**Exhibit10.82**

**NEITHERTHE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THESECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTEREDUNDER 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 EFFECTIVEREGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, ASAMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THECOMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLDPURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIESMAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN ORFINANCING ARRANGEMENT SECURED BY THE SECURITIES.  ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLYREVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iv) AND 19(a) HEREOF.  THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTEAND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESSTHAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iv) OFTHIS NOTE.**

**EarthBiofuels, Inc.**

**SeniorConvertible Note**
| Issuance Date:   August 11, 2006 | Original Principal Amount: U.S. $600,000.00 |
|---------------------------------------|---------------------------------------------|

**FORVALUE RECEIVED,** Earth Biofuels, Inc., a Delaware corporation(the “**Company**”), hereby promisesto pay to the order of **WHALEHAVEN CAPITAL FUNDLTD.**or registered assigns (“**Holder**”)the amount set out above as the Original Principal Amount (as reduced pursuantto the terms hereof pursuant to redemption, conversion or otherwise, the “**Principal**”) when due, whether upon theMaturity Date (as defined below), on any Installment Date with respect to theInstallment Amount due on such Installment Date (each, as defined herein),acceleration, redemption or otherwise (in each case in accordance with theterms hereof) and to pay interest (“**Interest**”)on any outstanding Principal at the applicable Interest Rate from the date setout above as the Issuance Date (the “**Issuance****Date**”) until the same becomes dueand payable, whether upon an Interest Date (as defined below), any InstallmentDate or the Maturity Date or acceleration, conversion, redemption or otherwise(in each case in accordance with the terms hereof).  This Senior Convertible Note (including allSenior Convertible Notes issued in exchange, transfer or replacement hereof,this “**Note**”) is one of an issue ofSenior Convertible Notes issued pursuant to the Securities Purchase Agreementon the Closing Date (collectively, the “**Notes**”and such other Senior Convertible Notes, the “**Other****Notes**”).  Certain capitalized terms used herein aredefined in Section 29.

# (1)           PAYMENTS OFPRINCIPAL.  On each Installment Date,the Company shall pay to the Holder an amount equal to the Installment Amountdue on such Installment Date

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# in accordance withSection 8.  On the Maturity Date, theCompany shall pay to the Holder an amount in cash representing all outstandingPrincipal, accrued and unpaid Interest and accrued and unpaid Late Charges onsuch Principal and Interest.  The “**Maturity****Date**”shall be August 11, 2011, as may be extended at the option of the Holder (i) inthe event that, and for so long as, an Event of Default (as defined in Section4(a)) shall have occurred and be continuing on the Maturity Date (as may beextended pursuant to this Section 1) or any event shall have occurred and becontinuing on the Maturity Date (as may be extended pursuant to this Section 1)that with the passage of time and the failure to cure would result in an Eventof Default and (ii) through the date that is ten (10) Business Days after theconsummation of a Change of Control in the event that a Change of Control ispublicly announced or a Change of Control Notice (as defined in Section 5(b))is delivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company may notprepay any portion of the outstanding Principal, accrued and unpaid interest oraccrued and unpaid Late Charges on Principal and Interest, if any.

# (2)           INTEREST; INTERESTRATE.  Interest on this Note shallcommence accruing on the Issuance Date and shall be computed on the basis of a360-day year comprised of twelve (12) thirty (30) day months and shall bepayable in arrears for each Calendar Quarter on the first day of the succeedingCalendar Quarter during the period beginning on the Issuance Date and endingon, and including, the Maturity Date (each, an “**Interest****Date**”) with the first Interest Date being November 1, 2006.  Interest shall be payable on each InterestDate, to the record holder of this Note on the applicable Interest Date, and to the extent that any Principal amountof this Note is converted prior to such Interest Date, accrued and unpaidInterest with respect to such converted Principal amount and accrued and unpaidLate Charges with respect to such Principal and Interest shall be paid on theConversion Date (as defined below) to the record holder of this Note on theapplicable Conversion Date, in cash. From and after the occurrence and during the continuance of an Event ofDefault, the Interest Rate shall be increased to fifteen percent (15.0%).  In the event that such Event of Default issubsequently cured, the adjustment referred to in the preceding sentence shallcease to be effective as of the date of such cure; provided that the Interestas calculated and unpaid at such increased rate during the continuance of suchEvent of Default shall continue to apply to the extent relating to the days afterthe occurrence of such Event of Default through and including the date of cureof such Event of Default.

# (3)           CONVERSION OF NOTES.  This Note shall be convertible into shares ofthe Company’s common stock, par value $0.001 per share (the “**Common Stock**”), on the terms and conditions set forth inthis Section 3.

## (a)           Conversion Right.  Subject to the provisions of Section 3(d), atany time or times on or after the Issuance Date, the Holder shall be entitledto convert any portion of the outstanding and unpaid Conversion Amount (asdefined below) into fully paid and nonassessable shares of Common Stock inaccordance with Section 3(c), at the Conversion Rate (as defined below).  The Company shall not issue any fraction of ashare of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share ofCommon Stock, the Company shall round such fraction of a share of Common Stockup to the nearest whole share.  TheCompany shall pay any and all transfer, stamp and similar taxes that may bepayable with respect to the issuance and delivery of Common Stock uponconversion of any Conversion Amount.

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## (b)           Conversion Rate.  The number of shares of Common Stock issuableupon conversion of any Conversion Amount pursuant to Section 3(a) shall bedetermined by dividing (x) such Conversion Amount by (y) the Conversion Price(the “**Conversion Rate**”).

### (i)            “**Conversion Amount**”means the portion of the Principal to be converted, redeemed or otherwise withrespect to which this determination is being made.

### (ii)           “**Conversion Price**”means, as of any Conversion Date (as defined below) or other date ofdetermination, $2.90, subject to adjustment as provided herein.

## (c)           Mechanics of Conversion.

### (i)            Optional Conversion.  To convert any Conversion Amount into sharesof Common Stock on any date (a “**Conversion Date**”), the Holder shall (A) transmit by facsimile (or otherwisedeliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, acopy of an executed notice of conversion in the form attached hereto as ExhibitI (the “**Conversion Notice**”) to the Company and (B) if required by Section 3(c)(iv),surrender this Note to a nationally recognized overnight delivery service fordelivery to the Company (or an indemnification undertaking with respect to thisNote in the case of its loss, theft or destruction).  On or before the first (1st) Business Day following the date ofreceipt of a Conversion Notice, the Company shall transmit by facsimile aconfirmation of receipt of such Conversion Notice to the Holder and theCompany’s transfer agent (the “**Transfer Agent**”).  On or before the second Business Dayfollowing the date of receipt of a Conversion Notice (the “**ShareDelivery****Date**”),the Company shall (1) (X) if legends are not required to be placed oncertificates of Common Stock pursuant to the Securities Purchase Agreement andprovided that the Transfer Agent is participating in the Depository TrustCompany’s (“**DTC**”) Fast Automated SecuritiesTransfer Program, credit such aggregate number of shares of Common Stock towhich the Holder shall be entitled to the Holder’s or its designee’s balanceaccount with DTC through its Deposit Withdrawal Agent Commission system or (Y)if the Transfer Agent is not participating in the DTC Fast Automated SecuritiesTransfer Program, issue and deliver to the address as specified in theConversion Notice, a certificate, registered in the name of the Holder or itsdesignee, for the number of shares of Common Stock to which the Holder shall beentitled which certificates shall not bear any restrictive legends unlessrequired pursuant to Section 2(g) of the Securities Purchase Agreement; (2) payto the Holder in cash an amount equal to the accrued and unpaid Interest on theConversion Amount up to and including the Conversion Date; and (3) for anyconversions prior to the third (3rd)anniversary of the Issuance Date, pay any applicable Make-Whole Amount inaccordance with Section 3(c)(ii).  Ifthis Note is physically surrendered for conversion as required by Section3(c)(iv) and the outstanding Principal of this Note is greater than thePrincipal portion of the Conversion Amount being converted, then the Companyshall as soon as practicable and in no event later than three (3) Business Daysafter receipt of this Note and at its own expense, issue and deliver to theholder a new Note (in accordance with Section 19(d)) representing theoutstanding Principal not converted.  ThePerson or Persons entitled to receive the shares of Common Stock issuable upona conversion of this Note shall be treated for all purposes as the recordholder or holders of such shares of Common Stock on the Conversion Date.  In the event of a partial conversion of thisNote pursuant hereto, the principal amount

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### converted shall be deducted from the Installment Amounts relating tothe Installment Dates as set forth in the Conversion Notice.

### (ii)           Make-Whole Amount.  If prior to the third (3rd) anniversary of the Issuance Date, theHolder converts all or any portion of this Note pursuant to Section 3(c) or theCompany requires conversion of all or any portion of this Note pursuant toSection 9, then upon delivery of the applicable shares of Common Stock uponsuch conversion, the Holder shall receive the Make-Whole Amount; provided,however, that in the event that the Average Market Price on a Conversion Dateor Mandatory Conversion Date, as applicable, occurring after the Effective Date(as defined in the Registration Rights Agreement) exceeds 175% of theConversion Price on the Conversion Date or Mandatory Conversion Date, asapplicable, then the Holder shall not be entitled to receive the Make-WholeAmount; provided, further, that in the event that the Closing Sale Price of the Common Stock for eachTrading Day of any forty (40) consecutive Trading Day period after theEffective Date exceeds 200% of the Conversion Price on the Issuance Date (asadjusted for any stock split, combination, reclassification or similartransaction), then the Holder shall no longer have the right to receive a Make-WholeAmount.  The Company shall pay theMake-Whole Amount in shares of Common Stock or, at the Company’s option, incash.  Following receipt of anyConversion Notice during the period when a Holder is entitled to receive aMake-Whole Amount hereunder, the Company shall, in its confirmation of receiptof such Conversion Notice as required by Section 3(c)(i) (the “**Conversion Notice Confirmation**”), (A) specify whether theMake-Whole Amount shall not be paid in shares of Common Stock but rather incash and (B) if the Make-Whole Amount is to be paid in shares of Common Stock,certify that there has been no Equity Conditions Failure.  Any Make-Whole Amount to be paid in shares ofCommon Stock shall be paid in a number of fully paid and nonassessable sharesof Common Stock equal to the quotient of (1) the Make-Whole Amount and (2) theMake-Whole Conversion Price.  If theMake-Whole Amount shall be paid in Common Stock on the Share Delivery Date, theCompany shall (x) if legends are not required to be placed on certificates ofCommon Stock pursuant to the Securities Purchase Agreement and provided theTransfer Agent is participating in the DTC Fast Automated Securities TransferProgram, credit such aggregate number of Common Shares to which the Holdershall be entitled to the Holder or its designee’s balance account with DTCthrough its Deposit Withdrawal Agent Commission system, or (y) if the TransferAgent is not participating in the DTC Fast Automated Securities TransferProgram, issue and deliver to the address as specified in the Conversion Noticeor in the register maintained by the Company for such purpose pursuant to theSecurities Purchase Agreement, a certificate, registered in the name of theHolder or its designee, for the number of Common Shares to which the Holdershall be entitled which certificates shall not bear any restrictive legendsunless required pursuant to Section 2(g) of the Securities PurchaseAgreement.  If the Make-Whole Amountshall be paid in cash, then the Company shall make such payment on the ShareDelivery Date by wire transfer of immediately available funds to an accountdesignated in writing by the Holder. Notwithstanding the foregoing the Company shall not be entitled to paythe Make-Whole Amount in shares of Common Stock and shall be required to pay suchMake-Whole Amount in cash on the applicable Share Delivery Date, if the EquityConditions are not then satisfied or if the Weighted Average Price of theCommon Stock on any Trading Day during the Make-Whole Conversion MeasuringPeriod is less than $1.00.

### (iii)          Company’s Failure to Timely Convert.  If within three (3) Trading Days after theCompany’s receipt of the facsimile copy of a Conversion Notice the

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### Company shall fail to issue and deliver a certificate to the Holder orcredit the Holder’s balance account with DTC for the number of shares of CommonStock to which the Holder is entitled upon such holder’s conversion of anyConversion Amount (a “**Conversion Failure**”),and if on or after such Trading Day the Holder purchases (in an open markettransaction or otherwise) Common Stock to deliver in satisfaction of a sale bythe Holder of Common Stock issuable upon such conversion that the Holderanticipated receiving from the Company (a “**Buy-In**”), thenthe Company shall, within three (3) Business Days after the Holder’s requestand in the Holder’s discretion, either (i) pay cash to the Holder in an amountequal to the Holder’s total purchase price (including brokerage commissions andother out of pocket expenses, if any) for the shares of Common Stock so purchased(the **“Buy-In Price”**), at which point theCompany’s obligation to deliver such certificate (and to issue such CommonStock) shall terminate, or (ii) promptly honor its obligation to deliver to theHolder a certificate or certificates representing such Common Stock and paycash to the Holder in an amount equal to the excess (if any) of the Buy-InPrice over the product of (A) such number of shares of Common Stock, times (B)the Closing Bid Price on the Conversion Date.

### (iv)          Book-Entry. Notwithstanding anythingto the contrary set forth herein, upon conversion of any portion of this Notein accordance with the terms hereof, the Holder shall not be required tophysically surrender this Note to the Company unless (A) the full ConversionAmount represented by this Note is being converted or (B) the Holder hasprovided the Company with prior written notice (which notice may be included ina Conversion Notice) requesting reissuance of this Note upon physical surrenderof this Note.  The Holder and the Companyshall maintain records showing the Principal, Interest and Late Chargesconverted and the dates of such conversions or shall use such other method,reasonably satisfactory to the Holder and the Company, so as not to requirephysical surrender of this Note upon conversion.

### (v)           Pro Rata Conversion; Disputes.  In the event that the Company receives aConversion Notice from more than one holder of Notes for the same ConversionDate and the Company can convert some, but not all, of such portions of theNotes submitted for conversion, the Company, subject to Section 3(d), shallconvert from each holder of Notes electing to have Notes converted on such datea pro rata amount of such holder’s portion of its Notes submitted forconversion based on the principal amount of Notes submitted for conversion onsuch date by such holder relative to the aggregate principal amount of allNotes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stockissuable to the Holder in connection with a conversion of this Note, theCompany shall issue to the Holder the number of shares of Common Stock not indispute and resolve such dispute in accordance with Section 24.

