Exhibit
10.37




THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
 
 US
$170,000
 
 ________________________________________
 
 12%
SECURED PROMISSORY NOTE DUE May 1, 2008
 
 FOR VALUE
RECEIVED, D.L. CLAIRE CAPITAL, INC., a corporation organized and existing under
the laws of the State of Delaware (the “Company”), promises to pay to CAMHZN Master LDC, the
registered holder hereof (the “Holder”), the principal sum of One Hundred
Seventy Thousand Dollars (US $170,000) on the Maturity Date (as defined below)
and to pay interest on the principal sum outstanding from time to time in
arrears at the rate of 12% per annum (computed on the basis of the actual number
of days elapsed and a year of 360 days and compounded monthly), accruing from
October 31, 2007, the date of initial issuance of this Note (the “Issue Date”),
to the date of payment. Such interest shall be payable on the date which is the
earlier of (i) the Maturity Date, or (ii) the date of any prepayment of
principal permitted hereunder; except that interest for month in advance shall
be paid on the Issue Date. Accrual of interest shall commence on the Issue Date
and shall continue to accrue on a daily basis until payment in full of the
principal sum has been made or duly provided for (whether before or after the
Maturity Date).
 
 This Note
is being issued pursuant to the terms of the Purchase Agreement, dated as of
October 31, 2007 (the “Purchase Agreement”), to which the Company and the Holder
(or the Holder’s predecessor in interest) are parties. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
 
 This Note
is subject to the following additional provisions:
 
 1.           
 The term “Maturity Date” means the earlier of (x) May 1, 2008 or (y) the
date on which the Company consummates an equity financing or funding transaction
in excess of $1,500,000 (a “Qualified Financing”), whether or not such
transaction is effected in connection with the current or future issuance of
securities.
 
 2.         
   (i)           This
Note may be prepaid in whole or in part at any time prior to the Maturity Date,
without penalty. Any payment shall be applied as provided in Section
3.
 
 (ii)           TIME IS OF THE ESSENCE WITH RESPECT TO ANY
PAYMENT DUE HEREUNDER. The Company shall be in default hereunder if any
payment is not made in a timely manner, without any right to cure unless such
right to cure is granted by the Holder or the terms of this Note in each
instance; provided, however, that the grant of such right by the Holder is in
the sole discretion of the Holder and may be withheld for any reason or for no
reason whatsoever.
  
  3.          
  Any payment made on account of the Note shall be applied in the
following order of priority: (i) first, to any amounts due hereunder other than
principal and accrued interest, (ii) then, to accrued interest through and
including the date of payment, and (iii) then, to principal of this
Note.
 
 4.          
  All payments contemplated hereby to be made “in cash” shall be made
in immediately available good funds of United States of America currency by wire
transfer to an account designated in writing by the Holder to the Company (which
account may be changed by notice similarly given). For purposes of this Note,
the phrase “date of payment” means the date good funds are received in the
account designated by the notice which is then currently effective.
 
 5.        
    Subject to the terms of the Purchase Agreement, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, and interest on,
this Note at the time, place, and rate, and in the coin or currency, as herein
prescribed. This Note is a direct obligation of the Company.
 
 6.         
   The obligations of the Company under this Note are secured by
all of the assets of the Company and by certain stock of the Company and
Marshall Holdings International, Inc. The stock is pledged to the Holder under
the terms of the Pledge Agreements, to which the Holder and the Pledgors are
parties. If the Holder forecloses on any of the Pledged Shares, the obligations
of the Company will be reduced only to the extent of the proceeds actually
realized from such foreclosure, in the priority specified in Section 3
hereof.
 
 7.        
    Conversion.
 
 a)         
  Voluntary
Conversion. At any time after the Original Issue Date until this Note is
no longer outstanding, this Note shall be convertible into shares of Common
Stock at the option of the Holder, in whole or in part at any time and from time
to time (subject to the limitations on conversion set forth in Section 7(d)
hereof). The Holder shall effect conversions by delivering to the Company the
form of Notice of Conversion attached hereto (a “Notice of Conversion”),
specifying therein the principal amount of Notes to be converted and the date on
which such conversion is to be effected (a “Conversion Date”). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that such Notice of Conversion is provided hereunder. To effect conversions
hereunder, the Holder shall not be required to physically surrender Notes to the
Company unless the entire principal amount of this Note plus all accrued and
unpaid interest thereon has been so converted. Conversions hereunder shall have
the effect of lowering the outstanding principal amount of this Note in an
amount equal to the applicable conversion. The Holder and the Company shall
maintain records showing the principal amount converted and the date of such
conversions. The Company shall deliver any objection to any Notice of Conversion
within 5 Business Days of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Note, the unpaid and
unconverted principal amount of this Note may be less than the amount stated on
the face hereof. However, at the Company’s request, the Holder shall surrender
the Note to the Company within five (5) Trading Days following such request so
that a new Note reflecting the correct principal amount may be issued to
Holder.
  
