this Warrant will, upon issuance, be validly issued, fully paidthe Warrants, and nonassessable, all such Securities will upon payment of the recited consideration and issuance be duly and validly issued as fully paid and non-assessable; g. the issuance of the Securities will not be subject to any preemptive rightspre-emptive right or other contractual right to purchase securities granted by Little Squaw or to which Little Squaw is bound; h. the issue and sale of the Securities by Little Squaw does not and will not conflict with, and free from all taxesdoes not and will not result in a breach of, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of its incorporating documents or any agreement or instrument to which Little Squaw is a party; i. Little Squaw has complied and will comply fully with the requirements of all applicable corporate and securities laws in all matters relating to the Offering; j. there are no legal or governmental actions, suits, proceedings or investigations pending or, to Little Squaw’s knowledge, threatened, to which Little Squaw or any of its subsidiaries is or may be a party or of which property owned or leased by Little Squaw or any of its subsidiaries is or may be the subject, or related to environmental, title, discrimination or other matters, which actions, suits, proceedings or investigations, individually or in the aggregate, could have a material adverse effect on Little Squaw; k. there are no judgments against Little Squaw or any of its subsidiaries, if any, which are unsatisfied, nor is Little Squaw or any of its subsidiaries, if any, subject to any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body; l. this WarrantAgreement has been or will be by the Closing Date, duly authorized by all necessary corporate action on the part of Little Squaw, and shall at all times in good faith assist in performing Little Squaw has full corporate power and giving effect authority to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairmentundertake this offering; 3.5. This Warrant m. this Agreement has been duly authorized authorized, executed and executed delivered by the Company Corporation and is constitutes a valid and legally binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or and other laws of general application relating to or affecting the enforcement rights of creditors’ rights; 3.6. The execution creditors generally and delivery except as limited by the application of this Warrant equitable principles when equitable remedies are notsought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law; n. neither Little Squaw nor any of its subsidiaries is in violation of its organizational or incorporating documents nor in violation of, or in default under, any lien, mortgage, lease, agreement or instrument, except for such defaults which would not, individually or in the aggregate, have a material adverse effect on the financial condition, properties or business of Little Squaw or it subsidiaries; o. subject to the accuracy of the representations and warranties of the Subscriber contained in this Agreement, the offer, sale and issuance of the Warrant Shares Securities as contemplated by this Agreement are exempt from the registration requirements of the U.S. Securities Act, from the registration or qualifications requirements of the state securities or “blue sky” laws and regulations of any applicable state or other applicable jurisdiction; p. Little Squaw’s shares of common stock are quoted for trading on the National Association of Securities Dealers over-the-counter electronic bulletin board (the “OTCBB”), q. no order ceasing, halting or suspending trading in securities of Little Squaw nor prohibiting the sale of such securities has been issued to and is outstanding against Little Squaw or its directors, officers or promoters, and, to the best of Little Squaw knowledge, no investigations or proceedings for such purposes are pending or threatened; r. neither Little Squaw nor any subsidiary thereof will have taken any action which would be reasonably expected to result in the delisting or suspension of quotation of Little Squaw’ shares of common stock on or from the OTCBB and Little Squaw will have complied, in all material respects, with the rules and regulations of eligibility on the OTCBB; s. except for the commission in the amount of 10% and agent’s warrants equal to 10% of the common shares acquirable upon exercise the conversion of the Debentures payable to Strata Partners, no person, firm or corporation acting or purporting to act at the request of Little Squaw is entitled to any brokerage, agency or finder’s fee in connection with the purchase and sale of the Securities described herein; t. Little Squaw is a "reporting issuer" under section 12 of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and is not in default of any of the requirements of the 1934 Act; u. as of their respective filing dates, each report, schedule, registration statement and proxy filed by Little Squaw with the United States Securities and Exchange Commission (“SEC”)(each, an “SEC Report” and collectively, the “SEC Reports”) (and if any SEC Report filed prior to the date of this Warrant Agreement was amended or superseded by a filing prior to the date of this Agreement, then also on the date of filing of such amendment or superseding filing), (i) where required, were prepared in all material respects in accordance with the terms hereof will not requirements of the U.S. Securities Act, or the 1934 Act, as the case may be, and the rules and regulations promulgated under such Acts applicable to such SEC Reports, (ii) did not contain any untrue statements of a material fact and did not omit to state a material fact necessary to make the statements therein, in violation light of the Companycircumstances under which they were made, not misleading and (iii) are all the forms, reports and documents required to be filed by Little Squaw with the SEC since that time. Little Squaw’ subsidiaries are not required to file any reports or other documents with the SEC. Each set of audited consolidated financial statements and unaudited interim financial statements of Xxxxxx Xxxxx (including any notes thereto) included in the SEC Reports (i) complies as to form in all material respects with the published rules and regulations of the SEC with respect thereto, and (ii) have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes thereto) and fairly present, in all material respects, the financial position of Little Squaw as of the dates thereof and the results of its operations and cash flows for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end adjustments which were not or are not expected to be material in amount. To Little Squaw’s certificate knowledge, no events or other factual matters exist which would require Little Squaw to file any amendments or modifications to any SEC Reports which have not yet been filed with the SEC but which are required to be filed with the SEC pursuant to the U.S. Securities Act or the 1934 Act; v. Each SEC Report containing financial statements that has been filed with or submitted to the SEC since July 31, 2002, was accompanied by the certifications required to be filed or submitted by Little Squaw’ chief executive officer and chief financial officer pursuant to the Xxxxxxxx-Xxxxx Act of incorporation 2002 (the “Xxxxxxxx-Xxxxx Act”); at the time of filing or bylawssubmission of each such certification, do such certification was true and accurate and complied with the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated thereunder; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Little Squaw nor any of its officers has received notice from any governmental entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certification; w. there is no fact known to Little Squaw which Little Squaw has not publicly disclosed which materially adversely affects, or so far as Little Squaw can reasonably foresee, will materially adversely affect, the assets, liabilities (contingent or otherwise), capital, affairs, business, prospects, operations or condition (financial or otherwise) of Little Squaw or the ability of Little Squaw to perform its obligations under this Agreement; x. Except as disclosed in the SEC Reports, Little Squaw and its subsidiaries, if any, have filed all federal, state, local and foreign tax returns which are required to be filed, or have requested extensions thereof, and have paid all taxes required to be paid by them and any other assessment, fine or penalty levied against them, to the extent that any of the foregoing is due and payable, except for such assessments, fines and penalties which are currently being contested in good faith; y. Little Squaw has established on its books and records reserves which are adequate for the payment of all taxes not yet due and payable and there are no liens for taxes on the assets of Little Squaw or its subsidiaries, if any, except for taxes not yet due, and there are no audits of any of the tax returns of Little Squaw which are known by Little Squaw’ management to be pending, and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any governmental agency of any deficiency which would have a material adverse effect on the properties, business or assets of Little Squaw; z. is not an "investment company" within the meaning of the Investment Company Act of 1940; aa. neither Little Squaw nor any of its affiliates, nor any person acting on its or their behalf (i) has made or will make any “directed selling efforts” (as such term is defined in Regulation S of the U.S. Securities Act) in the United States, or (ii) has engaged in or will engage in any form of “general solicitation” or “general advertising” (as such terms are defined in Rule 502 (c) under Regulation D of the U.S. Securities Act) in the United States with respect to offers or sales of the Securities; bb. Little Squaw has not, for a period of six months prior to the date hereof, sold, offered for sale or solicited, and will not contravene for a period of six months after the Closing Date, offer, sell or solicit, any law, governmental rule offer to buy any of its securities in a manner that would be integrated with the offer and sale of the Securities and would cause the exemption from registration set forth in Rule 506 of Regulation D or regulation, judgment or order applicable Rule 903 of Regulation S of the U.S. Securities Act to become unavailable with respect to the Company, offer and do not sale of the Securities; cc. the warranties and representations in this section are true and correct and will not conflict remain so as of the Closing Date; and dd. Little Squaw shall indemnify, defend and hold the Subscriber (which term shall, for the purposes of this Section, include the Subscriber or its shareholders, managers, partners, directors, officers, members, employees, direct or indirect investors, agents and affiliates and assignees and the stockholders, partners, directors, members, managers, officers, employees direct or indirect investors and agents of such affiliates and assignees) harmless against any and all liabilities, loss, cost or damage, together with or contravene any provision ofall reasonable costs and expenses related thereto (including reasonable legal and accounting fees and expenses), arising from, relating to, or constitute a material default underconnected with an untrue, inaccurate or breached statement, representation, warranty or covenant of Little Squaw contained herein. Little Squaw undertakes to notify the Subscriber immediately of any material indenturechange in any representation, mortgage, contract warranty or other instrument of material information relating to Little Squaw set forth in this Agreement which takes place prior to the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities lawsClosing Date.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, warrants and covenants to the Issuer and agrees the Trustee as follows: 3.1. All Warrant Shares which are issued upon (i) The Company is duly incorporated under the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise laws of the rights represented by this Warrant; 3.3State of Delaware, is in good standing in the State of Delaware and the State and is duly authorized to conduct its business in the State. The Company will, from time to time, take has all such action as may be required to assure that authority under the par value per share laws of the Warrant Shares is at State of Delaware, the State and its Articles of Incorporation to enter into, execute, deliver and perform this Loan Agreement, the Purchase Contract, the Project Certificate and the Tax Agreement (collectively, the “Company Agreements”), and all times equal to or less than action on its part necessary for the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any valid execution and delivery of the terms of this Warrant, Company Agreements and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant Limited Offering Memorandum has been duly authorized and executed by effectively taken, and the Company and is a Agreements will be the legal, valid and binding obligation obligations of the Company enforceable in accordance with its their respective terms, subject to any applicable bankruptcy, reorganization, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights;rights generally from time to time in effect, and to applicable equitable principles. 3.6. (ii) The representations and covenants contained in the Tax Agreement and Project Certificate executed by the Company on the Closing Date are true and correct and are incorporated herein by this reference and shall have the same effect as if such representations and covenants were actually contained in this Loan Agreement. (iii) The execution and delivery of this Warrant are notthe Company Agreements and the Limited Offering Memorandum on the Company’s part have been duly authorized by all necessary action, and neither the issuance Company’s execution and delivery of the Warrant Shares upon exercise Company Agreements or the Limited Offering Memorandum, the Company’s consummation of this Warrant in accordance the transactions contemplated on its part thereby, nor the Company’s fulfillment of or compliance with the terms hereof will not be, in violation and conditions of the Company’s certificate of incorporation or bylawsCompany Agreements, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict conflicts with or contravene any provision ofresults in a material breach of the Articles of Incorporation, or constitute a material default under, any material indenture, mortgage, contract agreement or other instrument of to which the Company is now a party or by which it the Company is bound (except for any such breaches for which the Company has obtained a waiver or require a required consent), or constitutes a material default (or would constitute a material default with due notice or the consent passage of time or approval both) under any of the foregoing. (iv) All orders and approvals have been received and will be in effect prior to the Closing Date, and, no further consent, approval, authorization or order of, the giving of notice to, the or registration or filing with or the taking of any action in respect of or bywith, any federalcourt or governmental or regulatory agency or body is required with respect to the Company for the execution, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock delivery and performance by the Company of the Company Agreements. (v) The Company has received an executed counterpart of the Indenture and hereby consents to and approves of the provisions thereof. (vi) The information relating to the Project and use of the proceeds of the Bonds furnished by the Company in writing to Xxxxxxx and Xxxxxx LLP, as Bond Counsel, in connection with the issuance of the Bonds, is, to the best of the Company’s knowledge, true and correct in all material respects. (vii) The Company does not, as of the date of issuance of the Bonds, reasonably expect any use of moneys derived from the proceeds of the Bonds or any investment or reinvestment thereof or from the sale of the Project which would cause the Bonds to be classified as “arbitrage bonds” within the meaning of Section 148 of the Code. (viii) The Project consists of those facilities described in Exhibit A hereto (as such Exhibit A is from time to time amended or supplemented in accordance with Section 3.03 hereof), and the Company shall consist not consent to any changes in the Project which would adversely affect the Tax-Exempt status of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares the Bonds. The Company covenants that at all times when any Bonds are issued and outstanding, the Project will be geographically located in the corporate limits of the Issuer. (ix) No litigation, proceedings or investigations are pending or, to the knowledge of the Company, threatened against the Company seeking to restrain, enjoin or in any way limit the approval or the execution and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares delivery of the Company Agreements and the Limited Offering Memorandum, or which would in any manner challenge or adversely affect the corporate existence, power and authority of the Company to enter into and carry out the transactions described in or contemplated by, or the execution, delivery, validity or performance by the Company of the Company Agreements and the Limited Offering Memorandum. In addition, except as described in the Limited Offering Memorandum (including all documents incorporated by reference therein), no litigation, proceedings or investigations are pending or, to the knowledge of the Company, threatened in writing against the Company, except litigation, proceedings or investigations involving claims for which the probable ultimate recoveries and the estimated costs and expenses of defense, in the opinion of the Company, (i) will be entirely within the applicable insurance policy limits (subject to applicable deductibles) or are not in excess of the total of the available assets held under applicable self-insurance programs or (ii) will not have been duly authorized a material adverse effect on the