## (d)           Limitations on Conversions.

### (i)            Beneficial Ownership.  The Company shall not effect any conversionof this Note or otherwise issue shares of Common Stock pursuant to Section3(c)(ii) hereof or Sections 8 or 9 hereof, and the Holder of this Note shallnot have the right to convert any portion of this Note pursuant to Section3(a), to the extent that after giving effect to such conversion, the Holder(together with the Holder’s affiliates) would beneficially own in excess of4.99% (the “**Maximum Percentage**”) of the numberof shares of Common Stock outstanding immediately after giving effect to suchconversion.  For purposes of theforegoing sentence, the

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### number of shares of Common Stock beneficially owned by the Holder andits affiliates shall include the number of shares of Common Stock issuable uponconversion of this Note with respect to which the determination of suchsentence is being made, but shall exclude the number of shares of Common Stockwhich would be issuable upon (A) conversion of the remaining, nonconvertedportion of this Note beneficially owned by the Holder or any of its affiliatesand (B) exercise or conversion of the unexercised or nonconverted portion ofany other securities of the Company (including, without limitation, any OtherNotes or warrants) subject to a limitation on conversion or exercise analogousto the limitation contained herein beneficially owned by the Holder or any ofits affiliates.  Except as set forth inthe preceding sentence, for purposes of this Section 3(d)(i), beneficialownership shall be calculated in accordance with Section 13(d) of theSecurities Exchange Act of 1934, as amended (the “**1934 Act**”).  Forpurposes of this Section 3(d)(i), in determining the number of outstandingshares of Common Stock, the Holder may rely on the number of outstanding sharesof Common Stock as reflected in (x) the Company’s most recent Form 10-KSB, Form10-QSB or Form 8-K, as the case may be (y) a more recent public announcement bythe Company or (z) any other notice by the Company or the Transfer Agentsetting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the writtenrequest of the Holder, the Company shall within one (1) Business Day confirm inwriting to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding sharesof Common Stock shall be determined after giving effect to the conversion orexercise of securities of the Company, including this Note, by the Holder orits affiliates since the date as of which such number of outstanding shares ofCommon Stock was reported.

### (ii)           Principal Market Regulation.  The Company shall not be obligated to issueany shares of Common Stock upon conversion of this Note, and the Holder of thisNote shall not have the right to receive upon conversion of this Note anyshares of Common Stock, if the issuance of such shares of Common Stock wouldexceed the aggregate number of shares of Common Stock which the Company mayissue upon conversion or exercise, as applicable, of the Notes and Warrantswithout breaching the Company’s obligations under the rules or regulations ofthe applicable Eligible Market (the number of shares which may be issuedwithout violating such rules and regulations, the “**Exchange Cap**”), except that such limitationshall not apply in the event that the Company (A) obtains the approval of itsstockholders as required by the applicable rules of such Eligible Market forissuances of Common Stock in excess of such amount or (B) obtains a writtenopinion from outside counsel to the Company that such approval is not required,which opinion shall be reasonably satisfactory to the Required Holders.  Unless and until such approval or writtenopinion is obtained, no purchaser of the Notes pursuant to the SecuritiesPurchase Agreement (the “**Purchasers**”) shall be issued in the aggregate, upon conversion or exerciseor otherwise, as applicable, of Notes or Warrants, shares of Common Stock in anamount greater than the product of the Exchange Cap multiplied by a fraction,the numerator of which is the principal amount of Notes issued to suchPurchasers pursuant to the Securities Purchase Agreement on the Closing Dateand the denominator of which is the aggregate principal amount of all Notesissued to the Purchasers pursuant to the Securities Purchase Agreement on theClosing Date (with respect to each Purchaser, the “**Exchange Cap Allocation**”). In the event that any Purchaser shall sell or otherwise transfer any ofsuch Purchaser’s Notes, the transferee shall be allocated a pro rata portion ofsuch Purchaser’s Exchange Cap Allocation, and the restrictions of the priorsentence shall apply to such transferee with respect to the portion of theExchange Cap Allocation allocated to such

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### transferee.  In the event thatany holder of Notes shall convert all of such holder’s Notes into a number ofshares of Common Stock which, in the aggregate, is less than such holder’sExchange Cap Allocation, then the difference between such holder’s Exchange CapAllocation and the number of shares of Common Stock actually issued to suchholder shall be allocated to the respective Exchange Cap Allocations of theremaining holders of Notes on a pro rata basis in proportion to the aggregateprincipal amount of the Notes then held by each such holder.

# (4)           RIGHTS UPON EVENT OFDEFAULT.

## (a)           Event of Default.  Each of the following events shall constitutean “**Event of Default**”:

### (i)            the failure of the applicable RegistrationStatement required to be filed pursuant to the Registration Rights Agreement tobe declared effective by the SEC on or prior to the date that is sixty (60)days after the applicable Effectiveness Deadline (as defined in theRegistration Rights Agreement), or, while the applicable Registration Statementis required to be maintained effective pursuant to the terms of theRegistration Rights Agreement, the effectiveness of the applicable RegistrationStatement lapses for any reason (including, without limitation, the issuance ofa stop order) or is unavailable to any holder of the Notes for sale of all ofsuch holder’s Registrable Securities (as defined in the Registration RightsAgreement) in accordance with the terms of the Registration Rights Agreement,and such lapse or unavailability continues for a period of ten (10) consecutivedays (other than days during an Allowable Grace Period (as defined in theRegistration Rights Agreement)or for more than an aggregate of thirty (30) daysin any 365-day period (other than days during an Allowable Grace Period);

### (ii)           the suspension from trading or failure ofthe Common Stock to be listed on an Eligible Market for a period of five (5)consecutive Trading Days or for more than an aggregate of ten (10) Trading Daysin any 365-day period;

### (iii)          the Company’s (A) failure to cure aConversion Failure by delivery of the required number of shares of Common Stockwithin ten (10) Business Days after the applicable Conversion Date or (B)notice, written or oral, to any holder of the Notes, including by way of publicannouncement, at any time, of its intention not to comply with a request forconversion of any Notes into shares of Common Stock that is tendered inaccordance with the provisions of the Notes, other than pursuant to Section3(d);

### (iv)          at any time following the tenth (10th) consecutive Business Dayfollowing the Authorized Share Failure Deadline that the Holder’s AuthorizedShare Allocation is less than the number of shares of Common Stock that theHolder would be entitled to receive upon a conversion of the full ConversionAmount of this Note (without regard to any limitations on conversion set forthin Section 3(d) or otherwise);

### (v)           the Company’s failure to pay to the Holderany amount of Principal, Interest, Late Charges or other amounts when and asdue under this Note (including, without limitation, the Company’s failure topay any redemption payments or amounts hereunder) or any other TransactionDocument (as defined in the Securities Purchase

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### Agreement) or any other agreement, document, certificate or otherinstrument delivered in connection with the transactions contemplated herebyand thereby to which the Holder is a party, except, in the case of a failure topay Interest and Late Charges when and as due, in which case only if suchfailure continues for a period of at least ten (10) Business Days;

### (vi)          theoccurrence of any default under, redemption of or acceleration prior tomaturity of any Indebtedness of the Company or any of its Subsidiaries (asdefined in Section 3(a) of the Securities Purchase Agreement) which,individually or in the aggregate, exceeds $500,000, other than with respect toany Other Notes;

### (vii)         the Company or any of its Subsidiaries,pursuant to or within the meaning of Title 11, U.S. Code, or any similarFederal, foreign or state law for the relief of debtors (collectively, “**BankruptcyLaw**”), (A)commences a voluntary case, (B) consents to the entry of an order for reliefagainst it in an involuntary case, (C) consents to the appointment of areceiver, trustee, assignee, liquidator or similar official (a “**Custodian**”), (D) makes a general assignmentfor the benefit of its creditors or (E) admits in writing that it is generallyunable to pay its debts as they become due;

### (viii)        a court of competent jurisdiction enters anorder or decree under any Bankruptcy Law that (A) is for relief against theCompany or any of its Subsidiaries in an involuntary case, (B) appoints aCustodian of the Company or any of its Subsidiaries or (C) orders theliquidation of the Company or any of its Subsidiaries;

### (ix)           a final judgment or judgments for thepayment of money aggregating in excess of $1,500,000 are rendered against the Company or any of itsSubsidiaries and which judgments are not, within sixty (60) days after theentry thereof, bonded, discharged or stayed pending appeal, or are notdischarged within sixty (60) days after the expiration of such stay; provided,however, that any judgment which is covered by insurance or an indemnity from acredit worthy party shall not be included in calculating the $1,500,000****amountset forth above so long as the Company provides the Holder a written statementfrom such insurer or indemnity provider (which written statement shall bereasonably satisfactory to the Holder) to the effect that such judgment iscovered by insurance or an indemnity and the Company will receive the proceedsof such insurance or indemnity within thirty (30) days of the issuance of suchjudgment;

### (x)            the Company breaches anyrepresentation, warranty, covenant or other term or condition of anyTransaction Document, which breach has or is likely to have a cost or adverseimpact on the Company or the Holders (including by reduction in the value ofthe shares of Common Stock deliverable in connection with the TransactionDocuments) in excess of $250,000, except, in the case of a breach of a covenantor other term or condition of any Transaction Document which is curable, onlyif such breach continues for a period of at least ten (10) consecutive BusinessDays;

### (xi)           any breach or failure in any respect tocomply with either of Sections 8 or 15 of this Note; or

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### (xii)          any Event of Default (as defined in the OtherNotes) occurs with respect to any Other Notes.

## (b)           Redemption Right.  Upon the occurrence of an Event of Defaultwith respect to this Note or any Other Note, the Company shall within one (1)Business Day deliver written notice thereof via facsimile and overnight courier(an “**Event of Default Notice**”) to the Holder.  At any time after the earlier of the Holder’sreceipt of an Event of Default Notice and the Holder becoming aware of an Eventof Default, the Holder may require the Company to redeem all or any portion ofthis Note by delivering written notice thereof (the “**Event of Default RedemptionNotice**”) to theCompany, which Event of Default Redemption Notice shall indicate the portion ofthis Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuantto this Section 4(b) shall be redeemed by the Company at a price equal to thegreater of (i) the product of (A) thesum of the Conversion Amount to be redeemed together with accrued and unpaidInterest with respect to such Conversion Amount and accrued and unpaid LateCharges with respect to such Conversion Amount and Interest and (B) the Redemption Premium and(ii) the product of (A) the Conversion Rate with respect to such sum of theConversion Amount together with accrued and unpaid Interest with respect tosuch Conversion Amount and accrued and unpaid Late Charges with respect to suchConversion Amount and Interest ineffect at such time as the Holder delivers an Event of Default RedemptionNotice and (B) the product of (1) the Equity Value Redemption Premium and (2)the greater of (x) the Closing Sale Price of the Common Stock on the dateimmediately preceding such Event of Default, (y) the Closing Sale Price of theCommon Stock on the date immediately after such Event of Default and (z) theClosing Sale Price of the Common Stock on the date the Holder delivers theEvent of Default Redemption Notice (the “**Event of Default****Redemption Price**”). Redemptions required by this Section 4(b) shall be made in accordancewith the provisions of Section 13.  Tothe extent redemptions required by this Section 4(b) are deemed or determinedby a court of competent jurisdiction to be prepayments of the Note by theCompany, such redemptions shall be deemed to be voluntary prepayments. In theevent of a partial redemption of this Note pursuant hereto, the principalamount redeemed shall be deducted from the Installment Amounts relating to theapplicable Installment Dates as set forth in the Event of Default RedemptionNotice.  The parties hereto agree that inthe event of the Company’s redemption of any portion of the Note under thisSection 4(b), the Holder’s damages would be uncertain and difficult to estimatebecause of the parties’ inability to predict future interest rates and theuncertainty of the availability of a suitable substitute investment opportunityfor the Holder.  Accordingly, anyRedemption Premium due under this Section 4(b) is intended by the parties tobe, and shall be deemed, a reasonable estimate of the Holder’s actual loss ofits investment opportunity and not as a penalty.

# (5)           RIGHTS UPONFUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

## (a)           Assumption.  TheCompany shall not enter into or be party to a Fundamental Transaction unless(i)  the Successor Entity assumes in writing all of the obligations of theCompany under this Note and the other Transaction Documents in accordance withthe provisions of this Section 5(a) pursuant to written agreements inform and substance reasonably satisfactory to the Required Holders and approvedby the Required Holders prior to such Fundamental Transaction, includingagreements to deliver to each holder of Notes in

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## exchange for such Notes a security of the Successor Entity evidencedby a written instrument substantially similar in form and substance to theNotes, including, without limitation, having a principal amount and interestrate equal to the principal amounts and the interest rates of the Notes thenoutstanding held by such holder, having similar conversion rights and havingsimilar ranking to the Notes, and reasonably satisfactory to the RequiredHolders and (ii)  theSuccessor Entity (including its Parent Entity) is a publicly tradedcorporation whose common stock is quoted on or listed for trading on anEligible Market (a “**Public Successor Entity**”).  Uponthe occurrence of any Fundamental Transaction, the Successor Entity shallsucceed to, and be substituted for (so that from and after the date of suchFundamental Transaction, the provisions of this Note referring to the “Company”shall refer instead to the Successor Entity), and may exercise every right andpower of the Company and shall assume all of the obligations of the Companyunder this Note with the same effect as if such Successor Entity had been namedas the Company herein.  Uponconsummation of the Fundamental Transaction, the Successor Entity shall deliverto the Holder confirmation that there shall be issued upon conversion of thisNote at any time after the consummation of the FundamentalTransaction, in lieu of the shares of the Company’s Common Stock (orother securities, cash, assets or other property) issuable upon the conversion of the Notes prior to such FundamentalTransaction, such shares of the publiclytraded common stock (or their equivalent) of the Successor Entity (includingits Parent Entity), as adjusted in accordance with the provisions of thisNote.  The provisions of thisSection shall apply similarly and equally to successive FundamentalTransactions and shall be applied without regard to any limitations on theconversion of this Note.

