SMARTIRE SYSTEMS INC
EXHIBIT 10.9
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<DESCRIPTION>EXHIBIT 10.9
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<B><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Exhibit 10.9</P>
<P ALIGN="RIGHT">&nbsp;</P><IMG SRC="smartire.gif" ALIGN="right" HSPACE=12 WIDTH=163 HEIGHT=136>
</FONT><FONT FACE="Arial" SIZE=1><P>SmarTire Systems Inc.</FONT><FONT FACE="Arial" SIZE=2> <BR>
</B></FONT><FONT FACE="Arial" SIZE=1>Suite 150, 13151 Vanier Place <BR>
Richmond, British Columbia <BR>
Canada, V6V 2J1</P>
<P>T: 604.276.9884<BR>
F: 604.276.2350<BR>
www.smartire.com<BR>
OTCBB: SMTR</P>
</FONT><FONT FACE="Arial" SIZE=2><P>November 6, 2003</P></FONT>
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<P><FONT FACE="Arial" SIZE=2>Goldplate Investment Partners<BR>
515 Ave I<BR>
Brooklyn NY 11219<BR>
U.S.A.</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
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</TABLE>

<FONT FACE="Arial" SIZE=2><P>Dear Sirs/Mesdames:</P>
<P>&nbsp;</P>
<B><P ALIGN="CENTER">Common Stock Purchase Warrants Dated May 15, 2003</P>
</B><P ALIGN="JUSTIFY">We refer to the 1,196,581 common stock purchase warrants dated May 15, 2003 (the "Outstanding Warrants"), each entitling you, as a "Warrant Holder," to purchase one share of our common stock at an exercise price of US$0.2645 per share until May 15, 2008.</P>
<P ALIGN="JUSTIFY">SmarTire Systems Inc. ("SmarTire") is requesting that you agree to immediately exercise the Outstanding Warrants at a reduced exercise price of US$0.1771 per share on the terms and subject to the conditions described in this letter which, if accepted, executed and delivered by you, will form a binding agreement between SmarTire and yourself. In consideration of your agreement to immediately exercise your Outstanding Warrants, subject to applicable securities laws, SmarTire will issue to you 1,196,581 common stock purchase warrants (the "Replacement Warrants") exercisable at an exercise price of US$0.1771 per share for a period of five years. <B>The offer contained in this letter, which supersedes the offer contained in our letter to you dated October 27, 2003, shall remain open for acceptance until 4:30 p.m. (Vancouver time) on November 19, 2003.</P>
</B><P ALIGN="JUSTIFY">&#9;The terms and conditions of are agreement are as follows:</P>
<P ALIGN="JUSTIFY">&nbsp;</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">1.&#9;The exercise price of each Outstanding Warrant be reduced from $0.2645 per share to U.S.$0.1771 per share. The Outstanding Warrants, as amended hereby, shall continue in full force and effect.<A NAME="_Ref54498364"></P>
<P ALIGN="JUSTIFY">2.&#9;Subject to and immediately upon the issuance of the certificate representing the Replacement Warrants to the Warrant Holder pursuant to Section 4, the Warrant Holder shall exercise each Outstanding Warrant for cash.<A NAME="_Ref55095186"><A NAME="_Ref54498398"></A></P>
<P ALIGN="JUSTIFY">3.&#9;In consideration of the Warrant Holder's agreement to immediately exercise the Outstanding Warrants for cash, SmarTire hereby agrees to grant to the Warrant Holder 1,196,581 Replacement Warrants, each entitling the holder thereof to purchase one share of common stock in the capital of SmarTire at an exercise price of U.S.$0.1771 per share (each a "Warrant Share" and collectively with the Replacement Warrants, the "Securities") until 5:00 p.m. (Vancouver time) on that date that is five years following the date of issue of the Replacement Warrants.<A NAME="_Ref55100247"></A></P>
<P ALIGN="JUSTIFY">4.&#9;SmarTire agrees to issue to the Warrant Holder a certificate representing the Replacement Warrants, in the form attached as Appendix 1 hereto, as soon as practicable following delivery by the Warrant Holder to SmarTire of:</A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(a)&#9;one fully-executed copy of this agreement, and</P>
<P ALIGN="JUSTIFY">(b)&#9;a Prospective Investor Suitability Questionnaire in the form attached as Appendix 2 (the "US Questionnaire").</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">5.&#9;The Warrant Holder represents and warrants to SmarTire that:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(a)&#9;the answers of the Warrant Holder contained in the US Questionnaire are true and correct; and</P>
