Document:

Exhibit 4.1

                                                               EXECUTION VERSION

                             SENIOR CONVERTIBLE NOTE

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES  REPRESENTED BY THIS CERTIFICATE
NOR THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE  CONVERTIBLE  HAVE BEEN
REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,  SOLD,  TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE  REGISTRATION  STATEMENT  FOR
THE SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF  REQUESTED BY THE  COMPANY),  IN A FORM  REASONABLY
ACCEPTABLE TO THE COMPANY,  THAT  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE SOLD  PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT.  NOTWITHSTANDING  THE  FOREGOING,  THE  SECURITIES  MAY BE  PLEDGED IN
CONNECTION  WITH  A  BONA  FIDE  MARGIN  ACCOUNT  OR  OTHER  LOAN  OR  FINANCING
ARRANGEMENT  SECURED  BY THE  SECURITIES.  ANY  TRANSFEREE  OF THIS NOTE  SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE,  INCLUDING SECTIONS 0 AND 0 HEREOF. THE
PRINCIPAL  AMOUNT  REPRESENTED  BY THIS NOTE AND,  ACCORDINGLY,  THE  SECURITIES
ISSUABLE  UPON  CONVERSION  HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE
FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

                                 TUNGSTEN CORP.

                             SENIOR CONVERTIBLE NOTE

Issuance Date: January 2, 2014          Original Principal Amount: U.S. $127,500

         FOR  VALUE  RECEIVED,   TUNGSTEN  CORP.,  a  Nevada   corporation  (the
"COMPANY"),  hereby  promises to pay to the order of HANOVER  HOLDINGS I, LLC or
its  registered  assigns  ("HOLDER")  the amount  set out above as the  Original
Principal   Amount  (as  reduced  pursuant  to  the  terms  hereof  pursuant  to
redemption, conversion or otherwise, the "PRINCIPAL") when due, whether upon the
Maturity Date (as defined below), acceleration, redemption or otherwise (in each
case in accordance  with the terms hereof) and to pay interest  ("INTEREST")  on
any outstanding Principal (as defined below) at the applicable Interest Rate (as
defined  below) from the date set out above as the Issuance Date (the  "ISSUANCE
DATE") until the same becomes due and payable, whether upon the Maturity Date or
acceleration,  conversion,  redemption  or otherwise (in each case in accordance
with the terms hereof). This Senior Convertible Note (this "NOTE", including all
Senior  Convertible  Notes issued in exchange,  transfer or replacement  hereof,
collectively,  the "NOTES") was initially  issued  pursuant to the Note Purchase
Agreement  (as defined  below) on the Closing Date (as defined  below).  Certain
capitalized terms used herein are defined in Section 28.
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     1. PAYMENTS OF PRINCIPAL.  On the Maturity  Date,  the Company shall pay to
the Holder an amount in cash representing all outstanding Principal, accrued and
unpaid  Interest  and  accrued  and unpaid  Late  Charges (as defined in Section
23(c)) on such  Principal  and Interest  (as  adjusted  with respect to any Note
Reduction (as defined in Section 12)).  Other than as specifically  permitted by
this Note, the Company may not prepay any portion of the outstanding  Principal,
accrued and unpaid  Interest or accrued and unpaid Late Charges on Principal and
Interest, if any.

     2. INTEREST; INTEREST RATE.

     (a) Interest on this Note shall commence  accruing on the Issuance Date and
shall be computed on the basis of a 360-day  year and twelve  30-day  months and
shall be payable in cash on the Maturity Date or any applicable Redemption Date,
subject to adjustment with respect to any Note Reduction.

     (b) Prior to the payment of Interest on the Maturity Date or any applicable
Redemption Date,  Interest on this Note shall accrue at the Interest Rate and be
payable by way of  inclusion of the  Interest in the  Conversion  Amount on each
Conversion  Date  in  accordance  with  Section  3(b)(i).  From  and  after  the
occurrence and during the continuance of any Event of Default, the Interest Rate
shall  automatically  be increased to eighteen percent (18.0%) per annum. In the
event that such Event of Default is subsequently  cured, the adjustment referred
to in the preceding  sentence shall cease to be effective as of the calendar day
immediately  following  the date of such cure;  provided  that the  Interest  as
calculated  and unpaid at such  increased  rate during the  continuance  of such
Event of Default  shall  continue  to apply to the extent  relating  to the days
after the occurrence of such Event of Default  through and including the date of
such cure of such Event of Default.

