ex10_9.htm


    
      

    

    
      Exhibit
        10.9

       

      NEITHER
        THIS NOTE NOR THE SECURITIES ISSUABLE UPON ITS CONVERSION HAVE BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THE
        SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
        EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN
        OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF
        COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER
        SAID
        ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SAID
        ACT.

       

       

      CONVERTIBLE
        PROMISSORY NOTE

       

      Houston,
        Texas

      
        	September
                14, 2006 	
                 $100,000

              


      

       

      FOR
        VALUE RECEIVED, EXOBOX TECHNOLOGIES CORP., a Nevada
        corporation (hereinafter called the “Borrower”), hereby
        promises to pay to the order of Manillo Investors, Ltd. or registered assigns
        (the “Holder”) the sum of One Hundred Thousand Dollars
        ($100,000), on January 1, 2007 (the “Maturity Date”), and to
        pay interest on the unpaid principal balance hereof at the rate of ten percent
        (10%) per annum from the date hereof the “Issue Date”) until
        the same becomes due and payable, whether at maturity or upon acceleration
        or by
        prepayment or otherwise.  Any amount of principal or interest on this
        Note which is not paid when due shall bear interest at the rate of fifteen
        percent (15%) per annum from the due date thereof until the same is paid
        (“Default Interest”).  Interest shall commence
        accruing on the issue date, shall be computed on the basis of a 365-day year
        and
        the actual number of days elapsed and shall be payable, at the option of
        the
        Holder, either at maturity or at the time of conversion of the principal
        to
        which such interest relates in accordance with Article I
        below.  All payments due hereunder (to the extent not converted into
        Series C preferred stock, $.001 par value per share, of the Borrower (the
        “Preferred Stock”) in accordance with the terms hereof) shall
        be made in lawful money of the United States of America or, at the option
        of the
        Borrower, in whole or in part, in shares of Preferred Stock of the Borrower
        at
        the then applicable Conversion Rate (as defined herein). All payments shall
        be
        made at such address as the Holder shall hereafter give to the Borrower by
        written notice made in accordance with the provisions of this
        Note.  Whenever any amount expressed to be due by the terms of this
        Note is due on any day which is not a business day, the same shall instead
        be
        due on the next succeeding day which is a business day and, in the case of
        any
        interest payment date which is not the date on which this Note is paid in
        full,
        the extension of the due date thereof shall not be taken into account for
        purposes of determining the amount of interest due on such date.  As
        used in this Note, the term “business day” shall mean any day other than a
        Saturday, Sunday or a day on which commercial banks in the city of Houston,
        Texas are authorized or required by law or executive order to remain
        closed.


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      This
        Note
        is free from all taxes, liens, claims and encumbrances with respect to the
        issue
        thereof and shall not be subject to preemptive rights or other similar rights
        of
        shareholders of the Borrower and will not impose personal liability upon
        the
        holder thereof.  The obligations of the Borrower under this Note shall
        be secured by that certain Security Agreement dated by and between the Borrower
        and the Holder of even date herewith.

       

      The
        terms
        and conditions of the Securities Purchase Agreement dated as of September
        20,
        2005 by and among the Borrower and the Purchasers (as defined therein) are
        incorporated herein by reference (the Securities Purchase Agreement and the
        exhibits thereto are referred to herein collectively as the “Purchase
        Agreement”).  Terms not defined herein shall have the meanings
        ascribed to them in the Purchase Agreement

       

      The
        following terms shall apply to this Note:

       

       

      ARTICLE
        I.
CONVERSION RIGHTS

       

      1.1    
        Conversion
        Right.  Provided that, and only to the
        extent that, the Borrower has a sufficient number of shares of authorized
        but
        unissued and unreserved shares of Series C Convertible Preferred Stock
        (“Preferred Stock”) available to issue upon conversion, the Holder shall have
        the right from time to time,on the earlier of (i) the Maturity Date or (ii)
        the
        date of payment of the Default Amount (as defined in Article III) pursuant
        to
        Section 1.6(a) or Article III, the Optional Prepayment Amount (as defined
        in
        Section 5.1 or any payments pursuant to Section 1.7, each in respect of the
        remaining outstanding principal amount of this Note to convert all or any
        part
        of the outstanding and unpaid principal amount of this Note into fully paid
        and
        non-assessable shares of Preferred Stock as such Preferred Stock exists on
        the
        Issue Date, or any shares of capital stock or other securities of the Borrower
        into which such Preferred Stock shall hereafter be changed or reclassified
        at
        the conversion rate (the “Conversion Rate”) determined as
        provided herein (a “Conversion”).  The number of
        shares of Preferred Stock to be issued upon each conversion of this Note
        shall
        be the pro rata part of the total number of fully paid and nonassessable
        shares
        of Preferred Stock issuable upon conversion of the original principal hereof
        based upon the Conversion Rate.  In the event the Conversion Amount
        (as defined below) is more that the original principal of this Note, the
        number
        of shares of Preferred Stock issuable upon conversion shall be increased
        ratably. The term “Conversion Amount” means, with respect to
        any conversion of this Note, the sum of (1) the principal amount of this
        Note to
        be converted in such conversion plus (2) accrued and unpaid interest, if
        any, on such principal amount at the interest rates provided in this Note
        to the
        Conversion Date plus (3) Default Interest, if any, on the amounts
        referred to in the immediately preceding clauses (1) and/or (2) plus (4)
        at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3
        and 1.4(g) hereof.

       

      1.2    
        Conversion Rate.

       

      (a)    Calculation
        of Conversion Rate.

       

      The
        Conversion Rate shall be 4,000 shares of Preferred Stock.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      1.3    
        Authorized
        Shares.  The Borrower covenants that
        during the period the conversion right exists, the Borrower will reserve
        from
        its authorized and unissued Preferred Stock a sufficient number of shares,
        free
        from preemptive rights, to provide for the issuance of Preferred Stock upon
        the
        full conversion of this Note and the other securities issued pursuant to
        the
        Purchase Agreement.  The Borrower is required at all times to have
        authorized and reserved one and one-quarter times the number of shares that
        is
        actually issuable upon full conversion of this note (based on the Conversion
        Rate of this note in effect from time to time) (the “Reserved
        Amount”).  The Borrower represents that upon issuance, such
        shares will be duly and validly issued, fully paid and non-assessable and
        a
        binding obligation of the Borrower.  In addition, if the Borrower
        shall issue any securities or make any change to its capital structure which
        would change the number of shares of Preferred Stock into which this note
        shall
        be convertible at the then current Conversion Rate, the Borrower shall at
        the
        same time make proper provision so that thereafter there shall be a sufficient
        number of shares of Preferred Stock authorized and reserved, free from
        preemptive rights, for conversion of the outstanding Note.  The
        Borrower (i) acknowledges that it has irrevocably instructed its transfer
        agent
        to issue certificates for the Preferred Stock issuable upon conversion of
        this
        Note, and (ii) agrees that its issuance of this Note shall constitute full
        authority to its officers and agents who are charged with the duty of executing
        stock certificates to execute and issue the necessary certificates for shares
        of
        Preferred Stock in accordance with the terms and conditions of this
        Note.