## (b)           Redemption Right.  No sooner than twenty (20) Trading Days norlater than ten (10) Trading Days prior to the consummation of a Change ofControl, but not prior to the public announcement of such Change of Control,the Company shall deliver written notice thereof via facsimile and overnightcourier to the Holder (a “**Change of Control****Notice**”). At any time during the period beginning after the Holder’s receipt of aChange of Control Notice and ending on the later of (A) one (1) Business Dayprior to consummation of such Change of Control or (B) twenty (20) Trading Daysafter the date of receipt of such Change of Control Notice, the Holder mayrequire the Company to redeem all or any portion of this Note by deliveringwritten notice thereof (“**Change of Control Redemption Notice**”) to the Company, which Change ofControl Redemption Notice shall indicate the Conversion Amount the Holder iselecting to redeem.  The portion of thisNote subject to redemption pursuant to this Section 5 shall be redeemed by theCompany in cash at a price equal to the greater of (i) the sum of (x) theproduct of the Change of Control Redemption Premium and the Conversion Amountbeing redeemed and (y) the amount of any accrued but unpaid Interest on suchConversion Amount being redeemed and accrued and unpaid Late Charges, if any,with respect to such Conversion Amount and Interest through the date of suchredemption payment and (ii) the product of (x) the Equity Value RedemptionPremium and (y) the sum of (1) the product of (A) the Conversion Amount beingredeemed multiplied by (B) the quotient determined by dividing (I) theaggregate cash consideration and the aggregate cash value of any non-cashconsideration per Common Share to be paid to the holders of the Common Sharesupon consummation of the Change of Control (any such non-cash consideration tobe valued at the higher of the Closing Sale Price of such securities as of theTrading Day immediately prior to the consummation of such Change of Control,the Closing Sale Price on the Trading Day immediately following the publicannouncement of such proposed Change of Control and the Closing Sale Price onthe Trading Day immediately prior to the public announcement of such proposedChange of Control) by (II)

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## the Conversion Price plus (2) the amount of any accrued but unpaidInterest on such Conversion Amount being redeemed and accrued and unpaid LateCharges, if any, with respect to such Conversion Amount and Interest throughthe date of such redemption payment, (the “**Change of Control Redemption Price**”).  Redemptions required by this Section 5 shallbe made in accordance with the provisions of Section 13 and shall have priorityto payments to stockholders in connection with a Change of Control.  To the extent redemptions required by thisSection 5(b) are deemed or determined by a court of competent jurisdiction tobe prepayments of the Note by the Company, such redemptions shall be deemed tobe voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subjectto Section 3(d), until the Change of Control Redemption Price (together withany interest thereon) is paid in full, the Conversion Amount submitted forredemption under this Section 5(c) (together with any interest thereon) may beconverted, in whole or in part, by the Holder into Common Stock pursuant toSection 3.  In the event of a partialredemption of this Note pursuant hereto, the principal amount redeemed shall bededucted from the Installment Amounts relating to the applicable InstallmentDates as set forth in the Change of Control Redemption Notice.  The parties hereto agree that in the event ofthe Company’s redemption of any portion of the Note under this Section 5(b), theHolder’s damages would be uncertain and difficult to estimate because of theparties’ inability to predict future interest rates and the uncertainty of theavailability of a suitable substitute investment opportunity for the Holder.  Accordingly, any Change of Control RedemptionPremium due under this Section 5(b) is intended by the parties to be, and shallbe deemed, a reasonable estimate of the Holder’s actual loss of its investmentopportunity and not as a penalty.

# (6)           RIGHTS UPON ISSUANCEOF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

## (a)           Purchase Rights.  If at any time the Company grants, issues orsells any Options, Convertible Securities or rights to purchase stock,warrants, securities or other property pro rata to the record holders of anyclass of Common Stock (the “**Purchase Rights**”), then the Holder will be entitled to acquire, upon the termsapplicable to such Purchase Rights, the aggregate Purchase Rights which theHolder could have acquired if the Holder had held the number of shares of CommonStock acquirable upon complete conversion of this Note (without taking intoaccount any limitations or restrictions on the convertibility of this Note)immediately before the date on which a record is taken for the grant, issuanceor sale of such Purchase Rights, or, if no such record is taken, the date as ofwhich the record holders of Common Stock are to be determined for the grant,issue or sale of such Purchase Rights.

## (b)           Other Corporate Events.  In addition to and not in substitution forany other rights hereunder, prior to the consummation of any FundamentalTransaction pursuant to which holders of shares of Common Stock are entitled toreceive securities or other assets with respect to or in exchange for shares ofCommon Stock (a “**Corporate Event**”), the Company shall make appropriate provision to insure thatthe Holder will thereafter have the right to receive upon a conversion of thisNote, at the Holder’s option, (i) in addition to the shares of Common Stockreceivable upon such conversion, such securities or other assets to which theHolder would have been entitled with respect to such shares of Common Stock hadsuch shares of Common Stock been held by the Holder upon the consummation ofsuch Corporate Event (without taking into account any limitations orrestrictions on the convertibility of this Note) or (ii) in lieu of the sharesof Common Stock otherwise receivable upon such conversion, such securities orother

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## assets received by the holders of shares of Common Stock in connectionwith the consummation of such Corporate Event in such amounts as the Holderwould have been entitled to receive had this Note initially been issued withconversion rights for the form of such consideration (as opposed to shares ofCommon Stock) at a conversion rate for such consideration commensurate with theConversion Rate.  The provisions of thisSection shall apply similarly and equally to successive Corporate Events andshall be applied without regard to any limitations on the conversion orredemption of this Note.

# (7)           RIGHTS UPON ISSUANCEOF OTHER SECURITIES.

## (a)           Adjustment of Conversion Price uponIssuance of Common Stock.  If andwhenever on or after the Subscription Date, the Company issues or sells, or inaccordance with this Section 7(a) is deemed to have issued or sold, any sharesof Common Stock (including the issuance or sale of shares of Common Stock ownedor held by or for the account of the Company, but excluding shares of CommonStock deemed to have been issued or sold by the Company in connection with anyExcluded Security) for a consideration per share less than a price equal to theConversion Price in effect immediately prior to such issue or sale (such pricethe “**Applicable Price**”) (the foregoing a “**Dilutive Issuance**”), then immediately after such Dilutive Issuance the ConversionPrice then in effect shall be reduced to an amount equal to the product of(A) the Conversion Price in effect immediately prior to such DilutiveIssuance and (B) the quotient determined by dividing (1) the sum of(I) the product derived by multiplying the Conversion Price in effectimmediately prior to such Dilutive Issuance and the number of shares of CommonStock Deemed Outstanding immediately prior to such Dilutive Issuance plus(II) the consideration, if any, received by the Company upon such DilutiveIssuance, by (2) the product derived by multiplying (I) the ConversionPrice in effect immediately prior to such Dilutive Issuance by (II) thenumber of shares of Common Stock Deemed Outstanding immediately after suchDilutive Issuance.  For purposes ofdetermining the adjusted Conversion Price under this Section 7(a), thefollowing shall be applicable:

### (i)            Issuanceof Options.  If the Company in anymanner grants or sells any Options and the lowest price per share for which oneshare of Common Stock is issuable upon the exercise of any such Option or uponconversion or exchange or exercise of any Convertible Securities issuable uponexercise of such Option is less than the Applicable Price, then such share ofCommon Stock shall be deemed to be outstanding and to have been issued and soldby the Company at the time of the granting or sale of such Option for suchprice per share.  For purposes of thisSection 7(a)(i), the “lowest price per share for which one share of Common Stockis issuable upon the exercise of any such Option or upon conversion or exchangeor exercise of any Convertible Securities issuable upon exercise of suchOption” shall be equal to the sum of the lowest amounts of consideration (ifany) received or receivable by the Company with respect to any one share ofCommon Stock upon granting or sale of the Option, upon exercise of the Optionand upon conversion or exchange or exercise of any Convertible Securityissuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon theactual issuance of such share of Common Stock or of such Convertible Securitiesupon the exercise of such Options or upon the actual issuance of such CommonStock upon conversion or exchange or exercise of such Convertible Securities.

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### (ii)           Issuanceof Convertible Securities.  If theCompany in any manner issues or sells any Convertible Securities and the lowestprice per share for which one share of Common Stock is issuable upon suchconversion or exchange or exercise thereof is less than the Applicable Price,then such share of Common Stock shall be deemed to be outstanding and to havebeen issued and sold by the Company at the time of the issuance or sale of suchConvertible Securities for such price per share.  For the purposes of this Section 7(a)(ii),the “lowest price per share for which one share of Common Stock is issuableupon such conversion or exchange or exercise” shall be equal to the sum of thelowest amounts of consideration (if any) received or receivable by the Companywith respect to any one share of Common Stock upon the issuance or sale of theConvertible Security and upon the conversion or exchange or exercise of suchConvertible Security.  No furtheradjustment of the Conversion Price shall be made upon the actual issuance ofsuch share of Common Stock upon conversion or exchange or exercise of suchConvertible Securities, and if any such issue or sale of such ConvertibleSecurities is made upon exercise of any Options for which adjustment of theConversion Price had been or are to be made pursuant to other provisions ofthis Section 7(a), no further adjustment of the Conversion Price shall be madeby reason of such issue or sale.

### (iii)          Changein Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additionalconsideration, if any, payable upon the issue, conversion, exchange or exerciseof any Convertible Securities, or the rate at which any Convertible Securitiesare convertible into or exchangeable or exercisable for Common Stock changes atany time, the Conversion Price in effect at the time of such change shall beadjusted to the Conversion Price which would have been in effect at such timehad such Options or Convertible Securities provided for such changed purchaseprice, additional consideration or changed conversion rate, as the case may be,at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option orConvertible Security that was outstanding as of the Subscription Date arechanged in the manner described in the immediately preceding sentence, thensuch Option or Convertible Security and the Common Stock deemed issuable uponexercise, conversion or exchange thereof shall be deemed to have been issued asof the date of such change.  Noadjustment shall be made if such adjustment would result in an increase of theConversion Price then in effect.

### (iv)          Calculationof Consideration Received.  In caseany Option is issued in connection with the issue or sale of other securitiesof the Company, together comprising one integrated transaction in which nospecific consideration is allocated to such Options by the parties thereto, theOptions will be deemed to have been issued for the difference of (x) theaggregate fair market value of such Options and other securities issued or soldin such integrated transaction, less (y) the fair market value of thesecurities other than such Option, issued or sold in such transaction and theother securities issued or sold in such integrated transaction will be deemedto have been issued or sold for the balance of the consideration received bythe Company.  If any Common Stock,Options or Convertible Securities are issued or sold or deemed to have beenissued or sold for cash, the consideration received therefor will be deemed tobe the gross amount raised by the Company; provided, however, that such grossamount is not greater than 110% of the net amount received by the Company therefor.  If any Common Stock,

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### Options orConvertible Securities are issued or sold for a consideration other than cash,the amount of the consideration other than cash received by the Company will bethe fair value of such consideration, except where such consideration consistsof securities, in which case the amount of consideration received by theCompany will be the Closing Sale Price of such securities on the date ofreceipt.  If any Common Stock, Options orConvertible Securities are issued to the owners of the non-surviving entity inconnection with any merger in which the Company is the surviving entity, theamount of consideration therefor will be deemed to be the fair value of suchportion of the net assets and business of the non-surviving entity as isattributable to such Common Stock, Options or Convertible Securities, as thecase may be.  The fair value of anyconsideration other than cash or securities will be determined jointly by theCompany and the Required Holders.  Ifsuch parties are unable to reach agreement within ten (10) days after theoccurrence of an event requiring valuation (the “**ValuationEvent**”), the fairvalue of such consideration will be determined within five (5) Business Daysafter the tenth (10th) dayfollowing the Valuation Event by an independent, reputable appraiser jointlyselected by the Company and the Required Holders.  The determination of such appraiser shall bedeemed binding upon all parties absent manifest error and the fees and expensesof such appraiser shall be borne by the Company.

### (v)           RecordDate.  If the Company takes a recordof the holders of Common Stock for the purpose of entitling them (A) to receivea dividend or other distribution payable in Common Stock, Options or inConvertible Securities or (B) to subscribe for or purchase Common Stock,Options or Convertible Securities, then such record date will be deemed to bethe date of the issue or sale of the Common Stock deemed to have been issued orsold upon the declaration of such dividend or the making of such otherdistribution or the date of the granting of such right of subscription orpurchase, as the case may be.

## (b)           Adjustment of Conversion Price uponSubdivision or Combination of Common Stock. If the Company at any time on or after the Subscription Date subdivides(by any stock split, stock dividend, recapitalization or otherwise) one or moreclasses of its outstanding shares of Common Stock into a greater number ofshares, the Conversion Price in effect immediately prior to such subdivisionwill be proportionately reduced.  If theCompany at any time on or after the Subscription Date combines (by combination,reverse stock split or otherwise) one or more classes of its outstanding sharesof Common Stock into a smaller number of shares, the Conversion Price in effectimmediately prior to such combination will be proportionately increased.

## (c)           Other Events.  If any event occurs of the type contemplatedby the provisions of this Section 7 but not expressly provided for by suchprovisions (including, without limitation, the granting of stock appreciationrights, phantom stock rights or other rights with equity features), then theCompany’s Board of Directors will make an appropriate adjustment in theConversion Price so as to protect the rights of the Holder under this Note;provided that no such adjustment will increase the Conversion Price asotherwise determined pursuant to this Section 7.

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# (8)           COMPANY INSTALLMENTCONVERSION OR REDEMPTION.

