Exhibit 10.1

AMENDMENT TO 8% CONVERTIBLE NOTES

This Amendment to 8% Convertible Notes (this “Agreement”) is dated as of March
24, 2017 by and between Euro Pacific Capital Inc. (“Euro Pacific Capital”) and
International Isotopes Inc. (the “Company”).

RECITALS

WHEREAS, on July 27, 2012, the Company issued to certain holders 8% Convertible
Notes in the aggregate principal amount of up to $8,000,000 with an interest
rate of 8% per annum and a maturity date of July 27, 2017 (the “Convertible
Notes”); and

WHEREAS, pursuant to Section 15 of the Convertible Notes, the Company and Euro
Pacific Capital have agreed to amend the Convertibles Notes to provide preferred
stock conversion rights and additional redemption rights as set forth on Exhibit
A hereto.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises herein made, the parties
hereto agree as follows:

1.

The Convertible Notes shall be amended and restated as set forth on Exhibit A
hereto.

2.

The Convertible Notes, as amended hereby, shall be and remain in full force and
effect in accordance with their terms and hereby are ratified and confirmed in
all respects.  Except as expressly set forth herein, the execution, delivery,
and performance of this Agreement shall not operate as a waiver of, or as an
amendment of, any right, power, or remedy of any holder under the Convertible
Notes, as in effect prior to the date hereof.

3.

This Agreement may be executed in two or more counterparts, including by
facsimile or .PDF, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the first
date above written.

INTERNATIONAL ISOTOPES INC.

 

 

 

 

By:

/s/ Steve Laflin

 

 

Name:

Steve Laflin

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

 

EURO PACIFIC CAPITAL INC.

 

 

 

 

By:

/s/ Peter Schiff

 

 

Name:

Peter Schiff

 

 

Title:

 

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EXHIBIT A

THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
 HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

INTERNATIONAL ISOTOPES INC.

AMENDED AND RESTATED 8% CONVERTIBLE NOTE

US $_____________

July 27, 2012

FOR VALUE RECEIVED, International Isotopes Inc., a Texas corporation (the
“Company”), promises to pay to
_________________________________________________(the “Holder”), the principal
sum of ___________________ DOLLARS ($_________) (the “Principal”) in lawful
money of the United States of America, with interest payable thereon at the rate
of eight percent (8%) per annum.  The principal amount hereof and all accrued
but unpaid interest thereon shall be paid in full to the Holder on the five (5)
year anniversary of the date of this Note (the “Maturity Date”).

Capitalized terms used herein but not defined herein shall have the meaning
ascribed to them in that certain Securities Purchase Agreement, dated of even
date herewith (the “SPA”), pursuant to which the Holder is acquiring this Note.

The following is a statement of the rights of the Holder of this Note and the
terms and conditions to which this Note is subject, and to which the Holder, by
acceptance of this Note, agrees:

1.

Series.  This Note is one of a series of Notes of the Company in the aggregate
principal amount of up to a maximum of Eight Million Dollars ($8,000,000)
(collectively, the “Notes”) as described in that certain Confidential Private
Placement Memorandum delivered to the Holder in connection with the transactions
contemplated by the SPA (the “Memorandum”).

2.

Principal Repayment.  The outstanding principal amount of this Note shall be
payable on the Maturity Date, unless this Note has been earlier converted or
redeemed as described below.

3.

Interest.

(a)

Computation; Payment.  Interest (the “Interest”) shall accrue on the unpaid
principal amount of this Note from the date hereof until such principal amount
is repaid in full at the rate of eight percent (8%) per annum.  The first
interest payment shall be due on September 30, 2013.  The second interest
payment shall be due on September 30, 2014.  Thereafter, interest shall be
payable semi-annually on March 30 and September 30 beginning on March 30, 2015.
 For purposes of clarity, the initial interest payment shall consist of accrued
interest from the date of issuance of the Note through September 30, 2013 and
the second interest payment shall consist of accrued interest from October 1,
2013 through September 30, 2014.  Thereafter, interest payments of accrued
interest shall be due and payable as set forth above until the Maturity Date,
subject to earlier conversion or redemption of the Note.  All computations of
the interest rate hereunder shall be made on the basis of a 360-day year of
twelve 30-day months.  In the event that any interest rate provided for herein
shall be determined to be unlawful, such interest rate shall be computed at the
highest rate permitted by applicable law.  Any payment by the Company

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of any interest amount in excess of that permitted by law shall be considered a
mistake, with the excess being applied to the principal of this Note without
prepayment premium or penalty.

(b)

Taxes, Charges and Expenses.  The Company, at its own cost, shall report
interest income, if any, to the IRS and/or other applicable tax authorities and
to the Holder on a Form 1099-INT or other appropriate form in accordance with
applicable law.  The Company shall bear sole responsibility for any costs or
fees in connection with the payment of Interest with respect to this Note,
including, but not limited to, wire transfer fees, bank check fees and escrow
agent fees.

4.

Conversion.

(a)

Generally.

(i)

Common Stock Conversion. The Holder shall have the right, exercisable at any
time prior to the Maturity Date, to convert all or any portion of the principal
amount then outstanding, plus all accrued but unpaid interest thereon, into
shares of the Company’s common stock, par value $0.01 per share (the “Common
Stock”) at a conversion price (the “Conversion Price”) equal to $0.225 per
share, subject to adjustment in accordance with Section 4(f) herein (the Common
Stock underlying the Notes being referred to herein as the “Common Shares”).

