Unassociated Document


    CONVERSION
      SERVICES INTERNATIONAL, INC.

    10%
      CONVERTIBLE UNSECURED NOTE

    DUE
      ON DEMAND

     

    
 

    
      	$400,000	
              June
                27,
                2007

            


    

            

    


    THIS
      NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF
      THE
      SECURITIES ACT OF 1933 (THE "ACT") AND QUALIFICATION PROVISIONS OF APPLICABLE
      STATE SECURITIES LAWS. NEITHER IT NOR THE SHARES OF COMMON STOCK INTO WHICH
      IT
      CAN BE CONVERTED CAN BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
      REGISTERED PURSUANT TO THE ACT AND QUALIFIED UNDER APPLICABLE STATE LAW OR,
      IN
      THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO MAKER, AN EXEMPTION THEREFROM
      IS
      AVAILABLE.

    


    FOR
      VALUE
      RECEIVED, the undersigned, Conversion Services International, Inc., a Delaware
      corporation with an address at 100 Eagle Rock Avenue, East Hanover, New Jersey
      07936, ("Maker"), promises to pay to TAG
      Virgin Islands, Inc.,
      with
      an address at The
      Tunick Building, 1336 Beltjen Road, Suite 202,
      St.
      Thomas, VI 00802, as agent ("Payee"),
      on demand, or sooner as otherwise provided herein (the "Maturity Date"), the
      principal amount of Four
      Hundred Thousand ($400,000)
      Dollars
      in
      lawful money of the United States of America (the "Principal”). This Note bears
      interest (the "Interest"), payable on the earlier of the Maturity Date or the
      date on which this Note is converted into Maker's common stock as provided
      herein, at the annual rate of ten percent (10%), except as otherwise provided
      herein, until the Principal and all accrued Interest thereon (collectively
      the
“Obligations”) shall be paid in full. This Note is convertible into Maker's
      common stock,
      par
      value $0.001 per share (the "Common Stock"), as set forth below. 

    


    1. Interest;
      Repayment of Principal.
      

    


    Interest
      on the Note will accrue from the most recent date to which Interest has been
      paid or, if no Interest has been paid, from the date of delivery of the Note.
      It
      will be computed on the basis of a 360-day year of twelve 30-day months. Maker
      shall repay to Payee the full Principal, Four Hundred Thousand ($400,000)
      Dollars, on the Maturity Date plus accrued but unpaid Interest.

    


    2. Method
      of Payment.
      

    


    Maker
      will pay Principal and Interest in money of the United States that at the time
      of payment is legal tender for the payment of public and private debts. All
      payments shall be sent to Payee at its address first set forth above or such
      other address as Payee shall notify Maker pursuant to the provisions of
Paragraph
      12 (g)
      below.

    


    3. Conversion.
      

    


    (a) Conversion
      of Note. Except as provided in Paragraph
      (c)(iii)
      of this
Section
      3
      below,
      by or on the Maturity Date, the Obligations will either be: (1) repaid in full
      to the Payee, or (2) converted into Common Stock. The price for conversion
      (the
“Conversion Price”), subject to adjustment as provided in Section
      4
      below,
      shall be $0.30 per share. Maker will not issue a fractional share of Common
      Stock upon conversion but will round any fractional share to the nearest share
      so that if the fraction is less than 0.5 no share shall be issued and if the
      fraction is 0.5 or higher Maker shall issue one full share. Maker shall pay
      Payee all accrued but unpaid Interest (the “Outstanding Interest”) as of the
      Conversion Date, as defined in Paragraph
      3 (b)
      below,
      as provided in Paragraph
      3(b)
      below.
      The date on which the Maker shall deliver the Common Stock and outstanding
      Interest is herein referred to as the “Conversion Date.” After the Conversion
      Date, this Note shall be void and Payee shall have the sole right to receive
      the
      Common Stock and outstanding Interest

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      $400,000
        Convertible Unsecured Note 

      of
        Conversion
        Services International, Inc. 

      payable
        to TAG
        Virgin Islands, Inc.

      as
        agent
        dated June
        27,
        2007

    

     

    (b) Taxes
      on
      Shares Issued. The issue of stock certificates on conversion of this Note shall
      be made without charge to Payee for any tax in respect of such issue. Maker
      shall not, however, be required to pay any tax that may be payable in respect
      of
      any transfer involved in the issue and delivery of Common Stock in any name
      other than that of Payee, and Maker shall not be required to issue or deliver
      any certificates representing such Common Stock unless and until the person
      or
      persons requesting the issue thereof shall have paid to Maker the amount of
      such
      tax or shall have established to the satisfaction of Maker that such tax has
      been paid.