     3. CONVERSION OF NOTES. This Note shall be convertible into validly issued,
fully paid and non-assessable  shares of Common Stock (as defined below), on the
terms and conditions set forth in this Section 3.

     (a)  Conversion  Right.  Subject to the  provisions of Section 3(d), at any
time or times on or after the  Issuance  Date,  the Holder  shall be entitled to
convert any portion of the outstanding and unpaid  Conversion Amount (as defined
below) into validly issued, fully paid and non-assessable shares of Common Stock
in accordance with Section 3(c), at the Conversion Rate (as defined below).  The
Company  shall not  issue  any  fraction  of a share of  Common  Stock  upon any
conversion.  If the  issuance  would  result in the  issuance of a fraction of a
share of Common  Stock,  the  Company  shall  round such  fraction of a share of
Common Stock up to the nearest  whole share.  The Company  shall pay any and all
transfer,  stamp, issuance and similar taxes that may be payable with respect to
the  issuance and delivery of Common  Stock upon  conversion  of any  Conversion
Amount.

     (b)  Conversion  Rate.  The number of shares of Common Stock  issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by  dividing  (x)  such  Conversion  Amount  by (y) the  Conversion  Price  (the
"CONVERSION RATE").

          (i)  "CONVERSION  AMOUNT"  means the  portion of the  Principal  to be
     converted,  redeemed or otherwise with respect to which this  determination

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     is being made,  plus all accrued and unpaid  Interest  with respect to such
     portion of the  Principal  amount and accrued and unpaid Late  Charges with
     respect to such portion of such Principal and such Interest.

          (ii) "CONVERSION PRICE" means, as of any Conversion Date or other date
     of determination, $0.0325, subject to adjustment as provided herein.

     (c) Mechanics of Conversion.

          (i) Optional Conversion.  To convert any Conversion Amount into shares
     of Common Stock on any date (a "CONVERSION DATE"), the Holder shall deliver
     (whether  via  facsimile  or  otherwise),  for receipt on or prior to 11:59
     p.m.,  New  York  time,  on such  date,  a copy of an  executed  notice  of
     conversion  in the form  attached  hereto  as  Exhibit  I (the  "CONVERSION
     NOTICE") to the Company. If required by Section 3(c)(iii), the Holder shall
     surrender this Note to a nationally  recognized  overnight delivery service
     for delivery to the Company (or an indemnification undertaking with respect
     to this Note in the case of its loss,  theft or destruction as contemplated
     by Section  17(b)).  On or before the first (1st) Trading Day following the
     date of receipt of a  Conversion  Notice,  the  Company  shall  transmit by
     facsimile an acknowledgment of confirmation, in the form attached hereto as
     Exhibit  II, of  receipt  of such  Conversion  Notice to the Holder and the
     Company's  transfer agent (the "TRANSFER  AGENT") . On or before the second
     (2nd) Trading Day following the date of receipt of a Conversion Notice, the
     Company shall (1) provided that the Transfer Agent is  participating in The
     Depository  Trust  Company's  ("DTC") Fast  Automated  Securities  Transfer
     Program,  credit such  aggregate  number of shares of Common Stock to which
     the Holder  shall be entitled to the  Holder's  or its  designee's  balance
     account with DTC through its  Deposit/Withdrawal at Custodian system or (2)
     if the  Transfer  Agent  is not  participating  in the DTC  Fast  Automated
     Securities  Transfer  Program,  issue and deliver (via reputable  overnight
     courier)  to  the  address  as  specified  in  the  Conversion   Notice,  a
     certificate,  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.  If
     this Note is physically  surrendered  for conversion as required by Section
     3(c)(iii)  and the  outstanding  Principal of this Note is greater than the
     Principal  portion  of the  Conversion  Amount  being  converted,  then the
     Company shall as soon as  practicable  and in no event later than three (3)
     Trading Days after  receipt of this Note and at its own expense,  issue and
     deliver to the  Holder (or its  designee)  a new Note (in  accordance  with
     Section 17(d))  representing the outstanding  Principal not converted.  The
     Person or Persons  entitled to receive the shares of Common Stock  issuable
     upon a  conversion  of this Note shall be treated  for all  purposes as the
     record  holder or holders of such shares of Common Stock on the  Conversion
     Date.