       

      If,
        at
        any time a Holder of this Note submits a Notice of Conversion, and the Borrower
        does not have sufficient authorized but unissued shares of Preferred Stock
        available to effect such conversion in accordance with the provisions of
        this
        Article I (a “Conversion Default”), subject to Section 4.8, the
        Borrower shall issue to the Holder all of the shares of Preferred Stock which
        are then available to effect such conversion.  The portion of this
        Note which the Holder included in its Conversion Notice and which exceeds
        the
        amount which is then convertible into available shares of Preferred Stock
        (the
“Excess Amount”) shall, notwithstanding anything to the
        contrary contained herein, not be convertible into Preferred Stock in accordance
        with the terms hereof until (and at the Holder’s option at any time after) the
        date additional shares of Preferred Stock are authorized by the Borrower
        to
        permit such conversion, at which time the Conversion Rate in respect thereof
        shall be the lesser of (i) the Conversion Rate on the Conversion Default
        Date
        (as defined below) and (ii) the Conversion Rate on the Conversion Date
        thereafter elected by the Holder in respect thereof.  In addition, the
        Borrower shall pay to the Holder payments (“Conversion Default
        Payments”) for a Conversion Default in the amount of (x) the sum
        of (1) the then outstanding principal amount of this Note plus (2)
        accrued and unpaid interest on the unpaid principal amount of this Note through
        the Authorization Date (as defined below) plus (3) Default Interest, if
        any, on the amounts referred to in clauses (1) and/or (2), multiplied by
        (y) .24, multiplied by (z) (N/365), where N = the number of days from the
        day the holder submits a Notice of Conversion giving rise to a Conversion
        Default (the “Conversion Default Date”) to the date (the
“Authorization Date”) that the Borrower authorizes a sufficient
        number of shares of Preferred Stock to effect conversion of the full outstanding
        principal balance of this Note.  The Borrower shall use its best
        efforts to authorize a sufficient number of shares of Preferred Stock as
        soon as
        practicable following the earlier of (i) such time that the Holder notifies
        the
        Borrower or that the Borrower otherwise becomes aware that there are or likely
        will be insufficient authorized and unissued shares to allow full conversion
        thereof and (ii) a Conversion Default.  The Borrower shall send notice
        to the Holder of the authorization of additional shares of Preferred Stock,
        the
        Authorization Date and the amount of Holder’s accrued Conversion Default
        Payments.  The accrued Conversion Default Payments for each calendar
        month shall be paid in cash or shall be convertible into Preferred Stock
        (at
        such time as there are sufficient authorized shares of Preferred Stock) at
        the
        applicable Conversion Rate, at the Holder’s option, as follows:

       


      
        
          
          

        

        
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      (a)    In
        the event Holder elects to take such payment in cash, cash payment shall
        be made
        to Holder by the fifth (5th) day
        of the month
        following the month in which it has accrued; and

       

      (b)    In
        the event Holder elects to take such payment in Preferred Stock, the Holder
        may
        convert such payment amount into Preferred Stock at the Conversion Rate (as
        in
        effect at the time of conversion) at any time after the fifth day of the
        month
        following the month in which it has accrued in accordance with the terms
        of this
        Article I (so long as there is then a sufficient number of authorized shares
        of
        Preferred Stock).

       

      The
        Holder’s election shall be made in writing to the Borrower at any time prior to
        6:00 p.m., Houston, Texas time, on the third day of the month following the
        month in which Conversion Default payments have accrued.  If no
        election is made, the Holder shall be deemed to have elected to receive
        cash.  Nothing herein shall limit the Holder’s right to pursue actual
        damages (to the extent in excess of the Conversion Default Payments) for
        the
        Borrower’s failure to maintain a sufficient number of authorized shares of
        Preferred Stock, and each holder shall have the right to pursue all remedies
        available at law or in equity (including degree of specific performance and/or
        injunctive relief).

       

      1.4    
        Method of Conversion.

       

      (a)    Mechanics
        of Conversion.  Subject to Section 1.1,
        this Note may be converted by the Holder in whole or in part at any time
        from
        time to time after the Issue Date, by (A) submitting to the Borrower a notice
        of
        conversion in the form attached hereto as Exhibit A (the “Notice of
        Conversion”) by facsimile or other reasonable means of communication
        dispatched prior to 6:00 p.m., Houston, Texas time (“Conversion
        Date”) and (B) subject to Section 1.4(b), surrendering this Note at the
        principal office of the Borrower.

       

      (b)    Surrender
        of Note Upon
        Conversion.  Notwithstanding anything to
        the contrary set forth herein, upon conversion of this Note in accordance
        with
        the terms hereof, the Holder shall not be required to physically surrender
        this
        Note to the Borrower unless the entire unpaid principal amount of this Note
        is
        so converted.  The Holder and the Borrower shall maintain records
        showing the principal amount so converted and the dates of such conversions
        or
        shall use such other method, reasonably satisfactory to the Holder and the
        Borrower, so as not to require physical surrender of this Note upon each
        such
        conversion.  In the event of any dispute or discrepancy, such records
        of the Borrower shall be controlling and determinative in the absence of
        manifest error.  Notwithstanding the foregoing, if any portion of this
        Note is converted as aforesaid, the Holder may not transfer this Note unless
        the
        Holder first physically surrenders this Note to the Borrower, whereupon the
        Borrower will forthwith issue and deliver upon the order of the Holder a
        new
        Note of like tenor, registered as the Holder (upon payment by the Holder
        of any
        applicable transfer taxes) may request, representing in the aggregate the
        remaining unpaid principal amount of this Note.  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 represented
        by
        this Note may be less than the amount stated on the face hereof.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (c)    Payment
        of Taxes.  The Borrower shall not be
        required to pay any tax which may be payable in respect of any transfer involved
        in the issue and delivery of shares of Preferred Stock or other securities
        or
        property on conversion of this Note in a name other than that of the Holder
        (or
        in street name), and the Borrower shall not be required to issue or deliver
        any
        such shares or other securities or property unless and until the person or
        persons (other than the Holder or the custodian in whose street name such
        shares
        are to be held for the Holder’s account) requesting the issuance thereof shall
        have paid to the Borrower the amount of any such tax or shall have established
        to the satisfaction of the Borrower that such tax has been paid.

