Exhibit 10.13
 
[FORM OF SENIOR SECURED CONVERTIBLE NOTE]
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.  ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF.  THE
PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES
ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE
FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
 
Uni-Pixel, Inc.
 
SENIOR SECURED CONVERTIBLE NOTE
 
Issuance Date:  April 16, 2015
Original Principal Amount: 

FOR VALUE RECEIVED, Uni-Pixel, Inc., a Delaware corporation (the "Company"),
hereby promises to pay to _____________________________ or registered assigns
(the "Holder") in cash and/or in shares of Common Stock (as defined below) the
amount set out above as the Original Principal Amount (as reduced pursuant to
the terms hereof pursuant to redemption, conversion, amortization or otherwise,
the "Principal") when due, whether upon the Maturity Date (as defined below), on
any Installment Date with respect to the Installment Amount due on such
Installment Date, acceleration, redemption or otherwise (in each case in
accordance with the terms hereof) and to pay interest ("Interest") on any
outstanding Principal at the applicable Interest Rate from the date set out
above as the Issuance Date (the "Issuance Date") until the same becomes due and
payable, whether upon an Interest Date (as defined below), any Installment Date,
the Maturity Date, acceleration, conversion, redemption or otherwise (in each
case in accordance with the terms hereof).  This Senior Secured Convertible Note
(including all Senior Secured Convertible Notes issued in exchange, transfer or
replacement hereof, this "Note") is one of an issue of Senior Secured
Convertible Notes issued pursuant to the Securities Purchase Agreement on any
Closing Date (collectively, the "Notes" and such other issued Senior Secured
Convertible Notes, the "Other Notes").  Certain capitalized terms used herein
are defined in Section 29.
 
 
 

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(1) PAYMENTS OF PRINCIPAL; PREPAYMENT.  On each Installment Date, the Company
shall pay to the Holder an amount equal to the Installment Amount due on such
Installment Date in accordance with Section 8.  On the Maturity Date, the
Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as
defined in Section 24(b)) on such Principal and Interest.  The "Maturity Date"
shall be April 16, 2016, as may be extended at the option of the Holder (i) in
the event that, and for so long as, an Event of Default (as defined in Section
4(a)) shall have occurred and be continuing on the Maturity Date (as may be
extended pursuant to this Section 1) or any event shall have occurred and be
continuing on the Maturity Date (as may be extended pursuant to this Section 1)
that with the passage of time and the failure to cure would result in an Event
of Default and (ii) through the date that is ten (10) Business Days after the
consummation of a Change of Control in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5(b)) is
delivered prior to the Maturity Date.  Other than as specifically permitted by
this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and
Interest, if any.
 
(2) INTEREST.
 
(a) Interest on this Note shall commence accruing on the Issuance Date at the
Interest Rate on any outstanding Principal and shall be computed on the basis of
a 360-day year and twelve 30-day months and shall be payable in arrears for each
calendar month on the 1st of each subsequent calendar month (or if any such date
falls on a Holiday, the next day that is not a Holiday), beginning on June 1,
2015 (each, an "Interest Date").  Interest shall be payable on each Interest
Date, to the record holder of this Note on the applicable Interest Date in
shares of Common Stock ("Interest Shares") so long as there has been no Equity
Conditions Failure during the period from the applicable Interest Notice Date
(as defined below) through the applicable Interest Date; provided, however, that
the Company, at its option following written notice to the Holder and each
holder of Other Notes, may pay Interest on any Interest Date in cash ("Cash
Interest") or in a combination of Cash Interest and Interest Shares.  The
Company shall deliver a written notice (each, an "Interest Election Notice") to
the Holder and each holder of Other Notes on or prior to the applicable Interest
Notice Due Date (the date such notice is delivered to the Holder and all holders
of Other Notes, the "Interest Notice Date") which notice (i) either (a) confirms
that Interest to be paid on such Interest Date shall be paid entirely in
Interest Shares, or (b) elects to pay Interest on such Interest Date as Cash
Interest or, provided that there is no Equity Conditions Failure, a combination
of Cash Interest and Interest Shares and specifies the amount of Interest that
shall be paid as Cash Interest and the amount of Interest, if any, that shall be
paid in Interest Shares which amounts, when added together, must at least equal
the applicable Interest due on such Interest Date, and (ii) if Interest is to be
paid, in whole or in part, in Interest Shares, certifies that there has been no
Equity Conditions Failure as of such Interest Notice Date.  If there is an
Equity Conditions Failure as of the Interest Notice Date, then unless the
Company has elected to pay such Interest as Cash Interest, the applicable
Interest Election Notice shall indicate that unless the Holder waives the Equity
Conditions Failure, the Interest shall be paid as Cash Interest.  If the Company
confirmed (or is deemed to have confirmed by operation of this Section 2) the
payment of the applicable Interest in Interest Shares, in whole or in part, and
if there was no Equity Conditions Failure as of the applicable Interest Notice
Date (or is deemed to have certified that there has been no Equity Conditions
 
 
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Failure in connection with such Interest payment in Interest Shares by operation
of this Section 2) but an Equity Conditions Failure occurred between the
applicable Interest Notice Date and any time prior to the applicable Interest
Date (an "Interest Interim Period"), the Company shall provide the Holder a
subsequent notice to that effect indicating that unless the Holder waives the
Equity Conditions Failure, the Interest shall be paid as Cash Interest.  If
there is an Equity Conditions Failure (which is not waived in writing by the
Holder) during such Interest Interim Period, then at the option of the Holder,
the Holder may require the Company to pay the amount of Interest payable on the
applicable Interest Date as Cash Interest.  If any portion of Interest for a
particular Interest Date shall be paid in Interest Shares, then on the
applicable Interest Date, the Company shall issue to the Holder, in accordance
with Section 2(b), the applicable Interest Shares.  All Interest Shares shall be
fully paid and nonassessable shares of Common Stock (rounded to the nearest
whole share in accordance with Section 3(a)).  If the Company does not timely
deliver an Interest Election Notice in accordance with this Section 2(a), then
the Company shall be deemed to have delivered an irrevocable Interest Election
Notice confirming the payment of Interest in Interest Shares and shall be deemed
to have certified that in connection with the delivery of Interest Shares on the
applicable Interest Date no Equity Conditions Failure has occurred.  Except as
expressly provided in this Section 2, the Company shall pay the applicable
Interest in Common Stock and/or cash to the Holder and all holders of Other
Notes pursuant to this Section 2 and pursuant to the corresponding provisions of
the Other Notes in the same ratio of the Interest Shares and/or Cash Interest
hereunder.
 
(b) When any Interest Shares are to be paid on an Interest Date, the Company
shall (i) (a) provided that the Company's transfer agent (the "Transfer Agent")
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer Program, credit such aggregate number of Interest Shares to
which the Holder shall be entitled to the Holder's or its designee's balance
account with DTC through its Deposit/Withdrawal At Custodian system, or (b) if
the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or if the Company does not have a transfer agent, issue and
deliver on the applicable Interest Date, to the address set forth in the
register maintained by the Company for such purpose pursuant to the Securities
Purchase Agreement or to such address as specified by the Holder in writing to
the Company at least two (2) Business Days prior to the applicable Interest Date
a certificate, registered in the name of the Holder or its designee, for the
number of Interest Shares to which the Holder shall be entitled, and (ii) with
respect to each Interest Date, pay to the Holder, in cash by wire transfer of
immediately available funds, the amount of any Cash Interest.
 
(c) Prior to the payment of Interest on an Interest Date, Interest on this Note
shall accrue at the Interest Rate and be payable by way of inclusion of the
Interest in the Conversion Amount (as defined in Section 3(b)(i)) on each
Conversion Date (as defined in Section 3(c)(i)) in accordance with Section
3(c)(i) and on each Redemption Date in accordance with the provisions of this
Note.  From and after the occurrence and during the continuance of an Event of
Default, the Interest Rate shall be increased to eighteen percent (18.0%) per
annum.  In the event that such Event of Default is subsequently cured, the
adjustment referred to in the preceding sentence shall cease to be effective as
of the date of such cure; provided, that the Interest as calculated and unpaid
at such increased rate during the continuance of such Event of Default shall
continue to apply to the extent relating to the days after the occurrence of
such Event of Default through and including the date of cure of such Event of
Default; provided,
 
 
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further, that for the purpose of this Section 2, such Event of Default shall not
be deemed cured unless and until any accrued and unpaid Interest shall be paid
to the Holder, including, without limitation, Interest accrued at the increased
rate of eighteen percent (18.0%) per annum.  The Company shall pay any and all
taxes (other than the Holder's income taxes) that may be payable with respect to
the issuance and delivery of shares of Common Stock as Interest pursuant to this
Section 2.
 
(3) CONVERSION OF NOTES.  At any time or times after the Issuance Date, this
Note shall be convertible into shares of the Company's common stock, par value
$0.001 per share (the "Common Stock"), on the terms and conditions set forth in
this Section 3.
 
(a) Conversion Right.  Subject to the provisions of Section 3(d), at any time or
times on or after the Issuance Date, the Holder shall be entitled to convert any
portion of the outstanding and unpaid Conversion Amount into fully paid and
nonassessable shares of Common Stock in accordance with Section 3(c), at the
Conversion Rate (as defined below).  The Company shall not issue any fraction of
a share of Common Stock upon any conversion.  If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company shall round
such fraction of a share of Common Stock up to the nearest whole share.  The
Company shall pay any and all transfer, stamp and similar taxes that may be
payable with respect to the issuance and delivery of Common Stock upon
conversion of any Conversion Amount.
 
(b) Conversion Rate.  The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the
"Conversion Rate").
 
(i) "Conversion Amount" means the sum of (A) the portion of the Principal to be
converted, amortized, redeemed or otherwise with respect to which this
determination is being made, (B) accrued and unpaid Interest with respect to
such Principal and (C) accrued and unpaid Late Charges, if any, with respect to
such Principal and Interest.
 
(ii) "Conversion Price" means, as of any Conversion Date or other date of
determination, the lesser of (a) $8.47 per share, subject to adjustment as
provided herein and (b) from and after the Company's failure to pay an Event of
Default Redemption Price (as defined in Section 4(b)) on or prior to the third
(3rd) Business Day immediately following the applicable Event of Default
Redemption Date (as defined in Section 11(a)), 85% of the lowest Closing Sale
Price of the Common Stock during the thirty (30) Trading Day period immediately
prior to the applicable Conversion Date.
 
(c) Mechanics of Conversion.
 
(i) Optional Conversion.  To convert any Conversion Amount into shares of Common
Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by
facsimile or electronic mail (or otherwise deliver), for receipt on or prior to
11:59 p.m., New York time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to
the Company and (B)
 
 
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 if required by Section 3(c)(iii), surrender this Note to a common carrier for
delivery to the Company as soon as practicable on or following such date (or an
indemnification undertaking with respect to this Note in the case of its loss,
theft or destruction).  On or before the first (1st) Business Day following the
date of receipt of a Conversion Notice, the Company shall transmit by facsimile
or electronic mail a confirmation of receipt of such Conversion Notice to the
Holder and the Transfer Agent.  On or before the third (3rd) Trading Day
following the date of receipt of a Conversion Notice (the "Share Delivery
Date"), the Company shall (x) provided that the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, credit such aggregate
number of shares of Common Stock to which the Holder shall be entitled to the
Holder's or its designee's balance account with DTC through its Deposit
Withdrawal At Custodian system or (y) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver to the
address as specified in the Conversion Notice, a certificate, registered in the
name of the Holder or its designee, for the number of shares of Common Stock to
which the Holder shall be entitled.  If this Note is physically surrendered for
conversion as required by Section 3(c)(iii) and the outstanding Principal of
this Note is greater than the Principal portion of the Conversion Amount being
converted, then the Company shall as soon as practicable and in no event later
than three (3) Business Days after receipt of this Note and at its own expense,
issue and deliver to the Holder a new Note (in accordance with Section 17(d))
representing the outstanding Principal not converted.  The Person or Persons
entitled to receive the shares of Common Stock issuable upon a conversion of
this Note shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Conversion Date, irrespective of the date
such Conversion Shares are credited to the Holder's account with DTC or the date
of delivery of the certificates evidencing such Conversion Shares, as the case
may be.  In the event that the Holder elects to convert a portion of the
Principal amount of this Note prior to any applicable Installment Date, the
Conversion Amount so converted shall be deducted in reverse order starting from
the final Installment Amount to be paid hereunder on the final Installment Date,
unless the Holder otherwise indicates and allocates among any Installment Dates
hereunder in the applicable Conversion Notice.
 
