Exhibit 10.2

 

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. SUCH 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.

 

ACUSPHERE, INC.

 

Senior Convertible Note

 

Issuance Date:        , 2008

 

Principal: U.S. $15,000,000

 

FOR VALUE RECEIVED, Acusphere, Inc., a Delaware corporation (the “Company”),
hereby promises to pay to the order of Cephalon, Inc., a Delaware corporation,
or registered and permitted assigns (“Holder”), the amount set forth above as
the Principal (the “Principal”) when due, whether on the Maturity Date (as
defined below), upon acceleration or otherwise (in each case in accordance with
the terms hereof) and to pay interest (“Interest”) on any outstanding Principal
at a rate per annum equal to the Interest Rate (as defined below), from the date
set forth above as the Issuance Date (the “Issuance Date”) until the same
becomes due and payable, whether on the Maturity Date, upon acceleration or
otherwise (in each case in accordance with the terms hereof). This Senior
Convertible Note (including all Senior Convertible Notes issued in exchange,
transfer or replacement hereof, this “Note”) is being issued on the Issuance
Date pursuant to the Note Purchase Agreement (as defined below).  Certain
capitalized terms are defined in Section 23.

 

(1)                                  MATURITY.  ON THE MATURITY DATE, THE
COMPANY SHALL PAY TO THE HOLDER (THE “MATURITY DATE PAYMENT”) AN AMOUNT IN CASH
REPRESENTING ALL OUTSTANDING PRINCIPAL, AN AMOUNT, AT THE OPTION OF THE COMPANY
AS DESCRIBED IN SECTION 2, PAYABLE IN CASH OR SHARES OF COMMON STOCK (AS DEFINED
BELOW), REPRESENTING ACCRUED AND UNPAID INTEREST AND AN AMOUNT IN CASH
REPRESENTING ALL ACCRUED AND UNPAID LATE CHARGES, IF ANY.  THE “MATURITY DATE”
SHALL BE NOVEMBER [    ], 2011, AS MAY BE EXTENDED AT THE OPTION OF THE HOLDER
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.

 

(2)                                  INTEREST; INTEREST RATE.  INTEREST ON THIS
NOTE SHALL COMMENCE ACCRUING ON THE ISSUANCE DATE AND SHALL BE COMPUTED ON THE
BASIS OF A 365-DAY YEAR BASED ON ACTUAL DAYS ELAPSED AND SHALL BE PAYABLE IN
ARREARS ON EACH NOVEMBER [    ] DURING THE PERIOD BEGINNING ON THE ISSUANCE DATE
AND ENDING ON, AND INCLUDING, THE MATURITY DATE AND ON THE MATURITY DATE (EACH,
AN “INTEREST DATE”) WITH THE FIRST INTEREST DATE BEING NOVEMBER [    ], 2009. 
INTEREST SHALL

 

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be payable on each Interest Date, at the option of the Company, either in cash
by wire transfer or by the issuance and delivery to the Holder of a certificate,
registered in the name of the Holder or its designee, for a number of shares of
Common Stock (with fractional shares being rounded to the next higher whole
number) equal to the amount of Interest due on such Interest Payment Date
divided by the Average Closing Price on the Interest Payment Date.  Prior to the
payment of Interest on the first 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 in accordance with Section 3(b)(i).  From and after the
occurrence of an Event of Default, the Interest Rate shall be increased to
fifteen percent (15%) per annum as described in Section 19 below.  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 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.

 

(3)                                  CONVERSION OF NOTE.  AT THE OPTION OF THE
HOLDER, THIS NOTE SHALL BE CONVERTIBLE INTO (I) SHARES OF COMMON STOCK OF THE
COMPANY, PAR VALUE $.01 PER SHARE (THE “COMMON STOCK”), (II) THE IMAGIFY LICENSE
(AS DEFINED BELOW) OR (III) (A) A CREDIT IN AN AMOUNT EQUAL TO THE CONVERSION
AMOUNT AGAINST ANY REQUIRED REGULATORY MILESTONE PAYMENT (AS DEFINED BELOW) AND
(B) AN AMOUNT PAYABLE, AT THE OPTION OF THE COMPANY, IN CASH OR BY DELIVERY OF A
NUMBER OF SHARES OF COMMON STOCK DETERMINED IN ACCORDANCE WITH
SECTION 3(A) EQUAL TO THE EXCESS OF THE CONVERSION AMOUNT OVER THE AMOUNT OF THE
REGULATORY MILESTONE PAYMENT (THE “CONVERSION AMOUNT EXCESS”), ON THE TERMS AND
CONDITIONS SET FORTH IN THIS SECTION 3.

 

(A)                                  CONVERSION RIGHT.  SUBJECT TO THE
PROVISIONS OF SECTIONS 3(C) AND 3(D), AT ANY TIME BETWEEN THE ISSUANCE DATE AND
5:00 P.M. NEW YORK TIME ON NOVEMBER [    ], 2009 (THE “CONVERSION DEADLINE”),
THE HOLDER SHALL BE ENTITLED TO CONVERT ALL BUT NOT LESS THAN ALL OF THE
OUTSTANDING AND UNPAID CONVERSION AMOUNT (AS DEFINED BELOW) INTO EITHER
(I) FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK (A “SHARE CONVERSION”)
IN ACCORDANCE WITH SECTIONS 3(B) AND 3(C), (II) THE RIGHT TO ENTER INTO THE
IMAGIFY LICENSE OR (III) (A) A CREDIT IN AN AMOUNT EQUAL TO THE CONVERSION
AMOUNT AGAINST ANY REQUIRED REGULATORY MILESTONE PAYMENT AND (B) AT THE OPTION
OF THE COMPANY, (X) CASH IN AN AMOUNT EQUAL TO THE CONVERSION AMOUNT EXCESS OR
(Y) DELIVERY TO THE HOLDER OF A NUMBER OF SHARES OF COMMON STOCK (WITH
FRACTIONAL SHARES BEING ROUNDED TO THE NEXT HIGHER WHOLE NUMBER EQUAL TO THE
CONVERSION AMOUNT EXCESS DIVIDED BY THE AVERAGE CLOSING PRICE ON THE CONVERSION
DATE (AS DEFINED BELOW).  IN THE CASE OF A SHARE CONVERSION, 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
SHARES OF COMMON STOCK UPON CONVERSION OF ANY CONVERSION AMOUNT; PROVIDED, THAT
THE COMPANY SHALL NOT BE RESPONSIBLE FOR THE PAYMENT OF ANY INCOME TAXES THAT
MAY BE INCURRED BY THE HOLDER AS A RESULT OF SUCH CONVERSION.

 

(B)                                 CONVERSION RATE FOR SHARE CONVERSION.  IN
CONNECTION WITH A SHARE CONVERSION, THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF ANY CONVERSION AMOUNT PURSUANT TO SECTION 3(A) SHALL
BE THE GREATER OF (I) THE AMOUNT DETERMINED BY DIVIDING (X) SUCH CONVERSION
AMOUNT BY (Y) THE CONVERSION PRICE AND (II) SUCH NUMBER OF SHARES OF COMMON

 

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STOCK AS SHALL REPRESENT IMMEDIATELY AFTER GIVING EFFECT TO SUCH CONVERSION 51%
OF THE COMMON STOCK DEEMED OUTSTANDING.

 

(I)                                     “CONVERSION AMOUNT” MEANS THE SUM OF
(A) THE PRINCIPAL, (B) ACCRUED AND UNPAID INTEREST WITH RESPECT TO SUCH
PRINCIPAL AND (C) ACCRUED AND UNPAID LATE CHARGES WITH RESPECT TO SUCH AMOUNT
BEING CONVERTED.

 

(II)                                  “CONVERSION PRICE” MEANS, AS OF ANY
CONVERSION DATE (AS DEFINED BELOW) OR OTHER DATE OF DETERMINATION, AND SUBJECT
TO ADJUSTMENT AS PROVIDED HEREIN, U.S.$0.486.

 

(C)                                  MECHANICS OF CONVERSION.

 

(I)                                     SHARE CONVERSION NOTICE.  TO CONVERT ANY
CONVERSION AMOUNT INTO SHARES OF COMMON STOCK ON ANY CONVERSION DATE, THE HOLDER
SHALL (A) TRANSMIT BY FACSIMILE (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 A (THE “SHARE CONVERSION
NOTICE”) TO THE COMPANY’S CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER,
WITH A COPY BY FACSIMILE OR EMAIL TO:

 

LAWRENCE S. WITTENBERG, ESQ.

GOODWIN PROCTER LLP

EXCHANGE PLACE

BOSTON, MASSACHUSETTS 02129

EMAIL:  LWITTENBERG@GOODWINPROCTER.COM

FAX: (617) 523-1231

 

AND (B) PHYSICALLY SURRENDER THE NOTE TO THE COMPANY FOR CANCELLATION IN
CONNECTION WITH SUCH CONVERSION.