(ii)

Preferred Stock Conversion. The Holder shall have the right, exercisable at any
time prior to May 12, 2017, to convert all or any portion of the principal
amount then outstanding, plus all accrued but unpaid interest thereon, into
shares of the Company’s Series C Convertible Redeemable Preferred Stock, par
value $0.01 per share (the “Series C Preferred Stock”) at a conversion price
equal to $1,000 per share of Series C Preferred Stock (the Series C Preferred
Stock underlying the Notes being referred to herein as the “Preferred Shares”);
provided that any Holder electing to convert all or any portion of their Notes
pursuant to this Section 4(a)(ii) must convert at least $25,000 in principal
amount of Notes then outstanding.  Holders electing to convert all or any
portion of this Note for Preferred Shares pursuant to this Section 4(a)(ii)
shall also be entitled to receive a Class M Common Stock Purchase Warrant of the
Company (the “Warrant,” and together with the Preferred Shares, the “Preferred
Securities”) to purchase up to 3,750 shares of Common Stock for each share of
Series C Preferred Stock received upon conversion of the Note pursuant to this
Section 4(a)(ii), with such Warrant to have an exercise price of $0.10 per share
of Common Stock and a term of five (5) years.

(b)

Mechanics of Conversion.  The conversion of this Note shall be conducted in the
following manner: (i) the Holder shall deliver a completed and executed Notice
of Conversion attached hereto as Exhibit A (a “Notice of Conversion”) by
facsimile and overnight courier and, if such conversion is for the entire
outstanding principal amount due under the Note, surrender and deliver this
Note, duly endorsed, to the Company’s office or such other address which the
Company shall designate against delivery of the certificates (or other
instruments) representing the Common Shares or Preferred Securities to be
delivered; and (ii) the Company shall, within three (3) Trading Days of receipt
of the Notice of Conversion, issue or cause the Company’s transfer agent to
issue such required number of Common Shares or Preferred Securities as set forth
in the Notice of Conversion.  The Holder shall not be required to physically
surrender this Note to the Company until all of the principal amount and accrued
and unpaid interest under this Note have been converted into Common Shares or
Preferred Securities, as applicable, or been paid in full, in which case, the
Holder shall surrender this Note to the Company for cancellation with the final
Notice of Conversion delivered to the Company.  A partial conversion of this
Note shall have the effect of first settling all accrued and unpaid interest and
then lowering the outstanding principal amount due hereunder.  The Holder and
the Company shall maintain records showing the number of Common Shares or
Preferred Securities into which this Note is converted and the date of such
conversion.  In the event of any dispute or discrepancy, the records of the
Company shall be controlling and determinative in the absence of manifest error.
 The Holder and any assignee, by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of this paragraph, the principal amount due
hereunder at any given time may be less than the amount stated on the face
hereof.

(c)

Conversion Limitations.  The Company may not effect any Mandatory Conversion,
and a Holder shall not have the right to convert any portion of this Note, to
the extent that after giving effect to such issuance after conversion as set
forth on the applicable Notice of Conversion or Mandatory Conversion Notice, the

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Holder (together with the Holder’s Affiliates, and any other Persons acting as a
group together with the Holder or any of the Holder’s Affiliates), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined
below).  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 Common Shares or Preferred Securities issuable upon conversion of this
Note with respect to which such determination is being made, but shall exclude
the number of Common Shares or Preferred Securities which would be issuable upon
(i) conversion of the remaining, nonconverted portion of this Note beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company
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 4(c), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  To the extent that the limitation contained in this
Section 4(c) applies, the determination of whether this Note is convertible (in
relation to other securities owned by the Holder together with any Affiliates)
and of which portion of this Note is convertible shall be in the sole discretion
of the Holder, and the submission of a Notice of Conversion or Objection to
Complete Mandatory Conversion shall be deemed to be the Holder’s determination
of whether this Note is convertible (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Note is
convertible, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.  Upon the written request of the Holder, the Company shall within
two Trading Days confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding.  Upon the written request of the
Company, the Holder shall within two Trading Days provide the Company in writing
evidence reasonably satisfactory to the Company supporting the Holder’s
determination of which portion of this Note is convertible as set forth in the
Objection to Complete Mandatory Conversion.  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.  The "Beneficial Ownership
Limitation" shall be 4.9% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of Common Shares or
Preferred Securities issuable upon exercise of this Note.  The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 4(c), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of Common Shares or Preferred Securities upon conversion of this Note
held by the Holder and the provisions of this Section 4(c) shall continue to
apply.  Any such increase or decrease will not be effective until the 61st day
after such notice is delivered to the Company.  The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 4(c) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Note.

(d)

Delivery of Shares.

(i)

The Company shall, upon the written request of the Holder, use its best efforts
to deliver, or cause to be delivered, the Common Shares hereunder electronically
through the Depository Trust and Clearing Corporation or another established
clearing corporation performing similar functions, if available; provided, that,
the Company may, but will not be required to, change its transfer agent if its
current transfer agent cannot deliver the Common Shares electronically through
the Depository Trust and Clearing Corporation.

(ii)

To the extent permitted by law, the Company’s obligations to issue and deliver
Common Shares or Preferred Securities in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Common Shares or Preferred Securities.

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(iii)

If the Company fails to transmit, or cause its transfer agent to transmit, to
the Holder a certificate or the certificates (or other instrument) (either
physical or electronic) representing the Common Shares or Preferred Securities,
as applicable, pursuant to the terms hereof by the third (3rd) Trading Day after
the date on which such certificate is required to be delivered pursuant to
Section 4(b), then the Holder will have the right to rescind such conversion.
 In addition, if after such third (3rd) Trading Day the Holder is required by
its broker to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Common Shares which the Holder
anticipated receiving upon such exercise, then the Company shall pay in cash to
the Holder the amount, if any, by which the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds the amount obtained by multiplying (i) the number of Common
Shares that the Company was required to deliver to the Holder in connection with
the conversion at issue times (ii) the price at which the sell order giving rise
to such purchase obligation was executed.  In addition, the Company will, at the
option of the Holder, either reinstate the principal and interest under the Note
for which the conversion was not honored (in which case such conversion shall be
deemed rescinded) or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its conversion
and delivery obligations hereunder.  Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates (or other instrument) representing the Common Shares or Preferred
Securities upon conversion of the Note as required pursuant to the terms hereof.