## (a)           General.  On each applicable Installment Date, theCompany shall pay to the Holder of this Note the Installment Amount due on suchdate by converting such Installment Amount, provided that there is not then anEquity Conditions Failure, in accordance with this Section 8 (a “**Company Conversion**”); provided, however, that the Companymay, at its option following notice to the Holder, pay the Installment Amountby redeeming such Installment Amount (a “**Company Redemption**”)or by any combination of a Company Conversion and a Company Redemption so longas all of the outstanding applicable Installment Amount shall be convertedand/or redeemed by the Company on the applicable Installment Date, subject tothe provisions of this Section 8; provided further, however, that the Companyshall not be entitled to pay any portion of the Installment Amount in shares ofCommon Stock pursuant to a Company Conversion and shall be required to pay suchInstallment Amount in cash pursuant to a Company Redemption if the WeightedAverage Price of the Common Stock on any Trading Day during the CompanyConversion Measuring Period is less than $1.00. Notwithstanding the foregoing,the Company may not effect a Company Conversion of any Installment Amount underthis Section in excess of the Holder Pro Rata Amount of the applicableInstallment Volume Limitation.  Onor prior to the date which is the eighth (8th) Trading Day prior to each Installment Date (each, an “**Installment Notice Due Date**”), the Company shall deliverwritten notice (each, a “**Company Installment Notice**”and the date all of the holders receive such notice is referred to as to the “**Company Installment Notice Date**”), to eachholder of Notes which Company Installment Notice shall (i) either (A) confirmthat the applicable Installment Amount of such holder’s Note shall be convertedin whole pursuant to a Company Conversion (such amount to be converted, the “**Company Conversion Amount**”) or (B) (1) state that theCompany elects to redeem, or is required to redeem in accordance with theprovisions of the Notes, in whole or in part, the applicable Installment Amountpursuant to a Company Redemption and (2) specify the portion (includingInterest and Late Charges, if any, on such amount and Interest) which theCompany elects or is required to redeem pursuant to a Company Redemption (suchamount to be redeemed, the “**Company Redemption Amount**”)and the portion (including Interest and Late Charges, if any, on such amountand Interest), if any, that the Company elects to convert pursuant to a CompanyConversion (such amount a “**Company Conversion Amount**”)which amounts when added together, must equal the applicable Installment Amountand (ii) if the Installment Amount is to be paid, in whole or in part, pursuantto a Company Conversion, certify that thereis not then an Equity Conditions Failure as of the date of the CompanyInstallment Notice.  Each CompanyInstallment Notice shall be irrevocable. If the Company does not timely deliver a Company Installment Notice inaccordance with this Section 8, then the Company shall be deemed to havedelivered an irrevocable Company Installment Notice confirming a CompanyConversion and shall be deemed to have certified that there is not then anEquity Conditions Failure in connection with any such conversion. Except asexpressly provided in this Section 8(a), the Company shall convert and/or redeemthe applicable Installment Amount of this Note pursuant to this Section 8 andthe corresponding Installment Amounts of the Other Notes pursuant to thecorresponding provisions of the Other Notes in the same ratio of theInstallment Amount being converted and/or redeemed hereunder.  The Company Conversion Amount (whether setforth in the Company Installment Notice or by operation of this Section 8)shall be converted in accordance with Section 8(b) and the Company RedemptionAmount shall be redeemed in accordance with Section 8(c).

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## (b)           Mechanics of Company Conversion.  Subject to Section 3(d), if the Companydelivers a Company Installment Notice and elects, or is deemed to have elected,in whole or in part, a Company Conversion in accordance with Section 8(a), thenthe applicable Company Conversion Amount, if any, which remains outstanding asof the applicable Installment Date shall be converted as of the applicableInstallment Date by converting on such Installment Date such Company ConversionAmount at the Company Conversion Price; provided that the Equity Conditions arethen satisfied (or waived in writing by the Holder) on such Installment Dateand that the Holder Pro Rata Amount of the Installment Volume Limitation is notexceeded.  If the Equity Conditions arenot satisfied (or waived in writing by the Holder) on such Installment Date orthe Holder Pro Rata Amount of the Installment Volume Limitation is exceeded,then at the option of the Holder designated in writing to the Company, theHolder may require the Company to do any one or more of the following: (i) theCompany shall redeem all or any part designated by the Holder of theunconverted Company Conversion Amount (such designated amount is referred to asthe “**First Redemption Amount**”) and the Companyshall pay to the Holder within three (3) days of such Installment Date, by wiretransfer of immediately available funds, an amount in cash equal to 120% ofsuch First Redemption Amount, and/or (ii) the Company Conversion shall be nulland void with respect to all or any part designated by the Holder of theunconverted Company Conversion Amount and the Holder shall be entitled to allthe rights of a holder of this Note with respect to such amount of the CompanyConversion Amount; provided, however, that the Conversion Price for suchunconverted Company Conversion Amount shall thereafter be adjusted to equal thelesser of (A) the Company Conversion Price as in effect on the date on whichthe Holder voided the Company Conversion and (B) the Company Conversion Priceas in effect on the date on which the Holder delivers a Conversion Noticerelating thereto.  If the Company failsto redeem any First Redemption Amount by the third (3rd) day following the applicableInstallment Date by payment of such amount on the applicable Installment Date,then the Holder shall have the rights set forth in Section 13(a) as if theCompany failed to pay the applicable Company Redemption Price and all otherrights under this Note (including, without limitation, such failure constitutingan Event of Default described in Section 4(a)(xi)).  Notwithstanding anything to the contrary inthis Section 8(b), but subject to 3(d), until the Company delivers Common Stockrepresenting the Company Conversion Amount to the Holder, the CompanyConversion Amount may be converted by the Holder into Common Stock pursuant toSection 3.  In the event that the Holderelects to convert the Company Conversion Amount prior to the applicableInstallment Date as set forth in the immediately preceding sentence, theCompany Conversion Amount so converted shall be deducted from the InstallmentAmounts relating to the applicable Installment Dates as set forth in theapplicable Conversion Notice.

## (c)           Mechanics of Company Redemption.  If the Company elects a Company Redemption inaccordance with Section 8(a), then the Company Redemption Amount, if any, whichis to be paid to the Holder on the applicable Installment Date shall beredeemed by the Company on such Installment Date, and the Company shall pay tothe Holder on such Installment Date, by wire transfer of immediately availablefunds, in an amount in cash (the “**Company InstallmentRedemption Price**”) equal to 100% of the Company RedemptionAmount.  If the Company fails to redeemthe Company Redemption Amount on the applicable Installment Date by payment ofthe Company Installment Redemption Price on such date, then at the option ofthe Holder designated in writing to the Company (any such designation, “**Conversion Notice**” for purposes of this Note), the Holdermay require the Company to convert

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## all or any part of the Company Redemption Amount at the CompanyConversion Price.  Conversions requiredby this Section 8(c) shall be made in accordance with the provisions of Section3(c).  Notwithstanding anything to thecontrary in this Section 8(c), but subject to Section 3(d), until the CompanyInstallment Redemption Price (together with any interest thereon) is paid infull, the Company Redemption Amount (together with any interest thereon) may beconverted, in whole or in part, by the Holder into Common Stock pursuant toSection 3.  In the event the Holderelects to convert all or any portion of the Company Redemption Amount prior tothe applicable Installment Date as set forth in the immediately precedingsentence, the Company Redemption Amount so converted shall be deducted from theInstallment Amounts relating to the applicable Installment Dates as set forthin the applicable Conversion Notice.

## (d)           Deferred Installment Amount.  Notwithstanding any provision of this Section8 to the contrary, the Holder may, at its option and in its sole discretion,deliver a written notice to the Company at least two (2) days prior to anyInstallment Notice Due Date electing to have the payment of all or any portionof an Installment Amount payable on the next Installment Date deferred to theMaturity Date.  Any amount deferred tothe Maturity Date pursuant to this Section 8(d) shall continue to accrueInterest through the Maturity Date and shall be paid on such date in cash.

## (e)           Cancellation of Installment Amount.  Notwithstanding any provision of this Section8 to the contrary, in the event that the Weighted Average Price of the CommonStock equals or exceeds 145% of the applicable Conversion Price for each of thefive (5) consecutive Trading Days immediately preceding the Installment NoticeDue Date, then the Installment Amount payable on such Installment Date shall bedeferred to the Maturity Date.  Anyamount deferred to the Maturity Date pursuant to this Section 8(e) shall continueto accrue Interest through the Maturity Date and shall be paid on such date incash.

# (9)   COMPANY’S RIGHT OFMANDATORY CONVERSION.

## (a)           Mandatory Conversion.  Subject to Section 3(d), if at any timefrom and after the Effective Date (as defined in the Registration RightsAgreement) (the “**Mandatory Conversion Eligibility Date**”), (i) theClosing Sale Price of the Common Stock for any twenty (20) Trading Days(which need not be consecutive) out of any thirty (30) consecutive Trading Dayperiodfollowing the applicable Mandatory Conversion Eligibility Date (the “**MandatoryConversion Measuring Period**”) equals or exceeds either (A) 150% (the “**FirstConversion Threshold**”) or (B) 175% (the “**Second Conversion Threshold**”) of theConversion Price on the Closing Date (subject to appropriate adjustments forstock splits, stock dividends, stock combinations and other similartransactions after the Subscription Date) and (ii) there is not then an EquityConditions Failure, the Company shall have the right to require the Holder toconvert (1) if the First Conversion Threshold has been met, up to theFirst Conversion Threshold Conversion Amount or (2) if the Second ConversionThreshold has been met, all, but not less than all, of the Conversion Amountthen remaining under this Note, in each case****asdesignated in the Mandatory Conversion Notice (as defined below) into fullypaid, validly issued and nonassessable shares of Common Stock in accordancewith Section 3(c) hereof at the Conversion Rate as of the MandatoryConversion Date (as defined below) (a “**MandatoryConversion**”).  The Company mayexercise its right to require conversion under this Section 9(a) by deliveringwithin not more than three (3) Trading Days following the end of such MandatoryConversion

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## Measuring Period a written notice thereof by facsimile and overnightcourier to all, but not less than all, of the holders of Notes and the TransferAgent (the **“Mandatory Conversion Notice”**and the date all of the holders received such notice by facsimile is referred toas the “**Mandatory Conversion Notice Date**”).  The Mandatory Conversion Notice shall beirrevocable.  The Mandatory ConversionNotice shall state (w) the Trading Day selected for the Mandatory Conversion inaccordance with Section 9(a), which Trading Day shall be no later than five (5)Business Days following the Mandatory Conversion Notice Date (the “**Mandatory Conversion Date**”), (v) the aggregate ConversionAmount, including any applicable First Conversion Threshold Conversion Amount,of the Notes subject to mandatory conversion from the Holder and all of theholders of the Notes pursuant to this Section 9 (and analogous provisions underthe Other Notes), (w) the number of shares of Common Stock to be issued to suchHolder on the Mandatory Conversion Date, (x) if the Mandatory Conversion isconsummated prior to the third (3rd)anniversary of the Issuance Date, that the Series B Warrants (as defined in theSecurities Purchase Agreement) issued to the Holder shall become exercisable onthe Mandatory Conversion Date, (y) the Make-Whole Amount, if any, required tobe paid on the Mandatory Conversion and whether such Make-Whole Amount shallnot be paid in shares of Common Stock but rather in cash and (z) certify thatthere is not then an Equity Conditions Failure; provided, however, that the Company may not effect a MandatoryConversion under this Section in excess of the Holder Pro Rata Amount of theapplicable Mandatory Conversion Volume Limitation.  Notwithstanding the foregoing, the Companymay effect only one (1) Mandatory Conversion with respect to the FirstConversion Threshold during any forty (40) consecutive Trading Days.  Any shares of Common Stock delivered inconnection with a Mandatory Conversion hereunder shall be accompanied by (I)any applicable Make-Whole Amount and (II) any accrued and unpaid Interest withrespect to such Conversion Amount subject to such Mandatory Conversion andaccrued and unpaid Late Charges with respect to such Conversion Amount andInterest.

## (b)           Pro Rata Conversion Requirement.  If the Company elects to cause a conversionof any Conversion Amount of this Note pursuant to Section 9(a), then it mustsimultaneously take the same action in the same proportion with respect to theOther Notes.  If the Company elects aMandatory Conversion of this Note pursuant to Section 9(a) (or similarprovisions under the Other Notes) with respect to less than all of theConversion Amounts of the Notes then outstanding, then the Company shallrequire conversion of a Conversion Amount from each of the holders of the Notesequal to the product of (I) the aggregate Conversion Amount of Notes which theCompany has elected to cause to be converted pursuant to Section 9(a),multiplied by (II) the fraction, the numerator of which is the sum of theaggregate Original Principal Amount of the Notes purchased by such holder ofoutstanding Notes and the denominator of which is the sum of the aggregateOriginal Principal Amount of the Notes purchased by all holders holdingoutstanding Notes (such fraction with respect to each holder is referred to asits “**Conversion****AllocationPercentage**,” and such amount with respect to each holder is referredto as its “**Pro Rata Conversion Amount**”);provided, however, that in the event that any holder’s Pro Rata ConversionAmount exceeds the outstanding Principal amount of such holder’s Note, thensuch excess Pro Rata Conversion Amount shall be allocated amongst the remainingholders of Notes in accordance with the foregoing formula.  In the event that the initial holder of any Notesshall sell or otherwise transfer any of such holder’s Notes, the transfereeshall be allocated a pro rata portion of such holder’s Conversion AllocationPercentage and the Pro Rata Conversion Amount.

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# (10)         HOLDER’S RIGHT OFOPTIONAL REDEMPTION.  On the third (3rd) anniversary of the IssuanceDate (the “**OptionalRedemption Date**”), the Holder shall have the right, in its solediscretion, to require that the Company redeem (each a “**Holder Optional Redemption**”) up to all ofthe Principal amount of the Note (excluding any Principal amount the payment ofwhich has been deferred pursuant to Section 8(d)) plus accrued and unpaidInterest with respect to such Principal and accrued and unpaid Late Chargeswith respect to such Principal and Interest then outstanding (the “**Optional Redemption Amount**”) by delivering written noticethereof (a “**Holder Optional Redemption Notice**”and, collectively with the Event of Default Redemption Notice and the Change ofControl Redemption Notice, the “**RedemptionNotices**” and each a “**RedemptionNotice**”) to the Company no later than three (3) Business Days priorto the Optional Redemption Date.  TheHolder Optional Redemption Notice shall indicate the amount of the applicableOptional Redemption Amount the Holder is electing to have redeemed on suchOptional Redemption Date (the “**HolderOptional Redemption Amount**”). The portion of this Note subject to redemption pursuant to this Section10 shall be redeemed by the Company in cash on the applicable OptionalRedemption Date at a price equal to the Holder Optional Redemption Amount beingredeemed (the “**Holder Optional RedemptionPrice**” and, collectively with the Event of Default Redemption Price,the Change of Control Redemption Price and the Company Installment RedemptionPrice, the “**Redemption Prices**”and, each a “**Redemption****Price**”).

# (11)         NONCIRCUMVENTION.  The Company hereby covenants and agrees thatthe Company will not, by amendment of its Certificate of Incorporation, Bylawsor through any reorganization, transfer of assets, consolidation, merger,scheme of arrangement, dissolution, issue or sale of securities, or any othervoluntary action, avoid or seek to avoid the observance or performance of anyof the terms of this Note, and will at all times in good faith carry out all ofthe provisions of this Note and take all action as may be required to protectthe rights of the Holder of this Note.

