Unassociated Document


     

    Exhibit
4.2

    

      THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN
OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE
COMPANY THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD, TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

      


      JUMA
TECHNOLOGY CORP.

      


      10%
Convertible Bridge Note

      


      Date: May
21, 2009

      $4,542,500

      


      For value
received, JUMA TECHNOLOGY CORP., a Delaware corporation (the “Company”),
and NECTAR SERVICES CORP., a Delaware corporation (“Nectar”,
and together with the Company, the “Makers”),
hereby promise to pay to the order of Vision Opportunity Master Fund, Ltd.
(together with its successors, representatives, and permitted assigns, the
“Holder”),
in accordance with the terms hereinafter provided, the principal amount of four
million five hundred forty two thousand five hundred dollars ($4,542,500)
dollars, together with interest thereon.  The Makers are issuing this
10% convertible bridge note (the “Note”)
to the Holder pursuant to the Purchase Agreement (as defined in Section
1.1 hereof).  Any other 10% convertible bridge notes issued
pursuant to the Purchase Agreement shall hereinafter be referred to as the
“Other
Notes” and such Holders as the “Other
Holders”, collectively, this Note and the Other Notes are referred to as
the “Notes.”

       

      All
payments under or pursuant to this Note shall be made in United States Dollars
in immediately available funds to the Holder at the address of the Holder as set
forth in the Purchase Agreement or at such other place as the Holder may
designate from time to time in writing to the Makers or by wire transfer of
funds to the Holder’s account, instructions for which are attached hereto as
Exhibit
A. The outstanding principal balance and all accrued Interest (as
defined herein) of this Note shall be due and payable on the one-year
anniversary of the Issuance Date (the “Maturity
Date”) or at such earlier time as provided herein.

       

      ARTICLE
I

       

      Section
1.1     Purchase
Agreement.  This Note has been executed and delivered pursuant
to the Note and Warrant Purchase Agreement dated as of May 21, 2009 (the “Purchase
Agreement”) by and among the Makers and the purchasers listed
therein.  Capitalized terms used and not otherwise defined herein
shall have the meanings set forth for such terms in the Purchase
Agreement.


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

       

      Section
1.2     Interest.  Beginning
on the issuance date of this Note (the “Issuance
Date”), the outstanding principal balance of this Note shall bear
interest (“Interest”),
at a rate per annum equal to ten percent (10%), so long as any principal amount
evidenced by this Note remains outstanding. Interest shall be payable in cash,
on the Maturity Date.  Interest shall be computed on the basis of a
360-day year of twelve (12) 30-day months and shall accrue commencing on the
Issuance Date.  Furthermore, upon the occurrence of an Event of
Default (as defined in Section
2.1 hereof), then to the extent permitted by law, the Makers will pay
Interest in cash to the Holder, payable on demand, on the outstanding principal
balance of this Note from the date of the Event of Default through the date of
payment at a new rate of the lesser of twelve percent (12%) and the maximum
applicable legal rate per annum (the “Default
Rate”).

       

      Section
1.3     Ranking and
Covenants.

       

      (a)     Other
than such indebtedness existing as of the Issuance Date, the Makers will not,
and will not permit any Subsidiary to, directly or indirectly, enter into,
create, incur, assume or suffer to exist any indebtedness of any kind, that is
senior in any respect to the Makers’ obligations under the Notes, and the Makers
will not, and will not permit any Subsidiary to, directly or indirectly, incur
any Lien on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom,
except for indebtedness with respect to capital leases incurred in the ordinary
course of business.

       

      (b)     So
long as any Notes are outstanding, none of the Makers nor any Subsidiary shall,
directly or indirectly, (i) redeem, purchase or otherwise acquire any of the
Company’s capital stock or set aside any monies for such a redemption, purchase
or other acquisition or (ii) issue any Options or Convertible Securities with an
exercise price or a conversion price or a number of underlying shares that
floats or resets or otherwise varies or is subject to adjustment based (directly
or indirectly) on market prices of the Common Stock.

       

      Section
1.4     Payment on Non-Business
Days.  Whenever any payment to be made shall be due on a
Saturday, Sunday or a public holiday under the laws of the State of New York,
such payment may be due on the next succeeding business day and such next
succeeding day shall be included in the calculation of the amount of accrued
Interest payable on such date.

       

      Section
1.5     Transfer.  This
Note may be transferred or sold, subject to the provisions of Section
4.8 of this Note, or pledged, hypothecated or otherwise granted as
security by the Holder.

       

      Section
1.6     Replacement.  Upon
receipt of a duly executed and notarized written statement from the Holder with
respect to the loss, theft or destruction of this Note (or any replacement
hereof) and a standard indemnity reasonably satisfactory to the Makers, or, in
the case of a mutilation of this Note, upon surrender and cancellation of such
Note, the Makers shall issue a new Note, of like tenor and amount, in lieu of
such lost, stolen, destroyed or mutilated Note.


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

       

      ARTICLE
II

       

      EVENTS OF
DEFAULT;  REMEDIES

       

      Section
2.1     Events of
Default.  The occurrence of any of the following events shall
be an “Event of
Default” under this Note:

       

      (a)     the
Makers shall fail to make any principal or Interest payments due under this Note
on the date such payments are due and such default is not fully cured within ten
(10) business days after the occurrence thereof; or

       

      (b)     Intentionally
Omitted; or

       

      (c)     the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed or quoted on at least one of the OTC
Bulletin Board, the American Stock Exchange, the NASDAQ Global Market, the
NASDAQ Capital Market or The New York Stock Exchange, Inc. for a period of ten
(10) consecutive Trading Days; or

       

      (d)     the
Company’s notice to the Holder, including by way of public announcement, at any
time, of its inability to comply (including for any of the reasons described in
Section
3.8(a) hereof) or its intention not to comply with proper requests for
conversion of this Note into shares of Common Stock; or

       

      (e)     either
(i) the Makers shall fail to timely deliver the shares of Common Stock upon an
Optional Conversion of the Note, or (ii) the Makers shall fail to make the
payment of any fees and/or liquidated damages under this Note or the Purchase
Agreement, which failure is not remedied within ten (10) business days after the
occurrence thereof; or

       

      (f)   
  Intentionally Omitted; or

       

      (g)     default
shall be made in the performance or observance of (i) any covenant, condition or
agreement contained in this Note and such default is not fully cured within ten
(10) business days after the Holder delivers written notice to the Makers of the
occurrence thereof or (ii) any covenant, condition or agreement contained in the
Purchase Agreement, the Other Notes, the Warrants or any other Transaction
Document which is not covered by any other provisions of this Section
2.1 and such default is not fully cured within ten (10) business days
after the Holder delivers written notice to the Makers of the occurrence
thereof;  or

       

      (h)     any
material representation or warranty made by either of the Makers herein or in
the Purchase Agreement, the Other Notes, the Warrants or any other Transaction
Document shall prove to have been false or incorrect or breached in a material
respect on the date as of which made and the Holder delivers written notice to
the Makers of the occurrence thereof; or


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

       

      (i)     either
of the Makers shall after the Issuance Date (A) default in any payment of any
amount or amounts of principal of or interest on any indebtedness (other than
the indebtedness hereunder) the aggregate principal amount of which indebtedness
is in excess of $100,000 or (B) default in the
observance or performance of any other agreement or condition relating to any
indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders or beneficiary or beneficiaries of such indebtedness to cause
with the giving of notice if required, such indebtedness to become due prior to
its stated maturity; or

       

