Document:

Lithium Exploration Group, Inc.: Exhibit 10.115- Filed by newsfilecorp.com

10.115 

LITHIUM EXPLORATION
GROUP, INC. 
10%
CONVERTIBLE PROMISSORY NOTE

	Effective Date June
      8, 2017 	US $85,800.00
  

Due June 8,
2018 

THIS NOTE AND
THE COMMON STOCK
ISSUABLE UPON CONVERSION
OF THIS NOTE HAVE
NOT BEEN AND WILL
NOT BE REGISTERED WITH
THE UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION OR THE
SECURITIES COMMISSION OF
ANY STATE PURSUANT TO
AN EXEMPTION FROM
REGISTRATION PROVIDED UNDER
THE SECURITIES ACT OF
1933, AS AMENDED, AND
THE RULES AND
REGULATIONS PROMULGATED THEREUNDER
(THE "1933 ACT”) 

FOR VALUE RECEIVED Lithium Exploration
Group, Inc. (the “Company”) promises to pay to
the order of Concord Holding Group,
LLC, and its authorized successors and permitted assigns
("Holder"), the aggregate principal face amount of Eighty Five Thousand
Eight Hundred Dollars exactly (U.S. $85,800.00) on June 8, 2018 ("Maturity
Date"). The Company will pay interest on the principal amount outstanding at
the rate of 10% per annum, which will commence on June 8, 2017. The Company
acknowledges that this Note was issued with a $7,800.00 original issue discount
(“OID”) such that the issuance price was $78,000.00 as well as document prep
fees of $3,000.00 (deducted from the amount funded) . The interest will be paid
to the Holder in whose name this Note is registered on the records of the Com–
pany regarding registration and transfers of this Note. The principal of, and
interest on, this Note are payable at 1080 Bergen St., Suite 240, Brooklyn, NY
11216, initially, and if changed, last appearing on the records of the Company
as designated in writing by the Holder hereof from time to time. The Company
will pay each interest payment and the out– standing principal due upon this
Note before or on the Maturity Date, less any amounts re– quired by law to be
deducted or withheld, to the Holder of this Note by check or wire trans– fer
addressed to such Holder at the last address appearing on the records of the
Company. The forwarding of such check or wire transfer shall constitute a
payment of outstanding principal hereunder and shall satisfy and discharge the
liability for principal on this Note to the extent of the sum represented by
such check or wire transfer. Interest shall be payable in Common Stock (as
defined below) pursuant to paragraph 4(b) herein. 

 This
Note is subject to the following additional provisions: 

1.           This Note is
exchangeable for an equal aggregate principal amount of Notes of different
authorized denominations, as requested by the Holder surrendering the same. No
service charge will be made for such registration or transfer or exchange,
except that Holder shall pay any tax or other governmental charges
payable in connection there– with. 

2.           Under all
applicable laws, the Company shall be entitled to withhold any amounts from all
payments it is entitled to. 

3.           This Note may
only be transferred or exchanged in compliance with the Securities Act of 1933,
as amended ("Act") and any applicable state securities laws. All attempts
transfer to a non–qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of
the Company may treat the person in whose name this Note is duly registered on
the Company's records as the owner hereof for all other purposes, whether or not
this Note be overdue, and nei– ther the Company nor any such agent shall be
affected or bound by notice to the contrary. Any Holder of this Note electing to
exercise the right of conversion set forth in Section 4(a) hereof, in addition
to the requirements set forth in Section 4(a), and any prospective trans– feree
of this Note, also is required to give the Company written confirmation that
this Note is being converted ("Notice of Conversion") in the form annexed
hereto as Exhibit A. The date of receipt (including receipt by telecopy)
of such Notice of Conversion shall be the Conversion Date. 

1.          
4.           (a) The Holder of
this Note has the option, upon the issu– ance date of the stock, to convert all
or any amount of the principal face amount of this Note then outstanding into
shares of the Company's common stock (the "Common Stock") at a price
("Conversion Price") for each share of Common Stock equal to the lesser
of $0.005 or 50% discount of the lowest
trading price of the
Common Stock as reported on the National Quotations Bureau OTC Markets exchange
which the Company’s shares are traded or any exchange upon which the Common
Stock may be traded in the future ("Ex– change"), for the (i)
twenty prior trading days, including the day
upon which a Notice of Conversion is received by the Company (provided such
Notice of Conversion is delivered by fax or other electronic method of
communication to the Company after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price), or (ii) the
twenty prior trading days immediately preceding the
issuance date of this Note. The Notice of Conversion may be rescinded if the
shares have not been delivered within 3 business days. The Company shall deliver
the shares of Common Stock to the Holder within 3 business days of receipt by
the Company of the Notice of Conversion. The Holder shall surrender this Note to
the Company upon receipt of the shares of Common Stock, executed by the Holder.
This will make clear the Holder's intention to convert this Note or a specified
portion hereof, and accompanied by proper assignment hereof in blank. Accrued
but unpaid interest shall be subject to conversion. The number of issuable
shares will be rounded to the nearest whole share, and no fractional shares or
scrip repre– senting fractions of shares will be issued on conversion. To the
extent the Conversion Price of the Company’s Common Stock closes below the par
value per share, the Company will take all steps necessary to solicit the
consent of the stockholders to reduce the par value to the lowest value possible
under law. The Company agrees to honor all conver– sions submitted pending this
increase. In the event
the Company experiences
a DTC “Chill” on its shares, the conversion price discount shall be increased to 60% while that “Chill” is in effect. Notwithstanding anything to the contrary contained in
the Note (except as set forth below in this Section), the Note shall not be
convertible by Investor, and Company shall not effect any conversion of the Note
or otherwise issue any shares of Common Stock to the extent (but only to the
extent) that Investor together with any of its affiliates would beneficially own
in excess of 9.99% (the “ Maximum Percentage”) of the
Common Stock outstanding. To the extent the foregoing limitation applies, the
determination of whether a Note shall be convertible (vis–à–vis other
convertible, exercisable or exchangeable secu– rities owned by Investor or any
of its affiliates) and of which such securities shall be con– vertible,
exercisable or exchangeable (as among all such securities owned by Investor and
its affiliates) shall, subject to such Maximum Percentage limitation, be
determined on the basis of the first submission to Company for conversion,
exercise or exchange (as the case may be). No prior inability to convert a Note,
or to issue shares of Common Stock, pursu– ant to this Section shall have any
effect on the applicability of the provisions of this Section with respect to
any subsequent determination of convertibility. For purposes of this Sec– tion,
beneficial ownership and all determinations and calculations (including, without
lim– itation, with respect to calculations of percentage ownership) shall be
determined in ac– cordance with Section 13(e) of the 1934 Act (as defined below)
and the rules and regula– tions promulgated thereunder. The provisions of this
Section shall be implemented in a manner otherwise than in strict conformity
with the terms of this Section to correct this Section (or any portion hereof)
which may be defective or inconsistent with the intended Maximum Percentage
beneficial ownership limitation herein contained or to make chang– es or
supplements necessary or desirable to properly give effect to such Maximum Per–
centage limitation. The limitations contained in this Section shall apply to a
successor holder of this Note and shall be unconditional, irrevocable and
non–waivable. For any rea– son at any time, upon the written or oral request of
Investor, Company shall within one (1) business day confirm orally and in
writing to Investor the number of shares of Com– mon Stock then outstanding,
including by virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without limitation,
pursuant to this Note. During the first six months, this Note is in effect, the
Investor may not convert this Note pursuant to this paragraph. The conversion
discount and look–back period will be adjusted downward (i.e. for the benefit of
the Holder) if the Company offers a more favorable conversion discount (whether
via interest rate, OID, lower ceiling price or otherwise) or look–back period to
another party while this note is in effect and the Holder will also get the
benefit of any other term (for a example a higher prepay) granted to any third
party while this Note is in effect. 