       

      (d)    Delivery
        of Preferred Stock Upon
        Conversion.  Upon receipt by the
        Borrower from the Holder of a facsimile transmission (or other reasonable
        means
        of communication) of a Notice of Conversion meeting the requirements for
        conversion as provided in this Section 1.4, the Borrower shall issue and
        deliver
        or cause to be issued and delivered to or upon the order of the Holder
        certificates for the Preferred Stock issuable upon such conversion within
        five
        (5) business days after such receipt (and, solely in the case of conversion
        of
        the entire unpaid principal amount hereof, surrender of this Note) (such
        fifth
        business day being hereinafter referred to as the “Deadline”)
        in accordance with the terms hereof and the Purchase Agreement.

       

      (e)    Obligation
        of Borrower to Deliver Preferred
        Stock.  Upon receipt by the Borrower of
        a Notice of Conversion, the Holder shall be deemed to be the holder of record
        of
        the Preferred Stock issuable upon such conversion, the outstanding principal
        amount and the amount of accrued and unpaid interest on this Note shall be
        reduced to reflect such conversion, and, unless the Borrower defaults on
        its
        obligations under this Article I, all rights with respect to the portion
        of this
        Note being so converted shall forthwith terminate except the right to receive
        the Preferred Stock or other securities, cash or other assets, as herein
        provided, on such conversion.  If the Holder shall have given a Notice
        of Conversion as provided herein, the Borrower’s obligation to issue and deliver
        the certificates for Preferred Stock shall be absolute and unconditional,
        irrespective of the absence of any action by the Holder to enforce the same,
        any
        waiver or consent with respect to any provision thereof, the recovery of
        any
        judgment against any person or any action to enforce the same, any failure
        or
        delay in the enforcement of any other obligation of the Borrower to the holder
        of record, or any setoff, counterclaim, recoupment, limitation or termination,
        or any breach or alleged breach by the Holder of any obligation to the Borrower,
        and irrespective of any other circumstance which might otherwise limit such
        obligation of the Borrower to the Holder in connection with such
        conversion.  The Conversion Date specified in the Notice of Conversion
        shall be the Conversion Date so long as the Notice of Conversion is received
        by
        the Borrower before 6:00 p.m., Houston, Texas time, on such date.

       

      (f)    Failure
        to Deliver Preferred Stock Prior to
        Deadline.  Without in any way limiting
        the Holder’s right to pursue other remedies, including actual damages and/or
        equitable relief, the parties agree that if delivery of the Preferred Stock
        issuable upon conversion of this Note is more than two (2) days after the
        Deadline because of the fault of Borrower (other than a failure due to the
        circumstances described in Section 1.3 above, which failure shall be governed
        by
        such Section) the Borrower shall pay to the Holder $2,000 per day in cash,
        for
        each day beyond the Deadline that the Borrower fails to deliver such Preferred
        Stock.  Such cash amount shall be paid to Holder by the fifth day of
        the month following the month in which it has accrued or, at the option of
        the
        Holder (by written notice to the Borrower by the first day of the month
        following the month in which it has accrued), shall be added to the principal
        amount of this Note, in which event interest shall accrue thereon in accordance
        with the terms of this Note and such additional principal amount shall be
        convertible into Preferred Stock in accordance with the terms of this
        Note.

       

      
        
          
          

        

        
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      1.5    
        Concerning the
        Shares.  The shares of Preferred Stock
        issuable upon conversion of this Note may not be sold or transferred
        unless  (i) such shares are sold pursuant to an effective registration
        statement under the Act or (ii) the Borrower or its transfer agent shall
        have
        been furnished with an opinion of  counsel (which opinion shall be in
        form, substance and scope customary for opinions of counsel in comparable
        transactions) to the effect that the shares to be sold or transferred may
        be
        sold or transferred pursuant to an exemption from such registration or
        (iii) such shares are sold or transferred pursuant to Rule 144 under the
        Act (or a successor rule) (“Rule 144”) or (iv) such shares are
        transferred to an “affiliate” (as defined in Rule 144) of the Borrower who
        agrees to sell or otherwise transfer the shares only in accordance with this
        Section 1.5 and who is an Accredited Investor (as defined in Section 6(b)
        of the
        Purchase Agreement).  Except as otherwise provided in the Purchase
        Agreement (and subject to the removal provisions set forth below), until
        such
        time as the shares of Preferred Stock issuable upon conversion of this Note
        have
        been registered under the Act or otherwise may be sold pursuant to Rule 144
        without any restriction as to the number of securities as of a particular
        date
        that can then be immediately sold, each certificate for shares of Preferred
        Stock issuable upon conversion of this Note that has not been so included
        in an
        effective registration statement or that has not been sold pursuant to an
        effective registration statement or an exemption that permits removal of
        the
        legend, shall bear a legend substantially in the following form, as
        appropriate:

       

      “NEITHER
        THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE
        UPON
        THEIR CONVERSION HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
        AMENDED.  THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
        THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
        SAID
        ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR
        OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT
        REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S
        UNDER
        SAID ACT.”

       

      The
        legend set forth above shall be removed and the Borrower shall issue to the
        Holder a new certificate therefor free of any transfer legend if (i) the
        Borrower or its transfer agent shall have received an opinion of counsel,
        in
        form, substance and scope customary for opinions of counsel in comparable
        transactions, to the effect that a public sale or transfer of such Preferred
        Stock may be made without registration under the Act and the shares are so
        sold
        or transferred, (ii) such Holder provides the Borrower or its transfer agent
        with reasonable assurances that the Preferred Stock issuable upon conversion
        of
        this Note (to the extent such securities are deemed to have been acquired
        on the
        same date) can be sold pursuant to Rule 144 or (iii) in the case of the
        Preferred Stock issuable upon conversion of this Note, such security is
        registered for sale by the Holder under an effective registration statement
        filed under the Act or otherwise may be sold pursuant to Rule 144 without
        any
        restriction as to the number of securities as of a particular date that can
        then
        be immediately sold.  Nothing in this Note shall affect in any way the
        Holder’s obligations to comply with applicable prospectus delivery requirements
        upon the resale of the securities referred to herein.

       

      
        
          
          

        

        
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      1.6    
        Effect of Certain Events.

