EXHIBIT 10.8

[FORM OF SENIOR 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 20(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.

Javo Beverage Company

SENIOR CONVERTIBLE NOTE

Issuance Date: December 15, 2006

Original Principal Amount: U.S. $                    

 

FOR VALUE RECEIVED, Javo Beverage Company, a Delaware corporation (the
“Company”), hereby promises to pay to [CAPITAL VENTURES INTERNATIONAL][OTHER
BUYERS] or registered assigns (the “Holder”) the amount set out above as the
Original Principal Amount (as reduced pursuant to the terms hereof pursuant to
redemption, conversion 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
Convertible Note (including all Senior Convertible Notes issued in exchange,
transfer or replacement hereof, this “Note”) is one of an issue of Senior
Convertible Notes issued pursuant to the Securities Purchase Agreement on the
Closing Date (collectively, the “Notes” and such other Senior Convertible Notes,
the “Other Notes”).  Certain capitalized terms used herein are defined in
Section 30.

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(1)           PAYMENTS OF PRINCIPAL.  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 ON
SUCH PRINCIPAL AND INTEREST.  THE “MATURITY DATE” SHALL BE DECEMBER 15, 2011 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; INTEREST RATE.  (A) INTEREST ON THIS NOTE SHALL COMMENCE
ACCRUING ON THE ISSUANCE DATE AND SHALL BE COMPUTED ON THE BASIS OF A 360-DAY
YEAR AND TWELVE 30-DAY MONTHS AND THE ACTUAL NUMBER OF DAYS ELAPSED AND SHALL BE
PAYABLE IN ARREARS FOR EACH CALENDAR QUARTER ON THE FIRST DAY OF THE SUCCEEDING
CALENDAR QUARTER DURING THE PERIOD BEGINNING ON THE ISSUANCE DATE AND ENDING ON,
AND INCLUDING, THE MATURITY DATE (EACH, AN “INTEREST DATE”) WITH THE FIRST
INTEREST DATE BEING APRIL 1, 2007.  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 IS NO EQUITY
CONDITIONS FAILURE; PROVIDED HOWEVER, THAT THE COMPANY MAY, AT ITS OPTION
FOLLOWING NOTICE TO THE HOLDER, 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
EACH HOLDER OF THE NOTES ON OR PRIOR TO THE INTEREST NOTICE DUE DATE (THE DATE
SUCH NOTICE IS DELIVERED TO ALL OF THE HOLDER, 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 AS CASH
INTEREST OR 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 AND (II) CERTIFIES THAT
THERE IS NO EQUITY CONDITIONS FAILURE.  IF THE EQUITY CONDITIONS ARE NOT
SATISFIED AS OF THE INTEREST NOTICE DATE, THEN UNLESS THE COMPANY HAS ELECTED TO
PAY SUCH INTEREST AS CASH INTEREST, THE INTEREST ELECTION NOTICE SHALL INDICATE
THAT UNLESS THE HOLDER WAIVES THE EQUITY CONDITIONS, THE INTEREST SHALL BE PAID
AS CASH INTEREST.  IF THE EQUITY CONDITIONS WERE SATISFIED AS OF THE INTEREST
NOTICE DATE BUT THE EQUITY CONDITIONS ARE NO LONGER SATISFIED AT ANY TIME PRIOR
TO THE INTEREST DATE, THE COMPANY SHALL PROVIDE THE HOLDER A SUBSEQUENT NOTICE
TO THAT EFFECT INDICATING THAT UNLESS THE HOLDER WAIVES THE EQUITY CONDITIONS,
THE INTEREST SHALL BE PAID IN CASH.  INTEREST TO BE PAID ON AN INTEREST DATE IN
INTEREST SHARES SHALL BE PAID IN A NUMBER OF FULLY PAID AND NONASSESSABLE SHARES
(ROUNDED TO THE NEAREST WHOLE SHARE IN ACCORDANCE WITH SECTION 3(A)) OF COMMON
STOCK EQUAL TO THE QUOTIENT OF (1) THE AMOUNT OF INTEREST PAYABLE ON SUCH
INTEREST DATE LESS ANY CASH INTEREST PAID AND (2) THE INTEREST CONVERSION PRICE
IN EFFECT ON THE APPLICABLE INTEREST DATE.

(B)           WHEN ANY INTEREST SHARES ARE TO BE PAID ON AN INTEREST DATE, THE
COMPANY SHALL (I) (X) PROVIDED THAT THE COMPANY’S TRANSFER AGENT (THE “TRANSFER
AGENT”) IS

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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 AGENT COMMISSION SYSTEM, OR (Y) IF THE
FOREGOING SHALL NOT APPLY, 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 IN CASH ON EACH
CONVERSION DATE IN ACCORDANCE WITH SECTION 3(B)(I).  FROM AND AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE INTEREST RATE
SHALL BE INCREASED TO FIFTEEN PERCENT (15.0%).  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.  THE COMPANY SHALL PAY ANY
AND ALL TAXES THAT MAY BE PAYABLE WITH RESPECT TO THE ISSUANCE AND DELIVERY OF
INTEREST SHARES; PROVIDED THAT THE COMPANY SHALL NOT BE REQUIRED TO PAY ANY TAX
THAT MAY BE PAYABLE IN RESPECT OF ANY ISSUANCE OF INTEREST SHARES TO ANY PERSON
OTHER THAN THE HOLDER OR WITH RESPECT TO ANY INCOME TAX DUE BY THE HOLDER WITH
RESPECT TO SUCH INTEREST SHARES.

(3)           CONVERSION OF NOTES.  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 (AS DEFINED
BELOW) 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 PORTION OF THE PRINCIPAL TO BE
CONVERTED, REDEEMED OR OTHERWISE WITH RESPECT TO WHICH THIS DETERMINATION IS
BEING MADE.

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(II)           “CONVERSION PRICE” MEANS, AS OF ANY CONVERSION DATE (AS DEFINED
BELOW) OR OTHER DATE OF DETERMINATION, $1.79, SUBJECT TO ADJUSTMENT AS PROVIDED
HEREIN.

(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 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) 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 A CONFIRMATION OF RECEIPT OF SUCH CONVERSION NOTICE TO THE HOLDER
AND THE TRANSFER AGENT.  ON OR BEFORE THE THIRD (3RD) BUSINESS DAY FOLLOWING THE
DATE OF RECEIPT OF A CONVERSION NOTICE (THE “SHARE DELIVERY DATE”), THE COMPANY
SHALL (A) (1) 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 AGENT
COMMISSION SYSTEM OR (2) 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 AND (B) PAY TO THE HOLDER IN CASH, BY WIRE TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS, AN AMOUNT EQUAL TO THE ACCRUED AND UNPAID INTEREST
ON THE CONVERSION AMOUNT AND LATE CHARGES, IF ANY, ON SUCH CONVERSION AMOUNT AND
INTEREST.  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 20(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.  IN THE EVENT OF A PARTIAL CONVERSION OF
THIS NOTE PURSUANT HERETO, THE PRINCIPAL AMOUNT CONVERTED SHALL BE DEDUCTED FROM
THE INSTALLMENT AMOUNTS RELATING TO THE INSTALLMENT DATES AS SET FORTH IN THE
CONVERSION NOTICE.

(ii)           Company’s Failure to Timely Convert.  If within three (3) Trading
Days after the Company’s receipt of the facsimile copy of a Conversion Notice
the Company shall fail to issue and deliver a certificate to the Holder or
credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled

 

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UPON SUCH 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 (B) 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 (A) 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
DELIVER SUCH CERTIFICATE (AND TO ISSUE SUCH COMMON STOCK) SHALL TERMINATE, OR
(B) PROMPTLY HONOR ITS OBLIGATION TO DELIVER TO THE HOLDER A CERTIFICATE OR
CERTIFICATES REPRESENTING SUCH 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 (1)
SUCH NUMBER OF SHARES OF COMMON STOCK, TIMES (2) THE CLOSING BID PRICE ON THE
CONVERSION 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 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 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 20.  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 PRINCIPAL
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 MORE THAN ONE HOLDER OF NOTES FOR THE SAME
CONVERSION DATE AND THE COMPANY CAN CONVERT SOME, BUT NOT ALL, OF SUCH PORTIONS
OF THE NOTES SUBMITTED FOR CONVERSION, THE COMPANY, SUBJECT TO SECTION 3(D),
SHALL CONVERT FROM EACH HOLDER OF NOTES ELECTING TO HAVE NOTES CONVERTED ON SUCH
DATE A PRO RATA AMOUNT OF SUCH HOLDER’S PORTION OF ITS NOTES SUBMITTED FOR
CONVERSION BASED ON THE PRINCIPAL AMOUNT OF NOTES SUBMITTED FOR CONVERSION ON
SUCH DATE BY SUCH HOLDER RELATIVE TO THE AGGREGATE PRINCIPAL AMOUNT OF ALL 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

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COMPANY SHALL ISSUE TO THE HOLDER THE NUMBER OF SHARES OF COMMON STOCK NOT IN
DISPUTE AND RESOLVE SUCH DISPUTE IN ACCORDANCE WITH SECTION 25.

(D)           LIMITATIONS ON CONVERSIONS.

(I)            BENEFICIAL OWNERSHIP.  THE COMPANY SHALL NOT EFFECT ANY
CONVERSION OF THIS NOTE, AND THE HOLDER OF THIS NOTE SHALL NOT HAVE THE RIGHT TO
CONVERT ANY PORTION OF THIS NOTE PURSUANT TO SECTION 3(A), TO THE EXTENT THAT
AFTER GIVING EFFECT TO SUCH CONVERSION, THE HOLDER (TOGETHER WITH THE HOLDER’S
AFFILIATES) WOULD BENEFICIALLY OWN IN EXCESS OF 4.99% (SUBJECT TO CHANGE AS
DESCRIBED BELOW, THE “MAXIMUM PERCENTAGE”) OF THE NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING IMMEDIATELY AFTER GIVING EFFECT TO SUCH CONVERSION.  FOR
PURPOSES OF THE FOREGOING SENTENCE, THE NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY THE HOLDER AND ITS AFFILIATES SHALL INCLUDE THE NUMBER OF
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE WITH RESPECT TO
WHICH THE DETERMINATION OF SUCH SENTENCE IS BEING MADE, BUT SHALL EXCLUDE THE
NUMBER OF SHARES OF COMMON STOCK WHICH WOULD BE ISSUABLE UPON (A) CONVERSION OF
THE REMAINING, NONCONVERTED PORTION OF THIS NOTE BENEFICIALLY OWNED BY THE
HOLDER OR ANY OF ITS AFFILIATES AND (B) EXERCISE OR CONVERSION OF THE
UNEXERCISED OR NONCONVERTED PORTION OF ANY OTHER SECURITIES OF THE COMPANY
(INCLUDING, WITHOUT LIMITATION, ANY OTHER NOTES OR WARRANTS) SUBJECT TO A
LIMITATION ON CONVERSION OR EXERCISE ANALOGOUS TO THE LIMITATION CONTAINED
HEREIN BENEFICIALLY OWNED BY THE HOLDER OR ANY OF ITS AFFILIATES.  EXCEPT AS SET
FORTH IN THE PRECEDING SENTENCE, FOR PURPOSES OF THIS SECTION 3(D)(I),
BENEFICIAL OWNERSHIP SHALL BE CALCULATED IN ACCORDANCE WITH SECTION 13(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “1934 ACT”).  FOR PURPOSES OF
THIS SECTION 3(D)(I), IN DETERMINING THE NUMBER OF OUTSTANDING SHARES OF COMMON
STOCK, THE HOLDER MAY RELY ON THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK
AS REFLECTED IN (X) THE COMPANY’S MOST RECENT FORM 10-K, FORM 10-KSB, FORM 10-Q,
FORM 10-QSB, FORM 8-K OR OTHER PUBLIC FILING WITH THE SECURITIES EXCHANGE
COMMISSION, AS THE CASE MAY BE, (Y) A MORE RECENT PUBLIC ANNOUNCEMENT BY THE
COMPANY OR (Z) ANY OTHER NOTICE BY THE COMPANY OR THE TRANSFER AGENT SETTING
FORTH THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING.  FOR ANY REASON AT ANY
TIME, UPON THE WRITTEN OR ORAL REQUEST OF THE HOLDER, THE COMPANY SHALL WITHIN
ONE (1) BUSINESS 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 OR
ITS AFFILIATES SINCE THE DATE AS OF WHICH SUCH NUMBER OF OUTSTANDING SHARES OF
COMMON STOCK WAS REPORTED.  BY WRITTEN NOTICE TO THE COMPANY, THE HOLDER MAY
INCREASE OR DECREASE THE MAXIMUM PERCENTAGE TO ANY OTHER PERCENTAGE NOT IN
EXCESS OF 9.99% SPECIFIED IN SUCH NOTICE; PROVIDED THAT (I) ANY SUCH INCREASE OR
DECREASE 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 NOT TO ANY OTHER HOLDER OF NOTES.

(II)           ELIGIBLE MARKET REGULATION.  THE COMPANY SHALL NOT BE OBLIGATED
TO ISSUE ANY SHARES OF COMMON STOCK UPON CONVERSION OF THIS NOTE IF THE ISSUANCE
OF SUCH SHARES OF COMMON STOCK WOULD EXCEED THE AGGREGATE NUMBER OF SHARES OF
COMMON STOCK THAT THE COMPANY MAY ISSUE UPON CONVERSION OR EXERCISE, AS
APPLICABLE, OF THE NOTES AND WARRANTS OR AS INTEREST SHARES WITHOUT BREACHING
THE COMPANY’S OBLIGATIONS UNDER THE RULES OR REGULATIONS OF THE PRINCIPAL MARKET
AND ANY APPLICABLE ELIGIBLE MARKET (THE “EXCHANGE CAP”), EXCEPT THAT SUCH
LIMITATION SHALL NOT APPLY IN THE EVENT THAT THE COMPANY (A) OBTAINS THE
APPROVAL

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OF ITS STOCKHOLDERS AS REQUIRED BY THE APPLICABLE RULES OF SUCH PRINCIPAL MARKET
AND ANY SUCH ELIGIBLE MARKET FOR ISSUANCES OF COMMON STOCK IN EXCESS OF SUCH
AMOUNT OR (B) 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, UPON CONVERSION OR EXERCISE OR
OTHERWISE, AS APPLICABLE, OF NOTES OR WARRANTS, OR AS INTEREST SHARES, 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 A PURCHASER PURSUANT TO THE SECURITIES PURCHASE AGREEMENT ON THE
CLOSING DATE AND THE DENOMINATOR OF WHICH IS THE AGGREGATE PRINCIPAL AMOUNT OF
ALL NOTES ISSUED TO THE PURCHASERS PURSUANT TO THE SECURITIES PURCHASE AGREEMENT
ON THE CLOSING DATE (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.

