ex10_2.htm


    
      

    

    Revised
      Execution Copy

    


    


    AMENDED
      AND RESTATED SENIOR SECURED CONVERTIBLE NOTE

    


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

    


    


    CHARYS
      HOLDING COMPANY, INC.

     

    AMENDED
      AND RESTATED SENIOR SECURED CONVERTIBLE NOTE

     

    


    Amendment
      Date:  April 5, 2007

    


    Principal
      Amount:  U.S. $3,666,568.35

    


    FOR
      VALUE
      RECEIVED, Charys Holding Company, Inc., a Delaware corporation (the
“Company”), hereby promises to pay to IMPERIUM MASTER FUND,
      LTD. or its registered assigns (“Holder”) the amount set out
      above as the Principal Amount (as may be reduced pursuant to the terms hereof
      pursuant to redemption, conversion or otherwise, the
“Principal”) when due, whether upon the Maturity Date (as
      defined below), acceleration, redemption or otherwise (in each case in
      accordance with the terms hereof) and to pay interest
      (“Interest”) on any outstanding Principal at a rate per annum
      equal to the Interest Rate (as defined below), from the date set out above
      as
      the Amendment Date (the “Amendment Date”) until the same
      becomes due and payable, whether upon an Interest Date (as defined below),
      or
      the Maturity Date, acceleration, conversion, redemption or otherwise (in each
      case in accordance with the terms hereof).  This Amended and Restated
      Senior Secured Convertible Note (including all Senior Secured Convertible Notes
      issued in exchange, transfer or replacement hereof, this
“Note”) is one of an issue of unpaid Senior Secured Convertible
      Notes (the “Existing Notes”) issued
      pursuant to the Securities Purchase Agreement, dated as of August 30, 2006
      (the
“Securities Purchase Agreement”), which Existing Notes are
      being amended and restated pursuant to the Amendment Agreement, dated as of
      the
      date hereof (the “Amendment Agreement”), between the Company
      and the holders named therein (this Note and the other amended and restated
      Existing Notes being collectively referred to herein as the
“Notes”).  This Note may not be redeemed or prepaid
      by the Company except as expressly contemplated by and in accordance with the
      terms and conditions of this Note. Certain capitalized terms used herein are
      defined in Section 28.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    1.           PAYMENTS
      OF PRINCIPAL; MATURITY.    The “Maturity Date”
shall be April 5, 2009, as may be extended at the option
      of the Holder in its
      sole and absolute discretion (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
      or
      any event shall have occurred and be continuing which 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) 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.  All outstanding Principal and accrued and unpaid Interest (at
      the applicable Company Redemption Price (as defined below)) and other unpaid
      amounts, if any, accrued hereon shall be paid to the Holder in full on the
      Maturity Date in cash by wire transfer of immediately available
      funds.

    


    2.           INTEREST;
      INTEREST RATE.

    


    (a)           Interest
      on this Note shall commence accruing on the Amendment Date and shall be computed
      on the basis of a 360-day year and actual days elapsed and shall be payable
      in
      arrears on the first day of each Calendar Month during the period beginning
      on
      the Amendment Date and ending on the Maturity Date (each, a “Scheduled
      Interest Date”) with the first Scheduled Interest Date being May 1,
      2007.  Interest shall be payable on (i) each Scheduled Interest Date, (ii)
      on the Maturity Date and (iii) on any date on which the entire Principal of
      this
      Note is paid in full (whether through conversion or otherwise) (each of (i),
      (ii) and (iii) being referred to herein as an “Interest Date”)
      to the record holder of this Note on the applicable Interest Date, in
      cash.

    


    (b)           From
      and after the occurrence of an Event of Default, the Interest Rate shall be
      increased to fifteen percent (15%) per annum.  In the event that such Event
      of Default is subsequently cured, the adjustment referred to in the preceding
      sentence shall cease to be effective as of the date of such cure; provided
      that
      the Interest as calculated at such increased rate during the continuance of
      such
      Event of Default shall continue to apply to the extent relating to the days
      after the occurrence of such Event of Default through and including the date
      of
      cure of such Event of Default.  

    


    3.           CONVERSION
      OF NOTES.  This Note shall be convertible into shares of common stock
      of the Company, par value $0.001 per share (the “Common
      Stock”), on the terms and conditions set forth in this Section
      3.

     

    
      
        
        

      

      
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    (a)           Conversion
      Right.  Subject to the provisions of Section 3(d), at any time or times
      on or after the Amendment 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 then in effect (the
      “Conversion Rate”).

    


    (i)           “Conversion
      Amount” means the portion of the Note to be converted, redeemed or
      otherwise with respect to which this determination is being made.

    


    (ii)           “Conversion
      Price” means, as of the Amendment Date, $2.25. The Conversion
      Price shall be subject to further adjustment from time to time in accordance
      with the terms set forth herein (including Section 7 hereof). The Conversion
      Price shall also be appropriately adjusted for any stock split, stock dividend,
      stock combination or other similar transaction that proportionately decreases
      or
      increases the Common Stock.

    


    (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)
      hereof, surrender this Note to the Company by sending this Note to the Company
      using a nationally recognized overnight delivery service (or an indemnification
      undertaking with respect to this Note in the case of its loss, theft or
      destruction). On or before the next 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 second (2nd) Business
      Day
      following the date of receipt of a Conversion Notice (the “Share
      Delivery Date”), the Company shall, (X) provided that the Transfer
      Agent is participating in the Fast Automated Securities Transfer Program of
      DTC,
      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 (Y) if the Transfer Agent
      is
      not participating in the DTC Fast Automated Securities Transfer Program, issue
      and deliver to the address as specified in the Conversion Notice, a certificate,
      registered in the name of the Holder or its designee, for the number of shares
      of Common Stock to which the Holder shall be entitled.  If this Note is
      physically surrendered for conversion as required by Section 3(c)(iii) and
      this
      Note is not being converted in full, then the Company shall as soon as
      practicable and in no event later than three 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 18(d)) representing the outstanding amount of this
      Note
      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.