(ii) Company's Failure to Timely Convert.  If the Company shall fail on or prior
to the Share Delivery Date to issue and deliver a certificate to the Holder, if
the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, or credit the Holder's balance account with DTC, if the
Transfer Agent is participating in the DTC Fast Automated Securities Transfer
Program, for the number of shares of Common Stock to which the Holder is
entitled upon the Holder's conversion of any Conversion Amount (a "Conversion
Failure"), then (A) the Company shall pay damages to the Holder for each Trading
Day of such Conversion Failure in an amount equal to 1.5% of the product of (1)
the sum of the number of shares of Common Stock not issued to the Holder on or
prior to the Share Delivery Date and to which the Holder is entitled, and (2)
any trading price of the Common Stock selected by the Holder in writing as in
effect at any time during the period beginning on the applicable Conversion Date
and ending on the applicable Share Delivery Date and (B) the Holder, upon
written notice to the Company, may void its Conversion Notice with respect to,
and retain or have returned, as the case may be, any portion of this Note that
has not been converted
 
 
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 pursuant to such Conversion Notice; provided that the voiding of a Conversion
Notice shall not affect the Company's obligations to make any payments which
have accrued prior to the date of such notice pursuant to this Section 3(c)(ii)
or otherwise.  In addition to the foregoing, if the Company shall fail on or
prior to the Share Delivery Date to issue and deliver a certificate to the
Holder, if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, or credit the Holder's balance account with DTC, if
the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, for the number of shares of Common Stock to which the Holder
is entitled upon the Holder's conversion of any Conversion Amount or on any date
of the Company's obligation to deliver shares of Common Stock as contemplated
pursuant to clause (y) below, and if on or after such Trading Day the Holder
purchases (in an open market transaction or otherwise) Common Stock to deliver
in satisfaction of a sale by the Holder of Common Stock issuable upon such
conversion that the Holder anticipated receiving from the Company (a "Buy-In"),
then the Company shall, within three (3) Trading Days after the Holder's request
and in the Holder's discretion, either (x) pay cash to the Holder in an amount
equal to the Holder's total purchase price (including brokerage commissions and
other out-of-pocket expenses, if any) for the shares of Common Stock so
purchased (the "Buy-In Price"), at which point the Company's obligation to issue
and deliver such certificate or credit the Holder's balance account with DTC for
the shares of Common Stock to which the Holder is entitled upon the Holder's
conversion of the applicable Conversion Amount shall terminate, or (y) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such shares of Common Stock or credit the Holder's balance account
with DTC for such shares of Common Stock and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) any trading price of the Common
Stock selected by the Holder in writing as in effect at any time during the
period beginning on the applicable Conversion Date and ending on the applicable
Share Delivery Date.
 
(iii) Registration; Book-Entry. The Company shall maintain a register (the
"Register") for the recordation of the names and addresses of the holders of
each Note and the Principal amount of the Notes (and stated interest thereon)
held by such holders (the "Registered Notes").  The entries in the Register
shall be conclusive and binding for all purposes absent manifest error.  The
Company and the holders of the Notes shall treat each Person whose name is
recorded in the Register as the owner of a Note for all purposes, including,
without limitation, the right to receive payments of Principal and Interest, if
any, hereunder, notwithstanding notice to the contrary.  A Registered Note may
be assigned or sold in whole or in part only by registration of such assignment
or sale on the Register.  Upon its receipt of a request to assign or sell all or
part of any Registered Note by a Holder, the Company shall record the
information contained therein in the Register and issue one or more new
Registered Notes in the same aggregate Principal amount as the Principal amount
of the surrendered Registered Note to the designated assignee or transferee
pursuant to Section 17.  Notwithstanding anything to the contrary in this
Section 3(c)(iii), a Holder may assign any Note or any portion thereof to an
Affiliate of such Holder or a Related Fund of such Holder without delivering a
request to assign or sell such Note to the Company and the recordation of such
assignment or sale in the Register (a "Related Party Assignment"); provided,
that
 
 
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 (x) the Company may continue to deal solely with such assigning or selling
Holder unless and until such Holder has delivered a request to assign or sell
such Note or portion thereof to the Company for recordation in the Register; (y)
the failure of such assigning or selling Holder to deliver a request to assign
or sell such Note or portion thereof to the Company shall not affect the
legality, validity, or binding effect of such assignment or sale and (z) such
assigning or selling Holder shall, acting solely for this purpose as a
non-fiduciary agent of the Company, maintain a register (the "Related Party
Register") comparable to the Register on behalf of the Company, and any such
assignment or sale shall be effective upon recordation of such assignment or
sale in the Related Party Register.  Notwithstanding anything to the contrary
set forth herein, upon conversion of any portion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this
Note to the Company unless (A) the full Conversion Amount represented by this
Note is being converted or (B) the Holder has provided the Company with prior
written notice (which notice may be included in a Conversion Notice) requesting
reissuance of this Note upon physical surrender of this Note.  The Holder and
the Company shall maintain records showing the Principal, Interest and Late
Charges, if any, converted and the dates of such conversions or shall use such
other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Note upon conversion.
 
(iv) Pro Rata Conversion; Disputes.  In the event that the Company receives a
Conversion Notice from this Note and one or more holder of Other Notes for the
same Conversion Date and the Company can convert some, but not all, of such
portions of this Note and the Other Notes submitted for conversion, the Company,
subject to Section 3(d), shall convert from the Holder and each holder of Other
Notes electing to have this Note or the Other Notes converted on such date a pro
rata amount of such holder's portion of the Note and its Other Notes submitted
for conversion based on the Principal amount of this Note and the Other Notes
submitted for conversion on such date by such holder relative to the aggregate
Principal amount of this Note and all Other Notes submitted for conversion on
such date.  In the event of a dispute as to the number of shares of Common Stock
issuable to the Holder in connection with a conversion of this Note, the Company
shall issue to the Holder the number of shares of Common Stock not in dispute
and resolve such dispute in accordance with Section 22.
 
(d) Limitations on Conversions.
 
(i)Beneficial Ownership.  The Company shall not effect the conversion of any
portion of this Note, and the Holder shall not have the right to convert any
portion of this Note, to the extent that after giving effect to such conversion,
the Holder together with the other Attribution Parties collectively would
beneficially own in excess of [4.99%] [9.99%] (the "Maximum Percentage") of the
shares of Common Stock outstanding immediately after giving effect to such
conversion.  For purposes of the foregoing sentence, the aggregate number of
shares of Common Stock beneficially owned by the Holder and the other
Attribution Parties shall include the number of shares of Common Stock held by
the Holder and all other Attribution Parties plus the number of shares of Common
Stock issuable upon conversion of this Note with respect to which the
determination of such sentence is being made, but shall exclude shares of Common
Stock
 
 
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which would be issuable upon (i) conversion of the remaining, nonconverted
portion of this Note beneficially owned by the Holder or any of the other
Attribution Parties and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred stock or warrants,
including the Other Notes and Warrants) beneficially owned by the Holder or any
other Attribution Party subject to a limitation on conversion or exercise
analogous to the limitation contained in this Section 3(d)(i).  For purposes of
this Section 3(d)(i), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act.  For purposes of determining the number
of outstanding shares of Common Stock the Holder may acquire upon the conversion
of the Note without exceeding the Maximum Percentage, the Holder may rely on the
number of outstanding shares of Common Stock as reflected in (i) the Company's
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other public filing with the SEC, as the case may be, (ii)
a more recent public announcement by the Company or (iii) any other written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding (the "Reported Outstanding Share Number").  If the
Company receives a Conversion Notice from a Holder at a time when the actual
number of outstanding shares of Common Stock is less than the Reported
Outstanding Share Number, the Company shall notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such
Conversion Notice would otherwise cause the Holder's beneficial ownership, as
determined pursuant to this Section 3(d)(i), to exceed the Maximum Percentage,
the Holder must notify the Company of a reduced number of shares of Common Stock
to be purchased pursuant to such Conversion Notice.  For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one (1)
Trading Day confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Note, by the Holder and
any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported.  In the event that the issuance of shares of Common
Stock to the Holder upon conversion of this Note results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate,
more than the Maximum Percentage of the number of outstanding shares of Common
Stock (as determined under Section 13(d) of the Exchange Act), the number of
shares so issued by which the Holder's and the other Attribution Parties'
aggregate beneficial ownership exceeds the Maximum Percentage (the "Excess
Shares") shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. Upon
delivery of a written notice to the Company, the Holder may from time to time
increase (with such increase not effective until the sixty-first (61st) day
after delivery of such notice) or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% as specified in such notice; provided that (i)
any such increase in the Maximum Percentage will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company and (ii)
any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Notes that is not an
Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Note in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the
Exchange Act.  The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 3(d)(i) to the extent necessary to correct this paragraph (or any
portion of this paragraph) which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 3(d)(i) or to
make changes or supplements necessary or desirable to properly give effect to
such limitation.  The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Note.
 
 
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(ii) Principal Market Regulation.  The Company shall not be obligated to issue
any shares of Common Stock pursuant to the terms of this Note, and the Holder
shall not have the right to receive pursuant to the terms of this Note any
shares of Common Stock, if the issuance of such shares of Common Stock would
exceed the aggregate number of shares of Common Stock which the Company may
issue pursuant to the terms of the Notes and upon exercise of the Warrants
without breaching the Company's obligations under the rules or regulations of
the Principal Market (the "Exchange Cap"), except that such limitation shall not
apply in the event that the Company (i) obtains the approval of its shareholders
as required by the applicable rules of the Principal Market for issuances of
Common Stock in excess of such amount or (ii) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Required Holders.  Until such approval
or written opinion is obtained, no purchaser of the Notes pursuant to the
Securities Purchase Agreement (the "Purchasers") shall be issued in the
aggregate, pursuant to the terms of the Notes or upon exercise of the Warrants,
shares of Common Stock in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the Principal amount of
Notes issued to such Purchaser pursuant to the Securities Purchase Agreement on
all Closing Dates and the denominator of which is the aggregate principal amount
of all Notes issued to the Purchasers pursuant to the Securities Purchase
Agreement on all Closing Dates (with respect to each Purchaser, the "Exchange
Cap Allocation").  In the event that any Purchaser shall sell or otherwise
transfer any of such Purchaser's Notes, the transferee shall be allocated a pro
rata portion of such Purchaser's Exchange Cap Allocation, and the restrictions
of the prior sentence shall apply to such transferee with respect to the portion
of the Exchange Cap Allocation allocated to such transferee.  In the event that
any holder of Notes shall convert all of such holder's Notes into a number of
shares of Common Stock which, in the aggregate, is less than such holder's
Exchange Cap Allocation, then the difference between such holder's Exchange Cap
Allocation and the number of shares of Common Stock actually issued to such
holder shall be allocated to the respective Exchange Cap Allocations of the
remaining holders of Notes on a pro rata basis in proportion to the aggregate
principal amount of the Notes then held by each such holder.  In the event that
the Company is prohibited from issuing any Conversion Shares for which a
Conversion Notice has been received as a result of the operation of this Section
3(d)(ii), then unless the Holder elects to void such conversion, the Holder may
require the Company to pay to the Holder within three (3) Trading Days of the
attempted conversion, cash in exchange for cancellation of the Conversion Amount
that is subject to such Conversion Notice, at a price per share of Common Stock
that would have been issuable upon such conversion if this Section 3(d)(ii) were
not in effect equal to the highest trading price of the Common Stock in effect
at any time during the period beginning on the applicable Conversion Date and
ending on the date the Company makes the payment provided for in this sentence.
 
 
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(4) RIGHTS UPON EVENT OF DEFAULT.
 