          (ii) Company's  Failure to Timely Convert.  If the Company shall fail,
     for any reason or for no reason,  to issue to the  Holder  within  five (5)
     Trading Days after the Company's  receipt of a Conversion  Notice  (whether
     via facsimile or otherwise) (the "SHARE DELIVERY DEADLINE"),  a certificate
     for the number of shares of Common  Stock to which the  Holder is  entitled

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     and register such shares of Common Stock on the Company's share register or
     to credit the Holder's or its designee's  balance account with DTC for such
     number of shares of Common  Stock to which the Holder is entitled  upon the
     Holder's  conversion  of any  Conversion  Amount  (as the  case  may be) (a
     "CONVERSION  FAILURE") then, in addition to all other remedies available to
     the  Holder,  (1) the  Company  shall pay in cash to the Holder on each day
     after such Share  Delivery  Deadline  that the  issuance  of such shares of
     Common Stock is not timely effected an amount equal to 2% of the product of
     (A) the sum of the  number  of shares  of  Common  Stock not  issued to the
     Holder on a timely basis and to which the Holder is entitled  multiplied by
     (B)  the  Closing  Sale  Price  of the  Common  Stock  on the  Trading  Day
     immediately  preceding  the last possible date which the Company could have
     issued such shares of Common Stock to the Holder without  violating Section
     3(c)(i) and (2) the Holder,  upon written  notice to the Company,  may void
     its Conversion  Notice with respect to, and retain or have returned (as the
     case may be) any portion of this Note that has not been converted  pursuant
     to such Conversion Notice, provided that the voiding of a Conversion Notice
     shall not affect the Company's  obligations to make any payments which have
     accrued prior to the date of such notice pursuant to this Section  3(c)(ii)
     or  otherwise.  In addition to the  foregoing,  if on or prior to the Share
     Delivery  Deadline,   the  Company  shall  fail  to  issue  and  deliver  a
     certificate  to the Holder and register  such shares of Common Stock on the
     Company's  share register or credit the Holder's or its designee's  balance
     account  with DTC for the  number of  shares  of Common  Stock to which the
     Holder is entitled upon the Holder's conversion  hereunder (as the case may
     be), and if on or after such Share Delivery  Deadline the Holder  purchases
     (in an open market  transaction  or  otherwise)  shares of Common  Stock to
     deliver in  satisfaction  of a sale by the Holder of all or any  portion of
     the  number of shares of Common  Stock,  or a sale of a number of shares of
     Common  Stock equal to all or any portion of the number of shares of Common
     Stock,  issuable  upon  such  conversion  that the  Holder  so  anticipated
     receiving  from the  Company,  then,  in  addition  to all  other  remedies
     available to the Holder, the Company shall,  within three (3) Business Days
     after receipt of the Holder's written request, pay cash to the Holder in an
     amount equal to the Holder's  total  purchase  price  (including  brokerage
     commissions  and other  out-of-pocket  expenses,  if any) for the shares of
     Common  Stock so purchased  (including,  without  limitation,  by any other
     Person in respect,  or on behalf,  of the Holder) (the "BUY-IN Price"),  at
     which  point  the  Company's  obligation  to  so  issue  and  deliver  such
     certificate or credit the Holder's  balance account with DTC for the number
     of shares of Common Stock to which the Holder is entitled upon the Holder's
     conversion  hereunder  (as the case may be) (and to issue  such  shares  of
     Common Stock) shall terminate.