<P ALIGN="JUSTIFY">(b)&#9;the Warrant Holder is a company, other than a mutual fund or non-redeemable investment fund, that had net assets of at least CDN$5,000,000, as shown on its most recently prepared financial statements, or that it is otherwise an "accredited investor" within the meaning assigned in Multilateral Instrument 45-103 ("MI 45-103"), as adopted by the British Columbia Securities Commission.<A NAME="_Ref55096680"></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">6.&#9;SmarTire hereby grants the following registration rights to the Warrant Holder:<A NAME="_Ref55096669"></A></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(a)&#9;If SmarTire decides to file a registration statement (the "Registration Statement") under the Securities Act of 1933 (the "1933 Act") covering the distribution or sale of any securities of SmarTire other than the Warrant Shares, it shall forthwith give written notice (the "Registration Notice") to the holders of the Replacement Warrants (the "Holders") of such decision. The Holders shall have the right to elect, by written notice (the "Reply to Registration Notice") to be given to SmarTire not more than five business days following receipt of the Registration Notice, to have the Registration Statement cover the sale by the Holders of all of the Warrant Shares that are issuable upon exercise of Replacement Warrants.</A></P>
<P ALIGN="JUSTIFY">(b)&#9;Section 6(a) shall be subject to the right of SmarTire to include none or a lesser number of Warrant Shares for qualification under the Registration Statement at the direction (made reasonably) of any underwriter or agent engaged by SmarTire in connection with the offering.</P>
<P ALIGN="JUSTIFY">(c)&#9;The obligations of SmarTire under this Section 6 shall terminate and be of no further effect upon the earliest to occur of the following:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(i)&#9;when all Warrant Shares issuable under the Replacement Warrants shall have been sold pursuant to Rule 144 (or any successor provision) under the 1933 Act;</P>
<P ALIGN="JUSTIFY">(ii)&#9;when all Warrant Shares issuable under the Replacement Warrants shall have been otherwise transferred and a new certificate(s) for such Warrant Shares not bearing a legend restricting further transfer shall have been delivered by SmarTire; or</P>
<P ALIGN="JUSTIFY">(iii)&#9;that day that is three years following the original issue date of the last of the Warrant Shares to be issued.</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">(d)&#9;In the event of a registration pursuant to the provisions of this Section 6, SmarTire shall use its best efforts to cause the Warrant Shares so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Holders may reasonably request; provided, however, that SmarTire shall not by reason of this Section 6 be required to qualify to do business in any state in which it is not otherwise required to qualify to do business or to file a general consent to service of process.</P>
<P ALIGN="JUSTIFY">(e)&#9;SmarTire shall keep effective any registration or qualification contemplated by this Section 6 and shall from time to time amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document, and communication for such period of time as shall be required to permit the Holders to complete the offer and sale of the Warrant Shares covered thereby.</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">7.&#9;The Warrant Holder acknowledges and agrees that:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(a)&#9;none of the Replacement Warrants or the Warrant Shares have been registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the 1933 Act ("Regulation S"), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;</P>
<P ALIGN="JUSTIFY">(b)&#9;the Warrant Holder acknowledges that, except as provided in Section 6, SmarTire has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act; and</P>
<P ALIGN="JUSTIFY">(c)&#9;upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Securities will bear a restrictive legend in customary form.</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">8.&#9;All questions concerning the construction, validity, enforcement and interpretation of this agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein. </P></DIR>
</DIR>

<P ALIGN="JUSTIFY"></A>If you agree to the above terms, kindly sign two copies of this letter signifying your approval and acceptance and return one fully executed letter to the writer at your earliest convenience and in any event no later than <B>4:30 p.m. (Vancouver time) on November 19, 2003</B>.</P>
<P ALIGN="JUSTIFY">Yours truly,</P>
<B><P ALIGN="JUSTIFY">SMARTIRE SYSTEMS INC.</P>
</B><P ALIGN="JUSTIFY">Per: /s/ Jeff Finkelstein</P>
<P>Jeff Finkelstein<BR>
Chief Financial Officer</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">The undersigned hereby agrees to the foregoing terms and conditions of this agreement as of the date first above written. </P>
<B><P ALIGN="JUSTIFY">GOLDPLATE INVESTMENT PARTNERS</P>
</B><P>Per:<BR>
<BR>
/s/ Ron Shapiro<BR>
</FONT><FONT FACE="Arial" SIZE=1>Authorized Signatory</P>
</FONT><FONT FACE="Arial" SIZE=2><P>Ron Shapiro<BR>
</FONT><FONT FACE="Arial" SIZE=1>Name (Please Print)</P>
</FONT><FONT FACE="Arial" SIZE=2><P>Principal<BR>
</FONT><FONT FACE="Arial" SIZE=1>Title</P>
</FONT><I><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">APPENDIX 1</P>