(b)           Interest on any
unpaid principal balance of this Note shall be paid at the rate of 10% per
annum. Interest shall be paid, by the Company, in Common Stock ("Interest
Shares"). Holder may send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount
converted into Interest Shares shall be all or a portion of the accrued interest
calculated on the unpaid principal balance of this Note to the date of such
notice. 

(c)           This Note may
not be prepaid. 

(d)           Upon (i) a
transfer of all or substantially all of the assets of the Company to any person
in a single transaction or series of related transactions, (ii) a re–
classification, capital reorganization or other change or exchange of
outstanding shares of the Common Stock, other than a forward or reverse stock
split or stock dividend, or (iii) any consolidation or merger of the Company
with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction
of incorporation of the Company and results in a reclassification, conversion or
exchange of outstanding shares of Common Stock solely into shares of Com– mon
Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"),
then, in each case, the Company shall, upon request of the Holder, redeem this
Note in cash for 150% of the principal amount, plus accrued but unpaid interest
through the date of redemption, or at the election of the Holder, such Holder
may convert the unpaid principal amount of this Note (together with the amount
of accrued but unpaid interest) into shares of Common Stock immediately prior to
such Sale Event at the Conversion Price. 

(e)           In case of any
Sale Event (not to include a sale of all or substan– tially all of the Company’s
assets) in connection with which this Note is not redeemed or converted, the
Company shall cause effective provision to be made so that the Holder of this
Note shall have the right thereafter, by converting this Note, to purchase or
convert this Note into the kind and number of shares of stock or other
securities or property (in– cluding cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of
the number of shares of Common Stock that could have been purchased upon
exercise of the Note and at the same Conversion Price, as de– fined in this
Note, immediately prior to such Sale Event. The foregoing provisions shall sim–
ilarly apply to successive Sale Events. If the consideration received by the
holders of Com– mon Stock is other than cash, the value shall be as determined
by the Board of Directors of the Company or successor person or entity acting in
good faith. 

 5.          
No provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, and interest on,
this Note at the time, place, and rate, and in the form, herein prescribed. 

 6.          
The Company hereby expressly waives demand and presentment for payment, notice
of non–payment, protest, notice of protest, notice of dishonor, notice of ac–
celeration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto. 

 7.          
The Company agrees to pay all costs and expenses, including reasona– ble
attorneys' fees and expenses, which may be incurred by the Holder in collecting
any amount due under this Note. 

 8.          
While this Note is outstanding and to the extent the Company grants any other
party more favorable investment terms (whether via interest rate, original issue
discount, conversion discount or look–back period), the terms
of the Note shall automati– cally adjust to match those more favorable terms. 

 

 9.      If
one or more of the following described "Events of Default" shall oc– cur: 

(a)           The Company
shall default in the payment of principal or interest on this Note or any other
note issued to the Holder by the Company; or 

(b)           Any of the
representations or warranties made by the Company herein or in any certificate
or financial or other written statements heretofore or hereaf– ter furnished by
or on behalf of the Company in connection with the execution and delivery of
this Note, or the Securities Purchase Agreement under which this note was issued
shall be false or misleading in any respect; or 

(c)           The Company
shall fail to perform or observe, in any respect, any covenant, term, provision,
condition, agreement or obligation of the Company under this Note or any other
note issued to the Holder; or 

(d)           The Company
shall (1) become insolvent; (2) admit in writing its inability to pay its debts
generally as they mature; (3) make an assignment for the bene– fit of creditors
or commence proceedings for its dissolution; (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a substantial
part of its proper– ty or business; (5) file a petition for relief, consent to
the filing of such petition or have filed against it an involuntary petition for
bankruptcy relief, all under federal or state laws as applicable; or 

(e)           A trustee,
liquidator or receiver shall be appointed for the Company or for a substantial
part of its property or business without its consent and shall not be discharged
within sixty (60) days after such appointment; or 