    


    (c) Covenants
      of Maker Relating to Conversion. Maker covenants and agrees that, except as
      provided in Subparagraphs (i) and (iv) of this Paragraph
      3(c),
      from
      and after the date hereof and until the date of repayment in full of the
      Obligations, or full conversion of the Obligations:

    


    (i) 
      On the
      Conversion Date it shall have, free from preemptive rights, out of its
      authorized but unissued shares, or out of shares held in its treasury,
      sufficient shares to effect the conversion of the Obligations;

    


    (ii) All
      Common Stock that may be issued upon conversion of the Obligations will upon
      issue be validly issued, fully paid and non-assessable, free from all taxes,
      liens and charges with respect to the issue thereof except as provided in
Paragraph
      3(c)
      above,
      and will not be subject to the preemptive rights of any stockholder of
      Maker;

    


    (iii) If
      any
      Common Stock to be provided for the purpose of conversion of the Obligations
      require registration with or approval of any governmental authority under any
      federal or state law before such shares may be validly issued upon conversion,
      Maker will in good faith and as expeditiously as possible attempt to secure
      such
      registration or approval, as the case may be, and Maker's obligation to deliver
      shares of the Common Stock upon conversion of the Obligations shall be abated
      until such registration or approval is obtained; provided,
      however,
      that
      this Note and the Obligations shall remain outstanding unless paid in full
      until
      Maker delivers the Common Stock and the outstanding Interest to Payee and in
      no
      event shall this Note be converted until Maker effects such delivery;
      and

    


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (iv) If
      on the
      Conversion Date, and thereafter so long as the Common Stock shall be listed
      on
      any securities exchange, market or other quotation system, Maker will, if
      permitted by the rules of such exchange, market or other quotation system,
      list
      and keep listed and for sale so long as the Common Stock shall be so listed
      on
      such exchange, market or other quotation system, upon official notice of
      issuance, all Common Stock issuable upon conversion of the
      Obligations.

    


    4. Adjustment
      in Conversion Price.
      

    


    (a) Adjustments
      for Change in Capital Stock. Except as provided in Paragraph
      4(n)
      below,
      if Maker shall (i) declare a dividend on all its outstanding Common Stock in
      shares of its capital stock, (ii) subdivide all its outstanding Common Stock,
      (iii) combine all its outstanding Common Stock into a smaller number of shares,
      or (iv) issue any shares of its capital stock by reclassification of its Common
      Stock (including any such reclassification in connection with a consolidation
      or
      merger in which Maker is the continuing corporation), then in each such case
      the
      conversion privilege and the Conversion Price in effect immediately prior to
      such action shall be adjusted so that if the Note is thereafter converted,
      Payee
      may receive the number and kind of shares that it would have owned immediately
      following such action if it had converted the Note immediately prior to such
      action. Such adjustment shall be made successively whenever such an event shall
      occur. The adjustment shall become effective immediately after the record date
      in the case of a dividend or distribution and immediately after the effective
      date in the case of a subdivision, combination or reclassification. If after
      an
      adjustment Payee upon conversion of this Note may receive shares of two or
      more
      classes of capital stock of Maker, Maker's Board of Directors, in good faith,
      shall determine the allocation of the adjusted Conversion Price between the
      classes of capital stock. After such allocation, the conversion privilege and
      Conversion Price of each class of capital stock shall thereafter be subject
      to
      adjustment on terms comparable to those applicable to Common Stock in this
      Section
      4.

    