</I><P ALIGN="JUSTIFY">NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "<U>SECURITIES ACT</U>"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES</P>
<B><P ALIGN="CENTER">STOCK PURCHASE WARRANT</P>
<P>&nbsp;</P>
</B><P ALIGN="CENTER">To Purchase ___________ Shares of Common Stock of</P>
<B><P ALIGN="CENTER">SMARTIRE SYSTEMS, INC.</P>
</B><P ALIGN="JUSTIFY">THIS STOCK PURCHASE WARRANT CERTIFIES that, for value received, _____________ (the "<U>Holder</U>"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after ____________, 2003 (the "<U>Initial Exercise Date</U>") and on or prior to the close of business on the fifth (5<SUP>th</SUP>) anniversary of the Initial Exercise Date (the "<U>Termination Date</U>") but not thereafter, to subscribe for and purchase from SmarTire Systems, Inc., a corporation continued in the Yukon Territory (the "<U>Company</U>"), up to ____________ shares (the "<U>Warrant Shares</U>") of Common Stock, without par value per share, of the Company (the "<U>Common Stock</U>"). The purchase price of one share of Common Stock (the "<U>Exercise Price</U>") under this Warrant shall be $0.1771, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. <B>Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the "<U>Purchase Agreement</U>"), dated May 15, 2003, between the Company and the investors signatory thereto.</P>
</B></FONT><FONT SIZE=2><P ALIGN="JUSTIFY">&nbsp;</P>
</FONT><FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">1.&#9;<U>Title to Warrant</U>. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.</P>
<P ALIGN="JUSTIFY">2.&#9;<U>Authorization of Shares</U>. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).</P>
<P ALIGN="JUSTIFY">3.&#9;<U>Exercise of Warrant.</U> </P>
<P ALIGN="JUSTIFY">(a)&#9;Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); <U>provided</U>, <U>however</U>, within five (5) Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. Certificates for shares purchased hereunder shall be delivered to the Holder within five (5) Trading Days from the delivery to the Company of the Notice of Exercise Form by facsimile copy, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above ("<U>Warrant Share Delivery Date</U>"); <U>provided</U>, <U>however</U>, in the event the Warrant is not surrendered or the aggregate Exercise Price is not received by the Company within five (5) Trading Days after the date on which the Notice of Exercise shall be delivered by facsimile copy, the Warrant Share Delivery Date shall be extended to the extent such five (5) Trading Day period is exceeded. This Warrant shall be deemed to have been exercised on the date the Notice of Exercise is delivered to the Company by facsimile copy. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid. If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares by the third (3<SUP>rd</SUP>) Trading Day after the Warrant Share Delivery Date, and if after such third Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "<U>Buy-In"</U>), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.</P>
<P ALIGN="JUSTIFY">(b)&#9;If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. </P>
<P ALIGN="JUSTIFY">(c)&#9;The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder's affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.&nbsp; For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, the Debentures and any other debentures or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.&nbsp; Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this Section 3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company's Transfer Agent setting forth the number of shares of Common Stock outstanding.&nbsp; Upon the written or oral request of the Holder, the Company shall within two (2) Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.&nbsp; In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61<SUP>st</SUP> day (or such later date, as determined by the Holder, as may be specified in such notice of waiver).</P>
<P ALIGN="JUSTIFY">(d)&#9;If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(A) = the Closing Price on the Trading Day preceding the date of such election;</P>
<P ALIGN="JUSTIFY">(B) = the Exercise Price of the Warrants, as adjusted; and </P>
<P ALIGN="JUSTIFY">(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">4.&#9;<U>No Fractional Shares or Scrip</U>. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.</P>
<P ALIGN="JUSTIFY">5.&#9;<U>Charges, Taxes and Expenses</U>. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.</P>
<P ALIGN="JUSTIFY">6.&#9;<U>Closing of Books</U>. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.</P>
<P ALIGN="JUSTIFY">7.&#9;<U>Transfer, Division and Combination</U>. </P>
<P ALIGN="JUSTIFY">(a)&#9;Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. </P>
<P ALIGN="JUSTIFY">(b)&#9;This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.</P>