(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 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 (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) IN ACCORDANCE WITH
THE TERMS OF THE REGISTRATION RIGHTS AGREEMENT, AND SUCH LAPSE OR UNAVAILABILITY
CONTINUES FOR A PERIOD OF TWENTY (20) CONSECUTIVE DAYS OR FOR MORE THAN AN
AGGREGATE OF FORTY-FIVE (45) 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 TEN (10) CONSECUTIVE TRADING DAYS
OR FOR MORE THAN AN AGGREGATE OF TWENTY (20) 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 FIFTEEN (15)
BUSINESS DAYS

7

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AFTER THE APPLICABLE CONVERSION DATE OR (B) NOTICE, WRITTEN OR ORAL, TO ANY
HOLDER OR TO ALL HOLDERS OF THE 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 ANY NOTES INTO SHARES OF COMMON STOCK THAT IS TENDERED
IN ACCORDANCE WITH THE PROVISIONS OF THE NOTES, OTHER THAN PURSUANT TO SECTION
3(D);

(IV)          AT ANY TIME FOLLOWING THE NINETIETH (90TH) CONSECUTIVE DAY THAT
THE HOLDER’S AUTHORIZED SHARE ALLOCATION IS LESS THAN 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);

(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
PAYMENTS OR AMOUNTS HEREUNDER) 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 ANY COMPANY REDEMPTION AMOUNT, INTEREST AND LATE CHARGES WHEN AND
AS DUE, IN WHICH CASE ONLY IF SUCH FAILURE CONTINUES FOR A PERIOD OF AT LEAST
FIVE (5) 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) WHICH, INDIVIDUALLY OR IN THE
AGGREGATE EXCEEDS $500,000 OTHER THAN WITH RESPECT TO ANY OTHER NOTES;

(VII)         THE COMPANY OR ANY OF ITS SUBSIDIARIES THAT WOULD BE DEEMED A
“SIGNIFICANT SUBSIDIARY” WITHIN THE MEANING OF REGULATION S-X ADOPTED BY THE
SECURITIES AND EXCHANGE COMMISSION (A “SIGNIFICANT SUBSIDIARY”), 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
SIGNIFICANT SUBSIDIARIES IN AN INVOLUNTARY CASE, (B) APPOINTS A CUSTODIAN OF THE
COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES OR (C) ORDERS THE LIQUIDATION OF
THE COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES;

(IX)           A FINAL JUDGMENT OR JUDGMENTS FOR THE PAYMENT OF MONEY
AGGREGATING IN EXCESS OF $500,000 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

8

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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
$500,000 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;

(X)            THE COMPANY BREACHES 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 TEN
(10) CONSECUTIVE BUSINESS DAYS;

(XI)           ANY BREACH OR FAILURE IN ANY RESPECT TO COMPLY WITH EITHER OF
SECTIONS 8 OR 16 OF THIS NOTE; OR

(XII)          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, THE COMPANY, WITHIN ONE (1) BUSINESS DAY OF THE DATE ON
WHICH THE COMPANY BECOMES AWARE OF OR REASONABLY SHOULD HAVE BECOME AWARE OF
SUCH EVENT OF DEFAULT, SHALL DELIVER WRITTEN NOTICE THEREOF VIA FACSIMILE 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 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 CONVERSION AMOUNT 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 AT A PRICE EQUAL TO THE GREATER OF (I) THE PRODUCT OF
(A) THE CONVERSION AMOUNT TO BE REDEEMED TOGETHER WITH ANY ACCRUED AND UNPAID
INTEREST AND LATE CHARGES THEREON, IF ANY, ON SUCH CONVERSION AMOUNT AND
INTEREST THROUGH THE REDEMPTION DATE AND (B) THE REDEMPTION PREMIUM AND (II) THE
SUM OF (X) THE PRODUCT OF (A) THE CONVERSION RATE WITH RESPECT TO SUCH
CONVERSION AMOUNT IN EFFECT AT SUCH TIME AS THE HOLDER DELIVERS AN EVENT OF
DEFAULT REDEMPTION NOTICE AND (B) THE GREATER OF (1) THE CLOSING SALE PRICE OF
THE COMMON STOCK ON THE DATE IMMEDIATELY PRECEDING SUCH EVENT OF DEFAULT, (2)
THE CLOSING SALE PRICE OF THE COMMON STOCK ON THE DATE IMMEDIATELY AFTER SUCH
EVENT OF DEFAULT AND (3) THE CLOSING SALE PRICE OF THE COMMON STOCK ON THE DATE
THE HOLDER DELIVERS THE EVENT OF DEFAULT REDEMPTION NOTICE AND (Y) ANY ACCRUED
AND UNPAID INTEREST ON THE CONVERSION AMOUNT AND LATE CHARGES, IF ANY, ON SUCH
CONVERSION AMOUNT AND INTEREST THROUGH THE REDEMPTION DATE (THE “EVENT OF
DEFAULT REDEMPTION PRICE”).  REDEMPTIONS REQUIRED BY THIS SECTION 4(B) SHALL BE
MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14.  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. IN THE EVENT OF A PARTIAL
REDEMPTION OF THIS NOTE PURSUANT HERETO, THE PRINCIPAL AMOUNT REDEEMED SHALL BE
DEDUCTED FROM THE INSTALLMENT AMOUNTS RELATING TO THE APPLICABLE INSTALLMENT
DATES AS SET FORTH IN THE EVENT OF DEFAULT REDEMPTION NOTICE.  THE PARTIES
HERETO

9

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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 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 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 REASONABLY SATISFACTORY TO THE REQUIRED
HOLDERS AND APPROVED BY THE REQUIRED HOLDERS PRIOR TO SUCH FUNDAMENTAL
TRANSACTION, INCLUDING AGREEMENTS 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 TO THE
NOTES, AND SATISFACTORY TO THE REQUIRED HOLDERS; PROVIDED, HOWEVER, THAT IN THE
EVENT THE SUCCESSOR ENTITY IS NOT A PUBLICLY TRADED CORPORATION WHOSE STOCK IS
TRADED ON AN ELIGIBLE MARKET (A “PRIVATE SUCCESSOR ENTITY”), SUCH FUNDAMENTAL
TRANSACTION MUST BE CONSUMMATED FOR CONSIDERATION CONSISTING SOLELY OF CASH. 
UPON THE OCCURRENCE OF ANY FUNDAMENTAL TRANSACTION, THE SUCCESSOR ENTITY SHALL
SUCCEED TO, AND BE SUBSTITUTED FOR (SO THAT FROM AND AFTER THE DATE OF SUCH
FUNDAMENTAL TRANSACTION, THE PROVISIONS OF THIS NOTE REFERRING TO THE “COMPANY”
SHALL REFER INSTEAD TO THE SUCCESSOR ENTITY), AND MAY EXERCISE EVERY RIGHT AND
POWER OF THE COMPANY AND SHALL ASSUME ALL OF THE OBLIGATIONS OF THE COMPANY
UNDER THIS NOTE WITH THE SAME EFFECT AS IF SUCH SUCCESSOR ENTITY HAD BEEN NAMED
AS THE COMPANY HEREIN.  UPON CONSUMMATION OF THE FUNDAMENTAL TRANSACTION, THE
SUCCESSOR ENTITY SHALL DELIVER TO THE HOLDER CONFIRMATION THAT THERE SHALL BE
ISSUED UPON CONVERSION OR REDEMPTION OF THIS NOTE AT ANY TIME AFTER THE
CONSUMMATION OF THE FUNDAMENTAL TRANSACTION, IN LIEU OF THE SHARES OF THE
COMPANY’S COMMON STOCK (OR OTHER SECURITIES, CASH, ASSETS OR OTHER PROPERTY)
ISSUABLE UPON THE CONVERSION OR REDEMPTION OF THE NOTES PRIOR TO SUCH
FUNDAMENTAL TRANSACTION, (I) IF THE SUCCESSOR ENTITY IS A PUBLICLY TRADED
CORPORATION WHOSE STOCK IS TRADED ON AN ELIGIBLE MARKET, SUCH SHARES OF THE
PUBLICLY TRADED COMMON STOCK (OR THEIR EQUIVALENT) OF THE SUCCESSOR ENTITY
(INCLUDING ITS PARENT ENTITY) OR (II) IF THE SUCCESSOR ENTITY IS A PRIVATE
SUCCESSOR ENTITY, SUCH CASH CONSIDERATION WHICH THE HOLDER WOULD HAVE BEEN
ENTITLED TO RECEIVE UPON THE HAPPENING OF SUCH FUNDAMENTAL TRANSACTION HAD THIS
NOTE BEEN CONVERTED IMMEDIATELY PRIOR TO SUCH FUNDAMENTAL TRANSACTION, IN EACH
CASE, AS ADJUSTED IN ACCORDANCE WITH THE PROVISIONS OF THIS NOTE.  THE
PROVISIONS OF THIS SECTION SHALL APPLY SIMILARLY AND EQUALLY TO SUCCESSIVE
FUNDAMENTAL TRANSACTIONS AND SHALL BE APPLIED WITHOUT REGARD TO ANY LIMITATIONS
ON THE CONVERSION OR REDEMPTION OF THIS NOTE.

(B)           REDEMPTION RIGHT.  NO SOONER THAN FIFTEEN (15) DAYS NOR LATER THAN
TEN (10) 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 AND OVERNIGHT COURIER TO THE HOLDER (A
“CHANGE OF CONTROL NOTICE”).  AT ANY TIME

10

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DURING THE PERIOD BEGINNING AFTER THE HOLDER’S RECEIPT OF A CHANGE OF CONTROL
NOTICE AND ENDING TWENTY (20) TRADING DAYS AFTER THE DATE OF THE CONSUMMATION OF
SUCH CHANGE OF CONTROL, THE HOLDER MAY REQUIRE THE COMPANY OR SUCCESSOR ENTITY,
AS APPLICABLE, TO REDEEM 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 SHALL BE REDEEMED BY THE
COMPANY IN CASH AT A PRICE EQUAL TO THE GREATER OF (I) 120% OF THE CONVERSION
AMOUNT BEING REDEEMED TOGETHER WITH ANY ACCRUED AND UNPAID INTEREST THEREON AND
LATE CHARGES, IF ANY, ON SUCH CONVERSION AMOUNT AND INTEREST THROUGH THE
REDEMPTION DATE AND (II) THE PRODUCT OF (A) THE CONVERSION AMOUNT BEING REDEEMED
TOGETHER WITH ANY ACCRUED AND UNPAID INTEREST THEREON AND LATE CHARGES, IF ANY,
ON SUCH CONVERSION AMOUNT AND INTEREST THROUGH THE APPLICABLE REDEMPTION DATE
MULTIPLIED BY (B) THE QUOTIENT DETERMINED BY DIVIDING (1) THE AGGREGATE CASH
CONSIDERATION AND THE AGGREGATE CASH VALUE OF ANY NON-CASH CONSIDERATION PER
COMMON SHARE TO BE PAID TO THE HOLDERS OF THE COMMON SHARES UPON CONSUMMATION OF
THE CHANGE OF CONTROL (ANY SUCH NON-CASH CONSIDERATION CONSISTING OF MARKETABLE
SECURITIES TO BE VALUED AT THE HIGHER OF THE CLOSING SALE PRICE OF SUCH
SECURITIES AS OF THE TRADING DAY IMMEDIATELY PRIOR TO THE CONSUMMATION OF SUCH
CHANGE OF CONTROL, THE CLOSING SALE PRICE AS OF THE TRADING DAY IMMEDIATELY
FOLLOWING THE PUBLIC ANNOUNCEMENT OF SUCH PROPOSED CHANGE OF CONTROL AND THE
CLOSING SALE PRICE AS OF THE TRADING DAY IMMEDIATELY PRIOR TO THE PUBLIC
ANNOUNCEMENT OF SUCH PROPOSED CHANGE OF CONTROL) BY (2) THE CONVERSION PRICE
(THE “CHANGE OF CONTROL REDEMPTION PRICE”).  REDEMPTIONS REQUIRED BY THIS
SECTION 5 SHALL BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14 AND
SHALL HAVE PRIORITY TO PAYMENTS TO STOCKHOLDERS IN CONNECTION WITH A CHANGE OF
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(C) (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 FROM THE INSTALLMENT AMOUNTS
RELATING TO THE APPLICABLE INSTALLMENT DATES AS SET FORTH IN THE 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)           RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE
EVENTS.

(A)           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,

11

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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 BEFORE 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
COMMON STOCK ARE TO BE DETERMINED FOR THE GRANT, ISSUE OR SALE OF SUCH PURCHASE
RIGHTS.