(f)           Any governmental
agency or any court of competent jurisdiction at the instance of any
governmental agency shall assume custody or control of the whole or any
substantial portion of the properties or assets of the Company; or 

(g)           One or more
money judgments, writs or warrants of attachment, or similar process, in excess
of Hundred Eighty Five Thousand and Eight Hundred dollars ($85,800.00) in the
aggregate, shall be entered or filed against the Company or any of its
properties or other assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of fifteen (15) days or in any event later than five (5)
days prior to the date of any proposed sale thereunder; or 

(h)           The Company
shall have defaulted on or breached any term of any other note of similar debt
instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or 

(i)           The Company
shall have its Common Stock delisted from an exchange (including the OTCBB
exchange) or, if the Common Stock trades on an exchange, then trading in the
Common Stock shall be suspended for more than 10 consecutive days; 

(j)           If a majority of
the members of the Board of Directors of the Company on the date hereof are no
longer serving as members of the Board; 

(k)           The Company
shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein
without restrictive legend within 3 business days of its receipt of a Notice of
Conversion; or 

(l)           The Company
shall not replenish the reserve set forth in Section 13, within 3 business days
of the request of the Holder. If the Company does not re– plenish, the request
of the Holder then the conversion discount set forth in Section 4(a) shall be
increased from a 50% conversion discount to a 60% conversion discount; or 

(m)           The Company
shall not be “current” in its filings with the Securities and Exchange
Commission; or 

(n)           The Company
shall lose the “bid” price for its stock in a market (including the OTC
marketplace or other exchange). 

(o)           The Company is
in arrears for more than 30 days with its Transfer Agent, the conversion
discount shall be increased from 50% to 60%. 

(p)           A default has
been declared against the Company, which has not been cured in any other loan or
Note agreement. 

Then, or at any time thereafter, unless cured within 5 days, and
  in each and every such case, unless such Event of Default shall have been waived
  in writing by the Holder (which waiver shall not be deemed to be a waiver of any
  subsequent default) at the option of the Holder and in the Holder's sole
  discretion, the Holder may consider this Note immediately due and payable,
  without presentment, demand, protest or (further) notice of any kind (other than
  notice of acceleration), all of which are hereby expressly waived, anything
  herein or in any note or other instruments contained to the contrary
  notwithstanding, and the Holder may immediately, and without expiration of any
  period of grace, enforce any and all of the Holder's rights and remedies
  provided herein or any other rights or remedies afforded by law. Upon an Event
  of Default, interest shall accrue at a default interest rate of 24% per annum
  or, if such rate is usurious or not permitted by current law, then at the
  highest rate of interest permitted by law. In the event of a breach of Section
  8(k) the penal– ty shall be $250 per day the shares are not issued beginning on
  the 4th day after the conver– sion notice was delivered to the
  Company. This penalty shall increase to $500 per day be– ginning on the
  10th day. The penalty for a breach of Section 8(n) shall be an
  increase of the outstanding principal amounts by 20%. In case of a breach of
  Section 8(i), (k), or (l) the outstanding principal due under this Note shall
  increase by 50%. If this Note is not paid at maturity, the outstanding principal
  due under this Note shall increase by 10%. If the Holder shall commence an
  action or proceeding to enforce any provisions of this Note, including, without
  limitation, engaging an attorney, then if the Holder prevails in such action,
  the Holder shall be reimbursed by the Company for its attorneys’ fees and other
  costs and ex– penses incurred in the investigation, preparation and prosecution
  of such action or proceeding. 

At the Holder’s election, if the Company fails for any reason
to deliver to the Holder the conversion shares by the 3rd business day following
the delivery of a Notice of Conversion to the Company and if the Holder incurs a
Failure to Deliver Loss, then at any time the Holder may provide the Company
written notice indicating the amounts payable to the Holder in respect of the
Failure to Deliver Loss and the Company must make the Holder whole as follows:

Failure to Deliver Loss = [(High trade price at any time on or
after the day of exercise) x (Number of conversion shares)] 

The Company must pay the Failure to Deliver Loss by cash
payment, and any such cash payment must be made by the third business day from
the time of the Holder’s written no– tice to the Company. 

10.           In case any
provision of this Note is held by a court of competent ju– risdiction to be
excessive in scope or otherwise invalid or unenforceable, such provision shall
be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining
provisions of this Note will not in any way be affected or impaired thereby.

11.           Neither this
Note nor any term hereof may be amended, waived, dis– charged or terminated
other than by a written instrument signed by the Company and the Holder. 

12.           The Company
represents that it is not a “shell” issuer and has never been a “shell” issuer
or that if it previously has been a “shell” issuer that at least 12 months have
passed since the Company has reported form 10 type information indicating it is
no longer a “shell issuer. Further. The Company will instruct its counsel to
either (i) write a 144– 3(a)(9) opinion to allow for salability of the
conversion shares or (ii) accept such opinion from Holder’s counsel. 

13.           The Company
shall reserve 66,000,000 shares of Common Stock for conversions under this Note
(the “Share Reserve”). The investor shall have the right to pe– riodically
request that the number of Reserved Shares be increased so that the number of
Reserved Shares at least equals 400% of the number of shares of Company
common stock issuable upon conversion of the Note. The Company shall pay all
costs associated with issuing and delivering the shares. At all times, the reserve shall
be maintained with the Transfer Agent at four times the amount of shares
required if the Note would be fully converted. If the Company defaults on these
terms, the conversion discount will increase to 60%. 

14.           The Company will
give the Holder direct notice of any corporate ac– tions, including but not
limited to name changes, stock splits, recapitalizations etc. This no– tice
shall be given to the Holder as soon as possible under law. 

15.           This Note shall
be governed by and construed in accordance with the laws of New York applicable
to contracts made and wholly to be performed within the State of New York and
shall be binding upon the successors and assigns of each party hereto. The
Holder and the Company hereby mutually waive trial by jury and consent to
exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be exe– cuted in counterparts, and the facsimile transmission of
an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed by an of– ficer thereunto duly authorized. Dated: June
8th, 2017 

	LITHIUM EXPLORATION GROUP, INC.
  
