CONVERTED).
SUCH CONVERSION
SHALL BE DEEMED TO HAVE BEEN MADE IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON
THE DATE OF SUCH SURRENDER OF THE NOTE, AND THE HOLDER SHALL BE TREATED FOR ALL
PURPOSES AS THE RECORD HOLDER OF SUCH SHARES OF EQUITY SECURITIES AS OF SUCH
DATE.
5.
AUTOMATIC CONVERSION UPON CONVERSION OF GS NOTE.
NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, UPON THE CONVERSION FROM TIME TO TIME OF ALL OR
ANY PORTION OF THE GS NOTE IN CONNECTION WITH (I) A QUALIFIED EQUITY INVESTMENT
OR (II) A NON-QUALIFIED EQUITY INVESTMENT, A PRO RATA PORTION OF THIS NOTE IN
THE RATIO OF 35:1.5 SHALL AUTOMATICALLY CONVERT UPON SUCH QUALIFIED EQUITY
INVESTMENT OR NON-QUALIFIED EQUITY INVESTMENT, AS APPLICABLE, IN ACCORDANCE WITH
THE TERMS OF SECTION 4 HEREOF (THE "AUTOMATIC SYNTEK CONVERSION").
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE AGGREGATE PRINCIPAL AMOUNT
OF THIS NOTE SUBJECT TO THE AUTOMATIC SYNTEK CONVERSION SHALL NOT EXCEED
$1,500,000.
FOR THE AVOIDANCE OF DOUBT AND FOR ILLUSTRATIVE PURPOSES ONLY, A
CONVERSION OF $1,000,000 OF PRINCIPAL AND ACCRUED BUT UNPAID INTEREST IN RESPECT
OF THE GS NOTE WOULD RESULT IN AUTOMATIC CONVERSION OF $42,857.14 OF PRINCIPAL
AND ACCRUED BUT UNPAID INTEREST IN RESPECT OF THIS NOTE.
6.
CONVERSION OF NOTES INTO COMMON SHARES.
SUBJECT TO SECTIONS 10 AND 18,
THIS NOTE SHALL BE CONVERTIBLE INTO SHARES OF COMMON STOCK OF THE COMPANY,
$0.0001 PAR VALUE (THE "COMMON SHARES"), ON THE TERMS AND CONDITIONS SET FORTH
IN THIS SECTION 6.
(A)
CONVERSION RIGHT.
AT ANY TIME OR TIMES ON OR AFTER THE ISSUANCE DATE
AND PRIOR TO REPAYMENT OR CONVERSION PURSUANT TO SECTION 4, THE HOLDER SHALL BE
ENTITLED TO CONVERT ANY PORTION OF THE OUTSTANDING AND UNPAID CONVERSION AMOUNT
(AS DEFINED BELOW) INTO FULLY PAID AND NONASSESSABLE COMMON SHARES IN ACCORDANCE
WITH SECTION 6(C), AT THE CONVERSION RATE (AS DEFINED BELOW); PROVIDED THAT,
FOLLOWING A FUNDAMENTAL TRANSACTION, THIS NOTE SHALL BE ENTITLED TO CONVERT ONLY
INTO SUCH CONSIDERATION AS THE COMMON SHARES OUTSTANDING PRIOR THERETO BECAME
ENTITLED TO RECEIVE, AS APPROPRIATELY ADJUSTED TO GIVE EFFECT TO THE CONVERSION
RATE IN THIS NOTE.
THE COMPANY SHALL NOT ISSUE ANY FRACTION OF A COMMON SHARE
UPON ANY CONVERSION.
IF THE ISSUANCE WOULD RESULT IN THE ISSUANCE OF A FRACTION
OF A COMMON SHARE, THE COMPANY SHALL ROUND SUCH FRACTION OF A COMMON SHARE TO
THE NEAREST WHOLE SHARE.
4
(B)
CONVERSION RATE.
THE NUMBER OF COMMON SHARES ISSUABLE UPON CONVERSION
OF ANY CONVERSION AMOUNT PURSUANT TO SECTION 6(A) SHALL BE DETERMINED BY
DIVIDING (X) SUCH CONVERSION AMOUNT BY (Y) THE CONVERSION PRICE (SUCH NUMBER OF
SHARES, THE "CONVERSION RATE").
(I)
"CONVERSION AMOUNT" MEANS THE PORTION OF THE PRINCIPAL TO BE
CONVERTED OR REDEEMED WITH RESPECT TO WHICH THIS DETERMINATION IS BEING MADE.
(II)
"CONVERSION PRICE" MEANS, AS OF ANY CONVERSION DATE (AS DEFINED
BELOW) OR OTHER DATE OF DETERMINATION A PRICE EQUAL TO $5.00, SUBJECT TO
ADJUSTMENT AS PROVIDED HEREIN.
(C)
MECHANICS OF CONVERSION.
TO CONVERT ANY CONVERSION AMOUNT INTO COMMON
SHARES ON ANY DATE (A