 

(II)                                  SHARE DELIVERY. ON OR BEFORE THE FIRST
BUSINESS DAY FOLLOWING THE DATE OF RECEIPT OF A SHARE CONVERSION NOTICE IN
CONNECTION WITH A SHARE CONVERSION, THE COMPANY SHALL TRANSMIT BY FACSIMILE A
CONFIRMATION OF RECEIPT OF SUCH SHARE CONVERSION NOTICE TO THE HOLDER AND THE
TRANSFER AGENT.  ON OR BEFORE THE THIRD BUSINESS DAY FOLLOWING THE LATER OF
(A) THE DATE OF RECEIPT OF A SHARE CONVERSION NOTICE AND THE COMPANY’S RECEIPT
OF THE NOTE FROM THE HOLDER AND (B) THE EXPIRATION OF ANY APPLICABLE WAITING
PERIOD UNDER THE HSR ACT (AS DEFINED BELOW) (THE “SHARE DELIVERY DATE”), THE
COMPANY SHALL ISSUE AND DELIVER TO SUCH ADDRESS OF THE HOLDER AS IS SET FORTH IN
THE NOTE PURCHASE AGREEMENT OR SUCH OTHER ADDRESS AS SPECIFIED IN THE SHARE
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. THE PERSON 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.

 

(D)                                 DELIVERIES IN CONNECTION WITH THE IMAGIFY
LICENSE.  TO CONVERT THIS NOTE INTO THE RIGHT TO ENTER INTO THE IMAGIFY LICENSE
ON ANY CONVERSION DATE, THE HOLDER SHALL (A) TRANSMIT BY FACSIMILE (OR OTHERWISE
DELIVER), FOR RECEIPT ON OR PRIOR TO 11:59 P.M., NEW YORK TIME, ON SUCH DATE, A
LETTER SIGNED BY AN AUTHORIZED OFFICER OF THE HOLDER ELECTING TO CONVERT THIS
NOTE INTO THE

 

3

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IMAGIFY LICENSE IN ACCORDANCE WITH THE TERMS OF THE NOTE (THE “IMAGIFY
CONVERSION NOTICE”) TO THE COMPANY’S CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER, WITH A COPY BY FACSIMILE OR EMAIL TO:

 

LAWRENCE S. WITTENBERG, ESQ.

GOODWIN PROCTER LLP

EXCHANGE PLACE

BOSTON, MASSACHUSETTS 02129

EMAIL:  LWITTENBERG@GOODWINPROCTER.COM

FAX: (617) 523-1231

 

AND (B) PHYSICALLY SURRENDER THE NOTE TO THE COMPANY FOR CANCELLATION IN
CONNECTION WITH SUCH CONVERSION.  NO LATER THAN THE SECOND BUSINESS DAY
FOLLOWING THE LATER OF (A) THE DATE OF RECEIPT OF SUCH IMAGIFY CONVERSION NOTICE
AND THE COMPANY’S RECEIPT OF THE NOTE FROM THE HOLDER AND (B) THE EXPIRATION OF
ANY APPLICABLE WAITING PERIOD UNDER THE HSR ACT, THE COMPANY SHALL DELIVERY TO
THE HOLDER DULY EXECUTED ORIGINAL COPIES OF (I) THE IMAGIFY LICENSE, (II) THE
ASSIGNMENT AGREEMENT (AS DEFINED BELOW) AND (III) THE TRADEMARK LICENSE (AS
DEFINED BELOW).

 

(E)                                  DELIVERIES IN CONNECTION WITH THE
REGULATORY MILESTONE PAYMENT CREDIT.  TO CONVERT THIS NOTE INTO THE RIGHT TO
RECEIVE A CREDIT AGAINST ANY REQUIRED REGULATORY MILESTONE PAYMENT AND THE
AMOUNT OF CASH, IF ANY, SPECIFIED IN SECTION 3(A) ON ANY CONVERSION DATE, THE
HOLDER SHALL (A) TRANSMIT BY FACSIMILE (OR OTHERWISE DELIVER), FOR RECEIPT ON OR
PRIOR TO 11:59 P.M., NEW YORK TIME, ON SUCH DATE, A LETTER SIGNED BY AN
AUTHORIZED OFFICER OF THE HOLDER ELECTING TO CONVERT THIS NOTE INTO A CREDIT
TOWARDS THE REGULATORY MILESTONE PAYMENT PLUS THE AMOUNT OF CASH, IF ANY
SPECIFIED IN SECTION 3(A) IN ACCORDANCE WITH THE TERMS OF THE NOTE (THE
“REGULATORY MILESTONE PAYMENT NOTICE”) TO THE COMPANY’S CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER, WITH A COPY BY FACSIMILE OR EMAIL TO:

 

LAWRENCE S. WITTENBERG, ESQ.

GOODWIN PROCTER LLP

EXCHANGE PLACE

BOSTON, MASSACHUSETTS 02129

EMAIL:  LWITTENBERG@GOODWINPROCTER.COM

FAX: (617) 523-1231

 

AND (B) PHYSICALLY SURRENDER THE NOTE TO THE COMPANY FOR CANCELLATION IN
CONNECTION WITH SUCH CONVERSION.  NO LATER THAN THE SECOND BUSINESS DAY
FOLLOWING THE LATER OF (A) THE DATE OF RECEIPT OF SUCH REGULATORY MILESTONE
PAYMENT NOTICE AND THE COMPANY’S RECEIPT OF THE NOTE FROM THE HOLDER AND (B) THE
EXPIRATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HSR ACT, THE COMPANY SHALL
DELIVER TO THE HOLDER (1) A DULY EXECUTED ORIGINAL COPY OF A CONFIRMATION OF THE
SATISFACTION OF ALL OF THE HOLDER’S OBLIGATIONS WITH RESPECT TO THE REGULATORY
MILESTONE PAYMENT AND (2) AT THE OPTION OF THE COMPANY, (X) A CASH PAYMENT, BY
WIRE TRANSFER TO THE ACCOUNT SPECIFIED BY THE HOLDER, IN AN AMOUNT EQUAL TO THE
CONVERSION AMOUNT EXCESS, OR (Y) A CERTIFICATE REGISTERED IN THE NAME OF THE
HOLDER OR ITS DESIGNEE, FOR A NUMBER OF SHARES OF COMMON STOCK (WITH FRACTIONAL
SHARES BEING ROUNDED TO THE NEXT HIGHER WHOLE NUMBER) EQUAL TO THE CONVERSION
AMOUNT EXCESS DIVIDED BY THE AVERAGE CLOSING PRICE ON THE CONVERSION DATE.

 

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(F)                                    IF THE EXPIRATION OF ANY APPLICABLE
WAITING PERIOD UNDER THE HSR ACT WITH RESPECT TO A CONVERSION OF THE NOTE SHALL
NOT HAVE OCCURRED WITHIN SIXTY (60) DAYS FOLLOWING THE DELIVERY OF THE SHARE
CONVERSION NOTICE, THE IMAGIFY CONVERSION NOTICE OR THE REGULATORY MILESTONE
PAYMENT NOTICE, AS APPLICABLE, THE PURCHASER SHALL HAVE THE RIGHT TO WITHDRAW
SUCH SHARE CONVERSION NOTICE, IMAGIFY CONVERSION NOTICE OR REGULATORY MILESTONE
PAYMENT NOTICE, AS APPLICABLE, BY DELIVERY OF WRITTEN NOTICE TO THE COMPANY
WITHIN FIVE (5) BUSINESS DAYS AFTER THE EXPIRATION OF SUCH SIXTY (60) DAY PERIOD
AND, WITHOUT WAIVING OR LIMITING ANY OTHER RIGHTS OF THE HOLDER HEREUNDER
(INCLUDING THE RIGHT TO CONVERT THE NOTE PURSUANT TO THE TERMS HEREOF), THE
CONVERSION OF THIS NOTE SHALL BE DEEMED NOT TO HAVE OCCURRED AND THE NOTE SHALL
BE DEEMED TO REMAIN OUTSTANDING.

 

(4)                                  RIGHTS UPON EVENT OF DEFAULT.

 

(A)                                  EVENT OF DEFAULT.  EACH OF THE FOLLOWING
EVENTS SHALL CONSTITUTE AN “EVENT OF DEFAULT”:

 

(I)                                     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, EXCEPT, IN THE CASE OF A FAILURE TO PAY INTEREST AND
LATE CHARGES WHEN AND AS DUE, IN WHICH CASE ONLY IF SUCH FAILURE CONTINUES FOR A
PERIOD OF AT LEAST THREE (3) BUSINESS DAYS;

 

(II)                                  THE COMPANY OR ANY OF ITS SUBSIDIARIES (AS
DEFINED IN THE NOTE PURCHASE AGREEMENT) SHALL FAIL TO MAKE ANY PAYMENT DUE
(WHETHER BY SCHEDULED MATURITY, REQUIRED PREPAYMENT, ACCELERATION, DEMAND OR
OTHERWISE) ON ANY OTHER INDEBTEDNESS (AS DEFINED IN THE NOTE PURCHASE AGREEMENT)
IN EXCESS OF $50,000 AND SUCH FAILURE SHALL CONTINUE AFTER THE APPLICABLE GRACE
PERIOD, IF ANY, SPECIFIED IN THE AGREEMENT OR INSTRUMENT RELATING TO SUCH
INDEBTEDNESS; OR ANY OTHER DEFAULT OR EVENT UNDER ANY AGREEMENT OR INSTRUMENT
RELATING TO ANY SUCH INDEBTEDNESS IN EXCESS OF $50,000 SHALL OCCUR AND SHALL
CONTINUE AFTER THE APPLICABLE GRACE PERIOD, IF ANY, SPECIFIED IN SUCH AGREEMENT
OR INSTRUMENT IF THE EFFECT OF SUCH DEFAULT OR EVENT IS TO ACCELERATE, OR TO
PERMIT THE ACCELERATION OF, THE MATURITY OF SUCH INDEBTEDNESS IN EXCESS OF 
$50,000 OR ANY SUCH INDEBTEDNESS IN EXCESS OF $50,000 SHALL BE DECLARED TO BE
DUE AND PAYABLE OR REQUIRED TO BE PREPAID (OTHER THAN BY A REGULARLY SCHEDULED
REQUIRED PREPAYMENT) PRIOR TO THE STATED MATURITY THEREOF;