<P ALIGN="JUSTIFY">(c)&#9;The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.</P>
<P ALIGN="JUSTIFY">(d)&#9;The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.</P>
<P ALIGN="JUSTIFY">(e)&#9;If, at the <A NAME="_DV_C75">time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective </A>registration<A NAME="_DV_C76"> statement under the Securities Act</A> and <A NAME="_DV_C78">under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without</A> registration <A NAME="_DV_C80">under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act</A>.</P>
<P ALIGN="JUSTIFY">8.&#9;<U>No Rights as Shareholder until Exercise</U>. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. </P>
<P ALIGN="JUSTIFY">9.&#9;<U>Loss, Theft, Destruction or Mutilation of Warrant</U>. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.</P>
<P ALIGN="JUSTIFY">10.&#9;<U>Saturdays, Sundays, Holidays, etc</U>. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.</P>
<P ALIGN="JUSTIFY">11.&#9;<U>Adjustments of Exercise Price and Number of Warrant Shares</U>.</P>
<P ALIGN="JUSTIFY">(a)&#9;<U>Stock Splits, etc.</U> The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.</P>
<P ALIGN="JUSTIFY">(b)&#9;<U>Anti-Dilution Provisions</U>. During the Exercise Period, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(i)&#9;<U>Adjustment of Exercise Price</U>. Except as set forth in Section 11(b)(ii)(E), if and whenever the Company issues or sells, or in accordance with Section 11(b) hereof is deemed to have issued or sold, any shares of Common Stock for an effective consideration per share of less than the then Exercise Price or for no consideration (such lower price, the "<U>Base Share Price</U>" and such issuances collectively, a "<U>Dilutive Issuance</U>"), then, the Exercise Price shall be reduced to equal the Base Share Price, <U>provided</U>, that for purposes hereof, all shares of Common Stock that are issuable upon conversion, exercise or exchange of Capital Share Equivalents shall be deemed outstanding immediately after the issuance of such Common Stock. Such adjustment shall be made whenever such shares of Common Stock or Capital Share Equivalents are issued.</P>
<P ALIGN="JUSTIFY">(ii)&#9;<U>Effect on Exercise Price of Certain Events</U>. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">(A)&#9;<U>Issuance of Rights or Options</U>. If the Company in any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities exercisable, convertible into or exchangeable for Common Stock ("<U>Convertible Securities</U>") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "<U>Options</U>") and the effective price per share for which Common Stock is issuable upon the exercise of such Options is less than the Exercise Price ("<U>Below Base Price Options</U>"), then the maximum total number of shares of Common Stock issuable upon the exercise of all such Below Base Price Options (assuming full exercise, conversion or exchange of Convertible Securities, if applicable) will, as of the date of the issuance or grant of such Below Base Price Options, be deemed to be outstanding and to have been issued and sold by the Company for such price per share and the maximum consideration payable to the Company upon such exercise (assuming full exercise, conversion or exchange of Convertible Securities, if applicable) will be deemed to have been received by the Company. For purposes of the preceding sentence, the "effective price per share for which Common Stock is issuable upon the exercise of such Below Base Price Options" is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or granting of all such Below Base Price Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of all such Below Base Price Options, plus, in the case of Convertible Securities issuable upon the exercise of such Below Base Price Options, the minimum aggregate amount of additional consideration payable upon the exercise, conversion or exchange thereof at the time such Convertible Securities first become exercisable, convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Below Base Price Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Exercise Price will be made upon the actual issuance of such Common Stock upon the exercise of such Below Base Price Options or upon the exercise, conversion or exchange of Convertible Securities issuable upon exercise of such Below Base Price Options. </P>