(B)           OTHER CORPORATE EVENTS.  IN ADDITION TO AND NOT IN SUBSTITUTION
FOR ANY OTHER RIGHTS HEREUNDER, PRIOR TO THE CONSUMMATION OF ANY FUNDAMENTAL
TRANSACTION PURSUANT TO WHICH HOLDERS OF 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, AT THE HOLDER’S OPTION, (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 CONVERSION RATE.  PROVISION MADE PURSUANT TO THE PRECEDING SENTENCE SHALL BE
IN A FORM AND SUBSTANCE SATISFACTORY TO THE REQUIRED HOLDERS.  THE PROVISIONS OF
THIS SECTION SHALL APPLY SIMILARLY AND EQUALLY TO SUCCESSIVE CORPORATE EVENTS
AND SHALL BE APPLIED WITHOUT REGARD TO ANY LIMITATIONS ON THE CONVERSION OR
REDEMPTION OF THIS NOTE.

(7)           RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

(A)   ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF COMMON STOCK.  IF AND
WHENEVER ON OR AFTER THE SUBSCRIPTION DATE, THE COMPANY ISSUES OR SELLS, OR IN
ACCORDANCE WITH THIS SECTION 7(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 CONVERSION PRICE IN EFFECT IMMEDIATELY
PRIOR TO SUCH DILUTIVE ISSUANCE AND (B) THE QUOTIENT DETERMINED BY DIVIDING
(1) THE SUM OF (I) THE PRODUCT DERIVED BY MULTIPLYING THE CONVERSION PRICE IN
EFFECT IMMEDIATELY PRIOR TO SUCH DILUTIVE ISSUANCE AND THE NUMBER OF SHARES OF
COMMON STOCK DEEMED OUTSTANDING IMMEDIATELY PRIOR TO SUCH DILUTIVE ISSUANCE PLUS
(II) THE CONSIDERATION, IF ANY, RECEIVED BY THE COMPANY UPON SUCH DILUTIVE
ISSUANCE, BY (2) THE PRODUCT DERIVED BY MULTIPLYING (I) THE APPLICABLE PRICE IN
EFFECT IMMEDIATELY PRIOR TO SUCH DILUTIVE ISSUANCE 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
7(A), THE FOLLOWING SHALL BE APPLICABLE:

12

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(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 7(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 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 OR SALE OF SUCH CONVERTIBLE SECURITIES FOR
SUCH PRICE PER SHARE.  FOR THE PURPOSES OF THIS SECTION 7(A)(II), THE “LOWEST
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 7(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 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 CHANGED CONVERSION RATE, AS THE CASE MAY BE, AT THE TIME
INITIALLY GRANTED, ISSUED OR SOLD.  FOR PURPOSES OF THIS SECTION 7(A)(III), IF
THE TERMS OF ANY OPTION OR CONVERTIBLE SECURITY THAT WAS OUTSTANDING AS OF THE
SUBSCRIPTION DATE ARE CHANGED IN THE MANNER DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE, THEN SUCH OPTION OR CONVERTIBLE SECURITY AND THE COMMON
STOCK DEEMED ISSUABLE UPON EXERCISE, CONVERSION OR EXCHANGE THEREOF SHALL BE
DEEMED TO HAVE BEEN ISSUED AS OF

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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 IS
ISSUED IN CONNECTION WITH THE ISSUE OR SALE OF OTHER SECURITIES OF THE COMPANY,
TOGETHER COMPRISING ONE INTEGRATED TRANSACTION, THE OPTIONS WILL BE DEEMED TO
HAVE BEEN ISSUED FOR THE DIFFERENCE OF (X) THE AGGREGATE FAIR MARKET VALUE OF
SUCH OPTIONS AND OTHER SECURITIES ISSUED OR SOLD IN SUCH INTEGRATED TRANSACTION,
LESS (Y) THE FAIR MARKET VALUE OF THE SECURITIES OTHER THAN SUCH OPTION, ISSUED
OR SOLD IN SUCH TRANSACTION AND THE OTHER SECURITIES ISSUED OR SOLD IN SUCH
INTEGRATED TRANSACTION WILL BE DEEMED TO HAVE BEEN ISSUED OR SOLD FOR THE
BALANCE OF THE CONSIDERATION RECEIVED BY THE COMPANY.  IF ANY 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 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 ON THE
DATE OF RECEIPT.  IF ANY 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 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 REQUIRED HOLDERS.  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 (10TH) DAY FOLLOWING
THE VALUATION EVENT BY AN INDEPENDENT, REPUTABLE APPRAISER JOINTLY SELECTED BY
THE COMPANY AND THE REQUIRED HOLDERS.  THE DETERMINATION OF SUCH APPRAISER SHALL
BE DEEMED BINDING UPON ALL PARTIES ABSENT MANIFEST ERROR AND THE FEES AND
EXPENSES OF SUCH APPRAISER SHALL BE BORNE BY THE COMPANY.

(V)           RECORD DATE.  IF THE COMPANY TAKES A RECORD OF THE HOLDERS OF
COMMON STOCK FOR THE PURPOSE OF ENTITLING THEM (A) TO RECEIVE A DIVIDEND OR
OTHER DISTRIBUTION PAYABLE IN COMMON STOCK, OPTIONS OR IN CONVERTIBLE SECURITIES
OR (B) TO SUBSCRIBE FOR OR PURCHASE COMMON STOCK, OPTIONS OR CONVERTIBLE
SECURITIES, THEN SUCH RECORD DATE WILL BE DEEMED TO BE THE DATE OF THE ISSUE OR
SALE OF THE 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
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

14

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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 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.

(8)           COMPANY INSTALLMENT CONVERSION OR REDEMPTION.

(A)           GENERAL.  ON EACH APPLICABLE INSTALLMENT DATE, PROVIDED THERE IS
NO EQUITY CONDITIONS FAILURE AS OF SUCH INSTALLMENT DATE, THE COMPANY SHALL PAY
TO THE HOLDER OF THIS NOTE THE INSTALLMENT AMOUNT DUE ON SUCH DATE BY CONVERTING
SUCH INSTALLMENT AMOUNT, IN ACCORDANCE WITH THIS SECTION 8 (A “COMPANY
CONVERSION”); PROVIDED, HOWEVER, THAT THE COMPANY MAY, AT ITS OPTION FOLLOWING
NOTICE TO THE HOLDER, PAY THE INSTALLMENT AMOUNT BY REDEEMING SUCH INSTALLMENT
AMOUNT (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 SHALL BE CONVERTED AND/OR REDEEMED BY THE COMPANY ON THE
APPLICABLE INSTALLMENT DATE, SUBJECT TO THE PROVISIONS OF THIS SECTION 8. 
NOTWITHSTANDING THE FOREGOING, THE COMPANY MAY NOT EFFECT A COMPANY CONVERSION
OF ANY INSTALLMENT AMOUNT UNDER THIS SECTION IF THE WEIGHTED AVERAGE PRICE OF
THE COMMON STOCK DURING THE TEN (10) CONSECUTIVE TRADING DAY PERIOD ENDING TWO
(2) TRADING DAYS PRIOR TO THE INSTALLMENT DATE IS NOT GREATER THAN $0.60.  ON OR
PRIOR TO THE DATE WHICH IS THE THIRD (3RD) 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 TO 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 SUCH HOLDER’S NOTE SHALL BE
CONVERTED IN WHOLE PURSUANT TO A COMPANY CONVERSION (SUCH AMOUNT TO BE
CONVERTED, THE “COMPANY CONVERSION AMOUNT”) OR (B) (1) STATE THAT THE COMPANY
ELECTS TO REDEEM, OR IS REQUIRED TO REDEEM 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 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, IF ANY, THAT THE COMPANY
ELECTS TO CONVERT PURSUANT TO A COMPANY CONVERSION (SUCH AMOUNT ALSO, A “COMPANY
CONVERSION AMOUNT”) WHICH AMOUNTS WHEN ADDED TOGETHER, MUST EQUAL THE APPLICABLE
INSTALLMENT AMOUNT AND (II) IF THE INSTALLMENT AMOUNT IS TO BE PAID, IN WHOLE OR
IN PART, PURSUANT TO A COMPANY CONVERSION, CERTIFY THAT THE EQUITY CONDITIONS
HAVE BEEN SATISFIED AS OF THE DATE OF THE COMPANY INSTALLMENT NOTICE.  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 HAVE BEEN
SATISFIED.  IN THE EVENT THAT THE COMPANY SHALL PAY ANY PORTION OF AN
INSTALLMENT AMOUNT ON ANY INSTALLMENT DATE PURSUANT TO A COMPANY CONVERSION, THE
HOLDER SHALL CONFIRM TO THE COMPANY PRIOR TO SUCH INSTALLMENT DATE

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THAT IT CAN RECEIVE THE FULL NUMBER OF SHARES TO BE ISSUED ON SUCH DATE WITHOUT
VIOLATING THE CONVERSION LIMITATION SET FORTH IN SECTION 3(D)(I).  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).

(B)           MECHANICS OF COMPANY CONVERSION.  (I) 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 TRADING DAY PRIOR TO THE INSTALLMENT DATE THE COMPANY SHALL, OR SHALL DIRECT
THE TRANSFER AGENT TO, DELIVER TO THE HOLDER’S ACCOUNT WITH DTC, OR ISSUE THE
HOLDER A CERTIFICATE FOR, A NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE
QUOTIENT OF (A) SUCH COMPANY CONVERSION AMOUNT DIVIDED BY (B) THE INITIAL
COMPANY CONVERSION PRICE (THE “PRE-INSTALLMENT CONVERSION SHARES”).  ON THE
TRADING DAY IMMEDIATELY AFTER THE END OF THE COMPANY CONVERSION MEASURING PERIOD
(THE “INSTALLMENT SETTLEMENT DATE”), THE COMPANY SHALL, OR SHALL DIRECT THE
TRANSFER AGENT TO, DELIVER TO THE HOLDER’S ACCOUNT WITH DTC, OR ISSUE THE HOLDER
A CERTIFICATE FOR, A NUMBER OF ADDITIONAL SHARES OF COMMON STOCK, IF ANY, EQUAL
TO THE INSTALLMENT BALANCE CONVERSION SHARES.  IF AN EVENT OF DEFAULT OCCURS
DURING ANY APPLICABLE COMPANY CONVERSION MEASURING PERIOD AND THE HOLDER ELECTS
AN EVENT OF DEFAULT REDEMPTION IN ACCORDANCE WITH SECTION 4(B), THEN, AT THE
HOLDER’S OPTION, EITHER (1) THE HOLDER, UPON RECEIPT OF THE EVENT OF DEFAULT
REDEMPTION PRICE (WHICH REDEMPTION PRICE INCLUDES REDEMPTION OF ANY PORTION OF A
COMPANY CONVERSION AMOUNT REPRESENTED BY PRE-INSTALLMENT CONVERSION SHARES THAT
THE HOLDER SHALL RETURN TO THE COMPANY), SHALL RETURN ANY PRE-INSTALLMENT
CONVERSION SHARES DELIVERED IN CONNECTION WITH THE APPLICABLE INSTALLMENT DATE,
WHICH THE HOLDER HAS NOT OTHERWISE SOLD, TRANSFERRED OR DISPOSED OF, TO THE
COMPANY OR (2) THE CONVERSION AMOUNT USED TO CALCULATE THE EVENT OF DEFAULT
REDEMPTION PRICE SHALL BE REDUCED BY THE PRODUCT OF (X) THE COMPANY CONVERSION
AMOUNT APPLICABLE TO SUCH INSTALLMENT DATE MULTIPLIED BY (Y) THE CONVERSION
SHARE RATIO.

(II)           IF THERE IS AN EQUITY CONDITIONS FAILURE AS OF THE INSTALLMENT
DATE OR THE INSTALLMENT SETTLEMENT DATE, AS APPLICABLE, 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: (A) THE COMPANY SHALL REDEEM
ALL OR ANY PART DESIGNATED BY THE HOLDER OF THE UNCONVERTED COMPANY CONVERSION
AMOUNT (SUCH DESIGNATED AMOUNT IS REFERRED TO AS THE “FIRST REDEMPTION AMOUNT”)
ON SUCH INSTALLMENT DATE OR INSTALLMENT SETTLEMENT DATE, AS APPLICABLE, 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 125% OF SUCH FIRST
REDEMPTION AMOUNT, AND/OR (B) 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 (1) THE
COMPANY CONVERSION PRICE AS IN EFFECT ON THE DATE ON WHICH THE HOLDER VOIDED THE
COMPANY CONVERSION AND (2) THE COMPANY CONVERSION PRICE AS IN EFFECT ON THE DATE
ON WHICH THE HOLDER

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DELIVERS A CONVERSION NOTICE RELATING THERETO.  IN THE EVENT THE HOLDER ELECTS
TO REQUIRE PAYMENT OF THE FIRST REDEMPTION AMOUNT UPON AN EQUITY CONDITIONS
FAILURE FOLLOWING THE INSTALLMENT DATE, AT THE HOLDER’S OPTION, EITHER (X) THE
HOLDER SHALL, UPON RECEIPT OF A FIRST REDEMPTION AMOUNT (WHICH AMOUNT INCLUDES
REDEMPTION OF ANY PORTION OF A COMPANY CONVERSION AMOUNT REPRESENTED BY
PRE-INSTALLMENT CONVERSION SHARES THAT THE HOLDER SHALL RETURN TO THE COMPANY),
RETURN ANY PRE-INSTALLMENT CONVERSION SHARES DELIVERED IN CONNECTION WITH THE
APPLICABLE INSTALLMENT DATE, WHICH THE HOLDER HAS NOT OTHERWISE SOLD,
TRANSFERRED OR DISPOSED OF, TO THE COMPANY OR (Y) ANY RELATED FIRST REDEMPTION
AMOUNT SHALL BE REDUCED BY THE PRODUCT OF (I) THE COMPANY CONVERSION AMOUNT
APPLICABLE TO SUCH INSTALLMENT DATE MULTIPLIED BY (II) THE CONVERSION SHARE
RATIO.  IF THE COMPANY FAILS TO REDEEM ANY FIRST REDEMPTION AMOUNT ON OR BEFORE
THE APPLICABLE INSTALLMENT DATE OR INSTALLMENT SETTLEMENT DATE, AS APPLICABLE,
BY PAYMENT OF SUCH AMOUNT ON THE APPLICABLE INSTALLMENT DATE OR INSTALLMENT
SETTLEMENT DATE, AS APPLICABLE, THEN THE HOLDER SHALL HAVE THE RIGHTS SET FORTH
IN SECTION 14(A) AS IF THE COMPANY FAILED TO PAY THE APPLICABLE COMPANY
REDEMPTION PRICE AND ALL OTHER RIGHTS UNDER THIS NOTE (INCLUDING, WITHOUT
LIMITATION, SUCH FAILURE CONSTITUTING AN EVENT OF DEFAULT DESCRIBED IN SECTION
4(A)(XI)).  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 8(B), BUT
SUBJECT TO 3(D), UNTIL THE COMPANY DELIVERS 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 FROM THE
INSTALLMENT AMOUNTS RELATING TO THE APPLICABLE INSTALLMENT DATES AS SET FORTH IN
THE APPLICABLE CONVERSION NOTICE.