operations or condition, financial or otherwise, of the Company. (x) The information used in the preparation of the financial statements referred to in paragraph (xi) below, this Loan Agreement, the Tax Agreement and validly issuedany other written statement furnished by the Company to the Issuer (including the descriptions and information contained or incorporated by reference in the Limited Offering Memorandum relating to (A) the Company, the Guarantor and the Project, (B) the operations and financial and other affairs of the Company and the Guarantor, (C) the application by the Company of the proceeds from the sale of the Bonds and (D) the participation by the Company and the Guarantor in the transactions contemplated herein and in the Limited Offering Memorandum) do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading. There is no fact which the Company has not disclosed to the Issuer in writing which materially adversely affects or, so far as the Company can now foresee, will materially adversely affect the financial condition of the Company or the Guarantor, the ability of the Company to own and operate the Project, the Company’s ability to make payments under this Loan Agreement or the Guarantor’s ability to make payments under the Bond Guarantee when and as the same become due and payable. (xi) The audited consolidated statements of operations, cash flows and stockholders’ deficit of the Company for each of the fiscal years ended October 31, 2009, 2008 and 2007 and the consolidated balance sheets as of October 31, 2009 and 2008, all audited by KPMG, LLP, an independent registered public accounting firm, all included in and incorporated by reference in, the Official Statement, correctly and fairly present the financial condition of the Company as of said dates, and are fully paid and nonassessablethe results of the operations of the Company for each of such periods, respectively, all in accordance with GAAP consistently applied except as stated in the notes thereto, and there has been no material adverse change in the condition, financial or otherwise, of the Company since October 31, 2009 from that set forth in the information so utilized except as disclosed in the Official Statement. (xii) The Company has all necessary licenses and permits to occupy and operate its existing facilities or has obtained waivers thereof and has obtained, will obtain or will cause to be obtained or waived all necessary licenses and permits to acquire, construct, renovate, occupy and operate the Project as they become required, except where failure to obtain any such shares license or permit would not have been issued in compliance a material adverse effect. With respect to the construction, renovation and equipping of the Project with all proceeds of the Bonds, the Company has complied with and will comply with the Illinois Prevailing Wage Act, 820 ILCS 130/1 to 130/12, to the extent required by applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not have a material adverse effect on the results of operations or financial condition of the Company and its subsidiaries taken as a whole; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not have a material adverse effect on the results of operations or financial condition of the Company and its subsidiaries taken as a whole. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to except as enforcement hereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium reorganization or other similar laws of general application or court decisions affecting the enforcement of creditors’ rights;' rights generally and except as enforcement hereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 3.6. (3) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby, the Investor Shares will be validly issued, fully paid and nonassessable, and will conform to the description of the Common Stock contained in the Prospectus. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable violate the Certificate of Incorporation (as amended to date) of the Company, and do not and will not conflict with or contravene the By-Laws (as amended to date) of the Company, or result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other material agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets, except where the failure to be in compliance would not have a material adverse effect on the results of operations or financial condition of the Company and its subsidiaries taken as a whole; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as have already may be required under Federal or state securities or "blue sky" laws, or in connection with the listing of the Offered Shares on the New York Stock Exchange, Inc. or, with respect to requirements applicable to the Investor. (5) No stop order suspending the effectiveness of the Registration Statement has been obtained issued and no proceeding for that purpose has been initiated or, to the Company's knowledge, threatened by the Commission. On the effective date of the Registration Statement, the Registration Statement and the prospectus included as part of the Registration Statement fully conformed, and at the date of the Closing, the Registration Statement and the Prospectus will fully conform, in all material respects with the applicable provisions of the Securities Act and the applicable rules and regulations of the Commission thereunder; on the effective date of the Registration Statement, the Registration Statement did not, and at the date of the Closing, the Registration Statement will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; on the effective date of the Registration Statement, the Prospectus did not, and at the date of the Closing and on the date the Prospectus Supplement is filed with the Commission pursuant to Rule 424(b) under the Securities Act, the Prospectus will not, contain an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made), not misleading; and on said dates the documents incorporated by reference in the Registration Statement and the Prospectus, taken as a whole, fully conformed or will fully conform in all material respects with the applicable provisions of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations of the Commission thereunder, and, when read together with the Prospectus on said dates did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 3.7. (6) The authorized capital stock unaudited financial statements of the Company shall consist for the six month period ended November 30, 2001 included or incorporated by reference in the Registration Statement and the Prospectus have been prepared in conformity with generally accepted accounting principles (except for the footnotes and subject to customary audit adjustments) applied on a consistent basis, are consistent in all material respects with the books and records of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstandingthe Company, and (b) 60,000,000 shares accurately present in all material respects the financial position and results of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares operations of the Company and its subsidiaries as of and for the six month period ended November 30, 2001. (7) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as disclosed in or contemplated by the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the capital stock or long- term debt of the Company or any of its subsidiaries, the Company and its subsidiaries have not incurred any material liabilities or obligations, direct or contingent, nor entered into any material transactions not in the ordinary course of business and there has not been duly authorized any material adverse change in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and validly issuedits subsidiaries considered as a whole, otherwise than as disclosed in or contemplated by the Prospectus. (8) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, taking into account the likelihood of the outcome, the damages or other relief sought and other relevant factors, would individually or in the aggregate reasonably be expected to have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries; to the best of the Company's knowledge, no such proceedings are fully paid threatened or contemplated by governmental authorities or threatened by others. (9) The Investor shall have no obligation with respect to any fees incurred by the Company or any other Person (other than the Investor, if the Investor has agreed in writing to pay such fees) or with respect to any claims made by or on behalf of other Persons for fees or commissions payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person, that may be due in connection with the transactions contemplated by this Agreement. The Company shall indemnify and nonassessablehold harmless the Investor, its employees, officers, directors, trustees, partners, or any affiliate of the Investor, from and against any losses, claims, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect of such shares have been issued claimed or existing fees incurred by the Company or any other Person (other than the Investor, if the Investor has agreed in compliance writing to pay such fees), as such fees and expenses are incurred. (10) Neither the Company nor any other Person acting on its behalf has provided the Investor or its agents or counsel with all applicable federal and state securities lawsany information that the Company believes constitutes material, non-public information.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized organized and executed is validly existing in good standing under the laws of the jurisdiction of its organization, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to applicable except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium reorganization or other similar laws of general application affecting the enforcement of creditors’ rights;' rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law) and except as the indemnification and contribution agreements of the Company in Section 5(d) hereof may be legally unenforceable. 3.6. (3) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, the Investor Shares will be validly issued, fully paid and nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests in respect of the issuance thereof. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to violate the Articles of Organization of the Company, and do not and will not conflict with or contravene the By-Laws of the Company, or result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as have already been obtained may be required under Federal or madestate securities or "blue sky" laws or, with respect to requirements applicable to the Investor. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A) through (E) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act. (A) the Company's Annual Report to Stockholders on Form 10-KSB for the fiscal year ended December 31, 1998 (without exhibits); (B) Amendment No. 1 to the Company's Annual Report for the fiscal year ended December 31, 1998 on Form 10-KSB/A; (D) Notice to Stockholders and Proxy Statement for its Special Meeting in lieu of an Annual Meeting of Stockholders held May 20, 1999; (E) the Company's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1999; and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as follows: 3.1. 3.1 All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue;. 3.2. 3.2 During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant;. 3.3. The 3.3 This Warrant has been duly authorized and executed by the Company willand is a valid and binding obligation of the Company enforceable in accordance with its terms, from time except to time, take all such action as the extent that enforcement thereof may be required limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to assure creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and except to the extent that rights to indemnification and contribution contained in this Warrant may be limited by federal or state securities laws on public policy relating thereto. 3.4 The execution and delivery of this Warrant are not, and the par value per share issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof (i) will not be in violation of the Company's certificate of incorporation or bylaws, (ii) do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, (iii) do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is at a party or by which it is bound or (iv) require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); except in the case of each of clauses (ii), (iii) and (iv), as could not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the Company's ability to perform fully on a timely basis all times equal to or less than the then effective Exercise Price;of its obligations under this Warrant. 3.4. 3.5 The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may reasonably be necessary or appropriate requested by the Warrantholder in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as followsfollows as of the date hereof and as of the Closing: 3.1. All Warrant Shares which are issued upon (1) The Company has been duly incorporated and has a valid existence and the exercise authorization to transact business as a corporation under the laws of this Warrant willthe State of Delaware, upon issuance, be validly issued, fully paidwith corporate power and authority to own its properties and conduct its business as described in the Prospectus, and nonassessablehas been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not subject to any preemptive rightsindividually or in the aggregate have a material adverse effect on the business, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, results of operations or financial condition of the Company will at all times have authorized and reserved, and keep available free from preemptive rights, its subsidiaries taken as a sufficient number of shares of Common Stock to provide for the exercise whole (a “Material Adverse Effect”). (2) Each subsidiary of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that has been duly organized or incorporated and is validly existing under the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment laws of its certificate jurisdiction of incorporation or through organization, with power and authority to own its properties and conduct its business as described in the Prospectus, and has been duly qualified for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any reorganizationbusiness so as to require such qualification, transfer except for such jurisdictions wherein the failure to be so qualified and in good standing would not individually or in the aggregate have a Material Adverse Effect. Except as disclosed by the Company’s periodic reports filed with the SEC and except as required pursuant to this Agreement, there are no outstanding (i) securities of assets, spinoff, consolidation, merger, dissolution, issue the Company or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms subsidiaries of the Company which are convertible into or exchangeable for shares of capital stock or voting securities of any subsidiary of the Company or (ii) options or other rights to acquire from the Company or any subsidiary of the Company, or other obligation of the Company or any subsidiary of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any subsidiary of the Company (collectively, the “Subsidiary Securities”). There are no outstanding obligations of the Company or any subsidiary of the Company to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities. (3) The execution, delivery and performance of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed Agreement by the Company and is the consummation of the transactions contemplated hereby are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and this Agreement, when duly executed and delivered by the parties hereto, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to except as enforcement hereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium reorganization or other similar laws of general application or court decisions affecting the enforcement of creditors’ rights;rights generally and except as enforcement hereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 3.6. (4) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated by this Agreement, the Investor Shares will be validly issued, fully paid and nonassessable, and will conform to the description of the Common Stock and the Series C Preferred Stock contained in the Prospectus. (5) The Company has reserved from its duly authorized capital stock a number of shares of Common Stock sufficient for issuance of all shares of Common Stock issuable upon the conversion of all shares of Series C Preferred Stock (the “Conversion Shares”). (6) The execution and delivery of this Warrant are Agreement do not, and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not benot, in violation (i) violate the Certificate of Incorporation (as amended to date) of the Company or the By-Laws (as amended to date) of the Company’s certificate , (ii) result in a breach or violation of incorporation any of the terms or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require the consent to which any of their properties or approval assets are subject, or (iii) result in a violation of, or failure to be in compliance with, any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental, regulatory or self-regulatory agency or body having jurisdiction over the giving Company or any of notice toits subsidiaries or any of their properties or assets, except where such breach, violation, default or the failure to be in compliance would not individually or in the aggregate have a Material Adverse Effect or adversely affect the ability of the Company to issue and sell the Investor Shares; and no consent, approval, authorization, order, registration, filing or qualification of or with any such court or governmental, regulatory or self-regulatory agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement or the issuance of the Investor Shares, except for the filing of a Form 8-K, the registration or filing of the Prospectus Supplement, the filing of the Certificate of Designations (which