      (j)     either
of the Makers shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect) or under
the comparable laws of any jurisdiction (foreign or domestic), (iv) file a
petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
or (vi) issue a notice of bankruptcy or winding down of its operations or issue
a press release regarding same; or

       

      (k)     a
proceeding or case shall be commenced in respect of either of the Makers,
without its application or consent, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, moratorium, dissolution, winding
up, or composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets in connection with its liquidation or dissolution
or (iii) similar relief in respect of it under any law providing for the relief
of debtors, and such proceeding or case described in clause (i), (ii) or (iii)
shall continue undismissed, or unstayed and in effect, for a period of thirty
(30) days or any order for relief shall be entered in an involuntary case under
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against either of the
Makers or action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing shall be taken with respect to either of the
Makers and shall continue undismissed, or unstayed and in effect for a period of
thirty (30) days; or

       

      (l)     the
failure of the Company to instruct its transfer agent to remove any legends from
shares of Common Stock eligible to be sold under Rule 144 of the Securities Act
and issue such unlegended certificates to the Holder within five (5) business
days of the Holder’s request so long as the Holder has provided reasonable
assurances to the Company, and based thereon the Company has determined, that
such shares of Common Stock can be sold pursuant to Rule 144; or

       

      (m)     the
failure of either of the Makers to pay any other amounts due to the Holder
herein or any other Transaction Document within ten (10) business days of the
date such payments are due and such default is not fully cured within ten (10)
business days after the Holder delivers written notice to the Maker of the
occurrence thereof; or


      
        
           


        

        
          4

          
            

          

        

        
           


        

      

       

      (n)     the
occurrence of an event of default under any other Transaction
Document.

       

      Section
2.2     Remedies Upon An Event of
Default.  If an Event of Default shall have occurred and shall
be continuing, the Holder of this Note may at any time at its option, (a)
declare the entire unpaid principal balance of this Note, together with all
Interest accrued hereon, due and payable, and thereupon, the same shall be
accelerated and so due and payable, without presentment, demand, protest, or
notice, all of which are hereby expressly unconditionally and irrevocably waived
by the Makers; provided,
however, that upon the occurrence of an Event of Default described in
Sections
2.1(j) or (k),
the outstanding principal balance and accrued Interest hereunder shall be
automatically due and payable, (b) demand that the principal amount of this Note
then outstanding shall be converted into shares of Common Stock at a Conversion
Price per share calculated pursuant to Section
3.1 hereof assuming that the date that the Event of Default occurs is the
Optional Conversion Date (as defined in Section
3.1 hereof), or (c) exercise or otherwise enforce any one or more of the
Holder’s rights, powers, privileges, remedies and interests under this Note, the
Purchase Agreement or applicable law.  No course of delay on the part
of the Holder shall operate as a waiver thereof or otherwise prejudice the right
of the Holder.  No remedy conferred hereby shall be exclusive of any
other remedy referred to herein or now or hereafter available at law, in equity,
by statute or otherwise.

       

      ARTICLE
III

       

      CONVERSION;
ANTIDILUTION; PREPAYMENT; COVENANTS

       

      Section
3.1     (a) Optional
Conversion.  At any time and from time to time on or after the
Issuance Date, this Note shall be convertible (in whole or in part), at the
option of the Holder (an “Optional
Conversion”), into such number of fully paid and non-assessable shares of
Common Stock as is determined by dividing (x) that portion of the outstanding
principal balance under this Note as of such date that the Holder elects to
convert by (y) the Conversion Price (as defined in Section
3.2(a) hereof) then in effect  (the “Optional
Conversion Rate”) on the date on which the Holder faxes a notice of
conversion (the “Optional
Conversion Notice”), duly executed, to the Company (facsimile number
(631) 270-1105, Attn.: Chief Executive Officer) (an “Optional
Conversion Date”); provided, however, that the
Conversion Price shall be subject to adjustment as described in Section
3.6 of this Note.  The Holder shall deliver this Note to the
Company at the address designated in the Purchase Agreement as soon as
practicable after such time that this Note is fully converted.  With
respect to partial conversions of this Note, the Company shall keep and attach
hereto written records of the amount of this Note converted as of each
Conversion Date.


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      (b)     Mandatory Conversion.
Effective as of the closing (the “Mandatory Conversion
Date”) of a Qualified Financing (as defined below), any and all
outstanding principal and accrued Interest represented by this Note shall
automatically (without further act or deed of the Holder or the Company) convert
(the “Mandatory
Conversion”) into the type of securities of the Company issued by the
Company in the Qualified Financing (the “Qualified
Financing Stock”) by dividing (x) the outstanding principal balance under
this Note as of the Mandatory Conversion Date by (y) a conversion price which
shall be equal to the lesser of (i) the price per share at which the Company
sells a share of Qualified Financing Stock in the Qualified Financing or (ii)
the Conversion Price (as defined in Section
3.2(a)).  A “Qualified
Financing” shall occur when both (1) a sale by the Company of shares of
equity of the Company to one or more purchasers generates not less than gross
proceeds to the Company of $5,000,000 closing within one hundred twenty (120)
days of the Issuance Date, and (2) the investors in such Qualified Financing are
issued either convertible preferred stock or fixed price convertible notes of
the Company. The Company shall cause notice of the Mandatory Conversion (the
“Mandatory Conversion
Notice”) to be mailed to the Holder, at such Holder’s address, at least
ten (10) days prior to the Mandatory Conversion Date.  On or before
the Mandatory Conversion Date, the Holder shall surrender this Note at the place
designated in such notice, together with a statement of the name or names (with
address) in which the certificate or certificates for shares of Qualified
Financing Stock which shall be issuable on such conversion shall be issued.
Notwithstanding the foregoing provisions of this Section
3.1(b), the Holder may convert any portion of this Note pursuant to Section
3.1(a) on or prior to the date immediately preceding the date of such
Mandatory Conversion.

       

      Section
3.2     Conversion
Price.

       

      (a)     The
term “Conversion
Price” shall mean $0.15, subject to adjustment under Section
3.6 hereof.

       

      (b)     The
term “Conversion
Shares” shall mean such shares of Common Stock issuable upon an Optional
Conversion of this Note. The term “Conversion
Securities” shall mean such securities of the Company issuable upon a
Mandatory Conversion of this Note in connection with the occurrence of a
Qualified Financing.

       

      (c)     Notwithstanding
any of the foregoing to the contrary, if during any period (a “Black-out
Period”), the Holder is unable to trade any Common Stock issued or
issuable upon an Optional Conversion of this Note immediately due to the
postponement of filing or delay or suspension of effectiveness of the
Registration Statement or because the Company has otherwise informed such Holder
that an existing prospectus cannot be used at that time in the sale or transfer
of such Common Stock, such Holder shall have the option but not the obligation
on any Optional Conversion Date within ten (10) Trading Days following the
expiration of the Black-out Period of using the Conversion Price applicable on
such Optional Conversion Date or any Conversion Price selected by the Holder
that would have been applicable had such Optional Conversion Date been at any
earlier time during the Black-out Period or within the ten (10) Trading Days
thereafter.  In no event shall the Black-out Period have any effect on
the Maturity Date of this Note.


      
        
           


        

        
          6

          
            

          

        

        
           


        

      

       

      Section
3.3     Mechanics of
Conversion.