(C)           MECHANICS OF COMPANY REDEMPTION.  IF THE COMPANY ELECTS A COMPANY
REDEMPTION IN ACCORDANCE WITH SECTION 8(A), 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), THE HOLDER MAY
REQUIRE THE COMPANY TO CONVERT ALL OR ANY PART OF THE COMPANY REDEMPTION AMOUNT
AT 75% OF THE COMPANY CONVERSION PRICE.  CONVERSIONS REQUIRED BY THIS SECTION
8(C) SHALL BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3(C). 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 8(C), BUT SUBJECT TO
SECTION 3(D), UNTIL THE COMPANY INSTALLMENT REDEMPTION PRICE IS PAID IN FULL,
THE COMPANY REDEMPTION AMOUNT 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 FROM THE
INSTALLMENT AMOUNTS RELATING TO THE APPLICABLE INSTALLMENT DATES AS SET FORTH IN
THE APPLICABLE CONVERSION NOTICE.

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(9)           OPTIONAL REDEMPTION AT THE COMPANY’S ELECTION.

(A)           GENERAL.  AT ANY TIME AFTER THE EFFECTIVE DATE (AS DEFINED IN THE
REGISTRATION RIGHTS AGREEMENT), SO LONG AS THERE IS NO EQUITY CONDITIONS
FAILURE, THE COMPANY SHALL HAVE THE RIGHT TO REDEEM ALL OR ANY PORTION OF THE
CONVERSION AMOUNT THEN REMAINING UNDER THIS NOTE (THE “OPTIONAL REDEMPTION
AMOUNT”) AS DESIGNATED IN THE OPTIONAL REDEMPTION NOTICE ON THE OPTIONAL
REDEMPTION DATE (EACH AS DEFINED BELOW) (AN “OPTIONAL REDEMPTION”).  THE PORTION
OF THIS NOTE SUBJECT TO REDEMPTION PURSUANT TO THIS SECTION 9(A) SHALL BE
REDEEMED BY THE COMPANY IN CASH AT A PRICE EQUAL TO THE SUM OF (I) THE
CONVERSION AMOUNT BEING REDEEMED PLUS (II) ANY ACCRUED AND UNPAID INTEREST ON
THE CONVERSION AMOUNT AND LATE CHARGES, IF ANY, ON SUCH CONVERSION AMOUNT AND
INTEREST PLUS (III) THE APPLICABLE MAKE-WHOLE AMOUNT (THE “OPTIONAL REDEMPTION
PRICE”).  THE COMPANY MAY EXERCISE ITS RIGHT TO REQUIRE REDEMPTION UNDER THIS
SECTION 9 BY DELIVERING A WRITTEN NOTICE THEREOF BY FACSIMILE AND OVERNIGHT
COURIER TO ALL, BUT NOT LESS THAN ALL, OF THE HOLDERS OF NOTES (THE “OPTIONAL
REDEMPTION NOTICE” AND THE DATE ALL OF THE HOLDERS RECEIVED SUCH NOTICE IS
REFERRED TO AS THE “OPTIONAL REDEMPTION NOTICE DATE”). EACH OPTIONAL REDEMPTION
NOTICE SHALL BE IRREVOCABLE.  THE OPTIONAL REDEMPTION NOTICE SHALL STATE (1) THE
DATE ON WHICH THE OPTIONAL REDEMPTION SHALL OCCUR (THE “OPTIONAL REDEMPTION
DATE”) WHICH DATE SHALL NOT BE LESS THAN FIVE (5) BUSINESS DAYS FOLLOWING THE
OPTIONAL REDEMPTION NOTICE DATE, (2) THE AGGREGATE CONVERSION AMOUNT OF THE
NOTES WHICH THE COMPANY HAS ELECTED TO BE SUBJECT TO OPTIONAL REDEMPTION FROM
THE HOLDER AND ALL OF THE OTHER HOLDERS OF THE NOTES PURSUANT TO THIS SECTION
9(A) (AND ANALOGOUS PROVISIONS UNDER THE OTHER NOTES) ON THE OPTIONAL REDEMPTION
DATE AND (3) THE NUMBER OF SHARES OF COMMON STOCK INTO WHICH THE SERIES C
WARRANTS SHALL BECOME EXERCISABLE ON THE OPTIONAL REDEMPTION DATE THEREOF.  THE
COMPANY MAY NOT EFFECT MORE THAN THREE (3) OPTIONAL REDEMPTIONS. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 9, UNTIL THE OPTIONAL
REDEMPTION PRICE IS PAID, IN FULL, THE OPTIONAL REDEMPTION AMOUNT MAY BE
CONVERTED, IN WHOLE OR IN PART, BY THE HOLDERS INTO SHARES OF COMMON STOCK
PURSUANT TO SECTION 3.  ALL CONVERSION AMOUNTS CONVERTED BY THE HOLDER AFTER THE
OPTIONAL REDEMPTION NOTICE DATE SHALL REDUCE THE OPTIONAL REDEMPTION AMOUNT OF
THIS NOTE REQUIRED TO BE REDEEMED ON THE OPTIONAL REDEMPTION DATE.  REDEMPTIONS
MADE PURSUANT TO THIS SECTION 9 SHALL BE MADE IN ACCORDANCE WITH SECTION 14.

(B)           PRO RATA REDEMPTION REQUIREMENT.  IF THE COMPANY ELECTS TO CAUSE
AN OPTIONAL REDEMPTION PURSUANT TO SECTION 9(A), THEN IT MUST SIMULTANEOUSLY
TAKE THE SAME ACTION IN THE SAME PROPORTION WITH RESPECT TO THE OTHER NOTES.  IF
THE COMPANY ELECTS TO CAUSE AN OPTIONAL REDEMPTION PURSUANT TO SECTION 9(A) (OR
SIMILAR PROVISIONS UNDER THE OTHER NOTES) WITH RESPECT TO LESS THAN ALL OF THE
CONVERSION AMOUNTS OF THE NOTES THEN OUTSTANDING, THEN THE COMPANY SHALL REQUIRE
REDEMPTION OF A CONVERSION AMOUNT FROM EACH OF THE HOLDERS OF THE NOTES EQUAL TO
THE PRODUCT OF (I) THE AGGREGATE CONVERSION AMOUNT OF NOTES WHICH THE COMPANY
HAS ELECTED TO CAUSE TO BE REDEEMED PURSUANT TO SECTION 9(A), MULTIPLIED BY (II)
THE FRACTION, THE NUMERATOR OF WHICH IS THE SUM OF THE AGGREGATE ORIGINAL
PRINCIPAL AMOUNT OF THE NOTES PURCHASED BY SUCH HOLDER OF OUTSTANDING NOTES AND
THE DENOMINATOR OF WHICH IS THE SUM OF THE AGGREGATE ORIGINAL PRINCIPAL AMOUNT
OF THE NOTES PURCHASED BY ALL HOLDERS HOLDING OUTSTANDING NOTES (SUCH FRACTION
WITH RESPECT TO EACH HOLDER IS REFERRED TO AS ITS “REDEMPTION ALLOCATION
PERCENTAGE”, AND SUCH AMOUNT WITH RESPECT TO EACH HOLDER IS REFERRED TO AS ITS
“PRO RATA REDEMPTION AMOUNT”); PROVIDED, HOWEVER THAT IN THE EVENT THAT ANY
HOLDER’S PRO RATA REDEMPTION AMOUNT EXCEEDS THE OUTSTANDING PRINCIPAL AMOUNT OF
SUCH HOLDER’S NOTE, THEN SUCH EXCESS PRO RATA REDEMPTION AMOUNT SHALL BE
ALLOCATED AMONGST THE REMAINING HOLDERS OF NOTES

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IN ACCORDANCE WITH THE FOREGOING FORMULA.  IN THE EVENT THAT THE INITIAL HOLDER
OF ANY NOTES SHALL SELL OR OTHERWISE TRANSFER ANY OF SUCH HOLDER’S NOTES, THE
TRANSFEREE SHALL BE ALLOCATED A PRO RATA PORTION OF SUCH HOLDER’S REDEMPTION
ALLOCATION PERCENTAGE AND PRO RATA REDEMPTION AMOUNT.

(10)         HOLDER’S RIGHT OF OPTIONAL CONVERSION/REDEMPTION. (A) GENERAL.  ON
JANUARY 1, 2010 THROUGH AND INCLUDING MARCH 1, 2010 (THE “HOLDER OPTIONAL
CONVERSION/REDEMPTION PERIOD”), THE HOLDER SHALL HAVE THE RIGHT, IN ITS SOLE
DISCRETION, TO REQUIRE THAT THE COMPANY, PROVIDED THERE IS NO EQUITY CONDITIONS
FAILURE CONVERT, OR, AT THE COMPANY’S ELECTION, REDEEM ALL OR ANY PORTION OF THE
CONVERSION AMOUNT THEN REMAINING UNDER THE NOTE PLUS ANY ACCRUED AND UNPAID
INTEREST ON SUCH CONVERSION AMOUNT AND LATE CHARGES, IF ANY, ON SUCH CONVERSION
AMOUNT AND INTEREST (THE “CONVERSION/REDEMPTION AMOUNT”) BY DELIVERING WRITTEN
NOTICE THEREOF TO THE COMPANY (A “HOLDER OPTIONAL CONVERSION/REDEMPTION NOTICE”
AND THE DATE THE HOLDER DELIVERS SUCH NOTICE, THE “HOLDER OPTIONAL
CONVERSION/REDEMPTION NOTICE DATE”).  WITHIN ONE (1) BUSINESS DAY AFTER THE
HOLDER OPTIONAL CONVERSION/REDEMPTION NOTICE DATE, THE COMPANY SHALL DELIVER TO
THE HOLDER A WRITTEN NOTICE (A “COMPANY CONVERSION/REDEMPTION ELECTION NOTICE”
AND THE DATE SUCH HOLDER RECEIVES SUCH NOTICE, THE “COMPANY
CONVERSION/REDEMPTION ELECTION NOTICE DATE”) WHICH NOTICE SHALL (I) EITHER (A)
CONFIRM THAT THE CONVERSION/REDEMPTION AMOUNT SHALL BE CONVERTED (A “HOLDER
OPTIONAL CONVERSION” AND SUCH AMOUNT TO BE CONVERTED, THE “HOLDER OPTIONAL
CONVERSION AMOUNT”) OR (B)(1) STATE THAT THE COMPANY ELECTS TO REDEEM (A “HOLDER
OPTIONAL REDEMPTION”), IN WHOLE OR IN PART, THE CONVERSION/REDEMPTION AMOUNT AND
(2) SPECIFY THE PORTION WHICH THE COMPANY ELECTS TO REDEEM PURSUANT TO A HOLDER
OPTIONAL REDEMPTION (SUCH AMOUNT TO BE REDEEMED, THE “HOLDER OPTIONAL REDEMPTION
AMOUNT”) CONVERT PURSUANT TO AN OPTIONAL REDEMPTION (SUCH AMOUNT ALSO, A “
HOLDER OPTIONAL CONVERSION AMOUNT”) AND THE PORTION, IF ANY, THAT THE COMPANY
ELECTS TO CONVERT PURSUANT TO A HOLDER OPTIONAL CONVERSION (SUCH AMOUNT ALSO, A
“HOLDER OPTIONAL CONVERSION AMOUNT”) AND (II) IF THE CONVERSION/REDEMPTION
AMOUNT IS TO BE PAID PURSUANT TO A HOLDER OPTIONAL CONVERSION, CERTIFY THAT
THERE IS NO EQUITY CONDITIONS FAILURE AS OF THE RELEVANT DATE OF DETERMINATION;
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE COMPANY BE ENTITLED TO ELECT (A) A
HOLDER OPTIONAL CONVERSION IF THE WEIGHTED AVERAGE PRICE OF THE COMMON STOCK
DURING THE TEN (10) CONSECUTIVE TRADING DAY PERIOD ENDING TWO (2) TRADING DAYS
PRIOR TO THE HOLDER OPTIONAL CONVERSION/REDEMPTION DATE IS NOT GREATER THAN
$0.60. AND (B) TO CONVERT MORE THAN 70% OF THE CONVERSION/REDEMPTION AMOUNT ON
THE HOLDER OPTIONAL CONVERSION/REDEMPTION DATE.  THE COMPANY SHALL REDEEM AND
CONVERT ANY HOLDER OPTIONAL REDEMPTION AMOUNT AND HOLDER OPTIONAL CONVERSION
AMOUNT WITHIN THREE (3) TRADING DAYS OF THE HOLDER OPTIONAL
CONVERSION/REDEMPTION NOTICE DATE (A “HOLDER OPTIONAL CONVERSION/REDEMPTION
DATE”).