is required to be filed and effective prior to the Closing in accordance with or Section 3(b)(3) hereof), the taking filing of any action in respect a Notification of or byListing of Additional Shares with The NASDAQ Stock Market LLC, any federal, state or local government authority or agency (other than and for such consents, approvals, noticesauthorizations, actions registrations, filings or filings qualifications as have already been obtained may be required under state securities or made); and“blue sky” laws. 3.7(7) The Company meets the requirements for use of Form S-3 under the Securities Act. The authorized capital stock Registration Statement, which covers the Investor Shares, including a form of prospectus and such amendments or supplements to such Registration Statement as may have been required prior to the date of this Agreement, has been prepared by the Company under the provisions of the Securities Act, has been filed with the Commission, has become effective and filed with the Commission and incorporates by reference documents which the Company has filed in accordance with the provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has prepared a Prospectus Supplement to the prospectus included in the Registration Statement referred to above, setting forth the terms of the offering and sale of the Investor Shares and additional information concerning the Company and its business and will promptly file the Prospectus Supplement with the Commission pursuant to Rule 424(b). No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto, or any part thereof, has been issued and served on the Company, and no proceedings for that purpose are pending or, to the knowledge of the Company, threatened by the Commission. The form of prospectus included in the Registration Statement as of the date hereof, as amended or supplemented from time to time (including the Prospectus Supplement), is referred to herein as the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated (or deemed to be incorporated) by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein. As of the close of business on March 28, 2011, at least a number of shares of Common Stock and Series C Preferred Stock equal to the number of Investor Shares and Conversion Shares were available for issuance pursuant to the Registration Statement, which permits the issuance of the Investor Shares and the Conversion Shares in the manner contemplated by this Agreement. Each part of the Registration Statement, when such part became or becomes effective, and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and at the date hereof and the date of the Closing, did or will in all material respects comply with all applicable provisions of the Securities Act and the Exchange Act. Each part of the Registration Statement, when such part became or becomes effective, did not or will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission, did not or will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing representations and warranties in this Section 4(b)(6) do not apply to any statements or omissions made in reliance on and in conformity with information relating to the Investors furnished in writing to the Company by the Investors specifically for inclusion in the Registration Statement or Prospectus or any amendment or supplement thereto. (8) The consolidated financial statements and financial schedules of the Company shall consist included or incorporated by reference in the Registration Statement and the Prospectus have been prepared in conformity with generally accepted accounting principles (except, with respect to the unaudited consolidated financial statements, for the footnotes and subject to customary audit adjustments) applied on a consistent basis, are consistent in all material respects with the books and records of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstandingthe Company, and (b) 60,000,000 shares accurately present in all material respects the consolidated financial position, results of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued operations and outstanding. All issued and outstanding shares cash flow of the Company and its subsidiaries as of and for the periods covered thereby. (9) Neither the Company nor any of its subsidiaries has sustained since the respective dates of the latest audited financial statements included in the Registration Statement and Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as disclosed in or contemplated by the Registration Statement and Prospectus; and, since the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been any material change in the capital stock or long-term debt of the Company or any of its subsidiaries. (10) Other than as disclosed in the Prospectus, there are no legal, governmental or regulatory proceedings pending to which the Company or any of its subsidiaries is a party or of which any material property of the Company or any of its subsidiaries is the subject which, taking into account the likelihood of the outcome, the damages or other relief sought and other relevant factors, would individually or in the aggregate reasonably be expected to have a Material Adverse Effect or adversely affect the ability of the Company to issue and sell the Investor Shares, and no such proceedings are threatened in writing to the Company or, to the Company’s knowledge, have been duly authorized contemplated by governmental or regulatory authorities or threatened by others. (11) The Company and validly issuedeach of its subsidiaries have title to all the real property, and owns all other properties and assets, reflected as owned in the financial statements included in the Registration Statement and the Prospectus, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those, if any, reflected in such financial statements or disclosed in the Company’s SEC filings or exhibits thereto, in favor of the Investors in connection with the Facility Agreement and all amendments thereto, or which are fully paid not material to the Company and nonassessableits subsidiaries taken as a whole. The Company and each of its subsidiaries hold their respective leased real and personal properties under valid and binding leases, and such shares except where the failure to do so would not reasonably be expected to individually or in the aggregate have been issued in compliance with a Material Adverse Effect. (12) The Company has filed all applicable necessary federal and state income and franchise tax returns and has paid all taxes shown as due thereon or has filed all necessary extensions, and there is no tax deficiency that has been, or to the knowledge of the Company could reasonably be expected to be, asserted against the Company or any of its properties or assets that would in the aggregate or individually reasonably be expected to have a Material Adverse Affect. (13) There are no holders of securities lawsof the Company having preemptive rights to purchase Common Stock. There are no holders or beneficial owners of securities of the Company having rights to registration thereof whose securities have not been previously registered or who have not waived such rights with respect to the registration of the Company’s securities on the Registration Statement, except where the failure to obtain such waiver would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect. (14) The Company is not, and does not intend to conduct its business in a manner in which it would become, an “investment company” as defined in Section 3(a) of the Investment Company Act of 1940, as amended.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing in good standing under the laws of the jurisdiction of its incorporation, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms. (3) The Investor Shares have been duly authorized by the Company, subject to applicable bankruptcyand when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, insolvencythe Investor Shares will be validly issued, reorganizationfully paid and nonassessable, moratorium or other laws free of general application affecting preemptive rights and free from all taxes, liens, charges and security interests in respect of the enforcement of creditors’ rights;issuance thereof. 3.6. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable (i) violate the Articles of Organization (as amended to date) of the Company, and do not and will not conflict with or contravene the By-Laws (as amended to date) of the Company, or (ii) result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets other than a breach or violation that could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Company (a "MATERIAL ADVERSE EFFECT"); and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as may be required under Federal or state securities or "blue sky" laws or, with respect to requirements applicable to the Investor and except where the failure to obtain such consents, approvals, authorizations, registrations or qualifications that could not reasonably be expected to have already been obtained a Material Adverse Effect. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or madeomit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A), (B) and (C) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act as of the date filed with the Commission. (A) the Company's Annual Report to Stockholders on Form 10-KSB for the fiscal year ended December 31, 2000, as amended (without exhibits); (B) Notice to Stockholders and Proxy Statement for its Special Meeting in lieu of an Annual Meeting of Stockholders held May 24, 2001; (C) the Company's Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2001, June 30, 2001(as amended) and September 30, 2001; and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrantswarrants and covenants (and acknowledges that the Purchaser is relying on such representations, covenants warranties and agrees covenants) that, as followsof each Closing Date: 3.1. All Warrant Shares which are issued upon a. the exercise Company is a valid and subsisting corporation duly incorporated and in good standing under the laws of this Warrant willits jurisdiction of incorporation, upon issuancethe Company’s subsidiary, be validly issuedXxxxxxxx Placer, fully paidLLC, is a valid and subsisting limited liability company duly organized and in good standing under the laws of its jurisdiction of organization, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, Xxxxxxxx has no subsidiaries other than taxes with respect to any transfer occurring contemporaneously with such issueas set forth in the Company’s annual report on Form 10-K for the year ended December 31, 2012; 3.2. During b. each of the period within Company and each of its subsidiaries is duly registered and licensed to carry on business in the jurisdictions in which this Warrant may be exercised, it carries on business or owns property where so required by the laws of that jurisdiction; c. the Company will at reserve or set aside sufficient Common Shares in its treasury to issue to Purchaser Warrant Shares held by Purchaser, exercise of all times have authorized and reservedof the Warrants held by the Purchaser, and keep available free from preemptive rightsall Notes, a sufficient number of shares of Common Stock to provide for the exercise Warrants and Warrant Shares will upon payment of the rights represented by this Warrantrecited consideration and issuance be duly and validly issued as fully paid and non-assessable; 3.3. The Company will, from time to time, take all such action d. attached hereto as may be required to assure that the par value per share Schedule III is a true and accurate accounting of the Warrant Shares is at all times equal to or less than Company’s current share capital structure on a fully diluted basis and a pro forma accounting showing the then effective Exercise PriceCompany’s share capital structure following this completion of the Private Placement; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, e. the issue or and sale of securities or any other action or inactionthe Note and Warrants by the Company and the execution and delivery of this Agreement and the Note do not and will not conflict with, seek to avoid the observance or performance of and do not and will not result in a breach of, any of the terms of this Warrantits incorporating documents or any agreement or instrument to which the Company is a party; f. the Company has complied and will comply fully with the requirements of all applicable corporate and securities laws in all matters relating to the offering of the Note and the Warrants; g. the Company has filed all documents that it is required to file under the continuous disclosure provisions of applicable securities laws in the United States, including annual and interim financial information and annual reports and quarterly reports and all other filings required under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and regulations thereunder, including all periodic reports required by Section 13(a) of the 1934 Act and the rules and regulations thereunder; h. each document filed or to be filed prior to the Closing with the SEC pursuant to the 1934 Act complied, or will comply, when so filed, in all material respects with the requirements of the 1934 Act and the rules and regulations thereunder, as applicable, and shall none of such documents contained, or will contain, at all times the time of its filing any untrue statement of a material fact or omitted or will omit at the time of its filing to state a material fact required to be stated therein or necessary to make the statements therein, in good faith assist in performing and giving effect light of the circumstances under which they were or are made, not false or misleading; i. subsequent to the terms hereof and respective dates as of which information is given in the taking documents filed with the SEC pursuant to the 1934 Act and the rules and regulations thereunder, and except as otherwise disclosed in such documents, (i) the Company has not declared or paid any dividends, or made any other distribution of all any kind, on or in respect of its share capital, (ii) there has not been any material change in the share capital or long-term or short-term debt of the Company or any of its subsidiaries, (iii) neither the Company nor any subsidiary has sustained any material loss or interference with its business or properties from fire, explosion, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labour dispute or any legal or governmental proceeding, and (iv) there has not been any material adverse change or any development involving a prospective material adverse change, whether or not arising from transactions in the ordinary course of business, in or affecting the business, general affairs, management, condition (financial or otherwise), results of operations, shareholders’ equity, properties or prospects of the Company and its subsidiaries, taken as a whole. Since the date of the latest audited balance sheet included in the documents filed with the SEC pursuant to the 1934 Act and the rules and regulations thereunder, the business of the Company and its subsidiaries have been carried on in the usual and ordinary course and neither the Company nor any Subsidiary has incurred or undertaken any liabilities or obligations, whether direct or indirect, liquidated or contingent, matured or unmatured, or entered into any transactions, including any acquisition or disposition of any business or asset, which are material to the Company and its subsidiaries, taken as a whole, except as for liabilities, obligations and transactions which are disclosed in such actions documents; j. except as disclosed in the reports the Company files with the SEC, there are no legal or governmental actions, suits, proceedings or investigations pending or, to the Company’s knowledge, threatened, to which the Company or any of its subsidiaries is or may be necessary a party or appropriate of which property owned or leased by the Company or any of its subsidiaries is or may be the subject, or related to environmental, title, discrimination or other matters, which actions, suits, proceedings or investigations, individually or in the aggregate, could have a material adverse effect on the Company; k. except as disclosed in the reports the Company files with the SEC, there are no judgments against the Company or any of its subsidiaries, if any, which are unsatisfied, nor is the Company or any of its subsidiaries, if any, subject to any injunction, judgment, decree or order to protect of any court, regulatory body, administrative agency or other governmental body; l. the rights issuance of the Warrantholder against dilution Note, the Warrants and the Warrant Shares upon exercise of the Warrants has been or other impairmentwill be by the Closing Date, duly authorized by all necessary corporate action on the part of the Company, and the Company has full corporate power and authority to issue the Note, the Warrants and the Warrant Shares; 3.5. This Warrant m. this Agreement has been or will be by the Closing Date, duly authorized by all necessary corporate action on the part of the Company, and the Company has full corporate power and authority to undertake this Offering; n. this Agreement and the Note have been duly authorized, executed and delivered by the Company and is a constitute valid and legally binding obligation obligations of the Company enforceable against it in accordance with its their terms, subject to applicable except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or and other laws of general application relating to or affecting the enforcement rights of creditors’ rightscreditors generally; 3.6. The execution o. the Guaranty has been duly authorized, executed and delivery delivered by the Guarantor and constitutes the valid and legally binding obligation of the Guarantor enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally; p. subject to the accuracy of the representations and warranties of the Purchaser contained in this Warrant are notAgreement, the offer, sale and the issuance of the Warrant Shares upon exercise Note and the Warrants as contemplated by this Agreement are exempt from