  b)       
    Conversion
Price. Subject to adjustment as provided for in Section 8, the initial
conversion price in effect on any Conversion Date shall be $10.00.
 
 c)       
    Reserved.
 
 d)      
     Conversion Limitations; Holder’s Restriction
on Conversion. The Company shall not effect any conversion of this Note,
and the Holder shall not have the right to convert any portion of this Note,
pursuant to Section 7(a) or otherwise, to the extent that after giving effect to
such conversion, the Holder (together with the Holder’s affiliates), as set
forth on the applicable Notice of Conversion, would beneficially own in excess
of 4.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) conversion of the remaining, nonconverted portion of
this Note beneficially owned by the Holder or any of its affiliates and (B)
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Notes or the
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 7(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act. To the extent that the limitation contained
in this section applies, the determination of whether this Note is convertible
(in relation to other securities owned by the Holder) and of which a portion of
this Note is convertible shall be in the sole discretion of such Holder. To
ensure compliance with this restriction, the Holder will be deemed to represent
to the Company each time it delivers a Notice of Conversion that such Notice of
Conversion has not violated the restrictions set forth in this paragraph and the
Company shall have no obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 7(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) MHII’s most recent Form
10-QSB or Form 10-KSB (or such related form), as the case may be, (y) a more
recent public announcement by MHII or (z) any other notice by MHII or its
Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of the Holder, the Company shall within five
Trading Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Note, by the Holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The provisions of this Section 7(d) may be waived by
the Holder upon, at the election of the Holder, not less than 61 days’ prior
notice to the Company, and the provisions of this Section 7(d) shall continue to
apply until such 61st day (or such later date, as determined by the Holder, as
may be specified in such notice of waiver).
 
 e)        
    Mechanics of
Conversion
  
  i.         
    Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of shares
of Common Stock issuable upon a conversion hereunder shall be determined by the
quotient obtained by dividing (x) the outstanding principal amount of this Note
to be converted by (y) the Conversion Price.
 
 ii.       
     Delivery
of Certificate Upon Conversion. Not later than five Trading Days after
any Conversion Date, the Company will deliver to the Holder (A) a certificate or
certificates representing the Conversion Shares which shall be free of
restrictive legends and trading restrictions (other than those required by the
Purchase Agreement) representing the number of shares of Common Stock being
acquired upon the conversion of Notes (including, if so timely elected by the
Company, shares of Common Stock representing the payment of accrued interest)
and (B) a bank check in the amount of accrued and unpaid interest (if the
Company is required to pay accrued interest in cash). The Company shall, if
available and if allowed under applicable securities laws, use its best efforts
to deliver any certificate or certificates required to be delivered by the
Company under this Section electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions.
 
 iii.       
 Failure to
Deliver Certificates. If in the case of any Notice of Conversion such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the fifth Trading Day after a Conversion Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the principal amount of Notes tendered for conversion.
 
 iv.       
    Obligation
Absolute; Partial Liquidated Damages. If the Company fails for any reason
to deliver to the Holder such certificate or certificates pursuant to Section
7(d)(ii) by the fifth Trading Day after the Conversion Date, the Company shall
pay to such Holder, in cash, as liquidated damages and not as a penalty, for
each $1,000 of principal amount being converted, $10 per Trading Day (increasing
to $20 per Trading Day after 5 Trading Days after such damages begin to accrue)
for each Trading Day after such fifth Trading Day until such certificates are
delivered. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Note in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares; provided, however, such delivery shall not
operate as a waiver by the Company of any such action the Company may have
against the Holder. In the event a Holder of this Note shall elect to convert
any or all of the outstanding principal amount hereof, the Company may not
refuse conversion based on any claim that the Holder or any one associated or
affiliated with the Holder of has been engaged in any violation of law,
agreement or for any other reason, unless, an injunction from a court, on
notice, restraining and or enjoining conversion of all or part of this Note
shall have been sought and obtained and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the principal amount of this Note
outstanding, which is subject to the injunction, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of an injunction precluding the same, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly noticed
conversion. Nothing herein shall limit a Holder’s right to pursue actual damages
or declare an Event of Default pursuant to Section 9 herein for the Company’s
failure to deliver Conversion Shares within the period specified herein and such
Holder shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the
Holders from seeking to enforce damages pursuant to any other Section hereof or
under applicable law.
  