       

      (a)    Effect
        of Merger, Consolidation, Etc.  At the option of the
        Holder, the sale, conveyance or disposition of all or substantially all of
        the
        assets of the Borrower, the effectuation by the Borrower of a transaction
        or
        series of related transactions in which more than 50% of the voting power
        of the
        Borrower is disposed of, or the consolidation, merger or other business
        combination of the Borrower with or into any other Person (as defined below)
        or
        Persons when the Borrower is not the survivor shall either:  (i) be
        deemed to be an Event of Default (as defined in Article III) pursuant to
        which
        the Borrower shall be required to pay to the Holder upon the consummation
        of and
        as a condition to such transaction an amount equal to the Default Amount
        (as
        defined in Article III) or (ii) be treated pursuant to Section 1.6(b)
        hereof.  “Person” shall mean any individual,
        corporation, limited liability company, partnership, association, trust or
        other
        entity or organization.

       

      (b)    Adjustment
        Due to Merger, Consolidation, Etc. If, at any
        time when this Note is issued and outstanding and prior to conversion of
        all of
        this note, there shall be any merger, consolidation, exchange of shares,
        recapitalization, reorganization, or other similar event, as a result of
        which
        shares of Preferred Stock of the Borrower shall be changed into the same
        or a
        different number of shares of another class or classes of stock or securities
        of
        the Borrower or another entity, or in case of any sale or conveyance of all
        or
        substantially all of the assets of the Borrower other than in connection
        with a
        plan of complete liquidation of the Borrower, then the Holder of this Note
        shall
        thereafter have the right to receive upon conversion of this Note, upon the
        basis and upon the terms and conditions specified herein and in lieu of the
        shares of Preferred Stock immediately theretofore issuable upon conversion,
        such
        stock, securities or assets which the Holder would have been entitled to
        receive
        in such transaction had this Note been converted in full immediately prior
        to
        such transaction (without regard to any limitations on conversion set forth
        herein), and in any such case appropriate provisions shall be made with respect
        to the rights and interests of the Holder of this Note to the end that the
        provisions hereof (including, without limitation, provisions for adjustment
        of
        the Conversion Rate and of the number of shares issuable upon conversion
        of this
        note) shall thereafter be applicable, as nearly as may be practicable in
        relation to any securities or assets thereafter deliverable upon the conversion
        hereof.  The Borrower shall not effect any transaction described in
        this Section 1.6(b) unless (a) it first gives, to the extent practicable,
        thirty
        (30) days prior written notice (but in any event at least fifteen (15) days
        prior written notice) of the record date of the special meeting of shareholders
        to approve, or if there is no such record date, the consummation of, such
        merger, consolidation, exchange of shares, recapitalization, reorganization
        or
        other similar event or sale of assets (during which time the Holder shall
        be
        entitled to convert this Note) and (b) the resulting successor or acquiring
        entity (if not the Borrower) assumes by written instrument the obligations
        of
        this Section 1.6(b).  The above provisions shall similarly apply to
        successive consolidations, mergers, sales, transfers or share
        exchanges.

       

      
        
          
          

        

        
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      (c)    Adjustment
        Due to Distribution.  If the Borrower
        shall declare or make any distribution of its assets (or rights to acquire
        its
        assets) to holders of Preferred Stock as a dividend, stock repurchase, by
        way of
        return of capital or otherwise (including any dividend or distribution to
        the
        Borrower’s shareholders in cash or shares (or rights to acquire shares) of
        capital stock of a subsidiary (i.e., a spin-off)) (a
“Distribution”), then the Holder of this Note shall be
        entitled, upon any conversion of this Note after the date of record for
        determining shareholders entitled to such Distribution, to receive the amount
        of
        such assets which would have been payable to the Holder with respect to the
        shares of Preferred Stock issuable upon such conversion had such Holder been
        the
        holder of such shares of Preferred Stock on the record date for the
        determination of shareholders entitled to such Distribution.

       

      (d)    Adjustment
        Due to Dilutive Issuance.  If, at any
        time when this Note is issued and outstanding, the Borrower issues or sells,
        or
        in accordance with this Section 1.6(d) hereof is deemed to have issued or
        sold,
        any shares of Preferred Stock (a “Dilutive Issuance”), then
        immediately upon the Dilutive Issuance, the Conversion Rate will be adjusted
        in
        order to maintain the same Conversion Rate.

       

      The
        Borrower shall be deemed to have issued or sold shares of Preferred Stock
        if the
        Borrower in any manner issues or grants any warrants, rights or options,
        whether
        or not immediately exercisable, to subscribe for or to purchase Preferred
        Stock
        or other securities convertible into or exchangeable for Preferred Stock
        (“Convertible Securities”) (such warrants, rights and options
        to purchase Preferred Stock or Convertible Securities are hereinafter referred
        to as “Options”).  No further adjustment to the
        Conversion Rate will be made upon the actual issuance of such Preferred Stock
        upon the exercise of such Options or upon the conversion or exchange of
        Convertible Securities issuable upon exercise of such Options.

       

      Additionally,
        the Borrower shall be deemed to have issued or sold shares of Preferred Stock
        if
        the Borrower in any manner issues or sells any Convertible Securities, whether
        or not immediately convertible (other than where the same are issuable upon
        the
        exercise of Options).

       

      No
        adjustment to the Conversion Rate will be made upon the exercise of any
        warrants, options or convertible securities granted, issued and outstanding
        on
        the date of issuance of this Note.

       

      (e)    Purchase
        Rights.  If, at any time when this Note
        is issued and outstanding, the Borrower issues any convertible securities
        or
        rights to purchase stock, warrants, securities or other property (the
“Purchase Rights”) pro rata to the record holders of any class
        of Preferred Stock, then the Holder of this Note and the holders of the Series
        C
        Convertible Preferred Stock will be entitled to acquire, upon the terms
        applicable to such Purchase Rights, the aggregate Purchase Rights which such
        Holder could have acquired if such Holder had held the number of shares of
        Preferred Stock acquirable upon complete conversion of this Note or the Series
        C
        Convertible Preferred Stock (without regard to any limitations on conversion
        contained herein) immediately before the date on which a record is taken
        for the
        grant, issuance or sale of such Purchase Rights or, if no such record is
        taken,
        the date as of which the record holders of Preferred Stock are to be determined
        for the grant, issue or sale of such Purchase Rights.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (f)    Notice
        of Adjustments.  Upon the occurrence of
        each adjustment or readjustment of the Conversion Rate as a result of the
        events
        described in this Section 1.6, the Borrower, at its expense, shall promptly
        compute such adjustment or readjustment and prepare and furnish to the Holder
        of
        a certificate setting forth such adjustment or readjustment and showing in
        detail the facts upon which such adjustment or readjustment is
        based.  The Borrower shall, upon the written request at any time of
        the Holder, furnish to such Holder a like certificate setting forth (i) such
        adjustment or readjustment, (ii) the Conversion Rate at the time in effect
        and
        (iii) the number of shares of Preferred Stock and the amount, if any, of
        other
        securities or property which at the time would be received upon conversion
        of
        this note.