the registration requirements of this Warrant the U.S. Securities Act, from the registration or qualifications requirements of the state securities or “blue sky” laws and regulations of any applicable state or other applicable jurisdiction; q. the Company’s shares of common stock trade on the Financial Industry Regulatory Authority’s Over the Counter Bulletin Board (the “OTCBB”); r. no order ceasing, halting or suspending trading in accordance with securities of the terms hereof will not beCompany nor prohibiting the sale of such securities has been issued to and is outstanding against the Company or its directors, in violation officers or promoters, and, to the best of the Company’s certificate of incorporation knowledge, no investigations or bylaws, do not and will not contravene any law, governmental rule proceedings for such purposes are pending or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which threatened; s. the Company is a party or by which it “reporting issuer” under section 12 of the 1934 Act and is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking not in default of any action of the requirements of the 1934 Act; t. the Company is not an “investment company” within the meaning of the Investment Company Act of 1940; u. neither the Company nor any of its affiliates, nor any person acting on its or their behalf has engaged in or will engage in any form of “general solicitation” or “general advertising” (as such terms are defined in Rule 502 (c) under Regulation D of the U.S. Securities Act) in the United States with respect to offers or sales of the Note or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings Warrants; v. the warranties and representations in this section are true and correct and will remain so as have already been obtained or made); andof each Closing Date; 3.7. The authorized capital stock w. the gold forward sales contracts listed on Schedule 3(w) attached hereto are the only secured indebtedness of the Company shall consist and its subsidiaries outstanding on the date of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstandingany Closing, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and there is outstanding shares no other indebtedness of the Company have or its subsidiaries that purports to be senior in right of payment to this Note or the Guaranty on the date of any Closing; x. other than any indebtedness of the Company that already is outstanding on the date of this Agreement, neither the Company nor any of the Company’s subsidiaries will issue or incur any secured debt or any debt that purports to rank senior in right of payment to, or pari passu with, the Note or the Guaranty until the Note and all interest thereon has been duly authorized fully paid; y. the Company will not pay any dividends or make any distributions to equity holders of the Company until the Note and validly issuedall interest thereon has been fully paid; z. the Company will not enter into any transaction with any affiliates unless such transaction is fair and reasonable to the Company; for purposes of this Section 3(z), “affiliate” has the meaning given thereto in Rule 12b-2 promulgated under the 1934 Act; aa. the Company will not form or directly or indirectly acquire any additional subsidiaries that are not subsidiaries of the Company as of the date of this Agreement unless it causes any such subsidiary to guarantee the Company’s indebtedness under the Note in substantially the form of the Guaranty and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.otherwise reasonably satisfactory to the Purchaser; and

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized organized and executed is validly existing in good standing under the laws of the jurisdiction of its organization, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms. (3) The Investor Shares have been duly authorized by the Company, subject to applicable bankruptcyand when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, insolvencythe Investor Shares will be validly issued, reorganizationfully paid and nonassessable, moratorium or other laws free of general application affecting preemptive rights and free from all taxes, liens, charges and security interests in respect of the enforcement of creditors’ rights;issuance thereof. 3.6. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable violate the Articles of Organization (as amended to date) of the Company, and do not and will not conflict with or contravene the By-Laws (as amended to date) of the Company, or result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as have already been obtained may be required under Federal or madestate securities or "blue sky" laws or, with respect to requirements applicable to the Investor. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A), (B) and (C) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act as of the date filed with the Commission. (A) the Company's Annual Report to Stockholders on Form 10-KSB for the fiscal year ended December 31, 2000 (without exhibits); (B) Notice to Stockholders and Proxy Statement for its Special Meeting in lieu of an Annual Meeting of Stockholders to be held May 24, 2001; (C) the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001; and 3.7. (D) the Memorandum. (6) The authorized capital stock balance sheets of the Company shall consist of (a) 130,000,000 shares of Common Stockfor the three months ended March 31, of which [29,070,786] shares 2001 have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, are issued consistent in all material respects with the books and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares records of the Company and accurately present in all material respects the financial position of the Company and its subsidiaries as of March 31, 2001. There has been no material adverse change in the financial condition or business or results of operations of the Company or its subsidiaries since March 31, 2001. (7) All patents, trademarks, copyrights and other proprietary rights owned by or licensed to the Company are referred to in this Section 4(b)(7) as the "Proprietary Rights." The Company owns or has the contractual right to use, sell or license all Proprietary Rights necessary or required for the conduct of its business as presently conducted, except for any failure to own or right to use, sell or license that would not reasonably be expected to have been duly authorized a material adverse effect on the financial condition, business or results of operation of the Company. To the Company's knowledge, no other person has an interest in or right or license to use, or the right to license others to use any of said Proprietary Rights and validly issuedthe Company has not received any notice of any such interest or right. There are no claims or demands of any other person pertaining to the Proprietary Rights and no proceedings are pending or, to the Company's knowledge, threatened that challenge the rights of the Company in respect thereof that would reasonably be expected to have a material adverse effect on the financial condition, business or results of operation of the Company. None of such Proprietary Rights is subject to any outstanding order, decree, judgment, or stipulation, or is being infringed by others. (8) There is no litigation, arbitration or governmental proceeding or investigation currently pending or, to the Company's knowledge, threatened by or against the Company or affecting any of the Company's properties or assets that would reasonably be expected to have a material adverse effect on the financial condition, business or results of operations of the Company. The Company is not a party to or in default with respect to any order, writ, injunction, decree, ruling or decision of any court, commission, board or other government agency that may have a material adverse effect on the financial condition, business or results of operations of the Company. (9) Except as disclosed in reports filed under the Securities and Exchange Act of 1934, (i) the operations of the Company are fully paid and nonassessable, and such shares have been issued in material compliance with all applicable federal Environmental Laws; (ii) to the knowledge of the Company, there has been no release of Hazardous Materials at any of the properties owned or operated by the Company, except in material compliance with Environmental Laws; (iii) no lien has been imposed on any property owned by the Company in connection with the presence of any Hazardous Material thereon; and state securities laws(iv) the Company has not entered into or been subject to any consent decree, compliance order, or administrative order, received any request for information, notice, demand letter, administrative inquiry, or complaint, or been subject to any governmental or citizen enforcement action, each with respect to the presence of Hazardous Materials at any property owned by the Company.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing in good standing under the laws of the jurisdiction of its incorporation, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. 5 / STKR 2003 Form S-3 (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms. (3) The Investor Shares have been duly authorized by the Company, subject to applicable bankruptcyand when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, insolvencythe Investor Shares will be validly issued, reorganizationfully paid and nonassessable, moratorium or other laws free of general application affecting preemptive rights and free from all taxes, liens, charges and security interests in respect of the enforcement of creditors’ rights;issuance thereof. 3.6. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable (i) violate the Articles of Organization (as amended to date) of the Company, and do not and will not conflict with or contravene the By‑Laws (as amended to date) of the Company, or (ii) result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets other than a breach or violation that would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Company (a "Material Adverse Effect"); and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as may be required under Federal or state securities or "blue sky" laws or, with respect to requirements applicable to the Investor and except where the failure to obtain such consents, approvals, authorizations, registrations or qualifications would not reasonably be expected to have already been obtained a Material Adverse Effect. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or madeomit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A), (B) and (C) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act as of the date filed with the Commission. (A) the Company's Annual Report to Stockholders on Form 10‑K for the fiscal year ended December 31, 2002, as amended (without exhibits); (B) Notice to Stockholders and Proxy Statement for its Special Meeting in lieu of an Annual Meeting of Stockholders to be held on May 22, 2003; (C) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003; (D) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003; and 3.7. (E) the Memorandum. (6) The authorized capital stock balance sheets of the Company shall consist of (a) 130,000,000 shares of Common Stockfor the twelve months ended December 31, of which [29,070,786] shares 2002 have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, are issued consistent in all material respects with the books and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares records of the Company have and accurately present in all material respects the financial position of the Company and its subsidiaries as of December 31, 2002. There has been duly authorized no material adverse change in the financial condition or business or results of operations of the Company or its subsidiaries since December 31, 2002, except as disclosed in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 and validly issuedthe Memorandum. 6 / STKR 2003 Form S-3 (c) Survival of Representations, Warranties and are fully paid Agreements. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and nonassessablewarranties made by the Company and the Investor herein and in the certificates for the Investor Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Investor of the Investor Shares and such shares have been issued in compliance with all applicable federal and state securities lawsthe payment therefor.

Company Representations, Warranties and Covenants. The Company hereby representsacknowledges, warrantsrepresents and warrants to, covenants and agrees with the Investor and Alterra (which representations and will be true and correct as of the date of the Closing as if the Agreement were made on the date of Closing) as follows: 3.14.1 The Company is validly existing and is in good standing under the laws of the State of Delaware. All Warrant Shares which are issued upon As a result of the exercise execution or approval of the Organizational Documents by the Company or the other signatories thereto (as the case may be), the Company has full corporate power and authority to enter into this Agreement and this Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by laws effecting creditors rights generally and general equitable principles. The sole business of the Company is to serve as the parent company of AHC Subsidiary, and the Company shall not engage in any business or activity other than (i) the transactions contemplated by this Agreement, the Loan Agreement and by such other agreements as may be contemplated thereby and (ii) serving as the parent company of AHC Subsidiary. Immediately after the Closing, the Company shall assign its rights under the Purchase Agreement to AHC Subsidiary in connection with the initial capitalization thereof. 4.2 The execution and delivery by the Company of, and the performance by the Company of its obligations under this Agreement in accordance with the terms of this Warrant willAgreement will not (a) contravene any provision of applicable law or the charter documents or by-laws of the Company or any agreement or other instrumental body, upon issuanceagency or court having jurisdiction over the Company, or (b) give any third party rights to acquire capital stock of the Company. No filing (except for such filings as may be required under applicable state and federal securities laws), notice, consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement. 4.3 The Documents do not, and through the date of the Closing will not, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 4.4 All of the Common Shares and the Preferred Shares have been duly authorized and, when issued in accordance herewith, shall be validly issued, fully paid, non-assessable and nonassessablefree of preemptive or similar rights. The Company does not have any class of authorized stock other than Common Stock and Preferred Stock. Except for Alterra with respect to the Common Shares and the Investors with respect to the Preferred Shares (including the Common Stock issuable upon the conversion thereof pursuant to the Certificate), no person has any right to receive any additional shares of capital stock of the Company. In addition, the shares of Common Stock issuable upon the conversion of the Preferred Shares, when issued as provided in the Certificate shall be validly issued and fully paid and non-assessable, and such shares shall not be subject to any preemptive or similar rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue;. 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. 4.5 The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment not in violation of its certificate charter or bylaws and is not in default in the performance of incorporation or through any reorganizationbond, transfer of assetsdebenture, spinoff, consolidation, merger, dissolution, issue or sale of securities note or any other action evidence of indebtedness or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, license, contract, lease or other instrument of to which the Company is a party or by which it is bound bound, or to which any of the property or assets of the Company is subject, except such as have been waived or which would not have, singly or in the aggregate, a material adverse effect on the company, taken as a whole. 4.6 There is no litigation or governmental proceeding pending, or to the knowledge of the Company, threatened against, or involving the property or the business of the Company, or, to the best knowledge of the Company which would adversely affect the condition (financial or otherwise), business, prospects or results of operations of the Company, taken as a whole. 4.7 Except as set forth in the Certificate, there is no existing option, warrant, call, right, commitment or other agreement of any character to which the Company is a party requiring, and there are no securities of the Company outstanding which upon conversion or exchange would require the consent issuance, sale or approval of, the giving of notice to, the registration or filing with or the taking transfer of any action in respect additional shares of capital stock or byother equity securities of the Company or other securities convertible into, any federal, state exchangeable for or local government authority evidencing the right to subscribe for or agency (purchase shares of capital stock or other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7equity securities of the Company. The authorized Company is not a party to any voting trust or other voting agreement with respect to any of the shares of the Common Stock or to any agreement relating to the issuance, sale, redemption, transfer or other disposition of the capital stock of the Company, except as set forth in the Certificate. 4.8 The Company shall consist of (a) 130,000,000 at all times will keep sufficient shares of its Common Stock, Stock available for issuance upon the conversion of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of the Preferred Stock. 4.9 The foregoing representations, par value $0.01 per share, of which [37,614,799] shares are issued warranties and outstanding. All issued and outstanding shares of agreements shall survive the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities lawsClosing.