(iv)

Issuance of certificates (or other instrument) for Common Shares or Preferred
Securities shall be made without charge to the Holder for any issue or
documentary tax in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates (or other
instrument) shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder. Notwithstanding the foregoing, that in the
event certificates (or other instruments) for Common Shares or Preferred
Securities are to be issued in a name other than the name of the Holder, (A)
this Note when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and (B) the Company shall not
be required to pay any tax that may be payable in respect of any such transfer
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto or the Holder
shall have established to the satisfaction of the Company that such tax has been
paid.

(e)

Company Conversion.  If at any time from and after the one year anniversary of
the issuance of this Note (i) the volume-weighted average price (“VWAP”) of the
Common Stock exceeds $0.40 per share over any thirty (30) Trading Day
measurement period after such one (1)-year anniversary (subject to appropriate
adjustments for any stock dividend, stock split, stock combination,
reclassification or similar transaction after the date hereof), (ii) during the
thirty (30) Trading Day measurement period referred to in subpart (i) above, the
average daily trading volume for the Common Stock is at least 500,000 shares
(subject to appropriate adjustments for any stock dividend, stock split, stock
combination, reclassification or similar transaction after the date hereof), and
(iii) the Company meets the Equity Conditions (as defined below), then the
Company shall have the right to require the Holder to convert all or any portion
of the principal and accrued interest then remaining under this Note into
validly issued, fully paid and non-assessable shares of Common Stock in
accordance with Section 4 hereof at the Conversion Price in effect on the
Mandatory Conversion Date (as defined below) (a “Mandatory Conversion”).  The
Company may exercise its right to require conversion under this Section 4(e) by
delivering a written notice thereof by facsimile and overnight courier to the
Holder (the “Mandatory Conversion Notice” and the date the Holder receives such
notice by facsimile is referred to as the “Mandatory Conversion Notice Date”).
The Mandatory Conversion Notice shall be irrevocable and shall (i) state the
Trading Day selected for the Mandatory Conversion in accordance with this
Section 4(e), which Trading Day shall be no sooner than five (5) Trading Days
nor later than thirty (30) Trading Days following the Objection to Complete
Mandatory Conversion Date (the “Mandatory Conversion Date”), (ii) the thirty
(30) Trading Day period over which the VWAP was calculated, (iii) the portion of
the principal balance of the Note subject to the Mandatory Conversion pursuant
to this Section 4(e) and all accrued and unpaid interest on the Note through the
Mandatory Conversion Date (the “Conversion Amount”) and (iv) the number of
Common Shares to be issued to the Holder on the Mandatory Conversion Date
(subject to adjustment for any adjustments to the Conversion Price occurring
under this Note after the execution of the Mandatory Conversion Notice by the
Company).  In the event that the

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Mandatory Conversion would violate the Beneficial Ownership Limitations, the
Holder may deliver a written notice thereof by facsimile and overnight courier
to the Company, together with a certification of which portion of this Note is
convertible without violating the Beneficial Ownership Limitations (the
“Objection to Complete Mandatory Conversion”), within three (3) Trading Days of
the Mandatory Conversion Notice Date (the “Objection to Complete Mandatory
Conversion Date”).  Any portion of this Note converted by the Holder after the
Mandatory Conversion Notice Date shall reduce the Conversion Amount subject to
the applicable Mandatory Conversion that is required to be converted on the
Mandatory Conversion Date. The mechanics of conversion set forth in Section 4(b)
shall apply to any Mandatory Conversion as if the Company had received from the
Holder on the Mandatory Conversion Date a Notice of Conversion with respect to
the Conversion Amount being converted pursuant to the Mandatory Conversion.  For
purposes of this Note, “Equity Conditions” shall mean: (a) the Company shall
have paid all amounts due and owing to the Holder hereunder; (b) either (1)
there is an effective registration statement pursuant to which non-Affiliate
Holders are permitted to utilize the prospectus thereunder to resell all of
their shares of Common Stock (and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable future) and there
are a sufficient number of shares of Common Stock registered on the effective
registration statement to permit the conversion of the then outstanding
principal amount of the Note and the exercise of all then outstanding Warrants
issued to such holders or (2) all of the shares issuable to non-Affiliate
Holders may be resold pursuant to Rule 144 without volume or manner-of-sale
restrictions as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the non-Affiliate Holder; (c) the Common Stock is trading on
a trading market (including the OTC Bulletin Board and all of the shares
issuable pursuant to the transaction documents are listed or quoted for trading
on such trading market (and the Company believes, in good faith, that trading of
the common stock on a trading market will continue uninterrupted for the
foreseeable future); (d) there is a sufficient number of authorized shares of
Common Stock for the issuance of the Common Shares to be issued upon such
Mandatory Conversion; and (e ) there is no existing Event of Default or no
existing event which, with the passage of time or the giving of notice, would
constitute an Event of Default hereunder.

(f)

Adjustments to Conversion Price.

(i)

Adjustments for Stock Splits and Combinations and Stock Dividends.  If the
Company shall at any time or from time to time after the date hereof, effect a
stock split or combination of the outstanding Common Stock or pay a stock
dividend in shares of Common Stock, then in each such case the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any adjustments under this Section 4(c)(i) shall
be effective at the close of business on the date the stock split or combination
becomes effective or the date of payment of the stock dividend, as applicable.