(B)           MECHANICS OF HOLDER OPTIONAL CONVERSION.  (I) IF THE COMPANY
DELIVERS A COMPANY CONVERSION/REDEMPTION ELECTION NOTICE ELECTING A HOLDER
OPTIONAL CONVERSION IN ACCORDANCE WITH SECTION 10(A), THEN, ON THE TRADING DAY
PRIOR TO THE APPLICABLE HOLDER OPTIONAL CONVERSION/REDEMPTION DATE, THE COMPANY
SHALL, OR SHALL DIRECT THE TRANSFER AGENT TO, DELIVER TO THE HOLDER’S ACCOUNT
WITH DTC, OR ISSUE THE HOLDER A CERTIFICATE FOR, A NUMBER OF SHARES OF COMMON
STOCK EQUAL TO THE QUOTIENT OF (A) SUCH HOLDER OPTIONAL CONVERSION AMOUNT
DIVIDED BY (B) THE INITIAL OPTIONAL CONVERSION PRICE (THE “PRE-CONVERSION
SHARES”).  ON THE TRADING DAY IMMEDIATELY AFTER THE END OF THE APPLICABLE
INITIAL OPTIONAL CONVERSION MEASURING PERIOD (THE “HOLDER CONVERSION/REDEMPTION
SETTLEMENT DATE”), THE COMPANY SHALL, OR SHALL DIRECT THE TRANSFER AGENT TO,
DELIVER TO THE HOLDER’S ACCOUNT WITH DTC,

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OR ISSUE THE HOLDER A CERTIFICATE FOR, A NUMBER OF ADDITIONAL SHARES OF COMMON
STOCK, IF ANY, EQUAL TO THE HOLDER BALANCE CONVERSION SHARES.  IF AN EVENT OF
DEFAULT OCCURS DURING ANY APPLICABLE INITIAL OPTIONAL CONVERSION MEASURING
PERIOD AND THE HOLDER ELECTS AN EVENT OF DEFAULT REDEMPTION IN ACCORDANCE WITH
SECTION 4(B), THEN, AT THE HOLDER’S OPTION, EITHER (1) THE HOLDER, UPON RECEIPT
OF THE EVENT OF DEFAULT REDEMPTION PRICE (WHICH REDEMPTION PRICE INCLUDES
REDEMPTION OF ANY PORTION OF A HOLDER OPTIONAL CONVERSION AMOUNT REPRESENTED BY
PRE-CONVERSION SHARES THAT THE HOLDER SHALL RETURN TO THE COMPANY), SHALL RETURN
ANY PRE-CONVERSION SHARES DELIVERED IN CONNECTION WITH THE HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE, WHICH THE HOLDER HAS NOT OTHERWISE SOLD, TRANSFERRED
OR DISPOSED OF, TO THE COMPANY OR (2) THE CONVERSION AMOUNT USED TO CALCULATE
THE EVENT OF DEFAULT REDEMPTION PRICE SHALL BE REDUCED BY THE PRODUCT OF (X) THE
HOLDER OPTIONAL CONVERSION AMOUNT APPLICABLE TO SUCH HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE MULTIPLIED BY (Y) THE HOLDER CONVERSION SHARE RATIO.

(II)           IF THERE IS AN EQUITY CONDITIONS FAILURE AS OF THE APPLICABLE
HOLDER OPTIONAL CONVERSION/REDEMPTION DATE OR THE HOLDER OPTIONAL
CONVERSION/REDEMPTION SETTLEMENT DATE, AS APPLICABLE, 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: (A) THE COMPANY SHALL REDEEM ALL OR
ANY PART DESIGNATED BY THE HOLDER OF THE UNCONVERTED HOLDER OPTIONAL CONVERSION
AMOUNT (SUCH DESIGNATED AMOUNT IS REFERRED TO AS THE “HOLDER DESIGNATED
REDEMPTION AMOUNT”) ON SUCH HOLDER OPTIONAL CONVERSION/REDEMPTION DATE OR HOLDER
CONVERSION/REDEMPTION SETTLEMENT DATE, AS APPLICABLE, AND THE COMPANY SHALL PAY
TO THE HOLDER ON SUCH HOLDER OPTIONAL CONVERSION/REDEMPTION DATE OR HOLDER
CONVERSION/REDEMPTION SETTLEMENT DATE, AS APPLICABLE, BY WIRE TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS, AN AMOUNT IN CASH EQUAL TO 125% OF SUCH HOLDER
DESIGNATED REDEMPTION AMOUNT, AND/OR (B) THE HOLDER OPTIONAL CONVERSION SHALL BE
NULL AND VOID WITH RESPECT TO ALL OR ANY PART DESIGNATED BY THE HOLDER OF THE
UNCONVERTED HOLDER OPTIONAL 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
HOLDER OPTIONAL CONVERSION AMOUNT; PROVIDED, HOWEVER, THAT THE CONVERSION PRICE
FOR SUCH UNCONVERTED HOLDER OPTIONAL CONVERSION AMOUNT SHALL THEREAFTER BE
ADJUSTED TO EQUAL THE LESSER OF (1) THE OPTIONAL CONVERSION PRICE AS IN EFFECT
ON THE DATE ON WHICH THE HOLDER VOIDED THE HOLDER OPTIONAL CONVERSION AND (2)
THE OPTIONAL CONVERSION PRICE AS IN EFFECT ON THE DATE ON WHICH THE HOLDER
DELIVERS A CONVERSION NOTICE RELATING THERETO.  IN THE EVENT THE HOLDER ELECTS
TO REQUIRE PAYMENT OF THE HOLDER DESIGNATED REDEMPTION AMOUNT UPON AN EQUITY
CONDITIONS FAILURE FOLLOWING THE HOLDER OPTIONAL CONVERSION/REDEMPTION DATE, AT
THE HOLDER’S OPTION, EITHER (X) THE HOLDER SHALL, UPON RECEIPT OF A HOLDER
DESIGNATED REDEMPTION AMOUNT (WHICH AMOUNT INCLUDES REDEMPTION OF ANY PORTION OF
A HOLDER OPTIONAL CONVERSION AMOUNT REPRESENTED BY PRE-CONVERSION SHARES THAT
THE HOLDER SHALL RETURN TO THE COMPANY), RETURN ANY PRE-CONVERSION SHARES
DELIVERED IN CONNECTION WITH THE APPLICABLE HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE, WHICH THE HOLDER HAS NOT OTHERWISE SOLD, TRANSFERRED
OR DISPOSED OF, TO THE COMPANY OR (Y) ANY RELATED HOLDER DESIGNATED REDEMPTION
AMOUNT SHALL BE REDUCED BY THE PRODUCT OF (I) THE HOLDER OPTIONAL CONVERSION
AMOUNT APPLICABLE TO SUCH HOLDER OPTIONAL CONVERSION/REDEMPTION DATE MULTIPLIED
BY (II) THE HOLDER CONVERSION SHARE RATIO.  IF THE COMPANY FAILS TO REDEEM THE
HOLDER DESIGNATED REDEMPTION AMOUNT ON OR BEFORE THE HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE OR HOLDER CONVERSION/REDEMPTION SETTLEMENT DATE, AS
APPLICABLE, BY PAYMENT OF SUCH AMOUNT ON SUCH HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE OR HOLDER CONVERSION/REDEMPTION SETTLEMENT DATE, AS
APPLICABLE, THEN THE HOLDER SHALL HAVE THE RIGHTS SET FORTH IN SECTION 14(A) AS
IF THE COMPANY FAILED TO PAY THE APPLICABLE HOLDER OPTIONAL

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REDEMPTION PRICE AND ALL OTHER RIGHTS UNDER THIS NOTE (INCLUDING, WITHOUT
LIMITATION, SUCH FAILURE CONSTITUTING AN EVENT OF DEFAULT DESCRIBED IN SECTION
4(A)(XI)).

(C)           MECHANICS OF HOLDER OPTIONAL REDEMPTION.  IF THE COMPANY ELECTS A
HOLDER OPTIONAL REDEMPTION IN ACCORDANCE WITH SECTION 10(A), THEN THE HOLDER
OPTIONAL REDEMPTION AMOUNT WHICH IS TO BE PAID TO THE HOLDER ON THE APPLICABLE
HOLDER OPTIONAL CONVERSION/REDEMPTION DATE SHALL BE REDEEMED BY THE COMPANY, AND
THE COMPANY SHALL PAY TO THE HOLDER ON SUCH HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS, THE
HOLDER OPTIONAL REDEMPTION PRICE.  IF THE COMPANY FAILS TO REDEEM THE HOLDER
OPTIONAL REDEMPTION AMOUNT ON THE HOLDER OPTIONAL CONVERSION/REDEMPTION DATE BY
PAYMENT OF THE HOLDER OPTIONAL 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), THE HOLDER MAY REQUIRE THE COMPANY TO CONVERT ALL OR ANY PART OF THE
HOLDER OPTIONAL REDEMPTION AMOUNT AT 75% OF THE OPTIONAL CONVERSION PRICE. 
CONVERSIONS REQUIRED BY THIS SECTION 10(C) SHALL BE MADE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 3(C).

(11)         [INTENTIONALLY OMITTED.]

(12)         NONCIRCUMVENTION.  THE COMPANY HEREBY COVENANTS AND AGREES THAT THE
COMPANY WILL NOT, BY AMENDMENT OF ITS CERTIFICATE 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.

(13)         RESERVATION OF AUTHORIZED SHARES.

(A)           RESERVATION.  THE COMPANY SHALL INITIALLY RESERVE OUT OF ITS
AUTHORIZED AND UNISSUED COMMON STOCK A NUMBER OF SHARES OF COMMON STOCK FOR EACH
OF THE NOTES EQUAL TO 130% OF THE CONVERSION RATE WITH RESPECT TO THE CONVERSION
AMOUNT OF EACH SUCH NOTE AS OF THE ISSUANCE DATE.  SO LONG AS ANY OF THE 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 THE NOTES, 130% OF THE NUMBER OF SHARES
OF COMMON STOCK 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 BY THE PREVIOUS SENTENCE (WITHOUT REGARD TO ANY LIMITATIONS ON
CONVERSIONS) (THE “REQUIRED RESERVE AMOUNT”).  THE INITIAL NUMBER OF SHARES OF
COMMON STOCK RESERVED FOR CONVERSIONS OF THE NOTES AND EACH INCREASE IN THE
NUMBER OF SHARES SO RESERVED SHALL BE ALLOCATED PRO RATA AMONG THE HOLDERS OF
THE NOTES BASED ON THE PRINCIPAL AMOUNT OF THE 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 ANY
OF SUCH HOLDER’S 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

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ALLOCATED TO THE REMAINING HOLDERS OF NOTES, PRO RATA BASED ON THE PRINCIPAL
AMOUNT OF THE 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 NINETY (90) DAYS AFTER THE OCCURRENCE OF SUCH
AUTHORIZED SHARE FAILURE, THE COMPANY SHALL HOLD A MEETING OF ITS STOCKHOLDERS
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
STOCKHOLDER WITH A PROXY STATEMENT AND SHALL USE ITS 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.

(14)         REDEMPTIONS.

(A)           MECHANICS.  THE COMPANY SHALL DELIVER THE APPLICABLE EVENT OF
DEFAULT REDEMPTION PRICE TO THE HOLDER WITHIN FIVE (5) BUSINESS DAYS AFTER THE
COMPANY’S RECEIPT OF THE HOLDER’S EVENT OF DEFAULT REDEMPTION NOTICE.  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 FIVE (5) BUSINESS DAYS AFTER THE COMPANY’S
RECEIPT OF SUCH NOTICE OTHERWISE.  THE COMPANY SHALL DELIVER THE APPLICABLE
COMPANY INSTALLMENT REDEMPTION PRICE TO THE HOLDER ON THE APPLICABLE INSTALLMENT
DATE.  THE COMPANY SHALL DELIVER THE APPLICABLE HOLDER OPTIONAL REDEMPTION PRICE
ON THE APPLICABLE HOLDER OPTIONAL CONVERSION/REDEMPTION 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 20(D)) REPRESENTING THE OUTSTANDING PRINCIPAL WHICH HAS
NOT BEEN REDEEMED.  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 AND (Y) THE
COMPANY SHALL IMMEDIATELY RETURN THIS NOTE, OR ISSUE A NEW NOTE (IN ACCORDANCE
WITH SECTION 20(D)) TO THE HOLDER REPRESENTING SUCH CONVERSION AMOUNT TO BE
REDEEMED.  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

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ACCRUED PRIOR TO THE DATE OF SUCH NOTICE WITH RESPECT TO THE CONVERSION AMOUNT
SUBJECT TO SUCH NOTICE.

(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), SECTION 10 OR SECTION 11
(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 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 EACH HOLDER OF THE
NOTES (INCLUDING THE HOLDER) BASED ON THE PRINCIPAL AMOUNT OF THE NOTES
SUBMITTED FOR REDEMPTION PURSUANT TO SUCH REDEMPTION NOTICE AND SUCH OTHER
REDEMPTION NOTICES RECEIVED BY THE COMPANY DURING SUCH SEVEN BUSINESS DAY
PERIOD.

(15)         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,
THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE, AND AS EXPRESSLY PROVIDED
IN THIS NOTE.

(16)         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 OTHER THAN PERMITTED SENIOR INDEBTEDNESS.

(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
PERMITTED INDEBTEDNESS, OTHER THAN ANY PERMITTED SENIOR INDEBTEDNESS, WHETHER BY
WAY OF PAYMENT IN RESPECT OF PRINCIPAL OF (OR PREMIUM, IF ANY) OR

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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.

(E)           RESTRICTION ON REDEMPTION AND CASH DIVIDENDS.  UNTIL ALL OF THE
NOTES HAVE BEEN CONVERTED, REDEEMED OR OTHERWISE SATISFIED IN ACCORDANCE WITH
THEIR TERMS, OTHER THAN PERMITTED DIVIDENDS AND REDEMPTIONS, THE COMPANY SHALL
NOT, DIRECTLY OR INDIRECTLY, REDEEM, REPURCHASE OR DECLARE OR PAY ANY CASH
DIVIDEND OR DISTRIBUTION ON ITS CAPITAL STOCK WITHOUT THE PRIOR EXPRESS WRITTEN
CONSENT OF THE REQUIRED HOLDERS; PROVIDED THAT THE COMPANY MAY AT ANY TIME IN
ITS DISCRETION REDEEM THE RIGHTS TO PURCHASE ATTACHED TO, OR IN THE FUTURE
SEPARATED FROM, THE COMMON SHARES PURSUANT TO THE CORPORATION’S SHAREHOLDER
RIGHTS PLAN, AS IT MAY BE AMENDED FROM TIME TO TIME, OR ANY SIMILAR SUCCESSOR
PLAN.