    (b) Subscription
      Offerings. In case Maker shall issue to all of its existing stockholders or
      otherwise grant rights, options, or warrants entitling the holders thereof
      to
      subscribe for or purchase Common Stock (or securities convertible into or
      exchangeable for Common Stock) at a price per share (or having a conversion
      price per share, in the case of a security convertible into or exchangeable
      for
      Common Stock) less than the Current Market Price per share (as defined in
Paragraph
      4(d)
      below)
      on the record date for the determination of stockholders entitled to receive
      such rights or granting date, as the case may be, then in each such case the
      Conversion Price in effect immediately prior to such action (the “Existing
      Conversion Price”) shall be adjusted by multiplying the Existing Conversion
      Price in effect immediately prior to such record or granting date by a fraction,
      of which the numerator shall be the number of shares of Common Stock outstanding
      on such record or granting date plus the number of shares of Common Stock which
      the aggregate offering price of the total number of shares of Common Stock
      so to
      be offered (or the aggregate initial conversion price of the convertible
      securities so to be offered) would purchase at such Current Market Price and
      of
      which the denominator shall be the number of shares of Common Stock outstanding
      on such record or granting date plus the number of additional shares of Common
      Stock to be offered for subscription or purchase (or into which the convertible
      or exchangeable securities so to be offered are initially convertible or
      exchangeable). Such adjustment shall become effective at the close of business
      on such record or granting date; provided,
      however,
      that,
      to the extent the shares of Common Stock (or securities convertible into or
      exchangeable for shares of Common Stock) are not delivered, the Conversion
      Price
      shall be readjusted after the expiration of such rights, options, or warrants
      (but only to the extent that this Note is not converted after such expiration),
      to the Conversion Price which would then be in effect had the adjustments made
      upon the issuance of such rights or warrants been made upon the basis of
      delivery of only the number of shares of Common Stock (or securities convertible
      into or exchangeable for shares of Common Stock) actually issued. In case any
      subscription price may be paid in a consideration part or all of which shall be
      in a form other than cash, the value of such consideration shall be as
      determined by Maker's Board of Directors, in good faith. Shares of Common Stock
      owned by or held for the account of Maker or any majority-owned subsidiary
      shall
      not be deemed outstanding for the purpose of any such computation. 

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (c) Other
      Rights to Acquire Common Stock. In case Maker shall distribute to all holders
      of
      its Common Stock evidences of its indebtedness or assets (excluding cash
      dividends or distributions paid from retained earnings of Maker) or rights
      or
      warrants to subscribe for or purchase Common Stock (excluding those referred
      to
      in Paragraph
      4(b)
      above),
      then in each such case the Conversion Price shall be adjusted so that the same
      shall equal the price determined by multiplying the Conversion Price in effect
      immediately prior to the date of such distribution by a fraction of which the
      numerator shall be the Current Market Price per share (as defined in
Paragraph
      4(d)
      below)
      of the Common Stock on the record date mentioned below less the then fair market
      value (as determined in good faith by the Board of Directors of Maker) of the
      portion of the assets or evidences of indebtedness so distributed or of such
      rights or warrants applicable to one share of Common Stock, and the denominator
      shall be the Current Market Price per share of the Common Stock. Such adjustment
      shall become effective immediately after the record date for the determination
      of shareholders entitled to receive such distribution. 

    


    (d) Current
      Market Price. For the purpose of any computation under Paragraphs
      4(b) and
      (c)
      above,
      the "Current Market Price" per share of Common Stock on any date shall be deemed
      to be the average of the daily “Closing Price” for the thirty (30) consecutive
      trading days commencing forty five (45) trading days before such date. The
      "Closing Price" for each day shall mean the last reported sales price regular
      way or, in case no such reported sale takes place on such day, the closing
      bid
      price regular way, in either case on the principal national securities exchange
      on which the Common Stock is listed or admitted to trading or, if the Common
      Stock is not listed or admitted to trading on any national securities exchange,
      the highest reported bid price as furnished by the National Association of
      Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is
      no
      longer reporting such information, or by the Pink Sheets, LLC or similar
      organization if the Common Stock is not then quoted on an inter-dealer quotation
      system. If on any such date the Common Stock is not quoted by any such
      organization, the fair value of the Common Stock on such date, as determined
      in
      good faith by Maker's Board of Directors, shall be used. 

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (e) Action
      to
      Permit Valid Issuance of Common Stock. Before taking any action which would
      cause an adjustment reducing the Conversion Price below the then par value,
      if
      any, of the shares of Common Stock issuable upon conversion of this Note, Maker
      will take all corporate action which may, in the opinion of its counsel, be
      necessary in order that Maker may validly and legally issue shares of such
      Common Stock at such adjusted Conversion Price. 

    


    (f) Minimum
      Adjustment. No adjustment in the Conversion Price shall be required if such
      adjustment is less than 1% of the then Existing Conversion Price; provided,
      however,
      that
      any adjustments which by reason of this Paragraph
      4(f)
      are not
      required to be made shall be carried forward and taken into account in any
      subsequent adjustment. All calculations under this Section
      4
      shall be
      made to the nearest cent or to the nearest one-hundredth of a share, as the
      case
      may be. Anything to the contrary notwithstanding, Maker shall be entitled to
      make such reductions in the Conversion Price, in addition to those required
      by
      this Paragraph
      4(f),
      as it
      in its discretion shall determine to be advisable in order that any stock
      dividends, subdivision of shares, distribution of rights to purchase stock
      or
      securities, or distribution of securities convertible into or exchangeable
      for
      stock hereafter made by Maker to its stockholders shall not be taxable.