(a) Event of Default.  Each of the following events shall constitute an "Event
of Default":
 
(i) the failure of the applicable Registration Statement required to be filed
pursuant to the Registration Rights Agreement to be filed within the applicable
time period specified in the Registration Rights Agreement or to be declared
effective by the SEC on or prior to the date that is sixty (60) days after the
applicable Effectiveness Deadline (as defined in the Registration Rights
Agreement), or, while the applicable Registration Statement is required to be
maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason
(including, without limitation, the issuance of a stop order) or is unavailable
to any holder of the Notes for sale of all of such holder's Registrable
Securities in accordance with the terms of the Registration Rights Agreement,
and such lapse or unavailability continues for a period of ten (10) consecutive
Trading Days or for more than an aggregate of thirty (30) Trading Days in any
365-day period (other than days during an Allowable Grace Period (as defined in
the Registration Rights Agreement));
 
(ii) the suspension from trading or failure of the Common Stock to be listed on
an Eligible Market for a period of three (3) consecutive Trading Days or for
more than an aggregate of ten (10) Trading Days in any 365-day period;
 
(iii) the Company's (A) failure to cure a Conversion Failure by delivery of the
required number of shares of Common Stock within five (5) Business Days after
the applicable Conversion Date or (B) notice, written or oral, to the Holder or
any holder of the Other Notes, including by way of public announcement or
through any of its agents, at any time, of its intention not to comply with a
request for conversion of this Note or any Other Notes into shares of Common
Stock that is tendered in accordance with the provisions of this Note or the
Other Notes, other than pursuant to Section 3(d) (and analogous provisions under
the Other Notes);
 
(iv) at any time following the fifth (5th) consecutive Business Day that the
Holder's Authorized Share Allocation is less than the sum of (A) 200% of the
number of shares of Common Stock that the Holder would be entitled to receive
upon a conversion of the full Conversion Amount of this Note (without regard to
any limitations on conversion set forth in Section 3(d) or otherwise) and (B)
the number of shares of Common Stock that the Holder would be entitled to
receive upon exercise in full of the Holder's Warrants (without regard to any
limitations on exercise set forth in the Warrants);
 
 
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(v) the Company's failure to pay to the Holder any amount of Principal,
Interest, Late Charges or other amounts when and as due under this Note
(including, without limitation, the Company's failure to pay any redemption,
Installment Amount, Late Charges or other amounts) or any other Transaction
Document (as defined in the Securities Purchase Agreement) or any other
agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby to which the Holder is a
party, except, in the case of a failure to pay Interest and/or Late Charges when
and as due, in which case only if such failure continues for a period of at
least an aggregate of three (3) Business Days;
 
(vi) any default under, redemption of or acceleration prior to maturity of any
Indebtedness of the Company or any of its Subsidiaries (as defined in Section
3(a) of the Securities Purchase Agreement) aggregating in excess of $200,000,
other than with respect to this Note or any Other Notes;
 
(vii) the Company or any of its Subsidiaries, pursuant to or within the meaning
of Title 11, U.S. Code, or any similar Federal, foreign or state law for the
relief of debtors (collectively, "Bankruptcy Law"), (A) commences a voluntary
case, (B) consents to the entry of an order for relief against it in an
involuntary case, (C) consents to the appointment of a receiver, trustee,
assignee, liquidator or similar official (a "Custodian"), (D) makes a general
assignment for the benefit of its creditors or (E) admits in writing that it is
generally unable to pay its debts as they become due;
 
(viii) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company or any of its
Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or
any of its Subsidiaries or (C) orders the liquidation of the Company or any of
its Subsidiaries;
 
(ix) a final judgment or judgments for the payment of money aggregating in
excess of $200,000 are rendered against the Company or any of its Subsidiaries
and which judgments are not, within sixty (60) days after the entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within sixty
(60) days after the expiration of such stay; provided, however, that any
judgment which is covered by insurance or an indemnity from a credit worthy
party shall not be included in calculating the $200,000 amount set forth above
so long as the Company provides the Holder a written statement from such insurer
or indemnity provider (which written statement shall be reasonably satisfactory
to the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company will receive the proceeds of such insurance or
indemnity within thirty (30) days of the issuance of such judgment;
 
 
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(x) other than as specifically set forth in another clause of this Section 4(a),
the Company or any of its Subsidiaries breaches in any material respect (except
for any representation, warranty, covenant or other term or condition of any
Transaction Document that is qualified by materiality or Material Adverse
Effect, with respect to which the Company or any of its Subsidiaries breaches in
any respect) any representation, warranty, covenant or other term or condition
of any Transaction Document, except, in the case of a breach of a covenant or
other term or condition of any Transaction Document which is curable, only if
such breach continues for a period of at least an aggregate of five (5) Business
Days;
 
(xi) any breach or failure in any respect to comply with either Sections 8 or 14
of this Note;
 
(xii) the Company or any Subsidiary shall fail to perform or comply with any
covenant or agreement contained in the Security Agreement as defined in the
Securities Purchase Agreement) to which it is a party;
 
(xiii) any material provision of any Security Document (as defined in the
Securities Purchase Agreement) (as determined by the Collateral Agent (as
defined in the Securities Purchase Agreement)) shall at any time for any reason
(other than pursuant to the express terms thereof) cease to be valid and binding
on or enforceable against the Company or any Subsidiary intended to be a party
thereto, or the validity or enforceability thereof shall be contested by any
party thereto, or a proceeding shall be commenced by the Company or any
Subsidiary or any governmental authority having jurisdiction over any of them,
seeking to establish the invalidity or unenforceability thereof, or the Company
or any Subsidiary shall deny in writing that it has any liability or obligation
purported to be created under any Security Document;
 
(xiv) any Security Document or any other security document, after delivery
thereof pursuant hereto, shall for any reason fail or cease to create a valid
and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien (as defined in Section 14(c)) in favor of the
Collateral Agent for the benefit of the holders of the Notes on any Collateral
(as defined in the Security Documents) purported to be covered thereby;
 
(xv) any bank at which any deposit account, blocked account, or lockbox account
of the Company or any Subsidiary is maintained shall fail to comply with any
material term of any deposit account, blocked account, lockbox account or
similar agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of the Company or any
Subsidiary shall fail to comply with any of the terms of any investment property
control agreement to which such Person is a party (it being understood that only
accounts pursuant to which the Collateral Agent has requested account control
agreements should be subject to this clause (xv));
 
(xvi) If (a) there shall occur and be continuing any "Event of Default" (or any
comparable term) under, and as defined in, the documents evidencing or governing
the Subordinated Notes, (b) any of the obligations under the Transaction
Documents for any reason shall cease to be "Senior Indebtedness" (or any
comparable terms) under, and as defined in, the documents evidencing or
governing the Subordinated Notes, (c) any Indebtedness other than the
obligations under the Transaction Documents shall constitute "Senior
Indebtedness" (or any comparable term) under, and as defined in, the documents
evidencing or governing the Subordinated Notes, (d) any holder of the
Subordinated Notes shall fail to perform or comply with any of the subordination
provisions of the documents evidencing or governing such Subordinated Notes, or
(e) the subordination provisions of the documents evidencing or governing the
Subordinated Notes shall, in whole or in part, terminate, cease to be effective
or cease to be legally valid, binding and enforceable against any holder of the
Subordinated Notes;
 
 
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(xvii) any material damage to, or loss, theft or destruction of, any Collateral
or a material amount of property of the Company, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at any facility of the Company or any Subsidiary, if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect (as
defined in the Securities Purchase Agreement);
 
(xviii) a false or inaccurate certification (including a false or inaccurate
deemed certification) by the Company that the Equity Conditions are satisfied or
that there has been no Equity Conditions Failure or as to whether any Event of
Default has occurred;
 
(xix) the Company's failure, within fifteen (15) days after the Initial Closing
Date (as defined in the Securities Purchase Agreement), to deliver to the
Collateral Agent account control agreements in full force and effect, in form
and substance satisfactory to the Collateral Agent, duly executed by the Company
and/or its Subsidiaries (as applicable) and such bank or financial institution
(as applicable), or enter into other arrangements in form and substance
satisfactory to the Collateral Agent, with respect to each of the Collection
Account (as defined in the Securities Purchase Agreement), the Cash Balance
Account (as defined in the Securities Purchase Agreement) and each other account
required under Section 5(i) of the Security Agreement; or
 
(xx) any Event of Default (as defined in the Other Notes) occurs with respect to
any Other Notes.
 
(b) Redemption Right.  Upon the occurrence of an Event of Default with respect
to this Note or any Other Note, the Company shall within three (3) Business Day
deliver written notice thereof via facsimile or electronic mail and overnight
courier (an "Event of Default Notice") to the Holder.  At any time after the
earlier of the Holder's receipt of an Event of Default Notice and the Holder
becoming aware of an Event of Default, the Holder may require the Company to
redeem (an "Event of Default Redemption") all or any portion of this Note by
delivering written notice thereof (the "Event of Default Redemption Notice") to
the Company, which Event of Default Redemption Notice shall indicate the portion
of this Note the Holder is electing to require the Company to redeem.  Each
portion of this Note subject to redemption by the Company pursuant to this
Section 4(b) shall be redeemed by the Company in cash by wire transfer of
immediately available funds at a price equal to the greater of (x) 115% of the
Conversion Amount being redeemed and (y) the product of (A) the Conversion
Amount being redeemed and (B) the quotient determined by dividing (I) the
greatest Closing Sale Price of the shares of Common Stock during the period
beginning on the date immediately preceding
 
 
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such Event of Default and ending on the date the Holder delivers the Event of
Default Redemption Notice, by (II) the lowest Conversion Price in effect during
such period (the "Event of Default Redemption Price").  Redemptions required by
this Section 4(b) shall be made in accordance with the provisions of Section
11.  To the extent redemptions required by this Section 4(b) are deemed or
determined by a court of competent jurisdiction to be prepayments of the Note by
the Company, such redemptions shall be deemed to be voluntary prepayments and
any such prepayment shall not constitute a breach of Section (1) of this Note.
Notwithstanding anything to the contrary in this Section 4, but subject to
Section 3(d), until the Event of Default Redemption Price (together with any
interest thereon) is paid in full, the Conversion Amount submitted for
redemption under this Section 4(b) (together with any interest thereon) may be
converted, in whole or in part, by the Holder into Common Stock pursuant to
Section 3. In the event of a partial redemption of this Note pursuant hereto,
the Principal amount redeemed shall be deducted in reverse order starting from
the final Installment Amount to be paid hereunder on the final Installment Date,
unless the Holder otherwise indicates and allocates among any Installment Dates
hereunder in the applicable Event of Default Redemption Notice.  The parties
hereto agree that in the event of the Company's redemption of any portion of the
Note under this Section 4(b), the Holder's damages would be uncertain and
difficult to estimate because of the parties' inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder.  Accordingly, any Event of Default
redemption premium due under this Section 4(b) is intended by the parties to be,
and shall be deemed, a reasonable estimate of the Holder's actual loss of its
investment opportunity and not as a penalty.
 
(5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
 
(a) Assumption.  The Company shall not enter into or be party to a Fundamental
Transaction unless (i)  the Successor Entity assumes in writing all of the
obligations of the Company under this Note and the other Transaction Documents
in accordance with the provisions of this Section 5(a) pursuant to written
agreements in form and substance satisfactory to the Required Holders and
approved by the Required Holders prior to such Fundamental Transaction,
including agreements, if so requested by the Holder, to deliver to each holder
of Notes in exchange for such Notes a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to the
Notes, including, without limitation, having a principal amount and interest
rate equal to the principal amounts and the interest rates of the Notes then
outstanding held by such holder, having similar conversion rights and having
similar ranking and security to the Notes, and satisfactory to the Required
Holders and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common capital stock is quoted on or listed
for trading on an Eligible Market.  Any security issuable or potentially
issuable to the Holder pursuant to the terms of this Note on the consummation of
a Fundamental Transaction shall be registered and freely tradable by the Holder
without any restriction or limitation or the requirement to be subject to any
holding period pursuant to any applicable securities laws.  No later than (i)
thirty (30) days prior to the occurrence or consummation of any Fundamental
Transaction or (ii) if later, the first Trading Day following the date the
Company first becomes aware of the occurrence or potential occurrence of a
Fundamental Transaction, the Company shall deliver written notice thereof via
facsimile or electronic mail and overnight courier to the Holder.  Upon the
occurrence or consummation of any Fundamental Transaction, and it shall be a
required condition to the
 