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, warrants and covenants and agrees as followsto the Purchaser that: 3.1. All Warrant Shares which are issued upon (a) The Company is duly organized, validly existing and in good standing under the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise laws of the rights represented by this Warrant;State of Delaware. 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. (b) This Warrant Agreement has been duly authorized validly authorized, executed and executed delivered by it and, assuming the due authorization, execution and delivery thereof by the Company and Purchaser, is a valid and binding obligation of the Company agreement enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium the general principles of equity and to bankruptcy or other laws of general application affecting the enforcement of creditors’ rights; 3.6rights generally. The execution execution, delivery and delivery performance of this Warrant are notAgreement by the Company does not and will not conflict with, violate or cause a breach of, constitute a default under, or result in a violation of (i) any agreement, contract or instrument to which the Company is a party which would prevent the Company from performing its obligations hereunder or (ii) any law, statute, rule or regulation to which the Company is subject. (c) The Company has the requisite corporate power and authority to enter into and to perform its obligations under this Agreement; and the issuance execution, delivery and performance by the Company of this Agreement have been duly authorized by all necessary action on the part of the Warrant Company. (d) The Purchased Shares upon exercise are duly and validly authorized for issuance and sale to the Purchaser by the Company, and, when issued and delivered by the Company against payment therefor by the Purchaser in accordance with the terms hereof, shall be validly issued and non-assessable and free from all preemptive or similar rights, taxes and encumbrances and the Purchased Shares shall be fully paid with the Purchaser being entitled to all rights accorded to a holder of Common Stock. Assuming the accuracy of the representations and warranties set forth in Section 4 of this Warrant Agreement, the offer and issuance by the Company of the Purchased Shares is exempt from registration under the Securities Act. (e) The Company acknowledges that the Purchaser makes no representations or warranties as to any matter whatsoever except as expressly set forth in this Agreement or in any certificate delivered by the Purchaser to the Company in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities lawsthereof.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing in good standing under the laws of the jurisdiction of its incorporation, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms. (3) The Investor Shares have been duly authorized by the Company, subject to applicable bankruptcyand when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, insolvencythe Investor Shares will be validly issued, reorganizationfully paid and nonassessable, moratorium or other laws free of general application affecting preemptive rights and free from all taxes, liens, charges and security interests in respect of the enforcement of creditors’ rights;issuance thereof. 3.6. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable (i) violate the Articles of Organization (as amended to date) of the Company, and do not and will not conflict with or contravene the By-Laws (as amended to date) of the Company, or (ii) result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets other than a breach or violation that would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Company (a “Material Adverse Effect”); and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as may be required under Federal or state securities or “blue sky” laws or, with respect to requirements applicable to the Investor and except where the failure to obtain such consents, approvals, authorizations, registrations or qualifications would not reasonably be expected to have already been obtained a Material Adverse Effect. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or madeomit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A), (B) and (C) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act as of the date filed with the Commission. (A) the Company’s Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2003, as amended (without exhibits); (B) the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004; and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed has a valid existence and the authorization to transact business as a corporation under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Prospectus. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation of the transactions contemplated hereby are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement, when duly executed and delivered by the parties hereto, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights;and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.6. (3) The execution and delivery of this Warrant are not, and the issuance of the Warrant Investor Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to have been duly authorized by the Company, and do not when issued and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which delivered by the Company is a party or against payment therefor as contemplated by which it is bound or require the consent or approval ofthis Agreement, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and Investor Shares will be validly issued, and are fully paid and nonassessable, and such shares have will conform to the description of the Common Stock contained in the Prospectus. (4) The Company meets the requirements for the use of Form S-3 under the Securities Act for the primary issuance of securities. The Registration Statement has been declared effective by the Commission and at the time it became effective, and as of the date hereof, the Registration Statement complied and complies with Rule 415 under the Securities Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the Commission. On the effective date of the Registration Statement, the Registration Statement complied, on the date of the Prospectus, the Prospectus will comply, and at the date of the Closing, the Registration Statement and the Prospectus will comply, in compliance all material respects with the applicable provisions of the Securities Act and the applicable rules and regulations of the Commission thereunder; on the effective date of the Registration Statement, the Registration Statement did not, on the date of the Prospectus, the Prospectus will not, and at the date of the Closing, the Registration Statement and the Prospectus, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made (with respect to the Prospectus), not misleading; and when filed with the Commission, the documents incorporated by reference in the Registration Statement and the Prospectus, complied or will comply in all material respects with the applicable federal provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and state securities lawsthe applicable rules and regulations of the Commission thereunder.

Company Representations, Warranties and Covenants. The Company hereby representsacknowledges, warrantsrepresents and warrants to, covenants and agrees with Investor as follows: 3.1. All Warrant Shares which are issued upon (a) The Company has been duly organized, validly exists and is in good standing under the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise laws of the rights represented by this Warrant; 3.3State of Nevada. The Company will, from time has full corporate power and authority to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of enter into this Warrant, Agreement and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant this Agreement has been duly authorized and validly authorized, executed and delivered by the Company and is a valid and binding obligation of the Company, enforceable against the Company enforceable in accordance with its terms, subject except as such enforcement may be limited by the United States Bankruptcy Code and laws effecting creditors rights, generally. (b) Subject to applicable bankruptcythe performance by Investor of its obligations under this Agreement and the accuracy of the representations and warranties of Investor, insolvency, reorganization, moratorium or other laws the offering and sale of general application affecting the enforcement shares will be exempt from the registration requirements of creditors’ rights;the Act. 3.6. (c) The execution and delivery of this Warrant are notby the Company of, and the issuance performance by the Company of the Warrant Shares upon exercise of its obligations under this Warrant Agreement in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and this Agreement will not contravene any lawprovision of applicable law or the charter documents of the Company or any agreement or other instrument binding upon the Company, or any judgment, order or decree of any governmental rule body, agency or regulation, judgment or order applicable to court having jurisdiction over the Company, and do not and will not conflict with no consent, approval, authorization or contravene any provision order of, or constitute a material default underqualification with, any material indenture, mortgage, contract governmental body or other instrument of which agency is required for the performance by the Company is a party or by which it is bound or require of its obligations under this Agreement in accordance with the consent or approval ofterms of this Agreement. (d) All of the information, facts and representations set forth in the giving Recitals section of notice to, this Agreement are in all respects true and accurate as of the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings date hereof and are incorporated as have already been obtained or made); and 3.7. The authorized capital stock representations and warranties of the Company shall consist of as if set forth in this Section 4. (ae) 130,000,000 shares of Common StockOther than as described in the Recitals, of which [29,070,786] shares are issued neither the Note nor the Purchased Debt has not been sold, transferred, assigned, exchanged, pledged, hypothecated or encumbered in any way, whether by the Company or by any other person. The Company makes this representation and outstandingwarranty after due inquiry. (f) After due inquiry the Company represents and warrants that at all times, the Company, the Original Lender and (b) 60,000,000 shares of Preferred Stockall subsequent transferees have complied in all respects with all securities and other applicable laws in relation with the issuance, par value $0.01 per share, of which [37,614,799] shares are issued holding and outstanding. All issued and outstanding shares transfers of the Company have Note. (g) Investor is not and has never been duly authorized an Affiliate of the Company, as that term is defined in the Act. (h) No broker or intermediary is involved in connection with the purchase of the Purchased Debt and validly issuedno commission or other remuneration is being paid in connection therewith. (i) The foregoing representations, warranties, covenants and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities lawsagreements shall survive the Closing.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, warrants and covenants to the Authority and agrees the Trustee as follows: 3.1. All Warrant Shares which are issued upon (i) The Company is duly incorporated under the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise laws of the rights represented by this Warrant; 3.3State of Delaware, is in good standing in the State of Delaware and the State and is duly authorized to conduct its business in the State. The Company will, from time to time, take has all such action as may be required to assure that authority under the par value per share laws of the Warrant Shares is at State of Delaware, the State and its Articles of Incorporation to enter into, execute, deliver and perform this Loan Agreement, the Purchase Contract, the Project Certificate and the Tax Agreement (collectively, the “Company Agreements”), and all times equal to or less than action on its part necessary for the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any valid execution and delivery of the terms of this Warrant, Company Agreements and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant Limited Offering Memorandum has been duly authorized and executed by effectively taken, and the Company and is a Agreements will be the legal, valid and binding obligation obligations of the Company enforceable in accordance with its their respective terms, subject to any applicable bankruptcy, reorganization, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights;rights generally from time to time in effect, and to applicable equitable principles. 3.6. (ii) The representations and covenants contained in the Tax Agreement and Project Certificate executed by the Company on the Closing Date are true and correct and are incorporated herein by this reference and shall have the same effect as if such representations and covenants were actually contained in this Loan Agreement. (iii) The execution and delivery of this Warrant are notthe Company Agreements and the Limited Offering Memorandum on the Company’s part have been duly authorized by all necessary action, and neither the issuance Company’s execution and delivery of the Warrant Shares upon exercise Company Agreements or the Limited Offering Memorandum, the Company’s consummation of this Warrant in accordance the transactions contemplated on its part thereby, nor the Company’s fulfillment of or compliance with the terms hereof will not be, in violation and conditions of the Company’s certificate of incorporation or bylawsCompany Agreements, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict conflicts with or contravene any provision ofresults in a material breach of the Articles of Incorporation, or constitute a material default under, any material indenture, mortgage, contract agreement or other instrument of to which the Company is now a party or by which it the Company is bound (except for any such breaches for which the Company has obtained a waiver or require a required consent), or constitutes a material default (or would constitute a material default with due notice or the consent passage of time or approval both) under any of the foregoing. (iv) All orders and approvals have been received and will be in effect prior to the Closing Date, and, no further consent, approval, authorization or order of, the giving of notice to, the or registration or filing with or the taking of any action in respect of or bywith, any federalcourt or governmental or regulatory agency or body is required with respect to the Company for the execution, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock delivery and performance by the Company of the Company Agreements. (v) The Company has received an executed counterpart of the Indenture and hereby consents to and approves of the provisions thereof. (vi) The information relating to the Project and use of the proceeds of the Bonds furnished by the Company in writing to Xxxxxxx and Xxxxxx LLP, as Bond Counsel, in connection with the issuance of the Bonds, is, to the best of the Company’s knowledge, true and correct in all material respects. (vii) The Company does not, as of the date of issuance of the Bonds, reasonably expect any use of moneys derived from the proceeds of the Bonds or any investment or reinvestment thereof or from the sale of the Project which would cause the Bonds to be classified as “arbitrage bonds” within the meaning of Section 148 of the Code. (viii) The Project consists of those facilities described in Exhibit A hereto (as such Exhibit A is from time to time amended or supplemented in accordance with Section 3.03 hereof), and the Company shall consist not consent to any changes in the Project which would adversely affect the Tax-Exempt status of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares the Bonds. The Company covenants that at all times when any Bonds are issued and outstanding, the Project will be geographically located in the corporate limits of the Authority. (ix) No litigation, proceedings or investigations are pending or, to the knowledge of the Company, threatened against the Company seeking to restrain, enjoin or in any way limit the approval or the execution and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares delivery of the Company Agreements and the Limited Offering Memorandum, or which would in any manner challenge or adversely affect the corporate existence, power and authority of the Company to enter into and carry out the transactions described in or contemplated by, or the execution, delivery, validity or performance by the Company of the Company Agreements and the Limited Offering Memorandum. In addition, except as described in the Limited Offering Memorandum (including all documents incorporated by reference therein), no litigation, proceedings or investigations are pending or, to the knowledge of the Company, threatened in writing against the Company, except litigation, proceedings or investigations involving claims for which the probable ultimate recoveries and the estimated costs and expenses of defense, in the opinion of the Company, (i) will be entirely within the applicable insurance policy limits (subject to applicable deductibles) or are not in excess of the total of the available assets held under applicable self- insurance programs or (ii) will not have been duly authorized a material adverse effect on the operations or condition, financial or otherwise, of the Company. (x) The information used in the preparation of the financial statements referred to in paragraph (xi) below, this Loan Agreement, the Tax Agreement and validly issuedany other written statement furnished by the Company to the Authority (including the