(ii)

Merger Sale, Reclassification, etc.  In case of any (A) consolidation or merger
(including a merger in which the Company is the surviving entity), (B) sale or
other disposition of all or substantially all of the Company’s assets or
distribution of property to shareholders (other than distributions payable out
of earnings or retained earnings), or reclassification, change or conversion of
the outstanding securities of the Company or of any reorganization of the
Company (or any other corporation the stock or securities of which are at the
time receivable upon the conversion of this Note) or any similar corporate
reorganization on or after the date hereof (other than as a result of a stock
split or combination of shares of Common Stock covered by Section 4(f)(ii)
above), then and in each such case the Holder of this Note, upon the conversion
hereof at any time thereafter shall be entitled to receive, in lieu of the stock
or other securities and property receivable upon the conversion hereof prior to
such consolidation, merger, sale or other disposition, reclassification, change,
conversion or reorganization, the stock or other securities or property to which
such Holder would have been entitled upon such consummation if such Holder had
converted this Note immediately prior thereto.

(g)

Elimination of Fractional Interests.  No fractional shares of Common Stock or
Series C Preferred Stock shall be issued upon conversion of this Note, nor shall
the Company be required to pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated and
that all issuances of Common Stock or Series C Preferred Stock shall be rounded
up to the nearest whole share.

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5.

Redemption.

(a)

Optional Redemption at Election of Company.  Subject to the provisions of this
Section 5, at any time and from time to time either (i) prior to the second
(2nd) anniversary of the date hereof if, but only if, the Company successfully
consummates a debt or equity financing of the Hobbs, New Mexico deconversion
facility (the “Hobbs Facility”) in the amount of at least $25,000,000, or (ii)
after the second (2nd) anniversary of the date hereof, the Company may deliver a
notice to the Holder (an “Optional Redemption Notice” and the date such notice
is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its
irrevocable election to redeem some or all of the then outstanding principal
amount of this Note for cash in an amount equal to the Optional Redemption
Amount on the thirtieth (30th) calendar day (or if such day is not a Trading
Day, the first Trading Day following such date) following the Optional
Redemption Notice Date (such date, the “Optional Redemption Date” and such
redemption, the “Optional Redemption”).  The Optional Redemption Amount is
payable in full on the Optional Redemption Date.  The Company covenants and
agrees that it will honor any Notice of Conversion tendered by the Holder from
the time of delivery of the Optional Redemption Notice through the date all
amounts owing thereon are due and paid in full.  “Optional Redemption Amount”
means the sum of (i) 110% of the principal amount of this Note redeemed pursuant
to subpart (i) of this Section 5(a), or, 106% of the principal amount of this
Note redeemed pursuant to subpart (ii) of this Section 5(a), as the case may be,
and (ii) all accrued but unpaid interest in respect of this Note at the Optional
Redemption Date.

(b)

Redemption at Election of the Holder.  Subject to the provisions of this Section
5, at any time and from time to time at the discretion of the Holder, the Holder
may deliver a Holder Redemption Notice to the Company attached hereto as Exhibit
B (a “Holder Redemption Notice” and the date such notice is deemed delivered
hereunder, the “Holder Redemption Notice Date”) of its irrevocable election to
have the Company redeem some or all of the then outstanding principal amount of
this Note for cash in an amount equal to (i) 100% of the principal amount of
this Note redeemed pursuant to this Section 5(b) and (ii) all accrued but unpaid
interest in respect of this Note at the Holder Redemption Date (such redemption,
the “Holder Redemption”). The “Holder Redemption Date” means the fifth Trading
Day following the Holder Redemption Notice Date.

(c)

Redemption Procedure.  The payment of cash pursuant to an Optional Redemption or
Holder Redemption shall be payable on the Optional Redemption Date or Holder
Redemption Date, as applicable.  Notwithstanding anything herein contained to
the contrary, if any portion of the Optional Redemption Amount or amounts due
under the Holder Redemption remain unpaid after the Optional Redemption Date or
Holder Redemption Date, as applicable, the Holder may elect, by written notice
to the Company given at any time thereafter, to invalidate such Optional
Redemption or Holder Redemption, as applicable, ab initio, and, with respect to
the Company’s failure to honor the Optional Redemption or Holder Redemption, the
Company shall have no further right to exercise such Optional Redemption or
Holder Redemption, as applicable.  The Holder may elect to convert the
outstanding principal amount of this Note pursuant to Section 4 prior to actual
payment in cash for any redemption under this Section 5 by the delivery of a
Notice of Conversion to the Company.

6.

No Security; Subordination of Interest Payments.  This Note is not secured by
any assets of the Company.  All claims of the Holder to interest owed under this
Note (collectively, “Junior Indebtedness”) are hereby expressly subordinated in
right of payment, as herein set forth, to the prior payment in full of all
Superior Indebtedness (as defined below).  For the purpose hereof, “Superior
Indebtedness” means all indebtedness of one or more lenders to the Company who
provide at least $25,000,000 of debt financing for the Hobbs Facility.  No
payment of interest under the Junior Indebtedness shall be made by the Company,
nor shall the Holder exercise any remedies under the Junior Indebtedness
(including taking any legal action (whether judicial or otherwise) to collect
interest arising under the Junior Indebtedness), if, at the time of such
payment, exercise or immediately after giving effect thereto, (i) there shall
exist any “Default” or “Event of Default” under any agreements governing any of
the Superior Indebtedness or (ii) the maturity of any of the Superior
Indebtedness has been accelerated and such acceleration has not been waived or
such Superior Indebtedness has not been paid in full; provided, however, that
(x) in the event that the holder of any Superior Indebtedness accelerates such
Superior Indebtedness, then the Holder may accelerate the indebtedness evidenced
by this Note, and (y) if the Company is permitted under the terms of the
Superior Indebtedness to pay an interest amount due and owing under this Note
and fails to make such interest payment, then so long as the terms of the
Superior Indebtedness do not prohibit such action, the Holder may exercise its
rights to be paid such interest amount. The provisions hereof are solely for the
purpose of defining the relative rights of the holders of the Superior
Indebtedness on the one hand and the Holder as holder of the Junior