# (12)         RESERVATION OFAUTHORIZED SHARES.

## (a)           Reservation.  The Company shall initially reserve out ofits authorized and unissued Common Stock a number of shares of Common Stock foreach of the Notes equal to 130% of the Conversion Rate with respect to theConversion Amount of each such Note as of the Issuance****Date.  So long as any of the Notes are outstanding,the Company shall take all action necessary to reserve and keep available outof its authorized and unissued Common Stock, solely for the purpose ofeffecting the conversion of the Notes, 130% of the number of shares of CommonStock as shall from time to time be necessary to effect the conversion of allof the Notes then outstanding; provided that at no time shall the number ofshares of Common Stock so reserved be less than the number of shares requiredto be reserved by the previous sentence (without regard to any limitations onconversions) (the “**Required Reserve Amount**”). The initial number of shares of Common Stock reserved for conversions ofthe Notes and each increase in the number of shares so reserved shall beallocated pro rata among the holders of the Notes based on the principal amountof the Notes held by each holder at the Closing (as defined in the SecuritiesPurchase Agreement) or increase in the number of reserved shares, as the casemay be (the “**Authorized Share Allocation**”). In the event that a holder shall sell or otherwise transfer any of suchholder’s Notes, each transferee shall be allocated a pro rata portion of suchholder’s Authorized Share Allocation. Any shares of

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## Common Stock reserved and allocated to any Person which ceases to holdany Notes shall be allocated to the remaining holders of Notes, pro rata basedon the principal amount of the Notes then held by such holders.

## (b)           Insufficient Authorized Shares.  If at any time while any of the Notes remainoutstanding the Company does not have a sufficient number of authorized andunreserved shares of Common Stock to satisfy its obligation to reserve forissuance upon conversion of the Notes at least a number of shares of CommonStock equal to the Required Reserve Amount (an “**Authorized Share Failure**”), then the Company shallimmediately take all action necessary to increase the Company’s authorizedshares of Common Stock to an amount sufficient to allow the Company to reservethe Required Reserve Amount for the Notes then outstanding.  Without limiting the generality of theforegoing sentence, as soon as practicable after the date of the occurrence ofan Authorized Share Failure, but in no event later than ninety (90) days afterthe occurrence of such Authorized Share Failure, the Company shall hold ameeting of its stockholders for the approval of an increase in (the “**Authorized Share Failure Deadline**”), thenumber of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholderwith a proxy statement and shall use its best efforts to solicit itsstockholders’ approval of such increase in authorized shares of Common Stockand to cause its board of directors to recommend to the stockholders that theyapprove such proposal.

# (13)         HOLDER’S REDEMPTIONS.

## (a)           Mechanics.  The Company shall deliver the applicableEvent of Default Redemption Price to the Holder within five (5) Business Daysafter the Company’s receipt of the Holder’s Event of Default Redemption Notice.  If the Holder has submitted a Change ofControl Redemption Notice in accordance with Section 5(b), the Company shalldeliver the applicable Change of Control Redemption Price to the Holderconcurrently with the consummation of such Change of Control if such notice is receivedprior to the consummation of such Change of Control and within five (5)Business Days after the Company’s receipt of such notice otherwise.  TheCompany shall deliver the applicable Company Installment Redemption Price tothe Holder on the applicable Installment Date and the applicable HolderOptional Redemption Price on the applicable Optional Redemption Date.  In the event of a redemption of lessthan all of the Conversion Amount of this Note, the Company shall promptlycause to be issued and delivered to the Holder a new Note (in accordance withSection 19(d)) representing the outstanding Principal which has not beenredeemed.  In the event that the Companydoes not pay the applicable Redemption Price to the Holder within the timeperiod required, at any time thereafter and until the Company pays such unpaidRedemption Price in full, the Holder shall have the option, in lieu ofredemption, to require the Company to promptly return to the Holder all or anyportion of this Note representing the Conversion Amount that was submitted forredemption and for which the applicable Redemption Price (together with anyLate Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable RedemptionNotice shall be null and void with respect to such Conversion Amount, (y) theCompany shall immediately return this Note, or issue a new Note (in accordancewith Section 19(d)) to the Holder representing the sum of such ConversionAmount to be redeemed together with accrued and unpaid Interest with respect tosuch Conversion Amount and accrued and unpaid Late Charges with respect to suchConversion Amount and Interest and (z) the

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## Conversion Price of this Note or such new Notes shall be adjusted tothe lesser of (A) the Conversion Price as in effect on the date on which theapplicable Redemption Notice is voided and (B) the lowest Closing Bid Price ofthe Common Stock during the period beginning on and including the date on whichthe applicable Redemption Notice is delivered to the Company and ending on andincluding the date on which the applicable Redemption Notice is voided.  The Holder’s delivery of a notice voiding aRedemption Notice and exercise of its rights following such notice shall not affectthe Company’s obligations to make any payments of Late Charges which haveaccrued prior to the date of such notice with respect to the Conversion Amountsubject to such notice.

## (b)           Redemption by Other Holders.  Upon the Company’s receipt of notice from anyof the holders of the Other Notes for redemption or repayment as a result of anevent or occurrence substantially similar to the events or occurrencesdescribed in Section 4(b), Section 5(b) or Section 10 (each, an “**OtherRedemption Notice**”),the Company shall immediately, but no later than one (1) Business Day of itsreceipt thereof, forward to the Holder by facsimile a copy of such notice.  If the Company receives a Redemption Noticeand one or more Other Redemption Notices, during the seven (7) Business Dayperiod beginning on and including the date which is three (3) Business Daysprior to the Company’s receipt of the Holder’s Redemption Notice and ending onand including the date which is three (3) Business Days after the Company’sreceipt of the Holder’s Redemption Notice and the Company is unable to redeemall principal, interest and other amounts designated in such Redemption Noticeand such Other Redemption Notices received during such seven (7) Business Dayperiod, then the Company shall redeem a pro rata amount from each holder of theNotes (including the Holder) based on the principal amount of the Notessubmitted for redemption pursuant to such Redemption Notice and such OtherRedemption Notices received by the Company during such seven Business Dayperiod.

# (14)         VOTING RIGHTS.  The Holder shall have no voting rights as theholder of this Note, except as required by law, including, but not limited to,the General Corporation Law of the State of Delaware, and as expressly providedin this Note.

# (15)         COVENANTS.

## (a)           Rank.      All payments due under this Note (a) shall rank *pari passu* with all Other Notes and (b) shall be senior toall other Indebtedness of the Company and its Subsidiaries other than PermittedIndebtedness of the type described in clause (iii) of the definition thereof.

## (b)           Incurrence of Indebtedness.  Solong as this Note is outstanding, the Company shall not, and the Companyshall not permit any of its Subsidiaries to, directly or indirectly, incur orguarantee, assume or suffer to exist any Indebtedness, other than (i) theIndebtedness evidenced by this Note and the Other Notes and (ii) otherPermitted Indebtedness.

## (c)           Existenceof Liens.  So long as this Note is outstanding, the Company shall not, andthe Company shall not permit any of its Subsidiaries to, directly or indirectly,allow or suffer to exist any mortgage,lien, pledge, charge, security interest or other

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## encumbranceupon or in any property or assets (including accounts and contract rights)owned by the Company or any of its Subsidiaries (collectively, “**Liens**”) other than Permitted Liens.

## (d)           RestrictedPayments.  The Company shall not, and the Companyshall not permit any of its Subsidiaries to, directly or indirectly, redeem,defease, repurchase, repay or make any payments in respect of, by the paymentof cash or cash equivalents (in whole or in part, whether by way of open marketpurchases, tender offers, private transactions or otherwise), all or anyportion of any Permitted Indebtedness, whether by way of payment in respect ofprincipal of (or premium, if any) or interest on, such Indebtedness if at thetime such payment is due or is otherwise made or, after giving effect to suchpayment, (i) an event constituting an Event of Default has occurred and iscontinuing or (ii) an event that with the passage of time and without beingcured would constitute an Event of Default has occurred and is continuing.

## (e)           Restriction on Redemption and CashDividends.  Until all of the Noteshave been converted, redeemed or otherwise satisfied in accordance with theirterms, the Company shall not, directly or indirectly, redeem, repurchase ordeclare or pay any cash dividend or distribution on its capital stock withoutthe prior express written consent of the Required Holders.

## (f)            Financial Covenants.

### (i)            EBITDA Test.  From and after December 31, 2007 and so long as this Note is outstanding,the Company shall maintain EBITDA which equals to or exceeds the applicableEBITDA Threshold (the “**EBITDA Test**”).

### (ii)           Net Cash BalanceTest.  If the EBITDA Test is not metfor any Fiscal Quarter, the Company shall maintain a Net Cash Balance in excessof the applicable Reserved Amount (the “**Net Cash Balance Test**”)until such time as the Company satisfies such EBITDA Test for any FiscalQuarter thereafter; provided, however, that if at any time the Company reportsan LTM Consolidated EBITDA equal to or in excess of $60.0 million or EBITDAequal to or in excess of $25.0 million for any Fiscal Quarter, the Companyshall not be required to satisfy the EBITDA Test or the Net Cash Balance Test atany time thereafter.  If the Companyfails (a “**Failure Date**”) tosatisfy the Net Cash Balance Test at any time when such test is required, theCompany promptly shall provide to the Holder a certification, executed onbehalf of the Company by the Chief Financial Officer of the Company, as to theamount of the Net Cash Balance as of the Failure Date, and publicly disclose(on a Current Report on Form 8-K or otherwise) such material non-publicinformation (the date of such certification and public announcement, the “**Disclosure Date**”).  On the Disclosure Date, the Company shallalso obtain the Letter of Credit (as defined in the Securities PurchaseAgreement) pursuant to and in accordance with Section 4(q) of the SecuritiesPurchase Agreement from a financial institution satisfactory to the RequiredHolders in the applicable Letter of Credit Amount for the benefit, pro rata byprincipal amount outstanding, of the holders of Notes in the event of anydefault by the Company under any of the Transaction Documents.

### (iii)          Operating ResultsAnnouncement.  The Company shallannounce its operating results (the “**OperatingResults**”) from which compliance with the

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### EBITDA Test and Net Cash Balance Test can bedetermined for each Fiscal Quarter no later than the forty-fifth (45th) day after the end of eachFiscal Quarter or, with respect to the last Fiscal Quarter, the ninetieth (90th) day after such quarter (the“**Announcement Date**”) and, in theevent the Company shall have satisfied the EBITDA Test and/or the Net CashBalance Test at all times during such Fiscal Quarter, as applicable, suchannouncement shall include a statement to the effect that the Company satisfiedthe EBITDA Test and/or the Net Cash Balance Test, as applicable, at all timesthroughout such Fiscal Quarter; provided, however, that in the event theCompany is delayed in announcing its Operating Results for any Fiscal Quarter,by the Announcement Date the Company shall, in lieu of the foregoing, (A) makea statement to the effect that it has complied with all of its covenants underthe Notes, including, without limitation, the EBITDA Test and/or the Net CashBalance Test, as applicable, and (B) provide to the Holders a certification, inaccordance with terms of  the next sentence,certifying the same.  On the AnnouncementDate, the Company shall also provide to the Holders a certification, executedon behalf of the Company by the Chief Financial Officer of the Company,certifying that the Company satisfied the EBITDA Test and/or the Net CashBalance Test, as applicable, at all times throughout such Fiscal Quarter.

# (16)         PARTICIPATION.  The Holder, as the holder of this Note, shallbe entitled to receive such dividends paid and distributions made to theholders of Common Stock to the same extent as if the Holder had converted thisNote into Common Stock (without regard to any limitations on conversion hereinor elsewhere) and had held such shares of Common Stock on the record date forsuch dividends and distributions. Payments under the preceding sentence shall be made concurrently withthe dividend or distribution to the holders of Common Stock.

# (17)         VOTE TO ISSUE, ORCHANGE THE TERMS OF, NOTES.  Theaffirmative vote at a meeting duly called for such purpose or the writtenconsent without a meeting of the Required Holders shall be required for anychange or amendment to this Note or the Other Notes.

# (18)         TRANSFER.  This Note and any shares of Common Stockissued upon conversion of this Note may be offered, sold, assigned ortransferred by the Holder without the consent of the Company, subject only tothe provisions of Section 2(f) of the Securities Purchase Agreement.

# (19)         REISSUANCE OF THISNOTE.

## (a)           Transfer.  If this Note is to be transferred, the Holdershall surrender this Note to the Company, whereupon the Company will, subjectto the satisfaction of the transfer provisions of the Securities PurchaseAgreement, forthwith issue and deliver upon the order of the Holder a new Note(in accordance with Section 19(d)), registered in the name of the registeredtransferee or assignee, representing the outstanding Principal beingtransferred by the Holder and, if less then the entire outstanding Principal isbeing transferred, a new Note (in accordance with Section 19(d)) to the Holderrepresenting the outstanding Principal not being transferred.  The Holder and any assignee, by acceptance ofthis Note, acknowledge and agree that, by reason of the provisions of Section3(c)(iv) following conversion or redemption of any

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## portion of this Note, the outstanding Principal represented by thisNote may be less than the Principal stated on the face of this Note.

## (b)           Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidencereasonably satisfactory to the Company of the loss, theft, destruction ormutilation of this Note, and, in the case of loss, theft or destruction, of anyindemnification undertaking by the Holder to the Company in customary form and,in the case of mutilation, upon surrender and cancellation of this Note, theCompany shall execute and deliver to the Holder a new Note (in accordance withSection 19(d)) representing the outstanding Principal.

## (c)           Note Exchangeable for DifferentDenominations.  This Note isexchangeable, upon the surrender hereof by the Holder at the principal officeof the Company, for a new Note or Notes (in accordance with Section 19(d) andin principal amounts of at least $100,000) representing in the aggregate theoutstanding Principal of this Note, and each such new Note will represent suchportion of such outstanding Principal as is designated by the Holder at thetime of such surrender.

## (d)           Issuance of New Notes.  Whenever the Company is required to issue anew Note pursuant to the terms of this Note, such new Note (i) shall be of liketenor with this Note, (ii) shall represent, as indicated on the face of suchnew Note, the Principal remaining outstanding (or in the case of a new Notebeing issued pursuant to Section 19(a) or Section 19(c), the Principaldesignated by the Holder which, when added to the principal represented by theother new Notes issued in connection with such issuance, does not exceed thePrincipal remaining outstanding under this Note immediately prior to suchissuance of new Notes), (iii) shall have an issuance date, as indicated on theface of such new Note, which is the same as the Issuance Date of this Note,(iv) shall have the same rights and conditions as this Note, and (v) shallrepresent accrued and unpaid Interest and Late Charges on the Principal andInterest of this Note, from the Issuance Date.