	 	 
	By: 	 
		Title:
  CEO  

EXHIBIT A 

NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert the
Note) 

 LITHIUM
EXPLORATION GROUP, INC. The undersigned hereby irrevocably elects to convert
$__________of the bove Note into _________Shares of Common Stock of Lithium
Exploration Group, Inc. (“Shares”) according to the conditions set forth in such
Note, as of the date written below. 

 If
Shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer and other taxes and charges payable with
respect thereto. 

	Date of Conversion: 	 
	Applicable Conversion Price: 	 
	Signature: 	 
		[Print Name of Holder and Title of Signer]  
	Address: 	 
		  
		  
	SSN or EIN: 	 
	Shares are to be registered in the following
      name: 	 
		  
	Name: 	 
	Address: 	 
	Tel: 	 
	Fax: 	
	SSN or EIN: 	
		  
	Shares are to be sent or delivered to the
      following account: 
		  
	Account Name: 	 
	Address:Lithium Exploration Group, Inc.: Exhibit 10.116- Filed by newsfilecorp.com

10.116 

THIS NOTE HAS 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 AN OPINION OF COUNSEL IN THE FORM,
SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS. 

LITHIUM EXPLORATION GROUP, INC. 

10% OID Convertible Promissory Note 
due September 3,
2014

	Original Issue Date: March 3,
    2014  	USD$220,000

For value received, Lithium
Exploration Group, Inc., a Nevada corporation (the “Company”), hereby
promises to pay to the order of JDF Capital Inc. (together with its
successors, representatives, and permitted assigns, the “Holder”), in
accordance with the terms hereinafter provided, up to an aggregate of $220,000
(Two Hundred and Twenty Thousand Dollars) (the “Principal Amount”). The
Principal Amount outstanding shall be due and payable on September 3, 2014 (the
“Maturity Date”).

All payments under or pursuant to
this Note refer to and shall be made in United States Dollars in immediately
available funds to the Holder at the address of the Holder first set forth above
or at such other place as the Holder may designate from time to time in writing
to the Company or by wire transfer of funds to the Holder’s account,
instructions for which are attached hereto as Exhibit A.

ARTICLE I 

Section
1.1      Purchase Agreement. This Note has
been executed and delivered pursuant to the Security Purchase Agreement dated as
of March 3, 2014 (the “Purchase Agreement”) by and among the Company 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.

(a)      Beginning
on the issuance date of this Note (the “Issuance Date”), the outstanding
principal balance of this Note shall bear interest, in arrears, at a rate per
annum equal to 12 percent accruing on a semi-annual basis commencing March 3,
2014 in cash or restricted shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”) at the option of the Holder.

Section
1.2      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 Nevada, 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
1.3      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
1.4      Replacement. Upon receipt of a duly
executed, notarized and unsecured written statement from the Holder with respect
to the loss, theft or destruction of this Note (or any replacement hereof), and
without requiring an indemnity bond or other security, or, in the case of a
mutilation of this Note, upon surrender and cancellation of such Note, the
Company shall issue a new Note, of like tenor and amount, in lieu of such lost,
stolen, destroyed or mutilated Note. 

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
Company shall fail to make the payment of any amount of principal outstanding on
the date such payment is due hereunder; 

(b)      the
Company shall fail to make any payment of interest in shares of Common Stock for
a period of three (3) days after the date such interest is due; 

(c)      the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be quoted or listed on at least one of the OTC
QB, OTC Bulletin Board, Nasdaq SmallCap Market, Nasdaq National Market, American
Stock Exchange or The New York Stock Exchange, Inc. for a period of five (5)
consecutive Trading Days; 

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

(e)     
the Company shall fail to (i) timely deliver the shares of Common Stock upon
conversion of the Note or any accrued and unpaid interest, or (ii) make the
payment of any fees and/or liquidated damages under this Note or the Purchase
Agreement, which failure in the case of items (i) and (ii) of this Section
2.1(e) is not remedied within three (3) business days after the incurrence
thereof; 

(f)      default
shall be made in the performance or observance of (i) any material covenant,
condition or agreement contained in this Note (other than as set forth in clause
(e) of this Section 2.1) and such default is not fully cured within five (5)
business days after the occurrence thereof or (ii) any material covenant,
condition or agreement contained in the Purchase Agreement 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 five (5) business days
after the occurrence thereof; 

(g)      any
material representation or warranty made by the Company herein or in the
Purchase Agreement 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; 

(h)     
the Company shall (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; 

-2-

(i)      the
Company 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),
(vi) issue a notice of bankruptcy or winding down of its operations or issue a
press release regarding same, or (vii) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; 

(j)      a
proceeding or case shall be commenced in respect of the Company, 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 the liquidation or dissolution of the Company 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 sixty
(60) 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 the Company or
action under the laws of any jurisdiction (foreign or domestic) analogous to any
of the foregoing shall be taken with respect to the Company and shall continue
undismissed, or unstayed and in effect for a period of sixty (60) days; or 

(k)      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 and opinions of counsel to the Company that such shares of Common
Stock can be resold pursuant to Rule 144; or 

(l)      the
failure of the Company to pay any amounts due to the Holder herein within three
(3) business days of receipt of notice to the Company. 

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 Company;
provided, however, that upon the occurrence of an Event of Default described in
(i) Sections 2.1 (k) or (l), the outstanding principal balance and interest
hereunder shall be automatically due and payable and (ii) Sections 2.1 (a)-(j)
and 2.1(m) -(n), demand the prepayment of this Note pursuant to Section 3.6
hereof, (b) subject to Section 3.4 hereof, demand that the principal amount of
this Note then outstanding shall be converted into shares of Common Stock at a
Conversion Price (as defined in Section 3.2(a) hereof) per share calculated
pursuant to Section 3.1 hereof assuming that the date that the Event of Default occurs is the Conversion Date and demand that all
accrued and unpaid interest under this Note shall be converted into shares of
Common Stock in accordance with Section 1.2 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, other Transaction Document 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. 