<P ALIGN="JUSTIFY">(B)&#9;<U>Issuance of Convertible Securities</U>. If the Company in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options) and the effective price per share for which Common Stock is issuable upon such exercise, conversion or exchange is less than the Exercise Price, then the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities will, as of the date of the issuance of such Convertible Securities, be deemed to be outstanding and to have been issued and sold by the Company for such price per share and the maximum consideration payable to the Company upon such exercise (assuming full exercise, conversion or exchange of Convertible Securities, if applicable) will be deemed to have been received by the Company. For the purposes of the preceding sentence, the "effective price per share for which Common Stock is issuable upon such exercise, conversion or exchange" is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange thereof at the time such Convertible Securities first become exercisable, convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities. No further adjustment to the Exercise Price will be made upon the actual issuance of such Common Stock upon exercise, conversion or exchange of such Convertible Securities.</P>
<P ALIGN="JUSTIFY">(C)&#9;<U>Change in Option Price or Conversion Rate</U>. If there is a change at any time in (i) the amount of additional consideration payable to the Company upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange of any Convertible Securities; or (iii) the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock (in each such case, other than under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such change will be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold.</P>
<P ALIGN="JUSTIFY">(D)&#9;<U>Calculation of Consideration Received</U>. If any Common Stock, Options or Convertible Securities are issued, granted or sold for cash, the consideration received therefor for purposes of this Warrant will be the amount received by the Company therefor, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Company will be the fair market value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the fair market value (closing bid price, if traded on any market) thereof as of the date of receipt. In case any Common Stock, Options or Convertible Securities are issued in connection with any merger or consolidation in which the Company is the surviving corporation, the amount of consideration therefor will be deemed to be the fair market value of such portion of the net assets and business of the non-surviving corporation as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair market value of any consideration other than cash or securities will be determined in good faith by an investment banker or other appropriate expert of national reputation selected by the Company and reasonably acceptable to the holder hereof, with the costs of such appraisal to be borne by the Company.</P>
<P ALIGN="JUSTIFY">(E)&#9;<U>Exceptions to Adjustment of Exercise Price</U>. Notwithstanding the foregoing, no adjustment will be made under this Section 11(b) in respect of (1) the granting of options to employees, officers and directors of the Company pursuant to any stock option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, or (2) upon the issuance or exercise of any Securities pursuant to the Purchase Agreement, or (3) upon the exercise of or conversion of any convertible securities, options or warrants issued and outstanding on the Original Issue Date, provided that the securities have not been amended since the date of the Purchase Agreement, or (4) acquisitions or strategic investments, the primary purpose of which is not to raise capital.</P></DIR>
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<P ALIGN="JUSTIFY">(iii)&#9;<U>Minimum Adjustment of Exercise Price</U>. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such <U>lesser</U> adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price. </P></DIR>
</DIR>

<P ALIGN="JUSTIFY">12.&#9;<U>Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets</U>. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event, or (b) cash equal to the value of this Warrant as determined in accordance with the Black-Sholes option pricing formula. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. </P>
<P ALIGN="JUSTIFY">13.&#9;<U>Voluntary Adjustment by the Company</U>. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.</P>
<P ALIGN="JUSTIFY">14.&#9;<U>Notice of Adjustment</U>. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.</P>
<P ALIGN="JUSTIFY">15.&#9;<U>Notice of Corporate Action</U>. If at any time:</P><DIR>
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<P ALIGN="JUSTIFY">(a)&#9;the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or</P>
<P ALIGN="JUSTIFY">(b)&#9;there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or</P>
<P ALIGN="JUSTIFY">(c)&#9;there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;</P></DIR>
</DIR>

<P ALIGN="JUSTIFY">then, in any one or more of such cases, the Company shall give to Holder (i) at least 20 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).</P>
<P ALIGN="JUSTIFY">16.&#9;<U>Authorized Shares</U>. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Principal Market upon which the Common Stock may be listed. </P>
<P ALIGN="JUSTIFY">Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.</P>