    
      
        
        

      

      
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    (ii)           Company’s
      Failure to Timely Convert.  If within three (3) Business 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 upon such Holder’s conversion of any Conversion Amount (a
“Conversion Failure”), and if on or after such Business 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) Business
      Days after the Holder’s request and in the Holder’s sole discretion, either (i)
      pay cash to the Holder by wire transfer of immediately available funds 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 (ii) promptly honor its obligation to deliver to
      the
      Holder a certificate or certificates representing such Common Stock and pay
      cash
      to the Holder by wire transfer of immediately available funds in an amount
      equal
      to the excess (if any) of the Buy-In Price over the product of (A) such number
      of shares of Common Stock, times (B) 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 the Notes 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 the
      Person whose name is recorded in the Register as the owner of this Note as
      the
      owner of this 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
      17.  Notwithstanding anything to the contrary set forth herein, upon
      conversion of any portion of this Note in accordance with the terms hereof,
      the
      Holder shall not be required to physically surrender this Note to the Company
      unless (A) the full Conversion Amount represented by this Note is being
      converted or (B) the Holder has provided the Company with prior written notice
      (which notice may be included in a Conversion Notice) requesting physical
      surrender and reissue of this Note.  The Holder and the Company shall
      maintain records showing the amount of this Note 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.

     

    
      
        
        

      

      
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    (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 is unable (due to having an insufficient
      number of shares of Common Stock authorized for issuance) to convert all of
      the
      aggregate amount 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 portion of such holder’s Note submitted for
      conversion based on the Conversion Amount of the Notes submitted for conversion
      on such date by such holder relative to the aggregate principal Conversion
      Amount of all Notes submitted for conversion on such date, and shall convert
      the
      balance of such Conversion Amount immediately upon the authorization of a
      sufficient number of shares of Common Stock to do so.  In the event of
      a dispute as to the number of shares of Common Stock issuable to the Holder
      in
      connection with a conversion of this Note, the Company shall issue to the Holder
      the number of shares of Common Stock not in dispute and resolve such dispute
      in
      accordance with Section 23.

    


    (d)           Limitations
      on Conversions.  The Company shall not effect any conversion of
      this Note, and the Holder of this Note (including any successor, transferee
      or
      assignee) 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% (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 convertible 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),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended.  For purposes of this Section
      3(d), 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-KSB, Form 10-K, Form 10-QSB, Form 10-Q
      or Form 8-K, 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, during regular business hours of the Company and upon the written
      request of the Holder, the Company shall within two (2) Business Days confirm
      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, 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 specified in such notice; provided that
      (i)
      any such increase will not be effective until the sixty-first (61st) day after
      such
      notice is delivered to the Company, (ii) any such increase or decrease will
      apply only to the Holder and not to any other holder of Notes and (iii) and
      in
      no case shall the Maximum Percentage exceed 9.999%.

     

    
      
        
        

      

      
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    4.           RIGHTS
      UPON EVENT OF DEFAULT.

    


    (a)           Event
      of Default.  Each of the following events shall constitute an “Event of
      Default”:

    


    (i)           the
      failure to file the applicable Registration Statement required to be filed
      pursuant to the Registration Rights Agreement on or prior to the Filing Deadline
      (as defined in the Registration Rights Agreement) or 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 thirty (30) 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 ten (10) consecutive days or for more than an aggregate of
      thirty (30) 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 the
      Principal Market or on an Eligible Market for a period of five (5) consecutive
      Business Days or for more than an aggregate of ten (10) Business 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 ten (10) Business Days after the
      applicable Conversion Date or (B) written notice to any holder of the Notes,
      including by way of public announcement or through any of its authorized 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;

    


    (iv)           at
      any time following the tenth consecutive Business 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 four hundred
      percent (400%) 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 (including,
      without limitation, on any redemption), Interest, Late Charges or other amounts
      when and as due under this Note or any other Transaction Document (as defined
      in
      the Amendment Agreement), including any Company Redemption Price or Redemption
      Premium in connection with any redemption of this Note, or any other agreement,
      document, certificate or other instrument delivered in connection with the
      transactions contemplated hereby and thereby to which the Company is a party,
      except, in the case of a failure to pay Interest and Late Charges when and
      as
      due, in which case only if such failure continues for a period of at least
      five
      (5) Business Days;

     

    
      
        
        

      

      
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    (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 Amendment Agreement);

    


    (vii)           the
      Company or any of its Subsidiaries, pursuant to or within the meaning of Title
      11, U.S. Code, or any similar Federal, foreign or state law for the relief
      of
      debtors (collectively, “Bankruptcy Law”), (A) commences a
      voluntary case, (B) consents to the entry of an order for relief against it
      in
      an involuntary case, (C) consents to the appointment of a receiver, trustee,
      assignee, liquidator or similar official (a
“Custodian”), (D) makes a general
      assignment for the benefit of
      its creditors or (E) admits in writing that it is generally unable to pay its
      debts as they become due;

    


    (viii)                                           a
      court of competent jurisdiction enters an order or decree under any Bankruptcy
      Law that (A) is for relief against the Company or any of its Subsidiaries in
      an
      involuntary case, (B) appoints a Custodian of the Company or any of its
      Subsidiaries or (C) orders the liquidation of the Company or any of its
      Subsidiaries;

    


    (ix)           a
      final judgment or judgments for the payment of money aggregating in excess
      of
      $250,000 are rendered against the Company or any of its Subsidiaries and which
      judgments are not, within sixty (60) days after the entry thereof, bonded,
      discharged or stayed pending appeal, or are not discharged within sixty (60)
      days after the expiration of such stay; provided, however, that any judgment
      which is covered by insurance or an indemnity from a credit worthy party shall
      not be included in calculating the $250,000 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 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 (x) Section 15 of this Note
      or
      (y) any of the Potential Partner Conditions;

    


    (xii)           any
      Event of Default (as defined in the other Notes) occurs with respect to any
      other Note;