       

      (a)     Not
later than three (3) Trading Days after any Optional Conversion Date or the
Mandatory Conversion Date, as the case may be (the “Delivery
Date”), the Company or its designated transfer agent, as applicable,
shall issue and deliver to (i) the Depository Trust Company (“DTC”)
account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
System (“DWAC”)
as specified in the Optional Conversion Notice, registered in the name of the
Holder or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled, or (ii) to the Holder, the Conversion Securities as
specified in the Mandatory Conversion Notice.  Notwithstanding the
foregoing, in the alternative, not later than the Delivery Date, the Company
shall deliver to the Holder by express courier a certificate or certificates
which shall be free of restrictive legends and trading restrictions (other than
those required by Section
5.1 of the Purchase Agreement and/or the related documentation of the
Qualified Financing, as the case may be) representing the number of Conversion
Shares or Conversion Securities, as the case may be, being acquired upon the
conversion of this Note.  If in the case of any Optional Conversion
such DWAC transfer or certificate or certificates are not delivered to or as
directed by the applicable Holder by the Delivery Date, the Holder shall be
entitled by written notice to the Company at any time on or before its receipt
of such certificate or certificates thereafter, to rescind such Optional
Conversion, in which event the Company shall immediately return this Note
tendered for Optional Conversion, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to the delivery
of such notice of revocation, except that any amounts described in Sections
3.3(b) and (c)
shall be payable through the date notice of rescission is given to the
Maker.

       

      (b)     The
Company understands that a delay in the delivery of the Conversion Shares or the
Conversion Securities beyond the Delivery Date could result in economic loss to
the Holder.  If the Company fails to deliver to the Holder such shares
via DWAC or a certificate or certificates, as applicable, pursuant to this Section
3.3(b) by the Delivery Date, the Makers shall pay to such Holder, in
cash, an amount per Trading Day for each Trading Day until such shares are
delivered via DWAC or certificates are delivered, as the case may be, together
with interest on such amount at a rate of 10% per annum, accruing until such
amount and any accrued interest thereon is paid in full, equal to the greater of
(A) (i) 1% of the aggregate principal amount of the Notes requested or required
to be converted for the first five (5) Trading Days after the Delivery Date and
(ii) 2% of the aggregate principal amount of the Notes requested or required to
be converted for each Trading Day thereafter and (B) $5,000 per day (which
amount shall be paid as liquidated damages and not as a
penalty).  Nothing herein shall limit a Holder’s right to pursue
actual damages for the Company’s failure to deliver certificates representing
the Conversion Shares or the Conversion Securities (as the case may be) within
the period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity (including, without limitation, a
decree of specific performance and/or injunctive
relief).  Notwithstanding anything to the contrary contained herein,
the Holder shall be entitled to withdraw an Optional Conversion Notice, and upon
such withdrawal the Makers shall only be obligated to pay the liquidated damages
accrued in accordance with this Section
3.3(b) through the date the Optional Conversion Notice is
withdrawn.


      
        
           


        

        
          7

          
            

          

        

        
           


        

      

       

      (c)     In
addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the shares of Common Stock issuable upon an Optional Conversion of
this Note on or before the Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
shares of Common Stock issuable upon an Optional Conversion of this Note which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Makers
shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Common Stock issuable upon an Optional Conversion of this
Note that the Company was required to deliver to the Holder in connection with
the Optional Conversion at issue times (B) the price at which the sell order
giving rise to such purchase obligation was executed, and (2) at the option of
the Holder, either reinstate the portion of the Note and equivalent number of
shares of Common Stock for which such Optional Conversion was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with the Optional Conversion and delivery
obligations hereunder.  For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted Optional Conversion of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (1)
of the immediately preceding sentence the Makers shall be required to pay the
Holder $1,000. The Holder shall provide the Makers written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the
Makers.  Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Note as required pursuant to the
terms hereof.

       

      Section
3.4     Ownership Cap and Certain
Conversion Restrictions. Notwithstanding anything to the contrary set
forth in Section
3 of this Note, at no time may the Holder convert all or a portion of
this Note if the number of shares of Common Stock to be issued pursuant to such
conversion would exceed, when aggregated with all other shares of Common Stock
owned by the Holder and its affiliates at such time, the number of shares of
Common Stock which would result in the Holder and its affiliates beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules thereunder) more than 4.99% of all of the Common Stock outstanding at
such time; provided,
however, that upon the
Holder of this Note providing the Company with sixty-one (61) days notice
(pursuant to Section
4.1 hereof) (the “Waiver
Notice”) that such Holder would like to waive this Section
3.4 with regard to any or all shares of Common Stock issuable upon
conversion of this Note, this Section
3.4 will be of no force or effect with regard to all or a portion of the
Note referenced in the Waiver Notice; provided, further, that during the
sixty-one (61) day period prior to the Maturity Date of this Note the Holder may
waive this Section
3.4 upon providing the Waiver Notice at any time during such sixty-one
(61) day period; and provided, further, that any Waiver
Notice during the sixty-one (61) day period prior to the Maturity Date will not
be effective until the Maturity Date.

       

      Section
3.5     Intentionally
Omitted.

       

      Section
3.6     Adjustment of Conversion
Price.

       

      (a)      The
Conversion Price shall be subject to adjustment from time to time as
follows:

       

      (i)     Adjustments for Stock Splits
and Combinations.  If the Company shall at any time or from
time to time after the Issuance Date, effect a stock split of the outstanding
Common Stock, the applicable Conversion Price in effect immediately prior to the
stock split shall be proportionately decreased.  If the Company shall
at any time or from time to time after the Issuance Date, combine the
outstanding shares of Common Stock, the applicable Conversion Price in effect
immediately prior to the combination shall be proportionately
increased.  Any adjustments under this Section
3.6(a)(i) shall be effective at the close of business on the date the
stock split or combination occurs.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (ii)     Adjustments for Certain
Dividends and Distributions.  If the Company shall at any time
or from time to time after the Issuance Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in shares of Common Stock, then, and in each
event, the applicable Conversion Price in effect immediately prior to such event
shall be decreased as of the time of such issuance or, in the event such record
date shall have been fixed, as of the close of business on such record date, by
multiplying, the applicable Conversion Price then in effect by a
fraction:

       

         (1)     the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date; and

       

       
 (2)     the denominator of which shall be the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such dividend or
distribution.

       

      (iii)     Adjustment for Other
Dividends and Distributions.  If the Company shall at any time
or from time to time after the Issuance Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in other than shares of Common Stock, then, and in
each event, an appropriate revision to the applicable Conversion Price shall be
made and provision shall be made (by adjustments of the Conversion Price or
otherwise) so that the holders of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
Conversion Date, retained such securities (together with any distributions
payable thereon during such period), giving application to all adjustments
called for during such period under this Section
3.6(a)(iii) with respect to the rights of the holders of this Note and
the Other Notes; provided,
however, that if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be adjusted to the Conversion Price in
effect immediately prior to such adjustment until the time of actual payment of
such dividends or distributions.

       

      (iv)     Adjustments for
Reclassification, Exchange or Substitution.  If the Common
Stock issuable upon conversion of this Note at any time or from time to time
after the Issuance Date shall be changed to the same or different number of
shares of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination of
shares or stock dividends provided for in Sections
3.6(a)(i), (ii)
and (iii),
or a reorganization, merger, consolidation, or sale of assets provided for in
Section
3.6(a)(v)), then, and in each event, an appropriate revision to the
Conversion Price shall be made and provisions shall be made (by adjustments of
the Conversion Price or otherwise) so that the Holder shall have the right
thereafter to convert this Note into the kind and amount of shares of stock and
other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Note might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.