          (iii) Book-Entry.  Notwithstanding  anything to the contrary set forth
     in this  Section 3,  following  conversion  of any  portion of this Note in
     accordance  with the terms  hereof,  the Holder  shall not be  required  to
     physically  surrender  this  Note  to  the  Company  unless  (A)  the  full
     Conversion  Amount  represented  by this Note is being  converted (in which
     event this Note shall be  delivered  to the  Company  following  conversion
     thereof as contemplated by Section  3(c)(i)) or (B) the Holder has provided
     the Company with prior  written  notice  (which notice may be included in a
     Conversion  Notice)  requesting  reissuance  of  this  Note  upon  physical

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     surrender of this Note. The Holder and the Company shall  maintain  records
     showing the  Principal,  Interest  and Late Charges  converted  and/or paid
     and/or  adjusted  (as the  case may be) and the  dates of such  conversions
     and/or payments  and/or  adjustments (as the case may be) or shall use such
     other method,  reasonably satisfactory to the Holder and the Company, so as
     not to require physical surrender of this Note upon conversion.

          (iv) Pro Rata  Conversion;  Disputes.  In the event of a dispute as to
     the number of shares of Common Stock  issuable to the Holder in  connection
     with a conversion  of this Note,  the Company shall issue to the Holder the
     number of shares of Common Stock not in dispute and resolve such dispute in
     accordance with Section 22.

     (d)  Limitations on Conversions.  Notwithstanding  anything to the contrary
contained in this Note, this Note shall not be convertible by the Holder hereof,
and the Company shall not effect any conversion of this Note or otherwise  issue
any shares of Common  Stock  pursuant  hereto,  to the  extent  (but only to the
extent)  that after giving  effect to such  conversion  or other share  issuance
hereunder the Holder  (together with its affiliates)  would  beneficially own in
excess of 9.99% (the "MAXIMUM  PERCENTAGE")  of the Common Stock.  To the extent
the above limitation  applies,  the  determination of whether this Note shall be
convertible (vis-a-vis other convertible, exercisable or exchangeable securities
owned by the Holder or any of its affiliates) and of which such securities shall
be convertible,  exercisable or exchangeable (as among all such securities owned
by the Holder and its  affiliates)  shall,  subject to such  Maximum  Percentage
limitation,  be determined  on the basis of the first  submission to the Company
for conversion, exercise or exchange (as the case may be). No prior inability to
convert  this  Note,  or to issue  shares  of  Common  Stock,  pursuant  to this
paragraph shall have any effect on the  applicability  of the provisions of this
paragraph with respect to any subsequent  determination of  convertibility.  For
purposes of this  paragraph,  beneficial  ownership and all  determinations  and
calculations  (including,  without  limitation,  with respect to calculations of
percentage  ownership)  shall be determined in accordance  with Section 13(d) of
the 1934 Act (as  defined  in the Note  Purchase  Agreement)  and the  rules and
regulations  promulgated  thereunder.  The provisions of this paragraph shall be
implemented in a manner  otherwise than in strict  conformity  with the terms of
this  paragraph to correct this  paragraph (or any portion  hereof) which may be
defective  or  inconsistent  with the  intended  Maximum  Percentage  beneficial
ownership  limitation  herein  contained  or  to  make  changes  or  supplements
necessary  or  desirable  to  properly  give effect to such  Maximum  Percentage
limitation.  The  limitations  contained  in this  paragraph  shall  apply  to a
successor  Holder of this Note. The holders of Common Stock shall be third party
beneficiaries  of this  paragraph  and the Company may not waive this  paragraph
without the consent of holders of a majority of its Common Stock. For any reason
at any time,  upon the written or oral request of the Holder,  the Company shall
within  one (1)  Business  Day  confirm  orally and in writing to the Holder the
number of shares of Common  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 or securities
issued pursuant to the Note Purchase Agreement.

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     4. RIGHTS UPON EVENT OF DEFAULT.