 

(III)                               ANY REPRESENTATION OR WARRANTY MADE BY THE
COMPANY IN ANY TRANSACTION AGREEMENT (AS DEFINED IN THE NOTE PURCHASE AGREEMENT)
SHALL PROVE TO HAVE BEEN UNTRUE IN ANY MATERIAL RESPECT WHEN MADE OR DEEMED TO
BE MADE OR ANY EVENT OCCURS, OR CONDITION OR STATE OF FACTS COMES INTO
EXISTENCE, WHICH, IF SUCH EVENT, CONDITION OR STATE OF FACTS HAD OCCURRED OR
BEEN IN EXISTENCE ON THE DATE HEREOF, WOULD HAVE CAUSED THE REPRESENTATIONS AND
WARRANTIES CONTAINED CLAUSES (I) (EXCEPT FOR THE WORDS “ALL WITHOUT CHALLENGE OF
ANY KIND” CONTAINED THEREIN), (II) (EXCEPT FOR THE WORDS “HAS NOT BEEN CANCELLED
OR ABANDONED AND” CONTAINED THEREIN) AND (V) (EXCEPT WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION AGREEMENTS (AS DEFINED IN THE NOTE
PURCHASE AGREEMENT)) OF THE FIRST SENTENCE OF SECTION 3.20(E) OF THE NOTE
PURCHASE AGREEMENT TO BE UNTRUE IN ANY MATERIAL RESPECT AS OF THE DATE HEREOF;

 

5

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(IV)                              DEFAULT BY THE COMPANY IN THE DUE OBSERVANCE
OR PERFORMANCE OR ANY COVENANT OR AGREEMENT CONTAINED IN ANY TRANSACTION
AGREEMENT AND SUCH DEFAULT SHALL CONTINUE FOR TWENTY (20) BUSINESS DAYS AFTER
WRITTEN NOTICE THEREOF TO THE COMPANY BY THE HOLDER;

 

(V)                                 THE COMPANY OR ANY OF ITS SUBSIDIARIES SHALL
(I) APPLY FOR OR CONSENT TO THE APPOINTMENT OF A RECEIVER, TRUSTEE, CUSTODIAN,
SEQUESTRATOR OR SIMILAR OFFICIAL (A “CUSTODIAN”) FOR ITSELF OR FOR A SUBSTANTIAL
PART OF ITS PROPERTY, (II) MAKE A GENERAL ASSIGNMENT FOR THE BENEFIT OF
CREDITORS, (III) BECOME UNABLE, OR ADMIT IN WRITING ITS INABILITY, TO PAY ITS
DEBTS AS THEY BECOME DUE, (IV) VOLUNTARILY OR INVOLUNTARILY DISSOLVE, LIQUIDATE
OR WIND UP ITS AFFAIRS, OR (V) TAKE ACTION FOR THE PURPOSE OF EFFECTING ANY OF
THE FOREGOING;

 

(VI)                              A PROCEEDING UNDER ANY BANKRUPTCY,
REORGANIZATION, ARRANGEMENT OF DEBTS, INSOLVENCY OR RECEIVERSHIP LAW
(COLLECTIVELY, “BANKRUPTCY LAW”) IS FILED BY OR AGAINST THE COMPANY OR ANY OF
ITS SUBSIDIARIES, OR THE COMPANY OR ANY OF ITS SUBSIDIARIES TAKES ANY ACTION TO
AUTHORIZE ANY OF THE FOREGOING MATTERS, AND IN THE CASE OF ANY SUCH PROCEEDING
INSTITUTED AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES (BUT NOT INSTITUTED BY
THE COMPANY OR ANY OF ITS SUBSIDIARIES), EITHER SUCH PROCEEDING SHALL REMAIN
UNDISMISSED OR UNSTAYED FOR A PERIOD OF 30 DAYS OR ANY OF THE ACTIONS SOUGHT IN
SUCH PROCEEDING (INCLUDING, WITHOUT LIMITATION, THE ENTRY OF AN ORDER FOR RELIEF
AGAINST, OR THE APPOINTMENT OF A RECEIVER, TRUSTEE OR OTHER SIMILAR OFFICIAL FOR
THE COMPANY OR ANY OF ITS SUBSIDIARIES OR ANY SUBSTANTIAL PART OF ITS PROPERTY)
SHALL BE GRANTED OR SHALL OCCUR;

 

(VII)                           EXCEPT IN CONNECTION WITH THOSE MATTERS SET
FORTH ON SCHEDULE 4(A)(VII) HERETO, A FINAL, NON-APPEALABLE JUDGMENT OR SERIES
OF JUDGMENTS FOR THE PAYMENT OF MONEY AGGREGATING IN EXCESS OF $50,000 IS
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 $50,000 AMOUNT SET FORTH ABOVE SO LONG AS THE COMPANY PROVIDES
THE HOLDER AS PROMPTLY AS PRACTICABLE WITH A WRITTEN STATEMENT FROM SUCH INSURER
OR INDEMNITY PROVIDER (WHICH WRITTEN STATEMENT SHALL BE IN A FORM 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 IN THE TIME FRAME PROVIDED UNDER THE APPLICABLE INSURANCE
POLICY;

 

(VIII)                        ANY BREACH OR FAILURE IN ANY RESPECT TO COMPLY
WITH SECTION 7 OF THIS NOTE;

 

(IX)                                ANY OF THE GOVERNMENTAL APPROVALS OR ANY
OTHER CONSENT OR APPROVAL NECESSARY FOR THE CONTINUING OPERATION OF THE COMPANY
OR ANY OF ITS SUBSIDIARIES SHALL CEASE TO BE IN FULL FORCE AND EFFECT; PROVIDED,
THAT A FAILURE TO SECURE APPROVAL OF THE IMAGIFY PRODUCT (AS DEFINED IN THE NOTE
PURCHASE AGREEMENT) BY THE FOOD AND DRUG ADMINISTRATION SHALL NOT BE CONSIDERED
A DEFAULT UNDER THIS PARAGRAPH;

 

(X)                                   FOR ANY REASON ANY TRANSACTION AGREEMENT
SHALL NOT BE IN FULL FORCE AND EFFECT OR SHALL NOT BE ENFORCEABLE IN ACCORDANCE
WITH ITS TERMS, OR ANY SECURITY INTEREST OR LIEN GRANTED PURSUANT THERETO SHALL
FAIL TO BE PERFECTED OR TO HAVE ITS INTENDED PRIORITY, OR ANY PARTY THERETO

 

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OTHER THAN THE HOLDER SHALL CONTEST THE VALIDITY OF ANY LIEN GRANTED UNDER, OR
SHALL DISAFFIRM ITS OBLIGATIONS UNDER ANY TRANSACTION AGREEMENT;

 

(XI)                                AN ERISA EVENT DESCRIBED IN CLAUSE (B) OF
THE DEFINITION THEREOF SHALL HAVE OCCURRED OR ANY OTHER ERISA EVENT SHALL HAVE
OCCURRED THAT, WHEN TAKEN TOGETHER WITH ALL OTHER SUCH ERISA EVENTS, COULD
REASONABLY BE EXPECTED TO RESULT IN LIABILITY OF THE COMPANY AND ITS ERISA
AFFILIATES IN AN AGGREGATE AMOUNT EXCEEDING $50,000;

 

(XII)                             ANY MATERIAL PORTION OF THE COLLATERAL (AS
DEFINED IN THE SECURITY AGREEMENT) SHALL BE TRANSFERRED OR OTHERWISE DISPOSED
OF, EITHER VOLUNTARILY OR INVOLUNTARILY, IN ANY MANNER NOT PERMITTED BY THE
SECURITY AGREEMENT OR SHALL BE LOST, STOLEN, DAMAGED OR DESTROYED AND SUCH LOSS,
THEFT, DAMAGE OR DESTRUCTION IS NOT COVERED MATERIALLY BY INSURANCE; OR

 

(XIII)                          FOR ANY REASON, THE COMPANY OR ANY OF ITS
MATERIAL SUBSIDIARIES CEASES TO OPERATE ITS BUSINESS OR CEASES TO OWN ANY OF ITS
GOVERNMENTAL APPROVALS NECESSARY FOR THE CONTINUING CONDUCT OF ITS BUSINESS.

 

(B)                                 RIGHTS UPON AN EVENT OF DEFAULT.

