ibii8k20100416ex4-12.htm


    
      

      

    

    EXHIBIT 4.12

    
 

    NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

    


    


    
      	
              Principal
      Amount: $85,000.00

            	
              Issue
      Date: April 16, 2010

            
	
              Purchase
      Price: $85,000.00

            	 
      


    

    


    


    CONVERTIBLE PROMISSORY
NOTE

    


    FOR VALUE RECEIVED, Island Breeze International
Inc., a Delaware corporation (hereinafter called the “Borrower”), hereby
promises to pay to the order of __________________________________, a Delaware
corporation, or registered assigns (the “Holder”) the sum of $85,000.00 together
with any interest as set forth herein, on January 5, 2011 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of eight
percent (8%) (the “Interest Rate”) 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.  This Note may not be
prepaid in whole or in part except as otherwise explicitly set forth herein in
Section 1.8. Any amount of principal or interest on this Note which is not paid
when due shall bear interest at the rate of twenty two percent (22%) 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.  All payments due hereunder (to the extent not converted into
class A common stock, $0.001 par value per share (the “Common Stock”) in
accordance with the terms hereof) shall be made in lawful money of the United
States of America.  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 New York, New York are authorized or required by law or executive order
to remain closed.  Each capitalized term used herein, and not otherwise
defined, shall have the meaning ascribed thereto in that certain Securities
Purchase Agreement dated the date hereof, pursuant to which this Note was
originally issued (the “Purchase Agreement”).


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    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
following terms shall apply to this Note:

    


    ARTICLE
I. CONVERSION RIGHTS

    


    1.1           Conversion
Right.  The Holder shall have the right from time to time, and
at any time on or prior to the later of (i) the Maturity Date and (ii) the date
of payment of the Default Amount (as defined in Article III) pursuant to Section
1.6(a) or Article III, 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
Common Stock, as such Common Stock exists on the Issue Date, or any shares of
capital stock or other securities of the Borrower into which such Common Stock
shall hereafter be changed or reclassified at the conversion
price  (the “Conversion Price”) determined as provided herein (a
“Conversion”); provided, however, that in no
event shall the Holder be entitled to convert any portion of this Note in excess
of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Notes or the unexercised
or unconverted portion of any other security of the Borrower subject to a
limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Note with respect to which the determination
of this proviso is being made, would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock.  For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of
such proviso, provided, further, however, that the
limitations on conversion may be waived by the Holder upon, at the election of
the Holder, not less than 61 days’ prior notice to the Borrower, and the
provisions of the conversion limitation 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)..  The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the applicable Conversion Price then in
effect on the date specified in the notice of conversion, in the form attached
hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by
the Holder in accordance with Section 1.4 below; provided that the Notice of
Conversion is submitted by facsimile (or by other means resulting in, or
reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New
York, New York time on such conversion date (the “Conversion
Date”).  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) at the Borrower’s option, accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Note to the Conversion
Date, provided, however, that the Company shall have the right to pay any or all
interest in cash plus (3) at the
Borrower’s option, 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
Price.

    


    (a)           Calculation of Conversion
Price.  The conversion price (the “Conversion Price”) shall
equal the Variable Conversion Price (as defined herein)(subject to equitable
adjustments for stock splits, stock dividends or rights offerings by the
Borrower relating to the Borrower’s securities or the securities of any
subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events).  The “Variable
Conversion Price” shall mean the Applicable Percentage (as defined herein)
multiplied by the Market Price (as defined herein).  “Market Price”
means the average of the lowest three (3) Trading Prices (as defined below) for
the Common Stock during the ten (10) Trading Day period ending one Trading Day
prior to the date the Conversion Notice is sent by the Holder to the Borrower
via facsimile (the “Conversion Date”).  “Trading Price” means, for any
security as of any date, the closing bid price on the Over-the-Counter Bulletin
Board, or applicable trading market (the “OTCBB”) as reported by a reliable
reporting service (“Reporting Service”) mutually acceptable to Borrower and
Holder and hereafter designated by Holders of a majority in interest of the
Notes and the Borrower or, if the OTCBB is not the principal trading market for
such security, the closing bid price of such security on the principal
securities exchange or trading market where such security is listed or traded
or, if no closing bid price of such security is available in any of the
foregoing manners, the average of the closing bid prices of any market makers
for such security that are listed in the “pink sheets” by the National Quotation
Bureau, Inc.  If the Trading Price cannot be calculated for such
security on such date in the manner provided above, the Trading Price shall be
the fair market value as mutually determined by the Borrower and the holders of
a majority in interest of the Notes being converted for which the calculation of
the Trading Price is required in order to determine the Conversion Price of such
Notes.  “Trading Day” shall mean any day on which the Common Stock is
traded for any period on the OTCBB, or on the principal securities exchange or
other securities market on which the Common Stock is then being
traded.  “Applicable Percentage” shall mean 67.0%.