# (20)         REMEDIES,CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Note shall becumulative and in addition to all other remedies available under this Note andany of the other Transaction Documents at law or in equity (including a decreeof specific performance and/or other injunctive relief), and nothing hereinshall limit the Holder’s right to pursue actual and consequential damages forany failure by the Company to comply with the terms of this Note.  Amounts set forth or provided for herein withrespect to payments, conversion and the like (and the computation thereof)shall be the amounts to be received by the Holder and shall not, except asexpressly provided herein, be subject to any other obligation of the Company(or the performance thereof).  TheCompany acknowledges that a breach by it of its obligations hereunder willcause irreparable harm to the Holder and that the remedy at law for any suchbreach may be inadequate.  The Companytherefore agrees that, in the event of any such breach or threatened breach,the Holder shall be entitled, in addition to all other available remedies, toan injunction restraining any breach, without the necessity of showing economicloss and without any bond or other security being required.

# (21)         PAYMENTOF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection orenforcement or is

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# collected or enforced through any legal proceeding orthe Holder otherwise takes action to collect amounts due under this Note or toenforce the provisions of this Note or (b) there occurs any bankruptcy,reorganization, receivership of the Company or other proceedings affectingCompany creditors’ rights and involving a claim under this Note, then theCompany shall pay the costs incurred by the Holder for such collection,enforcement or action or in connection with such bankruptcy, reorganization,receivership or other proceeding, including, but not limited to, attorneys’fees and disbursements.

# (22)         CONSTRUCTION;HEADINGS.  This Note shall be deemedto be jointly drafted by the Company and all the Purchasers and shall not beconstrued against any person as the drafter hereof.  The headings of this Note are for convenienceof reference and shall not form part of, or affect the interpretation of, thisNote.

# (23)         FAILUREOR INDULGENCE NOT WAIVER.  No failureor delay on the part of the Holder in the exercise of any power, right orprivilege hereunder shall operate as a waiver thereof, nor shall any single orpartial exercise of any such power, right or privilege preclude other orfurther exercise thereof or of any other right, power or privilege.

# (24)         DISPUTERESOLUTION.  In the case of a disputeas to the determination of the Closing Bid Price, the Closing Sale Price or theWeighted Average Price or the arithmetic calculation of the Conversion Rate orany Redemption Price, the Company shall submit the disputed determinations orarithmetic calculations via facsimile within two (2) Business Days of receipt,or deemed receipt, of the Conversion Notice or Redemption Notice or other eventgiving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable toagree upon such determination or calculation within two (2) Business Days ofsuch disputed determination or arithmetic calculation being submitted to theHolder, then the Company shall, within two (2) Business Days submit viafacsimile (a) the disputed determination of the Closing Bid Price, the ClosingSale Price or the Weighted Average Price to an independent, reputableinvestment bank selected by the Company and approved by the Holder or (b) thedisputed arithmetic calculation of the Conversion Rate or any Redemption Priceto the Company’s independent, outside accountant.  The Company, at the Company’s expense, shallcause the investment bank or the accountant, as the case may be, to perform thedeterminations or calculations and notify the Company and the Holder of theresults no later than five (5) Business Days from the time it receives thedisputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, asthe case may be, shall be binding upon all parties absent demonstrable error.

# (25)         NOTICES; PAYMENTS.

## (a)           Notices.  Whenever notice is required to be given underthis Note, unless otherwise provided herein, such notice shall be given inaccordance with Section 10(f) of the Securities Purchase Agreement.  The Company shall provide the Holder withprompt written notice of all actions taken pursuant to this Note, including inreasonable detail a description of such action and the reason therefore.  Without limiting the generality of theforegoing, the Company will give written notice to the Holder (i) immediatelyupon any adjustment of the Conversion Price, setting forth in reasonabledetail, and certifying, the calculation of such adjustment and (ii) at leasttwenty (20) days prior to the date on which the Company closes its

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## books or takes a record (A) with respect to any dividend ordistribution upon the Common Stock, (B) with respect to any pro ratasubscription offer to holders of Common Stock or (C) for determining rights tovote with respect to any Fundamental Transaction, dissolution or liquidation,provided in each case that such information shall be made known to the publicprior to or in conjunction with such notice being provided to the Holder.

## (b)           Payments.  Whenever any payment of cash is to be made bythe Company to any Person pursuant to this Note, such payment shall be made inlawful money of the United States of America by a check drawn on the account ofthe Company and sent via overnight courier service to such Person at suchaddress as previously provided to the Company in writing (which address, in thecase of each of the Purchasers, shall initially be as set forth on the Scheduleof Buyers attached to the Securities Purchase Agreement); provided that theHolder may elect to receive a payment of cash via wire transfer of immediatelyavailable funds by providing the Company with prior written notice setting outsuch request and the Holder’s wire transfer instructions.  Whenever any amount expressed to be due bythe terms of this Note is due on any day which is not a Business Day, the sameshall instead be due on the next succeeding day which is a Business Day and, inthe case of any Interest Date which is not the date on which this Note is paidin full, the extension of the due date thereof shall not be taken into accountfor purposes of determining the amount of Interest due on such date.  Any amount of Principal or other amounts dueunder the Transaction Documents, other than Interest, which is not paid whendue shall result in a late charge being incurred and payable by the Company inan amount equal to interest on such amount at the rate of eighteen percent(18%) per annum from the date such amount was due until the same is paid infull (“**Late Charge**”).

# (26)         CANCELLATION.  After all Principal, accrued Interest andother amounts at any time owed on this Note have been paid in full, this Noteshall automatically be deemed canceled, shall be surrendered to the Company forcancellation and shall not be reissued.

# (27)         WAIVEROF NOTICE.  To the extent permittedby law, the Company hereby waives demand, notice, protest and all other demandsand notices in connection with the delivery, acceptance, performance, defaultor enforcement of this Note and the Securities Purchase Agreement.

# (28)         GOVERNINGLAW.  This Note shall be construedand enforced in accor­dance with, and all questions concerning theconstruction, validity, interpretation and performance of this Note shall begoverned by, the internal laws of the State of New York, without giving effectto any choice of law or conflict of law provision or rule (whether of the Stateof New York or any other jurisdictions) that would cause the application of thelaws of any jurisdictions other than the State of New York.  The Company hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in The City ofNew York, Borough of Manhattan, for the adjudication of any dispute hereunderor in connection herewith or with any transaction contemplated hereby ordiscussed herein, and hereby irrevocably waives, and agrees not to assert in anysuit, action or proceeding, any claim that it is not personally subject to thejurisdiction of any such court, that such suit, action or proceeding is broughtin an inconvenient forum or that the venue of such suit, action or proceedingis improper.  Nothing contained hereinshall be deemed to limit in any way any right to serve process in any mannerpermitted by law.  In the event that anyprovision of this Note is invalid or unenforceable under any applicable

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# statute or rule oflaw, then such provision shall be deemed inoperative to the extent that it mayconflict therewith and shall be deemed modified to conform with such statute orrule of law.  Any such provision whichmay prove invalid or unenforceable under any law shall not affect the validityor enforceability of any other provision of this Note.  Nothing contained herein shall be deemed oroperate to preclude the Holder from bringing suit or taking other legal actionagainst the Company in any other jurisdiction to collect on the Company’sobligations to the Holder, to realize on any collateral or any other securityfor such obligations, or to enforce a judgment or other court ruling in favorof the Holder.  **THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAYHAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANYDISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANYTRANSACTION CONTEMPLATED HEREBY.**

# (29)         CERTAINDEFINITIONS.  For purposes of thisNote, the following terms shall have the following meanings:

## (a)           “**Approved Stock Plan**” means any employee benefit plan which has been approved by theBoard of Directors of the Company, pursuant to which the Company’s securitiesmay be issued to any employee, consultant, officer or director for servicesprovided to the Company.

## (b)           “**AverageMarket Price**” means, for any given date, the arithmetic average ofthe Weighted Average Price of the Common Stock during the ten (10) consecutiveTrading Day period ending on the third (3rd ) Trading Dayimmediately prior to such given date, as appropriately adjusted for any stocksplit, stock dividend, stock combination or other similar transaction thatproportionately decreases or increases the Common Stock during such period.

## (c)           “**Bloomberg**”means Bloomberg Financial Markets.

## (d)           “**Business Day**” means any day other than Saturday, Sunday or other day onwhich commercial banks in The City of New York are authorized or required bylaw to remain closed.

## (e)           “**Calendar Quarter**” means each of: the period beginning on and including January 1and ending on and including March 31; the period beginning on and includingApril 1 and ending on and including June 30; the period beginning on andincluding July 1 and ending on and including September 30; and the periodbeginning on and including October 1 and ending on and including December 31.

## (f)            “**Change of Control**”means any Fundamental Transaction other than (i) any reorganization,recapitalization or reclassification of the Common Stock or businesscombination in which the Company is the publicly traded surviving entityin which holders of the Company’s voting power immediately prior to suchreorganization, recapitalization or reclassification or business combinationcontinue after such reorganization, recapitalization or reclassification or businesscombination to hold publicly traded securities and, directly or indirectly, thevoting power of the surviving entity or entities necessary to elect a majorityof the members of the board of directors (or their equivalent if other than acorporation) of such entity

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## or entities (except where Apollo Resources International or itsaffiliates becomes the “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of 70% or greater of the aggregateVoting Stock of the Company), or (ii) pursuant to a migratory merger effectedsolely for the purpose of changing the jurisdiction of incorporation of theCompany.

## (g)           “**Change of ControlConsideration**” means, for any Change of Control, an amount, if any,equal to the sum of the aggregate cash consideration and the aggregate cashvalue of any marketable securities per share of Common Stock to be paid to theholders of the Common Stock upon consummation of such Change of Control, withany such non-cash consideration to be valued at the higher of the Closing SalePrice of such securities as of the Trading Day immediately prior to theconsummation of the Change of Control, the Closing Sale Price on the TradingDay immediately following the public announcement of such proposed Change of Controland the Closing Sale Price of on the Trading Day immediately prior to thepublic announcement of such proposed Change of Control.

## (h)           “**Change of ControlRedemption Premium**” means (i) for Change of Control Notice deliveredor required to be delivered in connection with a Change of Control prior to thethird (3rd)anniversary of the Issuance Date, 125% and (ii) for any Change of ControlNotice delivered or required to be delivered in connection with a Change ofControl following the third (3rd)anniversary of the Issuance Date, 115%; provided, however, that, in connectionwith any Change of Control in which the Change of Control Consideration equalsor exceeds $8.00 per share, then the Change of Control Redemption Premium shallequal 100%.

## (i)            “**Closing Bid Price**” and “**Closing Sale Price**” means, for any security as of any date, the last closing bidprice and last closing trade price, respectively, for such security on thePrincipal Market, as reported by Bloomberg, or, if the Principal Market beginsto operate on an extended hours basis and does not designate the closing bidprice or the closing trade price, as the case may be, then the last bid priceor last trade price, respectively, of such security prior to 4:00:00 p.m., NewYork Time, as reported by Bloomberg, or, if the Principal Market is not theprincipal securities exchange or trading market for such security, the lastclosing bid price or last trade price, respectively, of such security on theprincipal securities exchange or trading market where such security is listedor traded as reported by Bloomberg, or if the foregoing do not apply, the lastclosing bid price or last trade price, respectively, of such security in theover-the-counter market on the electronic bulletin board for such security asreported by Bloomberg, or, if no closing bid price or last trade price,respectively, is reported for such security by Bloomberg, the average of thebid prices, or the ask prices, respectively, of any market makers for suchsecurity as reported in the “pink sheets” by Pink Sheets LLC (formerly theNational Quotation Bureau, Inc.).  If theClosing Bid Price or the Closing Sale Price cannot be calculated for a securityon a particular date on any of the foregoing bases, the Closing Bid Price orthe Closing Sale Price, as the case may be, of such security on such date shallbe the fair market value as mutually determined by the Company and theHolder.  If the Company and the Holderare unable to agree upon the fair market value of such security, then such disputeshall be resolved pursuant to Section 24. All such determinations to be appropriately adjusted for any stockdividend, stock split, stock combination or other similar transaction duringthe applicable calculation period.

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## (j)            “**Closing Date**”shall have the meaning set forth in the Securities Purchase Agreement, whichdate is the date the Company initially issued Notes pursuant to the terms ofthe Securities Purchase Agreement.

## (k)           “**Common Stock DeemedOutstanding**” means, at any given time, the number of shares ofCommon Stock outstanding at such time, plus the number of shares of CommonStock deemed to be outstanding pursuant to Sections 7(a)(i) and 7(a)(ii) hereofregardless of whether the Options or Convertible Securities are actuallyexercisable at such time, but excluding any Common Stock owned or held by orfor the account of the Company or issuable upon conversion or exercise, asapplicable, of the Notes and the Warrants.

## (l)            “**CompanyConversion Price**” means, thelower of (i) the applicableConversion Price and (ii) that price which shall be computed as 90% of the arithmetic average of the WeightedAverage Price of the Common Stock on each of the five (5) consecutive TradingDays immediately preceding the applicable Installment Date (each such period, a“**Company ConversionMeasuring Period**”).  All such determinations to beappropriately adjusted for any stock split, stock dividend, stock combinationor other similar transaction during such CompanyConversion Measuring Period.

## (m)          “**Consolidated Net Income**”means, for any applicable period, the net income (loss) of the Company and itsSubsidiaries for such period, determined on a consolidated basis and inaccordance with GAAP, but excluding from the determination of Consolidated NetIncome (without duplication) (a) any extraordinary or non recurring gains orlosses or gains or losses from Dispositions, (b) restructuring charges, (c) anytax refunds, net operating losses or other net tax benefits, (d) effects ofdiscontinued operations and (e) interest income (including interestpaid-in-kind).

## (n)           “**Consolidated Net InterestExpense**” means, for any applicable period, gross interest expense ofthe Company and its Subsidiaries for such period determined on a consolidatedbasis and in accordance with GAAP, less (i) the sum of (A) interest income forsuch period and (B) gains for such period on Hedging Agreements (to the extentnot included in interest income above and to the extent not deducted in thecalculation of gross interest expense), plus (ii) the sum of (A) losses forsuch period on Hedging Agreements (to the extent not included in gross interestexpense) and (B) the upfront costs or fees for such period associated withHedging Agreements (to the extent not included in gross interest expense), ineach case, determined on a consolidated basis and in accordance with GAAP.