descriptions and information contained or incorporated by reference in the Limited Offering Memorandum relating to (A) the Company, the Guarantor and the Project, (B) the operations and financial and other affairs of the Company and the Guarantor, (C) the application by the Company of the proceeds from the sale of the Bonds and (D) the participation by the Company and the Guarantor in the transactions contemplated herein and in the Limited Offering Memorandum) do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading. There is no fact which the Company has not disclosed to the Authority in writing which materially adversely affects or, so far as the Company can now foresee, will materially adversely affect the financial condition of the Company or the Guarantor, the ability of the Company to own and operate the Project, the Company’s ability to make payments under this Loan Agreement or the Guarantor’s ability to make payments under the Bond Guarantee when and as the same become due and payable. (xi) The audited consolidated statements of operations, cash flows and stockholders’ deficit of the Company for each of the fiscal years ended October 31, 2009, 2008 and 2007 and the consolidated balance sheets as of October 31, 2009 and 2008, all audited by KPMG, LLP, an independent registered public accounting firm, all included in and incorporated by reference in, the Official Statement, correctly and fairly present the financial condition of the Company as of said dates, and are fully paid and nonassessablethe results of the operations of the Company for each of such periods, respectively, all in accordance with GAAP consistently applied except as stated in the notes thereto, and there has been no material adverse change in the condition, financial or otherwise, of the Company since October 31, 2009 from that set forth in the information so utilized except as disclosed in the Official Statement. (xii) The Company has all necessary licenses and permits to occupy and operate its existing facilities or has obtained waivers thereof and has obtained, will obtain or will cause to be obtained or waived all necessary licenses and permits to acquire, construct, renovate, occupy and operate the Project as they become required, except where failure to obtain any such shares license or permit would not have been issued in compliance a material adverse effect. With respect to the construction, renovation and equipping of the Project with all proceeds of the Bonds, the Company has complied with and will comply with the Illinois Prevailing Wage Act, 820 ILCS 130/1 to 130/12, to the extent required by the Act and other applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby Chilco represents, warrantswarrants and covenants (and acknowledges that the Subscriber is relying on such representations, covenants warranties and agrees as followscovenants) that, at the Closing Date: 3.1. All Warrant a. each of Chilco and each of its subsidiaries is a valid and subsisting corporation duly incorporated and in good standing under the laws of its jurisdiction of incorporation; x. Xxxxxx will reserve or set aside sufficient shares of common stock in its treasury to issue the Common Shares which are issued issuable upon conversion of the exercise of this Warrant will, upon issuance, be validly issued, fully paidDebentures, and nonassessable, all such Securities will upon payment of the recited consideration and issuance be duly and validly issued as fully paid and non-assessable; c. the issue and sale of the Securities by Chilco does not subject to any preemptive rightsand will not conflict with, and free from all taxesdoes not and will not result in a breach of, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of its incorporating documents or any agreement or instrument to which Chilco is a party; x. Xxxxxx has complied and will comply fully with the requirements of all applicable corporate and securities laws in all matters relating to the offering of the Securities; e. this WarrantAgreement has been or will be by the Closing Date, duly authorized by all necessary corporate action on the part of Chilco, and shall at all times in good faith assist in performing Chilco has full corporate power and giving effect authority to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairmentundertake this offering; 3.5. This Warrant f. this Agreement has been duly authorized authorized, executed and executed delivered by the Company Corporation and is constitutes a valid and legally binding obligation of the Company Corporation enforceable against it in accordance with its terms, subject to applicable except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or and other laws of general application relating to or affecting the enforcement rights of creditors’ rights; 3.6. The execution creditors generally and delivery except as limited by the application of this Warrant equitable principles when equitable remedies are notsought, and by the fact that rights to indemnity, contribution and waiver, and the issuance ability to sever unenforceable terms, may be limited by applicable law; x. Xxxxxx is not an “investment company” within the meaning of the Warrant Shares upon exercise Investment Company Act of this Warrant 1940; h. neither Chilco nor any of its affiliates, nor any person acting on its or their behalf (i) has made or will make any “directed selling efforts” (as such term is defined in accordance with the terms hereof will not be, in violation Regulation S of the Company’s certificate U.S. Securities Act) in the United States, or (ii) has engaged in or will engage in any form of incorporation “general solicitation” or bylaws“general advertising” (as such terms are defined in Rule 502 (c) under Regulation D of the U.S. Securities Act) in the United States with respect to offers or sales of the Securities; and x. Xxxxxx has not, do not for a period of six months prior to the date hereof, sold, offered for sale or solicited, and will not contravene for a period of six months after the Closing Date, offer, sell or solicit, any law, governmental rule offer to buy any of its securities in a manner that would be integrated with the offer and sale of the Securities and would cause the exemption from registration set forth in Rule 506 of Regulation D or regulation, judgment or order applicable Rule 903 of Regulation S of the U.S. Securities Act to become unavailable with respect to the Company, offer and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock sale of the Company Securities. x. Xxxxxx shall consist of use commercially reasonable effort to file a registration statement on Form SB-2 (aor such other form as may be available) 130,000,000 to register common shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares issuable upon conversion of the Company have been duly authorized and validly issuedDebentures under the U.S. Securities Act, and are fully paid and nonassessablewithin ninety (90) days after June 30, and such shares have been issued in compliance with all applicable federal and state securities laws2007.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, represents and warrants to and covenants and agrees with the Warrantholder as follows: 3.1. All Warrant Shares (a) The Company (i) is a corporation formed on August 10, 1999 in Delaware, (ii) is a wholly-owned subsidiary of Franklin Capital Corporation, a Delaware corporation ("Parent"), with Parent owning 100% of the outstanding common stock of Company, (iii) has conducted no business prior to the date hereof, (iv) has incurred no liabilities prior to the date hereof, except for corporate franchise taxes which are issued upon have been fully paid, (v) has the exercise corporate power and authority and the legal right to own or lease and operate its property and to conduct the business in which it is currently engaged and (vi) is in compliance in all material respects with all laws, rules and regulations applicable to it. (b) The execution, delivery and performance by the Company of this Warrant will, upon issuance, be validly issued, fully paid(i) are within the Company's corporate powers, and nonassessable(ii) have been duly authorized by all necessary corporate action. (c) Other than the parties to this Warrant (as set forth in the preamble to this Warrant), not subject to no consent of any preemptive rightsperson and no authorization or approval or other action by, and free from all taxesno notice to or filing or registration with, liensany governmental authority or regulatory body is required in connection with the execution, security interests, charges, delivery and other encumbrances with respect to performance by the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which Company of this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment;any action contemplated hereby. 3.5. (d) This Warrant has been duly authorized and executed by constitutes the Company and is a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other laws similar law affecting creditors' rights generally, and general principles of general application affecting equity (regardless of whether considered in a proceeding in equity or at law). (e) The execution, delivery and performance by the enforcement of creditors’ rights; 3.6. The execution and delivery Company of this Warrant are notdo not contravene the terms of its certificate of incorporation or bylaws and do not violate, and conflict with or result in any breach or contravention of, or the issuance creation of any lien under, any law, statute or regulation applicable to the Company. (f) The number of Warrant Shares that are issuable upon the exercise of this Warrant (as set forth in accordance with the terms hereof will not be, in violation preamble to this Warrant) is equal to twelve and one half percent (12.5%) of the Company’s certificate of incorporation or bylaws, do not total issued and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized outstanding capital stock of the Company shall consist of (a) 130,000,000 shares of Common StockCompany, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares as of the Company have been duly authorized and validly issueddate hereof, and are calculated on a fully paid and nonassessablediluted, and such shares have been issued in compliance with all applicable federal and state securities lawsas converted basis without taking into account this Warrant or the Warrant Shares.

Company Representations, Warranties and Covenants. The Company hereby Little Squaw represents, warrantswarrants and covenants (and acknowledges that the Subscriber is relying on such representations, covenants warranties and agrees as followscovenants) that, at the Closing Date: 3.1. All Warrant Shares which are issued upon a. each of Little Squaw and each of its subsidiaries is a valid and subsisting corporation duly incorporated and in good standing under the exercise laws of this Warrant will, upon issuance, be validly issued, fully paidits jurisdiction of incorporation, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, Little Squaw has no subsidiaries other than taxes with respect to any transfer occurring contemporaneously with such issueas set forth in the Company’s annual report on Form 10-KSB/A for the year ended December 31, 2005; 3.2. During b. each of Little Squaw and each of its subsidiaries is duly registered and licensed to carry on business in the period within jurisdictions in which this Warrant may be exercised, it carries on business or owns property where so required by the Company laws of that jurisdiction; c. Little Squaw will at all times have authorized and reserved, and keep available free from preemptive rights, a reserve or set aside sufficient number of shares of common stock in its treasury to issue the Common Stock to provide for the Shares issuable upon exercise of the rights represented by this WarrantWarrants, and all such Securities will upon payment of the recited consideration and issuance be duly and validly issued as fully paid and non-assessable; 3.3. The Company will, from time to time, take all such action as may be required to assure that d. the par value per share issue and sale of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall notSecurities by Little Squaw does not and will not conflict with, by amendment of its certificate of incorporation or through any reorganizationand does not and will not result in a breach of, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of its incorporating documents or any agreement or instrument to which Little Squaw is a party; e. Little Squaw has complied and will comply fully with the requirements of all applicable corporate and securities laws in all matters relating to the offering of the Units; f. there are no legal or governmental actions, suits, proceedings or investigations pending or, to Little Squaw’s knowledge, threatened, to which Little Squaw or any of its subsidiaries is or may be a party or of which property owned or leased by Little Squaw or any of its subsidiaries is or may be the subject, or related to environmental, title, discrimination or other matters, which actions, suits, proceedings or investigations, individually or in the aggregate, could have a material adverse effect on Little Squaw; g. there are no judgments against Little Squaw or any of its subsidiaries, if any, which are unsatisfied, nor is Little Squaw or any of its subsidiaries, if any, subject to any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body; h. this WarrantAgreement has been or will be by the Closing Date, duly authorized by all necessary corporate action on the part of Little Squaw, and shall at all times in good faith assist in performing Little Squaw has full corporate power and giving effect authority to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairmentundertake this offering; 3.5. This Warrant i. this Agreement has been duly authorized authorized, executed and executed delivered by the Company Corporation and is constitutes a valid and legally binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or and other laws of general application relating to or affecting the enforcement rights of creditors’ rights; 3.6. The execution creditors generally and delivery except as limited by the application of this Warrant equitable principles when equitable remedies are notsought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law; j. subject to the accuracy of the representations and warranties of the Subscriber contained in this Agreement, the offer, sale and issuance of the Warrant Shares upon exercise of Securities as contemplated by this Warrant in accordance with Agreement are exempt from the terms hereof will not be, in violation registration requirements of the Company’s certificate of incorporation or bylawsU.S. Securities Act, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, from the registration or filing with qualifications requirements of the state securities or the taking “blue sky” laws and regulations of any action in respect of or by, any federal, applicable state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); andapplicable jurisdiction; 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 k. Little Squaw’s shares of Common Stockcommon stock are quoted for trading on the National Association of Securities Dealers over-the-counter electronic bulletin board (the “OTCBB”), l. no order ceasing, halting or suspending trading in securities of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares Little Squaw nor prohibiting the sale of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have securities has been issued in compliance with all applicable federal to and state securities laws.is outstanding against Little Squaw or its directors, officers or promoters, and, to the best of Little Squaw’s knowledge, no investigations or proceedings for such purposes are pending or threatened;