(17)         PARTICIPATION.  THE HOLDER, AS THE HOLDER OF THIS NOTE, SHALL BE
ENTITLED TO RECEIVE SUCH DIVIDENDS PAID AND DISTRIBUTIONS MADE TO THE HOLDERS OF
COMMON STOCK TO THE SAME EXTENT AS IF THE HOLDER HAD CONVERTED THIS NOTE INTO
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 COMMON
STOCK.

(18)         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 TO
THIS NOTE OR THE OTHER NOTES.

(19)         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.

(20)         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
20(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 20(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.

(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

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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 20(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 20(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 20(A) OR SECTION 20(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.

(21)         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.

(22)         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,

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ATTORNEYS’ FEES AND DISBURSEMENTS.

(23)         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.

(24)         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.

(25)         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 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 (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 COMPANY AND APPROVED
BY THE HOLDER OR (B) THE DISPUTED ARITHMETIC CALCULATION OF THE CONVERSION RATE,
CONVERSION PRICE OR ANY REDEMPTION PRICE TO THE COMPANY’S INDEPENDENT, OUTSIDE
ACCOUNTANT.  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.

(26)         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 10(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 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 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 AND, IN THE CASE OF ANY INTEREST DATE WHICH IS NOT THE DATE ON
WHICH THIS NOTE IS PAID IN FULL, THE EXTENSION OF THE DUE DATE THEREOF SHALL NOT
BE TAKEN INTO ACCOUNT FOR PURPOSES OF DETERMINING THE AMOUNT OF INTEREST DUE ON
SUCH DATE.  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 FIFTEEN PERCENT (15%) PER ANNUM FROM THE DATE SUCH AMOUNT
WAS DUE UNTIL THE SAME IS PAID IN FULL (“LATE CHARGE”).

(27)         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.

(28)         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.

(29)         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 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.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY
RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  IN THE EVENT THAT ANY
PROVISION OF THIS NOTE IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE
OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT
THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH
STATUTE OR RULE OF LAW.  ANY SUCH PROVISION WHICH MAY PROVE INVALID OR
UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS NOTE.  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

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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.

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

(A)           “APPROVED STOCK PLAN” MEANS ANY EMPLOYEE BENEFIT PLAN WHICH HAS
BEEN OR SHALL HAVE BEEN APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY,
PURSUANT TO WHICH THE COMPANY’S SECURITIES MAY BE ISSUED TO ANY EMPLOYEE,
CONSULTANT, OFFICER OR DIRECTOR FOR SERVICES PROVIDED TO THE COMPANY.

(B)           “BLOOMBERG” MEANS BLOOMBERG FINANCIAL MARKETS.

(C)           “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.

(D)           “CALENDAR QUARTER” MEANS EACH OF: THE PERIOD BEGINNING ON AND
INCLUDING JANUARY 1 AND ENDING ON AND INCLUDING MARCH 31; THE PERIOD BEGINNING
ON AND INCLUDING APRIL 1 AND ENDING ON AND INCLUDING JUNE 30; THE PERIOD
BEGINNING ON AND INCLUDING JULY 1 AND ENDING ON AND INCLUDING SEPTEMBER 30; AND
THE PERIOD BEGINNING ON AND INCLUDING OCTOBER 1 AND ENDING ON AND INCLUDING
DECEMBER 31.

(E)           “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, THE VOTING POWER OF THE SURVIVING ENTITY
OR ENTITIES NECESSARY TO ELECT A MAJORITY OF THE MEMBERS OF THE BOARD OF
DIRECTORS (OR THEIR EQUIVALENT IF OTHER THAN A CORPORATION) OF SUCH ENTITY OR
ENTITIES, OR (II) PURSUANT TO A MIGRATORY MERGER EFFECTED SOLELY FOR THE PURPOSE
OF CHANGING THE JURISDICTION OF INCORPORATION OF THE COMPANY.

(F)            “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

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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 “PINK SHEETS” BY PINK SHEETS LLC (FORMERLY
THE NATIONAL QUOTATION BUREAU, 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 25.  ALL SUCH DETERMINATIONS
TO BE APPROPRIATELY ADJUSTED FOR ANY STOCK DIVIDEND, STOCK SPLIT, STOCK
COMBINATION OR OTHER SIMILAR TRANSACTION DURING THE APPLICABLE CALCULATION
PERIOD.

(G)           “CLOSING DATE” SHALL HAVE THE MEANING SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT, WHICH DATE IS THE DATE THE COMPANY INITIALLY ISSUED NOTES
PURSUANT TO THE TERMS OF THE SECURITIES PURCHASE AGREEMENT.

(H)           “COMMON STOCK DEEMED OUTSTANDING” MEANS, AT ANY GIVEN TIME, THE
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT SUCH TIME, PLUS THE NUMBER OF
SHARES OF COMMON STOCK DEEMED TO BE OUTSTANDING PURSUANT TO SECTIONS 7(A)(I) AND
7(A)(II) HEREOF REGARDLESS OF WHETHER THE OPTIONS OR CONVERTIBLE SECURITIES ARE
ACTUALLY EXERCISABLE AT SUCH TIME, BUT EXCLUDING ANY COMMON STOCK OWNED OR HELD
BY OR FOR THE ACCOUNT OF THE COMPANY OR ISSUABLE UPON CONVERSION OF THE NOTES.

(I)            “COMPANY CONVERSION PRICE” MEANS, THE LOWER OF (I) THE APPLICABLE
CONVERSION PRICE AND (II) THAT PRICE WHICH SHALL BE COMPUTED AS 88% OF THE
ARITHMETIC AVERAGE OF THE WEIGHTED AVERAGE PRICE OF THE COMMON STOCK ON EACH OF
THE TWENTY (20) CONSECUTIVE TRADING DAYS COMMENCING ON THE TRADING DAY
IMMEDIATELY FOLLOWING THE APPLICABLE INSTALLMENT DATE (EACH SUCH PERIOD, A
“COMPANY CONVERSION MEASURING PERIOD”); PROVIDED, HOWEVER, THAT IF THE
ARITHMETIC AVERAGE OF THE WEIGHTED AVERAGE PRICE OF THE COMMON STOCK DURING THE
COMPANY CONVERSION MEASURING PERIOD IS $1.00 OR LESS, THEN THE COMPANY
CONVERSION PRICE SHALL BE COMPUTED AS 85% OF THE ARITHMETIC AVERAGE OF THE
WEIGHTED AVERAGE PRICE OF THE COMMON STOCK DURING THE COMPANY CONVERSION
MEASURING PERIOD.  ALL SUCH DETERMINATIONS TO BE APPROPRIATELY ADJUSTED FOR ANY
STOCK SPLIT, STOCK DIVIDEND, STOCK COMBINATION OR OTHER SIMILAR TRANSACTION THAT
PROPORTIONATELY DECREASES OR INCREASES THE COMMON STOCK DURING SUCH COMPANY
CONVERSION MEASURING PERIOD.

(J)            “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.

(K)           “CONVERSION SHARE RATIO” MEANS, AS TO ANY INSTALLMENT DATE, THE
QUOTIENT OF (I) THE NUMBER OF PRE-INSTALLMENT CONVERSION SHARES DELIVERED IN
CONNECTION WITH

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SUCH INSTALLMENT DATE DIVIDED BY (II) THE NUMBER OF POST-INSTALLMENT CONVERSION
SHARES RELATING TO SUCH INSTALLMENT DATE.

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

(M)          “ELIGIBLE MARKET” MEANS THE PRINCIPAL MARKET, THE NEW YORK STOCK
EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, THE NASDAQ GLOBAL SELECT, THE
NASDAQ GLOBAL MARKET OR THE NASDAQ CAPITAL MARKET.

(N)           “EQUITY CONDITIONS” MEANS THAT EACH OF THE FOLLOWING CONDITIONS IS
SATISFIED:  (I) ON EACH DAY DURING THE PERIOD BEGINNING SIX (6) MONTH PRIOR TO
THE APPLICABLE DATE OF DETERMINATION AND ENDING ON AND INCLUDING THE APPLICABLE
DATE OF DETERMINATION (THE “EQUITY CONDITIONS MEASURING PERIOD”), EITHER (X) THE
REGISTRATION STATEMENT FILED PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT SHALL
BE EFFECTIVE AND AVAILABLE FOR THE RESALE OF ALL REMAINING REGISTRABLE
SECURITIES 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 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THE NOTES, EXERCISE OF THE WARRANTS AND AS INTEREST SHARES SHALL BE ELIGIBLE FOR
SALE WITHOUT RESTRICTION AND WITHOUT THE NEED FOR REGISTRATION UNDER ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS; (II) 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 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; (III) DURING THE ONE (1)
YEAR PERIOD ENDING ON AND INCLUDING THE DATE IMMEDIATELY PRECEDING THE
APPLICABLE DATE OF DETERMINATION, THE COMPANY SHALL HAVE DELIVERED SHARES OF
COMMON STOCK UPON CONVERSION OF THE NOTES AND UPON EXERCISE OF THE WARRANTS TO
THE HOLDERS ON A TIMELY BASIS AS SET FORTH IN SECTION 3(C)(II) HEREOF (AND
ANALOGOUS PROVISIONS UNDER THE OTHER NOTES) AND SECTION 1(A) OF THE WARRANTS;
(IV) ANY APPLICABLE SHARES OF COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
EVENT REQUIRING DETERMINATION MAY BE ISSUED IN FULL WITHOUT VIOLATING SECTION
3(D) HEREOF AND THE RULES OR REGULATIONS OF THE PRINCIPAL MARKET OR ANY
APPLICABLE ELIGIBLE MARKET; (V) DURING THE ONE (1) YEAR PERIOD ENDING ON AND
INCLUDING THE DATE IMMEDIATELY PRECEDING THE APPLICABLE DATE OF DETERMINATION,
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;
(VI) 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,
OR (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; (VII) THE COMPANY SHALL
HAVE NO KNOWLEDGE OF ANY FACT THAT WOULD CAUSE (X) THE REGISTRATION STATEMENTS
REQUIRED PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT NOT TO BE EFFECTIVE AND
AVAILABLE FOR THE RESALE OF ALL REMAINING REGISTRABLE SECURITIES IN ACCORDANCE
WITH THE TERMS OF THE REGISTRATION RIGHTS AGREEMENT OR (Y) ANY SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THE NOTES, SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THE WARRANTS AND ISSUABLE AS INTEREST SHARES NOT TO BE

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ELIGIBLE FOR SALE WITHOUT RESTRICTION PURSUANT TO RULE 144(K) AND ANY APPLICABLE
STATE SECURITIES LAWS; (VIII) THE COMPANY OTHERWISE SHALL HAVE BEEN IN
COMPLIANCE WITH AND SHALL NOT HAVE BREACHED ANY PROVISION, COVENANT,
REPRESENTATION OR WARRANTY OF ANY TRANSACTION DOCUMENT AND (IX) AFTER THE
STOCKHOLDER MEETING DEADLINE, THE COMPANY SHALL HAVE OBTAINED THE STOCKHOLDER
APPROVAL.

(O)           “EQUITY CONDITIONS FAILURE” MEANS THAT (I) ON ANY DAY DURING THE
PERIOD COMMENCING TEN (10) TRADING DAYS PRIOR TO THE APPLICABLE INTEREST DATE
THROUGH THE APPLICABLE INTEREST DATE, (II) ON ANY DAY DURING THE PERIOD
COMMENCING TEN (10) TRADING DAYS PRIOR TO THE APPLICABLE COMPANY INSTALLMENT
NOTICE DATE THROUGH THE APPLICABLE INSTALLMENT DATE, (III) ON ANY DAY DURING THE
PERIOD COMMENCING TEN (10) TRADING DAYS PRIOR TO THE APPLICABLE OPTIONAL
REDEMPTION NOTICE DATE THROUGH THE APPLICABLE OPTIONAL REDEMPTION DATE, (IV) ON
ANY DAY DURING THE PERIOD COMMENCING TEN (10) TRADING DAYS PRIOR TO THE
APPLICABLE HOLDER OPTIONAL CONVERSION/REDEMPTION NOTICE DATE THROUGH THE
APPLICABLE HOLDER OPTIONAL CONVERSION/REDEMPTION DATE, OR (V) ON ANY DAY DURING
THE PERIOD COMMENCING TEN (10) TRADING DAYS PRIOR TO THE APPLICABLE DIVIDEND
DATE WITH RESPECT TO SUCH PERMITTED CASH DIVIDEND THROUGH THE APPLICABLE
DIVIDEND DATE, THE EQUITY CONDITIONS HAVE NOT BEEN SATISFIED (OR WAIVED IN
WRITING BY THE HOLDER).

(P)           “EXCLUDED SECURITIES” MEANS ANY COMMON STOCK ISSUED OR ISSUABLE:
(I) IN CONNECTION WITH ANY EXISTING OR HEREINAFTER ESTABLISHED APPROVED STOCK
PLAN; (II) UPON CONVERSION OF THE NOTES OR THE EXERCISE OF THE WARRANTS; (III)
AS INTEREST SHARES OR AS PAYMENT OF INSTALLMENT AMOUNTS PURSUANT TO SECTION 8;
(IV) IN CONNECTION WITH ANY STRATEGIC ACQUISITION OR TRANSACTION BY THE COMPANY,
WHETHER THROUGH AN ACQUISITION OF STOCK OR A MERGER OF ANY BUSINESS, ASSETS OR
TECHNOLOGIES THE PRIMARY PURPOSE OF WHICH IS NOT TO RAISE EQUITY CAPITAL; AND
(V) UPON EXERCISE OF ANY OPTIONS OR CONVERTIBLE SECURITIES WHICH ARE OUTSTANDING
ON THE DAY IMMEDIATELY PRECEDING THE SUBSCRIPTION DATE, PROVIDED THAT THE TERMS
OF SUCH OPTIONS OR CONVERTIBLE SECURITIES ARE NOT AMENDED, MODIFIED OR CHANGED
ON OR AFTER THE SUBSCRIPTION DATE.