## (o)           “**Contingent Obligation**”means, as to any Person, any direct or indirect liability, contingent orotherwise, of that Person with respect to any Indebtedness, lease, dividend orother obligation of another Person if the primary purpose or intent of thePerson incurring such liability, or the primary effect thereof, is to provideassurance to the obligee of such liability that such liability will be paid ordischarged, or that any agreements relating thereto will be complied with, orthat the holders of such liability will be protected (in whole or in part)against loss with respect thereto.

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## (p)           “**ConvertibleSecurities**” means any stock or securities (other than Options)directly or indirectly convertible into or exercisable or exchangeable forCommon Stock.

## (q)           “**EBITDA**” means, with respect to any Person and its Subsidiaries for anyapplicable Fiscal Quarters, the Consolidated Net Income of such Person and itsSubsidiaries as set forth in the financial statements of the Company containedin the Form 10-QSB or Form 10-KSB of the Company for the applicable FiscalQuarter, *plus* without duplication, the sum ofthe following amounts of the Company and its Subsidiaries for such period tothe extent deducted in determining Consolidated Net Income of such Persons forsuch period:  (i) Consolidated NetInterest Expense, (ii) income tax expense, (iii) depreciation expense and (iv)amortization expense.

## (r)    “**EBITDA Threshold**” means:

### (i)            (A) $30.0 million ofLTM Consolidated EBITDA reported for the Fiscal Quarter ending December 31,2007 or (B) $27.5 million of LTM Consolidated EBITDA reported for the FiscalQuarter ending December 31, 2007 with at least $10.0 million in EBITDA reportedfor the Fiscal Quarter ending December 31, 2007;

### (ii)           $35.0 million of LTMConsolidated EBITDA reported for the Fiscal Quarter ending March 31, 2008 or$11.5 million in EBITDA reported for the Fiscal Quarter ending March 31, 2008;

### (iii)          $45.0 million of LTMConsolidated EBITDA reported for the Fiscal Quarter ending June 30, 2008 or$17.5 million in EBITDA reported for the Fiscal Quarter ending June 30, 2008;

### (iv)          $50.0 million of LTMConsolidated EBITDA reported for the Fiscal Quarter ending September 30, 2008or $17.5 million in EBITDA reported for the Fiscal Quarter ending September 30,2008; and

### (v)           $60.0 million of LTMConsolidated EBITDA reported for the Fiscal Quarter ending December 31, 2008 or$25.0 million in EBITDA reported for the Fiscal Quarter ending December 31, 2008.

## (s)           “**Eligible Market**”means the Principal Market, The New York Stock Exchange, Inc., the AmericanStock Exchange, the Nasdaq National Market or the Nasdaq Capital Market.

## (t)            “**Equity Conditions**” means that each of the followingconditions is satisfied:  (i) on each dayduring the period beginning three (3) months prior to the applicable date ofdetermination and ending on and including the applicable date of determination(the “**Equity Conditions Measuring Period**”),either (x) the Registration Statement filed pursuant to the Registration RightsAgreement shall be effective and available for the resale of all remainingRegistrable Securities in accordance with the terms of the Registration RightsAgreement and there shall not have been for the one (1) month period ending onand including the date immediately preceding the applicable date ofdetermination any Grace Periods (as defined in the

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## Registration Rights Agreement) or (y) all shares of Common Stockissuable upon conversion of the Notes and exercise of the Warrants shall beeligible for sale without restriction and without the need for registrationunder any applicable federal or state securities laws; (ii) on each day duringthe Equity Conditions Measuring Period, the Common Stock is designated for quotationon the Principal Market or any other Eligible Market and shall not have beensuspended from trading on such exchange or market (other than suspensions ofnot more than two (2) days and occurring prior to the applicable date ofdetermination due to business announcements by the Company) nor shall delistingor suspension by such exchange or market been threatened or pending either (A)in writing by such exchange or market or (B) by falling below the theneffective minimum listing maintenance requirements of such exchange or market;(iii) during the Equity Conditions Measuring Period, the Company shall havedelivered Conversion Shares upon conversion of the Notes and Warrant Sharesupon exercise of the Warrants to the holders on a timely basis as set forth inSection 3(c)(ii) hereof (and analogous provisions under the Other Notes) andSection 2(a) of the Warrants; (iv) any applicable shares of Common Stock to beissued in connection with the event requiring determination may be issued infull without violating Section 3(d) hereof and the rules or regulations of anyapplicable Eligible Market; (v) for the two (2) Calendar Quarters immediatelypreceding the applicable date of determination, the Company shall not havefailed to timely make any payments within five (5) Business Days of when suchpayment is due pursuant to any Transaction Document; (vi) during the EquityConditions Measuring Period, there shall not have occurred either (A) thepublic announcement of a pending, proposed or intended Fundamental Transactionwhich has not been abandoned, terminated or consummated, or (B) an Event ofDefault or (C) an event that with the passage of time or giving of notice wouldconstitute an Event of Default; (vii) the Company shall have no knowledge ofany fact that would cause (x) the Registration Statements required pursuant tothe Registration Rights Agreement not to be effective and available for theresale of all remaining Registrable Securities in accordance with the terms ofthe Registration Rights Agreement or (y) any shares of Common Stock issuableupon conversion of the Notes and shares of Common Stock issuable upon exerciseof the Warrants not to be eligible for sale without restriction pursuant toRule 144(k) and any applicable state securities laws; and (viii) during the six(6) month period ending on and including the date immediately preceding theapplicable date of determination, the Company otherwise shall have been inmaterial compliance with and shall not have materially breached any provision, covenant,representation or warranty of any Transaction Document.

## (u)           “**Equity Conditions Failure**”means that (i) on any day during the period commencing ten (10) Trading Daysprior to the applicable Conversion Date through the applicable Share DeliveryDate, (ii) on any day during the period commencing ten (10) Trading Days priorto the applicable Company Installment Notice Date through the applicableInstallment Date or (ii) on any day during the period commencing ten (10)Trading Days prior to the applicable Mandatory Conversion Notice Date throughthe applicable Mandatory Conversion Date, the Equity Conditions have not beensatisfied (or waived in writing by the Holder).

## (v)           “**Equity Value RedemptionPremium**” means (i) for any Change of Control Notice or Event ofDefault Notice, as applicable, delivered or required to be delivered inconnection with a Change of Control or Event of Default, as applicable, priorto the third (3rd)anniversary of the Issuance Date, 115% and (ii) for any Change of ControlNotice or Event of Default Notice, as applicable, delivered or required to bedelivered in connection with a Change

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## of Control or Event of Default, as applicable, following the third (3rd) anniversary of the IssuanceDate, 110%; provided, however, that, in connection with any Change of Controlin which the Change of Control Consideration equals or exceeds $8.00 per share,then the Equity Value Redemption Premium shall equal 100%.

## (w)          “**Excluded Securities**” means any Common Stock issued or issuable: (i) in connectionwith any Approved Stock Plan; (ii) upon conversion, adjustment or redemption ofthe Notes or the exercise of the Warrants; (iii) pursuant to a bona fide firmcommitment underwritten public offering with a nationally recognizedunderwriter which generates gross proceeds to the Company in excess of$50,000,000 (other than an “at-the-market offering” as defined in Rule415(a)(4) under the 1933 Act and “equity lines”); (iv) in connection with anyacquisition by the Company, whether through an acquisition of stock or a mergerof any business, assets or technologies the primary purpose of which is not toraise equity capital; (v) in connection with any other strategic transaction oralliance the primary purpose of which is not to raise equity capital including withoutlimitation, the issuance of no more than 10,000,000 shares of Common Stock toagricultural conglomerates and (vii) upon conversion or exercise of any Optionsor Convertible Securities which are outstanding on the day immediatelypreceding the Subscription Date, provided that the conversion or exercise priceof such Options or Convertible Securities is not amended, modified or changedon or after the Subscription Date.

## (x)            “**FirstConversion Threshold Conversion Amount**” means an amount equal to (x)50% of the Conversion Amount of this Note on the Issuance Date minus (y)the aggregate Conversion Amount of this Note converted or redeemed pursuant tothe terms of this Note.

## (y)           “**Fiscal Quarter**”****means each of the fiscalquarters adopted by the Company for financial reporting purposes thatcorrespond to the Company’s fiscal year that ends on December 31, or such otherfiscal quarter adopted by theCompany for financial reporting purposes in accordance with GAAP.

## (z)            “**Fundamental Transaction**”means that the Company shall,directly or indirectly, in one or more related transactions, (i) consolidate ormerge with or into (whether or not the Company is the surviving corporation)another Person or Persons, or (ii) sell, assign, transfer, convey or otherwisedispose of all or substantially all of the properties or assets of the Companyto another Person, or (iii) allow another Person to make a purchase,tender or exchange offer that is accepted by the holders of more than 50% ofthe outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person orPersons making or party to, or associated or affiliated with the Persons makingor party to, such purchase, tender or exchange offer), or (iv) consummate astock purchase agreement or other business combination (including,without limitation, a reorganization, recapitalization, spin-off or scheme ofarrangement) with anotherPerson whereby such other Person acquires more than the 50% of theoutstanding shares of Voting Stock (notincluding any shares of Voting Stock held by the other Person or other Personsmaking or party to, or associated or affiliated with the other Persons makingor party to, such stock purchase agreement or other business combination), or (v) reorganize, recapitalizeor reclassify its Common Stock, or (vi) any “person” or “group” (asthese terms are used for purposes of Sections 13(d) and 14(d) of the ExchangeAct) (other than Apollo Resources International) is or shall become the“beneficial owner” (as defined in Rule 13d-3

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## under the Exchange Act), directly or indirectly, of 50% of theaggregate Voting Stock of the Company, or (vii) Apollo Resources Internationalceases to be the “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of at least 50% of the aggregate VotingStock of the Company, or (viii) Apollo Resources International or itsaffiliates becomes the “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of 70% or greater of the aggregateVoting Stock of the Company.

## (aa)         “**GAAP**” meansUnited States generally accepted accounting principles, consistently applied.

## (bb)         “**Holder Pro Rata Amount**”means a fraction (i) the numerator of which is the Principal amount of thisNote on the Closing Date and (ii) the denominator of which is the aggregateprincipal amount of all Notes issued to the initial purchasers pursuant to theSecurities Purchase Agreement on the Closing Date.

## (cc)         “**Indebtedness**”of any Person means, without duplication (i) all indebtedness for borrowedmoney, (ii) all obligations issued, undertaken or assumed as the deferredpurchase price of property or services, including (without limitation) “capitalleases” in accordance with GAAP (other than trade payables entered into in theordinary course of business), (iii) all reimbursement or payment obligationswith respect to letters of credit, surety bonds and other similar instruments,(iv) all obligations evidenced by notes, bonds, debentures or similarinstruments, including obligations so evidenced incurred in connection with theacquisition of property, assets or businesses, (v) all indebtedness created orarising under any conditional sale or other title retention agreement, orincurred as financing, in either case with respect to any property or assetsacquired with the proceeds of such indebtedness (even though the rights andremedies of the seller or bank under such agreement in the event of default arelimited to repossession or sale of such property), (vi) all monetary obligationsunder any leasing or similar arrangement which, in connection with GAAP,consistently applied for the periods covered thereby, is classified as acapital lease, (vii) all indebtedness referred to in clauses (i) through (vi)above secured by (or for which the holder of such Indebtedness has an existingright, contingent or otherwise, to be secured by) any mortgage, lien, pledge,charge, security interest or other encumbrance upon or in any property orassets (including accounts and contract rights) owned by any Person, eventhough the Person which owns such assets or property has not assumed or becomeliable for the payment of such indebtedness, and (viii) all ContingentObligations in respect of indebtedness or obligations of others of the kinds referredto in clauses (i) through (vii) above.

## (dd)         “**Installment Amount**”means with respect to any Installment Date, the lesser of (A) the product of(i) $33,333.33, *multiplied*by (ii) Holder Pro Rata Amount and (B) the Principal amount under this Note asof such Installment Date, as any such Installment Amount may be reducedpursuant to the terms of this Note, whether upon conversion, redemption orotherwise, together with, in each case the sum of any accrued and unpaidInterest with respect to such Principal amount and accrued and unpaid LateCharges, if any, with respect to such Principal amount and Interest.  In the event the Holder shall sell orotherwise transfer any portion of this Note, the transferee shall be allocateda pro rata portion of the each unpaid Installment Amount hereunder.

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## (ee)         “**Installment Date**”means each of the following dates: (i) March 31, 2007, (ii) June 30, 2007,(iii) September 31, 2007, (iv) December 31, 2007, (v) March 31, 2008, (vi) June30, 2008, (vii) September 31, 2008, (viii) December 31, 2008, (ix) March 31,2009, (x) June 30, 2009, (xi) September 31, 2009, (xii) December 31, 2009,(xiii) March 31, 2010, (xiv) June 30, 2010, (xv) September 31, 2010, (xvi)December 31, 2010, (xvii) March 31, 2011 and (xviii) the earlier of theMaturity Date and June 30, 2011.

## (ff)           “**Installment VolumeLimitation**” means 15% ofthe aggregate dollar trading volume (as reported on Bloomberg) of the CommonStock on the Principal Market over the forty (40) consecutive Trading Dayperiod ending on the Trading Day immediately preceding the applicableInstallment Notice Date.

## (gg)         “**Interest****Rate**” means,initially eight percent (8.0%) per annum, subject to adjustment at thebeginning of each Calendar Quarter beginning with the Calendar Quarter endedMarch 31, 2007 in the event that the Interest Rate Conditions are satisfied asof the applicable Calendar Quarter, then in which case the Interest Rate shallequal six percent (6.0%) per annum thereafter.

## (hh)         “**Interest Rate Conditions**” means that (i)the Equity Conditions are presently satisfied (or waived in writing by theHolder) and (ii) the Company has reported LTM Consolidated EBITDA in excess of$40,000,000.

## (ii)           “**Letter of Credit Amount**” means, as of any date ofdetermination, an amount equal to 30% of the aggregate Principal Amountoutstanding under the Notes.

## (jj)           “**LTM Consolidated EBITDA**” means, with respect to any Person,the aggregate Consolidated Net Income of such Person and its Subsidiaries forthe current Fiscal Quarter and the immediately preceding three (3) FiscalQuarters but only if and as set forth in the financial statements of theCompany contained in the Form 10-QSB or Form 10-KSB of the Company; pluswithout duplication, the sum of the following amounts of such Person andits Subsidiaries for such period and to the extent deducted in determiningConsolidated Net Income of such Person for such period:  (i) Consolidated Net Interest Expense, (ii)income tax expense, (iii) depreciation expense, and (iv) amortizationexpense.