     (a) Event of Default.  Each of the  following  events shall  constitute  an
"EVENT OF DEFAULT":

          (i) the  suspension  (or  threatened  suspension)  from trading or the
     failure (or threatened failure) of the Common Stock to be trading or listed
     (as  applicable) on an Eligible Market for a period of five (5) consecutive
     days or for more than an aggregate of ten (10) days in any 365-day  period,
     or the  imposition  of any  suspension  of, or  restriction  on,  accepting
     additional   deposits  of  the  Common  Stock,  or  electronic  trading  or
     book-entry services by DTC with respect to the Common Stock;

          (ii)  the  Company's  or any  Subsidiary's  (as  defined  in the  Note
     Purchase  Agreement)  failure to pay to the Holder any amount of Principal,
     Interest,  Late  Charges or other  amounts  when and as due under this Note
     (including,  without limitation,  the Company's or any Subsidiary's failure
     to  pay  any  redemption  payments  or  amounts  hereunder)  or  any  other
     Transaction  Document (as defined in the Note  Purchase  Agreement)  or any
     other agreement,  document,  certificate or other  instrument  delivered in
     connection with the transactions  contemplated hereby and thereby,  except,
     in the case of a failure to pay  Interest and Late Charges when and as due,
     in which case only if such failure remains uncured for a period of at least
     five (5) days;

          (iii)  the  occurrence  of  any  default   under,   redemption  of  or
     acceleration  prior to maturity of an  aggregate  of any  Indebtedness  (as
     defined  in the  Note  Purchase  Agreement)  of the  Company  or any of its
     Subsidiaries;

          (iv) bankruptcy, insolvency, reorganization or liquidation proceedings
     or other  proceedings  for the relief of debtors  shall be instituted by or
     against  the  Company or any  Subsidiary  and,  if  instituted  against the
     Company or any Subsidiary by a third party,  shall not be dismissed  within
     thirty (30) days of their initiation;

          (v) the  commencement  by the Company or any Subsidiary of a voluntary
     case  or  proceeding  under  any  applicable  federal,   state  or  foreign
     bankruptcy, insolvency, reorganization or other similar law or of any other
     case or  proceeding  to be  adjudicated  a bankrupt  or  insolvent,  or the
     consent by it to the entry of a decree,  order,  judgment or other  similar
     document in respect of the Company or any Subsidiary in an involuntary case
     or proceeding under any applicable  federal,  state or foreign  bankruptcy,
     insolvency,  reorganization  or other similar law or to the commencement of
     any bankruptcy or insolvency  case or proceeding  against it, or the filing
     by it of a petition or answer or consent seeking  reorganization  or relief
     under any applicable federal, state or foreign law, or the consent by it to
     the filing of such petition or to the  appointment of or taking  possession
     by a custodian,  receiver,  liquidator,  assignee, trustee, sequestrator or
     other  similar  official  of  the  Company  or  any  Subsidiary  or of  any
     substantial part of its property,  or the making by it of an assignment for
     the benefit of creditors,  or the execution of a composition  of debts,  or

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     the occurrence of any other similar federal,  state or foreign  proceeding,
     or the  admission  by it in  writing  of its  inability  to pay  its  debts
     generally as they become due, the taking of corporate action by the Company
     or any  Subsidiary in  furtherance  of any such action or the taking of any
     action by any Person to commence a Uniform Commercial Code foreclosure sale
     or any other similar action under federal, state or foreign law;

          (vi) the entry by a court of (i) a decree,  order,  judgment  or other
     similar document in respect of the Company or any Subsidiary of a voluntary
     or involuntary  case or proceeding under any applicable  federal,  state or
     foreign bankruptcy, insolvency, reorganization or other similar law or (ii)
     a decree,  order,  judgment or other similar document adjudging the Company
     or any Subsidiary as bankrupt or insolvent,  or approving as properly filed
     a petition seeking liquidation, reorganization,  arrangement, adjustment or
     composition  of or in respect of the  Company or any  Subsidiary  under any
     applicable federal, state or foreign law or (iii) a decree, order, judgment
     or other similar  document  appointing a custodian,  receiver,  liquidator,
     assignee, trustee, sequestrator or other similar official of the Company or
     any Subsidiary or of any substantial part of its property,  or ordering the
     winding up or liquidation of its affairs,  and the  continuance of any such
     decree, order, judgment or other similar document or any such other decree,
     order,  judgment or other  similar  document  unstayed  and in effect for a
     period of thirty (30) consecutive days;