 

(I)                                     IF AN EVENT OF DEFAULT HAS OCCURRED WITH
RESPECT TO THIS NOTE AND THE HOLDER HAS PROVIDED WRITTEN NOTICE TO THE COMPANY
OF SUCH EVENT OF DEFAULT, THE UNPAID PRINCIPAL OF THIS NOTE SHALL BEAR INTEREST
AT A RATE OF FIFTEEN PERCENT (15%) PER ANNUM FROM THE OCCURRENCE AND DURING THE
CONTINUANCE OF SUCH EVENT OF DEFAULT.  UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT, EXCEPT IN THE CASE OF THE EVENTS DESCRIBED IN PARAGRAPHS (V) AND
(VI) ABOVE:  (X) THE HOLDER MAY, BY WRITTEN NOTICE TO THE COMPANY, ACCELERATE
THE MATURITY OF THIS NOTE WHEREUPON THE ENTIRE AMOUNT OF PRINCIPAL, TOGETHER
WITH ALL ACCRUED AND UNPAID INTEREST THEREON AND ALL OTHER LIABILITIES OF THE
COMPANY HEREUNDER, SHALL BECOME DUE AND PAYABLE IMMEDIATELY; PROVIDED, HOWEVER,
THAT WITH RESPECT TO AN EVENT OF DEFAULT DESCRIBED IN PARAGRAPH (V) OR
(VI) ABOVE, THIS NOTE, AND ALL SUCH PRINCIPAL, INTEREST AND OTHER LIABILITIES OF
THE COMPANY HEREUNDER SHALL AUTOMATICALLY BECOME DUE AND PAYABLE WITHOUT
PRESENTMENT, DEMAND, NOTICE OF NONPERFORMANCE, PROTEST, NOTICE OF PROTEST OR
NOTICE OF DISHONOR, ALL OF WHICH ARE EXPRESSLY WAIVED BY THE COMPANY AND (Y) THE
HOLDER MAY EXERCISE ALL OR ANY OTHER REMEDIES PROVIDED IN THE NOTE PURCHASE
AGREEMENT OR THE SECURITY AGREEMENT OR AVAILABLE AT LAW OR EQUITY.

 

(II)                                  DEMAND, PRESENTMENT, PROTEST AND NOTICES
OF NONPAYMENT, PROTEST, DISHONOR AND ACCEPTANCE ARE HEREBY WAIVED BY THE
COMPANY.  THE COMPANY ALSO WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL AND
EXEMPTION LAWS AND THE POSTING OF ANY BOND REQUIRED OF THE HOLDER IN CONNECTION
WITH ANY JUDICIAL PROCESS TO REALIZE ON THE COLLATERAL, TO ENFORCE ANY JUDGMENT
OR OTHER COURT ORDER ENTERED IN FAVOR OF THE HOLDER OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER, OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS NOTE OR ANY OTHER TRANSACTION AGREEMENT.  THE COMPANY WAIVES
THE RIGHT, IF ANY, TO THE BENEFIT OF, OR TO DIRECT THE APPLICATION OF, ANY
COLLATERAL.  THE COMPANY HEREBY ACKNOWLEDGES THAT THE HOLDER HAS NO OBLIGATION
TO RESORT TO ANY COLLATERAL OR MAKE CLAIM AGAINST ANY OTHER PERSON BEFORE
SEEKING PAYMENT OR PERFORMANCE FROM THE COMPANY.

 

(III)                               IN ADDITION TO ANY RIGHTS NOW OR HEREAFTER
GRANTED UNDER APPLICABLE LAW AND NOT BY WAY OF LIMITATION OF ANY SUCH RIGHTS,
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF

 

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ANY EVENT OF DEFAULT, THE HOLDER IS HEREBY AUTHORIZED AT ANY TIME OR FROM TIME
TO TIME, WITHOUT NOTICE TO THE COMPANY OR TO ANY OTHER PERSON, ANY SUCH NOTICE
BEING HEREBY EXPRESSLY WAIVED, TO SET OFF AND TO APPROPRIATE AND TO APPLY ANY
AND ALL BALANCES HELD BY IT AT ANY OF ITS OFFICES FOR THE ACCOUNT OF THE COMPANY
(REGARDLESS OF WHETHER SUCH BALANCES ARE THEN DUE TO THE COMPANY) AND ANY OTHER
PROPERTIES OR ASSETS ANY TIME HELD OR OWING BY THE COMPANY TO OR FOR THE CREDIT
OR FOR THE ACCOUNT OF THE COMPANY AGAINST AND ON ACCOUNT OF ANY OF THE SECURED
OBLIGATIONS (AS DEFINED IN THE SECURITY AGREEMENT) THEN DUE.  THE COMPANY HEREBY
AGREES THAT THE FOREGOING PROVISIONS ARE INTENDED TO BE CONSTRUED SO AS TO
SATISFY THE REQUIREMENTS OF SECTION 553 OF THE FEDERAL BANKRUPTCY CODE OR
AMENDMENTS THERETO (INCLUDING ANY REQUIREMENT OF MUTUALITY OF OBLIGATIONS
THEREIN).

 

(5)                                  RIGHTS UPON CORPORATE EVENTS.  IN ADDITION
TO AND NOT IN SUBSTITUTION FOR ANY OTHER RIGHTS HEREUNDER (BUT NOT IN
DUPLICATION OF ANY ADJUSTMENT MADE PURSUANT TO SECTION 6), PRIOR TO THE
CONSUMMATION OF ANY TRANSACTION PURSUANT TO WHICH ALL HOLDERS OF OUTSTANDING
SHARES OF COMMON STOCK ARE ENTITLED TO RECEIVE SECURITIES OR OTHER ASSETS WITH
RESPECT TO OR IN EXCHANGE FOR SHARES OF COMMON STOCK (A “CORPORATE EVENT”), THE
COMPANY SHALL MAKE APPROPRIATE PROVISION TO INSURE THAT THE HOLDER WILL
THEREAFTER HAVE THE RIGHT TO RECEIVE UPON A CONVERSION OF THIS NOTE FOR SHARES
OF COMMON STOCK (I.E. NOT INTO THE RIGHT TO ENTER INTO THE IMAGIFY LICENSE OR
RECEIVE A CREDIT AGAINST ANY REQUIRED REGULATORY MILESTONE PAYMENT), (I) IN
ADDITION TO THE SHARES OF COMMON STOCK RECEIVABLE UPON SUCH CONVERSION, SUCH
SECURITIES OR OTHER ASSETS TO WHICH THE HOLDER WOULD HAVE BEEN ENTITLED WITH
RESPECT TO SUCH SHARES OF COMMON STOCK HAD SUCH SHARES OF COMMON STOCK BEEN HELD
BY THE HOLDER UPON THE CONSUMMATION OF SUCH CORPORATE EVENT (WITHOUT TAKING INTO
ACCOUNT ANY LIMITATIONS OR RESTRICTIONS ON THE CONVERTIBILITY OF THIS NOTE) OR
(II) IN LIEU OF THE SHARES OF COMMON STOCK OTHERWISE RECEIVABLE UPON SUCH
CONVERSION, SUCH SECURITIES OR OTHER ASSETS RECEIVED BY THE HOLDERS OF SHARES OF
COMMON STOCK IN CONNECTION WITH THE CONSUMMATION OF SUCH CORPORATE EVENT IN SUCH
AMOUNTS AS THE HOLDER WOULD HAVE BEEN ENTITLED TO RECEIVE HAD THIS NOTE
INITIALLY BEEN ISSUED WITH CONVERSION RIGHTS FOR THE FORM OF SUCH CONSIDERATION
(AS OPPOSED TO SHARES OF COMMON STOCK) AT A CONVERSION RATE FOR SUCH
CONSIDERATION COMMENSURATE WITH THE TERMS OF CONVERSION SET FORTH IN SECTION 3.
PROVISION MADE PURSUANT TO THE PRECEDING SENTENCE SHALL BE IN A FORM AND
SUBSTANCE SATISFACTORY TO THE HOLDER.  THE PROVISIONS OF THIS SECTION 5 SHALL
APPLY SIMILARLY AND EQUALLY TO SUCCESSIVE CORPORATE EVENTS AND SHALL BE APPLIED
WITHOUT REGARD TO ANY LIMITATIONS ON THE CONVERSION OF THIS NOTE.

 

(6)                                  RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

(A)                                  ADJUSTMENT OF CONVERSION PRICE UPON
ISSUANCE OF SHARES OF COMMON STOCK.  IF AND WHENEVER DURING THE PERIOD BEGINNING
ON AFTER THE ISSUANCE DATE, THE COMPANY ISSUES OR SELLS, OR IN ACCORDANCE WITH
THIS SECTION 6(A) IS DEEMED TO HAVE ISSUED OR SOLD, ANY SHARES OF COMMON STOCK
(INCLUDING THE ISSUANCE OR SALE OF SHARES OF COMMON STOCK OWNED OR HELD BY OR
FOR THE ACCOUNT OF THE COMPANY, BUT EXCLUDING SHARES OF COMMON STOCK DEEMED TO
HAVE BEEN ISSUED OR SOLD BY THE COMPANY IN CONNECTION WITH ANY EXCLUDED
SECURITY) FOR A CONSIDERATION PER SHARE LESS THAN A PRICE (THE “APPLICABLE
PRICE”) EQUAL TO THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ISSUE
OR SALE (THE FOREGOING A “DILUTIVE ISSUANCE”), THEN IMMEDIATELY AFTER SUCH
DILUTIVE ISSUANCE, THE CONVERSION PRICE THEN IN EFFECT SHALL BE REDUCED TO AN
AMOUNT EQUAL TO THE PRODUCT OF (A) THE APPLICABLE PRICE AND (B) THE QUOTIENT
DETERMINED BY DIVIDING (1) THE SUM OF (I) THE PRODUCT DERIVED BY MULTIPLYING THE
APPLICABLE PRICE TIMES THE NUMBER OF SHARES OF COMMON STOCK DEEMED OUTSTANDING
IMMEDIATELY PRIOR TO SUCH DILUTIVE ISSUANCE PLUS

 

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(II) THE CONSIDERATION, IF ANY, RECEIVED (OR DEEMED TO BE RECEIVED) BY THE
COMPANY UPON SUCH DILUTIVE ISSUANCE, BY (2) THE PRODUCT DERIVED BY MULTIPLYING
(I) THE APPLICABLE PRICE BY (II) THE NUMBER OF SHARES OF COMMON STOCK DEEMED
OUTSTANDING IMMEDIATELY AFTER SUCH DILUTIVE ISSUANCE.  FOR PURPOSES OF
DETERMINING THE ADJUSTED CONVERSION PRICE UNDER THIS SECTION 6(A), THE FOLLOWING
SHALL BE APPLICABLE:

 

(I)                                     ISSUANCE OF OPTIONS.  IF THE COMPANY IN
ANY MANNER GRANTS OR SELLS ANY OPTIONS AND THE LOWEST PRICE PER SHARE FOR WHICH
ONE SHARE OF COMMON STOCK IS ISSUABLE UPON THE EXERCISE OF ANY SUCH OPTION OR
UPON CONVERSION OR EXCHANGE OR EXERCISE OF ANY CONVERTIBLE SECURITIES ISSUABLE
UPON EXERCISE OF SUCH OPTION IS LESS THAN THE APPLICABLE PRICE, THEN SUCH SHARE
OF COMMON STOCK SHALL BE DEEMED TO BE OUTSTANDING AND TO HAVE BEEN ISSUED AND
SOLD BY THE COMPANY AT THE TIME OF THE GRANTING OR SALE OF SUCH OPTION FOR SUCH
PRICE PER SHARE. FOR PURPOSES OF THIS SECTION 6(A)(I), THE “LOWEST PRICE PER
SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS ISSUABLE UPON THE EXERCISE OF ANY
SUCH OPTION OR UPON CONVERSION OR EXCHANGE OR EXERCISE OF ANY CONVERTIBLE
SECURITIES ISSUABLE UPON EXERCISE OF SUCH OPTION” SHALL BE EQUAL TO THE SUM OF
THE LOWEST AMOUNTS OF CONSIDERATION (IF ANY) RECEIVED OR RECEIVABLE BY THE
COMPANY WITH RESPECT TO ANY ONE SHARE OF COMMON STOCK UPON GRANTING OR SALE OF
THE OPTION, UPON EXERCISE OF THE OPTION AND UPON CONVERSION OR EXCHANGE OR
EXERCISE OF ANY CONVERTIBLE SECURITY ISSUABLE UPON EXERCISE OF SUCH OPTION. NO
FURTHER ADJUSTMENT OF THE CONVERSION PRICE SHALL BE MADE UPON THE ACTUAL
ISSUANCE OF SUCH SHARE OF COMMON STOCK OR OF SUCH CONVERTIBLE SECURITIES UPON
THE EXERCISE OF SUCH OPTIONS OR UPON THE ACTUAL ISSUANCE OF SUCH SHARE OF COMMON
STOCK UPON CONVERSION OR EXCHANGE OR EXERCISE OF SUCH CONVERTIBLE SECURITIES.

 

(II)                                  ISSUANCE OF CONVERTIBLE SECURITIES.  IF
THE COMPANY IN ANY MANNER ISSUES OR SELLS ANY CONVERTIBLE SECURITIES AND THE
LOWEST PRICE PER SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS ISSUABLE UPON SUCH
CONVERSION OR EXCHANGE OR EXERCISE THEREOF IS LESS THAN THE APPLICABLE PRICE,
THEN SUCH SHARE OF COMMON STOCK SHALL BE DEEMED TO BE OUTSTANDING AND TO HAVE
BEEN ISSUED AND SOLD BY THE COMPANY AT THE TIME OF THE ISSUANCE OF SALE OF SUCH
CONVERTIBLE SECURITIES FOR SUCH PRICE PER SHARE.  FOR THE PURPOSES OF THIS
SECTION 6(A)(II), THE “PRICE PER SHARE FOR WHICH ONE SHARE OF COMMON STOCK IS
ISSUABLE UPON SUCH CONVERSION OR EXCHANGE OR EXERCISE” SHALL BE EQUAL TO THE SUM
OF THE LOWEST AMOUNTS OF CONSIDERATION (IF ANY) RECEIVED OR RECEIVABLE BY THE
COMPANY WITH RESPECT TO ANY ONE SHARE OF COMMON STOCK UPON THE ISSUANCE OR SALE
OF THE CONVERTIBLE SECURITY AND UPON THE CONVERSION OR EXCHANGE OR EXERCISE OF
SUCH CONVERTIBLE SECURITY.  NO FURTHER ADJUSTMENT OF THE CONVERSION PRICE SHALL
BE MADE UPON THE ACTUAL ISSUANCE OF SUCH SHARE OF COMMON STOCK UPON CONVERSION
OR EXCHANGE OR EXERCISE OF SUCH CONVERTIBLE SECURITIES, AND IF ANY SUCH ISSUE OR
SALE OF SUCH CONVERTIBLE SECURITIES IS MADE UPON EXERCISE OF ANY OPTIONS FOR
WHICH ADJUSTMENT OF THE CONVERSION PRICE HAD BEEN OR ARE TO BE MADE PURSUANT TO
OTHER PROVISIONS OF THIS SECTION 6(A), NO FURTHER ADJUSTMENT OF THE CONVERSION
PRICE SHALL BE MADE BY REASON OF SUCH ISSUE OR SALE.

 

(III)                               CHANGE IN OPTION PRICE OR RATE OF
CONVERSION.  IF THE PURCHASE PRICE PROVIDED FOR IN ANY OPTIONS, THE ADDITIONAL
CONSIDERATION, IF ANY, PAYABLE UPON THE ISSUE, CONVERSION, EXCHANGE OR EXERCISE
OF ANY CONVERTIBLE SECURITIES, OR THE RATE AT WHICH ANY CONVERTIBLE SECURITIES
ARE CONVERTIBLE INTO OR EXCHANGEABLE OR EXERCISABLE FOR SHARES OF COMMON STOCK
CHANGES AT ANY TIME, THE CONVERSION PRICE IN EFFECT AT THE TIME OF SUCH CHANGE
SHALL BE ADJUSTED TO THE CONVERSION PRICE WHICH WOULD HAVE BEEN IN EFFECT AT
SUCH TIME HAD SUCH OPTIONS OR CONVERTIBLE SECURITIES PROVIDED FOR SUCH CHANGED
PURCHASE PRICE, ADDITIONAL CONSIDERATION OR

 

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CHANGED CONVERSION RATE, AS THE CASE MAY BE, AT THE TIME INITIALLY GRANTED,
ISSUED OR SOLD. FOR PURPOSES OF THIS SECTION 6(A)(III), IF THE TERMS OF ANY
OPTION OR CONVERTIBLE SECURITY THAT WAS OUTSTANDING AS OF THE ISSUANCE DATE ARE
CHANGED IN THE MANNER DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE, THEN SUCH
OPTION OR CONVERTIBLE SECURITY AND THE SHARES OF COMMON STOCK DEEMED ISSUABLE
UPON EXERCISE, CONVERSION OR EXCHANGE THEREOF SHALL BE DEEMED TO HAVE BEEN
ISSUED AS OF THE DATE OF SUCH CHANGE.  NO ADJUSTMENT SHALL BE MADE IF SUCH
ADJUSTMENT WOULD RESULT IN AN INCREASE OF THE CONVERSION PRICE THEN IN EFFECT.

 

(IV)                              CALCULATION OF CONSIDERATION RECEIVED.  IN
CASE ANY OPTION OR CONVERTIBLE SECURITIES ARE ISSUED IN CONNECTION WITH THE
ISSUE OR SALE OF OTHER SECURITIES OF THE COMPANY, TOGETHER COMPRISING ONE
INTEGRATED TRANSACTION IN WHICH NO SPECIFIC CONSIDERATION IS ALLOCATED TO SUCH
OPTIONS OR CONVERTIBLE SECURITIES BY THE PARTIES THERETO, THE OPTIONS OR
CONVERTIBLE SECURITIES WILL BE DEEMED TO HAVE BEEN ISSUED FOR A CONSIDERATION OF
$.01.  IF ANY SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES ARE
ISSUED OR SOLD OR DEEMED TO HAVE BEEN ISSUED OR SOLD FOR CASH, THE CONSIDERATION
RECEIVED THEREFOR WILL BE DEEMED TO BE THE NET AMOUNT RECEIVED BY THE COMPANY
THEREFOR.  IF ANY SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES ARE
ISSUED OR SOLD FOR A CONSIDERATION OTHER THAN CASH, THE AMOUNT OF THE
CONSIDERATION OTHER THAN CASH RECEIVED BY THE COMPANY WILL BE THE FAIR VALUE OF
SUCH CONSIDERATION, EXCEPT WHERE SUCH CONSIDERATION CONSISTS OF SECURITIES, IN
WHICH CASE THE AMOUNT OF CONSIDERATION RECEIVED BY THE COMPANY WILL BE THE
CLOSING SALE PRICE OF SUCH SECURITIES (IF THEN TRADED ON A NATIONAL SECURITIES
EXCHANGE OR OVER-THE-COUNTER MARKET) ON THE DATE OF RECEIPT.  IF ANY SHARES OF
COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES ARE ISSUED TO THE OWNERS OF THE
NON-SURVIVING ENTITY IN CONNECTION WITH ANY MERGER IN WHICH THE COMPANY IS THE
SURVIVING ENTITY, THE AMOUNT OF CONSIDERATION THEREFOR WILL BE DEEMED TO BE THE
FAIR VALUE OF SUCH PORTION OF THE NET ASSETS AND BUSINESS OF THE NON-SURVIVING
ENTITY AS IS ATTRIBUTABLE TO SUCH SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE
SECURITIES, AS THE CASE MAY BE.  THE FAIR VALUE OF ANY CONSIDERATION OTHER THAN
CASH OR SECURITIES WILL BE DETERMINED JOINTLY BY THE COMPANY AND THE HOLDER.  IF
SUCH PARTIES ARE UNABLE TO REACH AGREEMENT WITHIN TEN (10) DAYS AFTER THE
OCCURRENCE OF AN EVENT REQUIRING VALUATION (THE “VALUATION EVENT”), THE FAIR
VALUE OF SUCH CONSIDERATION WILL BE DETERMINED WITHIN FIVE (5) BUSINESS DAYS
AFTER THE TENTH DAY FOLLOWING THE VALUATION EVENT BY AN INDEPENDENT, NATIONALLY
RECOGNIZED APPRAISER JOINTLY SELECTED BY THE COMPANY AND THE HOLDER.  THE
DETERMINATION OF SUCH APPRAISER SHALL BE DEEMED BINDING UPON ALL PARTIES ABSENT
MANIFEST ERROR.  THE FEES AND EXPENSES OF SUCH APPRAISER SHALL BE BORNE BY THE
PARTY WHOSE DETERMINATION OR FAIR VALUE MOST DIFFERS FROM SUCH APPRAISER’S
DETERMINATION.