    


    (b)           Conversion Price During
Major Announcements.  Notwithstanding anything contained in
Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public
announcement that it intends to consolidate or merge with any other corporation
(other than a merger in which the Borrower is the surviving or continuing
corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Borrower or (ii) any person, group or
entity (including the Borrower) publicly announces a tender offer to purchase
50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
date of the announcement referred to in clause (i) or (ii) is hereinafter
referred to as the  “Announcement Date”), then the Conversion Price
shall, effective upon the Announcement Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to the lower of
(x) the Conversion Price which would have been applicable for a Conversion
occurring on the Announcement Date and (y) the Conversion Price that would
otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section
1.2(a).  For purposes hereof,  “Adjusted Conversion Price
Termination Date” shall mean, with respect to any proposed transaction or tender
offer (or takeover scheme) for which a public announcement as contemplated by
this Section 1.2(b) has been made, the date upon which the Borrower (in the case
of clause (i) above) or the person, group or entity (in the case of clause (ii)
above) consummates or publicly announces the termination or abandonment of the
proposed transaction or tender offer (or takeover scheme) which caused this
Section 1.2(b) to become operative.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    1.3           Authorized
Shares.  The Borrower covenants that during the period the
conversion right exists, the Borrower will reserve from its authorized and
unissued Common Stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of Common Stock upon the full conversion of
this Note issued pursuant to the Purchase Agreement.  The Borrower is
required at all times to have authorized and reserved three times the number of
shares that is actually issuable upon full conversion of the Note (based on the
Conversion Price of the Notes in effect from time to time)(the “Reserved
Amount”).  The Reserved Amount shall be increased from time to time in
accordance with the Borrower’s obligations pursuant to Section 4(g) of the
Purchase Agreement.  The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and
non-assessable.  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 Common Stock into which the Notes shall be convertible at
the then current Conversion Price, the Borrower shall at the same time make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Notes.  The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue certificates for
the Common 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 Common 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 Common Stock
available to effect such conversion in accordance with the provisions of this
Article I (a “Conversion Default”), the Borrower shall issue to the Holder all
of the shares of Common 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 Common Stock (the “Excess Amount”) shall, notwithstanding
anything to the contrary contained herein, not be convertible into Common Stock
in accordance with the terms hereof until (and at the Holder’s option at any
time after) the date additional shares of Common Stock are authorized by the
Borrower to permit such conversion, at which time the Conversion Price in
respect thereof shall be the lesser of (i) the Conversion Price on the
Conversion Default Date (as defined below) and (ii) the Conversion Price 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 Common 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 Common 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 Common 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 Common Stock (at such time as there are
sufficient authorized shares of Common Stock) at the applicable Conversion
Price, at the Borrower’s option, as follows:


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    (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 Common Stock, the Holder may
convert such payment amount into Common Stock at the Conversion Price (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
Common Stock).

    


    The
Holder’s election shall be made in writing to the Borrower at any time prior to
6:00 p.m., New York, New York 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
Common 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 (by
facsimile or other reasonable means of communication dispatched on the
Conversion Date prior to 6:00 p.m., New York, New York time) 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, prima facie, 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.

    


    (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 Common 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 Common 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 Common Stock
issuable upon such conversion within three (3) business days after such receipt
(and, solely in the case of conversion of the entire unpaid principal amount
hereof, surrender of this Note) (such third business day being hereinafter
referred to as the “Deadline”) in accordance with the terms hereof and the
Purchase Agreement (including, without limitation, in accordance with the
requirements of Section 2(g) of the Purchase Agreement.

    


    (e)           Obligation of Borrower to
Deliver Common Stock.  Upon receipt by the Borrower of a Notice
of Conversion, the Holder shall be deemed to be the holder of record of the
Common 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 Common
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 Common 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., New York,
New York time, on such date.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (f)      
     Delivery of Common Stock by
Electronic Transfer.  In lieu of delivering physical
certificates representing the Common Stock issuable upon conversion, provided
the Borrower’s transfer agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the
Holder and its compliance with the provisions contained in Section 1.1 and in
this Section 1.4, the Borrower shall use its best efforts to cause its transfer
agent to electronically transmit the Common Stock issuable upon conversion to
the Holder by crediting the account of Holder’s Prime Broker with DTC through
its Deposit Withdrawal Agent Commission (“DWAC”) system.