<P ALIGN="JUSTIFY">Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.</P>
<P ALIGN="JUSTIFY">17.&#9;<U>Miscellaneous</U>.</P><DIR>
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<P ALIGN="JUSTIFY">(a)&#9;<U>Jurisdiction</U>. This Warrant shall constitute a contract under the laws of New York, without regard to its conflict of law, principles or rules.</P>
<P ALIGN="JUSTIFY">(b)&#9;<U>Restrictions</U>. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.</P>
<P ALIGN="JUSTIFY">(c)&#9;<U>Nonwaiver and Expenses</U>. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. </P>
<P ALIGN="JUSTIFY">(d)&#9;<U>Notices</U>. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.</P>
<P ALIGN="JUSTIFY">(e)&#9;<U>Limitation of Liability</U>. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.</P>
<P ALIGN="JUSTIFY">(f)&#9;<U>Remedies</U>. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.</P>
<P ALIGN="JUSTIFY">(g)&#9;<U>Successors and Assigns</U>. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.</P>
<P ALIGN="JUSTIFY">(h)&#9;<U>Amendment</U>. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.</P>
<P ALIGN="JUSTIFY">(i)&#9;<U>Severability</U>. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.</P>
<P ALIGN="JUSTIFY">(j)&#9;<U>Headings</U>. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.</P></DIR>
</DIR>

<P ALIGN="CENTER">********************</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.</P>
<P>Dated: ______________, 2003</P><DIR>
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<B><P>SMARTIRE SYSTEMS, INC.</P>
</B><P>By:&#9;<BR>
Name:<BR>
Title:</P>
<P>&nbsp;</P></DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
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<B><P ALIGN="CENTER">NOTICE OF EXERCISE</P>
</B><P>To:&#9;SmarTire Systems, Inc.</P>
<P ALIGN="JUSTIFY">&#9;&#9;(1)&#9;The undersigned hereby elects to purchase ________ Warrant Shares of SmarTire Systems, Inc. pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.</P>
<P ALIGN="JUSTIFY">&#9;&#9;(2)&#9;Payment shall take the form of (check applicable box):</P><DIR>
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<P ALIGN="JUSTIFY">[ ] in lawful money of the United States; or</P>
<P ALIGN="JUSTIFY">[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(d), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 3(d).</P></DIR>
</DIR>
</DIR>
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<P ALIGN="JUSTIFY">&#9;&#9;(3)&#9;Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:</P>
<P ALIGN="JUSTIFY">&#9;&#9;&#9;_______________________________</P>
<P>&#9;&#9;&#9;</P>
<P>The Warrant Shares shall be delivered to the following:</P>
<P>&#9;&#9;&#9;_______________________________</P>
<P>&#9;&#9;&#9;</P>
<P>&#9;&#9;&#9;_______________________________</P>
<P>&#9;&#9;&#9;</P>
<P>&#9;&#9;&#9;_______________________________</P>
<P>&#9;&#9;(4)&#9;<U>Accredited Investor</U>. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.</P><DIR>
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<P>[PURCHASER]</P>
<P>&nbsp;</P>
<P>By: ______________________________<BR>
Name:<BR>
Title:</P>
<P>Dated: ________________________</P>
<P>&nbsp;</P>
</FONT><P ALIGN="CENTER">&nbsp;</P>
<B><FONT SIZE=2><P ALIGN="CENTER">ASSIGNMENT FORM</P></DIR>
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</B></FONT><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">(To assign the foregoing warrant, execute<BR>
this form and supply required information. <BR>
Do not use this form to exercise the warrant.)</P>
<P>&nbsp;</P>
</FONT><FONT SIZE=2><P ALIGN="JUSTIFY">FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to</P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="47%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>whose address is</FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>Dated:</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>Holder's Signature:</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>Holder's Address:</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
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<P>&nbsp;</TD>
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<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>Signature Guaranteed:</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><P>&nbsp;</P>
<P>&nbsp;</P>
<P>NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.</P>
<I><P ALIGN="CENTER">APPENDIX 2</P>
</I><B><U><P ALIGN="CENTER">U.S. PROSPECTIVE INVESTOR SUITABILITY QUESTIONNAIRE</P>
</B></U><P ALIGN="JUSTIFY">All capitalised terms herein, unless otherwise defined, have the meanings ascribed thereto in the Warrant Exercise and Subscription Agreement.</P>