 
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occurrence or consummation of any Fundamental Transaction that, the Company and
the Successor Entity or Successor Entities, jointly and severally, shall succeed
to, and the Company shall cause any Successor Entity or Successor Entities to
jointly and severally succeed to, and be added to the term "Company" under this
Note (so that from and after the date of such Fundamental Transaction, each and
every provision of this Note referring to the "Company" shall refer instead to
each of the Company and the Successor Entity or Successor Entities, jointly and
severally), and the Company and the Successor Entity or Successor Entities,
jointly and severally, may exercise every right and power of the Company prior
thereto and shall assume all of the obligations of the Company prior thereto
under this Note with the same effect as if the Company and such Successor Entity
or Successor Entities, jointly and severally, had been named as the Company in
this Note, and, solely at the request of the Holder, if the Successor Entity
and/or Successor Entities is a publicly traded corporation whose common capital
stock is quoted on or listed for trading on an Eligible Market, shall deliver
(in addition to and without limiting any right under this Note) to the Holder in
exchange for this Note a security of the Successor Entity and/or Successor
Entities evidenced by a written instrument substantially similar in form and
substance to this Note and convertible for a corresponding number of shares of
capital stock of the Successor Entity and/or Successor Entities (the "Successor
Capital Stock") equivalent (as set forth below) to the shares of Common Stock
acquirable and receivable upon conversion of this Note (without regard to any
limitations on the conversion of this Note) prior to such Fundamental
Transaction (such corresponding number of shares of Successor Capital Stock to
be delivered to the Holder shall equal the greater of (I) the quotient of (A)
the aggregate dollar value of all consideration (including cash consideration
and any consideration other than cash ("Non-Cash Consideration"), in such
Fundamental Transaction, as such values are set forth in any definitive
agreement for the Fundamental Transaction that has been executed at the time of
the first public announcement of the Fundamental Transaction or, if no such
value is determinable from such definitive agreement, as determined in
accordance with Section 22 with the term "Non-Cash Consideration" being
substituted for the term "Conversion Price") that the Holder would have been
entitled to receive upon the happening of such Fundamental Transaction or the
record, eligibility or other determination date for the event resulting in such
Fundamental Transaction, had this Note been converted immediately prior to such
Fundamental Transaction or the record, eligibility or other determination date
for the event resulting in such Fundamental Transaction (without regard to any
limitations on the conversion of this Note) (the "Aggregate Consideration")
divided by (B) the per share Closing Sale Price of such corresponding Successor
Capital Stock on the Trading Day immediately prior to the consummation or
occurrence of the Fundamental Transaction and (II) the product of (A) the
Aggregate Consideration and (B) the highest exchange ratio pursuant to which any
shareholder of the Company may exchange Common Stock for Successor Capital
Stock) (provided, however, to the extent that the Holder's right to receive any
such shares of publicly traded common stock (or their equivalent) of the
Successor Entity would result in the Holder and its other Attribution Parties
exceeding the Maximum Percentage, if applicable, then the Holder shall not be
entitled to receive such shares to such extent (and shall not be entitled to
beneficial ownership of such shares of publicly traded common stock (or their
equivalent) of the Successor Entity as a result of such consideration to such
extent) and the portion of such shares shall be held in abeyance for the Holder
until such time or times, as its right thereto would not result in the Holder
and its other Attribution Parties exceeding the Maximum Percentage, at which
time or times the Holder shall be delivered such shares to the extent as if
there had been no such limitation), and such
 
 
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security shall be satisfactory to the Holder, and with an identical conversion
price to the Conversion Price hereunder (such adjustments to the number of
shares of capital stock and such conversion price being for the purpose of
protecting after the consummation or occurrence of such Fundamental Transaction
the economic value of this Note that was in effect immediately prior to the
consummation or occurrence of such Fundamental Transaction, as elected by the
Holder solely at its option).  Upon occurrence or consummation of the
Fundamental Transaction, and it shall be a required condition to the occurrence
or consummation of such Fundamental Transaction that, the Company and the
Successor Entity or Successor Entities shall deliver to the Holder confirmation
that there shall be issued upon conversion of this Note at any time after the
occurrence or consummation of the Fundamental Transaction, as elected by the
Holder solely at its option, shares of Common Stock, Successor Capital Stock or,
in lieu of the shares of Common Stock or Successor Capital Stock (or other
securities, cash, assets or other property purchasable upon the conversion of
this Note prior to such Fundamental Transaction), such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights), which for purposes of clarification may
continue to be shares of Common Stock, if any, that the Holder would have been
entitled to receive upon the happening of such Fundamental Transaction or the
record, eligibility or other determination date for the event resulting in such
Fundamental Transaction, had this Note been converted immediately prior to such
Fundamental Transaction or the record, eligibility or other determination date
for the event resulting in such Fundamental Transaction (without regard to any
limitations on the conversion of this Note), as adjusted in accordance with the
provisions of this Note.  The provisions of this Section 5(a) shall apply
similarly and equally to successive Fundamental Transactions.
 
(b) Redemption Right.  No sooner than twenty-five (25) days nor later than
twenty (20) days prior to the consummation of a Change of Control, but not prior
to the public announcement of such Change of Control, the Company shall deliver
written notice thereof via facsimile or electronic mail and overnight courier to
the Holder (a "Change of Control Notice").  At any time during the period
beginning on the earlier to occur of (x) any oral or written agreement by the
Company or any of its Subsidiaries, upon consummation of which the transaction
contemplated thereby would reasonably be expected to result in a Change of
Control, (y) the Holder becoming aware of a Change of Control and (z) the
Holder's receipt of a Change of Control Notice and ending twenty-five (25)
Trading Days after the date of the consummation of such Change of Control, the
Holder may require the Company to redeem (a "Change of Control Redemption") all
or any portion of this Note by delivering written notice thereof ("Change of
Control Redemption Notice") to the Company, which Change of Control Redemption
Notice shall indicate the Conversion Amount the Holder is electing to require
the Company to redeem.  The portion of this Note subject to redemption pursuant
to this Section 5(b) shall be redeemed by the Company in cash by wire transfer
of immediately available funds at a price equal to the greater of (x) 125% of
the Conversion Amount being redeemed and (y) the product of (A) the Conversion
Amount being redeemed and (B) the quotient determined by dividing (I) the
greatest Closing Sale Price of the shares of Common Stock during the period
beginning on the date immediately preceding the earlier to occur of (x) the
consummation of the Change of Control and (y) the public announcement of such
Change of Control and ending on the date the Holder delivers the Change of
Control Redemption Notice, by (II) the lowest Conversion Price in effect during
such period (the "Change of Control Redemption Price").  Redemptions required by
this Section 5 shall be made in accordance with the provisions of Section 12 and
shall have priority to payments to shareholders in connection with a Change of
 
 
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Control.  To the extent redemptions required by this Section 5(b) are deemed or
determined by a court of competent jurisdiction to be prepayments of the Note by
the Company, such redemptions shall be deemed to be voluntary
prepayments.  Notwithstanding anything to the contrary in this Section 5, but
subject to Section 3(d), until the Change of Control Redemption Price (together
with any interest thereon) is paid in full, the Conversion Amount submitted for
redemption under this Section 5(b) (together with any interest thereon) may be
converted, in whole or in part, by the Holder into Common Stock pursuant to
Section 3.  In the event of a partial redemption of this Note pursuant hereto,
the Principal amount redeemed shall be deducted in reverse order starting from
the final Installment Amount to be paid hereunder on the final Installment Date,
unless the Holder otherwise indicates and allocates among any Installment Dates
hereunder in the applicable Change of Control Redemption Notice.  The parties
hereto agree that in the event of the Company's redemption of any portion of the
Note under this Section 5(b), the Holder's damages would be uncertain and
difficult to estimate because of the parties' inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder.  Accordingly, any Change of Control
redemption premium due under this Section 5(b) is intended by the parties to be,
and shall be deemed, a reasonable estimate of the Holder's actual loss of its
investment opportunity and not as a penalty.
 
(6) DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER
CORPORATE EVENTS.
 
(a) Distribution of Assets.  If the Company shall declare or make any dividend
or other distributions of its assets (or rights to acquire its assets) to any or
all holders of shares of Common Stock, by way of return of capital or otherwise
(including without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (the "Distributions"), then the Holder will be entitled to
such Distributions as if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without taking into
account any limitations or restrictions on the convertibility of this Note)
immediately prior to the date on which a record is taken for such Distribution
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for such Distributions (provided, however,
that to the extent that the Holder's right to participate in any such
Distribution would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to
participate in such Distribution to such extent (and shall not be entitled to
beneficial ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to such extent) and the portion of such
Distribution shall be held in abeyance for the Holder until such time or times
as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder
shall be granted such rights (and any rights under this Section 6(a) on such
initial rights or on any subsequent such rights to be held similarly in
abeyance) to the same extent as if there had been no such limitation).
 
 
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(b) Purchase Rights.  If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this
Note (without taking into account any limitations or restrictions on the
convertibility of this Note) immediately prior to the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that to the extent that the Holder's right to participate in
any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such
Purchase Right (and beneficial ownership) to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time or
times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation).
 
(c) Other Corporate Events.  In addition to and not in substitution for any
other rights hereunder, prior to the occurrence or consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are
entitled to receive securities, cash, assets or other property with respect to
or in exchange for shares of Common Stock (a "Corporate Event"), the Company
shall make appropriate provision to insure that, and any applicable Successor
Entity or Successor Entities shall ensure that, and it shall be a required
condition to the occurrence or consummation of such Corporate Event that, the
Holder will thereafter have the right to receive upon conversion of this Note at
any time after the occurrence or consummation of the Corporate Event, shares of
Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu
of the shares of Common Stock (or other securities, cash, assets or other
property) purchasable upon the conversion of this Note prior to such Corporate
Event (but not in lieu of such items still issuable under Sections 6(a) and
6(b), which shall continue to be receivable on the Common Stock or on such
shares of stock, securities, cash, assets or any other property otherwise
receivable with respect to or in exchange for shares of Common Stock), such
shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights and any shares of
Common Stock) which the Holder would have been entitled to receive upon the
occurrence or consummation of such Corporate Event or the record, eligibility or
other determination date for the event resulting in such Corporate Event, had
this Note been converted immediately prior to such Corporate Event or the
record, eligibility or other determination date for the event resulting in such
Corporate Event (without regard to any limitations on conversion of this
Note).  Provision made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Required Holders.  The provisions of
this Section 6 shall apply similarly and equally to successive Corporate Events.
 
 
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(7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
 
(a) Adjustment of Conversion Price upon Subdivision or Combination of Common
Stock.  If the Company at any time on or after the Subscription Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced.  If the Company at any time on or after the
Subscription Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased.
 
(b) Other Events.  If any event occurs of the type contemplated by the
provisions of this Section 7 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
Board of Directors will make an appropriate adjustment in the Conversion Price
so as to protect the rights of the Holder under this Note; provided, that no
such adjustment will increase the Conversion Price as otherwise determined
pursuant to this Section 7.
 
(c) Voluntary Adjustment by Company. The Company may at any time during the term
of this Note, with the prior written consent of the Required Holders, reduce the
then current Conversion Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
 
(8) COMPANY CONVERSION OR REDEMPTION.
 
(a) General.  On each applicable Installment Date, provided there has been no
Equity Conditions Failure, the Company shall pay to the Holder of this Note the
Installment Amount due on such date by converting all or some of such
Installment Amount into Common Stock, in accordance with this Section 8 (a
"Company Conversion"); provided, however, that the Company may, at its option
following notice to the Holder as set forth below, pay the Installment Amount by
redeeming such Installment Amount in cash (a "Company Redemption") or by any
combination of a Company Conversion and a Company Redemption so long as all of
the outstanding applicable Installment Amount due on any Installment Date shall
be converted and/or redeemed by the Company on the applicable Installment Date,
subject to the provisions of this Section 8.  On or prior to the date which is
the thirteenth (13th) Trading Day prior to each Installment Date (each, an
"Installment Notice Due Date"), the Company shall deliver written notice (each,
a "Company Installment Notice" and the date all of the holders receive such
notice is referred to as the "Company Installment Notice Date"), to each holder
of Notes which Company Installment Notice shall (i) either (A) confirm that the
applicable Installment Amount of the Holder's Note shall be converted to Common
Stock in whole or in part pursuant to a Company Conversion (such amount to be
converted, the "Company Conversion Amount") or (B) (1) state that the Company
elects to redeem for cash, or is required to redeem for cash in accordance with
the provisions of the Notes, in whole or in part, the applicable Installment
Amount pursuant to a Company Redemption and (2) specify the portion (including
Interest and Late Charges, if any, on such amount and Interest) which the
Company elects or is required to redeem pursuant to a Company Redemption (such
amount to be redeemed, the "Company Redemption Amount") and the portion
(including Interest and Late Charges, if any, on such amount and Interest, if
any) that is the Company Conversion Amount, which amounts, when added together,
must at least equal the applicable Installment Amount and (ii) if the
Installment Amount is to be paid, in whole or in part, in Common Stock pursuant
to a
 
 
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Company Conversion, certify that the Equity Conditions have been satisfied as of
the Company Installment Notice Date.  Each Company Installment Notice shall be
irrevocable.  If the Company does not timely deliver a Company Installment
Notice in accordance with this Section 8, then the Company shall be deemed to
have delivered an irrevocable Company Installment Notice confirming a Company
Conversion and shall be deemed to have certified that the Equity Conditions in
connection with any such conversion on the Company Installment Notice Date and
Installment Date have been satisfied.  Except as expressly provided in this
Section 8(a), the Company shall convert and/or redeem the applicable Installment
Amount of this Note pursuant to this Section 8 and the corresponding Installment
Amounts of the Other Notes pursuant to the corresponding provisions of the Other
Notes in the same ratio of the Installment Amount being converted and/or
redeemed hereunder.  The Company Conversion Amount (whether set forth in the
Company Installment Notice or by operation of this Section 8) shall be converted
in accordance with Section 8(b) and the Company Redemption Amount shall be
redeemed in accordance with Section 8(c).  Notwithstanding anything herein to
the contrary, in the event of any partial conversion or redemption of this Note,
the Principal amount converted or redeemed shall be deducted in reverse order
starting from the final Installment Amount to be paid hereunder on the final
Installment Date, unless the Holder otherwise indicates and allocates among any
Installment Dates hereunder in the applicable Conversion Notice or Redemption
Notice, as applicable.
 