     

    
      
        
        

      

      
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    (xiii)                      to
      the knowledge of the Company, the SEC commencing either a formal or informal
      investigation of the Company and/or its Subsidiaries, which has not been
      concluded in the Company’s favor within 120 days of such
      commencement;

    


    (xiv)                      the
      inability of the Common Stock to be transferred at DTC through the Deposit
      Withdrawal at Custodian system;

    


    (xv)           the
      Security Agreement (as defined in the Amendment Agreement) shall for any reason
      fail or cease to create a valid and perfected and, except to the extent
      permitted by the terms thereof, first priority lien (subject to any applicable
      Permitted Liens) in favor of the Collateral Agent (as defined in the Amendment
      Agreement) for the benefit of the holders of the Notes (including without
      limitation this Note) on any Collateral (as defined in the Security Agreement)
      purported to be covered thereby;

    


    (xvi)                      any
      optional redemption request made by any holder of the Company’s Series D
      Preferred Stock pursuant to the Certificate of Designation thereof, including,
      without limitation, Section 4 of such Certificate of Designation, or any event
      of default by the Company under or any breach of, any of the transaction
      documents with the holders of the Company’s Series D Preferred Stock;
      or

    


    (xvii)                      any
      amendment to the letter agreement with the holders of the Company’s Series D
      Preferred Stock dated as of November 8, 2006, an executed copy of which has
      been
      delivered to the Holder.

    


    (b)           Redemption
      Right.  Upon the occurrence of an Event of Default with respect to this
      Note, the Company shall within two (2) Business Days after the day on which
      the
      Company is aware of the Event of Default 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 portion of this Note the Holder is electing to have redeemed.
       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 (x) the Conversion Amount to be redeemed and
      (y)
      the Redemption Premium and (ii) 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 Closing Sale Price of the
      Common Stock on the date immediately preceding such Event of Default (the
“Event of Default Redemption Price”).  Redemptions
      required by this Section 4(b) shall be made in accordance with the provisions
      of Section 12.  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.  The parties hereto agree that in the event of
      the Company’s redemption of any portion of this 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.
 

     

    
      
        
        

      

      
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    5.           RIGHTS
      UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

    


    (a)           Assumption.
       The Company shall not enter into or be party to a Fundamental Transaction
      unless (i)  the Successor Entity assumes in writing all of the obligations
      of the Company under this Note and the other Transaction Documents in accordance
      with the provisions of this Section 5(a) pursuant to written agreements in
      form
      and substance satisfactory to the Required Holders and approved by the Required
      Holders prior to such Fundamental Transaction, including agreements 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 held by such holder, having similar conversion rights as the Notes and
      having similar ranking to the Notes, and satisfactory to the Required Holders
      and (ii) the Successor Entity (including its Parent Entity) is a publicly
      traded corporation whose common stock is quoted on or listed for trading on
      an
      Eligible Market. 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 Common Stock (or other securities, cash, assets or other
      property) issuable upon the conversion of the Notes prior to such Fundamental
      Transaction, such shares of publicly traded common stock (or their equivalent)
      of the Successor Entity, 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 of this Note.

    


    (b)           Change
      of Control 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 during
      the period beginning after the Holder’s receipt of a Change of Control Notice
      and ending ten (10) Trading Days after the consummation of such Change of
      Control, the Holder may require the Company 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
      be redeemed. 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) the product of the Change of Control Premium and the product
      of
      (x) the sum of the Conversion Amount being redeemed and any accrued and unpaid
      Interest with respect to such Conversion Amount and accrued and unpaid Late
      Charges with respect to such Conversion Amount and Interest and (y) the quotient
      determined by dividing (A) the Closing Sale Price of the Common Stock
      immediately following the public announcement of such proposed Change of Control
      by (B) the Conversion Price and (ii) 150% of the sum of the Conversion Amount
      being redeemed and any accrued and unpaid Interest with respect to such
      Conversion Amount subject to such Change of Control Redemption and accrued
      and
      unpaid Late Charges with respect to such Conversion Amount and Interest (the
      “Change of Control Redemption Price”).  Redemptions
      required by this Section 5 shall be made in accordance with the provisions
      of
      Section 15 and shall have priority over payments to shareholders 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 this Note by the Company, such redemptions shall be deemed to
      be
      voluntary prepayments. Notwithstanding anything to the contrary in this Section
      5, until the Change of Control Redemption Price (together with any Interest
      thereon) is paid in full, the Conversion Amount submitted for redemption under
      this Section 5(b) may be converted, in whole or in part, by the Holder into
      shares of Common Stock, or in the event the Conversion Date is after the
      consummation of the Change of Control, shares of publicly traded common stock
      (or their equivalent) of the Successor Entity pursuant to Section 3.  The
      parties hereto agree that in the event of the Company’s redemption of any
      portion of this 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
      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.

     

    
      
        
        

      

      
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    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, 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 ensure that the Holder will thereafter
      have
      the right to receive upon 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.

     

    
      
        
        

      

      
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    7.           RIGHTS
      UPON ISSUANCE OF OTHER SECURITIES.

    


    (a)           Adjustment
      of Conversion Price upon Issuance of Common Stock.  If at any time
      after the Closing 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 issued
      or
      sold or deemed to have been issued or sold by the Company in connection with
      any
      Excluded Security) for a consideration per share (the “New Issuance
      Price”) 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
      the New Issuance Price.  For purposes of determining the adjusted
      Conversion Price under this Section 7(a), the following shall be
      applicable:

    


    (i)           Issuance
      of Options.  If the Company in any manner grants or sells any Options
      and the lowest price per share for which one share of Common Stock is issuable
      upon the exercise of any such Option or upon conversion or exchange or exercise
      of any Convertible Securities issuable upon exercise of such Option is less
      than
      the Applicable Price, then all of such shares of Common Stock underlying such
      Option 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.