    


    (g) Referral
      of Adjustment. In any case in which this Section
      4
      shall
      require that an adjustment in the Conversion Price be made effective as of
      a
      record date for a specified event, if the Note shall have been converted after
      such record date Maker may elect to defer until the occurrence of such event
      issuing to Payee the shares, if any, issuable upon such conversion event over
      and above the shares, if any, issuable upon such conversion on the basis of
      the
      Conversion Price in effect prior to such adjustment; provided,
      however,
      that
      Maker shall deliver to Payee a due bill or other appropriate instrument
      evidencing Payee's right to receive such additional shares upon the occurrence
      of the event requiring such adjustment. 

    


    (h) Number
      of
      Shares. Upon each adjustment of the Conversion Price as a result of the
      calculations made in Paragraphs
      4(a)
      through
(c)
      above,
      this Note shall thereafter evidence the right to purchase, at the adjusted
      Conversion Price, that number of shares (calculated to the nearest
      one-hundredth) obtained by dividing (i) the product obtained by multiplying
      the
      number of shares issuable upon conversion of this Note prior to adjustment
      of
      the number of shares by the Conversion Price in effect prior to adjustment
      of
      the Conversion Price by (ii) the Conversion Price in effect after such
      adjustment of the Conversion Price. 

    


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (i) When
      No
      Adjustment Required. No adjustment need be made for a transaction referred
      to in
Paragraphs
      4(a)
      through
(c)
      above if
      Payee is permitted to participate in the transaction on a basis no less
      favorable than any other party and at a level which would preserve Payee's
      percentage equity participation in the Common Stock upon conversion of the
      Note.
      No adjustment need be made for sales of Common Stock pursuant to any Maker
      plan
      for reinvestment of dividends or interest, the granting of options and/or the
      exercise of options outstanding under any of Maker's stock option plans, the
      exercise of any other of Maker's currently outstanding options, or any currently
      authorized warrants, whether or not outstanding. No adjustment need be made
      for
      a change in the par value of the Common Stock, or from par value to no par
      value. If the Note becomes convertible solely into cash, no adjustment need
      be
      made thereafter. Interest will not accrue on the cash. 

    


    (j) Notice
      of
      Adjustment. Whenever the Conversion Price is adjusted, Maker shall promptly
      mail
      to Payee a notice of the adjustment together with a certificate from Maker's
      Chief Financial Officer briefly stating (i) the facts requiring the adjustment,
      (ii) the adjusted Conversion Price and the manner of computing it, and the
      date
      on which such adjustment becomes effective. The certificate shall be evidence
      that the adjustment is correct, absent manifest error. 

    


    (k) Voluntary
      Reduction. Maker from time to time may reduce the Conversion Price by any amount
      for any period of time if the period is at least twenty (20) days and if the
      reduction is irrevocable during the period. Whenever the Conversion Price is
      reduced, Maker shall mail to Payee a notice of the reduction. Maker shall mail
      the notice at least fifteen (15) days before the date the reduced Conversion
      Price takes effect. The notice shall state the reduced Conversion Price and
      the
      period it will be in effect. A reduction of the Conversion Price does not change
      or adjust the Conversion Price otherwise in effect for purposes of Paragraphs
      4(a)
      through
(c)
      above.
      Anything to the contrary notwithstanding, this Paragraph
      4(k)
      shall be
      void and of no effect if it violates the rules and/or regulations of any
      exchange on which the Common Stock is then listed for trading. 

    


    (l) Prohibition
      against Certain Reductions of Exercise Price. Anything to the contrary
      notwithstanding, in no event shall the Conversion Price be reduced below the
      par
      value of the Common Stock. 

    


    (m) Notice
      of
      Certain Transactions. If (i) Maker takes any action that would require an
      adjustment in the Conversion Price pursuant to this Section
      4;
      or (ii)
      there is a liquidation or dissolution of Maker, Maker shall mail to Payee a
      notice stating the proposed record date for a distribution or effective date
      of
      a reclassification, consolidation, merger, transfer, lease, liquidation or
      dissolution. Maker shall mail the notice at least fifteen (15) days before
      such
      date. Failure to mail the notice or any defect in it shall not affect the
      validity of the transaction. 