(b) Mechanics of Company Conversion.  If the Company delivers a Company
Installment Notice and confirms, or is deemed to have confirmed, in whole or in
part, a Company Conversion in accordance with Section 8(a), then on the
applicable Installment Date, the Company shall, or shall direct the Transfer
Agent to, credit the Holder's account with DTC (or if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver to the Holder a certificate) for a number of shares of Common Stock
equal to the Installment Conversion Shares; provided, that the Equity Conditions
have been satisfied (or waived in writing by the Holder) on each day during the
period commencing on such Company Installment Notice Date through the applicable
Installment Date.  On the second (2nd) Trading Day immediately after the end of
the Measuring Period, the Company shall deliver a notice setting forth the
calculation of the Installment Conversion Shares (and the calculation of the
component parts of such calculation) to the Holders.  If an Event of Default
occurs during the period from any Company Installment Notice Date through the
Installment Date, the Holder may elect an Event of Default Redemption in
accordance with Section 4(b).  All Installment Conversion Shares shall be fully
paid and nonassessable shares of Common Stock (rounded to the nearest whole
share).  If the Equity Conditions are not satisfied as of the Company
Installment Notice Date, then unless the Company has elected to redeem such
Installment Amount, the Company Installment Notice shall indicate that unless
the Holder waives the Equity Conditions, the Installment Amount shall be
redeemed for cash.  If the Company confirmed (or is deemed to have confirmed by
operation of Section 8(a)) the conversion of the applicable Company Conversion
Amount, in whole or in part, and there was no Equity Conditions Failure as of
the applicable Company Installment Notice Date (or is deemed to have certified
that the Equity Conditions in connection with any such conversion have been
satisfied by operation of Section 8(a)) but an Equity Conditions Failure
occurred between the applicable Company Installment Notice Date and any time
through the applicable Installment Date (the "Interim Installment Period"), the
Company shall provide the Holder a subsequent notice to that effect.  If the
Equity Conditions are not satisfied (or waived in writing by the Holder) during
such
 
 
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Interim Installment Period, then at the option of the Holder designated in
writing to the Company, the Holder may require the Company to do either one or
both of the following: (i) the Company shall redeem all or any part designated
by the Holder of the Company Conversion Amount (such designated amount is
referred to as the "First Redemption Amount") on such Installment Date and the
Company shall pay to the Holder on such Installment Date, by wire transfer of
immediately available funds, an amount in cash equal to 115% of such First
Redemption Amount and/or (ii) the Company Conversion shall be null and void with
respect to all or any part designated by the Holder of the unconverted Company
Conversion Amount and the Holder shall be entitled to all the rights of a holder
of this Note with respect to such amount of the Company Conversion Amount;
provided, however, that the Conversion Price for such unconverted Company
Conversion Amount shall thereafter be adjusted to equal the lesser of (A) the
Company Conversion Price as in effect on the date on which the Holder voided the
Company Conversion and (B) the Company Conversion Price as in effect on the date
on which the Holder delivers a Conversion Notice relating thereto.  If the
Company fails to redeem any First Redemption Amount on or before the applicable
Installment Date by payment of such amount on the applicable Installment Date,
then the Holder shall have the rights set forth in Section 11(a) as if the
Company failed to pay the applicable Company Installment Redemption Price (as
defined below) and all other rights under this Note (including, without
limitation, such failure constituting an Event of Default described in Section
4(a)(v)).  Notwithstanding anything to the contrary in this Section 8(b), but
subject to the limitations set forth in Section 3(d), until the Company credits
the Holder's account with DTC, or if the Transfer Agent is not participating in
the DTC Fast Automated Securities Transfer Program, issues and delivers to the
Holder a certificate for, the shares of Common Stock representing the Company
Conversion Amount to the Holder, the Company Conversion Amount may be converted
by the Holder into Common Stock pursuant to Section 3.  In the event that the
Holder elects to convert the Company Conversion Amount prior to the applicable
Installment Date as set forth in the immediately preceding sentence, the Company
Conversion Amount so converted shall be deducted in reverse order starting from
the final Installment Amount to be paid hereunder on the final Installment Date,
unless the Holder otherwise indicates and allocates among any Installment Dates
hereunder in the applicable Conversion Notice.
 
(c) Mechanics of Company Redemption.  If the Company elects a Company Redemption
in accordance with Section 8, then the Company Redemption Amount which is to be
paid to the Holder on the applicable Installment Date shall be redeemed by the
Company and the Company shall pay to the Holder on such Installment Date, by
wire transfer of immediately available funds, an amount in cash (the "Company
Installment Redemption Price") equal to 100% of the Company Redemption
Amount.  If the Company fails to redeem the Company Redemption Amount on the
applicable Installment Date by payment of the Company Installment Redemption
Price on such date, then at the option of the Holder designated in writing to
the Company (any such designation shall be deemed a "Conversion Notice" pursuant
to Section 3(c) for purposes of this Note), (i) the Holder shall have the rights
set forth in Section 11(a) as if the Company failed to pay the applicable
Company Installment Redemption Price and all other rights as a Holder of Notes
(including, without limitation, such failure constituting an Event of Default
described in Section 4(a)(v)) and (ii) the Holder may require the Company to
convert all or any part of the Company Redemption Amount at the Company
Conversion Price as in effect on the applicable Installment Date.  Conversions
required by this Section 8(c) shall be made in accordance with the provisions of
Section 3(c).  Notwithstanding
 
 
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anything to the contrary in this Section 8(c), but subject to Section 3(d),
until the Company Installment Redemption Price (together with any interest
thereon) is paid in full, the Company Redemption Amount (together with any
interest thereon) may be converted, in whole or in part, by the Holder into
Common Stock pursuant to Section 3.  In the event the Holder elects to convert
all or any portion of the Company Redemption Amount prior to the applicable
Installment Date as set forth in the immediately preceding sentence, the Company
Redemption Amount so converted shall be deducted in reverse order starting from
the final Installment Amount to be paid hereunder on the final Installment Date,
unless the Holder otherwise indicates and allocates among any Installment Dates
hereunder in the applicable Conversion Notice.
 
(d) Deferred Installment Amount.  Notwithstanding any provision of this Section
8 to the contrary, the Holder may, at its option and in its sole discretion,
deliver a written notice to the Company no later than the Business Day
immediately prior to the applicable Installment Date electing to have the
payment of all or any portion of an Installment Amount payable on such
Installment Date deferred (such amount(s) deferred, the "Deferral Amount") until
any subsequent Installment Date selected by the Holder, in its sole discretion,
in which case, the Deferral Amount shall be added to, and become part of, the
Installment Amount to be paid on such subsequent Installment Date and such
Deferral Amount shall continue to accrue Interest hereunder. Any notice
delivered by the Holder pursuant to this Section 8(d) shall set forth (i) the
Deferral Amount and (ii) the date that such Deferral Amount shall now be
payable.
 
(e) Accelerated Installment Amount.  Notwithstanding any provision of this
Section 8 to the contrary, the Holder may, at its option and in its sole
discretion, deliver one or more written notices to the Company (an "Acceleration
Notice") (x) at any time prior to the Installment Trigger Date, in which case
the next immediately succeeding first (1st) or fifteenth (15th) calendar day of
the calendar month after delivery of the applicable Acceleration Notice (or if
any such date falls on a Holiday, the next day that is not a Holiday), shall be
treated as an Installment Date for all purposes hereunder (provided that the
Equity Conditions set forth in clauses (i) and (viii) of the definition thereof
need not be satisfied for the Installment Amount on any such deemed Installment
Date to be paid pursuant to a Company Conversion) and (y) at any time on or
after the Installment Trigger Date, by no later than the Business Day
immediately prior to the applicable Installment Date, in each case, electing to
have the payment of all or any portion of up to a total of two (2) times the
Installment Amount that may be due on future Installment Dates after the
applicable Installment Date accelerated (such amount(s) accelerated, the
"Accelerated Amount(s)") to be paid on the applicable Installment Date, in which
case, such Accelerated Amount(s) shall be added to, and become part of, the
Installment Amount payable on such applicable Installment Date and which
Accelerated Amount(s) shall be payable, at the option of the Holder, in (i)
Common Stock by including or adding such Accelerated Amount(s) in the Company
Conversion Amount, or (ii) cash by including or adding such Accelerated
Amount(s) in the Company Redemption Amount, or any combination thereof, in each
case, for the applicable Installment Date.  Any notice delivered by the Holder
pursuant to this Section 8(e) shall set forth (i) the Accelerated Amount(s) and
(ii) the date that such Accelerated Amount should have been paid if not for the
Holder's right to accelerate such Installment Amount(s) pursuant to this Section
8(e).
 
 
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(9) NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company
will not, by amendment of its Articles of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, 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 Note, and will at all times in good faith carry out all of the
provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note.
 
(10) RESERVATION OF AUTHORIZED SHARES.
 
(a) Reservation.  The Company shall initially reserve out of its authorized and
unissued shares of Common Stock a number of shares of Common Stock for each of
this Note and the Other Notes equal to 200% of the Conversion Rate with respect
to the Conversion Amount of each such Note as of the Issuance Date.  So long as
any of this Note and the Other Notes are outstanding, the Company shall take all
action necessary to reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the conversion of
this Note and the Other Notes, the number of shares of Common Stock specified
above in this Section 10(a) as shall from time to time be necessary to effect
the conversion of all of the Notes then outstanding; provided, that at no time
shall the number of shares of Common Stock so reserved be less than the number
of shares required to be reserved pursuant hereto (in each case, without regard
to any limitations on conversions) (the "Required Reserve Amount").  The initial
number of shares of Common Stock reserved for conversions of this Note and the
Other Notes and each increase in the number of shares so reserved shall be
allocated pro rata among the Holder and the holders of the Other Notes based on
the Principal amount of this Note and the Other Notes held by each holder at the
Closing (as defined in the Securities Purchase Agreement) or increase in the
number of reserved shares, as the case may be (the "Authorized Share
Allocation").  In the event that a holder shall sell or otherwise transfer this
Note or any of such holder's Other Notes, each transferee shall be allocated a
pro rata portion of such holder's Authorized Share Allocation.  Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any Notes
shall be allocated to the Holder and the remaining holders of Other Notes, pro
rata based on the Principal amount of this Note and the Other Notes then held by
such holders.
 
(b) Insufficient Authorized Shares.  If at any time while any of the Notes
remain outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Notes at least a number of shares of Common
Stock equal to the Required Reserve Amount (an "Authorized Share Failure"), then
the Company shall immediately take all action necessary to increase the
Company's authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Notes then
outstanding.  Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such
Authorized Share Failure, the Company shall either (x) obtain the written
consent of its shareholders for the approval of an increase in the number of
authorized shares of Common Stock and provide each shareholder with an
information statement with respect thereto or (y) hold a meeting of its
shareholders for the approval of an increase in the number of authorized shares
of Common Stock.  In connection with such meeting, the Company shall provide
each shareholder with a proxy statement and shall use its reasonable best
efforts to solicit its shareholders' approval of such increase in authorized
shares of Common Stock and to cause its Board of Directors to recommend to the
shareholders that they approve such proposal.  If, upon any conversion of this
Note, the Company does not have sufficient authorized shares to deliver in
satisfaction of such conversion, then unless the Holder elects to rescind such
attempted conversion, the Holder may require the Company to pay to the Holder
within three (3) Trading Days of the applicable attempted conversion, cash in an
amount equal to the product of (i) the number of Conversion Shares that the
Company is unable to deliver pursuant to this Section 11, and (ii) the highest
trading price of the Common Stock in effect at any time during the period
beginning on the applicable Conversion Date and ending on the date the Company
makes the payment provided for in this sentence.
 