          (vii)  a  final  judgment  or  judgments  for  the  payment  of  money
     aggregating  in excess of $100,000 are rendered  against the Company and/or
     any of its  Subsidiaries  and which  judgments are not,  within thirty (30)
     days after the entry thereof, bonded,  discharged or stayed pending appeal,
     or are not discharged  within thirty (30) days after the expiration of such
     stay;  provided,  however, any judgment which is covered by insurance or an
     indemnity  from a credit worthy party shall not be included in  calculating
     the  $100,000  amount set forth above so long as the Company  provides  the
     Holder a written  statement from such insurer or indemnity  provider (which
     written  statement  shall be reasonably  satisfactory to the Holder) to the
     effect that such  judgment is covered by insurance or an indemnity  and the
     Company or such  Subsidiary  (as the case may be) will receive the proceeds
     of such  insurance or indemnity  within thirty (30) days of the issuance of
     such judgment;

          (viii) the  Company  and/or  any  Subsidiary,  individually  or in the
     aggregate,  either (i) fails to pay,  when due,  or within  any  applicable
     grace  period,  any payment with respect to any  Indebtedness  in excess of
     $100,000  due to any third party  (other  than,  with  respect to unsecured
     Indebtedness only, payments contested by the Company and/or such Subsidiary
     (as the case may be) in good faith by proper  proceedings  and with respect
     to which adequate  reserves have been set aside for the payment  thereof in
     accordance  with  GAAP) or is  otherwise  in  breach  or  violation  of any
     agreement  for  monies  owed or owing in an amount  in excess of  $100,000,
     which  breach or  violation  permits the other  party  thereto to declare a
     default or otherwise  accelerate amounts due thereunder,  or (ii) suffer to
     exist any other  circumstance  or event that  would,  with or  without  the
     passage of time or the  giving of  notice,  result in a default or event of
     default under any agreement  binding the Company or any  Subsidiary,  which

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     default or event of default  would or is likely to have a material  adverse
     effect on the business,  assets,  operations  (including  results thereof),
     liabilities,  properties,  condition  (including  financial  condition)  or
     prospects of the Company or any of its Subsidiaries, individually or in the
     aggregate;

          (ix) other than as  specifically  set forth in another  clause of this
     Section 4(a),  the Company or any Subsidiary  breaches any  representation,
     warranty,  covenant or other term or condition of any Transaction Document,
     except,  in the case of a breach of a covenant  or other term or  condition
     that is curable,  only if such breach remains uncured for a period of three
     (3) consecutive Trading Days;

          (x) any  Material  Adverse  Effect (as  defined  in the Note  Purchase
     Agreement) occurs; or

          (xi) any Change of Control occurs.