    


    (n) Reorganization
      of Company. If Maker and/or the holders of Common Stock are parties to a merger,
      consolidation or a transaction in which (i) Maker transfers or leases
      substantially all of its assets; (ii) Maker reclassifies or changes its
      outstanding Common Stock; or (iii) the Common Stock is exchanged for securities,
      cash or other assets; the person who is the transferee or lessee of such assets
      or is obligated to deliver such securities, cash or other assets shall assume
      the obligations under this Note. If the issuer of securities deliverable upon
      conversion of the Note is an affiliate of the surviving, transferee or lessee
      corporation, that issuer shall join in such assumption. The assumption agreement
      shall provide that the Payee may convert the Obligations into the kind and
      amount of securities, cash or other assets which it would have owned immediately
      after the consolidation, merger, transfer, lease or exchange if it had converted
      the Note immediately before the effective date of the transaction. The
      assumption agreement shall provide for adjustments that shall be as nearly
      equivalent as may be practical to the adjustments provided for in this
Section
      4.
      The
      successor company shall mail to Payee a notice briefly describing the assumption
      agreement. If this Paragraph applies, Paragraph
      4(a)
      above
      does not apply. 

    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    5. Covenants.
      

    


    Maker
      covenants and agrees that from and after the date hereof and until the date
      of
      repayment in full of the Obligations it shall comply with the following
      conditions:

    


    (i) Maintenance
      of Existence and Conduct of Business. Maker shall, and shall cause each of
      its
      subsidiaries, if
      any,
      to (A)
      do or cause to be done all things necessary to preserve and keep in full force
      and effect its legal existence and rights and maintain its property; and (B)
      continue to conduct its business so that the business carried on in connection
      therewith may be properly and advantageously conducted at all
      times.

    


    (ii) Books
      and
      Records. Maker shall, and shall cause each of its subsidiaries, if any, to
      keep
      adequate books and records of account with respect to its business
      activities.

    


    (iii) Insurance.
      Maker shall, and shall cause each of its subsidiaries, if any, to maintain
      insurance policies insuring such risks as are customarily insured against by
      companies engaged in businesses and/or with property similar to those operated
      and/or owned or leased by Maker or any such subsidiaries, as the case may be,
      including but not limited to, insurance policies covering real property
      acceptable to Payee on which Payee is named as an additional insured. All such
      policies are to be carried with reputable insurance carriers and shall be in
      such amounts as are customarily insured against by companies with similar assets
      and properties engaged in a similar business.

    


    (iv) Compliance
      with Law. Maker shall, and shall cause each of its subsidiaries, if any, to
      comply in all material respects with all federal, state, local and other laws
      and regulations applicable to it or any such subsidiaries, as the case may
      be,
      which, if breached, would have a material adverse effect on Maker's or any
      such
      subsidiaries', as the case may be, business or financial condition.

    


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    6. Reorganization
      of Maker.

    


    If
      Maker
      is party to a merger, consolidation or a transaction in which it is not the
      surviving or continuing entity or transfers or leases all or substantially
      all
      of its assets, the person who is the surviving or continuing entity or is the
      transferee or lessee of such assets shall assume the terms of this Note and
      the
      Obligations.

    


    7. Representations
      and Warranties of Maker.

    