      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      (v)     Adjustments for
Reorganization, Merger, Consolidation or Sales of Assets.  If
at any time or from time to time after the Issuance Date there shall be a
capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in Section
3.6(a)(i), (ii)
and (iii),
or a reclassification, exchange or substitution of shares provided for in Section
3.6(a)(iv)), or a merger or consolidation of the Company with or into
another corporation where the holders of outstanding voting securities of the
Company prior to such merger or consolidation do not own over fifty percent
(50%) of the outstanding voting securities of the merged or consolidated entity,
immediately after such merger or consolidation, or the sale of all or
substantially all of the Company’s properties or assets to any other person (an
“Organic
Change”), then as a part of such Organic Change, (A) if the surviving
entity in any such Organic Change is a public company that is registered
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and its common stock is listed or quoted on a national exchange or
the OTC Bulletin Board, an appropriate revision to the Conversion Price shall be
made and provision shall be made (by adjustments of the Conversion Price) so
that the Holder shall have the right thereafter to convert such Note into the
kind and amount of shares of stock and other securities or property of the
Company or any successor corporation as it would have received as a result of
such Organic Change if it had converted this Note into Common Stock immediately
prior to such Organic Change, and (B) if the surviving entity in any such
Organic Change is not a public company that is registered pursuant to the
Exchange Act, or its common stock is not listed or quoted on a national exchange
or the OTC Bulletin Board, the Holder shall have the right to demand prepayment
pursuant to Section
3.7(b) hereof.  In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section
3.6(a)(v) with respect to the rights of the Holder after the Organic
Change to the end that the provisions of this Section
3.6(a)(v) (including any adjustment in the applicable Conversion Price
then in effect and the number of shares of stock or other securities deliverable
upon conversion of this Note) shall be applied after that event in as nearly an
equivalent manner as may be practicable.

       

      (vi)     Adjustments for Issuance of
Additional Shares of Common Stock.

      


             (1)     In
the event the Company shall, at any time within one (1) year following the
Issuance Date (the “Full
Ratchet Period”), issue or sell any additional shares of common stock
(otherwise than as provided  in the foregoing subsections (i) through
(v) of this Section
3.6(a) or pursuant to Common Stock Equivalents (hereafter defined)
granted or issued prior to the Issuance Date) (“Additional
Shares of Common Stock”), at a price per share less than the Conversion
Price then in effect or without consideration (the “New
Conversion Price”), then the Conversion Price upon each such issuance
shall be reduced to an amount equal to such New Conversion Price.

      


             (2)     The
provisions of paragraph (1) of this Section
3.6(a)(vi) shall not apply to any issuance of Additional Shares of Common
Stock for which an adjustment is provided under Section
3.6(a)(vii).  No adjustment of the number of shares of Common
Stock for which this Note shall be convertible shall be made under paragraph (1)
of this Section
3.6(a)(vi) upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise of any Common Stock Equivalents, if
any such adjustment shall previously have been made upon the issuance of such
Common Stock Equivalents pursuant to Section
3.6(a)(vii).


      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      (vii)     Issuance of Common Stock
Equivalents.  In the event the Company shall at any time within
the Full Ratchet Period issue any securities convertible into or exchangeable
for, directly or indirectly, Common Stock (“Convertible
Securities”), other than the Notes, or any rights or warrants or options
to purchase any such Common Stock or Convertible Securities, shall be issued or
sold (collectively, the “Common
Stock Equivalents”) and the aggregate price per share for which
Additional Shares of Common Stock may be issuable thereafter pursuant to such
Common Stock Equivalent, plus the consideration received by the Company for
issuance of such Common Stock  Equivalent divided by the number of
shares of Common Stock issuable pursuant to such Common Stock Equivalent (the
“Aggregate
Per Common Share Price”) shall be less than the applicable Conversion
Price then in effect, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so amended
shall make the Aggregate Per Common Share Price be less than the applicable
Conversion Price in effect at the time of such amendment or adjustment, then the
applicable Conversion Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (vi) of this Section
3.6(a) on the basis that (1) the maximum number of Additional Shares of
Common Stock issuable pursuant to all such Common Stock Equivalents shall be
deemed to have been issued (whether or not such Common Stock Equivalents are
actually then exercisable, convertible or exchangeable in whole or in part) as
of the earlier of (A) the date on which the Company shall enter into a firm
contract for the issuance of such Common Stock Equivalent, or (B) the date of
actual issuance of such Common Stock Equivalent.  No adjustment of the
applicable Conversion Price shall be made under this subsection (vii) upon the
issuance of any Convertible Security which is issued pursuant to the exercise of
any warrants or other subscription or purchase rights therefor, if any
adjustment shall previously have been made to the exercise price of such
warrants or other subscription or purchase rights therefor, then in effect upon
the issuance of such warrants or other subscription or purchase rights therefor
pursuant to this subsection (vii).  No adjustment shall be made to the
Conversion Price upon the issuance of Common Stock pursuant to the exercise,
conversion or exchange of any Convertible Security or Common Stock Equivalent
where an adjustment to the Conversion Price was made as a result of the issuance
or purchase of any Convertible Security or Common Stock Equivalent.

           

      (viii)     Subsequent Common Stock and
Common Stock Equivalents Issues.  In the event the Company,
shall, at any time after the Full Ratchet Period, issue or sell any Additional
Shares of Common Stock or Common Stock Equivalents (otherwise than as provided
in the foregoing subsections of this Section
4), at a price per share less than the Conversion Price, or without
consideration, the Conversion Price then in effect upon each such issuance shall
be adjusted to that price (rounded to the nearest cent) determined by
multiplying the Conversion Price by a fraction: (1) the numerator of which shall
be equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus (B) the number of shares
of Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common Stock so
issued would purchase at a price per share equal to the then Conversion Price;
and (2) the denominator of which shall be equal to the number of shares of
Common Stock outstanding immediately after the issuance of such Additional
Shares of Common Stock.  No adjustment of the number of shares of
Common Stock shall be made upon the issuance of any Additional Shares of Common
Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Common Stock Equivalents if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights or
upon the issuance of such Common Stock Equivalents (or upon the issuance of any
warrant or other rights therefore).


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

      


      (ix)     Consideration for
Stock.  In case any shares of Common Stock or any Common Stock
Equivalents shall be issued or sold:

      


        
(1)     in connection with any merger or consolidation
in which the Company is the surviving corporation (other than any consolidation
or merger in which the previously outstanding shares of Common Stock of the
Company shall be changed to or exchanged for the stock or other securities of
another corporation), the amount of consideration therefor shall be, deemed to
be the fair market value, as determined reasonably and in good faith by the
board of directors of the Company (the “Board”),
of such portion of the assets and business of the nonsurviving corporation as
the Board may determine to be attributable to such shares of Common Stock,
Convertible Securities, rights or warrants or options, as the case may be;
or

       

         (2)     in
the event of any consolidation or merger of the Company in which the Company is
not the surviving corporation or in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the stock or
other securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Company for stock or other securities of
any corporation, the Company shall be deemed to have issued a number of shares
of its Common Stock for stock or securities or other property of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation.  If any such calculation results in
adjustment of the applicable Conversion Price, or the number of shares of Common
Stock issuable upon conversion of the Notes, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Notes immediately prior to such merger, consolidation or sale,
shall be made after giving effect to such adjustment of the number of shares of
Common Stock issuable upon conversion of the Notes.  In the event
Common Stock is issued with other shares or securities or other assets of the
Company for consideration which covers both, the consideration computed as
provided in this Section
3.6(viii) shall be allocated among such securities and assets as
determined in good faith by the Board.

       

      (x)     Adjustment for the Failure
of a Qualified Financing.  If the Company does not close a
Qualified Financing within one hundred twenty (120) days from the Issuance Date,
the Conversion Price of this Note shall be automatically reduced to the lesser
of (i) the Conversion Price then in effect and (ii) $0.15.