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Indebtedness on the other hand, and nothing herein shall impair, as between the
Company and the Holder, the obligations of the Company under the Junior
Indebtedness, which are unconditional and absolute.  With this in mind,
notwithstanding the other provisions of this Section 6, if and so long as all
documents governing the Superior Indebtedness permit one of the actions
restricted by this Section 6, the restriction shall be waived and the restricted
action permitted hereunder.  Each holder of any Superior Indebtedness, whether
such Superior Indebtedness was created or acquired before or after the issuance
of this Note, shall be entitled to rely on the subordination provisions set
forth in this Note.  Notwithstanding the provisions of this Section 6, the
Holder shall not be charged with knowledge of the existence of facts which would
prohibit the making of any interest payments on the Junior Indebtedness unless
and until the holder(s) of the Superior Indebtedness or their representatives
send written notice to Holder of same.

7.

Events of Default.  In the event that any of the following (each, an “Event of
Default”) shall occur:

(a)

Non-Payment.  The Company shall default in the payment of the principal of, or
accrued interest on, this Note as and when the same shall become due and
payable, whether by acceleration or otherwise; or

(b)

Default in Covenants.  The Company shall default in any material manner in the
observance or performance of the affirmative or negative covenants or agreements
set forth in the SPA or this Note (collectively, the “Transaction Documents”);
or

(c)

Breach of Representations and Warranties.  Any representation or warranty made
by the Company in any Transaction Documents shall be untrue or incorrect in any
material respect as of the date when made or deemed made; or

(d)

Exchange Act or Exchange Requirements.  Any termination of registration or
suspension of the Company’s reporting obligations under the Exchange Act or
suspension from trading on the OTCBB (or any exchange on which the Common Stock
is traded or listed for quotation (it being agreed that the delisting of the
Common Stock from any national exchange shall not be an Event of Default if the
Common Stock is, within ten (10) Business Days of the effective date of such
delisting, quoted on the OTCBB)), or the Company’s failure to file any material
report with the SEC on a timely basis as required by the Exchange Act; or

(e)

Judgments.  Any final, non-appealable judgment, decree or order for the payment
of money is entered against any of the Company or the Company’s subsidiaries in
an amount equal to $250,000 or more and the same remains unsatisfied or unbonded
for more than thirty (30) days; or

(f)

Nationalization.  The confiscation, expropriation or nationalization by any
governmental authority to which the Company or a Subsidiary is subject of any
material property or assets of the Company or its Subsidiaries, taken as a
whole; or

(g)

Illegality of Notes.  Any court of competent jurisdiction issues an order
declaring the Notes or any provision thereunder to be illegal; or

(h)

Cross Default.  There occurs with respect to any Superior Indebtedness (i) a
default with respect to any payment obligation thereunder that then entitles the
holder thereof to declare such Indebtedness to be due and payable prior to its
stated maturity, or (ii) any other default thereunder that entitles, and has
caused, the holder thereof to declare such indebtedness to be due and payable
prior to its stated maturity, or

(i)

Bankruptcy.  The Company shall: (i) admit in writing its inability to pay its
debts as they become due; (ii) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Company or any of its property, or make a general assignment for the benefit of
creditors; (iii) in the absence of such application, consent or acquiesce in,
permit or suffer to exist the appointment of a trustee, receiver, sequestrator
or other custodian for the Company or for any part of its property; or (iv)
permit or suffer to exist the commencement of any bankruptcy, reorganization,
debt arrangement or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution, winding up or liquidation proceeding, in respect of the
Company,

7

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and, if such case or proceeding is not commenced by the Company or converted to
a voluntary case, such case or proceeding shall be consented to or acquiesced in
by the Company or shall result in the entry of an order for relief.

Then, and so long as such Event of Default is continuing for a period of two (2)
Business Days in the case of non-payment under Section 7(a), a period of five
(5) Business Days in the case of a cross default under Section 7(h), or for a
period of thirty (30) calendar days in the case of events under Sections 7(b)
through 7(g) (and the event which would constitute such Event of Default, if
curable, has not been cured), by written notice to the Company from the Investor
Representative, all obligations of the Company under this Note shall be
immediately due and payable without presentment, demand, protest or any other
action nor obligation of the Holder of any kind, all of which are hereby
expressly waived, and Holder may exercise any other remedies the Holder may have
at law or in equity.  If an Event of Default specified in Section 7(i) above
occurs, the principal of, and accrued interest on, all the Notes shall
automatically, and without any declaration or other action on the part of any
Holder, become immediately due and payable.

8.