 
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(11) REDEMPTIONS.
 
(a) Mechanics.  The Company shall deliver the applicable Event of Default
Redemption Price to the Holder within three (3) Business Days after the
Company's receipt of the Holder's Event of Default Redemption Notice (the "Event
of Default Redemption Date").  If the Holder has submitted a Change of Control
Redemption Notice in accordance with Section 5(b), the Company shall deliver the
applicable Change of Control Redemption Price to the Holder (i) concurrently
with the consummation of such Change of Control if such notice is received prior
to the consummation of such Change of Control and (ii) within three (3) Business
Days after the Company's receipt of such notice otherwise (such date, the
"Change of Control Redemption Date").  The Company shall deliver the applicable
Company Installment Redemption Price to the Holder on the applicable Installment
Date.  The Company shall pay the applicable Redemption Price to the Holder in
cash by wire transfer of immediately available funds pursuant to wire
instruction provided by the holder in writing to the Company on the applicable
due date.  In the event of a redemption of less than all of the Conversion
Amount of this Note, the Company shall promptly cause to be issued and delivered
to the Holder a new Note (in accordance with Section 17(d)) representing the
outstanding Principal which has not been redeemed and any accrued Interest on
such Principal which shall be calculated as if no Redemption Notice has been
delivered.  In the event that the Company does not pay the applicable Redemption
Price to the Holder within the time period required, at any time thereafter and
until the Company pays such unpaid Redemption Price in full, the Holder shall
have the option, in lieu of redemption, to require the Company to promptly
return to the Holder all or any portion of this Note representing the Conversion
Amount that was submitted for redemption and for which the applicable Redemption
Price (together with any Late Charges thereon) has not been paid.  Upon the
Company's receipt of such notice, (x) the applicable Redemption Notice shall be
null and void with respect to such Conversion Amount, (y) the Company shall
immediately return this Note, or issue a new Note (in accordance with Section
17(d)) to the Holder representing such Conversion Amount to be redeemed and (z)
the Conversion Price of this Note or such new Notes shall be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the
applicable Redemption Notice is voided and (B) the lowest Closing Sale Price of
the Common Stock during the period beginning on and including the date on which
the applicable Redemption Notice is delivered to the Company and ending on and
including the date on which the applicable Redemption Notice is voided.  The
Holder's delivery of a notice voiding a Redemption Notice and exercise of its
rights following such notice shall not affect the Company's obligations to make
any payments of Late Charges which have accrued prior to the date of such notice
with respect to the Conversion Amount subject to such notice.
 
 
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(b) Redemption by Other Holders.  Upon the Company's receipt of notice from any
of the holders of the Other Notes for redemption or repayment as a result of an
event or occurrence substantially similar to the events or occurrences described
in Section 4(b), Section 5(b) or Section 8 or pursuant to equivalent provisions
set forth in the Other Notes (each, an "Other Redemption Notice"), the Company
shall immediately, but no later than one (1) Business Day of its receipt
thereof, forward to the Holder by facsimile or electronic mail a copy of such
notice.  If the Company receives a Redemption Notice and one or more Other
Redemption Notices, during the seven (7) Business Day period beginning on and
including the date which is three (3) Business Days prior to the Company's
receipt of the Holder's Redemption Notice and ending on and including the date
which is three (3) Business Days after the Company's receipt of the Holder's
Redemption Notice and the Company is unable to redeem all principal, interest
and other amounts designated in such Redemption Notice and such Other Redemption
Notices received during such seven (7) Business Day period, then the Company
shall redeem a pro rata amount from the Holder and each holder of the Other
Notes (including the Holder) based on the Principal amount of this Note and the
Other Notes submitted for redemption pursuant to such Redemption Notice and such
Other Redemption Notices received by the Company during such seven Business Day
period.
 
(12) VOTING RIGHTS.  The Holder shall have no voting rights as the holder of
this Note, except as required by law and as expressly provided in this Note.
 
(13) SECURITY.  This Note and the Other Notes are secured to the extent and in
the manner set forth in the Security Documents.
 
(14) COVENANTS.
 
(a) Rank. All payments due under this Note (a) shall rank pari passu with all
Other Notes and (b) shall be senior to all other Indebtedness of the Company and
its Subsidiaries.
 
(b) Incurrence of Indebtedness.  So long as this Note is outstanding, the
Company shall not, and the Company shall not permit any of its Subsidiaries to,
directly or indirectly, incur or guarantee, assume or suffer to exist any
Indebtedness, other than Permitted Indebtedness.
 
(c) Existence of Liens.  So long as this Note is outstanding, the Company shall
not, and the Company shall not permit any of its Subsidiaries to, directly or
indirectly, allow or suffer to exist any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its
Subsidiaries (collectively, "Liens") other than Permitted Liens.
 
(d) Restricted Payments.  The Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, redeem, defease,
repurchase, repay or make any payments in respect of, by the payment of cash or
cash equivalents (in whole or in part, whether by way of open market purchases,
tender offers, private transactions or otherwise), all or any portion of any
Indebtedness (other than this Note and the Other Notes), whether by way of
payment in respect of principal of (or premium, if any) or interest on, such
Indebtedness if at the time such payment is due or is otherwise made or, after
giving effect to such payment, an event constituting, or that with the passage
of time and without being cured would constitute, an Event of Default has
occurred and is continuing.
 
 
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(e) Restriction on Redemption and Cash Dividends.  Until all of the Notes have
been converted, redeemed or otherwise satisfied in accordance with their terms,
the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, redeem or repurchase its Equity Interest, or permit
any Subsidiary to redeem or repurchase its Equity Interests (except on a pro
rata basis among all holders thereof) or declare or pay any cash dividend or
distribution on any Equity Interest of the Company or of its Subsidiaries
without in each case the prior express written consent of the Required Holders.
 
(f) Change in Nature of Business.  The Company shall not make, or permit any of
its Subsidiaries to make, any change in the nature of its business as described
in the Company's most recent Annual Report filed on Form 10-K with the SEC.  The
Company shall not modify its corporate structure or purpose.
 
(g) Intellectual Property.  The Company shall not, and the Company shall not
permit any of its Subsidiaries, directly or indirectly, to encumber or allow any
Liens on, any of its copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, patent applications and
like protections, including improvements, divisions, continuations, renewals,
reissues, extensions, and continuations-in-part of the same, trademarks, service
marks and, to the extent permitted under applicable law, any applications
therefor, whether registered or not, and the goodwill of the business of the
Company and its Subsidiaries connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, other than Permitted Liens.
 
(h) Preservation of Existence, Etc.  The Company shall maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its Subsidiaries
to become or remain, duly qualified and in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary.
 
(i) Maintenance of Properties, Etc.  The Company shall maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of its
properties which are necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted, and
comply, and cause each of its Subsidiaries to comply, at all times with the
provisions of all leases to which it is a party as lessee or under which it
occupies property, so as to prevent any loss or forfeiture thereof or
thereunder.
 
(j) Maintenance of Insurance.  The Company shall maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated.
 
 
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(k) Transactions with Affiliates.  The Company shall not, nor shall it permit
any of its Subsidiaries to, enter into, renew, extend or be a party to, any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease, transfer or exchange of property or assets of any
kind or the rendering of services of any kind) with any Affiliate, except in the
ordinary course of business in a manner and to an extent consistent with past
practice and necessary or desirable for the prudent operation of its business,
for fair consideration and on terms no less favorable to it or its Subsidiaries
than would be obtainable in a comparable arm's length transaction with a Person
that is not an Affiliate thereof.
 
(l) Subordinated Notes. Neither the Company nor any Guarantor shall amend,
modify, alter, increase, or change, directly or indirectly, any of the terms or
conditions of the documents evidencing or governing the Subordinated Notes
without the prior written consent of the Required Holders.  Neither the Company
nor any Guarantor shall optionally prepay or redeem any Indebtedness under the
Subordinated Notes without the prior written consent of the Required Holders.
 
(15) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES.  The affirmative vote at a
meeting duly called for such purpose or the written consent without a meeting of
the Required Holders shall be required for any change or amendment or waiver of
any provision to this Note or any of the Other Notes. Any change, amendment or
waiver by the Company and the Required Holders shall be binding on the Holder of
this Note and all holders of the Other Notes.
 
(16) TRANSFER.  This Note and any shares of Common Stock issued upon conversion
of this Note may be offered, sold, assigned or transferred by the Holder without
the consent of the Company, subject only to the provisions of Section 2(f) of
the Securities Purchase Agreement.
 
(17) REISSUANCE OF THIS NOTE.
 
(a) Transfer.  If this Note is to be transferred, the Holder shall surrender
this Note to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 17(d) and
subject to Section 3(c)(iii)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if
less than the entire outstanding Principal is being transferred, a new Note (in
accordance with Section 17(d)) to the Holder representing the outstanding
Principal not being transferred.  The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of Section
3(c)(iii) following conversion or redemption of any portion of this Note, the
outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.
 
 
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(b) Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with
Section 17(d)) representing the outstanding Principal.
 
(c) Note Exchangeable for Different Denominations.  This Note is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Note or Notes (in accordance with Section 17(d) and in Principal
amounts of at least $100,000) representing in the aggregate the outstanding
Principal of this Note, and each such new Note will represent such portion of
such outstanding Principal as is designated by the Holder at the time of such
surrender.
 
(d) Issuance of New Notes.  Whenever the Company is required to issue a new Note
pursuant to the terms of this Note, such new Note (i) shall be of like tenor
with this Note, (ii) shall represent, as indicated on the face of such new Note,
the Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 17(a) or Section 17(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest and Late Charges, if any, on the Principal and Interest of this Note,
from the Issuance Date.
 
(18) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.  The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note and any of the other Transaction
Documents at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the Holder's right to
pursue actual and consequential damages for any failure by the Company to comply
with the terms of this Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).  The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate.  The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
 
(19) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise takes action to
collect amounts due under this Note or to enforce the provisions of this Note or
(b) there occurs any bankruptcy, reorganization, receivership of the Company or
other proceedings affecting Company creditors' rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for
such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, but not limited to,
attorneys' fees and disbursements.
 
 
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(20) CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted by
the Company and all the Purchasers and shall not be construed against any person
as the drafter hereof.  The headings of this Note are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Note.
 
(21) FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.
 
(22) DISPUTE RESOLUTION.  In the case of a dispute as to the determination of
the Closing Bid Price, the Closing Sale Price or the Weighted Average Price or
the arithmetic calculation of the Conversion Rate, the Conversion Price or any
Redemption Price, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile or electronic mail within one (1) Business
Day of receipt, or deemed receipt, of the Conversion Notice or Redemption Notice
or other event giving rise to such dispute, as the case may be, to the
Holder.  If the Holder and the Company are unable to agree upon such
determination or calculation within one (1) Business Day of such disputed
determination or arithmetic calculation being submitted to the Holder, then the
Company shall, within one Business Day submit via facsimile or electronic mail
(a) the disputed determination of the Closing Bid Price, the Closing Sale Price
or the Weighted Average Price to an independent, reputable investment bank
selected by the Holder and approved by the Company, such approval not to be
unreasonably withheld or delayed, provided that Cowen and Company, LLC is hereby
approved by Holder for such purposes, or (b) the disputed arithmetic calculation
of the Conversion Rate, Conversion Price or any Redemption Price to an
independent, outside accountant, selected by the Holder and approved by the
Company, such approval not to be unreasonably withheld or delayed.  The Company,
at the Company's expense, shall cause the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five (5) Business Days from
the time it receives the disputed determinations or calculations.  Such
investment bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.
 
(23) NOTICES; PAYMENTS.
 
(a) Notices.  Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with Section
9(f) of the Securities Purchase Agreement.  The Company shall provide the Holder
with prompt written notice of all actions taken pursuant to this Note, including
in reasonable detail a description of such action and the reason
therefore.  Without limiting the generality of the foregoing, the Company shall
give written notice to the Holder (i) immediately upon any adjustment of the
Conversion Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least twenty (20) days prior to the
date on which the Company closes its books or takes a record (A) with respect to
any dividend or distribution upon the Common Stock, (B) with respect to any pro
rata subscription offer to holders of Common Stock or (C) for determining rights
to vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder.
 