       

      1.7     
        Trading Market Limitations.
Unless permitted
        by the applicable rules and regulations of the
        principal securities market on which the Preferred Stock is then listed or
        traded, in no event shall the Borrower issue upon conversion of or otherwise
        pursuant to this Note and the other convertible securities issued pursuant
        to
        the Purchase Agreement more than the maximum number of shares of Preferred
        Stock
        that the Borrower can issue pursuant to any rule of the principal United
        States
        securities market on which the Preferred Stock is then traded (the
“Maximum Share Amount”), which, as of the Issue Date shall be
        19.99% of the total shares outstanding on the Issue Date), subject to equitable
        adjustment from time to time for stock splits, stock dividends, combinations,
        capital reorganizations and similar events relating to the Preferred Stock
        occurring after the date hereof.  Once the Maximum Share Amount has
        been issued (the date of which is hereinafter referred to as the
“Maximum Conversion Date”), if the Borrower fails to eliminate
        any prohibitions under applicable law or the rules or regulations of any
        stock
        exchange, interdealer quotation system or other self-regulatory organization
        with jurisdiction over the Borrower or any of its securities on the Borrower’s
        ability to issue shares of Preferred Stock in excess of the Maximum Share
        Amount
        (a “Trading Market Prepayment Event”), in lieu of any further
        right to convert this Note, and in full satisfaction of the Borrower’s
        obligations under this Note, the Borrower shall pay to the Holder, within
        fifteen (15) business days of the Maximum Conversion Date (the “Trading
        Market Prepayment Date”), an amount equal to 130% times the
sum of (a) the then outstanding principal amount of
        this Note immediately
        following the Maximum Conversion Date, plus (b) accrued and unpaid
        interest on the unpaid principal amount of this Note to the Trading Market
        Prepayment Date, plus (c) Default Interest, if any, on the amounts
        referred to in clause (a) and/or (b) above, plus (d) any optional amounts
        that may be added thereto at the Maximum Conversion Date by the Holder in
        accordance with the terms hereof (the then outstanding principal amount of
        this
        Note immediately following the Maximum Conversion Date, plus the amounts
        referred to in clauses (b), (c) and (d) above shall collectively be referred
        to
        as the “Remaining Convertible Amount”).  With respect
        to each Holder of Note, the Maximum Share Amount shall refer to such Holder’s
prorata share thereof determined in accordance with Section 4.8
        below.  In the event that the sum of (x) the aggregate number of
        shares of Preferred Stock issued upon conversion of this Note and the other
        convertible securities issued pursuant to the Purchase Agreement plus (y)
        the aggregate number of shares of Preferred Stock that remain issuable upon
        conversion of this Note and the other convertible securities issued pursuant
        to
        the Purchase Agreement, represents at least one hundred percent (100%) of
        the
        Maximum Share Amount (the “Triggering Event”), the Borrower
        will use its best efforts to seek and obtain Shareholder Approval (or obtain
        such other relief as will allow conversions hereunder in excess of the Maximum
        Share Amount) as soon as practicable following the Triggering Event and before
        the Maximum Conversion Date.  As used herein, “Shareholder
        Approval” means approval by the shareholders of the Borrower to
        authorize the issuance of the full number of shares of Preferred Stock which
        would be issuable upon full conversion of the then outstanding Note but for
        the
        Maximum Share Amount.

       

      
        
          
          

        

        
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      1.8     Status
        as Shareholder.  Upon submission of a
        Notice of Conversion by a Holder, (i) the shares covered thereby (other than
        the
        shares, if any, which cannot be issued because their issuance would exceed
        such
        Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall
        be deemed converted into shares of Preferred Stock and (ii) the Holder’s rights
        as a Holder of such converted portion of this Note shall cease and terminate,
        excepting only the right to receive certificates for such shares of Preferred
        Stock and to any remedies provided herein or otherwise available at law or
        in
        equity to such Holder because of a failure by the Borrower to comply with
        the
        terms  of this Note.  Notwithstanding the foregoing, if a
        Holder has not received certificates for all shares of Preferred Stock prior
        to
        the tenth (10th) business day after the expiration of the Deadline with respect
        to a conversion of any portion of this Note for any reason, then (unless
        the
        Holder otherwise elects to retain its status as a holder of Preferred Stock
        by
        so notifying the Borrower) the Holder shall regain the rights of a Holder
        of
        this Note with respect to such unconverted portions of this Note and the
        Borrower shall, as soon as practicable, return such unconverted Note to the
        Holder or, if this note has not been surrendered, adjust its records to reflect
        that such portion of this Note has not been converted.  In all cases,
        the Holder shall retain all of its rights and remedies (including, without
        limitation, (i) the right to receive Conversion Default Payments pursuant
        to
        Section 1.3 to the extent required thereby for such Conversion Default and
        any
        subsequent Conversion Default and (ii) the right to have the Conversion Rate
        with respect to subsequent conversions determined in accordance with Section
        1.3) for the Borrower’s failure to convert this Note.

       

       

      ARTICLE
        II.
CERTAIN COVENANTS

       

      2.1    
        Distributions on Capital
        Stock.  So long as the Borrower shall
        have any obligation under this Note, the Borrower shall not without the Holder’s
        written consent (a) pay, declare or set apart for such payment, any dividend
        or
        other distribution (whether in cash, property or other securities) on shares
        of
        capital stock other than dividends on shares of Common Stock solely in the
        form
        of additional shares of Common Stock or (b) directly or indirectly or through
        any subsidiary make any other payment or distribution in respect of its capital
        stock except for distributions pursuant to any shareholders’ rights plan which
        is approved by a majority of the Borrower’s disinterested
        directors.

       

      2.2    
        Restriction on Stock
        Repurchases.  So long as the Borrower
        shall have any obligation under this Note, the Borrower shall not without
        the
        Holder’s written consent redeem, repurchase or otherwise acquire (whether for
        cash or in exchange for property or other securities or otherwise) in any
        one
        transaction or series of related transactions any shares of capital stock
        of the
        Borrower or any warrants, rights or options to purchase or acquire any such
        shares.