    


    (g)           Failure to Deliver Common
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 Common Stock
issuable upon conversion of this Note is more than three (3) business days after
the Deadline (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 three-day beyond the Deadline
that the Borrower fails to deliver such Common 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 Common Stock in accordance
with the terms of this Note.

    


    1.5           Concerning the
Shares.  The shares of Common 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 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 Common 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 Common 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 ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.”

    


    The
legend set forth above shall be removed and the Borrower shall issue to the
Holder a new certificate therefore 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 Common 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 Common 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 Common 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.

    


    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:  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 the Notes, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common 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 Common 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
Price and of the number of shares issuable upon conversion of the 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 affect 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.

    


    (c)           Adjustment Due to
Distribution.  If the Borrower shall declare or make any
distribution of its assets (or rights to acquire its assets) pro rata to holders
of Common 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 Common Stock issuable upon such conversion had such Holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such Distribution.

    


    


    (d)           Purchase
Rights.  If, at any time when any Notes are 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 Common Stock, then the Holder of
this Note 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 Common Stock acquirable upon
complete conversion of this Note (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 Common Stock are to
be determined for the grant, issue or sale of such Purchase
Rights.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    (e)           Notice of
Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Conversion Price 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 Price at the time in effect and (iii) the
number of shares of Common Stock and the amount, if any, of other securities or
property which at the time would be received upon conversion of the
Note.

    


    (f)           Trading Market
Limitations.  Unless permitted by the applicable rules and
regulations of the principal securities market on which the Common 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 Notes issued pursuant to the
Purchase Agreement more than the maximum number of shares of Common Stock that
the Borrower can issue pursuant to any rule of the principal United States
securities market on which the Common Stock is then traded (the “Maximum Share
Amount”), which shall be 4.99% of the total shares outstanding on the Closing
Date (as defined in the Purchase Agreement), subject to equitable adjustment
from time to time for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock occurring after
the date hereof.

    


    1.7           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 Common 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 Common 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 Common 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 Common 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
the 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 Price with respect to subsequent conversions determined in accordance
with Section 1.3) for the Borrower’s failure to convert this
Note.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    1.8           Prepayment.  Notwithstanding
anything to the contrary contained in this Note, so long as: (i) no Event
of Default shall have occurred and be continuing, (ii) the Borrower has a
sufficient number of authorized shares of Common Stock reserved for issuance
upon full conversion of the Note, and (iii) the Borrower has not received a
Notice of Conversion from the Holder, then at any time during the period
beginning on the Issue Date and ending on the date which is one hundred eighty
(180) days following the date hereof, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the
Holder of the Note to prepay the outstanding Note (principal and accrued
interest), in full, in accordance with this Section 1.8.  Any notice
of prepayment hereunder (an “Optional Prepayment”) shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the date of
prepayment (the “Optional Prepayment Notice”) which shall be not more than three
(3) Trading Days from the date of the Optional Prepayment Notice.  On
the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower
shall make payment of the Optional Prepayment Amount (as defined below) to or
upon the order of the Holder as specified by the Holder in writing to the
Borrower at least one (1) business day prior to the Optional Prepayment
Date.  If the Borrower exercises its right to prepay the Note, the
Borrower shall make payment to the Holder of an amount in cash (the “Optional
Prepayment Amount”) equal to 150%, multiplied by 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 Optional
Prepayment Date plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts
owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then
outstanding principal amount of this Note to the date of payment plus the amounts
referred to in clauses (x), (y) and (z) shall collectively be known as the
“Optional Prepayment Sum”).  If the Borrower delivers an Optional
Prepayment Notice and fails to pay the Optional Prepayment Amount due to the
Holder of the Note within two (2) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to redeem the Note
pursuant to this Section 1.8.

    


    


    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           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 substantially all of its assets resulting in
the Borrower being a “shell” as such term is defined in Rule 144..

    


    2.4           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 $100,000.

    


    2.5           Contingent
Liabilities.  So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder’s written consent,
which shall not be unreasonably withheld, 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, within five
business days after written demand by the Buyer, upon acceleration or
otherwise;

    


    3.2           Conversion and the
Shares.  The Borrower fails to issue shares of Common 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, fails to transfer or cause its transfer
agent to transfer (electronically or in certificated form) any certificate for
shares of Common 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 Common 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 three (3) days after the
Borrower shall have been notified thereof in writing by the
Holder;


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    3.3           Breach of
Covenants.  The Borrower breaches any material covenant or
other material term or condition contained in this Note and any collateral
documents including but not limited to 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 material 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,
voluntary or involuntary, 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 and is not dismissed within 45 days;

    


    3.8           Delisting of Common
Stock.  The Borrower shall fail to maintain the listing of the
Common Stock on at least one of the OTCBB or an equivalent replacement exchange,
the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock
Exchange, or the American Stock Exchange;

    


    3.9           Failure to Comply with the
Exchange Act.  The Borrower shall cease to be subject to the
reporting requirements of the Exchange Act; and/or the Borrower shall cease to
have adequate current public information publicly available pursuant to Rule
144(c)(1);

    


    3.10         Liquidation. Any
dissolution, liquidation, or winding up of Borrower or any substantial portion
of its business.