 
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(b) Payments.  Whenever any payment of cash is to be made by the Company to any
Person pursuant to this Note, such payment shall be made in lawful money of the
United States of America by a check drawn on the account of the Company and sent
via overnight courier service to such Person at such address as previously
provided to the Company in writing (which address, in the case of each of the
Purchasers, shall initially be as set forth on the Schedule of Buyers attached
to the Securities Purchase Agreement); provided, that the Holder may elect to
receive a payment of cash via wire transfer of immediately available funds by
providing the Company with prior written notice setting out such request and the
Holder's wire transfer instructions.  Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a Business Day, the same
shall instead be due on the next succeeding day which is a Business Day.  Any
amount of Principal or other amounts due under the Transaction Documents which
is not paid when due shall result in a late charge being incurred and payable by
the Company in an amount equal to interest on such amount at the rate of
eighteen percent (18.0%) per annum from the date such amount was due until the
same is paid in full ("Late Charge"); provided, however, that Late Charges will
not apply while the Interest Rate is increased to eighteen (18.0%) per annum
pursuant to Section 2(c).
 
(24) CANCELLATION.  After all Principal, accrued Interest and other amounts at
any time owed on this Note have been paid in full, this Note shall automatically
be deemed canceled, shall be surrendered to the Company for cancellation and
shall not be reissued.
 
(25) WAIVER OF NOTICE.  To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.
 
(26) GOVERNING LAW; JURISDICTION; JURY TRIAL.  This Note shall be construed and
enforced in accor­dance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  The Company 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, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  The Company hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address it set forth
on the signature page hereto and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.  Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the Company's obligations to the
Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder.  THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.
 
 
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(27) SEVERABILITY. If any provision of this Note is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Note
so long as this Note as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties.  The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).
 
(28) DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Note, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its Subsidiaries, the Company
shall within one (1) Business Day after any such receipt or delivery publicly
disclose such material, nonpublic information on a Current Report on Form 8-K or
otherwise.  In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its Subsidiaries, the
Company so shall indicate to such Holder contemporaneously with delivery of such
notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its Subsidiaries.
 
(29) CERTAIN DEFINITIONS.  For purposes of this Note, the following terms shall
have the following meanings:
 
(a) "Pending Acquisition" means the acquisition from Atmel Corporation and CIT
Technology Limited of the machinery, equipment, licenses and intellectual
property required to manufacture and sell XSense Touch Sensors.
 
(b) "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
"control" of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
 
 
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(c) "Approved Stock Plan" means any employee benefit plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer or director for
services provided to the Company.
 
(d) "Attribution Parties" means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder's investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company's Common
Stock would or could be aggregated with the Holder's and the other Attribution
Parties for purposes of Section 13(d) of the Exchange Act.  For clarity, the
purpose of the foregoing is to subject collectively the Holder and all other
Attribution Parties to the Maximum Percentage.
 
(e) "Bloomberg" means Bloomberg Financial Markets.
 
(f) "Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.
 
(g) "Change of Control" means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in
which holders of the Company's voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification or (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company.
 
(h) "Closing Bid Price" and "Closing Sale Price" means, for any security as of
any date, the last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by Bloomberg, or, if the
Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the case may be,
then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or trading market for
such security, the last closing bid price or last trade price, respectively, of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last
trade price, respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the OTC Link or "pink sheets" by OTC Markets
Group Inc. (formerly Pink OTC Markets Inc.).  If the Closing Bid Price or the
Closing Sale Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as
the case may be, of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder.  If the Company and the
Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 22.  All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction during the applicable
calculation period.
 
 
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(i) "Closing Date" shall have the meaning set forth in the Securities Purchase
Agreement, which dates are the dates the Company initially issued Notes pursuant
to the terms of the Securities Purchase Agreement.
 
(j) "Company Conversion Price" means as of any date of determination, that price
which shall be the lower of (i) the Conversion Price then in effect and (ii) the
Market Price as of such date of determination.
 
(k) "Company Interest Conversion Price" means, with respect to any Interest
Date, that price which shall be the lower of (i) the Conversion Price then in
effect and (ii) the Market Price as of the applicable Interest Date.
 
(l) "Contingent Obligation" means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.
 
(m) "Conversion Shares" means shares of Common Stock issuable by the Company
pursuant to the terms of any of the Notes, including any related Interest and
Late Charges so converted, amortized or redeemed.
 
(n) "Convertible Securities" means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
shares of Common Stock.
 
(o) "Eligible Market" means the Principal Market, The New York Stock Exchange,
The NASDAQ Global Market, The NASDAQ Global Select Market or the NYSE MKT.
 
 
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(p) "Equity Conditions" means each of the following conditions:  (i) on each day
during Equity Conditions Measuring Period, either (x) all Registration
Statements filed and required to be filed pursuant to the Registration Rights
Agreement shall be effective and available for the resale of all remaining
Registrable Securities including the shares of Common Stock issuable upon
conversion of the Conversion Amount that is subject to the applicable Company
Conversion requiring the satisfaction of the Equity Conditions, in accordance
with the terms of the Registration Rights Agreement and there shall not have
been any Grace Periods (as defined in the Registration Rights Agreement) or (y)
all Conversion Shares issuable pursuant to the terms of this Note and the Other
Notes and exercise of the Warrants, including the shares of Common Stock
issuable upon conversion of the Conversion Amount that is subject to the
applicable Company Conversion requiring the satisfaction of the Equity
Conditions, shall be eligible for sale without restriction  pursuant to Rule 144
and without the need for registration under any applicable federal or state
securities laws; (ii) if the event requiring the satisfaction of the Equity
Conditions is the payment of Interest or the payment of an Installment Amount,
all Interest Shares issuable on the applicable Interest Date and the shares of
Common Stock issuable upon conversion of the Conversion Amount that is subject
to the applicable Company Conversion on the applicable Installment Date, as
applicable, requiring the satisfaction of the Equity Conditions, shall be either
(x) issuable without restrictive legends and shall be eligible for sale without
restriction pursuant to Rule 144 of the Securities Act or Rule 3(a)(9) of the
Securities Act and without the need for registration under any applicable
federal or state securities laws or (y) be subject to an effective registration
statement; (iii) on each day during the Equity Conditions Measuring Period, the
Common Stock is designated for quotation on the Principal Market or any other
Eligible Market and shall not have been suspended from trading on such exchange
or market (other than suspensions of not more than two (2) days and occurring
prior to the applicable date of determination due to business announcements by
the Company) nor shall delisting or suspension by such exchange or market been
threatened, commenced or pending either (A) in writing by such exchange or
market or (B) by falling below the then effective minimum listing maintenance
requirements of such exchange or market; (iv) during the Equity Conditions
Measuring Period, the Company shall have delivered Conversion Shares pursuant to
the terms of this Note and the Other Notes and Warrant Shares upon exercise of
the Warrants to the holders on a timely basis as set forth in Section 3(c)
hereof (and analogous provisions under the Other Notes) and Section 1(a) of the
Warrants; (v) the Interest Shares issuable on the applicable Interest Date and
the shares of Common Stock issuable upon conversion of the Conversion Amount
that is subject to the applicable Company Conversion requiring the satisfaction
of the Equity Conditions may be issued in full without violating Section 3(d)
hereof and the rules or regulations of the Principal Market or any other
applicable Eligible Market; (vi) during the Equity Conditions Measuring Period,
the Company shall not have failed to timely make any payments within five (5)
Business Days of when such payment is due pursuant to any Transaction Document;
(vii) during the Equity Conditions Measuring Period, there shall not have
occurred either (A) the public announcement of a pending, proposed or intended
Fundamental Transaction which has not been abandoned, terminated or consummated,
(B) an Event of Default or (C) an event that with the passage of time or giving
of notice would constitute an Event of Default; (viii) the Company shall have no
knowledge of any fact that would cause (a) the Registration Statements required
pursuant to the Registration Rights Agreement not to be effective and available
for the resale of all remaining Registrable Securities, including, without
limitation, the shares of Common Stock issuable upon conversion of the
Conversion Amount that is subject to the applicable Company Conversion and the
Interest Shares issuable on the applicable Interest Date, as applicable,
requiring the satisfaction of the Equity Conditions, in accordance with the
terms of the Registration Rights Agreement or (b) any shares of Common Stock
issuable pursuant to the terms of this Note and the Other Notes and
 
 
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shares of Common Stock issuable upon exercise of the Warrants, including,
without limitation, the shares of Common Stock issuable upon conversion of the
Conversion Amount that is subject to the applicable Company Conversion and the
Interest Shares issuable on the applicable Interest Date, as applicable,
requiring the satisfaction of the Equity Conditions, not to be eligible for sale
without restriction pursuant to Rule 144 and without the requirement to be in
compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the
Securities Act and any applicable state securities laws; (ix) during the Equity
Conditions Measuring Period, the Company otherwise shall have been in compliance
with and shall not have breached in any material respect (except for any
provision, covenant, representation or warranty that is qualified by materiality
or Material Adverse Effect, with respect to which the Company shall have been in
compliance in all respects and shall not have breached in any respect) any
provision, covenant, representation or warranty of any Transaction Document; (x)
the Holder shall not be in possession of any material, nonpublic information
received from the Company, any Subsidiary or its respective agent or affiliates;
(xi) the shares of Common Stock issuable upon conversion of the Conversion
Amount that is subject to the applicable Company Conversion and the Interest
Shares issuable on the applicable Interest Date, as applicable, requiring the
satisfaction of the Equity Conditions are duly authorized and listed and
eligible for trading without restriction on an Eligible Market; (xii) (a) the
arithmetic average of the daily dollar trading volume of the Common Stock as
reported by Bloomberg during the Equity Conditions Measuring Period shall be at
least $250,000 and (b) the daily dollar trading volume of the Common Stock as
reported by Bloomberg for each of the last three Trading Days of the Equity
Conditions Measuring Period shall be at least $200,000; and (xiii)(a) if the
event requiring satisfaction of the Equity Conditions is a Company Conversion,
the arithmetic average of the daily Weighted Average Prices of the Common Stock
during the Equity Conditions Measuring Period equals or exceeds $3.00 and (b) on
each of the last three Trading Days of the Equity Conditions Measuring Period,
the Closing Sale Price of the Common Stock equals or exceeds $3.00 (in the case
of each of (a) and (b), as adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction occurring after the
Subscription Date).
 
(q) "Equity Conditions Failure" means that on any day during the period
commencing ten (10) Trading Days prior to the applicable date of determination
through the applicable date of determination, the Equity Conditions have not
each been satisfied (or waived in writing by the Holder).
 
(r) "Equity Conditions Measuring Period" means each day during the period
beginning twenty (20) Trading Days prior to the applicable date of determination
and ending on and including the applicable date of determination.
 
(s) "Equity Interests" means (a) all shares of capital stock (whether
denominated as common capital stock or preferred capital stock), equity
interests, beneficial, partnership or membership interests, joint venture
interests, participations or other ownership or profit interests in or
equivalents (regardless of how designated) of or in a Person (other than an
individual), whether voting or non-voting and (b) all securities convertible
into or exchangeable for any of the foregoing and all warrants, options or other
rights to purchase, subscribe for or otherwise acquire any of the foregoing,
whether or not presently convertible, exchangeable or exercisable.
 
 
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(t) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
(u) "Fundamental Transaction" means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its "significant subsidiaries" (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such purchase, tender or exchange offer,
become collectively the beneficial owners (as defined in Rule 13d-3 under the
Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby such Subject Entities,
individually or in the aggregate, acquire, either (x) at least 50% of the
outstanding shares of Common Stock, (y) at least 50% of the outstanding shares
of Common Stock calculated as if any shares of Common Stock held by all the
Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such stock purchase agreement or other business combination
were not outstanding; or (z) such number of shares of Common Stock such that the
Subject Entities become collectively the beneficial owners (as defined in Rule
13d-3 under the Exchange Act) of at least 50% of the outstanding shares of
Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock,
(B) that any Subject Entity individually or the Subject Entities in the
aggregate is or shall become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Note
calculated as if any shares of Common Stock held by all such Subject Entities
were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other shareholders of
the Company to surrender their shares of Common Stock without approval of the
shareholders of the Company or (C) the issuance of or the entering into any
other instrument or transaction structured in a manner to circumvent, or that
circumvents, the intent of this definition in which case this definition shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this
definition or any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or transaction.
 