<P ALIGN="JUSTIFY">This Questionnaire is for use by each Warrant Holder who is a US person (as that term is defined Regulation S of the United States Securities Act of 1933 (the "1933 Act")) and has indicated an interest in acquiring Securities of SmarTire Systems Inc. (the "Company"). The purpose of this Questionnaire is to assure the Company that each Warrant Holder will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws. The Company will rely on the information contained in this Questionnaire for the purposes of such determination. The Securities will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act. This Questionnaire is not an offer of the Securities or any other securities of the Company in any state other than those specifically authorized by the Company.</P>
<P ALIGN="JUSTIFY">All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, each Warrant Holder agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Securities hereunder.</P>
<P ALIGN="JUSTIFY">The Warrant Holder covenants, represents and warrants to the Company that:</P><DIR>
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<P ALIGN="JUSTIFY">1. &#9;it satisfies one or more of the categories of "<B>Qualified Institutional Buyer</B>", as defined by Rule 144A promulgated under the 1933 Act, as indicated below: (Please initial in the space provide those categories, if any, of an "Qualified Institutional Buyer" which the Warrant Holder satisfies.)</P></DIR>
</DIR>
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</DIR>
</FONT>
<P ALIGN="RIGHT"><TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=535>
<TR><TD WIDTH="16%" VALIGN="TOP">
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<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Any of the following entities, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity:</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(A) an <I>insurance company</I> as defined in Section 2(13) of the 1933 Act;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(B) an investment company registered under the Investment Company Act of 1940 (the "Investment Company Act") or any business development company as defined in Section 2(a)(48) of that Act;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(C) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(D) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(E) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(F) a trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in paragraph (1) (D) or (E), except trust funds that include as participants individual retirement accounts on H.R. 10 plans;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(G) a business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(H) an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation (other than a bank as defined in Section 3(a)(2) of the 1933 Act or a savings and loan association or other institution referenced in Section 3(a)(5)(A) of the 1933 Act or a foreign bank or savings and loan association or equivalent institution), partnership, or Massachusetts or similar business trust; or</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">(I) an <I>investment adviser</I> registered under the Investment Advisers Act; or</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A <I>dealer</I> registered pursuant to Section 15 of the Securities Exchange Act of 1934 (the "Exchange Act"), acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the dealer, <I>provided that</I> securities constituting the whole or a part of an unsold allotment to or subscription by a dealer as a participant in a public offering shall not be deemed to be owned by such dealer; or</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A <I>dealer</I> registered pursuant to Section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a qualified institutional buyer; or</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">An investment company registered under the Investment Company Act, acting for its own account or for the accounts of other qualified institutional buyers, that is part of a family of investment companies which own in the aggregate at least $100 million in securities of issuers, other than issuers that are affiliated with the investment company or are part of such family of investment companies; or</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">An entity, all of the equity owners of which are qualified institutional buyers, acting for its own account or the accounts of other qualified institutional buyers; or</FONT></TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A <I>bank</I> as defined in Section 3(a)(2) of the 1933 Act, any savings and loan association or other institution as referenced in Section 3(a)(5)(A) of the 1933 Act, <I>or </I>any foreign bank or savings and loan association or equivalent institution, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements, as of a date not more than 16 months prior to the date hereof in the case of a U.S. bank or savings and loan association, and not more than 18 months prior to the date hereof for a foreign bank or savings and loan association or equivalent institution.</FONT></TD>