  v.        
    Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In
addition to any other rights available to the Holder, if the Company fails for
any reason to deliver to the Holder such certificate or certificates pursuant to
Section 7(d)(ii) by the fifth Trading Day after the Conversion Date, and if
after such fifth Trading Day the Holder is required by its brokerage firm to
purchase (in an open market transaction or otherwise) Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares which the Holder
anticipated receiving upon such conversion (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder (in addition to any remedies available to or
elected by the Holder) the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of shares of Common Stock
that such Holder anticipated receiving from the conversion at issue multiplied
by (2) the actual sale price of the Common Stock at the time of the sale
(including brokerage commissions, if any) giving rise to such purchase
obligation and (B) at the option of the Holder, either reissue Notes in
principal amount equal to the principal amount of the attempted conversion or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its delivery requirements under
Section 7(e)(ii). For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
conversion of Notes with respect to which the actual sale price of the
Conversion Shares at the time of the sale (including brokerage commissions, if
any) giving rise to such purchase obligation was a total of $10,000 under clause
(A) of the immediately preceding sentence, the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
Notwithstanding anything contained herein to the contrary, if a Holder requires
the Company to make payment in respect of a Buy-In for the failure to timely
deliver certificates hereunder and the Company timely pays in full such payment,
the Company shall not be required to pay such Holder liquidated damages under
Section 7(d)(iv) in respect of the certificates resulting in such
Buy-In.
 
 vi.       
    Reservation of
Shares Issuable Upon Conversion. The Company covenants that it will use
its best efforts to have MHII at all times reserve and keep available out of its
authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Notes and payment of interest on the Note, each
as herein provided, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holders, not less than such number of
shares of the Common Stock as shall (subject to any additional requirements of
the Company and MHII as to reservation of such shares set forth in the Purchase
Agreement) be issuable (taking into account the adjustments and restrictions of
Section 8) upon the conversion of the outstanding principal amount of the Notes
and payment of interest hereunder. The Company covenants that it shall use its
best efforts to ensure that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid,
nonassessable and, if the Registration Statement is then effective under the
Securities Act, registered for public sale in accordance with such Registration
Statement.
  
  vii.       
   Fractional
Shares. Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of the Common Stock,
but may if otherwise permitted, make a cash payment in respect of any final
fraction of a share based on the VWAP at such time. If the Company elects not,
or is unable, to make such a cash payment, the Holder shall be entitled to
receive, in lieu of the final fraction of a share, one whole share of Common
Stock.
 
 viii.      
   Transfer
Taxes. The issuance of certificates for shares of the Common Stock on
conversion of the Notes shall be made without charge to the Holders thereof for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such Notes so converted and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
  ix. Withholding of Taxes. All payments by
the Company under the Note shall be made in full without set-off or counterclaim
and free and clear of any deduction or withholding for or on account of any
taxes unless the Company is required by applicable law to make any deduction or
withholding from any payment due under the Note for or on account of any taxes.
In this event, the Company shall promptly notify the Purchaser, pay such
additional amounts as are necessary to ensure that the Purchaser receives the
amount which it would have received if there had been no such deduction or
withholding, promptly pay the tax deducted to the appropriate tax authority
before any fine or penalty becomes payable and indemnify the Purchaser in
respect of any such taxes. As soon as practical, but no later than 30 days after
any such deduction or withholding, the Company shall forward to the Purchaser
official tax receipts and any other documents or evidence reasonably required by
the Purchaser that such taxes have been remitted to the appropriate taxation
authority.
 