Affirmative Covenants of the Company.  The Company hereby agrees that, so long
as the Note remains outstanding and unpaid, or any other amount is owing to the
Holder hereunder, the Company will:

(a)

Corporate Existence and Qualification.  Take the commercially reasonable steps
to preserve its corporate existence and its right to conduct business in all
states in which the nature of its business requires qualification to do
business;

(b)

Books of Account.  Keep its books of account in accordance with good accounting
practices;

(c)

Insurance.  Maintain insurance with responsible and reputable insurance
companies or associations, as determined by the Company in its sole but
reasonable discretion, in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Company operates;

(d)

Compliance with Law.  Comply in all material respects with the charter and
bylaws or other organizational or governing documents of the Company, and any
material law, treaty, rule or regulation, or determination of an arbitrator or a
court or other governmental authority, in each case applicable to or binding
upon the Company or any of its property or to which each of the Company or any
of its properties is subject;

(e)

Taxes.  Duly pay and discharge all taxes or other claims, which could reasonably
be expected to become a lien upon any of its property except to the extent that
any thereof are being in good faith appropriately contested with adequate
reserves provided therefore;

(f)

Reservation of Shares.  At all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock and Preferred
Securities and issuable upon conversion of this Note to provide for the issuance
of all of the Shares.  Prior to complete conversion of this Note, the Company
shall not reduce the number of shares of Common Stock and Preferred Securities
reserved for issuance hereunder without the written consent of the Holder,
except with respect to the Common Shares, for a reduction proportionate to a
reverse stock split effected for a business purpose other than affecting the
requirements of this Section, which reverse stock split affects all shares of
Common Stock equally; and

(g)

Use of Proceeds.  Use the proceeds of the Notes for the purposes described in
the Memorandum.

(h)

Notice of Known Events of Default.  The Company shall furnish to the Investor
Representative a notice of any occurrence of an Event of Default, and what
action the Company is taking or proposes to take with respect thereto, promptly
after such Event of Default becomes known to the Company.

(i)

Further Assurances.  The Company shall execute and deliver any and all such
further documents and take any and all such other actions as may be reasonably
necessary or appropriate to carry out the intent and purposes of this Note and
to consummate the transactions contemplated herein.

8

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9.

Negative Covenants of the Company.  The Company hereby agrees that, so long as
this Note remains outstanding and unpaid it will not, nor will it permit any of
its Subsidiaries, without the consent of the Investor Representative, to:

(a)

Indebtedness for Borrowed Money.  Except for Superior Indebtedness and existing
Indebtedness disclosed in the Memorandum, incur, or permit to exist, any
Indebtedness (as defined below) for borrowed money in excess of (i) $10,000,000
during the twelve (12) month period beginning on the date hereof, or (ii)
$15,000,000 during period beginning on the date hereof and ending on the
Maturity Date, except in the ordinary course of the Company’s business.  For
purposes of this Section 9(a), “Indebtedness” shall mean: (i) all obligations of
the Company for borrowed money or with respect to deposits or advances of any
kind, (ii) all obligations of the Company evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of the Company for the
deferred purchase price of property or services, except current accounts payable
arising in the ordinary course of business and not overdue beyond such period as
is commercially reasonable for the Company’s business, (iv) all obligations of
the Company under conditional sale or other title retention agreements relating
to property purchased by the Company, (v) all payment obligations of the Company
with respect to interest rate or currency protection agreements, (vi) all
obligations of the Company as an account party under any letter of credit or in
respect of bankers’ acceptances, (vii) all obligations of any third party
secured by property or assets of such Person (regardless of whether or not the
Company is liable for repayment of such obligations), except for obligations to
secure Indebtedness incurred within the limitations of this Section 9(a); (viii)
all guarantees of the Company and (ix) the redemption price of all redeemable
preferred stock of the Company, but only to the extent that such stock is
redeemable at the option of the holder or requires sinking fund or similar
payments at any time prior to the Maturity Date;

(b)

Loans; Investments.  Lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any Person in excess of
$500,000 except: (i) investments in United States Government obligations,
certificates of deposit of any banking institution with combined capital and
surplus of at least $200,000,000; (ii) accounts receivable arising out of sales
in the ordinary course of business; and (iii) inter-company loans between and
among the Company and its Subsidiaries;

(c)

Redemptions, Dividends and Distributions.  Redeem, repurchase or pay cash
dividends or make any other cash distribution on shares of the capital stock of
the Company other than inter-company dividends and distributions between and
among the Company and its Subsidiaries;

(d)

Liens.  Create, assume or permit to exist, any lien on any of its property or
assets now owned or hereafter acquired except (i) liens in favor of the Holder;
(ii) liens granted to secure Indebtedness incurred within the limitations of
Section 9(a) hereof; (iii) liens incidental to the conduct of its business or
the ownership of its property and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit and which do
not materially impair the use thereof in the operation of its business; (iv)
liens for taxes or other governmental charges which are not delinquent or which
are being contested in good faith and for which a reserve shall have been
established in accordance with generally accepted accounting principles; and (v)
purchase money liens granted to secure the unpaid purchase price of any fixed
assets;

(e)

Contingent Liabilities.  Assume, endorse, be or become liable for or guarantee
the obligations of any Person, contingently or otherwise, excluding however, the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business or guarantees of the Company made within the limitations of
Section 9(a) hereof;

(f)

Sales of Receivables; Sale - Leasebacks.  Sell, discount or otherwise dispose of
notes, accounts receivable or other obligations owing to the Company, with or
without recourse, except for the purpose of collection in the ordinary course of
business; or sell any asset pursuant to an arrangement to thereafter lease such
asset from the purchaser thereof;

(g)

Nature of Business.  Materially alter the nature of the Company’s business or
otherwise engage in any business other than the business engaged in or proposed
to be engaged in on the date of this Note;

9

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(h)

Stock of Subsidiaries.  Sell or otherwise dispose of any Subsidiary or permit a
Subsidiary to issue any additional shares of its capital stock except pro rata
to its stockholders; and

(i)

Accounting Changes.  Make, or permit any Subsidiary to make any material change
in their accounting treatment or financial reporting practices except as
required or permitted by generally accepted accounting principles in effect from
time to time.