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances (other than those created by the Warrantholder or any predecessor-in-interest thereof) with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ ' rights; 3.6. The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s 's certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist consists of (a) 130,000,000 50,000,000 shares of Common Stock, of which [29,070,786] 17,047,080 shares are were issued and outstandingoutstanding as of August 17, 2001, and (b) 60,000,000 5,000,000 shares of Preferred Stock, par value $0.01 .01 per share, of which [37,614,799] 505,000 shares are were issued and outstandingoutstanding as of August 22, 2001. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized incorporated and executed is validly existing as a corporation in good standing under the laws of the State of California, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not individually or in the aggregate have a material adverse effect on the business, results of operations or financial condition of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"); and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not individually or in the aggregate have a Material Adverse Effect. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to except as enforcement hereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium reorganization or other similar laws of general application or court decisions affecting the enforcement of creditors’ rights;' rights generally and except as enforcement hereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 3.6. (3) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby, the Investor Shares will be validly issued, fully paid and nonassessable, and will conform to the description of the Common Stock contained in the Prospectus. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule violate the Articles of Incorporation (as amended to date) of the Company or regulation, judgment or order applicable the By-Laws (as amended to date) of the Company, and do not and will not conflict with or contravene result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental or regulatory agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets, except where such breach, violation, default or the failure to be in compliance would not individually or in the aggregate have a Material Adverse Effect or adversely affect the ability of the Company to consummate the transactions contemplated hereby; and no consent, approval, authorization, order, registration, filing or qualification of or with any such court or governmental or regulatory agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as have already been obtained may be required under federal or madestate securities or "blue sky" laws or in connection with the listing of the Offered Shares on the Nasdaq National Market. (5) The Company meets the requirements for the use of Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"); and 3.7, for the primary issuance of securities. The authorized capital stock Registration Statement has been declared effective by the Commission and at the time it became effective, and as of the date hereof, the Registration Statement complied and complies with Rule 415 under the Securities Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been initiated or, to the Company's knowledge, threatened by the Commission. On the effective date of the Registration Statement, the Registration Statement and the Prospectus fully conformed, and at the date of the Closing, the Registration Statement and the Prospectus will fully conform, in all material respects with the applicable provisions of the Securities Act and the applicable rules and regulations of the Commission thereunder; on the effective date of the Registration Statement, the Registration Statement did not, and at the date of the Closing, the Registration Statement will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; on the effective date of the Registration Statement, the Prospectus did not, and on the date the Prospectus Supplement is filed with the Commission pursuant to Rule 424(b) under the Securities Act and the date of the Closing, the Prospectus will not, contain an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and when filed with the Commission, the documents incorporated by reference in the Registration Statement and the Prospectus, taken as a whole, fully conformed or will fully conform in all material respects with the applicable provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the applicable rules and regulations of the Commission thereunder. (6) The consolidated financial statements and financial schedules of the Company shall consist included or incorporated by reference in the Registration Statement and the Prospectus have been prepared in conformity with generally accepted accounting principles (except, with respect to the unaudited consolidated financial statements, for the footnotes and subject to customary audit adjustments) applied on a consistent basis, are consistent in all material respects with the books and records of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstandingthe Company, and (b) 60,000,000 shares accurately present in all material respects the consolidated financial position, results of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued operations and outstanding. All issued and outstanding shares cash flow of the Company and its subsidiaries as of and for the periods covered thereby. (7) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as disclosed in or contemplated by the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the capital stock or long-term debt of the Company or any of its subsidiaries, the Company and its subsidiaries have not incurred any material liabilities or obligations, direct or contingent, nor entered into any material transactions not in the ordinary course of business and there has not been any material adverse change in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries considered as a whole, otherwise than as disclosed or incorporated by reference in or contemplated by the Prospectus. (8) Other than as set forth or incorporated by reference in the Prospectus, there are no legal, governmental or regulatory proceedings pending to which the Company or any of its subsidiaries is a party or of which any material property of the Company or any of its subsidiaries is the subject which, taking into account the likelihood of the outcome, the damages or other relief sought and other relevant factors, would individually or in the aggregate reasonably be expected to have a Material Adverse Effect or adversely affect the ability of the Company to consummate the transactions contemplated hereby; to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental or regulatory authorities or threatened by others. (9) The Company together with its subsidiaries owns and possesses all right, title and interest in and to, or has duly authorized licensed from third parties, all patents, patent rights, trade secrets, inventions, know-how, trademarks, trade names, copyrights, service marks and validly issuedother proprietary rights ("Intellectual Property") material to the business of the Company and each of its subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries has received any notice of infringement, misappropriation or conflict from any third party as to such that has not been resolved or disposed of and to the Company's knowledge, neither the Company nor any of its subsidiaries has infringed, misappropriated or otherwise conflicted with Intellectual Property of any third parties, which infringement, misappropriation or conflict would individually or in the aggregate have a Material Adverse Effect. (10) The conduct of the business of the Company and each of its subsidiaries is in compliance in all respects with applicable federal, state, local and foreign laws and regulations, except where the failure to be in compliance would not individually or in the aggregate have a Material Adverse Effect. (11) The Company is not, and does not intend to conduct its business in a manner in which it would become, an "investment company" as defined in Section 3(a) of the Investment Company Act of 1940, as amended. (12) The Investor shall have no obligation with respect to any fees incurred by the Company or any other Person (other than the Investor, if the Investor has agreed in writing to pay such fees) or with respect to any claims made by or on behalf of other Persons for fees or commissions payable by the Company to any broker, financial advisor or consultant, finder, selling agent, investment banker, bank or other Person, that may be due in connection with the transactions contemplated by this Agreement. The Company shall indemnify and hold harmless the Investor, its employees, officers, directors, trustees, partners, or any affiliate of the Investor, from and against any losses, claims, damages, costs (including the costs of preparation and reasonable attorney's fees) and expenses suffered in respect of such claimed or existing fees incurred by the Company or any other Person (other than the Investor, if the Investor has agreed in writing to pay such fees), as such fees and expenses are fully paid and nonassessableincurred. (13) Neither the Company nor to the Company's knowledge, and such shares have been issued in compliance any other Person acting on its behalf has provided the Investor or its agents or counsel with all applicable federal and state securities lawsany information that the Company believes constitutes material, non-public information.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All (1) The Company and each of its subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, with full power and authority (corporate and other) to perform its obligations under this Agreement and the Warrant Shares which are issued upon Agreement and to consummate the exercise transactions contemplated hereby and thereby. (2) The execution, delivery and performance of this Agreement and the Warrant willAgreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary action of the Company and each of the Agreement and the Warrant Agreemet has been duly executed and delivered by the Company; and this Agreement and the Warrant Agreement, upon issuancewhen duly executed and delivered by the Investor, will constitute a valid and legally binding instrument of the Company enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law) and except as the indemnification and contribution agreements of the Company in Section 5(d) hereof may be legally unenforceable. (3) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, the Investor Shares will be validly issued, fully paid, paid and nonassessable, not subject to any free of preemptive rights, rights and free from all taxes, liens, charges and security interests, charges, and other encumbrances with interests in respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant;issuance thereof. 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. (4) The execution and delivery of this Warrant are not, Agreement and the issuance Warrant Agreement, the consummation by the Company of the Warrant Shares upon exercise of this Warrant in accordance transactions herein and therein contemplated and the compliance by the Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, and thereof do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to violate the Certificate of Incorporation of the Company, and do not and will not conflict with or contravene the By-Laws of the Company, or result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice to, the registration or filing with Investor Shares or the taking consummation by the Company of any action in respect of or bythe other transactions contemplated by this Agreement, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as have already been obtained may be required under Federal or madestate securities or "blue sky" laws or, with respect to requirements applicable to the Investor. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A) through (F) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act. (A) the Company's Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 1998 (without exhibits); (B) Amendment No. 1 to the Company's Annual Report for the fiscal year ended December 31, 1998 on Form 10-K/A; (C) Notice to Shareholders and Proxy Statement for its Annual Meeting of Shareholders held June 16, 1999; (D) the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999; (E) the Company's Current Report on Form 8-K, filed with the SEC as of June 2, 1999; (F) Amendment No. 1 to Current Report on Form 8-K/A, filed with the SEC on August 2, 1999; (G) the Company's January 31, 2000 Press Release regarding Fourth Quarter and Year End Financial Results; and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Without limiting the covenants, representations and warranties provided in other sections of this Agreement, including without limitation those provided under Article IV hereof, the Company hereby representsfurther covenants with, warrants, covenants and agrees represents and warrants to the OOGEDT as of the Effective Date as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant willA. The Company has all necessary corporate and legal authority to enter into, upon issuance, be validly issued, fully paidexecute, and nonassessabledeliver this Agreement, not subject the Unit and all other documents referred to any preemptive rightsherein, and free from it has taken all taxesactions necessary to duly execute and deliver all such agreements, liensinstruments and documents. B. The Company shall comply with all of the terms, security interestsconditions, chargesprovisions, covenants, requirements, and warranties in this Agreement and all other encumbrances documents referred to herein. C. The Company has made no material false statement or misstatement of fact in connection with respect its receipt of the Award, and all of the information it previously submitted to the issue thereofOOGEDT or which it shall submit to the OOGEDT in the future relating to the Award or the disbursement of any of the Award is and shall be true and correct as of the date such information is submitted to the OOGEDT. D. The Company is not in violation of any provisions of its certificate of formation or bylaws (or other charter documents) or of the laws of the State of Texas, the laws of the state in which it was formed or any other federal, state or local statutes, laws, ordinances and regulations applicable to the Company and its business, and there are no actions, suits, or proceedings pending, or to its knowledge threatened, before any judicial body or governmental authority against or affecting it, other than taxes those specifically disclosed in the Application, and it is not in default with respect to any transfer occurring contemporaneously with such issue; 3.2. During order, writ, injunction, decree, or demand of any court or any governmental authority which would impair its ability to enter into this Agreement, execute and issue the period within which this Warrant may be exercisedUnit, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment perform any of its certificate of incorporation obligations hereunder or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue thereunder or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized and executed required by the Company and is a valid and binding obligation of transactions contemplated hereby. E. Neither the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. The execution and delivery of this Warrant are notAgreement, and the issuance or any document referred to herein, nor compliance with any of the Warrant Shares upon exercise of terms, conditions, requirements, or provisions contained in this Warrant in accordance with the terms hereof will not beAgreement or any documents referred to herein is prevented by, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision constitutes a breach of, or constitute shall result in a material default underbreach of, any material indentureterm, mortgagecondition, contract or other instrument provision of any agreement or document to which the Company is now a party or by which it is bound or require bound. F. The Company is a corporation duly organized, validly existing and in good standing under the consent or approval oflaws of its jurisdiction of incorporation and any other jurisdiction in which it is qualified to transact business as a foreign corporation, and has provided the OOGEDT sufficient evidence of such, and certifies that it owes no delinquent taxes to any taxing entity of the State of Texas as of the Effective Date. G. Except as set forth on Schedule 2.06(G), the giving Company, directly or indirectly, owns and has good title to or, in the case of notice toleased or licensed property and assets, has valid leasehold or license interests in, all property and assets necessary for the conduct of the Company’s business, in each case free and clear of all Liens and other encumbrances other than Permitted Liens. Texas Emerging Technology Fund Award and Security Agreement H. Except as set forth on Schedule 2.06(H), there are no existing or contemplated transactions of a material nature involving the Company by and between the members of the Company’s board of directors, its officers, and/or its investors, shareholders or other affiliates of the Company. I. The Company is not reasonably susceptible, and shall not in the future be reasonably susceptible, of being substantively consolidated with another Person in the context of bankruptcy or insolvency proceedings. J. The Company has no subsidiaries as of the Effective Date and the Company hereby covenants and agrees that it shall not, without the prior written consent of the OOGEDT (such consent to be granted or withheld in the sole discretion of the OOGEDT), create or acquire any subsidiary during the Security Term. If the OOGEDT shall consent to the formation or acquisition of a subsidiary (in its sole discretion), the registration Company shall provide the OOGEDT with a written supplement to Schedule 2.06(J) to this Agreement providing in reasonable detail the following information regarding such subsidiary: (i) its name, (ii) its jurisdiction of formation and (iii) the shares of capital stock (number of shares and percentage) of such subsidiary that are beneficially owned, directly or filing indirectly, by the Company. The Company shall promptly provide the OOGEDT with an amended Schedule 2.06(J) to reflect any change with respect to any such subsidiary that occurs during the Security Term. K. The Company’s jurisdiction of formation, legal name and organizational identification number, if any, and the location of the Company’s chief executive office or sole place of business, in each case as of the Effective Date, are specified on Schedule 2.06(K), and such Schedule 2.06(K) also lists any jurisdictions of incorporation, legal names and locations of the Company’s chief executive office or sole place of business for the five (5) years preceding the Effective Date. The Company hereby covenants and agrees that it shall not change its jurisdiction of formation, legal name, organizational identification number (if any) or the taking location of any action the Company’s chief executive office or sole place of business without first providing the OOGEDT with thirty (30) days prior written notice of the same, and then only in respect accordance with the other terms and conditions of this Agreement. L. The Company shall furnish a certificate executed by the Chief Executive Officer or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock Chief Financial Officer of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares on behalf of the Company have been duly authorized certifying that the representations and validly issued, warranties made by Company in this Section 2.06 (as modified by the disclosure in any schedule or exhibit hereto) shall be true and are fully paid correct in all material respects as of the Effective Date. Texas Emerging Technology Fund Award and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.Security Agreement