      


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (b)     Record
Date.  In case the Company shall take record of the holders of
its Common Stock for the purpose of entitling them to subscribe for or purchase
Common Stock or Convertible Securities, then the date of the issue or sale of
the shares of Common Stock shall be deemed to be such record date.

       

      (c)     Certain Issues
Excepted.  Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustment to the Conversion Price in
connection with (i) securities issued (other than for cash) in connection with a
merger, acquisition, or consolidation that do not exceed 25% of the outstanding
Common Stock of the Company as of the date of the Purchase Agreement (such
percentage subject to adjustment in a manner consistent with the adjustments to
the Conversion Price contemplated in Section
3 hereof) and such issuances are determined in the light of the whole
transaction to which they are a part to be in the best interests of the Company,
(ii) securities issued pursuant to the conversion or exercise of convertible or
exercisable securities issued or outstanding on or prior to the date of the
Purchase Agreement or issued pursuant to the Purchase Agreement (so long as the
conversion or exercise price in such securities are not amended to lower such
price and/or adversely affect the Holders), (iii) Common Stock issued or the
issuance or grants of options to purchase Common Stock pursuant to the Company’s
stock option plans and employee stock purchase plans that either (x) exist on
the date of the Purchase Agreement, or (y) do not exceed fifteen percent (15%)
of the outstanding Common Stock of the Company as of the date of the Purchase
Agreement (such percentage subject to adjustment in a manner consistent with the
adjustments to the Conversion Price contemplated in Section
3 hereof), (iv) securities issued in connection with bona fide strategic license
agreements or other partnering agreements so long as such issuances are not for
the purpose of raising capital which are approved by a majority of its
independent directors and such issuances are determined in the light of the
whole transaction to which they are a part to be in the best interests of the
Company, and (v) a Qualified Financing.

      


      (d)     No
Impairment.  The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section
3.6 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder against
impairment.  In the event a Holder shall elect to convert any Notes as
provided herein, the Company cannot refuse conversion based on any claim that
such Holder or any one associated or affiliated with such Holder has been
engaged in any violation of law, violation of an agreement to which such Holder
is a party or for any reason whatsoever, unless, an injunction from a court, or
notice, restraining and or adjoining conversion of all or of said Notes shall
have issued and the Company posts a surety bond for the benefit of such Holder
in an amount equal to one hundred percent (100%) of the amount of the Notes the
Holder has elected to convert, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Holder (as liquidated damages) in the event it obtains
judgment.


      
        
           


        

        
          13

          
            

          

        

        
           


        

      


      (e)     Certificates as to
Adjustments.  Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of this Note pursuant to this Section
3.6, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the Holder a
certificate setting forth such adjustment and readjustment, showing in detail
the facts upon which such adjustment or readjustment is based.  The
Company shall, upon written request of the Holder, at any time, furnish or cause
to be furnished to the Holder a like certificate setting forth such adjustments
and readjustments, the applicable Conversion Price in effect at the time, and
the number of shares of Common Stock and the amount, if any, of other securities
or property which at the time would be received upon the conversion of this
Note.  Notwithstanding the foregoing, the Company shall not be
obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent (1%) of such adjusted
amount.

       

      (f)     Issue
Taxes.  The Makers shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of securities on conversion of this Note pursuant
thereto; provided,
however, that the Makers shall not be obligated to pay any transfer taxes
resulting from any transfer requested by the Holder in connection with any such
conversion.

       

      (g)     Fractional
Shares.  No fractional shares of Common Stock shall be issued
upon conversion of this Note.  In lieu of any fractional shares to
which the Holder would otherwise be entitled, the Maker shall pay cash equal to
the product of the fraction that would evidence such fractional shares
multiplied by the average of the Closing Bid Prices of the Common Stock for the
five (5) consecutive Trading Days immediately preceding the Conversion
Date.   The term “Closing
Bid Price” shall mean, on any particular date (i) the last closing bid
price per share of the Common Stock on such date on the OTC Bulletin Board or
another registered national stock exchange on which the Common Stock is then
listed, or if there is no such price on such date, then the last closing bid
price on such exchange or quotation system on the date nearest preceding such
date, or (ii) if the Common Stock is not listed then on the OTC Bulletin Board
or any registered national stock exchange, the last trading price for a share of
Common Stock in the over-the-counter market, as reported by the OTC Bulletin
Board or in the National Quotation Bureau Incorporated or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (iii) if the Common Stock is not then reported by the
OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting prices), then
the average of the “Pink Sheet” quotes for the relevant conversion period, as
determined in good faith by the Holder and reasonably acceptable to the Company,
or (iv) if the Common Stock is not then publicly traded the fair market value of
a share of Common Stock as determined by the Holder and reasonably acceptable to
the Company.

       

      (h)     Reservation of Common
Stock.  The Company shall at all times when this Note shall be
outstanding, reserve and keep available out of its authorized but unissued
Common Stock, one hundred twenty percent (120%) of such number of shares of
Common Stock as shall from time to time be sufficient to effect a full Optional
Conversion of this Note.  The Company shall, from time to time in
accordance with Delaware law, increase the authorized number of shares of Common
Stock if at any time the unissued number of authorized shares shall not be
sufficient to satisfy the Company’s obligations under this Section
3.6(h).


      
        
           


        

        
          14

          
            

          

        

        
           


        

      


      (i)     Regulatory
Compliance.  If any shares of Common Stock to be reserved for
the purpose of an Optional Conversion of this Note require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be.

      


      Section
3.7     Prepayment.

       

      (a)     Prepayment Upon an Event of
Default.  Notwithstanding anything to the contrary contained
herein, upon the occurrence of an Event of Default described in Sections
2.1(b)-(i), (l),
(m)
and (n)
hereof, the Holder shall have the right, at the Holder’s option, to require the
Makers to prepay in cash all or a portion of this Note at a price equal to one
hundred percent (100%) of the aggregate principal amount of this Note plus all
accrued and unpaid Interest applicable at the time of such
request.  Nothing in this Section
3.7(a) shall limit the Holder’s rights under Section
2.2 hereof.

       

      (b)     Prepayment Option Upon Major
Transaction.  In addition to all other rights of the Holder
contained herein, simultaneous with the occurrence of a Major Transaction (as
defined below), the Holder shall have the right, at the Holder’s option, to
require the Makers to prepay in cash all or a portion of this Note at a price
equal to one hundred twenty percent (120%) of the aggregate principal amount of
this Note plus all accrued and unpaid Interest (the “Major
Transaction Prepayment Price”).

       

      (c)     Prepayment Option Upon
Triggering Event.  In addition to all other rights of the
Holder contained herein, after a Triggering Event (as defined below), the Holder
shall have the right, at the Holder’s option, to require the Makers to prepay
all or a portion of this Note in cash at a price equal to one hundred twenty
percent (120%) of the aggregate principal amount of this Note plus all accrued
and unpaid Interest (the “Triggering
Event Prepayment Price,” and, collectively with the Major Transaction
Prepayment Price, the “Prepayment
Price”).