 8.       
     Certain
Adjustments.
 
 a)         
   Stock Dividends and
Stock Splits. If MHII, at any time while the Notes are outstanding: (A)
shall pay a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by MHII pursuant to this Note,
including as interest thereon), (B) subdivide outstanding shares of Common Stock
into a larger number of shares, (C) combine (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(D) issue by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock outstanding after
such event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
  
  b)         
   Subsequent Equity
Sales. If MHII, at any time while this Note is outstanding, shall offer,
sell, grant any option to purchase or offer, sell or grant any right to reprice
its securities, or otherwise dispose of or issue (or announce any offer, sale,
grant or any option to purchase or other disposition) any Common Stock or Common
Stock Equivalents entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the then Conversion Price (such lower price,
the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued in
connection with such issuance, be entitled to receive shares of Common Stock at
an effective price per share which is less than the Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price),
then, the Conversion Price shall be reduced to equal the Base Share Price and
the number of Conversion Shares issuable hereunder shall be increased. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder in writing, no later than three
Trading Day upon learning of the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of
clarification, whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 8(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to receive a
number of Conversion Shares based upon the Base Share Price regardless of
whether the Holder accurately refers to the Base Share Price in the Notice of
Conversion.
 
 c)         
   Pro Rata
Distributions. If MHII, at any time while Notes are outstanding, shall
distribute to all holders of Common Stock (and not to Holders) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security, then in each such case the Conversion Price shall be determined by
multiplying such Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP on
such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of the Common Stock as determined by the Board of
Directors of MHII in good faith. In either case the adjustments shall be
described in a statement provided to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.
 
 d)        
    Calculations. All calculations under
this Section 8 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. The number of shares of Common Stock outstanding at
any given time shall not includes shares of Common Stock owned or held by or for
the account of the Company, and the description of any such shares of Common
Stock shall be considered on issue or sale of Common Stock. For purposes of this
Section 8, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and
outstanding.
  
  e)          
  Notice to
Holders.
 
 i.           Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any of this Section 8, the
Company shall promptly mail to each Holder a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
 
 ii.           Notice to Allow Conversion by Holder.
If (A) MHII shall declare a dividend (or any other distribution) on the Common
Stock; (B) MHII shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) MHII shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; (D) the approval of any
stockholders of MHII shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the
Company, of any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property; (E) MHII shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Notes, and shall cause
to be mailed to the Holders at their last addresses as they shall appear upon
the stock books of MHII , at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. Holders are
entitled to convert Notes during the 20-day period commencing the date of such
notice to the effective date of the event triggering such notice.
 
 iii.           Fundamental Transaction. If, at any
time while this Note is outstanding, (A) MHII effects any merger or
consolidation of the Company with or into another Person, (B) MHII effects any
sale of all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by MHII or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (D)
MHII effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then upon any subsequent conversion of this Note,
the Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion absent such Fundamental Transaction, the
same kind and amount of securities, cash or property as it would have been
entitled to receive upon the occurrence of such Fundamental Transaction if it
had been, immediately prior to such Fundamental Transaction, the holder of one
share of Common Stock (the “Alternate Consideration”). For purposes of any such
conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Conversion Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any conversion of this
Note following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, the Company, in the event of a Fundamental
Transaction, shall issue to the Holder a new note consistent with the foregoing
provisions and evidencing the Holder’s right to convert such note into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and
insuring that this Note (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
  
  iv.           Exempt Issuance. Notwithstanding the
foregoing, no adjustment will be made under this Section 8 in respect of an
Exempt Issuance.
 
 9.      
     The Holder of the Note, by acceptance hereof,
agrees that this Note is being acquired for investment and that such Holder will
not offer, sell or otherwise dispose of this Note except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended,
or any applicable state Blue Sky or foreign laws or similar laws relating to the
sale of securities.
 
 10.           Any
notice given by any party to the other with respect to this Note shall be given
in the manner contemplated by the Purchase Agreement in the section entitled
“Notices.”
 
 11.           This
Note shall be governed by and construed in accordance with the laws of the State
of New York. Each of the parties consents to the exclusive jurisdiction of the
federal courts whose districts encompass any part of the County of New York or
the state courts of the State of New York sitting in the County of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non
coveniens, to the bringing of any such proceeding in such jurisdictions.
To the extent determined by such court, the Company shall reimburse the Holder
for any reasonable legal fees and disbursements incurred by the Holder in
enforcement of or protection of any of its rights under any of this
Note.
 
 12.           JURY TRIAL WAIVER.The Company
and the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out of or in connection with this
Note.
  