       

      2.3    
        Borrowings.  So
        long as the Borrower shall have any obligation under this Note, the Borrower
        shall not, without the Holder’s written consent, create, incur, assume or suffer
        to exist any liability for borrowed money, except (a) borrowings in existence
        or
        committed on the date hereof and of which the Borrower has informed Holder
        in
        writing prior to the date hereof, (b) indebtedness to trade creditors or
        financial institutions incurred in the ordinary course of business or (c)
        borrowings, the proceeds of which shall be used to repay this Note.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      2.4    
        Sale of
        Assets.  So long as the Borrower shall
        have any obligation under this Note, the Borrower shall not, without the
        Holder’s written consent, sell, lease or otherwise dispose of any significant
        portion of its assets outside the ordinary course of business.  Any
        consent to the disposition of any assets may be conditioned on a specified
        use
        of the proceeds of disposition.

       

      2.5    
        Advances and
        Loans.  So long as the Borrower shall
        have any obligation under this Note, the Borrower shall not, without the
        Holder’s written consent, lend money, give credit or make advances to any
        person, firm, joint venture or corporation, including, without limitation,
        officers, directors, employees, subsidiaries and affiliates of the Borrower,
        except loans, credits or advances (a) in existence or committed on the date
        hereof and which the Borrower has informed Holder in writing prior to the
        date
        hereof, (b) made in the ordinary course of business or (c) not in excess
        of
        $50,000.

       

      2.6    
        Contingent
        Liabilities.  So long as the Borrower
        shall have any obligation under this Note, the Borrower shall not, without
        the
        Holder’s written consent, assume, guarantee, endorse, contingently agree to
        purchase or otherwise become liable upon the obligation of any person, firm,
        partnership, joint venture or corporation, except by the endorsement of
        negotiable instruments for deposit or collection and except assumptions,
        guarantees, endorsements and contingencies (a) in existence or committed
        on the
        date hereof and which the Borrower has informed Holder in writing prior to
        the
        date hereof, and (b) similar transactions in the ordinary course of
        business.

       

       

      ARTICLE
        III.
EVENTS OF DEFAULT

       

      If
        any of
        the following events of default (each, an “Event of Default”)
        shall occur:

       

      3.1    
        Failure to Pay Principal or
        Interest.  The Borrower fails to pay the
        principal hereof or interest thereon when due on this Note, whether at maturity,
        upon a Trading Market Prepayment Event pursuant to Section 1.7, upon
        acceleration or otherwise;

       

      3.2    
        Conversion and the
        Shares.  The Borrower fails to issue
        shares of Preferred Stock to the Holder (or announces or threatens that it
        will
        not honor its obligation to do so) upon exercise by the Holder of the conversion
        rights of the Holder in accordance with the terms of this Note (for a period
        of
        at least sixty (60) days, if such failure is solely as a result of the
        circumstances governed by Section 1.3 and the Borrower is using its best
        efforts
        to authorize a sufficient number of shares of Preferred Stock as soon as
        practicable), fails to transfer or cause its transfer agent to transfer
        (electronically or in certificated form) any certificate for shares of Preferred
        Stock issued to the Holder upon conversion of or otherwise pursuant to this
        Note
        as and when required by this Note or fails to remove any restrictive legend
        (or
        to withdraw any stop transfer instructions in respect thereof) on any
        certificate for any shares of Preferred Stock issued to the Holder upon
        conversion of or otherwise pursuant to this Note as and when required by
        this
        Note (or makes any announcement, statement or threat that it does not intend
        to
        honor the obligations described in this paragraph) and any such failure shall
        continue uncured (or any announcement, statement or threat not to honor its
        obligations shall not be rescinded in writing) for ten (10) days after the
        Borrower shall have been notified thereof in writing by the Holder;

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      3.3    
        Breach of
        Covenants.  The Borrower breaches any
        material covenant or other material term or condition contained in Sections
        1.3,
        1.6 or 1.7 of this Note, or Sections 7(d), 7(g), 7(h), 7(i), 7(k) or 8 of
        the
        Purchase Agreement and such breach continues for a period of ten (10) days
        after
        written notice thereof to the Borrower from the Holder;

       

      3.4    
        Breach of Representations and
        Warranties.  Any representation or
        warranty of the Borrower made herein or in any agreement, statement or
        certificate given in writing pursuant hereto or in connection herewith
        (including, without limitation, the Purchase Agreement), shall be false or
        misleading in any material respect when made and the breach of which has
        (or
        with the passage of time will have) a material adverse effect on the rights
        of
        the Holder with respect to this Note or the Purchase Agreement;

       

      3.5    
        Receiver or
        Trustee.  The Borrower or any subsidiary
        of the Borrower shall make an assignment for the benefit of creditors, or
        apply
        for or consent to the appointment of a receiver or trustee for it or for
        a
        substantial part of its property or business, or such a receiver or trustee
        shall otherwise be appointed;

       

      3.6    
        Judgments.  Any
        money judgment, writ or similar process shall be entered or filed against
        the
        Borrower or any subsidiary of the Borrower or any of its property or other
        assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
        for a period of twenty (20) days unless otherwise consented to by the Holder,
        which consent will not be unreasonably withheld;

       

      3.7    
        Bankruptcy.  Bankruptcy,
        insolvency, reorganization 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 Borrower or any subsidiary of the Borrower;
        or

       

      3.8    
        Default Under Other
        Securities.  An Event of Default has
        occurred and is continuing under any of the other securities issued pursuant
        to
        the Purchase Agreement then, upon the occurrence and during the continuation
        of
        any Event of Default specified in Section 3.1, 3.2, 3.3, 3.4, 3.6, 3.7, or
        3.9,
        at the option of the Holders of a majority of the aggregate principal amount
        of
        the outstanding Note or other securities issued pursuant to the Purchase
        Agreement exercisable through the delivery of written notice to the Borrower
        by
        such Holders (the “Default Notice”), and upon the occurrence of
        an Event of Default specified in Section 3.6 or 3.8, this note shall become
        immediately due and payable and the Borrower shall pay to the Holder, in
        full
        satisfaction of its obligations hereunder, an amount equal to the greater
        of (i)
        130% times the sum of (w) the then outstanding principal amount of
        this Note plus (x) accrued and unpaid interest on the unpaid principal
        amount of this Note to the date of payment (the “Mandatory Prepayment
        Date”) plus (y) Default Interest, if any, on the amounts
        referred to in clauses (w) (the then outstanding principal amount of this
        Note
        to the date of payment plus the amounts referred to in clauses (x)
        and  (y) shall collectively be known as the “Default
        Sum”) or (ii) the “parity value” of the Default Sum to be prepaid,
        where parity value means (a) the highest number of shares of Preferred Stock
        issuable upon conversion of or otherwise pursuant to such Default Sum in
        accordance with Article I, treating the Trading Day immediately preceding
        the
        Mandatory Prepayment Date as the “Conversion Date” for purposes of determining
        the lowest applicable Conversion Rate, unless the Default Event arises as
        a
        result of a breach in respect of a specific Conversion Date in which case
        such
        Conversion Date shall be the Conversion Date), multiplied by (b) the
        highest Closing Price for the Preferred Stock during the period beginning
        on the
        date of first occurrence of the Event of Default and ending one day prior
        to the
        Mandatory Prepayment Date (the “Default Amount”) and all other
        amounts payable hereunder shall immediately become due and payable, all without
        demand, presentment or notice, all of which hereby are expressly waived,
        together with all costs, including, without limitation, legal fees and expenses,
        of collection, and the Holder shall be entitled to exercise all other rights
        and
        remedies available at law or in equity.  If the Borrower fails to pay
        the Default Amount within five (5) business days of written notice that such
        amount is due and payable, then the Holder shall have the right at any time,
        so
        long as the Borrower remains in default (and so long and to the extent that
        there are sufficient authorized shares), to require the Borrower, upon written
        notice, to immediately issue, in lieu of the Default Amount, the number of
        shares of Preferred Stock of the Borrower equal to the Default Amount divided
        by
        the Conversion Rate then in effect.