       

      (d)     Optional Prepayment by
Company.  In addition to all other rights of the Company
contained herein, at any time after six (6) months from the Issuance Date, the
Company shall have the right, solely at the Company’s option, to prepay in cash
(the “Optional
Prepayment”) at a price equal to one hundred ten percent (110%) of the
aggregate principal amount of this Note plus all accrued and unpaid Interest, if
any, thereon to the date of such Optional Prepayment (the “Optional
Company Prepayment Price”) by providing written notice of at least thirty
(30) calendar days prior to the consummation of the Optional Prepayment via
facsimile and overnight courier (“Notice of
Optional Prepayment”) to the Holder of this Note and the Other Holders.
The Company may pay, upon an Optional Prepayment, all accrued and unpaid
Interest, if any, by issuing the Holders additional Notes with a principal
amount equal to the Interest then due and payable (a “PIK
Note”). The Company shall deliver the applicable Optional Company
Prepayment Price to the Holder, within five (5) business days after the date
specified in the Notice of Optional Prepayment for the Optional
Prepayment.  If the Company shall fail to prepay the Notes (other than
pursuant to a dispute as to the arithmetic calculation of the Optional Company
Prepayment Price), in addition to any remedy such Holder of the Notes may have
under this Note and the Purchase Agreement, the Optional Company Prepayment
Price payable in respect of such Notes not prepaid shall bear interest at the
Default Rate until paid in full.  Notwithstanding the foregoing in
this Section
3.7(d), the Holder may convert any portion of this Note pursuant to Section
3.1(a) on or prior to the date immediate preceding the date of such
Optional Prepayment.


      
        
           


        

        
          15

          
            

          

        

        
           


        

      

       

      (e)     “Major
Transaction.”  A “Major
Transaction” shall be deemed to have occurred at such time as any of the
following events have occurred:

       

        (i)      the
consolidation, merger or other business combination of the Company with or into
another Person (as defined in Section
4.13 hereof) (other than (A) pursuant to a migratory merger effected
solely for the purpose of changing the jurisdiction of incorporation of the
Company or (B) a consolidation, merger or other business combination in which
holders of the Company’s voting power immediately prior to the transaction
continue after the transaction to hold, directly or indirectly, the voting power
of the surviving entity or entities necessary to elect a majority of the members
of the board of directors (or their equivalent if other than a corporation) of
such entity or entities); or

       

        (ii)      the
sale or transfer of more than fifty percent (50%) of the Company’s assets (based
on the fair market value as determined in good faith by the Board) other than
inventory in the ordinary course of business in one or a related series of
transactions; or

       

        (iii)      closing
of a purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty
percent (50%) of the outstanding shares of Common Stock were tendered and
accepted; or

       

        (iv)      a
change in more than fifty percent (50%) of the current members of the Company’s
Board of Directors as of the Issuance Date, except for such changes approved by
the Holder of this Note.

       

      (f)     “Triggering
Event.”  A “Triggering
Event” shall be deemed to have occurred at such time as any of the
following events:

       

        (i)     
Intentionally Omitted;     

       

        (ii)     the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, the American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital
Market or The New York Stock Exchange, Inc., for a period of ten (10)
consecutive Trading Days;

       

        (iii)    the
Company’s notice to the Holder or any Other Holders, including by way of public
announcement, at any time, of its inability to comply (including for any of the
reasons described in Section
3.8(a) hereof) or its intention not to comply with proper requests for
conversion of any Notes into shares of Common Stock; or


      
        
           


        

        
          16

          
            

          

        

        
           


        

      

       

        (iv)     the
Company’s failure to comply with an Optional Conversion Notice tendered in
accordance with the provisions of this Note within five (5) Trading Days after
the receipt by the Company of the Optional Conversion Notice; or

       

        (v)     the
Company deregisters its shares of Common Stock and as a result such shares of
Common Stock are no longer publicly traded; or

       

        (vi)     the
Company consummates a “going private” transaction and as a result the Common
Stock is no longer registered under Sections 12(b) or 12(g) of the Exchange Act;
or

       

        (vii)     either
of the Makers breach any representation, warranty, covenant or other term or
condition of the Purchase Agreement, this Note or any other agreement, document,
certificate or other instrument delivered in connection with the transactions
contemplated thereby or hereby, except to the extent that such breach would not
have a Material Adverse Effect (as defined in the Purchase Agreement) and
except, in the case of a breach of a covenant which is curable, only if such
breach continues for a period of a least twenty (20) business days.

       

      (g)     Intentionally
Omitted.

      


      (h)     Mechanics of Prepayment at
Option of Holder Upon Major Transaction.  No sooner than
fifteen (15) days nor later than ten (10) days prior to the consummation of a
Major Transaction, but in  no event prior to the public announcement
of such Major Transaction, the Makers shall deliver written notice thereof via
facsimile and overnight courier (“Notice of
Major Transaction”) to the Holder of this Note and the Other
Holders.  At any time after receipt of a Notice of Major Transaction
(or, in the event a Notice of Major Transaction is not delivered at least ten
(10) days prior to a Major Transaction, at any time during the ten (10) day
period prior to a Major Transaction), the Holder of this Note and the Other
Holders of the Other Notes then outstanding may require the Makers to prepay,
effective immediately prior to the consummation of such Major Transaction, all
or any portion of this Note then outstanding by delivering written notice
thereof via facsimile and overnight courier (“Notice of
Prepayment at Option of Holder Upon Major Transaction”) to the Makers,
which Notice of Prepayment at Option of Holder Upon Major Transaction shall
indicate (i) the principal amount of this Note that the Holder is electing to
have prepaid and (ii) the applicable Major Transaction Prepayment Price, as
calculated pursuant to Section
3.7(b) above.

       

      (i)     Mechanics of Prepayment at
Option of Holder Upon Triggering Event.  Within three (3)
business days after the occurrence of a Triggering Event, the Makers shall
deliver written notice thereof via facsimile and overnight courier (“Notice of
Triggering Event”) to the Holder and the Other Holders.  At any
time after the earlier of the Holder’s receipt of a Notice of Triggering Event
and the Holder becoming aware of a Triggering Event, the Holder  of
this Note and the Other Holders of the Other Notes then outstanding may require
the Makers to prepay all or any portion of this Note then outstanding by
delivering written notice thereof via facsimile and overnight courier (“Notice of
Prepayment at Option of Holder Upon Triggering Event”) to the Makers,
which Notice of Prepayment at Option of Holder Upon Triggering Event shall
indicate (i) the amount of the Note that the Holder is electing to have prepaid
and (ii) the applicable Triggering Event Prepayment Price, as calculated
pursuant to Section
3.7(c) above.  The Holder shall only be permitted to require
the Makers to prepay this Note pursuant to Section
3.7 hereof for the greater of a period of ten (10) days after receipt by
the Holder of a Notice of Triggering Event or for so long as such Triggering
Event is continuing.


      
        
           


        

        
          17

          
            

          

        

        
           


        

      

       