(Q)           “EXISTING PROMISSORY NOTES” MEANS THOSE PROMISSORY NOTES AS
REFERRED TO IN SCHEDULE 3(S) TO THE SECURITIES PURCHASE AGREEMENT AS PROMISSORY
NOTES.

(R)            “FUNDAMENTAL TRANSACTION” MEANS THAT THE COMPANY SHALL, DIRECTLY
OR INDIRECTLY, IN ONE OR MORE RELATED TRANSACTIONS, (I) CONSOLIDATE OR MERGE
WITH OR INTO (WHETHER OR NOT THE COMPANY IS THE SURVIVING CORPORATION) ANOTHER
PERSON OR PERSONS, OR (II) SELL, ASSIGN, TRANSFER, CONVEY OR OTHERWISE DISPOSE
OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTIES OR ASSETS OF THE COMPANY TO
ANOTHER PERSON, OR (III) ALLOW ANOTHER PERSON TO MAKE A PURCHASE, TENDER OR
EXCHANGE OFFER THAT IS ACCEPTED BY THE HOLDERS OF MORE THAN 50% OF THE
OUTSTANDING SHARES OF VOTING STOCK (NOT INCLUDING ANY SHARES OF VOTING STOCK
HELD BY THE PERSON OR PERSONS MAKING OR PARTY TO, OR ASSOCIATED OR AFFILIATED
WITH THE PERSONS MAKING OR PARTY TO, SUCH PURCHASE, TENDER OR EXCHANGE OFFER),
OR (IV) CONSUMMATE A STOCK PURCHASE AGREEMENT OR OTHER BUSINESS COMBINATION
(INCLUDING, WITHOUT LIMITATION, A REORGANIZATION, RECAPITALIZATION, SPIN-OFF OR
SCHEME OF ARRANGEMENT) WITH ANOTHER PERSON WHEREBY SUCH OTHER PERSON ACQUIRES
MORE THAN THE 50% OF THE OUTSTANDING SHARES OF VOTING STOCK (NOT INCLUDING ANY
SHARES OF VOTING STOCK HELD BY THE OTHER PERSON OR OTHER PERSONS MAKING OR PARTY
TO, OR ASSOCIATED OR AFFILIATED WITH THE OTHER PERSONS MAKING OR PARTY TO, SUCH
STOCK PURCHASE AGREEMENT OR OTHER BUSINESS COMBINATION), OR (V) REORGANIZE,
RECAPITALIZE OR RECLASSIFY ITS COMMON STOCK OR (VI) ANY “PERSON” OR “GROUP” (AS
THESE

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TERMS ARE USED FOR PURPOSES OF SECTIONS 13(D) AND 14(D) OF THE EXCHANGE ACT) IS
OR SHALL BECOME THE “BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 UNDER THE
EXCHANGE ACT), DIRECTLY OR INDIRECTLY, OF 50% OF THE AGGREGATE VOTING STOCK OF
THE COMPANY.

(S)           “GAAP” MEANS UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, CONSISTENTLY APPLIED.

(T)            “HOLDER BALANCE CONVERSION SHARES” MEANS, FOR ANY HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE, A NUMBER OF SHARES OF COMMON STOCK EQUAL TO (I) THE
POST-CONVERSION SHARES FOR SUCH DATE MINUS (II) THE AMOUNT OF ANY PRE-CONVERSION
SHARES DELIVERED BEFORE OR ON SUCH DATE; PROVIDED THAT IN THE EVENT THAT THE
AMOUNT OF PRE-CONVERSION SHARES EXCEEDS THE POST-CONVERSION SHARES FOR SUCH DATE
(SUCH EXCESS, THE “HOLDER CONVERSION SHARES EXCESS”), THE OUTSTANDING PRINCIPAL
UNDER THIS NOTE SHALL BE REDUCED BY AN AMOUNT EQUAL TO THE PRODUCT OF (X) THE
HOLDER CONVERSION SHARE EXCESS AND (Y) THE OPTIONAL CONVERSION PRICE (THE
“HOLDER CONVERSION SHARES EXCESS AMOUNT”) AND THE HOLDER BALANCE CONVERSION
SHARES SHALL EQUAL ZERO (0); PROVIDED, HOWEVER, THAT IN THE EVENT THAT ON ANY
HOLDER OPTIONAL CONVERSION/REDEMPTION DATE THE ENTIRE OUTSTANDING PRINCIPAL
UNDER THIS NOTE IS BEING CONVERTED AND/OR REDEEMED AND, WITH RESPECT TO SUCH
DATE, THERE IS A HOLDER CONVERSION SHARES EXCESS PURSUANT TO THE FOREGOING, THE
HOLDER SHALL PAY TO THE COMPANY IN CASH AN AMOUNT EQUAL TO THE HOLDER CONVERSION
SHARES EXCESS AMOUNT ON THE APPLICABLE HOLDER OPTIONAL CONVERSION/REDEMPTION
SETTLEMENT DATE.

(U)           “HOLDER CONVERSION SHARE RATIO” MEANS, AS TO THE HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE, THE QUOTIENT OF (I) THE NUMBER OF PRE-CONVERSION
SHARES DELIVERED IN CONNECTION WITH SUCH HOLDER OPTIONAL CONVERSION/REDEMPTION
DATE DIVIDED BY (II) THE NUMBER OF POST-CONVERSION SHARES RELATING TO SUCH
HOLDER OPTIONAL CONVERSION/REDEMPTION DATE.

(V)           “HOLDER PRO RATA AMOUNT” MEANS A FRACTION (I) THE NUMERATOR OF
WHICH IS THE PRINCIPAL AMOUNT OF THIS NOTE ON THE CLOSING DATE AND (II) THE
DENOMINATOR OF WHICH IS THE AGGREGATE PRINCIPAL AMOUNT OF ALL NOTES ISSUED TO
THE INITIAL PURCHASERS PURSUANT TO THE SECURITIES PURCHASE AGREEMENT ON THE
CLOSING DATE.

(W)          “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)

32

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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.

(X)            “INITIAL COMPANY CONVERSION PRICE” MEANS, AS OF ANY DATE OF
DETERMINATION, THAT PRICE WHICH SHALL BE THE LOWER OF (I) THE APPLICABLE
CONVERSION PRICE AND (II) THAT PRICE COMPUTED AS 90% OF THE LOWEST WEIGHTED
AVERAGE PRICE OF THE COMMON STOCK DURING THE TEN (10) CONSECUTIVE TRADING DAY
PERIOD ENDING TWO (2) TRADING DAYS PRIOR TO THE INSTALLMENT DATE (SUCH PERIOD,
THE “INITIAL COMPANY CONVERSION MEASURING PERIOD”).  ALL SUCH DETERMINATIONS TO
BE APPROPRIATELY ADJUSTED FOR ANY STOCK SPLIT, STOCK DIVIDEND, STOCK COMBINATION
OR OTHER SIMILAR TRANSACTION THAT PROPORTIONATELY DECREASES OR INCREASES THE
COMMON STOCK DURING SUCH INITIAL COMPANY CONVERSION MEASURING PERIOD.

(Y)           “INITIAL OPTIONAL CONVERSION PRICE” MEANS, AS OF ANY DATE OF
DETERMINATION, THAT PRICE WHICH SHALL BE THE LOWER OF (I) THE APPLICABLE
CONVERSION PRICE AND (II) THAT PRICE COMPUTED AS 90% OF THE LOWEST WEIGHTED
AVERAGE PRICE OF THE COMMON STOCK DURING THE TEN (10) CONSECUTIVE TRADING DAY
PERIOD ENDING TWO (2) TRADING DAYS PRIOR TO THE HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE (SUCH PERIOD, THE “INITIAL OPTIONAL CONVERSION
MEASURING PERIOD”).  ALL SUCH DETERMINATIONS TO BE APPROPRIATELY ADJUSTED FOR
ANY STOCK SPLIT, STOCK DIVIDEND, STOCK COMBINATION OR OTHER SIMILAR TRANSACTION
THAT PROPORTIONATELY DECREASES OR INCREASES THE COMMON STOCK DURING SUCH INITIAL
OPTIONAL CONVERSION MEASURING PERIOD.

(Z)            “INSTALLMENT AMOUNT” MEANS AS TO AN INSTALLMENT DATE, AN AMOUNT
EQUAL TO THE LESSER OF (I) THE PRODUCT OF (A) $388,889 MULTIPLIED BY (B) THE
HOLDER PRO RATA AMOUNT AND (II) THE PRINCIPAL AMOUNT UNDER THIS NOTE AS OF SUCH
INSTALLMENT DATE, AS ANY SUCH INSTALLMENT AMOUNT MAY BE REDUCED PURSUANT TO THE
TERMS OF THIS NOTE, WHETHER UPON CONVERSION, REDEMPTION OR OTHERWISE.  IN THE
EVENT THE HOLDER SHALL SELL OR OTHERWISE TRANSFER ANY PORTION OF THIS NOTE, THE
TRANSFEREE SHALL BE ALLOCATED A PRO RATA PORTION OF THE EACH UNPAID INSTALLMENT
AMOUNT HEREUNDER.

(AA)         “INSTALLMENT BALANCE CONVERSION SHARES” MEANS, FOR ANY INSTALLMENT
DATE, A NUMBER OF SHARES OF COMMON STOCK EQUAL TO (I) THE POST-INSTALLMENT
CONVERSION SHARES FOR SUCH DATE MINUS (II) THE AMOUNT OF ANY PRE-INSTALLMENT
CONVERSION SHARES DELIVERED BEFORE OR ON SUCH DATE; PROVIDED THAT IN THE EVENT
THAT THE AMOUNT OF PRE-INSTALLMENT CONVERSION SHARES EXCEEDS THE
POST-INSTALLMENT CONVERSION SHARES FOR SUCH DATE (SUCH EXCESS, THE “INSTALLMENT
CONVERSION SHARES EXCESS”), THE OUTSTANDING PRINCIPAL UNDER THIS NOTE SHALL BE
REDUCED BY, BUT NOT IN AN AMOUNT IN EXCESS OF THE OUTSTANDING PRINCIPAL OF THIS
NOTE AT SUCH TIME, AN AMOUNT EQUAL TO THE PRODUCT OF (X) THE INSTALLMENT
CONVERSION SHARE EXCESS AND (Y) THE COMPANY CONVERSION PRICE AND THE INSTALLMENT
BALANCE CONVERSION SHARES SHALL EQUAL ZERO (0).

(BB)         “INSTALLMENT DATE” MEANS, MAY 1, 2007 AND, THEREAFTER, THE FIRST
(1ST) DAY OF EACH CALENDAR MONTH THROUGH OCTOBER 1, 2011.

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(CC)         “INTEREST NOTICE DUE DATE” MEANS THE TWENTY-FIFTH (25TH) TRADING
DAY PRIOR TO THE APPLICABLE INTEREST DATE.

(DD)         “INTEREST CONVERSION PRICE” MEANS, WITH RESPECT TO ANY INTEREST
DATE THAT PRICE WHICH SHALL BE THE LOWER OF (I) THE APPLICABLE CONVERSION PRICE
AND (II) THE PRICE COMPUTED AS 88% OF THE ARITHMETIC AVERAGE OF THE WEIGHTED
AVERAGE PRICE OF THE COMMON STOCK ON EACH OF THE TWENTY (20) CONSECUTIVE TRADING
DAYS ENDING ON THE TRADING DAY IMMEDIATELY PRECEDING THE APPLICABLE INTEREST
DATE (EACH, AN “INTEREST MEASURING PERIOD”); PROVIDED, HOWEVER, THAT IF SUCH
ARITHMETIC AVERAGE OF THE WEIGHTED AVERAGE PRICE DURING THE INTEREST MEASURING
PERIOD SHALL YIELD A PRICE THAT IS $1.00 OR LESS, THEN THE COMPANY CONVERSION
PRICE SHALL BE COMPUTED AS 85% OF THE ARITHMETIC AVERAGE OF THE WEIGHTED AVERAGE
PRICE OF THE COMMON STOCK DURING THE INTEREST MEASURING PERIOD.  ALL SUCH
DETERMINATIONS TO BE APPROPRIATELY ADJUSTED FOR ANY STOCK SPLIT, STOCK DIVIDEND,
STOCK COMBINATION OR OTHER SIMILAR TRANSACTION DURING SUCH INTEREST MEASURING
PERIOD.

(EE)         “INTEREST RATE” MEANS, 6.95% PER ANNUM, SUBJECT TO ADJUSTMENT AS
SET FORTH IN SECTION 2.

(FF)           “MAKE-WHOLE AMOUNT” MEANS, AS TO ANY CONVERSION AMOUNT BEING
REDEEMED PURSUANT TO SECTION 9, AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN (I)
THE PRESENT VALUE OF INTEREST THAT, BUT FOR THE APPLICABLE REDEMPTION, WOULD
HAVE BEEN PAID TO THE HOLDER ON SUCH CONVERSION AMOUNT FROM THE OPTIONAL
REDEMPTION DATE THROUGH THE THIRD (3RD) ANNIVERSARY OF THE ISSUANCE DATE AND
(II) THE AMOUNT OF INTEREST ALREADY PAID TO THE HOLDER THROUGH THE OPTIONAL
REDEMPTION DATE.