## (kk)         “**Make-Whole Amount**” means, as to any Conversion Amount beingconverted pursuant to Section 3(c) or pursuant to Section 9, an amount equal tothe difference between (i) an amount of Interest that, but for the applicableconversion, would have been paid to the Holder on such Conversion Amount fromthe Issuance Date through the third (3rd)anniversary of the Issuance Date and (ii) the amount of Interest already paidto the Holder from the Issuance Date through the Conversion Date or MandatoryConversion Date, as applicable with respect to that Conversion Amount.

## (ll)           “**Make-Whole Conversion Price**” means that price which shall bethe lower of (i) the applicable Conversion Price and (ii) the price computed as90% of the arithmetic average of the Weighted Average Price of the CommonShares during the five (5) consecutive Trading Day period ending on the TradingDay immediately preceding the

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## Conversion Date or Mandatory Conversion Notice Date, as applicable(each, a “**Make-Whole ConversionMeasuring Period**”).  All suchdeterminations to be appropriately adjusted for any stock split, stockdividend, stock combination or other similar transaction during such Make-WholeConversion Period.

## (mm)       “**Mandatory Conversion Volume Limitation**” means 25% of the aggregate dollar trading volume(as reported on Bloomberg) of the Common Stock on the Principal Market over thethirty (30) consecutive Trading Day period prior to the applicable MandatoryConversion Notice Date.

## (nn)         “**Net Cash Balance**” means, at any date, (i) an amount equal tothe aggregate amount of cash, cash equivalents (including cash collateralizingthe Letter of Credit and not including other restricted cash) and marketablesecurities, consisting of corporate bonds, commercial paper and medium-termnotes, as shown or reflected in the notes to the Company’s consolidated balancesheet as at such date *minus* (ii)the unpaid principal balance of any Indebtedness for borrowed money (excludingIndebtedness under the Notes and accounts payable).

## (oo)         “**Options**” means any rights, warrants or options to subscribefor or purchase shares of Common Stock or Convertible Securities.

## (pp)         “**ParentEntity**” of a Person means an entity that, directly or indirectly, controls the applicablePerson and whose common stock or equivalent equity security is quoted orlisted on an Eligible Market,or, if there is more than one such Person or Parent Entity, the Person orParent Entity with the largest public market capitalization as of the date ofconsummation of the Fundamental Transaction.

## (qq)         “**PermittedIndebtedness**” means (i) from the Issuance Date through December 31,2007, total Indebtedness of the Company not to exceed $77.5 million in theaggregate outstanding at any one time; (ii) on and after January 1, 2008, totalaggregate Indebtedness of the Company that does not as of the date on which anysuch Indebtedness is incurred, or as of the end of any Fiscal Quarter, exceed3.0x LTM Consolidated EBITDA; provided, however, that such Indebtednesspermitted pursuant to clauses (i) and (ii) hereof, shall be made expresslysubordinate in right of payment to the Indebtedness evidenced by this Note, asreflected in a written agreement acceptable to the Required Holders andapproved by the Required Holders in writing, and which Indebtedness does notprovide at any time for (A) the payment, prepayment, repayment, repurchase ordefeasance, directly or indirectly, of any principal or premium, if any,thereon until ninety-one (91) days after the Maturity Date or later and (B)total interest and fees at a rate in excess of the initial Interest Rate perannum; (iii) Indebtedness of the Company outstanding as of the date hereof, andIndebtedness of any Subsidiary that is non-recourse to the Company or any otherSubsidiary; (iv) Indebtedness incurred in connection with the build up of aShell terminal which Indebtedness shall not exceed twenty percent (20.0%) ofthe total cost of such build up project and which Indebtedness may only besecured by such Shell terminal being financed; (v) Indebtedness represented bythat certain municipal bond financing for the Company’s facility in Bell Chase,Louisiana which Indebtedness shall be non-recourse to the Company, (vi) theIndebtedness evidenced by this Note and the Other Notes.

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## (rr)           “**Permitted Liens**” means (i) any Lien for taxes not yetdue or delinquent or being contested in good faith by appropriate proceedingsfor which adequate reserves have been established in accordance with GAAP, (ii)any statutory Lien arising in the ordinary course of business by operation oflaw with respect to a liability that is not yet due or delinquent, (iii) anyLien created by operation of law, such as materialmen’s liens, mechanics’ liensand other similar liens, arising in the ordinary course of business withrespect to a liability that is not yet due or delinquent or that are beingcontested in good faith by appropriate proceedings, (v) Liens (A)upon or in any equipment (as defined in the Security Agreement) acquired orheld by the Company or any of its Subsidiaries to secure the purchase price ofsuch equipment or indebtedness incurred solely for the purpose of financing theacquisition or lease of such equipment, or (B) existing on such equipment atthe time of its acquisition, provided that the Lien is confined solely to theproperty so acquired and improvements thereon, and the proceeds of suchequipment, (v) Liens on Permitted Indebtedness of the type described in clauses(iii) and (iv) of the definition thereof; (vi) Liens incurred in connectionwith the extension, renewal or refinancing of the indebtedness secured by Liensof the type described in clauses (i) and (v) above, provided that anyextension, renewal or replacement Lien shall be limited to the propertyencumbered by the existing Lien and the principal amount of the Indebtednessbeing extended, renewed or refinanced does not increase, (vii) leases orsubleases and licenses and sublicenses granted to others in the ordinary courseof the Company’s business, not interfering in any material respect with thebusiness of the Company and its Subsidiaries taken as a whole,(viii) Liens in favor of customs and revenue authorities arising as amatter of law to secure payments of custom duties in connection with theimportation of goods, and (ix) Liens arising from judgments, decrees orattachments in circumstances not constituting an Event of Default under Section4(a)(ix).

## (ss)         “**Person**” means an individual, a limited liability company, apartnership, a joint venture, a corporation, a trust, an unincorporatedorganization, any other entity and a government or any department or agencythereof.

## (tt)           “**PrincipalMarket**” means the OTC Bulletin Board.

## (uu)         “**Redemption Premium**”means (i) in the case of the Events of Default described in Section 4(a)(i) -(vi) and (ix) - (xii), 120% or (ii) in the case of the Events of Defaultdescribed in Section 4(a)(vii) - (viii), 100%.

## (vv)         “**Registration Rights Agreement**” means that certain registrationrights agreement dated as of the Subscription Date by and among the Company andthe initial holders of the Notes relating to, among other things, theregistration of the resale of the Common Stock issuable upon conversion of theNotes and exercise of the Warrants.

## (ww)       “**Required Holders**”means the holders of Notes representing at least a majority of the aggregateprincipal amount of the Notes then outstanding.

## (xx)          “**Reserved Amount**”means, as of any date of determination, an amount equal to 35% of the aggregatePrincipal amount outstanding under all of the Notes.

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## (yy)         “**SEC**”means the United States Securities and Exchange Commission.

## (zz)          “**Securities Purchase Agreement**” means that certain securitiespurchase agreement dated as of the Subscription Date by and among the Companyand the initial holders of the Notes pursuant to which the Company issued theNotes and Warrants.

## (aaa)       “**Subscription Date**”means August 11, 2006.

## (bbb)      “**SuccessorEntity**” means thePerson, which may be the Company, formed by, resulting from or surviving anyFundamental Transaction or the Person with which such Fundamental Transactionshall have been made, provided that if such Person is not a publiclytraded entity whose common stock or equivalent equity security is quoted orlisted for trading on an Eligible Market, Successor Entity shall mean suchPerson’s Parent Entity.

## (ccc)       “**Trading Day**” means any day on which the Common Stock is traded on thePrincipal Market, or, if the Principal Market is not the principal tradingmarket for the Common Stock, then on the principal securities exchange orsecurities market on which the Common Stock is then traded; provided that“Trading Day” shall not include any day on which the Common Stock is scheduledto trade on such exchange or market for less than 4.5 hours or any day that theCommon Stock is suspended from trading during the final hour of trading on suchexchange or market (or if such exchange or market does not designate in advancethe closing time of trading on such exchange or market, then during the hourending at 4:00:00 p.m., New York Time).

## (ddd)      “**Voting Stock**”of a Person means capital stock of such Person of the class or classes pursuantto which the holders thereof have the general voting power to elect, or thegeneral power to appoint, at least a majority of the board of directors,managers or trustees of such Person (irrespective of whether or not at the timecapital stock of any other class or classes shall have or might have votingpower by reason of the happening of any contingency).

## (eee)       “**Warrants**” has the meaning ascribed to such term in the SecuritiesPurchase Agreement, and shall include all warrants issued in exchange thereforor replacement thereof.

## (fff)         “**Weighted Average Price**” means, for any security as of anydate, the dollar volume-weighted average price for such security on thePrincipal Market during the period beginning at 9:30:01 a.m., New York Time (orsuch other time as the Principal Market publicly announces is the official openof trading), and ending at 4:00:00 p.m., New York Time (or such other time asthe Principal Market publicly announces is the official close of trading) as reportedby Bloomberg through its “Volume at Price” functions, or, if the foregoing doesnot apply, the dollar volume-weighted average price of such security in theover-the-counter market on the electronic bulletin board for such securityduring the period beginning at 9:30:01 a.m., New York Time (or such other timeas such market publicly announces is the official open of trading), and endingat 4:00:00 p.m., New York Time (or such other time as such market publiclyannounces is the official close of trading) as reported by Bloomberg, or, if nodollar volume-weighted average price is reported for such security by Bloombergfor such hours, the average of

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## the highest closing bid price and the lowest closing ask price of anyof the market makers for such security as reported in the “pink sheets” by PinkSheets LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted Average Price cannot becalculated for a security on a particular date on any of the foregoing bases,the Weighted Average Price of such security on such date shall be the fairmarket value as mutually determined by the Company and the RequiredHolders.  If the Company and the RequiredHolders are unable to agree upon the fair market value of such security, thensuch dispute shall be resolved pursuant to Section 24.  All such determinations to be appropriatelyadjusted for any stock dividend, stock split, stock combination or othersimilar transaction during the applicable calculation period.

# (30)         DISCLOSURE. Uponreceipt or delivery by the Company of any notice in accordance with the termsof this Note, unless the Company has in good faith determined that the mattersrelating to such notice do not constitute material, nonpublic informationrelating to the Company or its Subsidiaries, the Company shall within two (2)Business Days after any such receipt or delivery publicly disclose suchmaterial, nonpublic information on a Current Report on Form 8-K orotherwise.  In the event that the Companybelieves that a notice contains material, nonpublic information relating to theCompany or its Subsidiaries, the Company so shall indicate to such Holdercontemporaneously with delivery of such notice, and in the absence of any suchindication, the Holder shall be allowed to presume that all matters relating tosuch notice do not constitute material, nonpublic information relating to theCompany or its Subsidiaries.  In theevent of a breach of the foregoing covenant by the Company, any of itsSubsidiaries, or any of its or their respective officers, directors, employeesand agents, in addition to any other remedy provided herein or in theTransaction Documents, a Holder shall have the right to make a publicdisclosure, in the form of a press release, public advertisement or otherwise,of such material, nonpublic information without the prior approval by theCompany, its Subsidiaries, or any of its or their respective officers,directors, employees or agents.  NoHolder shall have any liability to the Company, its Subsidiaries, or any of itsor their respective officers, directors, employees, stockholders or agents forany such disclosure.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Note to be dulyexecuted as of the Issuance Date set out above.
|            | **Earth Biofuels, Inc.**         |
|------------|----------------------------------|
| ** ** | ** **                       |
| ** ** | ** **                       |
|       | By:                              | /s/ Dennis G. McLaughlin |   |
|       | Name: Dennis G.  McLaughlin, III |   |
|       | Title: Chief  Executive Officer  |   |

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**EXHIBIT IEARTH BIOFUELS, INC.CONVERSION NOTICE**

Reference is made to theSenior Convertible Note (the “**Note**”) issuedto the undersigned by Earth Biofuels, Inc. (the “**Company**”).  In accordance with andpursuant to the Note, the undersigned hereby elects to convert the ConversionAmount (as defined in the Note) of the Note indicated below into shares ofCommon Stock par value $0.001 per share (the “**Common Stock**”) of the Company, as of the datespecified below.
| Date of Conversion:                                                                                                       |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                      |   |
| Aggregate  Conversion Amount to be converted:                                                                             |   |
|                                                                                                                      |   |
| Please confirm the following information:                                                                                 |   |
|                                                                                                                      |   |
| Conversion  Price:                                                                                                        |   |
|                                                                                                                      |   |
| Number of shares  of Common Stock to be issued:                                                                           |   |
|                                                                                                                      |   |
| Please issue the Common Stock into which the Note is  being converted in the following name and to the following address: |
|                                                                                                                      |   |
| Issue to:                                                                                                                 |   |
|                                                                                                                      |   |
|                                                                                                                      |   |
| Facsimile  Number:                                                                                                        |   |
|                                                                                                                      |   |
| Authorization:                                                                                                            |   |
|                                                                                                                      |   |
| By:                                                                                                                       |   |
|                                                                                                                      |   |
| Title:                                                                                                                    |   |
|                                                                                                                      |   |
| Dated:                                                                                                                    |   |
|                                                                                                                      |   |
| Account Number:                                                                                                           |   |
|   (if  electronic book entry transfer)                                                                          |   |
|                                                                                                                      |   |
| Transaction Code  Number:                                                                                                 |   |
|   (if  electronic book entry transfer)                                                                          |   |
| Installment Amounts to be reduced and amount  of reduction:                                                               |   |
|                                                                                                                           |        |  |  |  |  |  |  |  |  |  |  |  |  |

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**ACKNOWLEDGMENT**

The Company herebyacknowledges this Conversion Notice and hereby directs Nevada Agency and TrustCompany to issue the above indicated number of shares of Common Stock inaccordance with the Transfer Agent Instructions dated August   ,2006 from the Company and acknowledged and agreed to by Nevada Agency and TrustCompany.
|            | **EARTH BIOFUELS, INC.** |
|------------|--------------------------|
| ** ** | ** **               |
| ** ** | ** **               |
|       | By:                      |   |   |
|       |                     | Name: |
|       |                     | Title: |

 

 

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