-3-

ARTICLE III

CONVERSION; ANTIDILUTION; PREPAYMENT

Section
3.1      Conversion Option.

(a)     
At any time on or after the Issuance Date, this Note shall be convertible (in
whole or in part), at the option of the Holder (the “Conversion Option”),
into such number of fully paid and non-assessable shares of Common Stock (the
“Conversion Rate”) as is determined by dividing that portion of the
outstanding principal balance under this Note as of such date that the Holder
elects to convert by the Conversion Price (as defined in Section 3.2(a) hereof)
then in effect on the date on which the Holder faxes a notice of conversion (the
“Conversion Notice”), duly executed, to the Company (the “Voluntary
Conversion Date”), provided, however, that the Conversion Price shall be
subject to adjustment as described in Section 3.5 below. The Holder shall
deliver this Note to the Company at the address designated in the Purchase
Agreement at such time that this Note is fully converted. With respect to
partial conversions of this Note, the Company shall keep written records of the
amount of this Note converted as of each Conversion Date.

(b)     
On any Voluntary Conversion Date, the Holder may cause the any outstanding
Principal Amount of this Note plus all accrued and unpaid interest to convert
into a number of fully paid and nonassessable shares of Common Stock equal to
the quotient of the elected outstanding principal amount of this Note plus all
accrued interest on the elected outstanding on the Voluntary Conversion Date (as
described in this Section below) divided by the Conversion Price as described in
Section 3.2(a) below. 

Furthermore, upon the occurrence of an Event of Default (as
defined in Section 2.1 hereof), then to the extent permitted by law, the Company
will pay interest to the Holder, payable on demand, on the outstanding principal
balance of the Note from the date of the Event of Default until such Event of
Default is cured at the rate of the lesser of fifteen percent (15%) and the
maximum applicable legal rate per annum. 

(c)     
Conversion Limitations; Holder’s Restriction on Conversion. The
Company shall not effect any conversion of this Note, and the Holder shall not
have the right to convert any portion of this Note, to the extent that after
giving effect to such conversion, the Holder (together with the Holder’s
affiliates), as set forth on the applicable Conversion Notice, would
beneficially own in excess of 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to such conversion. For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its affiliates shall include the number of shares of Common
Stock issuable upon conversion of this Note with respect to which the
determination of such sentence is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (A) conversion of the
remaining, nonconverted portion of this Note beneficially owned by the Holder or
any of its affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without
limitation, any other Notes or the Warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section, beneficial ownership shall be calculated
in accordance with Section 13(d) of the Exchange Act. To the extent that the
limitation contained in this section applies, the determination of whether this
Note is convertible (in relation to other securities owned by the Holder) and of
which a portion of this Note is convertible shall be in the sole discretion of
such Holder. To ensure compliance with this restriction, the Holder will be
deemed to represent to the Company each time it delivers a Conversion Notice
that such Conversion Notice has not violated the restrictions set forth in this
paragraph and the Company shall have no obligation to verify or confirm the
accuracy of such determination. For purposes of this Section, in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (x) the Company’s most
recent Form 10-Q or Form 10-K (or such related form), as the case may be, (y) a
more recent public announcement by the Company or (z) any other notice by the
Company or the Company’s Transfer Agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of the Holder, the
Company shall within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The provisions of
this Section may be waived by the Holder upon, at the election of the Holder,
not less than 61 days’ prior notice to the Company, and the provisions of this
Section shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver). 

-4-

Section
3.2      Conversion Price. 

(a)     
The term “Conversion Price” shall mean a 50% discount of the lowest
closing price of the common stock for the 20 trading days immediately prior to
(i) the date of the Purchase Agreement, or (ii) the Voluntary Conversion
Date.

Section
3.3      Mechanics of Conversion.

(a)      Not
later than three (3) Trading Days after any Conversion Date, the Company or its
designated transfer agent, as applicable, shall issue and deliver to the
Depository Trust Company (“DTC”) account on the Holder’s behalf via the
Deposit Withdrawal Agent Commission System (“DWAC”) as specified in the
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. In the
alternative, not later than three (3) Trading Days after any Conversion Date,
the Company shall deliver to the applicable 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) representing the number of shares of Common Stock being acquired upon
the conversion of this Note (the “Delivery Date”). Notwithstanding the
foregoing to the contrary, the Company or its transfer agent shall only be
obligated to issue and deliver the shares to the DTC on the Holder’s behalf via
DWAC (or certificates free of restrictive legends) if such conversion is in
connection with a sale and the Holder has complied with the applicable
prospectus delivery requirements. If in the case of any Conversion Notice such
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 conversion, in which event the
Company shall immediately return this Note if tendered for 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 Company.

-5-

(b)      The
Company understands that a delay in the delivery of the shares of Common Stock
upon conversion of this Note 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 pursuant to this Section hereunder by
the Delivery Date, the Company 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, 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 Note requested to be converted for the first five (5) Trading Days
after the Delivery Date and (ii) 2% of the aggregate principal amount of the
Note requested to be converted for each Trading Day thereafter. Nothing herein
shall limit a Holder’s right to pursue actual damages for the Company’s failure
to deliver certificates representing shares of Common Stock upon conversion
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 a Conversion Notice, and upon such withdrawal the Company
shall only be obligated to pay the liquidated damages accrued in accordance with
this Section 3.3(b) through the date the Conversion Notice is withdrawn. 