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, and covenants and agrees as followsto each other Party that: 3.1. All Warrant Shares which are issued upon (a) it is duly incorporated and validly existing and in good standing under the exercise laws of this Warrant will, upon issuance, be validly issued, fully paidthe State of Florida; (b) it is duly qualified and is properly licensed to do business, and nonassessable, not subject is in good standing (i) in each jurisdiction in which the conduct of its business requires it to any preemptive rightsso qualify or be licensed, and free from all taxes, liens, security interests, charges, and other encumbrances (ii) with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issueeach Regulatory Authority having jurisdiction over it; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant(c) it has, and shall at all times in good faith assist in performing maintain, all necessary licenses, permits, approvals, and giving effect registrations from all Regulatory Authorities which are required to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairmentperform its obligations hereunder; 3.5. This Warrant has been duly authorized and executed by (d) the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. The execution and delivery of this Warrant are not, Agreement by Company and the issuance performance of its obligations hereunder require no consent, approval, order or authorization of, or registration, declaration or filing with, or other action by, any governmental agency or authority, except for such consents, approvals, orders, authorizations, registrations, declarations or filings which Company has made or obtained; (e) the Warrant Shares upon exercise performance of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, its obligations hereunder do not and will not contravene violate any law, governmental rule or regulation, judgment or order applicable other agreement to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound a party; (f) it (i) has entered into a written Issuing Bank Agreement pursuant to which it is obligated or require otherwise authorized to engage InComm to perform the consent Processing Services in connection with the Prepaid Products, (ii) is in compliance with such Issuing Bank Agreement; and (iii) shall immediately notify InComm in the event that such agreement is terminated or approval ofnot renewed, either Company or Issuing Bank suspends or limits its performance under the giving Issuing Bank Agreement or provides notice of notice its intention not to renew the Issuing Bank Agreement, or such Issuing Bank Agreement is amended or otherwise modified in any way, or any action is taken by Company or Issuing Bank, which would impact the rights, obligations or liabilities of InComm; (g) it is not authorized to itself issue any of the Prepaid Products, and that the Issuing Bank Agreement reflects Issuing Bank’s authority under Applicable Law to issue such Prepaid Products; the Company Technologies do not infringe on any United States or other jurisdiction’s patent rights, copyrights, trademarks, trade dress, service marks, trade secret rights, or other proprietary rights of any third party; (h) as of the Effective Date of this Agreement, there are no pending or, to the knowledge of Company, threatened, Claims or litigation against Company that would adversely impact Company’s ability to perform its obligations under this Agreement, including, but not limited to, the registration any Claims or filing with litigation contesting Company’s ownership or the taking of right to use any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common StockTechnologies or its patents, of which [29,070,786] shares are issued and outstandingcopyrights, and (b) 60,000,000 shares of Preferred Stocktrademarks, par value $0.01 per shareservice marks, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of or trade secrets in connection with the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities lawsTechnologies.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment;hereof. 3.53.4. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ ' rights; 3.63.5. The execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, in violation of the Company’s 's certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than such consents, approvals, notices, actions or filings as have already been obtained or made); and 3.7. The authorized capital stock of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares of the Company have been duly authorized and validly issued, and are fully paid and nonassessable, and such shares have been issued in compliance with all applicable federal and state securities laws.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment and each of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid subsidiaries listed on Schedule II hereto (the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant “Subsidiaries”) has been duly authorized organized and executed has a valid existence and the authorization to transact business as a corporation under the laws of its jurisdiction of organization, with corporate power and authority to own and lease its properties and conduct its business as described in the Preliminary Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except for such jurisdictions wherein the failure to be so qualified and in good standing would not individually or in the aggregate have a material adverse effect on the business, results of operations or financial condition of the Company and its subsidiaries taken as a whole (a “ Material Adverse Effect ”). (2) No consent, approval, authorization, order, registration, filing or qualification of or with any such court or governmental, regulatory or self-regulatory agency or body is required for the valid authorization, execution, delivery and performance by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights; 3.6. The execution and delivery of this Warrant are not, and Agreement or the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not beInvestor Shares, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a material default under, any material indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations, filings or filings qualifications as have already been obtained may be required under the Securities Act or made); and 3.7state securities or “blue sky” laws. The authorized Company shall obtain the listing of the Investor Shares on the Nasdaq Global Market no later than the time of Closing. (3) The authorized, issued and outstanding capital stock of the Company shall consist is as set forth in the Preliminary Prospectus and as will be as set forth in the Final Prospectus under the caption “Capitalization” (other than for issuances after the dates thereof, if any, pursuant to employee benefit plans, or upon exercise of (a) 130,000,000 shares of outstanding options or warrants, as the case may be). The Common Stock, of which [29,070,786] shares are issued and outstandingincluding the Investor Shares, conforms, and (b) 60,000,000 shares in the case of Preferred Stockthe Final Prospectus, par value $0.01 per sharewill conform, of which [37,614,799] shares are issued in all material respects to the description thereof contained in the Preliminary Prospectus and outstandingthe Final Prospectus. All the issued and outstanding shares of the capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance, in all material respects, with all applicable laws. None of the outstanding shares of Common Stock of the Company were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described in the Preliminary Prospectus and those that will be described in the Final Prospectus. (4) The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and this Agreement, when duly executed and delivered by the parties hereto, will constitute a valid and legally binding instrument of the Company enforceable in accordance with its terms, except as enforcement hereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization or similar laws or court decisions affecting enforcement of creditors’ rights generally and except as enforcement hereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (5) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated by this Agreement, the Investor Shares will be validly issued, fully paid and nonassessable, and will conform to the description of the Common Stock contained in the Preliminary Prospectus. (6) The execution and delivery of this Agreement do not, and the compliance by the Company with the terms hereof will not, (i) violate the Articles of Incorporation (as amended to date) of the Company or the By-Laws (as amended to date) of the Company, (ii) result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of their properties or assets are subject, or (iii) result in a violation of, or failure to be in compliance with, any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental, regulatory or self-regulatory agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their properties or assets, except where such shares breach, violation, default or the failure to be in compliance would not individually or in the aggregate have a Material Adverse Effect or adversely affect the ability of the Company to issue and sell the Investor Shares. (7) The Company meets the requirements for the use of Form S-3 under the Securities Act for the primary issuance of securities. The Registration Statement has been declared effective by the Commission and at the time it became effective, and as of the date hereof, the Registration Statement complied and complies with Rule 415 under the Securities Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the Commission. On the effective date of the Registration Statement, the Registration Statement complied, on the date of the Prospectus, the Preliminary Prospectus complied, and at the date of the Closing, the Final Prospectus will comply, in compliance all material respects with the applicable provisions of the Securities Act and the applicable rules and regulations of the Commission thereunder; on the effective date of the Registration Statement, the Registration Statement did not, on the date of the Preliminary Prospectus, the Preliminary Prospectus did not, and at the date of the Closing, the Final Prospectus and other information provided in writing to the Investors, when ready together, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made (with respect to the Prospectus), not misleading; and when filed with the Commission, the documents incorporated by reference in the Registration Statement, the Prospectus and the Final Prospectus, taken as a whole, complied or will comply in all material respects with the applicable federal provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and state securities lawsthe applicable rules and regulations of the Commission thereunder. There is no material document of a character required to be described in the Registration Statement, the Preliminary Prospectus or the Final Prospectus or to be filed as an exhibit to the Registration Statement that is not described or filed as required. (8) The Company is not, and does not intend to conduct its business in a manner in which it would become, an “investment company” as defined in Section 3(a) of the Investment Company Act of 1940, as amended.

Company Representations, Warranties and Covenants. The Company hereby represents, warrants, covenants warrants and agrees as follows: 3.1. All Warrant Shares which are issued upon the exercise of this Warrant will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issue thereof, other than taxes with respect to any transfer occurring contemporaneously with such issue; 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant; 3.3. (1) The Company will, from time to time, take all such action as may be required to assure that the par value per share of the Warrant Shares is at all times equal to or less than the then effective Exercise Price; 3.4. The Company shall not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, spinoff, consolidation, merger, dissolution, issue or sale of securities or any other action or inaction, seek to avoid the observance or performance of any of the terms of this Warrant, and shall at all times in good faith assist in performing and giving effect to the terms hereof and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment; 3.5. This Warrant has been duly authorized organized and executed is validly existing in good standing under the laws of the jurisdiction of its organization, with full power and authority (corporate and other) to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. (2) The execution, delivery and performance of this Agreement by the Company and is the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary action of the Company and the Agreement has been duly executed and delivered by the Company; and this Agreement, when duly executed and delivered by the Investor, will constitute a valid and legally binding obligation instrument of the Company enforceable in accordance with its terms, subject to applicable except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium reorganization or other similar laws of general application affecting the enforcement of creditors’ rights;' rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law) and except as the indemnification and contribution agreements of the Company in Section 5(d) hereof may be legally unenforceable. 3.6. (3) The Investor Shares have been duly authorized by the Company, and when issued and delivered by the Company against payment therefor as contemplated hereby and in accordance with the terms of the Memorandum, the Investor Shares will be validly issued, fully paid and nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests in respect of the issuance thereof. (4) The execution and delivery of this Warrant are notAgreement, the consummation by the Company of the transactions herein contemplated and the issuance of compliance by the Warrant Shares upon exercise of this Warrant in accordance Company with the terms hereof will not be, in violation of the Company’s certificate of incorporation or bylaws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to violate the Articles of Organization of the Company, and do not and will not conflict with or contravene the By-Laws of the Company, or result in a breach or violation of any provision of the terms or provisions of, or constitute a material default under, any material indenture, mortgage, contract deed of trust, loan agreement or other agreement or instrument of to which the Company or any of its subsidiaries is a party or by which it the Company or any of its subsidiaries is bound or require to which any of their properties or assets are subject, or any applicable statute or any order, judgment, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the consent Company or approval ofany of its subsidiaries or any of their properties or assets; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the valid authorization, execution, delivery and performance by the Company of this Agreement, the giving issue of notice tothe Investor Sharesor the consummation by the Company of the other transactions contemplated by this Agreement, the registration or filing with or the taking of any action in respect of or by, any federal, state or local government authority or agency (other than except for such consents, approvals, noticesauthorizations, actions registrations or filings qualifications as have already been obtained may be required under Federal or madestate securities or "blue sky" laws or, with respect to requirements applicable to the Investor. (5) The information contained in the following documents, which the Company has furnished to the Investor does not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements therein in light of the circumstances in which they were made not misleading as of the respective final dates of the documents. Each of the documents listed in (A) through (E) below complied as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act as of the date filed with the Commission. (A) the Company's Annual Report to Stockholders on Form 10-KSB for the fiscal year ended December 31, 1999 (without exhibits); (B) the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2000; (C) the Company's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2000; (D) the Company's Current Report on Form 8-K filed on June 30, 2000; (E) the Company's Current Report on Form 8-K filed on July 31, 2000; and 3.7. (F) Notice to Stockholders and Proxy Statement for its Special Meeting in lieu of an Annual Meeting of Stockholders held May 30, 2000; (6) The authorized capital stock balance sheets contained in the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2000 have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, are consistent in all material respects with the books and records of the Company shall consist of (a) 130,000,000 shares of Common Stock, of which [29,070,786] shares are issued and outstanding, and (b) 60,000,000 shares of Preferred Stock, par value $0.01 per share, of which [37,614,799] shares are issued and outstanding. All issued and outstanding shares accurately present in all material respects the financial position of the Company and its subsidiaries as of June 30, 2000. There has been no material adverse change in the financial condition or business or results of operations of the Company or its subsidiaries since June 30, 2000. (7) Except as disclosed in the documents referred to in paragraph (5) above, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened in writing against the Company or any of its subsidiaries, wherein an unfavorable decision, ruling or finding would have been duly authorized a material adverse effect on the properties, business, condition (financial or other), or results of operations of the Company and validly issuedits subsidiaries taken as a whole or the transactions contemplated by this Agreement or any of the documents contemplated hereby or which would adversely affect the validity or enforceability of, and are fully paid and nonassessable, and or the authority or ability of the Company to perform its obligations under this Agreement or any of such shares have been issued in compliance with all applicable federal and state securities lawsother documents.