       

      
        
          
          

        

        
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      ARTICLE
        IV.
MISCELLANEOUS

       

      4.1    
        Failure or Indulgence Not
        Waiver.  No failure or delay on the part
        of the Holder in the exercise of any power, right or privilege hereunder
        shall
        operate as a waiver thereof, nor shall any single or partial exercise of
        any
        such power, right or privilege preclude other or further exercise thereof
        or of
        any other right, power or privileges.  All rights and remedies
        existing hereunder are cumulative to, and not exclusive of, any rights or
        remedies otherwise available.

       

      4.2     Notices.  Any
        notice herein required or permitted to be given shall be in writing and may
        be
        personally served or delivered by courier or sent by United States mail and
        shall be deemed to have been given upon receipt if personally served (which
        shall include telephone line facsimile transmission) or sent by courier or
        three
        (3) days after being deposited in the United States mail, certified, with
        postage pre-paid and properly addressed, if sent by mail.  For the
        purposes hereof, the address of the Holder shall be as shown on the records
        of
        the Borrower; and the address of the Borrower shall be 6303 Beverly Hill,
        Suite
        210, Houston, Texas 77057, with a copy not constituting notice sent to Douglas
        J, Dillon, Andrews Kurth, LLP, 600 Travis, Houston, Texas 77002.  Both
        the Holder and the Borrower may change the address for service by service
        of
        written notice to the other as herein provided.

       

      4.3    
        Amendments.  This
        Note and any provision hereof may only be amended by an instrument in writing
        signed by the Borrower and the Holder.  The term “Note” and all
        reference thereto, as used throughout this instrument, shall mean this
        instrument (and the other Note issued pursuant to the Purchase Agreement)
        as
        originally executed, or if later amended or supplemented, then as so amended
        or
        supplemented.

       

      
        
          
          

        

        
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      4.4    
        Assignability.  This
        Note shall be binding upon the Borrower and its successors and assigns, and
        shall inure to be the benefit of the Holder and its successors and
        assigns.  Each transferee of this Note must be an “accredited
        investor” (as defined in Rule 501(a) of the 1933
        Act).  Notwithstanding anything in this Note to the contrary, this
        Note may be pledged as collateral in connection with a bonafide
        margin account or other lending arrangement.

       

      4.5    
        Cost of
        Collection.  If default is made in the
        payment of this Note, the Borrower shall pay the Holder hereof costs of
        collection, including reasonable attorneys’ fees.

       

      4.6    
        Governing
        Law.  THIS NOTE SHALL BE ENFORCED,
        GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA
        APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
        WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE BORROWER
        HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL
        COURTS
        LOCATED IN HOUSTON, TEXAS WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS
        NOTE,
        THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
        CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE
        OF AN
        INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
        PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A
        PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
        SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
        PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
        PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT
        A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
        CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
        OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
        ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND
        EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
        CONNECTION WITH SUCH DISPUTE.

       

      4.7     Certain
        Amounts.  Whenever pursuant to this Note
        the Borrower is required to pay an amount in excess of the outstanding principal
        amount (or the portion thereof required to be paid at that time) plus accrued
        and unpaid interest plus Default Interest on such interest, the Borrower
        and the
        Holder agree that the actual damages to the Holder from the receipt of cash
        payment on this Note may be difficult to determine and the amount to be so
        paid
        by the Borrower represents stipulated damages and not a penalty and is intended
        to compensate the Holder in part for loss of the opportunity to convert this
        Note and to earn a return from the sale of shares of Preferred Stock acquired
        upon conversion of this Note at a price in excess of the price paid for such
        shares pursuant to this Note.  The Borrower and the Holder hereby
        agree that such amount of stipulated damages is not plainly disproportionate
        to
        the possible loss to the Holder from the receipt of a cash payment without
        the
        opportunity to convert this Note into shares of Preferred Stock.

       

      
        
          
          

        

        
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      4.8    
        Allocations of Maximum Share Amount and Reserved
        Amount.  The Maximum Share Amount and
        Reserved Amount shall be allocated pro rata among the Holders of Note based
        on
        the principal amount of such Note issued to each Holder.  Each
        increase to the Maximum Share Amount and Reserved Amount shall be allocated
        pro
        rata among the Holders of Note based on the principal amount of such Note
        held
        by each Holder at the time of the increase in the Maximum Share Amount or
        Reserved Amount.  In the event a Holder shall sell or otherwise
        transfer any of such Holder’s Note, each transferee shall be allocated a pro
        rata portion of such transferor’s Maximum Share Amount and Reserved
        Amount.  Any portion of the Maximum Share Amount or Reserved Amount
        which remains allocated to any person or entity which does not hold any Note
        shall be allocated to the remaining Holders of Note, pro rata based on the
        principal amount of such Note then held by such Holders.

       

      4.9    
        Damages
        Shares.  The shares of Preferred Stock
        that may be issuable to the Holder pursuant to Sections 1.3 and 1.4(f)
        (“Damages Shares”) shall be treated as Preferred Stock issuable
        upon conversion of this Note for all purposes hereof and shall be subject
        to all
        of the limitations and afforded all of the rights of the other shares of
        Preferred Stock issuable hereunder.  For purposes of calculating
        interest payable on the outstanding principal amount hereof, except as otherwise
        provided herein, amounts convertible into Damages Shares (“Damages
        Amounts”) shall not bear interest but must be converted prior to the
        conversion of any outstanding principal amount hereof, until the outstanding
        Damages Amounts is zero.