(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 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 conversion of this Note which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company 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 conversion of this Note that the Company
was required to deliver to the Holder in connection with the 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 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 its 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 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 Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company 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 Company. 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 at such time, the
number of shares of Common Stock which would result in the Holder beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act
and the rules thereunder) more than 9.9% of all of the Common Stock
outstanding at such time; provided, however, that upon the Holder providing the
Company with sixty-one (61) days notice (pursuant to Section 4.1 hereof) (the
“Waiver Notice”) that the 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
this provision shall be of no further force or effect during the sixty-one (61)
days immediately preceding the Maturity Date.

-6-

Section
3.5      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 3.5(a)(i) shall be effective at the close of business on the date the
stock split or combination occurs. 

(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 3.5(a)(iii) with
respect to the rights of the holders of this Note; 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 pursuant to this paragraph
as of the time of actual payment of such dividends or distributions. 

-7-

(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 3.5(a)(i), (ii) and (iii), or a
reorganization, merger, consolidation, or sale of assets provided for in Section
3.5(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. 

(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 3.5(a)(i), (ii) and (iii), or a reclassification, exchange or
substitution of shares provided for in Section 3.5(a)(iv)), or a merger or
consolidation of the Company with or into another corporation where the holders
of outstanding voting securities 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
an appropriate revision to the Conversion Price shall be made and provision
shall be made (by adjustments of the Conversion Price or otherwise) 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 resulting from Organic Change. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3.5(a)(v) with respect to the rights of the Holder after the
Organic Change to the end that the provisions of this Section 3.5(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)      Issuance
of Common Stock Equivalents. If the Company, at any time after the Issuance
Date, shall issue any securities convertible into or exchangeable for, directly
or indirectly, Common Stock (“Convertible Securities”), other than the
Note, 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 of the 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 Share Common 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
3.5(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 then in
effect upon the issuance of such warrants or other rights 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. 

-8-

(vii)      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 value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the non-surviving
corporation as such 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 Note, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Note 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 Note. 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 3.5(viii) shall be allocated among such securities and assets as
determined in good faith by the Board of Directors of the Company. 

(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, (ii) securities issued pursuant to a bona
fide firm underwritten public offering of the Company’s securities,(iii) securities issued pursuant to the conversion or exercise
of convertible or excercisable securities issued or outstanding on or prior to
the date hereof or issued pursuant to the Purchase Agreement, (iv) the shares of
Common Stock issuable upon the exercise of Warrants, (v) securities issued in
connection with strategic license agreements or other partnering arrangements so
long as such issuances are not for the purpose of raising capital, (vi) Common
Stock issued or options to purchase Common Stock granted or issued pursuant to
the Company’s stock option plans and employee stock purchase plans as they now
exist and (vii) the payment of any accrued interest in shares of Common Stock
pursuant to this Note. 

-9-

(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 3.5 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 Note 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 Note shall have issued and the Company posts a
surety bond for the benefit of such Holder in an amount equal to one hundred
thirty percent (130%) of the amount of the Note 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 in the event it obtains judgment. 

(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 3.5, 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 Company 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 shares of Common Stock on conversion of this Note
pursuant thereto; provided, however, that the Company 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 Company shall pay cash equal to the product of such
fraction 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.

(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, such number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of this Note and all interest accrued
thereon; provided that the number of shares of Common Stock so reserved
shall at no time be less than one hundred twenty percent (120%) of the number of
shares of Common Stock for which this Note and all interest accrued thereon are
at any time convertible. The Company shall, from time to time in accordance with
Nevada corporate 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 3.5(h) . 

-10- 

(i)      Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose of
conversion of this Note or any interest accrued thereon 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
3.6      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(a) -(j) and 2.1(m) -(o) hereof, the Holder shall have the right,
at such Holder’s option, to require the Company 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
applicable at the time of such request (the “Event of Default Prepayment
Price”). Nothing in this Section 3.6(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 in Section 3.6(e) hereof), the Holder shall have the right, at the
Holder’s option, to require the Company to prepay all or a portion of the
Holder’s Note at a price equal to one hundred ten percent (110%) 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 Company to prepay all or
a portion of this Note in cash at a price equal to the sum of (i) the greater of
(A) one hundred twenty percent (120%) of the aggregate principal amount of this
Note plus all accrued and unpaid interest and (B) in the event at such time the
Holder is unable to obtain the benefit of its conversion rights through the
conversion of this Note and resale of the shares of Common Stock issuable upon
conversion hereof in accordance with the terms of this Note and the other
Transaction Documents, the aggregate principal amount of this Note plus all
accrued but unpaid interest hereon, divided by the Conversion Price on (x) the
date the Prepayment Price (as defined below) is demanded or otherwise due or (y)
the date the Prepayment Price is paid in full, whichever is less, multiplied by
the VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and
(y) the date the Prepayment Price is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
this Note and the other Transaction Documents (the “Triggering Event Prepayment
Price,” and, collectively with the “Major Transaction Prepayment Price,” the
“Prepayment Price”).

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

-11- 

(i)      the
consolidation, merger or other business combination of the Company with or into
another Person (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 Company’s
Board of Directors) 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. 

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

(i)      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, Nasdaq SmallCap Market, Nasdaq National Market, American Stock Exchange
or The New York Stock Exchange, Inc. for a period of five (5) consecutive
Trading Days; 

(ii)      the
Company’s notice to any holder of the Note, 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) or its intention not to comply with proper
requests for conversion of any Note into shares of Common Stock; or 

(iii)      the
Company’s failure to comply with a Conversion Notice tendered in accordance with
the provisions of this Note within ten (10) business days after the receipt by
the Company of the Conversion Notice; or (iv) the Company deregisters its shares
of Common Stock and as a result such shares of Common Stock are no longer
publicly traded; or 

(v)      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.