(j)

Merger or Sale.

(i)

The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, consolidate or merge with or into another Person (whether or not
the Company or such Subsidiary is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a whole in one
or more related transactions, to any other Person, unless (A) either the Company
or such Subsidiary is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company or such
Subsidiary) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia,
(B) the Person formed by or surviving any such consolidation or merger (if other
than the Company or such Subsidiary) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes in writing all the obligations of the Company under the Notes and the
other Transaction Documents, and (C) immediately after such transaction, no
default or Event of Default exists.

The foregoing paragraph in this Section 9(j)(i) shall not apply to (x) a merger
of the Company with an Affiliate with no material assets, liabilities or
operations solely for the purpose of reincorporating the Company in another
jurisdiction; or (y) any consolidation or merger, or any sale, assignment,
transfer, conveyance, lease or other disposition of assets between or among the
Company and its Subsidiaries; provided, however, that such consolidation or
merger shall comply with subclauses (A) and (B) in the foregoing paragraph.

(ii)

Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company or any of its Subsidiaries permitted by Section 9(j)(i) hereof, the
successor corporation formed by such consolidation or into or with which the
Company or such Subsidiary is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall succeed to, and
be substituted for (so that from and after the date of such consolidation,
merger, sale, lease, conveyance or other disposition, the provisions of this
Note referring to the “Company,” or to a “Subsidiary” shall refer instead to the
successor corporation and not to the Company or such Subsidiary, as the case may
be), may exercise every right and power of the Company or such Subsidiary under
this Note with the same effect as if such successor Person had been named as the
Company or a Subsidiary herein and shall be bound by every obligation and
liability of the Company or such Subsidiary under this Note and the other
Transaction Documents, however, that the predecessor Person shall not be
relieved from the obligation to pay the principal of and interest on the Notes.

(k)

Transactions with Affiliates.  Except for transactions contemplated by the
Transaction Documents or as otherwise approved by the Board (including a
majority of the independent directors then on the Board) or as disclosed in the
SEC Reports or the Memorandum, the Company shall not, and shall cause its
Subsidiaries not to enter into any transaction with any director, officer,
employee or holder of more than five percent of the outstanding capital stock of
any class or series of capital stock of the Company or any Subsidiary, member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or member of the family of any such person, is
a director, officer, trustee, partner or holder of more than five percent of the
outstanding capital stock thereof.

(l)

Amendment of Organization Documents.  The Company shall not and shall not permit
any Subsidiary to amend, restate, supplement or otherwise modify its or any
Subsidiary's governing organizational documents if the effect of such amendment,
restatement, supplement, modification or waiver would be adverse to any Holder.

10

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10.

Holder Not Deemed a Stockholder.  The Holder, as a holder of this Note, shall
not be entitled to vote or receive dividends or be deemed the holder of shares
of the Company for any purpose, nor shall anything contained in this Note be
construed to confer upon the Holder hereof, as such, any of the rights at law of
a stockholder of the Company prior to the issuance to the Holder of the shares
of Common Stock or Series C Preferred Stock which the Holder is then entitled to
receive upon the due conversion of this Note.

11.

Mutilated, Destroyed, Lost or Stolen Notes.  If this Note or any certificate for
Common Shares or Preferred Securities issued on conversion of this Note shall
become mutilated or defaced, or be destroyed, lost or stolen, the Company shall
execute and deliver a new note of like principal amount in exchange and
substitution for the mutilated or defaced Note or Share certificate, or in lieu
of and in substitution for the destroyed, lost or stolen Note or Share
certificate.  In the case of a mutilated or defaced Note or Share certificate,
the Holder shall surrender such Note or Share certificate to the Company.  In
the case of any destroyed, lost or stolen Note or Share certificate, the Holder
shall furnish to the Company: (i) evidence to its satisfaction of the
destruction, loss or theft of such Note or Share certificate and (ii) such
security or indemnity (which shall not include the posting of any bond) as may
be reasonably required by the Company to hold the Company harmless.

12.

Waiver of Demand, Presentment, etc.  The Company hereby expressly waives demand
and presentment for payment, notice of nonpayment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to accelerate, bringing of
suit and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and
to be owing hereunder, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder.  The Company agrees that, in the event of an Event of Default, to
reimburse the Holder for all reasonable costs and expenses (including reasonable
legal fees of one counsel) incurred in connection with the enforcement and
collection of this Note.

13.

Payment.  All payments with respect to this Note shall be made in lawful money
of the United States of America, at the address of the Holder as of the date
hereof or as designated in writing by the Holder from time to time.  The receipt
by the Holder of immediately available funds shall constitute a payment of
principal and interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Note to the extent of the sum represented by
such payment.  Payment shall be credited first to the accrued interest then due
and payable and the remainder applied to principal.

14.

Assignment.  This Note has been issued subject to certain investment
representations of the original Holder set forth in the SPA and may be
transferred or exchanged only in compliance with the SPA and applicable federal
and state securities laws and regulations.  The rights and obligations of the
Company and the Holder of this Note shall be binding upon, and inure to the
benefit of, the successors and permitted assigns of the parties hereto.  To
complete an assignment or transfer this Note, the Holder shall deliver a
completed and executed Form of Assignment attached hereto as Exhibit C and
surrender and deliver this Note, duly endorsed, to the Company’s office or such
other address which the Company shall designate, upon receipt of which a new
Note, in substantially the form of this Note (any such new Note, a “New Note”),
evidencing the portion of this Note so transferred shall be issued to the
transferee and a New Note evidencing the remaining portion of this Note not so
transferred, if any, shall be issued to the transferring Holder.  The acceptance
of the New Note by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations in respect of the New Note that
the Holder has in respect of this Note.  Interest and principal are payable only
to the registered Holder of this Note set forth on the books and records of the
Company.