    Maker
      represents and warrants that (i) it is a corporation duly organized, validly
      existing and in good standing under the laws of Delaware and has all requisite
      power to carry on its business as now conducted and to own its properties and
      assets it now owns; (ii) it is duly qualified or licensed to do business as
      a
      foreign corporation in good standing in the jurisdictions in which ownership
      of
      property or the conduct of its business requires such qualification except
      jurisdictions in which the failure to qualify to do business will have no
      material adverse effect on its business, prospects, operations, properties,
      assets or condition (financial or otherwise); (iii) it has full power and
      authority to execute and deliver this Note, and that the execution and delivery
      of this Note will not result in the breach of or default under, with or without
      the giving of notice and/or the passage of time, any other agreement, financial
      instrument, arrangement or indenture to which it is a party or by which it
      may
      be bound, or the violation of any law, statute, rule, decree, judgment or
      regulation binding upon it; (iv) it has filed all reports, schedules, forms,
      statements and other documents required to be filed by it with the Securities
      and Exchange Commission (the “Commission”)
      pursuant to the Securities Act of 1933 (the “Securities Act”) and the Securities
      Exchange Act of 1934 (the “Exchange
      Act”)
      (the
“SEC
      Documents”);
      (v)
      the SEC Documents have complied in all material respects with the requirements
      of the Securities Act or the Exchange Act, as the case may be, and the rules
      and
      regulations of the Commission promulgated thereunder applicable to the SEC
      Documents, and none of the SEC Documents, at the time they were filed with
      the
      Commission, contained any untrue statement of a material fact or omitted to
      state a material fact required to be stated therein or necessary in order to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; (vi) as of their respective dates, Maker’s financial
      statements included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the Commission with respect thereto, such financial statements
      have been prepared in accordance with accounting principles generally accepted
      in the United States as in effect from time to time, consistently applied,
      during the periods involved (except (a) as may be otherwise indicated in such
      financial statements or the notes thereto, or (b) in the case of unaudited
      interim statements, to the extent they may exclude footnotes or may be condensed
      or summary statements) and fairly present in all material respects the financial
      condition of Maker as of the respective dates thereof and the results of its
      operations and cash flows for the respective periods then ended (subject, in
      the
      case of unaudited statements, to normal year-end audit adjustments); (vii)
      except as set forth in the SEC Documents, Maker has not received notification
      from the Commission, the American Stock Exchange and/or any federal or state
      securities bureaus that any investigation (informal or formal), inquiry or
      claim
      is pending, threatened or in process against Maker and/or relating to any of
      Maker’s securities; (viii) except as set forth in the SEC Documents, there is no
      action, suit, proceeding, or investigation pending or currently threatened
      against Maker, and (ix) it has taken and will take all acts required, including
      but not limited to authorizing the signatory hereof on its behalf to execute
      this Note, so that upon the execution and delivery of this Note, it shall
      constitute the valid and legally binding obligation of Maker enforceable in
      accordance with the terms thereof.

    


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    8. Defaults
      and Remedies.
      

    


    (a) Events
      of
      Default. The occurrence or existence of any one or more of the following events
      or conditions (regardless of the reasons therefor) shall constitute an "Event
      of
      Default" hereunder:

    


    (i) Maker
      shall fail to make any payment of Principal or Interest when due and payable
      or
      declared due and payable pursuant to the terms hereof;

    


    (ii) Maker
      shall fail at any time to be in material compliance with any of the covenants
      set forth in Paragraph
      3(d) or
      Section
      5
      of this
      Note, or shall fail at any time to be in material compliance with or neglect
      to
      perform, keep or observe any of the provisions of this
      Note,
      to be
      complied with, performed, kept or observed by Maker and such failure shall
      remain uncured for a period of five (5) days after notice thereof has been
      given
      by Payee to Maker;

    


    (iii) Any
      representation or warranty made in this Note by Maker shall be untrue or
      incorrect in any material respect as of the date when made or deemed
      made;

    


    (iv) Maker
      shall have received a written notice of default related to any material
      agreement to which it is a party, and such act of default shall remain uncured
      after any applicable cure period;

    


    (v) A
      case or
      proceeding shall have been commenced against Maker or any of its subsidiaries,
      if any, (each a “Proceeding
      Company”)
      in a
      court having competent jurisdiction seeking a decree or order in respect of
      a
      Proceeding Company (A) under Title 11 of the United States Code, as now
      constituted or hereafter amended, or any other applicable federal, state or
      foreign bankruptcy or other similar law; (B) appointing a custodian, receiver,
      liquidator, assignee, trustee or sequestrator (or similar official) of a
      Proceeding Company, or any of its properties; or (C) ordering the winding-up
      or
      liquidation of the affairs of a Proceeding Company, and such case or proceeding
      shall remain unstayed or undismissed for a period of ten (10) consecutive days
      or such court shall enter a decree or order granting the relief sought in such
      case or proceeding; or

    


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (vi) A
      Proceeding Company shall (A) file a petition seeking relief under Title 11
      of
      the United States Code, as now constituted or hereafter amended, or any other
      applicable federal, state or foreign bankruptcy or other similar law; or (B)
      consent to the institution of proceedings thereunder or to the filing of any
      such petition or to the appointment of or the taking of possession by a
      custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
      official) of such Proceeding Company, or any of its properties.