     

    
      
        
        

      

      
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    (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 all share of Common Stock
      issuable upon conversion of such Convertible Securities 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 Closing 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 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 in which no specific consideration is allocated
      to
      such Options by the parties thereto, the Options will be deemed to have been
      issued for such consideration as determined in good faith by the Board of
      Directors of 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 as determined
      in good faith by the
      Board of Directors of the Company, except where such consideration consists
      of
      publicly traded securities, in which case the amount of consideration received
      by the Company will be the Closing Sale Price of such publicly traded 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 publicly traded
      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 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.

     

    
      
        
        

      

      
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    (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 Closing 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
      Closing Date combines (by combination, reverse stock split or otherwise) one
      or
      more classes of its outstanding shares of Common Stock into a smaller number
      of
      shares, the Conversion Price in effect immediately prior to such combination
      will be proportionately increased.

    


    (c)           Other
      Events.  If any event occurs of the type contemplated by the provisions
      of this Section 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
      RIGHT OF REDEMPTION.  

    


    (a)           General.
      From and after the Amendment Date, for as long as no Event of Default has
      occurred and is continuing, the Company at its option shall have the right
      to
      redeem, with three (3) Business Days advance written notice (the
“Company Redemption Notice”), a portion or all of the
      outstanding Principal of this Note.  The Holder may convert this Note
      after the Company Redemption Notice is received up until such time as the
      Company Redemption Price is received by the Holder.  The redemption
      price shall be one hundred twenty percent (120%) of the sum of (x) the face
      amount redeemed plus (y) accrued Interest until the expiration of nine (9)
      months following the Amendment Date and one hundred forty percent (140%) of
      the
      sum of (i) the face amount redeemed thereafter plus (ii) accrued Interest (the
      “CompanyRedemption Price”).  The
      Company shall pay the Company Redemption Price on all payments made pursuant
      to
      this Note (except to the extent a higher redemption price is due in connection
      with an Event of Default or Change of Control, in which case such higher
      redemption price shall be paid by the Company), including payments made before,
      on, or after the Maturity Date.  It shall be an Event of Default if
      the Company does not timely redeem the portion of this Note elected to be
      redeemed pursuant to a Company Redemption Notice and, thereafter, the Holder
      shall be able to exercise all of its rights and remedies hereunder upon an
      Event
      of Default, including the right to accelerate this Note and cause this Note
      to
      be redeemed in full pursuant to Section 4(b) hereof.  For all payments
      under this Note, the payment of the Company Redemption Price by the Company
      shall be in addition to any accrued Interest due.

     

    
      
        
        

      

      
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    (b)           Mechanics
      of Company Redemption.  If the Company elects to redeem the Note in
      accordance with Section 8(a), then the Company Redemption Price, if any, which
      is to be paid to the Holder, shall be paid, by wire transfer of immediately
      available funds, an amount in cash equal to 100% of the Company Redemption
      Price.  If the Company fails to redeem the Company Redemption Price on or
      before the applicable date specified in Section 12 below, then at the option
      of
      the Holder designated in writing to the Company (any such designation,
“Conversion Notice” for purposes of this Note), the Holder may
      require the Company to convert all or any part of the Company Redemption Price
      at the Conversion Price.  Conversions required by this Section 8(b) shall
      be made in accordance with the provisions of Section 3(c).  Notwithstanding
      anything to the contrary in this Section 8(b), but subject to Section 3(d),
      until the Company Redemption Price (together with any Interest thereon) is
      paid
      in full, the Company Redemption Price (together with any Interest thereon)
      may
      be converted, in whole or in part, by the Holder into Common Stock pursuant
      to
      Section 3.

    


    (c)           Pro
      Rata Redemption Requirement.  If the Company elects to redeem any
      Conversion Amount of this Note pursuant to Section 8(a), then it must
      simultaneously take the same action in the same proportion with respect to
      the
      other Notes.

    


    (d)           Upon
      the occurrence of a Financing Transaction, the Holder may require the Company
      to
      redeem all or any portion of this Note by delivering written notice thereof
      (the
“Financing Transaction Redemption Notice”) to the Company,
      which Financing Transaction Redemption Notice shall indicate the portion of
      this
      Note the Holder is electing to redeem.  Each portion of this Note subject
      to redemption by the Company pursuant to this Section 8(d) shall be redeemed
      by
      the Company at a price equal to the then-applicable Company Redemption Price.
      Redemptions required by this Section 8(d) shall be made in accordance with
      the
      provisions of Section 12.

     

    
      
        
        

      

      
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    (e)           Upon
      the expiration of nine (9) months following the Amendment Date, the Holder
      may
      require the Company to redeem all or, from time to time, any portion of this
      Note by delivering written notice thereof (the “Nine Month Redemption
      Notice”) to the Company, which Nine Month Redemption Notice shall
      indicate the portion of this Note the Holder is electing to be redeemed. Each
      portion of this Note subject to redemption by the Company pursuant to this
      Section 8(e) shall be redeemed by the Company at a price equal to the Company
      Redemption Price.  Redemptions required by this Section 8(e) shall be
      made in accordance with the provisions of Section 12.

    


    9.           SECURITY.
       This Note and the other Notes are secured to the extent and in the manner
      set forth in the Security Documents (as defined in the Amendment
      Agreement).

    


    10.           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, 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 reasonable action as may be required to protect the rights of
      the
      Holder of this Note.

    


    11.           RESERVATION
      OF AUTHORIZED SHARES.

    


    (a)           Reservation.
       The Company initially shall reserve out of its authorized and unissued
      Common Stock a number of shares of Common Stock for this Note equal to 175%
      of
      the number of shares of Common Stock issuable upon conversion of this Note
      as of
      the Amendment Date (without regard to any limitations on conversions).  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,
      175% 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 pursuant to 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 (including without limitation this Note) based on the
      principal amount of the Notes held by each holder at the Closing (as defined
      in
      the Amendment 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 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 forty-five (45) days after
      the occurrence of such Authorized Share Failure, the Company shall hold a
      meeting of its shareholders for the approval of an increase in the number of
      authorized shares of Common Stock.  In connection with such meeting, the
      Company shall provide each shareholder with a proxy or information statement
      and
      shall use its best efforts to solicit its shareholders’ approval of such
      increase in authorized shares of Common Stock and to cause its board of
      directors to recommend to the shareholders that they approve such
      proposal.