15.

Waiver and Amendment.  Any provision of this Note, including, without
limitation, the due date hereof, and the observance of any term hereof, may be
amended, waived or modified (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and the Investor Representative.

16.

Notices.  Whenever the Conversion Price is adjusted pursuant to any provision of
Section 4, the Company shall promptly mail to the Holder a notice setting forth
the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. If (i) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (ii)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (iii) the Company shall authorize the granting

11

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to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (iv) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (v) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the records of
the Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice.  The Holder shall
remain entitled to convert this Note during the period commencing on the date of
such notice to the effective date of the event triggering such notice except as
may otherwise be expressly set forth herein.  Any notice, request or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if given in accordance with the provisions of
Section 9.2 of the SPA.

17.

Governing Law.  This Note shall be governed by and construed in accordance with
the laws of the State of New York, USA, without regard to the principles of
conflicts of law thereof (other than Section 5-1401 of the General Obligations
Law of the State of New York).

18.

Consent to Jurisdiction.  Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Note (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York.  Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
New York for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of this Note, 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 improper.  Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Note and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE
HOLDER (INCLUDING THEIR RESPECTIVE AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND
EMPLOYEES) HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

19.

Severability.  If one or more provisions of this Note are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Note, and the balance of this Note shall be interpreted as if such provisions
were so excluded and shall be enforceable in accordance with its terms.

20.

Headings.  Section headings in this Note are for convenience only, and shall not
be used in the construction of this Note.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date
first above written.

INTERNATIONAL ISOTOPES INC.

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

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EXHIBIT A

INTERNATIONAL ISOTOPES INC.

NOTE NOTICE OF CONVERSION

Reference is made to the 8% Convertible Note in the original principal amount of
$___________ of International Isotopes Inc., a Texas corporation (the
“Company”), issued to the undersigned (the “Note”).  

In accordance with and pursuant to the terms of the Note, the undersigned
hereby:

¨ elects to convert the entire outstanding principal amount due and owing under
the Note, together with all accrued but unpaid interest thereon, into shares of
Common Stock, $0.01 par value per share, of the Company (the “Common Stock”), by
tendering the original of the Note for cancellation;

¨ elects to convert $________ of the outstanding principal amount due and owing
under the Note, together with all accrued but unpaid interest on the Note into
shares of Common Stock;

¨ elects to convert the entire outstanding principal amount due and owing under
the Note, together with all accrued but unpaid interest thereon, into shares of
Series C Convertible Redeemable Preferred Stock, $0.01 par value per share, of
the Company (the “Series C Preferred Stock”), by tendering the original of the
Note for cancellation; or

¨ elects to convert $________ of the outstanding principal amount due and owing
under the Note, together with all accrued but unpaid interest on the Note into
shares of Series C Preferred Stock.

The undersigned is an “accredited investor” as defined in Regulation D, as
promulgated under the Securities Act of 1933, as amended.

Please confirm the following information:

Principal Amount Outstanding

under the Note____________________________

Accrued but unpaid interest

under the Note:________________________

Conversion Amount (if a partial conversion):_______________________

Conversion Price:_________________________

Number of shares of Common Stock to be issued:_________________________

Number of shares of Series C Preferred Stock to be
issued:_________________________

Number of shares of Common Stock underlying Class M Warrants to be
issued:_________________________

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

Please issue the Common Stock or Series C Preferred Stock, as applicable, into
which the Note is being converted in the following name and to the following
address:

Issue to:

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facsimile Number:

 

 

 

 

 

 

 

 

 

Authorization:

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

 

 

Dated:

 

 

 

 

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EXHIBIT B

INTERNATIONAL ISOTOPES INC.

NOTICE OF REDEMPTION

Reference is made to the 8% Convertible Note in the original principal amount of
$___________ of International Isotopes Inc., a Texas corporation (the
“Company”), issued to the undersigned (the “Note”).  

In accordance with and pursuant to the terms of the Note, the undersigned
hereby:

¨ elects to have the Company redeem the entire outstanding principal amount due
and owing under the Note, together with all accrued but unpaid interest thereon,
for cash; or

¨ elects to have the Company redeem $________ of the outstanding principal
amount due and owing under the Note, together with all accrued but unpaid
interest thereon, for cash.

Please confirm the following information:

Principal Amount Outstanding

under the Note______________________________

Accrued but unpaid interest

under the Note:________________________

Redemption Amount (if a partial redemption):_______________________

Please wire the funds for which the Note is being redeemed to the following:

Name:

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wire Instructions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Authorization:

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

 

 

Dated:

 

 

 

 

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EXHIBIT C

FORM OF ASSIGNMENT

TO:

INTERNATIONAL ISOTOPES INC.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
___________________ (name), __________________________________________
(address), US$____________ of 8% Convertible Notes (“Notes”) of International
Isotopes Inc. (the “Company”), including any and all accrued and unpaid interest
owing thereon, registered in the name of the undersigned on the records of the
Company represented by the within certificate, and irrevocably appoints
___________________ the attorney of the undersigned to transfer the said
securities on the books or register with full power of substitution.

DATED this ________ day of, __________________, 20 ____.

 

(Signature of Registered Note Holder)

 

 

 

(Print name of Registered Note Holder)

Instructions:

1.

Signature of Holder must be the signature of the person appearing on the face of
the Note.

2.

If the transfer of Note is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person acting in a
fiduciary or representative capacity, the certificate must be accompanied by
evidence of authority to sign satisfactory to the Company.