(GG)         “OPTIONAL CONVERSION PRICE” MEANS, THE LOWER OF (I) THE APPLICABLE
CONVERSION PRICE AND (II) THAT PRICE WHICH SHALL BE COMPUTED AS 85% OF THE
ARITHMETIC AVERAGE OF THE WEIGHTED AVERAGE PRICE OF THE COMMON STOCK FOR THE
SIXTY (60) CONSECUTIVE TRADING DAY PERIOD IMMEDIATELY FOLLOWING THE APPLICABLE
HOLDER OPTIONAL CONVERSION/REDEMPTION DATE (EACH SUCH PERIOD, AN “OPTIONAL
CONVERSION/REDEMPTION MEASURING PERIOD”).  ALL SUCH DETERMINATIONS TO BE
APPROPRIATELY ADJUSTED FOR ANY STOCK SPLIT, STOCK DIVIDEND, STOCK COMBINATION
DURING OR OTHER SIMILAR TRANSACTION THAT PROPORTIONATELY DECREASES OR INCREASES
THE COMMON STOCK THE APPLICABLE SUCH OPTIONAL CONVERSION/REDEMPTION MEASURING
PERIOD.

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

(II)           “PARENT ENTITY” OF A PERSON MEANS AN ENTITY THAT, DIRECTLY OR
INDIRECTLY, CONTROLS THE APPLICABLE PERSON AND WHOSE COMMON STOCK OR EQUIVALENT
EQUITY SECURITY IS QUOTED OR LISTED ON AN ELIGIBLE MARKET, OR, IF THERE IS MORE
THAN ONE SUCH PERSON OR PARENT ENTITY, THE PERSON OR PARENT ENTITY WITH THE
LARGEST PUBLIC MARKET CAPITALIZATION AS OF THE DATE OF CONSUMMATION OF THE
FUNDAMENTAL TRANSACTION.

(JJ)           “PERMITTED DIVIDENDS AND REDEMPTIONS” MEANS (I) SUCH CASH
DIVIDENDS PAYABLE PURSUANT TO ARTICLE 9(A) OF THE CERTIFICATE OF DESIGNATIONS OF
THE SERIES B PREFERRED STOCK OF THE COMPANY (THE “SERIES B PREFERRED STOCK”)
WHICH ARE OUTSTANDING ON THE

34

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DAY IMMEDIATELY PRECEDING THE SUBSCRIPTION DATE AND WHICH MAY BE ISSUED PURSUANT
TO (III) BELOW IN THIS SUBSECTION (JJ), (II) SUCH LIQUIDITY EVENT PAYMENTS AS
DEFINED IN AND PURSUANT TO ARTICLE 9(C)(1) OF THE CERTIFICATE OF DESIGNATIONS OF
THE SERIES B PREFERRED STOCK AND (III) SUCH ADDITIONAL SHARES OF SERIES B
PREFERRED STOCK AS MAY BE ISSUED IN THE FUTURE AS STOCK DIVIDENDS PURSUANT TO
ARTICLE 9(A) OF THE CERTIFICATE OF DESIGNATIONS OF THE SERIES B PREFERRED STOCK,
PROVIDED, THAT, OTHER THAN WITH RESPECT TO CLAUSE (II), NO EQUITY CONDITIONS
FAILURE HAS OCCURRED AS OF THE APPLICABLE DIVIDEND DATE; PROVIDED, FURTHER, THAT
THE TERMS OF SUCH SERIES B PREFERRED STOCK ARE NOT AMENDED, MODIFIED OR CHANGED
ON OR AFTER THE SUBSCRIPTION DATE.

(KK)         “PERMITTED INDEBTEDNESS” MEANS (I) THE INDEBTEDNESS EVIDENCED BY
THIS NOTE AND THE OTHER NOTES, (II) PERMITTED SENIOR INDEBTEDNESS AND (III)
OTHER UNSECURED INDEBTEDNESS INCURRED BY THE COMPANY AND/OR ANY OF ITS
SUBSIDIARIES THAT IS MADE EXPRESSLY SUBORDINATE IN RIGHT OF PAYMENT TO THE
INDEBTEDNESS EVIDENCED BY THIS NOTE, 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 THE INTEREST RATE PER ANNUM.

(LL)           “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, (V) LIENS INCURRED IN CONNECTION WITH THE EXTENSION, RENEWAL OR
REFINANCING OF THE INDEBTEDNESS SECURED BY LIENS OF THE TYPE DESCRIBED IN
CLAUSES (I) AND (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 ARISING FROM JUDGMENTS, DECREES OR
ATTACHMENTS IN CIRCUMSTANCES NOT CONSTITUTING AN EVENT OF DEFAULT UNDER SECTION
4(A)(IX) AND (IX) LIENS SECURING PERMITTED SENIOR INDEBTEDNESS.

(MM)       “PERMITTED SENIOR INDEBTEDNESS” MEANS (I) THE PRINCIPAL OF (AND
PREMIUM, IF ANY), INTEREST ON, AND ALL FEES AND OTHER AMOUNTS (INCLUDING,
WITHOUT LIMITATION, ANY REASONABLE OUT-OF-POCKET COSTS, ENFORCEMENT EXPENSES
(INCLUDING REASONABLE OUT-OF-POCKET LEGAL FEES AND DISBURSEMENTS), COLLATERAL
PROTECTION EXPENSES AND OTHER REIMBURSEMENT OR INDEMNITY

35

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OBLIGATIONS RELATING THERETO) PAYABLE BY COMPANY AND/OR ITS SUBSIDIARIES UNDER
OR IN CONNECTION WITH ANY CREDIT FACILITY OR OTHER LOAN OR FINANCING PRESENTLY
OUTSTANDING TO OR FROM TIME TO TIME TO BE ENTERED INTO BY THE COMPANY AND/OR ITS
SUBSIDIARIES WITH ONE OR MORE FINANCIAL INSTITUTIONS (AND ON TERMS AND
CONDITIONS) OR OTHER, WHICH, IN THE CASE OF FUTURE FACILITIES, LOANS OR
FINANCING, ARE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE REQUIRED
HOLDERS, INCLUDING WITHOUT LIMITATION ANY EXISTING PROMISSORY NOTES, SO LONG AS
SUCH EXISTING PROMISSORY NOTES ARE NOT AMENDED, MODIFIED OR CHANGES ON OR AFTER
THE SUBSCRIPTION DATE; PROVIDED, HOWEVER, THAT THE AGGREGATE OUTSTANDING AMOUNT
OF SUCH INDEBTEDNESS PERMITTED HEREUNDER (TAKING INTO ACCOUNT THE MAXIMUM
AMOUNTS WHICH MAY BE ADVANCED UNDER THE LOAN DOCUMENTS EVIDENCING SUCH PERMITTED
SENIOR INDEBTEDNESS) DOES NOT AT ANY TIME EXCEED $5,000,000 AND (II)
INDEBTEDNESS INCURRED IN CONNECTION WITH THE FINANCING OF DISPENSING EQUIPMENT.

(NN)         “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.

(OO)         “POST-CONVERSION SHARES” MEANS, FOR THE HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE, THAT NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE
APPLICABLE HOLDER OPTIONAL CONVERSION AMOUNT FOR SUCH HOLDER OPTIONAL
CONVERSION/REDEMPTION DATE DIVIDED BY THE OPTIONAL CONVERSION PRICE (WITHOUT
TAKING INTO ACCOUNT THE DELIVERY OF ANY PRE-CONVERSION SHARES).

(PP)         “POST-INSTALLMENT CONVERSION SHARES” MEANS, FOR ANY INSTALLMENT
DATE, THAT NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE APPLICABLE COMPANY
CONVERSION AMOUNT FOR SUCH INSTALLMENT DATE DIVIDED BY THE COMPANY CONVERSION
PRICE (WITHOUT TAKING INTO ACCOUNT THE DELIVERY OF ANY PRE-INSTALLMENT
CONVERSION SHARES).

(QQ)         “PRINCIPAL MARKET” MEANS THE OTC BULLETIN BOARD.

(RR)           “REDEMPTION NOTICES” MEANS, COLLECTIVELY, THE EVENT OF DEFAULT
REDEMPTION NOTICES, THE CHANGE OF CONTROL REDEMPTION NOTICES, THE COMPANY
INSTALLMENT NOTICE (IF A COMPANY REDEMPTION HAS BEEN ELECTED), THE COMPANY
OPTIONAL REDEMPTION NOTICE AND THE COMPANY CONVERSION/REDEMPTION ELECTION
NOTICES (IF A HOLDER OPTIONAL REDEMPTION HAS BEEN ELECTED), EACH OF THE
FOREGOING, INDIVIDUALLY, A REDEMPTION NOTICE.

(SS)         “REDEMPTION PREMIUM” MEANS (I) IN THE CASE OF THE EVENTS OF DEFAULT
DESCRIBED IN SECTION 4(A)(I) - (VI) AND (IX) - (XII), 125% OR (II) IN THE CASE
OF THE EVENTS OF DEFAULT DESCRIBED IN SECTION 4(A)(VII) - (VIII), 100%.

(TT)           “REDEMPTION PRICES” MEANS, COLLECTIVELY, THE EVENT OF DEFAULT
REDEMPTION PRICE, CHANGE OF CONTROL REDEMPTION PRICE, THE COMPANY INSTALLMENT
REDEMPTION PRICE, THE COMPANY OPTIONAL REDEMPTION PRICE AND THE HOLDER OPTIONAL
REDEMPTION PRICE, EACH OF THE FOREGOING, INDIVIDUALLY, A REDEMPTION PRICE.

(UU)         “REGISTRATION RIGHTS AGREEMENT” MEANS THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED AS OF THE SUBSCRIPTION DATE BY AND AMONG THE COMPANY AND
THE INITIAL HOLDERS OF THE NOTES RELATING TO, AMONG OTHER THINGS, THE
REGISTRATION OF THE RESALE OF THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE
NOTES AND EXERCISE OF THE WARRANTS.

36

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(VV)         “REQUIRED HOLDERS” MEANS THE HOLDERS OF NOTES REPRESENTING AT LEAST
TWO-THIRDS (2/3RDS) OF THE AGGREGATE PRINCIPAL AMOUNT OF THE NOTES THEN
OUTSTANDING.

(WW)       “SEC” MEANS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

(XX)          “SECURITIES PURCHASE AGREEMENT” MEANS THAT CERTAIN SECURITIES
PURCHASE AGREEMENT DATED AS OF THE SUBSCRIPTION DATE BY AND AMONG THE COMPANY
AND THE INITIAL HOLDERS OF THE NOTES PURSUANT TO WHICH THE COMPANY ISSUED THE
NOTES AND WARRANTS.

(YY)         “SERIES B 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.

(ZZ)          “SUBSCRIPTION DATE” MEANS DECEMBER 14, 2006.

(AAA)       “SUCCESSOR ENTITY” MEANS THE PERSON, WHICH MAY BE THE COMPANY,
FORMED BY, RESULTING FROM OR SURVIVING ANY FUNDAMENTAL TRANSACTION OR THE PERSON
WITH WHICH SUCH FUNDAMENTAL TRANSACTION SHALL HAVE BEEN MADE, PROVIDED THAT IF
SUCH PERSON IS NOT A PUBLICLY TRADED ENTITY WHOSE COMMON STOCK OR EQUIVALENT
EQUITY SECURITY IS QUOTED OR LISTED FOR TRADING ON AN ELIGIBLE MARKET, SUCCESSOR
ENTITY SHALL MEAN SUCH PERSON’S PARENT ENTITY.

(BBB)      “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).

(CCC)       “VOTING STOCK” OF A PERSON MEANS CAPITAL STOCK OF SUCH PERSON OF THE
CLASS OR CLASSES PURSUANT TO WHICH THE HOLDERS THEREOF HAVE THE GENERAL VOTING
POWER TO ELECT, OR THE GENERAL POWER TO APPOINT, AT LEAST A MAJORITY OF THE
BOARD OF DIRECTORS, MANAGERS OR TRUSTEES OF SUCH PERSON (IRRESPECTIVE OF WHETHER
OR NOT AT THE TIME CAPITAL STOCK OF ANY OTHER CLASS OR CLASSES SHALL HAVE OR
MIGHT HAVE VOTING POWER BY REASON OF THE HAPPENING OF ANY CONTINGENCY).

(DDD)      “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.

(EEE)       “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

37

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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 “PINK SHEETS” BY PINK SHEETS LLC (FORMERLY THE NATIONAL QUOTATION BUREAU,
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 25.  ALL SUCH DETERMINATIONS TO BE APPROPRIATELY
ADJUSTED FOR ANY STOCK DIVIDEND, STOCK SPLIT, STOCK COMBINATION OR OTHER SIMILAR
TRANSACTION DURING THE APPLICABLE CALCULATION PERIOD.

(31)         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.

[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.

Javo Beverage Company

 

 

 

 

 

By:

/s/ Cody C. Ashwell

 

 

 

 Name: Cody C. Ashwell

 

 

 Title:

Chairman and Chief Executive
Officer

 

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EXHIBIT I

JAVO BEVERAGE COMPANY
CONVERSION NOTICE

Reference is made to the Senior Convertible Note (the “Note”) issued to the
undersigned by Javo Beverage 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 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:

 

 

 

 

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:

 

 

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

Notwithstanding anything to the contrary contained herein, this Conversion
Notice shall constitute a representation by the holder of the Note submitting
this Conversion Notice that, after giving effect to the conversion provided for
in this Conversion Notice, such holder (together with its affiliates) will not
have beneficial ownership (together with the beneficial ownership of such
Person’s affiliates) of a number of shares of Common Stock which exceeds the
Maximum Percentage of the total outstanding shares of Company Common Stock as
determined pursuant to the provisions of Section 3(d)(i) of the Note.

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

ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs
Corporate Stock Transfer, Inc. to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated
December 15, 2006 from the Company and acknowledged and agreed to by Corporate
Stock Transfer, Inc.

 

JAVO BEVERAGE COMPANY

 

 

 

 

 

By:

 

 

 

 

 Name:

 

 

 Title:

 

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