 
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(v) "GAAP" means United States generally accepted accounting principles,
consistently applied.
 
(w) "Group" means a "group" as that term is used in Section 13(d) of the
Exchange Act and as defined in Rule 13d-5 thereunder.
 
(x) "Guarantors" shall have the meaning ascribed to such term in the Security
Documents.
 
(y) "Holiday" means a day other than a Business Day or on which trading does not
take place on the Principal Market.
 
(z) "Indebtedness" of any Person means, without duplication (i) all indebtedness
for borrowed money, (ii) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services, including (without limitation)
"capital leases" in accordance with GAAP (other than trade payables entered into
in the ordinary course of business), (iii) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (iv) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (v) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even though the
rights and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (vi) all monetary
obligations under any leasing or similar arrangement which, in connection with
GAAP, consistently applied for the periods covered thereby, is classified as a
capital lease, (vii) all indebtedness referred to in clauses (i) through (vi)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (viii) all Contingent Obligations in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vii) above.
 
(aa) "Installment Amount" means with respect to each Installment Date, an amount
equal to the sum of the (i) prior to the Installment Trigger Date, and from and
after the Installment Trigger Date, the lesser of (A) the quotient of the
Original Principal Amount of this Note divided by the Installment Amount Factor
and (B) the Principal outstanding on such Installment Date, (ii) any Deferral
Amount deferred pursuant to Section 8(d) and included in such Installment
Amount, (iii) any Accelerated Amount accelerated pursuant to Section 8(e) and
included in such Installment Amount and (iv) accrued and unpaid Interest with
respect to such Principal and accrued and unpaid Late Charges, if any, with
respect to such Principal and Interest, as any such Installment Amount for each
Holder may be reduced pursuant to the terms hereof, whether upon conversion,
redemption or otherwise. In the event the Holder shall sell or otherwise
transfer or assign any portion of this Note, the transferee shall be allocated a
pro rata portion of each unpaid Installment Amount hereunder.
 
 
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(bb) "Installment Amount Factor" means two times the number of calendar months
after the Installment Trigger Date until the scheduled Maturity Date.
 
(cc) " Installment Conversion Shares" means, for any Installment Date, that
number of shares of Common Stock equal to the applicable Company Conversion
Amount (including, without limitation, the addition of any Accelerated Amounts
to such Company Conversion Amount in accordance with Section 8(e)) on such
Installment Date divided by the Company Conversion Price as in effect on the
applicable Installment Date, rounded up to the nearest whole share of Common
Stock.
 
(dd) "Installment Date" means the first (1st) and fifteenth (15th) calendar day
of each calendar month from and after the Installment Trigger Date with the last
Installment Date being the Maturity Date, or, if any such date falls on a
Holiday, the next day that is not a Holiday.
 
(ee) "Installment Trigger Date" means the earliest of (i) July 15, 2015, (ii)
the Initial Effective Date (as defined in the Registration Rights Agreement) and
(iii) the Initial Effectiveness Deadline (as defined in the Registration Rights
Agreement).
 
(ff) "Interest Notice Due Date" means the thirteenth (13th) Trading Day prior to
the applicable Interest Date.
 
(gg) "Interest Rate" means 9.00% per annum, subject to adjustment as set forth
in Section 2.
 
(hh) "Interest Shares" means, for any Interest Date, that number of shares of
Common Stock equal to the applicable amount of Interest to be paid in Interest
Shares for such Interest Date divided by the Company Interest Conversion Price,
rounded up to the nearest whole share of Common Stock.
 
(ii) "Lead Investor" means Hudson Bay Master Fund Ltd.
 
(jj) "Market Price" means 85% of the lower of (i) the arithmetic average of the
four (4) lowest daily Weighted Average Prices of the Common Stock during the
Measuring Period and (ii) the Closing Sale Price on the date prior to the date
of determination.  All such determinations to be appropriately adjusted for any
stock split, stock dividend, stock combination, reclassification or other
similar transaction during such Measuring Period.
 
(kk) "Measuring Period" means the twelve (12) consecutive Trading Day period
ending on the Trading Day immediately preceding the applicable date of
determination.
 
(ll) "Options" means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.
 
 
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(mm) "Parent Entity" of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common capital stock
or equivalent equity security is quoted or listed on an Eligible Market (or, if
so elected by the Required Holders, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
entity designated by the Required Holders or in the absence of such designation,
such Person or entity with the largest public market capitalization as of the
date of consummation of the Fundamental Transaction.
 
(nn) "Permitted Indebtedness" means (i) Indebtedness evidenced by this Note and
the Other Notes, (ii) trade payables incurred in the ordinary course of business
consistent with past practice, (iii) unsecured Indebtedness, in an aggregate
principal amount not to exceed $250,000, incurred by the Company, that is made
expressly subordinate in right of payment to all Indebtedness of the Company and
the Guarantors under the Transaction Documents, as reflected in a written
agreement acceptable to the Required Holders and approved by the Required
Holders in writing, and which Indebtedness does not provide at any time for (a)
the payment, prepayment, repayment, repurchase or defeasance, directly or
indirectly, of any principal or premium, if any, thereon until ninety-one (91)
days after the Maturity Date or later and (b) total interest and fees at a rate
in excess of 6.00% per annum, (iv) Indebtedness under the Subordinated Notes, in
an aggregate principal amount not to exceed $450,000 (plus any principal amount
arising from payments in kind of interest thereon by adding such interest to the
then outstanding principal amount of such Indebtedness), that is made expressly
subordinate in right of payment to all Indebtedness of the Company and the
Guarantors under the Transaction Documents on terms and conditions satisfactory
to the Collateral Agent; provided, however, that any such Indebtedness,
including, without limitation, any interest, fees and any other amounts due with
respect to such Indebtedness, shall not exceed $500,000, in the aggregate,
during the term of this Note; provided, further, that the documents relating to
such Indebtedness are not amended, modified or changed on or after the
Subscription Date from the forms thereof provided to the Holder prior to the
Subscription Date; (v) Indebtedness constituting the payment of royalties with
secured notes pursuant to that certain XSense Patent License Agreement with
Atmel Corporation and that certain FLT (Fine Line Technology) Patent License
Agreement with CIT Technology Limited (together, the “License Agreements”), that
are made expressly subordinate in right of payment to all Indebtedness of the
Company and the Guarantors under the Transaction Documents on terms and
conditions satisfactory to the Collateral Agent and which secured notes shall be
subordinate to the rights and interests set forth in the Security Documents;
provided, further, that the documents relating to such Indebtedness are not
amended, modified or changed on or after the Subscription Date from the forms
thereof provided to the Holder prior to the Subscription Date; and (vi)
Indebtedness secured by Permitted Liens described in clause (iv) of the
definition of Permitted Liens.
 
 
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(oo) "Permitted Liens" means (i) any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen's liens, mechanics' liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or
held by the Company or any of its Subsidiaries to secure the purchase price of
such equipment or Indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
equipment, provided that, in connection with either (A) or (B), any such liens
in connection with the Pending Acquisition shall be subordinated to the rights
and interests set forth in the Security Documents, (v) Liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clause (iv) above, provided that any
extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced does not increase, (vi) leases or
subleases and licenses and sublicenses granted to others in the ordinary course
of the Company's business, not interfering in any material respect with the
business of the Company and its Subsidiaries taken as a whole, (vii) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of goods, (viii)
Liens in favor of Atmel Corporation and/or CIT Technology Limited for the
payment of royalties pursuant to the License Agreements, provided, that such
Liens shall be subordinated to the rights and interests set forth in the
Security Documents on terms and conditions satisfactory to the Collateral Agent;
provided, further, that the documents relating to such Liens are not amended,
modified or changed on or after the Subscription Date from the forms thereof
provided to the Holder prior to the Subscription Date; and (ix) Liens arising
from judgments, decrees or attachments in circumstances not constituting an
Event of Default under Section 4(a)(ix).
 
(pp) "Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.
 
(qq) "Principal Market" means The NASDAQ Capital Market.
 
(rr) "Redemption Dates" means, collectively, the Event of Default Redemption
Dates, the Change of Control Redemption Dates and the Installment Dates, each of
the foregoing, individually, a Redemption Date.
 
(ss) "Redemption Notices" means, collectively, the Event of Default Redemption
Notices, the Change of Control Redemption Notices and the Company Installment
Notices, each of the foregoing, individually, a Redemption Notice.
 
(tt) "Redemption Prices" means, collectively, the Event of Default Redemption
Price, the Change of Control Redemption Price and the Company Installment
Redemption Price, each of the foregoing, individually, a Redemption Price.
 
(uu) "Registrable Securities" shall have the meaning ascribed to such term in
the Registration Rights Agreement.
 
 
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(vv) "Registration Rights Agreement" means that certain registration rights
agreement dated as of the Subscription Date by and among the Company and the
Purchasers relating to, among other things, the registration of the resale of
the shares of Common Stock issuable upon conversion of this Note and the Other
Notes and exercise of the Warrants.
 
(ww) "Registration Statement" shall have the meaning ascribed to such term in
the Registration Rights Agreement.
 
(xx) "Related Fund" means, with respect to any Person, a fund or account managed
by such Person or an Affiliate of such Person.
 
(yy) "Required Holders" means the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes then outstanding and
shall include the Lead Investor so long as the Lead Investor or any of its
Affiliates holds any Notes.
 
(zz) "SEC" means the United States Securities and Exchange Commission.
 
(aaa) "Securities Act" means the Securities Act of 1933, as amended.
 
(bbb) "Securities Purchase Agreement" means that certain securities purchase
agreement dated as of the Subscription Date by and among the Company and the
Purchasers of the Notes pursuant to which the Company issued the Notes and
Warrants.
 
(ccc) "Subject Entity" means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.
 
(ddd) "Subordinated Notes" means the Secured Promissory Notes expected to be
issued by the Company on April 16, 2015 to Atmel Corporation in connection with
the Pending Acquisition in the aggregate principal amount of no greater than
$450,000, without giving effect to any amendment, supplement or modification
after the issuance thereof.
 
(eee) "Subscription Date" means April 16, 2015.
 
(fff) "Successor Entity" means one or more Person or Persons (or, if so elected
by the Holder, the Company or Parent Entity) formed by, resulting from or
surviving any Fundamental Transaction or one or more Person or Persons (or, if
so elected by the Holder, the Company or the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
 
(ggg) "Trading Day" means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded; provided that
"Trading Day" shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York Time).
 
 
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(hhh) "Warrants" has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.
 
(iii) "Warrant Shares" means shares of Common Stock issuable by the Company upon
the exercise of any of the Warrants.
 
(jjj) "Weighted Average Price" means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
during the period beginning at 9:30:01 a.m., New York Time (or such other time
as the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York Time (or such other time as the Principal
Market publicly announces is the official close of trading) as reported by
Bloomberg through its "Volume at Price" functions, or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York Time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York Time (or such other time as such market publicly
announces is the official close of trading) as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in
the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.).  If the Weighted Average Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Weighted
Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder.  If the Company and the
Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 22.  All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction during the applicable
calculation period.
 
[Signature Page Follows]
 
 
 
 
 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
the Issuance Date set out above.
 

Uni-Pixel, Inc.
By:                                                                
Name:
Title:

 

 
 
 

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EXHIBIT I

UNI-PIXEL, INC.

 
CONVERSION NOTICE
 
Reference is made to the Senior Secured Convertible Note (the "Note") issued to
the undersigned by Uni-Pixel, Inc., a Delaware corporation (the "Company").  In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock par value $0.001 per share (the "Common
Stock") of the Company, as of the date specified below.
 
Date of Conversion:
 
Aggregate Conversion Amount to be converted:
 
Please confirm the following information:
Conversion Price:
 
Number of shares of Common Stock to be issued:
 
Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:
Issue to:
         
Facsimile Number and Electronic Mail:
 
Authorization:
 
By:
 
Title:
 
Dated:
 
Account Number:
 
  (if electronic book entry transfer)
 
Transaction Code Number:
 
  (if electronic book entry transfer)
 
Installment Amounts to be reduced and amount of reduction:
___________________________

 
 
 

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ACKNOWLEDGMENT
 
The Company hereby acknowledges this Conversion Notice and hereby directs
Securities Transfer Corporation to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated April __,
2015 from the Company and acknowledged and agreed to by Securities Transfer
Corporation.
 

Uni-Pixel, Inc.
By:                                                                
Name:
Title:

 
 

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