    


    (b) Remedies.
      Upon the occurrence of an Event of Default specified in Paragraph
      8(a)
      above,
      all Obligations then remaining unpaid hereunder shall immediately become due
      and
      payable in full, plus interest on the unpaid portion of the Obligations at
      the
      highest rate permitted by applicable law, without notice to Maker and without
      presentment, demand, protest or notice of protest, all of which are hereby
      waived by Maker together with all reasonable costs and expenses of the
      collection and enforcement of this Note, including reasonable attorney's fees
      and expenses, all of which shall be added to the amount due under this Note.
      The
      rights, powers, privileges and remedies of Payee pursuant to the terms hereof
      are cumulative and not exclusive of any other rights, powers, privileges and
      remedies which Payee may have under this Note or any other instrument or
      agreement.

    


    9. Acknowledgment
      of Payee's Investment Representations.

    


    By
      accepting this Note, Payee acknowledges that, except as provided in the
      Registration Rights Agreement dated as of the date hereof between Maker and
      Payee, neither this Note nor the Common Stock have been or will be registered
      under the Act or qualified under any state securities laws and that the
      transferability thereof is restricted by the registration provisions of the
      Act
      as well as such state laws. Based upon the representations and agreements being
      made by it herein, this Note is being and any Common Stock will be issued to
      it
      pursuant to an exemption from such registration provided by Section 4(2) of
      the
      Act, and applicable state securities law qualification exemptions. Payee
      represents that it (i) is an “Accredited Investor” as that term is defined in
      Rule 501 (a) of Regulation D promulgated under the Act, and (ii) is acquiring
      this Note and will acquire any Common Stock for its own account, for investment
      purposes only and not with a view to resale or other distribution thereof,
      nor
      with the intention of selling, transferring or otherwise disposing of all or
      any
      part of these securities for any particular event or circumstance, except
      selling, transferring or disposing of them only upon full compliance with all
      applicable provisions of the Act, the Securities Exchange Act of 1934, the
      Rules
      and Regulations promulgated by the Commission thereunder, and any applicable
      state securities laws. In addition, Payee understands and acknowledges that
      any
      routine sales of these securities made in reliance upon Rule 144 promulgated
      by
      the Commission under the Act can be effected only in the amounts set forth
      in
      and pursuant to the other terms and conditions, including applicable holding
      periods, of that Rule. Payee further understands and agrees that no transfer
      of
      this Note shall be valid unless made in compliance with the restrictions set
      forth on the front of this Note, effected on Maker's books by the registered
      holder hereof, in person or by an attorney duly authorized in writing, and
      similarly noted hereon as provided in Paragraph
      12(h)
      below.


    


    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    10. Limitation
      of Interest Payments.

    


    Nothing
      contained in this Note or in any other agreement between Maker and Payee
      requires Maker to pay or Payee to accept interest in an amount that would
      subject Payee to any penalty or forfeiture under applicable law. In no event
      shall the total of all charges payable hereunder, whether of interest or of
      such
      other charges, which may or might be characterized as interest, exceed the
      maximum rate permitted to be charged under the laws of the States of New Jersey,
      New York, Delaware, North Carolina, the United States Virgin Islands or any
      other state or domestic or other jurisdiction in which either Maker or Payee
      may
      be located or may conduct business. Should Payee receive any payment that is
      or
      would be in excess of that permitted to be charged under such laws, such payment
      shall have been and shall be deemed to have been made in error and shall
      automatically be applied to reduce the Principal outstanding on this
      Note.

    


    11.  Maker’s
      Obligation to Prepay.

    


    If
      at
      anytime prior to the repayment of all of the Obligations Maker shall obtain
      financing of at least $500,000, whether in the form of equity or debt, (the
      “Financing”), Maker shall notify Payee of the date (the “Closing Date”) on which
      the Financing is to be closed (the “Closing”) no less than fifteen (15) business
      days prior to the Closing Date and shall prepay the Obligations at the Closing
      to the extent of the amount of the Financing. 

    


    12. Miscellaneous.

    


    (a) Effect
      of
      Forbearance. No forbearance, indulgence, delay or failure to exercise any right
      or remedy by Payee with respect to this Note shall operate as a waiver or as
      an
      acquiescence in any default.

    


    (b) Effect
      of
      Single or Partial Exercise of Right. No single or partial exercise of any right
      or remedy by Payee shall preclude any other or further exercise thereof or
      any
      exercise of any other right or remedy by Payee.

