THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE  REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

     

    MASTER SILICON CARBIDE INDUSTRIES,
INC.

     

     (A
Delaware Corporation)

     

     CONVERTIBLE  NOTE

     

    DATE:   September
21, 2009

    


    FOR VALUE
RECEIVED, Master Silicon
Carbide Industries, Inc. a Delaware corporation (the “Company”), hereby
unconditionally promises to pay to Vicis Capital Master Fund
(together with its registered
assigns, the “Holder”) on the
Maturity Date, as defined below, the principal sum of TEN MILLION DOLLARS (U.S.
$10,000,000), and to pay to the Holder interest on the unpaid principal amount
of this Note as provided in Article I
hereof.  Capitalized terms used but not otherwise defined herein have
the respective meanings given to such terms in Article V
hereof.

    


    ARTICLE
I

    


    PRINCIPAL

    


    Section
1.1          Principal.  The
entire unpaid principal amount of this Note shall be paid on the Maturity
Date.   Promptly following the payment in full of this Note, the
Holder shall surrender this Note to the Company for cancellation.

    


    Section
1.2           Interest.  No
interest shall be payable on this Note.



    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    ARTICLE
II

    


    PAYMENTS

    


    Section
2.1          Payments
Generally.  All payments of principal to be made by the Company
in respect of this Note shall be made in Dollars by delivery to the Holder, at
the address the Holder provides to the Company, not later than 12:00 noon New
York time on the date on which such payment shall be due.  If the due
date of any payment in respect of this Note would otherwise fall on a day that
is not a Business Day, such due date shall be extended to the next succeeding
Business Day.  All payments by the Company under this Note will be
made without setoff or counterclaim and free and clear of, and without
deductions for, any taxes, fees or other expenses or claims of any
kind.

    


    Section
2.2          Prepayments.  At
any time, and from time to time, the Company may, at its option, prepay this
Note (in an amount up to but not exceeding the unpaid principal amount hereof)
in whole or in part without premium or penalty.

    


    ARTICLE
III

    


    CONVERSION

    


    Section
3.1           Automatic
Conversion.   Within three business
days  following  completion of the proposed merger (the
“Change of
Domicile”) of the Company with and  into a Nevada subsidiary
with the Nevada subsidiary being the surviving
corporation   this  Note shall be automatically
converted  into shares of Series B Preferred Stock (“Shares”) of the
Nevada corporation at the Conversion Rate (as defined below).  The
Shares shall have the rights and preferences set forth in the Certificate of
Designation, a copy of which is attached hereto.  The number of Shares
issuable upon conversion of the Note shall be determined by dividing (x) the
principal amount of the Note by (y) the Conversion Price (the "Conversion
Rate").  "Conversion Price"
means $10.87 per Share.

     

    Section
3.3          Mechanics
of  Conversion.  The holder shall surrender this Note
(or an indemnification undertaking in respect of this Note in the case of its
loss, theft or destruction) to a common carrier for delivery to the Company as
soon as practicable on or following automatic conversion of the
Note.   On or before the third (3rd) day following the date of
receipt of the Note, the Company shall deliver a certificate, registered in the
name of the holder or its designee, for the number of Shares to which the holder
shall be entitled.

     

    ARTICLE
IV

    


    EVENTS
OF DEFAULT

    


    Section
4.1          Event of
Default.  "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental
body):

    


    (a)           default
in the payment of the outstanding principal amount of this Note at its Maturity
Date; or

    


    (b)           a
default by the Company of any of its obligations (other than (a) and (b) above)
under this Note which shall not have been cured within 10 days after notice from
the holder of such default.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (c)           the
entry of a decree or order by a court having jurisdiction in the premises
adjudging the Company a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under Federal bankruptcy law or any other applicable
Federal or state law, or appointing a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of the property of the Company, or ordering the winding up or liquidation of the
affairs of the Company; or

    


    (d)           the
institution by the Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under Federal bankruptcy law
or any other applicable Federal or state law, or the consent by the Company to
the filing of such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of any
substantial part of the property of the Company, or the making by the Company of
an assignment for the benefit of creditors, or the admission by the Company in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such
action.