       

      4.10  
        Denominations.  At
        the request of the Holder, upon surrender of this Note, the Borrower shall
        promptly issue a new Note in the aggregate outstanding principal amount hereof,
        in the form hereof, in such denominations as the Holder shall
        request.

       

      4.11  
        Purchase
        Agreement.  By its acceptance of this
        Note, each Holder agrees to be bound by the applicable terms of the Purchase
        Agreement.

       

      4.12  
        Notice of Corporate
        Events.  Except as otherwise provided
        below, the Holder of this Note shall have no rights as a Holder of Preferred
        Stock unless and only to the extent that it converts this Note into Preferred
        Stock.  The Borrower shall provide the Holder with prior notification
        of any meeting of the Borrower’s shareholders (and copies of proxy materials and
        other information sent to shareholders).  In the event of any taking
        by the Borrower of a record of its shareholders for the purpose of determining
        shareholders who are entitled to receive payment of any dividend or other
        distribution, any right to subscribe for, purchase or otherwise acquire
        (including by way of merger, consolidation, reclassification or
        recapitalization) any share of any class or any other securities or property,
        or
        to receive any other right, or for the purpose of determining shareholders
        who
        are entitled to vote in connection with any proposed sale, lease or conveyance
        of all or substantially all of the assets of the Borrower or any proposed
        liquidation, dissolution or winding up of the Borrower, the Borrower shall
        mail
        a notice to the Holder, at least twenty (20) days prior to the record date
        specified therein (or thirty (30) days prior to the consummation of the
        transaction or event, whichever is earlier), of the date on which any such
        record is to be taken for the purpose of such dividend, distribution, right
        or
        other event, and a brief statement regarding the amount and character of
        such
        dividend, distribution, right or other event to the extent known at such
        time.  The Borrower shall make a public announcement of any event
        requiring notification to the Holder hereunder substantially simultaneously
        with
        the notification to the Holder in accordance with the terms of this Section
        4.12.

       

      
        
          
          

        

        
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      4.13 
        Remedies.  The
        Borrower acknowledges that a breach by it of its obligations hereunder will
        cause irreparable harm to the Holder, by vitiating the intent and purpose
        of the
        transaction contemplated hereby.  Accordingly, the Borrower
        acknowledges that the remedy at law for a breach of its obligations under
        this
        Note will be inadequate and agrees, in the event of a breach or threatened
        breach by the Borrower of the provisions of this Note, that the Holder shall
        be
        entitled, in addition to all other available remedies at law or in equity,
        and
        in addition to the penalties assessable herein, to an injunction or injunctions
        restraining, preventing or curing any breach of this Note and to enforce
        specifically the terms and provisions thereof, without the necessity of showing
        economic loss and without any bond or other security being
        required.

       

       

      ARTICLE
        V.
OPTIONAL PREPAYMENT

       

      5.1    
        Optional
        Prepayment.  Notwithstanding anything to
        the contrary contained in this Note, the Borrower shall have the unilateral
        right at its sole election to prepay all of this outstanding Note in accordance
        with this Section 5.1.  Any notice of prepayment hereunder (an
“Optional Prepayment”) shall be delivered to the Holders of
        this Note at their registered addresses appearing on the books and records
        of
        the Borrower and shall state (1) that the Borrower is exercising its right
        to
        prepay all of this Note issued on the Issue Date and (2) the date of prepayment
        (the “Optional Prepayment Notice”).  On the date
        fixed for prepayment (the “Optional Prepayment Date”), the
        Borrower shall make payment of the unpaid principal balance and accrued interest
        and other amounts, if any, owing under the terms of this Note.

       

       

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        OF PAGE INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
        by its duly authorized officer this 14th day of
        September,
        2006.

       

      
        	 	 	
                EXOBOX
                  TECHNOLOGIES CORP.

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Robert
                  B. Dillon, President

              


      


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A

       

      NOTICE
        OF CONVERSION

       

      (To
        be
        Executed by the Registered Holder

       

      in
        order
        to Convert this note)

       

      The
        undersigned hereby irrevocably elects to convert $__________ principal amount
        of
        this note (defined below) into shares of common stock, par value $.001 per
        share
        (“Preferred Stock”), of Exobox Technologies Corp., a Nevada
        corporation (the “Borrower”) according to the conditions of the
        convertible Note of the Borrower dated as of September ___, 2006 (the “Note”),
        as of the date written below.  If securities are to be issued in the
        name of a person other than the undersigned, the undersigned will pay all
        transfer taxes payable with respect thereto and is delivering herewith such
        certificates.  No fee will be charged to the Holder for any
        conversion, except for transfer taxes, if any.  A copy of each Note is
        attached hereto (or evidence of loss, theft or destruction
        thereof).

       

      The
        Borrower shall electronically transmit the Preferred Stock issuable pursuant
        to
        this Notice of Conversion to the account of the undersigned or its nominee
        with
        DTC through its Deposit Withdrawal Agent Commission system (“DWAC
        Transfer”).

       

      
        	
                Name
                  of DTC Prime Broker:

              	 
	
                Account
                  Number:

              	 


      

      In
        lieu
        of receiving shares of Preferred Stock issuable pursuant to this Notice of
        Conversion by way of a DWAC Transfer, the undersigned hereby requests that
        the
        Borrower issue a certificate or certificates for the number of shares of
        Preferred Stock set forth below (which numbers are based on the Holder’s
        calculation attached hereto) in the name(s) specified immediately below or,
        if
        additional space is necessary, on an attachment hereto:

       

      
        	
                Name:

              	 
	
                Address:

              	 


      

      The
        undersigned represents and warrants that all offers and sales by the undersigned
        of the securities issuable to the undersigned upon conversion of this Note
        shall
        be made pursuant to registration of the securities under the Securities Act
        of
        1933, as amended (the “Act”), or pursuant to an exemption from
        registration under the Act.

       

      
        	
                Date
                  of Conversion:

              	 
	
                Applicable
                  Conversion Rate:

              	 
	
                Number
                  of Shares of Preferred Stock to be Issued Pursuant to 
                  

              
	
                Conversion
                  of this note:

              	 
	
                Signature:

              	 
	
                Name:

              	 
	
                Address:

              	 


      


      The
        Borrower shall issue and deliver shares of Preferred Stock to an overnight
        courier not later than three business days following receipt of the original
        Note(s) to be converted, and shall make payments pursuant to this Note for
        the
        number of business days such issuance and delivery is late.

    

     

    
       

      18