 

(V)                                 RECORD DATE.  IF THE COMPANY TAKES A RECORD
OF THE HOLDERS OF SHARES OF COMMON STOCK FOR THE PURPOSE OF ENTITLING THEM
(A) TO RECEIVE A DIVIDEND OR OTHER DISTRIBUTION PAYABLE IN SHARES OF COMMON
STOCK, OPTIONS OR IN CONVERTIBLE SECURITIES OR (B) TO SUBSCRIBE FOR OR PURCHASE
SHARES OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES, THEN SUCH RECORD DATE
WILL BE DEEMED TO BE THE DATE OF THE ISSUE OR SALE OF THE SHARES OF COMMON STOCK
DEEMED TO HAVE BEEN ISSUED OR SOLD UPON THE DECLARATION OF SUCH DIVIDEND OR THE
MAKING OF SUCH OTHER DISTRIBUTION OR THE DATE OF THE GRANTING OF SUCH RIGHT OF
SUBSCRIPTION OR PURCHASE, AS THE CASE MAY BE.

 

(B)                                 ADJUSTMENT OF CONVERSION PRICE UPON
SUBDIVISION OR COMBINATION OF SHARES OF COMMON STOCK.  IF THE COMPANY AT ANY
TIME ON OR AFTER THE ISSUANCE DATE SUBDIVIDES (BY ANY STOCK SPLIT, STOCK
DIVIDEND, RECAPITALIZATION OR OTHERWISE) ONE OR MORE CLASSES OF ITS OUTSTANDING

 

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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 ISSUANCE 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.

 

(C)                                  OTHER EVENTS.  IF ANY EVENT OCCURS OF THE
TYPE CONTEMPLATED BY THE PROVISIONS OF THIS SECTION 6 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 6.

 

(7)                                  RESERVATION OF AUTHORIZED SHARES.

 

(A)                                  RESERVATION.  THE COMPANY INITIALLY SHALL
RESERVE OUT OF ITS AUTHORIZED AND UNISSUED SHARES OF COMMON STOCK A NUMBER OF
SHARES OF COMMON STOCK FOR THE NOTE EQUAL TO THE MAXIMUM NUMBER OF SHARES OF
COMMON STOCK INTO WHICH THE CONVERSION AMOUNT OF THE NOTE IS CONVERTIBLE AS OF
THE ISSUANCE DATE.  SO LONG AS THE NOTE IS OUTSTANDING, THE COMPANY SHALL TAKE
ALL ACTION NECESSARY TO RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED AND
UNISSUED SHARES OF COMMON STOCK, SOLELY FOR THE PURPOSE OF EFFECTING THE
CONVERSION OF THE NOTE, THE NUMBER OF SHARES OF COMMON STOCK AS SHALL FROM TIME
TO TIME BE NECESSARY TO EFFECT THE CONVERSION OF THE NOTE PURSUANT TO SECTION 3
(THE “REQUIRED RESERVE AMOUNT”).

 

(B)                                 INSUFFICIENT AUTHORIZED SHARES.  IF AT ANY
TIME WHILE THE NOTE REMAINS 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 NOTE 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 NOTE. 
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 60 DAYS AFTER THE OCCURRENCE OF SUCH AUTHORIZED SHARE
FAILURE, THE COMPANY SHALL TAKE ALL NECESSARY ACTIONS TO OBTAIN STOCKHOLDER
APPROVAL OF AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.  IN
CONNECTION WITH A MEETING OF STOCKHOLDERS, THE COMPANY SHALL PROVIDE EACH
STOCKHOLDER WITH A PROXY STATEMENT AND SHALL USE ITS REASONABLE BEST EFFORTS TO
SOLICIT ITS STOCKHOLDERS’ APPROVAL OF SUCH INCREASE IN AUTHORIZED SHARES OF
COMMON STOCK AND TO CAUSE ITS BOARD OF DIRECTORS TO RECOMMEND TO THE
STOCKHOLDERS THAT THEY APPROVE SUCH PROPOSAL.

 

(8)                                  VOTING RIGHTS.  THE HOLDER SHALL HAVE NO
VOTING RIGHTS AS THE HOLDER OF THIS NOTE, EXCEPT AS REQUIRED BY LAW, INCLUDING
BUT NOT LIMITED TO APPLICABLE LAWS OF THE STATE OF DELAWARE, AND AS EXPRESSLY
PROVIDED IN THIS NOTE.

 

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(9)                                  RANK; ADDITIONAL INDEBTEDNESS; LIENS.

 

(A)                                  RANK.  NO INDEBTEDNESS OF THE COMPANY OR
ITS SUBSIDIARIES SHALL RANK SENIOR TO THE PAYMENTS DUE UNDER THIS NOTE WITHOUT
THE PRIOR WRITTEN CONSENT OF THE PURCHASER.

 

(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 (I) THE INDEBTEDNESS EVIDENCED BY
THIS NOTE AND (II) 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.  EXCEPT WITH RESPECT TO
THE DIVIDEND PAYMENTS ON THE COMPANY’S 6.5% CONVERTIBLE EXCHANGEABLE PREFERRED
STOCK OUTSTANDING ON THE DATE HEREOF, AS SET FORTH IN THE COMPANY’S CERTIFICATE
OF INCORPORATION, 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 PERMITTED
INDEBTEDNESS EXCEPT FOR PAYMENTS OF PRINCIPAL OR INTEREST REQUIRED PURSUANT TO
PERMITTED INDEBTEDNESS DESCRIBED UNDER CLAUSE (I) OR (II) OF THE DEFINITION OF
PERMITTED INDEBTEDNESS, 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 OF
DEFAULT HAS OCCURRED AND IS CONTINUING.

 

(10)                            PARTICIPATION.  THE HOLDER, AS THE HOLDER OF
THIS NOTE, SHALL BE ENTITLED TO SUCH DIVIDENDS PAID AND DISTRIBUTIONS MADE TO
THE HOLDERS OF SHARES OF COMMON STOCK TO THE SAME EXTENT AS IF THE HOLDER HAD
CONVERTED THIS NOTE INTO SHARES OF COMMON STOCK (WITHOUT REGARD TO ANY
LIMITATIONS ON CONVERSION HEREIN OR ELSEWHERE) AND HAD HELD SUCH SHARES OF
COMMON STOCK ON THE RECORD DATE FOR SUCH DIVIDENDS AND DISTRIBUTIONS.  PAYMENTS
UNDER THE PRECEDING SENTENCE SHALL BE MADE CONCURRENTLY WITH THE DIVIDEND OR
DISTRIBUTION TO THE HOLDERS OF SHARES OF COMMON STOCK.  THE PROVISIONS OF THIS
SECTION 10 SHALL NOT OPERATE IN DUPLICATE OF SECTION 5 OR SECTION 6 HEREOF AND
WITH RESPECT TO CASH DIVIDENDS, SECTION 10 SHALL CONTROL.

 

(11)                            CHANGE TO TERMS OF THE NOTE.  ANY AMENDMENT,
SUPPLEMENT OR MODIFICATION OF OR TO ANY OF THE PROVISIONS OF THIS NOTE SHALL BE
EFFECTIVE ONLY IF IT IS MADE IN WRITING AND SIGNED BY THE COMPANY AND THE
HOLDER.

 

(12)                            TRANSFER.  PRIOR TO AND INCLUDING THE CONVERSION
DEADLINE, THIS NOTE MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED BY THE
HOLDER, OTHER THAN TO AN AFFILIATE (AS DEFINED IN THE NOTE PURCHASE AGREEMENT)
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY.  AFTER THE CONVERSION
DEADLINE, THIS NOTE MAY BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED BY THE HOLDER
WITHOUT THE CONSENT OF THE COMPANY.

 

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(13)                            REISSUANCE OF THIS NOTE.

 

(A)                                  TRANSFER.  IF THIS NOTE IS TO BE
TRANSFERRED IN ACCORDANCE WITH SECTION 12, 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 13(D)), REGISTERED AS
THE HOLDER MAY REQUEST, REPRESENTING THE OUTSTANDING PRINCIPAL BEING TRANSFERRED
BY THE HOLDER AND, IF LESS THEN THE ENTIRE OUTSTANDING PRINCIPAL IS BEING
TRANSFERRED, A NEW NOTE (IN ACCORDANCE WITH SECTION 13(D)) TO THE HOLDER
REPRESENTING THE OUTSTANDING PRINCIPAL NOT BEING TRANSFERRED.