     (b) Notice of an Event of Default; Redemption Right. Upon the occurrence of
an Event of Default with respect to this Note,  the Company shall within one (1)
Business Day deliver written notice thereof via facsimile and overnight  courier
(with next day delivery specified) (an "EVENT OF DEFAULT NOTICE") to the Holder.
At any time  after the  earlier of the  Holder's  receipt of an Event of Default
Notice  and the Holder  becoming  aware of an Event of  Default,  the Holder may
require the Company to redeem  (regardless  of whether such Event of Default has
been cured) all or any portion of this Note by delivering written notice thereof
(the  "EVENT OF DEFAULT  REDEMPTION  NOTICE")  to the  Company,  which  Event of
Default  Redemption Notice shall indicate the portion of this Note the Holder is
electing  to redeem.  Each  portion of this Note  subject to  redemption  by the
Company  pursuant  to this  Section  4(b) shall be  redeemed by the Company at a
price equal to the greater of (i) the product of (A) the Conversion Amount to be
redeemed  multiplied by (B) the  Redemption  Premium and (ii) the product of (X)
the Conversion Rate with respect to the Conversion Amount in effect at such time
as the Holder delivers an Event of Default  Redemption  Notice multiplied by (Y)
the product of (1) the Redemption Premium multiplied by (2) the greatest Closing
Sale Price of the Common  Stock on any Trading Day during the period  commencing
on the date  immediately  preceding such Event of Default and ending on the date
the Company makes the entire payment required to be made under this Section 4(b)
(the "EVENT OF DEFAULT REDEMPTION PRICE").  Redemptions required by this Section
4(b) shall be made in  accordance  with the  provisions  of  Section  10. To the
extent  redemptions  required by this Section 4(b) are deemed or determined by a
court of competent  jurisdiction  to be prepayments of this Note by the Company,
such redemptions  shall be deemed to be voluntary  prepayments.  Notwithstanding
anything to the contrary in this Section 4, but subject to Section  3(d),  until
the Event of Default  Redemption  Price (together with any Late Charges thereon)
is paid in full,  the  Conversion  Amount  submitted for  redemption  under this
Section 4(b) (together with any Late Charges thereon) may be converted, in whole
or in part, by the Holder into Common Stock  pursuant to the terms of this Note.
In the event of the Company's  redemption of any portion of this Note under this
Section 4(b), the Holder's  damages would be uncertain and difficult to estimate
because of the  parties'  inability  to predict  future  interest  rates and the
uncertainty of the availability of a suitable substitute investment  opportunity

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for the Holder. Accordingly,  any redemption premium due under this Section 4(b)
is intended by the parties to be, and shall be deemed, a reasonable  estimate of
the Holder's actual loss of its investment opportunity and not as a penalty.

     5. RIGHTS UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.

     (a)  Assumption.  The  Company  shall  not  enter  into  or be  party  to a
Fundamental  Transaction  unless (i) the Successor Entity assumes in writing all
of the  obligations  of the  Company  under this Note and the other  Transaction
Documents in  accordance  with the  provisions  of this Section 5(a) pursuant to
written agreements in form and substance satisfactory to the Holder and approved
by the Holder prior to such  Fundamental  Transaction,  including  agreements to
deliver to each  holder of Notes in  exchange  for such Notes a security  of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to the Notes,  including,  without limitation,  having a principal
amount and interest rate equal to the principal amounts then outstanding and the
interest  rates of the Notes  held by such  holder,  having  similar  conversion
rights as the Notes and having similar ranking to the Notes, and satisfactory to
the Holder and (ii) the  Successor  Entity  (including  its Parent  Entity) is a
publicly  traded  corporation  whose  common  stock is quoted  on or listed  for
trading  on  an  Eligible  Market.   Upon  the  occurrence  of  any  Fundamental
Transaction,  the Successor  Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction,  the provisions of
this Note and the other Transaction  Documents  referring to the "Company" shall
refer instead to the Successor  Entity),  and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Note  and the  other  Transaction  Documents  with the  same  effect  as if such
Successor  Entity had been named as the Company herein.  Upon  consummation of a
Fundamental  Transaction,  the  Successor  Entity  shall  deliver  to the Holder
confirmation  that there shall be issued upon  conversion  or redemption of this
Note at any time after the consummation of such Fundamental Transaction, in lieu
of the shares of the Company's Common Stock (or other  securities,  cash, assets
or other  property  (except such items still  issuable  under  Section 14, which
shall  continue to be receivable  thereafter)  issuable  upon the  conversion or
redemption of the Notes prior to such  Fundamental  Transaction,  such shares of
the publicly traded common stock (or their  equivalent) of the Successor  Entity
(including  its Parent  Entity)  which the Holder  would have been  entitled  to
receive upon the happening of such  Fundamental  Transaction  had this Note been
converted  immediately prior to such Fundamental  Transaction (without regard to
any  limitations on the conversion of this Note), as adjusted in accordance with
the  provisions  of this Note.  Notwithstanding  the  foregoing,  the Holder may
elect, at its sole option, by delivery of written notice to the Company to waive
this Section 5(a) to permit the Fundamental  Transaction  without the assumption
of this Note.