(f)      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 not prior to the public announcement of such Major
Transaction, the Company shall deliver written notice thereof via facsimile and
overnight courier (“Notice of Major Transaction”) to the Holder of this Note. 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 within ten (10) days prior to a Major
Transaction), any holder of the Notes then outstanding may require the Company
to prepay, effective immediately prior to the consummation of such Major
Transaction, all of the holder’s Notes then outstanding by delivering written
notice thereof via facsimile and overnight courier (“Notice of Prepayment at
Option of Holder Upon Major Transaction”) to the Company, which Notice of
Prepayment at Option of Holder Upon Major Transaction shall indicate (i) the
number of Notes that such holder is electing to prepay and (ii) the applicable
Major Transaction Prepayment Price, as calculated pursuant to Section 3.6(b) above.

-12-

(g)      Mechanics
of Prepayment at Option of Holder Upon Triggering Event. Within one (1)
business day after the occurrence of a Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier (“Notice of
Triggering Event”) to each holder of the Notes. At any time after the earlier of
a holder’s receipt of a Notice of Triggering Event and such holder becoming
aware of a Triggering Event, any holder of this Note may require the Company to
prepay all of the Notes on a pro rata basis by delivering written notice thereof
via facsimile and overnight courier (“Notice of Prepayment at Option of
Holder Upon Triggering Event”) to the Company, which Notice of Prepayment at
Option of Holder Upon Triggering Event shall indicate (i) the amount of the Note
that such holder is electing to have prepaid and (ii) the applicable Triggering
Event Prepayment Price, as calculated pursuant to Section 3.6(c) above. A holder
shall only be permitted to require the Company to prepay the Note pursuant to
Section 3.6 hereof for the greater of a period of ten (10) days after receipt by
such holder of a Notice of Triggering Event or for so long as such Triggering
Event is continuing. 

(h)      Payment
of Prepayment Price. Upon the Company’s 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 any holder of the Notes, the Company shall
immediately notify each holder of the Notes by facsimile of the Company’s
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 and
each holder which has sent such a notice shall promptly submit to the Company
such holder’s certificates representing the Notes which such holder has elected
to have prepaid. The Company shall deliver the applicable Triggering Event
Prepayment Price, in the case of a prepayment pursuant to Section 3.6(i), to
such holder within five (5) business days after the Company’s receipt of a
Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case
of a prepayment pursuant to Section 3.(f), the Company shall deliver the
applicable Major Transaction Prepayment Price immediately prior to the
consummation of the Major Transaction; provided that a holder’s original Note
shall have been so delivered to the Company; provided further that if the
Company is unable to prepay all of the Notes to be prepaid, the Company shall
prepay an amount from each holder of the Notes being prepaid equal to such
holder’s pro-rata amount (based on the number of Notes held by such holder
relative to the number of Notes outstanding) of all Notes being prepaid. If the
Company 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 rate of two percent
(2%) per month (prorated for partial months) until paid in full. Until the
Company pays 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 Company to
promptly return to such holder(s) all of the Notes that were submitted for
prepayment by such holder(s) under this Section 3.6 and for which the applicable
Prepayment Price has not been paid, by sending written notice thereof to the
Company via facsimile (the “Void Optional Prepayment Notice”). Upon the
Company’s 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 with respect to those Notes submitted for
prepayment and for which the applicable Prepayment Price has not been paid, (ii)
the Company shall immediately return any Notes submitted to the Company by each
holder for prepayment under this Section 3.6(h) 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 Void Optional Prepayment Notice(s) is delivered
to the Company 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 Company and ending on the date on which the Void Optional Prepayment
Notice(s) is delivered to the Company; 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 Company’s obligations to
make any payments which have accrued prior to the date of such notice. Payments
provided for in this Section 3.6 shall have priority to payments to other
stockholders in connection with a Major Transaction.

-13-

(i)      Company
Prepayment Option upon Major Transaction. Upon the consummation of a Major
Transaction, the Company may prepay in cash all or any portion of the
outstanding principal amount of this Note together with all accrued and unpaid
interest thereon upon at least thirty (30) days prior written notice to the
Holder (the “Company’s Prepayment Notice”) at a price equal to one
hundred twenty percent (120%) of the aggregate principal amount of this Note
plus any accrued but unpaid interest (the “Company’s Prepayment Price”);
provided, however, that if a holder has delivered a Conversion Notice to the
Company or delivers a Conversion Notice within such thirty (30) day period
following delivery of the Company’s Prepayment Notice, the principal amount of
the Notes plus any accrued but unpaid interest designated to be converted may
not be prepaid by the Company and shall be converted in accordance with Section
3.3 hereof; provided further that if during the period between delivery of the
Company’s Prepayment Notice and the Company’s Prepayment Date (as defined
below), a holder shall become entitled and elects to deliver a Notice of
Prepayment at Option of Holder Upon Major Transaction or Notice of Prepayment at
Option of Holder upon Triggering Event, then such rights of the holders shall
take precedence over the previously delivered Company Prepayment Notice if the
holder so elects. The Company’s Prepayment Notice shall state the date of
prepayment which date shall be the date of the consummation of the Major
Transaction (the “Company’s Prepayment Date”), the Company’s Prepayment Price
and the principal amount of Notes plus any accrued but unpaid interest to be
prepaid by the Company. The Company shall deliver the Company’s Prepayment Price
on the Company’s Prepayment Date, provided, that if the holder(s) delivers a
Conversion Notice before the Company’s Prepayment Date, then the portion of the
Company’s Prepayment Price which would be paid to prepay the Notes covered by
such Conversion Notice shall be returned to the Company upon delivery of the
Common Stock issuable in connection with such Conversion Notice to the
holder(s). On the Company’s Prepayment Date, the Company shall pay the Company’s
Prepayment Price, subject to any adjustment pursuant to the immediately
preceding sentence, to the holder(s) on a pro rata basis. If the Company fails
to pay the Company’s Prepayment Price by the third (3rd) business day after the
Company’s Prepayment Date, the prepayment will be declared null and void and the
Company shall lose its right to serve a Company’s Prepayment Notice pursuant to
this Section 3.6(i) in the future. Notwithstanding the foregoing to the
contrary, the Company may effect a prepayment pursuant to this Section 3.6(i)
only if trading in the Common Stock shall not have been suspended by the
Securities and Exchange Commission or the Nasdaq SmallCap Market (or other
exchange or market on which the Common Stock is trading), and and the Company is
in material compliance with the terms and conditions of this Note and the other
Transaction Documents.