      (j)     Payment of Prepayment
Price.  Upon the Makers’ receipt of a Notice(s) of Prepayment
at Option of Holder Upon Triggering Event or a Notice(s) of Prepayment at Option
of Holder Upon Major Transaction from the Holder or the Other Holders, the
Makers shall notify the Holder or such Other Holders, as the case may be, by
facsimile of the Makers’ receipt of such Notice(s) of Prepayment at Option of
Holder Upon Triggering Event or Notice(s) of Prepayment at Option of Holder Upon
Major Transaction within two (2) business days of the Makers’ receipt of the
same and the Holder and each Other Holder which has sent such a notice shall
promptly thereafter submit to the Makers this Note (or certificates representing
a portion of this Note if the Holder elects not to have all of the outstanding
principal and accrued Interest hereunder prepaid)  or the Other Notes
(or certificates representing a portion of the Other Notes if the Other Holders
elect not to have all of the outstanding principal and accrued Interest
thereunder prepaid) which the Holder or Other Holders, as the case may be, have
elected to have prepaid.  The Makers shall deliver the applicable
Triggering Event Prepayment Price to the Holder, within five (5) business days
after the Makers’ receipt of this Note or the certificates related thereto, as
the case may be, and, in the case of a prepayment pursuant to Section
3.7(h), the Makers shall deliver the applicable Major Transaction
Prepayment Price immediately prior to the consummation of the Major Transaction;
provided that the
Holder’s original Note or the Other Holders’ original Other Notes, or the
certificates related thereto, shall have been so delivered to the Makers; provided further that if the Makers
are unable to prepay all of the Notes to be prepaid, the Makers shall prepay an
amount to the Holder and each Other Holder of this Note and the Other Notes
being prepaid equal to such holder’s pro-rata amount of all Notes
being prepaid.  If the Makers shall fail to prepay all of the Notes
submitted for prepayment (other than pursuant to a dispute as to the arithmetic
calculation of the Prepayment Price), in addition to any remedy such holder of
the Notes may have under this Note and the Purchase Agreement, the applicable
Prepayment Price payable in respect of such Notes not prepaid shall bear
interest at the Default Rate until paid in full.  Until the Makers pay
such unpaid applicable Prepayment Price in full to a holder of the Notes
submitted for prepayment, such holder shall have the option (the “Void
Optional Prepayment Option”) to, in lieu of prepayment, require the
Makers to promptly return to such holder(s) all of the Notes that were submitted
for prepayment by such holder(s) under this Section
3.7 and for which the applicable Prepayment Price has not been paid, by
sending written notice thereof to the Makers via facsimile (the “Void
Optional Prepayment Notice”).  Upon the Makers’ receipt of such
Void Optional Prepayment Notice(s) and prior to payment of the full applicable
Prepayment Price to such holder, (i) the Notice(s) of Prepayment at Option of
Holder Upon Triggering Event or the Notice(s) of Prepayment at Option of Holder
Upon Major Transaction, as the case may be, shall be null and void ab initio with respect to
those Notes submitted for prepayment and for which the applicable Prepayment
Price has not been paid, (ii) the Makers shall immediately return any such Notes
submitted to the Makers by each holder for prepayment under this Section
3.7(j) and for which the applicable Prepayment Price has not been paid
and (iii) the Conversion Price of such returned Notes shall be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the
applicable Void Optional Prepayment Notice(s) is delivered to the Makers and (B)
the lowest Closing Bid Price during the period beginning on the date on which
the Notice(s) of Prepayment of Option of Holder Upon Major Transaction or the
Notice(s) of Prepayment at Option of Holder Upon Triggering Event, as the case
may be, is delivered to the Makers and ending on the date on which the Void
Optional Prepayment Notice(s) is delivered to the Makers; provided that no adjustment
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect.  A holder’s delivery of a Void Optional
Prepayment Notice and exercise of its rights following such notice shall not
effect the Makers’ obligations to make any payments which have accrued prior to
the date of such notice.  Payments provided for in this Section
3.7 shall have priority to payments to other stockholders in connection
with a Major Transaction.


      
        
           


        

        
          18

          
            

          

        

        
           


        

      

       

      Section
3.8     Inability to Fully
Convert.

       

      (a)     Holder’s Option if Maker
Cannot Fully Convert.  If, upon the Company’s receipt of an
Optional Conversion Notice, the Company cannot issue registered shares of Common
Stock, for any reason, including, without limitation, because the Company (x)
does not have a sufficient number of shares of Common Stock authorized and
available, (y) is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or any of its
securities from issuing all of the Common Stock which is to be issued to the
Holder pursuant to a Conversion Notice or (z) fails to have a sufficient number
of registered shares of Common Stock, then the Company shall issue as many
shares of registered Common Stock, as it is able to issue in accordance with the
Holder’s Optional Conversion Notice and, with respect to the unconverted portion
of this Note, the Holder, solely at Holder’s option, can elect to:

       

        (i)     require
the Makers to prepay that portion of this Note for which the Company is unable
to issue Common Stock in accordance with the Holder’s Optional Conversion Notice
(the “Mandatory
Prepayment”) at a price per share equal to the Triggering Event
Prepayment Price as of such Conversion Date (the “Mandatory
Prepayment Price”);

       

        (ii)     require
the Company to issue restricted shares of Common Stock, if it is permissible for
the Company to do so, in accordance with the Holder’s Optional Conversion
Notice;

       

        (iii)     void
its Optional Conversion Notice and retain or have returned, as the case may be,
this Note (or the portion thereof) that was to be converted pursuant to the
Optional Conversion Notice (provided that the Holder’s voiding its Optional
Conversion Notice shall not effect the Makers’ obligations to make any payments
which have accrued prior to the date of such notice); or

       

        (iv)     exercise
its Buy-In rights pursuant to and in accordance with the terms and provisions of
Section
3.3(c) of this Note.

       

       (b)     Mechanics of Fulfilling
Holder’s Election.  Upon receipt of a facsimile copy of an
Optional Conversion Notice from the Holder which cannot be fully satisfied as
described in Section
3.8(a) above, the Company shall within two (2) Trading Days send via
facsimile to the Holder a notice of the Company’s inability to fully satisfy the
Optional Conversion Notice (the “Inability
to Fully Convert Notice”).  Such Inability to Fully Convert
Notice shall indicate (i) the reason why the Company is unable to fully satisfy
the Holder’s Optional Conversion Notice, (ii) the amount of this Note which
cannot be converted and (iii) the applicable Mandatory Prepayment
Price.  The Holder shall notify the Makers of its election pursuant to
Section
3.8(a) above by delivering written notice via facsimile to the Makers
(“Notice in
Response to Inability to Convert”).

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      (c)     Payment of Prepayment
Price.  If the Holder shall elect to have its Note prepaid
pursuant to Section
3.8(a)(i) above, the Makers shall pay the Mandatory Prepayment Price to
the Holder within thirty (30) days of the Makers’ receipt of the Holder’s Notice
in Response to Inability to Convert, provided that prior to the
Makers’ receipt of the Holder’s Notice in Response to Inability to Convert the
Company has not delivered a notice to the Holder stating, to the satisfaction of
the Holder, that the event or condition resulting in the Mandatory Prepayment
has been cured and all Conversion Shares issuable to the Holder can and will be
delivered to the Holder in accordance with the terms of this Note.  If
the Makers shall fail to pay the applicable Mandatory Prepayment Price to the
Holder on the date that is three (3) business days following the Makers’ receipt
of the Holder’s Notice in Response to Inability to Convert (other than pursuant
to a dispute as to the determination of the arithmetic calculation of the
Prepayment Price), in addition to any remedy the Holder may have under this Note
and the Purchase Agreement, such unpaid amount shall bear interest at the rate
of two percent (2%) per month (prorated for partial months) until paid in
full.  Until the full Mandatory Prepayment Price is paid in full to
the Holder, the Holder may (i) void the Mandatory Prepayment with respect to
that portion of the Note for which the full Mandatory Prepayment Price has not
been paid, (ii) receive back such Note, and (iii) require that the Conversion
Price of such returned Note be adjusted to the lesser of (A) the Conversion
Price as in effect on the date on which the Holder voided the Mandatory
Prepayment and (B) the lowest Closing Bid Price during the period beginning on
the Optional Conversion Date and ending on the date the Holder voided the
Mandatory Prepayment.

       

      (d)     Pro-rata Conversion and
Prepayment.  In the event the Company receives an Optional
Conversion Notice from the Holder and the Other Holders on the same day and the
Company can convert and prepay some, but not all, of this Note pursuant to this
Section
3.8, the Company shall convert and prepay from the Holder and each Other
Holder electing to have its Other Notes converted and prepaid at such time an
amount equal to the Holder or such Other Holder’s pro-rata amount of all the
Notes and the Other Notes being converted and prepaid at such time.