 

(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 13(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 13(D) AND IN PRINCIPAL AMOUNTS OF AT LEAST $500,000)
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.  IF 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 13(A) OR SECTION 13(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 INTEREST AND LATE CHARGES (IF ANY) ON THE PRINCIPAL AND
INTEREST OF THIS NOTE, FROM THE ISSUANCE DATE.

 

(14)                            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
THE OTHER TRANSACTION AGREEMENTS 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 SEEK AN INJUNCTION RESTRAINING ANY BREACH,

 

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WITHOUT THE NECESSITY OF SHOWING ECONOMIC LOSS AND WITHOUT ANY BOND OR OTHER
SECURITY BEING REQUIRED.

 

(15)                            PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER
COSTS.  IF (I) 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 (II) 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 DOCUMENTED 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.

 

(16)                            SECURITY AGREEMENT. THE PAYMENT OF PRINCIPAL,
INTEREST AND ALL OTHER LIABILITIES OF THE COMPANY HEREUNDER IS SECURED BY A
SECURITY INTEREST IN CERTAIN COLLATERAL OF THE COMPANY AS DESCRIBED IN THE
SECURITY AGREEMENT (AS DEFINED BELOW).

 

(17)                            CONSTRUCTION; HEADINGS.  THIS NOTE SHALL BE
DEEMED TO BE JOINTLY DRAFTED BY THE COMPANY AND THE HOLDER 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.

 

(18)                            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.

 

(19)                            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 12.3 OF THE NOTE 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 WILL 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 SHARES OF COMMON
STOCK, (B) WITH RESPECT TO ANY PRO RATA SUBSCRIPTION OFFER TO HOLDERS OF SHARES
OF COMMON STOCK OR (C) FOR DETERMINING RIGHTS TO VOTE WITH RESPECT TO ANY
TRANSACTION DESCRIBED IN SECTION 5, 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.

 

(B)                                 PAYMENTS.  WHENEVER ANY PAYMENT OF CASH IS
TO BE MADE BY THE COMPANY TO THE HOLDER PURSUANT TO THIS NOTE, SUCH PAYMENT
SHALL BE MADE IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA BY WIRE TRANSFER
OF IMMEDIATELY AVAILABLE FUNDS TO THE BANK ACCOUNT SPECIFIED BY THE HOLDER TO
THE COMPANY IN WRITING PRIOR TO SUCH PAYMENT. WHENEVER ANY AMOUNT EXPRESSED TO
BE

 

14

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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 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 15% PER ANNUM FROM THE DATE SUCH AMOUNT WAS DUE UNTIL THE
SAME IS PAID IN FULL (“LATE CHARGE”).

 

(20)                            CANCELLATION.  AFTER ALL PRINCIPAL, ACCRUED
INTEREST AND OTHER AMOUNTS AT ANY TIME OWED ON THIS NOTE HAS BEEN PAID IN FULL,
WHETHER BY PAYMENT OF CASH OR UPON THE CONVERSION OF THE NOTE AS SET FORTH IN
SECTION 3, THIS NOTE SHALL AUTOMATICALLY BE DEEMED CANCELED, SHALL BE
SURRENDERED TO THE COMPANY FOR CANCELLATION AND SHALL NOT BE REISSUED.

 

(21)                            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 NOTE PURCHASE AGREEMENT.

 

(22)                            GOVERNING LAW.  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 DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTIONS OTHER THAN THE STATE OF DELAWARE.

 

(23)                            CERTAIN DEFINITIONS.  FOR PURPOSES OF THIS NOTE,
THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

(A)                                  “ASSIGNMENT AGREEMENT” MEANS THE ASSIGNMENT
AGREEMENT BETWEEN THE COMPANY AND THE PURCHASER, IN THE FORM OF EXHIBIT B.

 

(B)                                 “AVERAGE CLOSING PRICE” MEANS THE AVERAGE
CLOSING PRICE OF THE COMMON STOCK ON THE NASDAQ STOCK MARKET OR SUCH OTHER
NATIONAL SECURITIES EXCHANGE OR TRADING SYSTEM ON WHICH THE COMMON STOCK IS THEN
PRINCIPALLY TRADED DURING THE TEN (10) TRADING DAY PERIOD IMMEDIATELY PRIOR TO
THE DATE IN QUESTION.

 

(C)                                  “BENEFIT PLAN” MEANS ANY EMPLOYEE PENSION
BENEFIT PLAN (OTHER THAN A MULTIEMPLOYER PLAN) SUBJECT TO THE PROVISIONS OF
TITLE IV OF ERISA OR SECTION 412 OF THE TAX CODE OR SECTION 307 OF ERISA, AND IN
RESPECT OF WHICH THE COMPANY OR ANY ERISA AFFILIATE IS (OR, IF SUCH PLAN WERE
TERMINATED, WOULD UNDER SECTION 4069 OF ERISA BE DEEMED TO BE) AN “EMPLOYER” AS
DEFINED IN SECTION 3(5) OF ERISA.

 

(D)                                 “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.

 

(E)                                  “COMMON STOCK DEEMED OUTSTANDING” MEANS, AT
ANY GIVEN TIME, THE NUMBER OF SHARES OF COMMON STOCK ACTUALLY OUTSTANDING AT
SUCH TIME, PLUS THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OR CONVERSION OF ALL OUTSTANDING OPTIONS OR CONVERTIBLE SECURITIES, SUCH NUMBER
TO BE DETERMINED IN THE MANNER SET FORTH IN SECTION 6(A)(I) AND 6(A)(II),
REGARDLESS OF WHETHER THE OPTIONS OR CONVERTIBLE SECURITIES ARE ACTUALLY
EXERCISABLE

 

15

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AT SUCH TIME, BUT EXCLUDING (I) ANY SHARES OF COMMON STOCK OWNED OR HELD BY OR
FOR THE ACCOUNT OF THE COMPANY, (II) SOLELY FOR PURPOSES OF SECTION 6 AND NOT
FOR PURPOSES OF SECTION 3, SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE AND (III) ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF
ANY OPTIONS HAVING AN EXERCISE PRICE PER SHARE OF COMMON STOCK INTO WHICH SUCH
OPTION IS CONVERTIBLE (OR, IN THE CASE OF OPTIONS TO SUBSCRIBE FOR OR PURCHASE
CONVERTIBLE SECURITIES, HAVING AN AGGREGATE EXERCISE PRICE IN CONNECTION WITH
ANY CONVERSION INTO SUCH CONVERTIBLE SECURITIES AND ANY FURTHER CONVERSION INTO
COMMON STOCK) THAT IS GREATER THAN THE GREATER OF (I) 3 TIMES THE AVERAGE
CLOSING PRICE OF THE COMMON STOCK ON THE DATE IN QUESTION OR (II) $8.00
(APPROPRIATELY ADJUSTED FOR ANY EVENT OF THE TYPE DESCRIBED IN SECTION 6(B))

 

(F)                                    “CONVERSION DATE” MEANS THE DATE, WHICH
SHALL BE PRIOR TO THE CONVERSION DEADLINE, ON WHICH THIS NOTE IS CONVERTED IN
ACCORDANCE WITH SECTION 3(A).

 

(G)                                 “CONVERTIBLE SECURITIES” MEANS ANY STOCK OR
SECURITIES (OTHER THAN OPTIONS) DIRECTLY OR INDIRECTLY CONVERTIBLE INTO OR
EXERCISABLE OR EXCHANGEABLE FOR SHARES OF COMMON STOCK.

 

(H)                                 “ERISA” MEAN THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED FROM TIME TO TIME, REGULATIONS PROMULGATED
THEREUNDER AND ANY SUCCESSOR THERETO.

 

(I)                                     “ERISA AFFILIATE” MEANS ANY ENTITY
(WHETHER OR NOT INCORPORATED) THAT, TOGETHER WITH THE COMPANY IS TREATED AS A
SINGLE EMPLOYER UNDER SECTION 414(B) OR (C) OF THE TAX CODE, OR SOLELY FOR
PURPOSES OF SECTION 302 OF ERISA AND SECTION 412 OF THE TAX CODE, IS TREATED AS
A SINGLE EMPLOYER UNDER SECTION 414 OF THE TAX CODE.