  13.           The
following shall constitute an "Event of Default":
 
 a.
              The
      Company shall default in the payment of any amount due on this Note, time
      being of the essence, whether by maturity, pursuant to Section 2 or
      otherwise; or
 
 b.
              Any
      of the representations or warranties made by the Company herein, in the
      Purchase Agreement or any of the other Transaction Agreements shall be
      false or misleading in any material respect at the time made;
      or
 
 c.
              The
      Company shall (1) make an assignment for the benefit of creditors or
      commence proceedings for its dissolution; or (2) apply for or consent to
      the appointment of a trustee, liquidator or receiver for its or for a
      substantial part of its property or business;
or
 
 d.
              A
      trustee, liquidator or receiver shall be appointed for the Company or for
      a substantial part of its property or business without its consent;
      or
 
 e.
              Any
      governmental agency or any court of competent jurisdiction at the instance
      of any governmental agency shall assume custody or control of the whole or
      any substantial portion of the properties or assets of the Company;
      or
 
 f.
              Any
      Pledgor shall default on any of its obligations under the Pledge
      Agreements; or
 
 g.
              The
      Company shall enter into, create, incur, assume or suffer to exist any
      indebtedness for borrowed money or liens of any kind, on or with respect
      to any of its property or assets now owned or hereafter acquired or any
      interest therein or any income or profits therefrom that is senior to or
      pari passu with, in any respect, the Company’s obligations under this
      Note, other than as provided in the Disclosure Annex to the Purchase
      Agreement; or
 
 h.
              Bankruptcy,
      reorganization, insolvency or liquidation proceedings or other proceedings
      for relief under any bankruptcy law or any law for the relief of debtors
      shall be instituted by or against the Company or any of the
      Pledgors.
 
 i.
              Failure
      by the Company to deliver any Shares required to be delivered pursuant to
      the Transaction Documents or any other agreements between the
      parties.
 
 If an Event of Default shall have
occurred, then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Note immediately due and payable (and the Maturity Date shall be
accelerated accordingly), without presentment, demand, protest or notice of any
kinds, all of which are hereby expressly waived, anything herein or in any note
or other instruments contained to the contrary notwithstanding, and interest
shall accrue on the total amount  shall not be deemed to be a waiver of
any subsequent default) at the option of the Holder and in theHolder's sole discretion, the Holder
may consider this Note immediately due and payable (and the Maturity Date shall
be accelerated accordingly), without presentment, demand, protest or notice ofany kinds, all of which
are hereby expressly waived, anything herein or in any note or otherinstruments contained to
the contrary notwithstanding, and interest shall accrue on the total amountdue (the "Default Amount")
on the date of the Event of Default (the "Default Date") at the rate of110% per annum or the
maximum rate allowed by law, whichever is lower, from the Default Dateuntil the date payment is
made, and the Holder may immediately enforce any and all of the Holder'srights and remedies
provided herein or any other rights or remedies afforded by
law.
  
  14.           In
the event of a Qualified Financing, the Company shall offer to repurchase from
the Holder, any restricted stock given to the Holder in connection with the
transactions contemplated under the Purchase Agreement. The purchase price for
such restricted stock shall be 70% of the VWAP for the 20 Trading Days prior to
the consummation of the Qualified Financing.
 
 15.           In
the event for any reason, any payment by or act of the Company or the Holder
shall result in payment of interest which would exceed the limit authorized by
or be in violation of the law of the jurisdiction applicable to this Note, then
ipso factothe
obligation of the Company to pay interest or perform such act or requirement
shall be reduced to the limit authorized under such law, so that in no event
shall the Company be obligated to pay any such interest, perform any such act or
be bound by any requirement which would result in the payment of interest in
excess of the limit so authorized. In the event any payment by or act of the
Company shall result in the extraction of a rate of interest in excess of a sum
which is lawfully collectible as interest, then such amount (to the extent of
such excess not returned to the Company) shall, without further agreement or
notice between or by the Company or the Holder, be deemed applied to the payment
of principal, if any, hereunder immediately upon receipt of such excess funds by
the Holder, with the same force and effect as though the Company had
specifically designated such sums to be so applied to principal and the Holder
had agreed to accept such sums as an interest-free prepayment of this Note. If
any part of such excess remains after the principal has been paid in full,
whether by the provisions of the preceding sentences of this Section or
otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provision's of this Section shall control every other provision
of this Note.
 
 IN
WITNESS WHEREOF, the Company has caused this Promissory Note to be duly .
executed by an officer thereunto duly authorized this 31st day of
October, .2007.
 
 
 D.L.
      CLAIRE CAPITAL INC.By:
              /s/
      David FuselierName:
              David
      FuselierTitle:
              President