Section
3.7      Inability to Fully Convert. 

(a)      Holder’s
Option if Company Cannot Fully Convert. If, upon the Company’s receipt of a
Conversion Notice, the Company cannot issue shares of Common Stock for any
reason, including, without limitation, because the Company (w) does not have a
sufficient number of shares of Common Stock authorized and available, or (x) 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, then the Company shall issue as many shares of Common Stock
as it is able to issue in accordance with the Holder’s Conversion Notice and,
with respect to the unconverted portion of this Note, the Holder,
solely at Holder’s option, can elect to: 

-14-

(i)      require
the Company to prepay that portion of this Note for which the Company is unable
to issue Common Stock in accordance with the Holder’s 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)     
void its Conversion Notice and retain or have returned, as the case may be, this
Note that was to be converted pursuant to the Conversion Notice (provided that
the Holder’s voiding its Conversion Notice shall not effect the Company’s
obligations to make any payments which have accrued prior to the date of such
notice). 

In the event a Holder shall elect to convert any portion of its
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, on notice, restraining and or adjoining conversion of all or of said
Notes shall have been issued and the Company posts a surety bond for the benefit
of such Holder in an amount equal to 130% of the principal 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 in the event it obtains judgment.

(b)      Mechanics
of Fulfilling Holder’s Election. The Company shall immediately send via
facsimile to the Holder, upon receipt of a facsimile copy of a Conversion Notice
from the Holder which cannot be fully satisfied as described in Section 3.7(a)
above, a notice of the Company’s inability to fully satisfy the 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 such holder’s Conversion Notice, (ii) the amount of this Note which
cannot be converted and (iii) the applicable Mandatory Prepayment Price. The
Holder shall notify the Company of its election pursuant to Section 3.7(a) above
by delivering written notice via facsimile to the Company (“Notice in
Response to Inability to Convert”). 

(c)      Payment
of Prepayment Price. If the Holder shall elect to have its Notes prepaid
pursuant to Section 3.7(a)(i) above, the Company shall pay the Mandatory
Prepayment Price to the Holder within thirty (30) days of the Company’s receipt
of the Holder’s Notice in Response to Inability to Convert, provided that
prior to the Company’s 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 Company shall fail to pay the applicable Mandatory Prepayment
Price to the Holder on a timely basis as described in this Section 3.7(c) (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 Conversion
Date and ending on the date the Holder voided the Mandatory Prepayment.

-15-

(d)     
Pro-rata Conversion and Prepayment. In the event the Company receives a
Conversion Notice from more than one holder of the Notes on the same day and the
Company can convert and prepay some, but not all, of the Notes pursuant to this
Section 3.7, the Company shall convert and prepay from each holder of the Notes
electing to have its Notes converted and prepaid at such time an amount equal to
such holder’s pro-rata amount (based on the principal amount of the Notes held
by such holder relative to the principal amount of the Notes outstanding) of all
the Notes being converted and prepaid at such time. 

Section
3.8      No Rights as Shareholder. 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 shareholder in respect of any meeting of
shareholders for the election of directors of the Company or of any other
matter, or any other rights as a shareholder of the Company. 

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 by
telex (with correct answer back received), telecopy 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 Company 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 and in no event shall such notice be
provided to such holder prior to such information being made known to the
public. The Company 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 and in no event shall such notice be
provided to the Holder prior to such information being made known to the
public.

Section
4.2      Governing Law. This Note shall be
governed by and construed in accordance with the internal laws of the State of
Nevada, without giving effect to any of the conflicts of law principles which
would result in the application of the substantive law of another jurisdiction.
This Note shall not be interpreted or construed with any presumption against the
party causing this Note to be drafted. 

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 Company to comply with the terms of this Note.

-16-

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 thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company 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 the
Company 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.

Section
4.5      Enforcement Expenses. The Company
agrees to pay all costs and expenses of enforcement of this Note, including,
without limitation, reasonable attorneys’ fees and expenses. 

Section
4.6      Binding Effect. The obligations of
the Company 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 Company 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 HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM,
SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.” 

Section
4.9 Consent to Jurisdiction. Each of the Company and the Holder (i)
hereby irrevocably submits to the exclusive jurisdiction of the State of Nevada
for the purposes of any suit, action or proceeding arising out of or relating to
this Note and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Holder consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under the Purchase Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 4.9 shall affect or limit any right to
serve process in any other manner permitted by law. Each of the Company and the
Holder hereby agree that the prevailing party in any suit, action or proceeding
arising out of or relating to this Note shall be entitled to reimbursement for reasonable legal fees from the non-prevailing
party.

-17-

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

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. 

Section
4.12      Company Waivers. Except as otherwise
specifically provided herein, the Company 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 Company liable
for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY. 

(a)      No
delay or omission on the part of the Holder in exercising its rights under this
Note, or course of conduct relating hereto, shall operate as a waiver of such
rights or any other right of the Holder, 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. 

(b)      THE
COMPANY ACKNOWLEDGES 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. 

 

	LITHIUM EXPLORATION GROUP,
      INC. 
	 
	By: 	 
	 	Name: 
	 	Title: 

-18-

EXHIBIT A 
WIRE INSTRUCTIONS

	Payee: 	 
	Bank: 	 
	Address: 	 
	  	 
	Bank No.: 	 
	Account No.: 	 
	Account Name: 	 

-19-

FORM OF 

NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert the
Note) 

The undersigned hereby irrevocably elects to convert $
________________of the principal amount of the above Note No. ___ into shares of
Common Stock of Lithium Exploration Group, Inc. 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: 	 
	Print Name: 	 
	Address: 	 

-20-

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