 

(J)                                     “ERISA EVENT” MEANS (A) ANY “REPORTABLE
EVENT”, AS DEFINED IN SECTION 4043 OF ERISA OR THE REGULATIONS ISSUED
THEREUNDER, WITH RESPECT TO A BENEFIT PLAN (OTHER THAN AN EVENT FOR WHICH THE
30-DAY NOTICE PERIOD IS WAIVED); (B) THE EXISTENCE WITH RESPECT TO ANY BENEFIT
PLAN OF AN “ACCUMULATED FUNDING DEFICIENCY” (AS DEFINED IN SECTION 412 OF THE
TAX CODE OR SECTION 302 OF ERISA), WHETHER OR NOT WAIVED; (C) THE FILING
PURSUANT TO SECTION 412(D) OF THE TAX CODE OR SECTION 303(D) OF ERISA OF AN
APPLICATION FOR A WAIVER OF THE MINIMUM FUNDING STANDARD WITH RESPECT TO ANY
BENEFIT PLAN; (D) THE INCURRENCE BY THE COMPANY OR ANY OF ITS ERISA AFFILIATES
OF ANY LIABILITY UNDER TITLE IV OF ERISA WITH RESPECT TO THE TERMINATION OF ANY
BENEFIT PLAN OR THE WITHDRAWAL OR PARTIAL WITHDRAWAL OF THE COMPANY OR ANY OF
ITS ERISA AFFILIATES FROM ANY BENEFIT PLAN OR MULTIEMPLOYER PLAN; (E) THE
RECEIPT BY THE COMPANY OR ANY OF ITS ERISA AFFILIATES FROM THE PBGC OR A PLAN
ADMINISTRATOR OF ANY NOTICE RELATING TO THE INTENTION TO TERMINATE ANY BENEFIT
PLAN OR PLANS OR TO APPOINT A TRUSTEE TO ADMINISTER ANY BENEFIT PLAN; (F) THE
ADOPTION OF ANY AMENDMENT TO A BENEFIT PLAN THAT WOULD REQUIRE THE PROVISION OF
SECURITY PURSUANT TO SECTION 401(A)(29) OF THE TAX CODE OR SECTION 307 OF ERISA;
(G) THE RECEIPT BY THE COMPANY OR ANY OF ITS ERISA AFFILIATES OF ANY NOTICE, OR
THE RECEIPT BY ANY MULTIEMPLOYER PLAN FROM THE COMPANY OR ANY OF ITS ERISA
AFFILIATES OF ANY NOTICE, CONCERNING THE IMPOSITION OF WITHDRAWAL LIABILITY OR A
DETERMINATION THAT A MULTIEMPLOYER PLAN IS, OR IS EXPECTED TO BE, INSOLVENT OR
IN REORGANIZATION, WITHIN THE MEANING OF TITLE IV OF ERISA; (H) THE OCCURRENCE
OF A “PROHIBITED TRANSACTION” INVOLVING A BENEFIT PLAN WITH RESPECT TO WHICH THE
COMPANY OR ANY OF THE SUBSIDIARIES IS A “DISQUALIFIED PERSON” (WITHIN THE
MEANING OF SECTION 4975 OF THE TAX CODE) OR WITH RESPECT TO WHICH THE COMPANY OR
ANY SUCH SUBSIDIARY COULD

 

16

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OTHERWISE BE LIABLE; OR (I) ANY OTHER EVENT OR CONDITION WITH RESPECT TO A
BENEFIT PLAN OR MULTIEMPLOYER PLAN THAT COULD RESULT IN LIABILITY OF THE COMPANY
OR ANY SUBSIDIARY OF THE COMPANY.

 

(K)                                  “GOVERNMENTAL APPROVAL” MEANS ANY LICENSE,
PERMIT OR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY ISSUED OR REQUIRED TO
BE ISSUED TO THE COMPANY OR ANY OF ITS SUBSIDIARIES BY ANY GOVERNMENTAL
AUTHORITY.

 

(L)                                     “GOVERNMENTAL AUTHORITY” MEANS ANY
UNITED STATES FEDERAL, STATE, LOCAL OR OTHER POLITICAL SUBDIVISION THEREOF AND
ANY UNITED STATES OR FOREIGN ENTITY EXERCISING EXECUTIVE, LEGISLATIVE, JUDICIAL,
REGULATORY OR ADMINISTRATIVE FUNCTIONS OF OR PERTAINING TO GOVERNMENT.

 

(M)                               “HSR ACT” MEANS THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED.

 

(N)                                 “INTEREST RATE” MEANS 8.00% PER ANNUM,
SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 2.

 

(O)                                 “IMAGIFY LICENSE” MEANS THE LICENSE
AGREEMENT BETWEEN THE COMPANY AND THE PURCHASER, IN THE FORM ATTACHED HERETO AS
EXHIBIT C.

 

(P)                                 “LATE CHARGES” HAS THE MEANING GIVEN SUCH
TERM IN SECTION 19(B).

 

(Q)                                 “MULTIEMPLOYER PLAN” MEANS A MULTIEMPLOYER
PLAN AS DEFINED IN SECTION 4001(A)(3) OF ERISA.

 

(R)                                    “NOTE PURCHASE AGREEMENT” MEANS THE NOTE
PURCHASE AGREEMENT DATED AS OF OCTOBER 24, 2008 BY AND BETWEEN THE COMPANY AND
THE PURCHASER.

 

(S)                                  “OPTIONS” MEANS ANY RIGHTS, WARRANTS OR
OPTIONS TO SUBSCRIBE FOR OR PURCHASE SHARES OF COMMON STOCK OR CONVERTIBLE
SECURITIES.

 

(T)                                    “PERMITTED INDEBTEDNESS” MEANS (I) THE
INDEBTEDNESS SET FORTH IN SCHEDULE 3.12 OF THE COMPANY DISCLOSURE LETTER (AS
DEFINED IN THE NOTE PURCHASE AGREEMENT UNDER THE HEADING “LOAN AGREEMENTS”),
(II) TRADE PAYABLES INCURRED IN THE ORDINARY COURSE OF BUSINESS, (III) OTHER
INDEBTEDNESS NOT EXCEEDING $2 MILLION IN THE AGGREGATE AT ANY ONE TIME
OUTSTANDING AND (IV) ANY OTHER INDEBTEDNESS CONSENTED IN WRITING BY THE
PURCHASER.

 

(U)                                 “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
GENERALLY ACCEPTED ACCOUNTING PRINCIPALS IN THE UNITED STATES (“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, OTHER THAN ANY
LIEN IMPOSED BY ERISA, (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 AND FOR WHICH ADEQUATE RESERVES HAVE BEEN ESTABLISHED IN ACCORDANCE
WITH GAAP, (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

 

17

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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, (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 ARISING FROM JUDGMENTS, DECREES OR
ATTACHMENTS IN CIRCUMSTANCES NOT CONSTITUTING AN EVENT OF DEFAULT, (VIII) LIENS
SECURING THE COMPANY’S OBLIGATIONS UNDER THE NOTES, (IX) LIENS ARISING OUT OF
PLEDGES OR DEPOSITS UNDER WORKMEN’S COMPENSATION LAWS, UNEMPLOYMENT INSURANCE,
OLD AGE PENSIONS, OR OTHER SOCIAL SECURITY BENEFITS OTHER THAN ANY LIEN IMPOSED
BY ERISA, (X) LIENS INCURRED OR DEPOSITS MADE IN THE ORDINARY COURSE OF BUSINESS
TO SECURE SURETY BONDS PROVIDED THAT SUCH LIENS SHALL EXTEND ONLY TO CASH
COLLATERAL FOR SUCH SURETY BONDS AND (XI) LIENS LISTED ON SCHEDULE 1.1(B) OF THE
COMPANY DISCLOSURE LETTER (AS DEFINED IN THE NOTE PURCHASE AGREEMENT).

 

(V)                                 “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.

 

(W)                               “PURCHASER” MEANS CEPHALON, INC., A DELAWARE
CORPORATION.

 

(X)                                   “REGULATORY MILESTONE PAYMENT” MEANS THE
$15,000,000 PAYMENT TO BE PAID BY THE PURCHASER PURSUANT TO SECTION 2.9 OF THE
CELECOXIB LICENSE AGREEMENT (AS DEFINED IN THE NOTE PURCHASE AGREEMENT).

 

(Y)                                 “SECURITY AGREEMENT” MEANS THE SECURITY
AGREEMENT DATED AS OF           , 2008 BY AND BETWEEN THE COMPANY AND THE
PURCHASER.

 

(Z)                                   “TAX CODE” SHALL MEAN THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED FROM TIME TO TIME.

 

(AA)                            “TRADEMARK LICENSE” MEANS THE TRADEMARK LICENSE
BETWEEN THE COMPANY AND THE PURCHASER IN THE FORM AS ATTACHED TO THE IMAGIFY
LICENSE.

 

(BB)                          “TRANSFER AGENT” MEANS AMERICAN STOCK TRANSFER &
TRUST COMPANY.

 

(CC)                            “WITHDRAWAL LIABILITY” MEANS LIABILITY TO A
MULTIEMPLOYER PLAN AS A RESULT OF A COMPLETE OR PARTIAL WITHDRAWAL FROM SUCH
MULTIEMPLOYER PLAN, AS SUCH TERMS ARE DEFINED IN PART I OF SUBTITLE E OF
TITLE IV OF ERISA.

 

[Signature Page Follows]

 

18

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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.

 

 

 

ACUSPHERE, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

EXHIBIT A

 

ACUSPHERE, INC.
CONVERSION NOTICE

 

Reference is made to the Senior Convertible Note (the “Note”) issued to the
undersigned by [COMPANY] (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 of
the Company, par value $.01 per share (the “Common Stock”), 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 shares of Common Stock into which the Note is being converted
in the following name and to the following address:

 

 

Issue to:

 

 

 

 

 

 

 

 

 

 

 

 

 

Facsimile Number:

 

 

 

 

 

Authorization:

 

 

 

 

 

 

     By:

 

 

 

 

 

             Title:

 

 

 

 

Dated:

 

 

 

 

 

Account Number:

 

 

 

 

 

(if electronic book entry transfer)

 

 

 

Transaction Code Number:

 

 

 

 

 

(if electronic book entry transfer)

 

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

 

ACKNOWLEDGMENT

 

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

 

 

ACUSPHERE, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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Exhibit B

 

Assignment Agreement

 

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Exhibit C

 

Imagify License

 

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Schedule 4(a)(vii)

 

Litigation

 

Claim filed by Miguel Torres with the Commonwealth of Massachusetts – Commission
Against Discrimination (MCAD), Claim No. 08BEM01015

 

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