       

      Section
3.9     No Rights as
Stockholder.  Nothing contained in this Note shall be construed
as conferring upon the Holder, prior to the conversion of this Note, the right
to vote or to receive dividends or to consent or to receive notice as a
stockholder in respect of any meeting of stockholders for the election of
directors of the Company or of any other matter, or any other rights as a
stockholder of the Company.


      
        
           


        

        
          20

          
            

          

        

        
           


        

      

       

      ARTICLE
IV

       

      MISCELLANEOUS

       

      Section
4.1     Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or facsimile at the address or number designated in the Purchase
Agreement (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The Makers will give written notice to the Holder at least ten
(10) days prior to the date on which the Company takes a record (x) with respect
to any dividend or distribution upon the Common Stock, (y) with respect to any
pro rata subscription offer to holders of Common Stock or (z) for determining
rights to vote with respect to any Organic Change, dissolution, liquidation or
winding-up but in no event shall such notice be provided to the Holder prior to
such information being made known to the public.  The Makers will also
give written notice to the Holder at least ten (10) days prior to the date on
which any Organic Change, dissolution, liquidation or winding-up will take place
but in no event shall such notice be provided to the Holder prior to such
information being made known to the public. The Makers shall promptly notify the
Holder of any notices sent or received, or any actions taken with respect to the
Other Notes.

       

      Section
4.2     Governing Law; Consent to
Jurisdiction. The parties acknowledge and agree that any claim,
controversy, dispute or action relating in any way to this agreement or the
subject matter of this agreement shall be governed solely by the laws of the
State of New York, without regard to any conflict of laws
doctrines.  The parties irrevocably consent to being served with legal
process issued from the state and federal courts located in New York and
irrevocably consent to the exclusive personal jurisdiction of the federal and
state courts situated in the State of New York.  The parties
irrevocably waive any objections to the personal jurisdiction of these
courts.  Said courts shall have sole and exclusive jurisdiction over
any and all claims, controversies, disputes and actions which in any way relate
to this agreement or the subject matter of this agreement.  The
parties also irrevocably waive any objections that these courts constitute an
oppressive, unfair, or inconvenient forum and agree not to seek to change venue
on these grounds or any other grounds. Nothing in this Section
4.2 shall affect or limit any right to serve process in any other manner
permitted by law.

       

      Section
4.3     Headings.  Article
and section headings in this Note are included herein for purposes of
convenience of reference only and shall not constitute a part of this Note for
any other purpose.

       

      Section
4.4     Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief.  The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note, at law or in equity (including, without
limitation, a decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a Holder’s
right to pursue actual damages for any failure by the Makers to comply with the
terms of this Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder hereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Makers (or
the performance thereof). Each of the Makers acknowledges that a breach by it of
its obligations hereunder will cause irreparable and material harm to the Holder
and that the remedy at law for any such breach may be inadequate. Therefore each
Maker agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available rights and
remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      Section
4.5     Enforcement
Expenses.  The Makers agree to pay all costs and expenses of
the Holder incurred as a result of enforcement of this Note, including, without
limitation, reasonable attorneys’ fees and expenses.

       

      Section
4.6     Binding
Effect.   The obligations of the Makers and the Holder set
forth herein shall be binding upon the successors and assigns of each such
party, whether or not such successors or assigns are permitted by the terms
hereof.

       

      Section
4.7     Amendments.  This
Note may not be modified or amended in any manner except in writing executed by
the Makers and the Holder.

       

      Section
4.8     Compliance with Securities
Laws.  The Holder of this Note acknowledges that this Note is
being acquired solely for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder shall not offer, sell or
otherwise dispose of this Note.  This Note and any Note issued in
substitution or replacement therefor shall be stamped or imprinted with a legend
in substantially the following form:

       

      “THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN
OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE
COMPANY THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD, TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

      


      Section
4.9     Accredited Investor
Status.  In no event may the Holder convert this Note in whole
or in part unless the Holder is an “accredited investor” as defined in
Regulation D under the Act.

       

      Section
4.10     Parties in
Interest.  This Note shall be binding upon, inure to the
benefit of and be enforceable by the Makers, the Holder and their respective
successors and permitted assigns.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      Section
4.11     Failure or Indulgence Not
Waiver.  No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege, nor shall any waiver by the Holder of any such right or
rights on any one occasion be deemed a waiver of the same right or rights on any
future occasion.

       

      Section
4.12     Makers’
Waivers.

       

      (a)
     Except as otherwise specifically provided herein,
the Makers and all others that may become liable for all or any part of the
obligations evidenced by this Note, hereby waive presentment, demand, notice of
nonpayment, protest and all other demands’ and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and do hereby
consent to any number of renewals of extensions of the time or payment hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon, all without affecting the liability
of the other persons, firms or Makers liable for the payment of this Note, AND
DO HEREBY WAIVE TRIAL BY JURY.

       

      (b)     THE
MAKERS ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY
WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

       

      Section
4.13     Definitions.  For
the purposes hereof, the following terms shall have the following
meanings:

      


      “Convertible
Securities” means any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of Common Stock
or Common Stock Equivalents.

      


      “Options”
shall mean any rights, warrants or options to subscribe for or purchase Common
Stock or Convertible Securities of the Company.

      


      “Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

      


      “Trading
Day” means (a) a day on which the Common Stock is traded on the OTC
Bulletin Board, or (b) if the Common Stock is not traded on the OTC Bulletin
Board, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided, however, that in
the event that the Common Stock is not listed or quoted as set forth in (a) or
(b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

      


      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      


      [remainder of page intentionally left
blank]


      
        
           


        

        
          24

          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the Makers have caused this Note to be duly executed as of the
Issuance Date set out above.

      


      
        
          	
                  JUMA
      TECHNOLOGY CORP.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Anthony M. Servidio

                
	 
      	
                  Name:
      Anthony M. Servidio

                
	 
      	
                  Title:  Chief
      Executive Officer

                


        

      

      


      
        
          	
                  NECTAR
      SERVICES CORP.

                
	 
      
	
                  By:

                	
                    /s/ Anthony M. Servidio 

                
	 
      	
                  Name:
      Anthony M. Servidio

                
	 
      	
                  Title:  Chief
      Executive Officer

                


        

      


      
        
           


        

        
          25

          
            

          

        

        
           


        

      


      EXHIBIT
A

      


      WIRE
INSTRUCTIONS

       

      Payee:
________________________________________________________

       

      Bank:  ________________________________________________________

       

      Address:
_____________________________________________________

       

       ______________________________________________________

       

      Bank No.:
_____________________________________________________

       

      Account
No.:  __________________________________________________

       

      Account
Name: _________________________________________________


      
        
           


        

        
          26

          
            

          

        

        
           


        

      


      FORM
OF

       

      NOTICE OF
OPTIONAL CONVERSION INTO SHARES OF COMMON STOCK

       

      (To be
Executed by the Registered Holder in

      order to
Convert the Note into Shares of Common Stock)

      


      The
undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount of the above Note No. ___ into shares of Common Stock of JUMA
TECHNOLOGY CORP. (the “Company”)
according to the conditions hereof, as of the date written below.

       

      Date of
Conversion
_________________________________________________________

       

      Applicable
Conversion Price __________________________________________________

       

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion: _________________________

       

      Signature___________________________________________________________________

       

      [Name]

       

      Address:__________________________________________________________________

       

      _______________________________________________________________________


      
        
           


        

        
          27