     

    
      
        
        

      

      
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    12.           HOLDER’S
      REDEMPTIONS.  (a) 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 concurrently with the consummation of such Change
      of Control if such notice is received prior to the consummation of such Change
      of Control and within five (5) Business Days after the Company’s receipt of such
      notice otherwise. If the Holder has submitted a Financing Transaction Redemption
      Notice or a Nine Month Redemption Notice, the Company shall deliver the
      applicable Company Redemption Price within five (5) Business Days after the
      Company’s receipt of such notice.  In the event of a redemption of less
      than all of this Note, the Company shall promptly cause to be issued and
      delivered to the Holder a new Note (in accordance with Section 18(d))
      representing the portion of this Note 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, (y) the Company shall
      immediately return this Note, or issue a new Note (in accordance with Section
      18(d)) to the Holder representing the sum of such Conversion Amount to be
      redeemed together with accrued and unpaid Interest with respect to such
      Conversion Amount and accrued and unpaid Late Charges with respect to such
      Conversion Amount and Interest and (z) the Conversion Price of this Note or
      such
      new Notes shall be adjusted to the lesser of (A) the Conversion Price as in
      effect on the date on which the applicable Redemption Notice is voided and
      (B)
      the lowest Closing Bid Price during the period beginning on and including the
      date on which the applicable Redemption Notice is delivered to the Company
      and
      ending on and including the date on which the applicable Redemption Notice
      is
      voided.  The Holder’s delivery of a notice voiding a Redemption Notice and
      exercise of its rights following such notice shall not affect the Company’s
      obligations to make payments of Interest or Late Charges which have accrued
      prior to the date of such notice with respect to the Conversion Amount subject
      to such notice. All amounts required to be paid pursuant to this Section 12
      shall be paid in cash by wire transfer of immediately available
      funds.

     

    
      
        
        

      

      
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    (b)           Redemption
      by Other Holders.  Upon the Company’s receipt of notice from any
      of the holders of the other Notes for redemption or repayment as a result of
      an
      event or occurrence substantially similar to the events or occurrences described
      in Section 4(b) or Section 5(b) (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, as a result of
      having insufficient funds, 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 (7) Business Day period, and shall redeem the balance of
      such
      principal amount immediately upon its receipt of sufficient funds to do
      so.

    


    13.           RESTRICTION
      ON REDEMPTION AND CASH DIVIDENDS.  Until all of the Notes have been
      converted, redeemed or otherwise satisfied in accordance with their terms,
      the
      Company shall not, except as otherwise permitted under the Amendment Agreement,
      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.

    


    14.           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 Section 212 of
      the
      Delaware General Corporation Law, and as expressly provided in this
      Note.

    


    15.           COVENANTS.
       

    


    (a)           Rank.  All
      payments due under this Note shall rank pari passu with all other Notes
      and no other Indebtedness of the Company and its Subsidiaries (other than
      Indebtedness of the Company’s Subsidiaries set forth on Schedule 3(o) of the
      Amendment Agreement) shall be senior to the Indebtedness of the Company
      evidenced by this Note and the other Notes.  Without limiting the
      foregoing, the Company shall ensure that its 8.75% Senior Convertible Notes
      Due
      2012 issued under and pursuant to that certain Indenture, dated as of February
      16, 2007, between the Company, the Guarantors named therein, and The Bank of
      New
      York, N.A., are subordinate in right of payment to the prior payment in full
      of
      this Note and the other Notes.

    


    (b)           Incurrence
      of Indebtedness.  So long as this Note is outstanding, the Company
      shall not, and the Company shall not permit any of its Subsidiaries to, directly
      or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness,
      other than (i) the Indebtedness evidenced by this Note and the other Notes
      and
      (ii) Permitted Indebtedness.

     

    
      
        
        

      

      
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    (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.  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, 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, whether by way of payment
      in
      respect of Principal of (or premium, if any) or Interest on, such Indebtedness
      if at the time such payment is due or is otherwise made or, after giving effect
      to such payment, an event constituting, or that with the passage of time and
      without being cured would constitute, an Event of Default has occurred and
      is
      continuing.

    


    (e)           Sales
      of Equity Securities.  So long as this Note is outstanding, except
      for any issuance of Securities in accordance with the Transaction Documents
      or
      as otherwise permitted under the Amendment Agreement, the Company will not,
      directly or indirectly, offer, sell, grant any option to purchase, or otherwise
      dispose of (or announce any offer, sale, grant or any option to purchase or
      other disposition of) any of its equity or Common Stock Equivalents (as defined
      in the Amendment Agreement), including without limitation any debt, preferred
      stock or other instrument or security that is, at any time during its life
      and
      under any circumstances, convertible into or exchangeable or exercisable for
      shares of common equity of the Company, without the prior written consent of
      the
      Required Holders.

    


    (f)           Subsidiary
      Internal Accounting Controls.  So long as this Note is outstanding, the
      Company and each of its Subsidiaries shall maintain, in all material respects,
      a
system of internal accounting controls
      consistent with
      applicable law.

    


    (g)           Dispositions.
      So long as any Obligations are outstanding, the Company shall not, and the
      Company shall not permit any of its Subsidiaries to, convey, sell, lease or
      sublease, transfer or otherwise dispose of, whether in one transaction or a
      series of related transactions, all or any part of its business, property or
      assets, whether now owned or hereafter acquired (or agree to do any of the
      foregoing); provided, however, that the Company and its Subsidiaries may (i)
      sell inventory in the ordinary course of business, (ii) dispose of obsolete
      or
      worn-out equipment in the ordinary course of business and (iii) dispose of
      non-core assets to the extent permitted under the other Transaction
      Documents.