    


    3.11         Cessation of
Operations. Any cessation of operations by Borrower or Borrower
admits it is otherwise generally unable to pay its debts as such debts become
due, provided,
however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as
they become due.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    3.12         Maintenance of
Assets. The failure by Borrower to maintain any material
intellectual property rights, personal, real property or other assets which are
necessary to conduct its business (whether now or in the future).

     

    3.13         Reverse
Splits.  The Borrower effectuates a reverse split of its Common
Stock without twenty (20) days prior written notice to the Holder.

    


    Upon the
occurrence and during the continuation of any Event of Default specified in
Section 3.1 (solely with respect to failure to pay the principal hereof or
interest thereon when due at the Maturity Date), the Borrower shall pay to the
Holder, in full satisfaction of its obligations hereunder, an amount equal to
the Default Sum (as defined herein).  Upon the occurrence and during
the continuation of any Event of Default specified in Sections 3.1 (solely with
respect to failure to pay the principal hereof or interest thereon when due on
this Note or upon acceleration), 3.2, 3.3, 3.4, 3.6, or 3.8 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 the remaining
sections of Articles III (other than failure to pay the principal hereof or
interest thereon at the Maturity Date specified in Section 3,1 hereof), the 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) 150% 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) and/or (x) plus (z) any amounts
owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then
outstanding principal amount of this Note to the date of payment plus the amounts
referred to in clauses (x), (y) and (z) 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 Common 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 Price, 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 Common 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 Common Stock of the Borrower equal
to the Default Amount divided by the Conversion Price then in
effect.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    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.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

    


    


    If to the
Borrower, to:

    Island
Breeze International Inc.

    211
Benigno Blvd.Suite 201

    Bellmawr,
New Jersey 08031Attn: Bradley T. Prader, Chairman, President, CEO

    facsimile:
[enter fax number]

    


    
      With a
copy by fax only to (which copy shall not constitute notice):

    

    


    Eaton
& Van Winkle LLP

    Attn:
Joseph L. Cannella, Esq.

    3 Park
Avenue

    New York,
NY 10016

    facsimile:
(212) 779-9928

    


    If to the
Holder:

    (INSERT)

    


    With a
copy by fax only to (which copy shall not constitute notice):


    (INSERT)


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    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 Notes issued pursuant to the Purchase Agreement) as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.

    


    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 governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws.  Any action brought by either party against the
other concerning the transactions contemplated by this Note shall be brought
only in the state courts of New York or in the federal courts located in the
state and county of Nassau.  The parties to this Note hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The Borrower and Holder waive trial by
jury.  The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs.  In the event
that any provision of this Note or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.   Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law.

     

    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 Common 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 Common Stock.

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

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

    


    4.9           Notice of Corporate
Events.  Except as otherwise provided below, the Holder of this
Note shall have no rights as a Holder of Common Stock unless and only to the
extent that it converts this Note into Common 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 4.9.

    


    4.10           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.


    


    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its
duly authorized officer this April 16, 2010.

    


    
      	 
      	
              Island
      Breeze International Inc.

            
	 
      	 
      
	 
      	
              By:
      _______________________________

            
	 
      	
                        Bradley
      T. Prader

            
	 
      	
                        Chairman,
      President, CEO

            


    

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
A

    


    NOTICE OF
CONVERSION

    


    (To be
Executed by the Registered Holder

    in order
to Convert the Notes)

    


    The
undersigned hereby irrevocably elects to convert $__________ principal amount of
the Note (defined below) into _________ shares of class A common
stock,  $0.001 par value per share (“Common Stock”), of Island Breeze
International Inc., a Delaware corporation (the “Borrower”) according to the
conditions of the convertible note of the Borrower dated as of ___________ (the
“Notes”), 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 Common 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 Common 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 Common
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 the Notes 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 Price: ____________________

    Number of
Shares of Common Stock to be Issued Pursuant to

    Conversion
of the Notes: ______________

    Signature:
___________________________________

    Name:
______________________________________

    Address:
____________________________________


    The
Borrower shall issue and deliver shares of Common 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 the Notes for the number of
business days such issuance and delivery is late.