    


    (c) Governing
      Law; Waiver of Right to Jury Trial; Venue. This Note shall be construed and
      enforced in accordance with, and the rights of the parties shall be governed
      by,
      the internal laws of the jurisdiction to be determined by Payee applicable
      to
      contracts made and to be performed entirely within such jurisdiction. Maker
      hereby waives all right to trial by jury in any action, suit or proceeding
      brought to enforce or defend any rights or remedies under this Note, and agrees
      that any lawsuit brought to enforce or interpret the provisions of this Note
      shall be instituted in state or federal courts, as appropriate, in the
      jurisdiction to be determined by Payee, and Maker further agrees to submit
      to
      the personal jurisdiction of such court and waives
      any objection which it may have, based on improper venue, forum non conveniens
      or sufficiency of contact with the forum state, to the conduct of any proceeding
      in any such court and waives personal service of any and all process upon it,
      and consents that all such service of process be made by mail or messenger
      directed to it at the address set forth in Paragraph
      12(g)
      below
      and that service so made shall be deemed to be completed upon the earlier of
      actual receipt or three (3) days after the same shall have been posted to its
      address. Nothing contained in this Paragraph
      12(c)
      affects
      the right of Payee to serve legal process in any other manner permitted by
      law
      or affects the right of Payee to bring any action or proceeding against
Maker
      or
      its
      property in the courts of any other jurisdiction. 

    


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (d) Headings.
      The headings and captions of the various sections herein are for convenience
      of
      reference only and shall in no way modify any of the terms or provisions of
      this
      Note.

    


    (e) Loss,
      Theft, Destruction or Mutilation of Note. Upon receipt by Maker of evidence
      reasonably satisfactory to it of loss, theft, destruction or mutilation of
      this
      Note, Maker shall make and deliver or caused to be made and delivered to Payee
      a
      new Note of like tenor in lieu of this Note. 

    


    (f) Modification
      of Note or Waiver of Terms Thereof Relating to Payee. No modification or waiver
      of any of the provisions of this Note shall be effective unless in writing
      and
      signed by Payee and then only to the extent set forth in such writing, or shall
      any such modification or waiver be applicable except in the specific instance
      for which it is given. This Note may not be discharged orally but only in
      writing duly executed by Payee.

    


    (g) Notice.
      All offers, acceptances, notices, requests, demands and other communications
      under this Note shall be in writing and, except as otherwise provided herein,
      shall be deemed to have been given only when delivered in person, via nationally
      recognized overnight courier service, via facsimile transmission if receipt
      thereof is confirmed by the recipient, or, if mailed, when mailed by certified
      or registered mail prepaid, to the parties at their respective addresses first
      set forth above, or at such other address as may be given in writing in future
      by either party to the other. 

    


    (h) Transfer.
      This Note shall be transferable only on the books of Maker upon delivery thereof
      duly endorsed by Payee or by its duly authorized attorney or representative,
      or
      accompanied by proper evidence of succession, assignment, or authority to
      transfer. In all cases of transfer by an attorney, executor, administrator,
      guardian, or other legal representative, duly authenticated evidence of his
      authority shall be produced. Upon any registration of transfer, Maker shall
      deliver a new Note or Notes to the person entitled thereto. Notwithstanding
      the
      foregoing, Maker shall have no obligation to cause Notes to be transferred
      on
      its books to any person if, in the opinion of counsel to Maker, such transfer
      does not comply with the provisions of the Act and the rules and regulations
      thereunder.

     

    (i) Successors
      and Assigns. This Note shall be binding upon Maker, its successors, assigns
      and
      transferees, and shall inure to the benefit of and be enforceable by Payee
      and
      its successors and assigns.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (j) Severability.
      If one or more of the provisions or portions of this Note shall be deemed by
      any
      court or quasi-judicial authority to be invalid, illegal or unenforceable in
      any
      respect, the invalidity, illegality or unenforceability of the remaining
      provisions, or portions of provisions contained herein shall not in any way
      be
      affected or impaired thereby.

    


    (k) Gender.
      The use herein of the masculine pronouns or similar terms shall be deemed to
      include the feminine and neuter genders as well and the use of the singular
      pronouns shall be deemed to include the plural as well.

    


    IN
      WITNESS WHEREOF, Maker has caused this Note to be executed on its behalf by
      an
      officer thereunto duly authorized as of the date set forth above.

    
      	 	 	 
	 	
              CONVERSION
                SERVICES INTERNATIONAL, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Scott Newman
	 	
              

              Name: Scott
                Newman

              Title: President
                and Chief Executive Officer

            
	 	 




    


    
      
        
        

      

      
        -13-