    


    (h)           Additional
      Collateral Security. Except as otherwise set forth in the Amendment
      Agreement, the Company shall cause each Subsidiary of the Company or any such
      Subsidiary not in existence on the Amendment Date, to execute and deliver to
      the
      Collateral Agent promptly and in any event within five (5) Business Days after
      the formation, acquisition or change in status thereof (i) a Security Agreement
      and (ii) such other agreements, instruments, approvals, legal opinions or other
      documents reasonably requested by the Collateral Agent in order to create,
      perfect, establish the first priority of (subject to Permitted Liens) or
      otherwise protect any Lien purported to be covered by any such Security
      Agreement or otherwise to effect the intent that such Subsidiary shall become
      bound by all of the terms, covenants and agreements contained in the this Note
      and that all property and assets of such Subsidiary shall become Collateral
      for
      the Obligations.

     

    
      
        
        

      

      
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    16.           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 any other Note.  In no event shall any amendment, modification or
      waiver be made to this Note which would adversely affect the Holder without
      the
      written consent of the Holder.

    


    17.           TRANSFER.
       The Holder and the Company acknowledge and agree that this Note may be
      offered, sold, assigned or transferred by the Holder without the consent of
      the
      Company, provided that the provisions of Section 2(f) of the Amendment Agreement
      are complied with in all respects.

    


    18.           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 issue, promptly following the
      satisfaction of the provisions of Section 2(f) of the Amendment Agreement,
      and
      deliver upon the order of the Holder a new Note (in accordance with Section
      18(d)), in the name of the validly registered assigns or transferee,
      representing the outstanding Principal being transferred by the Holder and,
      if
      less then the entire outstanding amount of this Note is being transferred,
      a new
      Note (in accordance with Section 18(d)) to the Holder representing the
      outstanding amount of this Note 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) and this Section 18(a), 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 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 18(d)) representing the outstanding amount of this Note.

    


    (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 18(d) and in principal
      amounts of at least $100,000) representing in the aggregate the outstanding
      amount of this Note, and each such new Note will represent such portion of
      such
      outstanding amount 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 18(a) or Section 18(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 that is the same as the Amendment Date of
      this
      Note, (iv) shall have the same rights and conditions as this Note, and (v)
      shall
      represent accrued Interest and Late Charges on the Principal and Interest of
      this Note, from the Amendment Date.

     

    
      
        
        

      

      
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    19.           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.

    


    20.           PAYMENT
      OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed
      in the hands of an attorney for collection or enforcement or is collected or
      enforced through any legal proceeding or the Holder otherwise takes action
      to
      collect amounts due under this Note or to enforce the provisions of this Note
      or
      (b) there occurs any bankruptcy, reorganization, receivership of the Company
      or
      other proceedings affecting Company creditors’ rights and involving a claim
      under this Note, then the Company shall pay the costs incurred by the Holder
      for
      such collection, enforcement or action or in connection with such bankruptcy,
      reorganization, receivership or other proceeding, including, but not limited
      to,
      attorneys’ fees and disbursements.

    


    21.           CONSTRUCTION;
      HEADINGS.  This Note shall be deemed to be jointly drafted by the
      Company and the Holder (as defined in the Amendment Agreement) 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.

    


    22.           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.

    


    23.           DISPUTE
      RESOLUTION.  In the case of a dispute as to the determination of the
      Closing Bid Price, the Closing Sale Price, the Average Market Price or the
      Weighted Average Price or the arithmetic calculation of the Conversion Rate
      or
      any Redemption Price, the Company shall submit the disputed determinations
      or
      arithmetic calculations via facsimile within one (1) Business Day of 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 (1) Business Day
      submit via facsimile (a) the disputed determination of the Closing Bid Price,
      the Closing Sale Price, the Average Market Price or the Weighted Average Price
      to an independent, reputable investment bank selected by the Company and
      approved by the Holder (such approval not to be unreasonably withheld or
      delayed) or (b) the disputed arithmetic calculation of the Conversion Rate
      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.

     

    
      
        
        

      

      
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    24.           NOTICES;
      PAYMENTS.

    


    (a)           Notices.
       Whenever notice is required to be given under this Note, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Amendment 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.

    


    (b)           Payments.
       Whenever any payment of cash is to be made by the Company to any Person
      pursuant to this Note, and except where such payment is explicitly required
      by
      this Agreement to be made by wire transfer, 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
      the
      Holder (as defined in the Amendment Agreement), shall initially be as set forth
      on the Schedule of Holders attached to the Amendment 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, other
      than Interest, 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”).

     

    
      
        
        

      

      
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    25.           CANCELLATION.
       After all Principal, accrued Interest and other amounts at any time owed
      on this Note has been paid in full, this Note shall automatically be deemed
      canceled, shall be surrendered to the Company for cancellation and shall not
      be
      reissued.

    


    26           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, the
      Amendment Agreement and the other Transaction Documents.

    


    27.           GOVERNING
      LAW; JURISDICTION; JURY TRIAL.  This Note shall be construed and
      enforced in accordance with, and all questions concerning the construction,
      validity, interpretation and performance of this Note shall be governed by,
      the
      internal laws of the State of New York, without giving effect to any choice
      of
      law or conflict of law provision or rule (whether of the State of New York
      or
      any other jurisdictions) that would cause the application of the laws of any
      jurisdictions other than the State of New York.  The Company hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in The City of New York, Borough of Manhattan, for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper.  The Company hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof to
      such
      party at the address it set forth on the signature page hereto and agrees that
      such service shall constitute good and sufficient service of process and notice
      thereof.  Nothing contained herein shall be deemed to limit in any way
      any right to serve process in any manner permitted by law.  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 realize on any collateral
      or any other security for such obligations, or to enforce a judgment or other
      court ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES
      ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
      ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
      OF
      THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

    
      
        
        

      

      
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    28.           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 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)           “Average
      Market Price” means, for any given date, the lesser of (i) the
      arithmetic average of the Weighted Average Price of the Common Stock during
      the
      twenty (20) consecutive Trading Day period ending on the third (3rd) Trading
      Day
      immediately prior to such given date and (ii) the arithmetic average of the
      Weighted Average Price of the Common Stock during the five (5) consecutive
      Trading Day period commencing during the 20 consecutive Trading Day period
      ending on the third (3rd) Trading
      Day
      immediately prior to such given date provided, that all such determinations
      shall 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 periods.