</TR>
</TABLE>
</P>
<DIR>
<DIR>
<DIR>
<DIR>

<B><U><FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">OR:</P>
</B></U><P ALIGN="JUSTIFY">2.&#9;it satisfies one or more of the categories of "<B>Accredited Investor</B>", as defined by Regulation D promulgated under the 1933 Act, as indicated below: (Please initial in the space provide those categories, if any, of an "Accredited Investor" which the Warrant Holder satisfies.)</P></DIR>
</DIR>
</DIR>
</DIR>
</FONT>
<P ALIGN="RIGHT"><TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=535>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 1</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of US&nbsp;$5,000,000;</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 2</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A natural person whose individual net worth, or joint net worth with that person's spouse, on the date of purchase exceeds US&nbsp;$1,000,000;</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 3</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A natural person who had an individual income in excess of US&nbsp;$200,000 in each of the two most recent years or joint income with that person's spouse in excess of US&nbsp;$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 4</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A "bank" as defined under Section&nbsp;(3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section&nbsp;3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section&nbsp;15 of the <I>Securities Exchange Act of 1934</I> (United States); an insurance company as defined in Section&nbsp;2(13) of the 1933 Act; an investment company registered under the <I>Investment Company Act of 1940</I> (United States) or a business development company as defined in Section&nbsp;2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section&nbsp;301(c) or (d) of the <I>Small Business Investment Act of 1958</I> (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the <I>Employee Retirement Income Security Act of 1974</I> (United States) whose investment decisions are made by a plan fiduciary, as defined in Section&nbsp;3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 5</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A private business development company as defined in Section&nbsp;202(a)(22) of the <I>Investment Advisers Act of 1940</I> (United States);</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 6</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A director or executive officer of the Company;</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 7</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule&nbsp;506(b)(2)(ii) under the 1933 Act;</FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">Category 8</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;</FONT></TD>
</TR>
</TABLE>
</P>

<FONT FACE="Arial" SIZE=2><P ALIGN="JUSTIFY">&nbsp;</P><DIR>
<DIR>
<DIR>
<DIR>

<P ALIGN="JUSTIFY">Note that prospective Warrant Holders claiming to satisfy one of the above categories of Qualified Institutional Buyer or Accredited Investor may be required to supply the Company with a balance sheet, prior years' federal income tax returns or other appropriate documentation to verify and substantiate the Warrant Holder's status as a Qualified Institutional Buyer or an Accredited Investor, as the case may be.</P></DIR>
</DIR>
</DIR>
</DIR>

<P ALIGN="JUSTIFY">If the Warrant Holder is an entity which initialled Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity: </P>
<P ALIGN="JUSTIFY">______________________________________________________________________________</P>
<P ALIGN="JUSTIFY">______________________________________________________________________________</P>
<P ALIGN="JUSTIFY">The Warrant Holder hereby certifies that the information contained in this Questionnaire is complete and accurate and the Warrant Holder will notify the Company promptly of any change in any such information. If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the Warrant Holder represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.</P>
<P ALIGN="JUSTIFY">IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ______ day of __________________, 20_____.</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=139>
<P><FONT FACE="Arial" SIZE=2>If a Corporation, Partnership or<BR>
Other Entity:</P>
<U><P>&#9;</U><BR>
Print or Type Name of Entity</P>
<U><P>&#9;</U><BR>
Signature of Authorized Signatory</P>
<U><P>&#9;</U><BR>
Type of Entity</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP" HEIGHT=139><DIR>

<FONT FACE="Arial" SIZE=2><P>If an Individual:</P>
<U><P>&#9;</U><BR>
Signature</P>
<U><P>&#9;</U><BR>
Print or Type Name</P>
<U><P>&#9;</U><BR>
Social Security/Tax I.D. No.</DIR>
</FONT></TD>
</TR>
</TABLE>

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