BY DELIVERING AN EXECUTED AND
COMPLETED NOTICE OF CONVERSION (A "NOTICE OF CONVERSION") TO THE BORROWER, WHICH
SHALL PROVIDE A BREAKDOWN IN REASONABLE DETAIL OF THE PRINCIPAL, ACCRUED
INTEREST AND AMOUNTS BEING CONVERTED, AND THIS ORIGINAL NOTE.
PURSUANT TO THE
TERMS OF A NOTICE OF CONVERSION, THE BORROWER WILL ISSUE CERTIFICATES
REPRESENTING THE SHARES THAT HAVE BEEN CONVERTED TO THE HOLDER.
UPON ANY
PARTIAL CONVERSION OF THIS NOTE, A REPLACEMENT NOTE CONTAINING THE SAME DATE AND
PROVISIONS OF THIS NOTE SHALL BE ISSUED BY THE BORROWER TO THE HOLDER FOR THE
OUTSTANDING PRINCIPAL AND ACCRUED INTEREST WHICH SHALL NOT HAVE BEEN CONVERTED
OR PAID.
3.3
RESERVATION.
DURING THE PERIOD THAT THIS NOTE IS OUTSTANDING, THE
BORROWER WILL RESERVE FROM ITS AUTHORIZED AND UNISSUED COMMON STOCK THE NUMBER
OF SHARES TO PROVIDE FOR THE ISSUANCE OF COMMON STOCK UPON THE FULL CONVERSION
OF THIS NOTE.
BORROWER REPRESENTS THAT UPON ISSUANCE, SUCH SHARES WILL BE DULY
AND VALIDLY ISSUED, FULLY PAID AND NON-ASSESSABLE.
BORROWER AGREES THAT ITS
ISSUANCE OF THIS NOTE SHALL CONSTITUTE FULL AUTHORITY TO ITS OFFICERS, AGENTS,
AND TRANSFER AGENTS WHO ARE CHARGED WITH THE DUTY OF EXECUTING AND ISSUING STOCK
CERTIFICATES TO EXECUTE AND ISSUE THE NECESSARY CERTIFICATES FOR SHARES UPON THE
CONVERSION OF THIS NOTE.
ARTICLE 4
EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Event of Default")
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment, or grace period,
all of which hereby are expressly waived, except as set forth below:
(A)
FAILURE TO PAY.
THE BORROWER FAILS TO PAY THE PRINCIPAL AMOUNT,
INTEREST OR OTHER SUM DUE UNDER THIS NOTE WHEN DUE AND SUCH FAILURE CONTINUES
FOR A PERIOD OF TEN (10) BUSINESS DAYS AFTER THE DUE DATE.
2
(B)
BREACH OF COVENANT.
THE BORROWER BREACHES ANY MATERIAL COVENANT OR
THIS NOTE IN ANY MATERIAL RESPECT AND SUCH BREACH, IF SUBJECT TO CURE, CONTINUES
FOR A PERIOD OF TEN (10) BUSINESS DAYS AFTER WRITTEN NOTICE TO THE BORROWER FROM
THE HOLDER.
(C)
BREACH OF REPRESENTATIONS AND WARRANTIES.
ANY MATERIAL REPRESENTATION
OR WARRANTY OF THE BORROWER MADE HEREIN, STATEMENT OR CERTIFICATE GIVEN IN
WRITING PURSUANT HERETO OR IN CONNECTION HEREWITH OR THEREWITH SHALL BE FALSE OR
MISLEADING IN ANY MATERIAL RESPECT AS OF THE DATE MADE AND THE CLOSING DATE.
(D)
JUDGMENTS.
ANY MONEY JUDGMENT, WRIT OR SIMILAR FINAL PROCESS SHALL BE
ENTERED OR FILED AGAINST BORROWER OR ANY SUBSIDIARY OF BORROWER OR ANY OF THEIR
PROPERTY OR OTHER ASSETS FOR MORE THAN $100,000, AND SHALL REMAIN UNVACATED,
UNBONDED OR UNSTAYED FOR A PERIOD OF FORTY-FIVE (45) DAYS.
(E)
RECEIVER OR TRUSTEE.
THE BORROWER SHALL MAKE AN ASSIGNMENT FOR THE
BENEFIT OF CREDITORS, OR APPLY FOR OR CONSENT TO THE APPOINTMENT OF A RECEIVER
OR TRUSTEE FOR THEM OR FOR A SUBSTANTIAL PART OF THEIR PROPERTY OR BUSINESS; OR
SUCH A RECEIVER OR TRUSTEE SHALL OTHERWISE BE