    


    (c)           “Bloomberg”
      means Bloomberg Financial Markets.

    


    (d)           “Business
      Day” means any day other than Saturday, Sunday or other day on which
      commercial banks in The City of New York are authorized or required by law
      to
      remain closed.

    


    (e)           “Calendar
      Month” means the period beginning on and including the first of each
      calendar month and ending on and including the last day of such calendar
      month.

    


    (f)           “Change
      of Control” means any Fundamental Transaction other than (i) any
      reorganization, recapitalization or reclassification of the Common Stock in
      which holders of a majority 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.

    


    (g)           “Change
      of Control Premium” means (i) 125% or (ii) 120% in the event of a
      Change of Control involving consideration paid to holders of the Company’s
      Common Stock where the consideration per share of the Company’s Common Stock to
      be received by the holders thereof is greater (as to amounts other than cash,
      as
      determined reasonably and in good faith by the Board of Directors of the
      Company) than 200% of the Conversion Price as of the
      Amendment Date (as adjusted for stock splits, stock dividends, reverse stock
      splits, recapitalizations, reclassifications and similar
      events).

     

    
      
        
        

      

      
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    (h)           “Closing
      Bid Price” and “Closing Sale Price” means, for any
      security as of any date, the last closing bid price and last closing trade
      price, respectively, for such security on the Principal Market, as reported
      by
      Bloomberg, or, if the Principal Market begins to operate on an extended hours
      basis and does not designate the closing bid price or the closing trade price,
      as the case may be, then the last bid price or last trade price, respectively,
      of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg,
      or, if the Principal Market is not the principal securities exchange or trading
      market for such security, the last closing bid price or last trade price,
      respectively, of such security on the principal securities exchange or trading
      market where such security is listed or traded as reported by Bloomberg, or
      if
      the foregoing do not apply, the last closing bid price or last trade price,
      respectively, of such security in the over-the-counter market on the electronic
      bulletin board for such security as reported by Bloomberg, or, if no closing
      bid
      price or last trade price, respectively, is reported for such security by
      Bloomberg, the average of the bid prices, or the ask prices, respectively,
      of
      any market makers for such security as reported in the “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 23.  All such determinations to be appropriately adjusted for
      any stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

    


    (i)           “Closing
      Date” shall have the meaning set forth in the Amendment Agreement,
      which date is the date the Company has amended and restated the Existing Notes
      pursuant to the terms of the Amendment Agreement.

    


    (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)           “Convertible
      Securities” means any stock or securities (other than Options) directly
      or indirectly convertible into or exercisable or exchangeable for Common
      Stock.

    


    (l)           “Eligible
      Market” means, the Principal Market, The New York Stock Exchange, Inc.,
      the Nasdaq Capital Market, the Nasdaq Global Market or the American Stock
      Exchange.

    


    (m)           “Excluded
      Securities” means any Common Stock issued or issuable: (i) in
      connection with any Approved Stock Plan up to a maximum of five percent (5%)
      of
      the outstanding Common Stock; (ii) upon conversion of, or in exchange for,
      the
      Notes or the exercise of the Warrants; (iii) upon conversion of any Options
      or
      Convertible Securities which are outstanding on the day immediately preceding
      the Closing Date, provided that the terms of such Options or Convertible
      Securities are not amended, modified or changed on or after the Closing Date
      and
      (iv) in connection with Permitted Indebtedness.

     

    
      
        
        

      

      
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    (n)           “Financing
      Transaction” means that the Company or any of its Subsidiaries engages
      in a debt, equity or any other financing or series of financing transactions
      in
      which the Company and/or its Subsidiaries receive a gross dollar amount of
      Fifty
      Million Dollars ($50,000,000) or more.

    


    (o)           “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 (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 or Persons to make a purchase, tender or exchange offer that is accepted
      by the holders of more than the 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 Person or Persons making
      or
      party to, such purchase, tender or exchange offer), (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 either
      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), (v) reorganize, recapitalize or
      reclassify its Common Stock or (vi) any “person” or “group” (as these 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.  Provided, however, notwithstanding
      anything herein contained or in any of the other Transaction Documents, any
      consolidation of a Subsidiary into another Subsidiary or Subsidiaries shall
      not
      be deemed to be a Fundamental Transaction.

    


    (p)           “GAAP”
      means United States generally accepted accounting principles, consistently
      applied.

    


    (q)           “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 generally accepted accounting principles (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 generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (vii) all
      indebtedness referred to in clauses (i) through (vi) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      Interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, (viii) all obligations issued, undertaken or assumed as
      part
      of any financing facility with respect to accounts receivables of the Company
      and its Subsidiaries, including, without limitation, any factoring arrangement
      of such accounts receivables and (ix) all Contingent Obligations in respect
      of
      indebtedness or obligations of others of the kinds referred to in clauses (i)
      through (viii) above.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    (r)           “Interest
      Rate” means ten percent (10%) per annum, subject to periodic adjustment
      pursuant to Section 2.

    


    (s)           “Options”
      means any rights, warrants or options to subscribe for or purchase Common Stock
      or Convertible Securities.

    


    (t)           “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.