    


    Section
4.2           Acceleration of
Note.  If an Event of Default occurs and is continuing, then
and in every such case the Holder may declare the outstanding principal amount
of this Note to be due and payable immediately, by a notice in writing to the
Company, and upon any such declaration such principal shall become immediately
due and payable.  Notwithstanding the foregoing, if an Event of
Default referenced in paragraph (c) or paragraph (d) of Section 4.1 occurs, the
outstanding principal amount of this Note shall automatically become due and
payable immediately without any declaration or other action on the part of the
Holder.  At any time after the outstanding principal amount of this
Note shall become immediately due and payable and before a judgment or decree
for payment of the money due has been obtained, the Holder, by written notice to
the Company, may rescind and annul any acceleration and its
consequences.

    


    ARTICLE
V

    


    DEFINITIONS

    


    Section
5.1           Definitions.  The
following terms shall have the meanings set forth below:

    


    “Business Day” means a day
other than Saturday, Sunday or any day on which banks located in the Province of
Ontario are authorized or obligated to close.

    


    “Dollars” and “$” means lawful money of the
United States of America.

    


    “Maturity Date” shall mean
December 31, 2009.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    “Note” means this Promissory
Note of the Company issued to the holder, as modified and supplemented and in
effect from time to time.

    


    “Person” means any person or
entity of any nature whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a limited liability company, a trust or
other entity.

    


    ARTICLE
VI

    


    MISCELLANEOUS

    


    Section
6.1           Governing Law;
Jurisdiction.  This Note shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of laws provisions thereof.  The Company hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Courts of the State of New York in any action or proceeding
arising out of or relating to this Note, or for recognition or enforcement of
any judgment, and hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in the
State of New York.  The Company hereby agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  The Company hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Note in any court referred to
above, and hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.  The Company irrevocably consents to
service of process in the manner provided for notices below.  Nothing
in this Agreement will affect the right of the Holder to serve process in any
other manner permitted by law.

    


    Section
6.2           Successors.  All
agreements of the Company in this Note shall bind its successors and permitted
assigns (including, without limitation, the surviving entity from the Company’s
proposed reincorporation into the State of Nevada, which entity shall take all
steps reasonably necessary to file the Certificate of Designation and issue the
Shares following the Conversion Date).  This Note shall inure to the
benefit of the Holder and its permitted successors and assigns.  The
Company shall not delegate any of its obligations hereunder without the prior
written consent of Holder.

    


    Section
6.3           Amendment, Modification or
Waiver.  No provision of this Note may be amended, modified or
waived except by an instrument in writing signed by the Company and the
Holder.

    


    Section
6.4           Legend.  This Note,
and any note issued in exchange or substitution for this Note, shall bear the
legend appearing on the first page hereof.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Section
6.5           Notices.  All
notices and other communications in respect of this Note (including, without
limitation, any modifications of, or requests, waivers or consents under, this
Note) shall be given or made in writing (including, without limitation, by
telecopy) at the following addresses:

     

    If  to
the Company:

    


    
      Master
Silicon Carbide Industries, Inc.

    

    558 Lime
Rock Road

    
      Lakeville,
Connecticut 06039

    

    
      Telephone:
(860) 435-7000

    

    Facsimile:
(860) 435-6540

    


    
      and
to:

    

    


    
      Guzov
Ofsink, LLC

    

    
      600
Madison Avenue, 14th
Floor

    

    
      New York,
NY 10022

    

    
      Attention:
Darren L. Ofsink, Esq.

    

    
      Facsimile
No: 212-688-7273

    

    


    
      If to
Investor:

    

    


    Vicis Capital Master Fund,

    c/o Vicis
Capital,  LLC

    126 East 56th Street,
7th
Floor,

    New York, NY 10022.

    
      Tel. No.:
212-909-4600

    

    
      Fax No.:
212-909-4601

    

    


    Except as
otherwise provided in this Note, all such communications shall be deemed to have
been duly given when transmitted by telecopier or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.

    


    Section
6.6           Delay or Omission 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 right, power or
privilege.  All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    IN WITNESS WHEREOF, the Company has
caused this Note to be duly executed by an authorized officer thereof as of the
date and year first above written.

    


    
      
        
          
            	
                    MASTER
      SILICON CARBIDE INDUSTRIES, INC.

                  
	 
      	 
      
	
                    By:

                  	
                    /s/
      John D. Kuhns

                  
	
                    Name:   

                  	
                    John
      D. Kuhns

                  
	
                    Title:   

                  	
                    CEO
      and President