    


    (u)           “Permitted
      Indebtedness” means (A) all Indebtedness existing as of the date hereof
      or incurred by the Company after the date hereof and is made expressly
      subordinate in right of payment and priority to the Indebtedness evidenced
      by
      this Note pursuant to any other written agreement acceptable to the Holder
      and
      approved by the Holder in writing (which approval shall not be unreasonably
      delayed), and which Indebtedness does not provide at any time for (1) 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 (2) total Interest and fees at a
      rate
      in excess of the Interest Rate hereunder, (B) Permitted Sureties, (C)
      Indebtedness secured by Permitted Liens, (D) Indebtedness to trade creditors
      incurred in the ordinary course of business, and (E)
      extensions, refinancings and renewals of any items of Permitted Indebtedness,
      provided that the principal amount is not increased or the terms modified to
      impose more burdensome terms upon the Company or its Subsidiary, as the case
      may
      be.

    


    (v)           “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 securing the Company’s obligations under the
      Notes, (v) Liens (A) upon or in any equipment (as defined in the Security
      Agreement) 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, (vi) Liens incurred in connection with the
      extension, renewal or refinancing of the indebtedness secured by Liens of the
      type described in clause (v) 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, (vii) leases or subleases and licenses and
      sublicenses hereafter 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, (viii) 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; (ix) Liens arising from
      judgments, decrees or attachments in circumstances not constituting an Event
      of
      Default under Section 4(a)(ix), (x) Liens with respect to Indebtedness not
      individually in excess of $25,000 or in the aggregate in excess of $100,000,
      which individually and in aggregate are not material to the Company, and (xi)
      all Liens existing on the date hereof.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    (w)           “Permitted
      Sureties” means any General Agreement of Indemnity,
      Indemnity Agreement, or Surety Agreement, whereby the Company or any Subsidiary
      desires to execute bonds, undertakings, and/or obligations of suretyship or
      guarantee, including undertakings and other obligations, including any bond
      or
      bonds (severally, the “Bond”) on its behalf and on behalf of any of its present
      or future, directly or indirectly owned or controlled subsidiaries or
      affiliates, whether alone or in joint venture with others whether or not named
      herein, and any corporation, partnership or person upon the written request
      of
      the issuer of any such Bond.

    


    (x)           “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.

    


    (y)           “Potential
      Partner Conditions” means at any time during the period commencing on
      the date of the consummation of any material transaction between the Company
      and
      a Person and ending on the first anniversary of the Amendment Date, there shall
      be no disclosure that any executive officer of such Person has (i) exhibited
      dishonesty in the performance of his or her duties, which is materially and
      demonstrably injurious to the Company; or (ii) been
      convicted of (x) a felony under the laws of the United States or any state
      thereof or (y) a misdemeanor involving moral turpitude, in each case, which
      is
      materially and demonstrably injurious to the Company.

    


    (z)           “Principal
      Market” means Over-the-Counter Bulletin Board.

    


    (aa)           “Redemption
      Notices” means, collectively, the Event of Default Redemption Notices,
      Change of Control Redemption Notices, the Company Redemption Notice, Financing
      Transaction Redemption Notice, Nine Month Redemption Notice, and, each of the
      foregoing, individually, a Redemption Notice.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    (bb)           “Redemption
      Premium” means 145%.

    


    (cc)           “Redemption
      Prices” means, collectively, the Event of Default Redemption Price,
      Change of Control Redemption Price, and the Company Redemption Price, and,
      each
      of the foregoing, individually, a Redemption Price.

    


    (dd)           “Registration
      Rights Agreement” means that certain registration rights agreement
      between 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.

    


    (ee)           “Required
      Holders” mean the holders of Notes and the other Notes representing at
      least two-thirds (2/3) of the aggregate principal amount of the Notes and the
      other Notes then outstanding.

    


    (ff)           “SEC”
      means the United States Securities and Exchange Commission.

    


    (gg)           “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.

    


    (hh)           “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 p.m.,
      New York Time).

    


    (ii)           “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).

    


    (jj)           “Warrants”
      has the meaning ascribed to such term in the Amendment Agreement, and shall
      include all warrants issued in exchange therefor or replacement
      thereof.

    


    (kk)           “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 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 p.m., New York Time (or such other time as the Principal Market publicly
      announces is the official close of trading) as reported by Bloomberg through
      its
“Volume at Price” functions, or, if the foregoing does not apply, the dollar
      volume-weighted average price of such security in the over-the-counter market
      on
      the electronic bulletin board for such security during the period beginning
      at
      9:30 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 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 23.  All such determinations to be appropriately adjusted for any
      stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    29.           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 shall indicate to the 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.

    


    30.           Controlling
      Agreement.  In the event of any conflict between the provisions of
      this Note, the Amendment Agreement and any of the other Transaction Documents,
      the terms of the Amendment Agreement shall control.

    


    


    [Signature
      Page Follows]


    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly
      executed as of the Amendment Date set out above.

    


    


    
      	 	
              CHARYS
                HOLDING COMPANY, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	
               

            	
            
	 	
              Billy
                V. Ray, Jr.

            
	 	
              Chief
                Executive Officer

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      I

    


    


    NOTICE
      OF CONVERSION

    


    The
      undersigned hereby elects to convert principal of the Amended and Restated
      Senior Secured Convertible Note (the “Note”) issued by CHARYS HOLDING COMPANY,
      INC. (the “Company”) into shares of common stock (“Common Stock”) of the
      Company according to the terms and conditions of the Note. Capitalized terms
      used herein and not otherwise defined shall have the respective meanings set
      forth in the Note.

    


    


    
      	 	
              Date
                of Conversion:

            	
               

            
	 	 	 
	 	
              Principal
                Amount of

            	 
	 	
              Note
                to be Converted:

            	
               

            
	 	 	 
	 	
              Number
                of Shares of

            	 
	 	
              Common
                Stock to be Issued:

            	
               

            
	 	 	 
	 	
              Name
                of Holder:

            	
               

            
	 	 	 
	 	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:

            
	 	 	 
	 	 	 
	 	
              Holder’s
                Address:

            	
               

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 


    

    


    


    Holder
      Requests Delivery to be made: (check one)

    


    
      	
              

            	
              By
                Delivery of Physical Certificates to the Above
                Address

            


    

    


    
      	
              

            	
              Through
                Depository Trust Corporation

            


    

    (Account
                                                           
)