     (b) Other Corporate  Events. In addition to and not in substitution for any
other rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant  to which  holders of shares of Common  Stock are  entitled  to receive
securities  or other  assets with respect to or in exchange for shares of Common
Stock (a "CORPORATE  EVENT"),  the Company shall make  appropriate  provision to
insure  that the  Holder  will  thereafter  have the  right  to  receive  upon a
conversion of this Note (i) in addition to the shares of Common Stock receivable
upon such conversion,  such securities or other assets to which the Holder would
have been  entitled  with respect to such shares of Common Stock had such shares
of Common Stock been held by the Holder upon the  consummation of such Corporate
Event  (without  taking into  account any  limitations  or  restrictions  on the

                                       9
<PAGE>
convertibility  of this  Note) or (ii) in lieu of the  shares  of  Common  Stock
otherwise  receivable  upon such  conversion,  such  securities  or other assets
received  by the  holders  of  shares  of Common  Stock in  connection  with the
consummation  of such  Corporate  Event in such amounts as the Holder would have
been  entitled to receive had this Note  initially  been issued with  conversion
rights for the form of such consideration (as opposed to shares of Common Stock)
at a conversion  rate for such  consideration  commensurate  with the Conversion
Rate.  Provision made pursuant to the preceding  sentence shall be in a form and
substance satisfactory to the Holder.

     (c) The  provisions of this Section 5 shall apply  similarly and equally to
successive  Fundamental  Transactions  and Corporate Events and shall be applied
without regard to any limitations on the conversion of this Note.

     6. RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

     (a)  Adjustment of Conversion  Price upon Issuance of Common Stock.  If and
whenever  on or after the  Closing  Date the  Company  issues  or  sells,  or in
accordance  with this Section 6(a) is deemed to have issued or sold,  any shares
of Common Stock  (including the issuance or sale of shares of Common Stock owned
or held  by or for the  account  of the  Company,  but  excluding  any  Excluded
Securities  issued  or sold or  deemed  to  have  been  issued  or  sold)  for a
consideration  per share (the "NEW  ISSUANCE  PRICE") less than a price equal to
the Conversion Price in effect immediately prior to such issue or sale or deemed
issuance or sale (such  Conversion Price then in effect is referred to herein as
the "APPLICABLE PRICE") (the foregoing a "DILUTIVE ISSUANCE"), then, immediately
after such  Dilutive  Issuance,  the  Conversion  Price then in effect  shall be
reduced to an amount  equal to the New Issuance  Price.  For all purposes of the
foregoing  (including,  without limitation,  determining the adjusted Conversion
Price and  consideration per share under this Section 6(a)), the following shall
be applicable:

          (i) Issuance of Options.  If the Company in any manner grants or sells
     any  Options  and the lowest  price per share for which one share of Common
     Stock is issuable upon the exercise of any such Option or upon  conversion,
     exercise or exchange of any Convertible  Securities  issuable upon exercise
     of any such Option is less than the  Applicable  Price,  then such share of
     Common Stock shall be deemed to be outstanding  and to have been issued and
     sold by the Company at the time of the  granting or sale of such Option for
     such price per share.  For  purposes of this Section  6(a)(i),  the "lowest
     price per share for which one share of Common  Stock is  issuable  upon the
     exercise of any such Option or upon conversion, exercise or exchange of any
     Convertible  Securities issuable upon exercise of any such Option" shall be
     equal  to  (1)  the  lower  of  (x)  the  sum  of  the  lowest  amounts  of
     consideration  (if any)  received or receivable by the Company with respect
     to any one share of Common  Stock upon the granting or sale of such Option,
     upon exercise of such Option and upon  conversion,  exercise or exchange of
     any Convertible  Security issuable upon exercise of such Option and (y) the
     lowest  exercise  price  set  forth in such  Option  for which one share of
     Common  Stock is issuable  upon the  exercise  of any such  Options or upon
     conversion,  exercise or exchange of any  Convertible  Securities  issuable
     upon exercise of any such Option,  minus (2) the sum of all amounts paid or
     payable  to the  holder  of such  Option  (or any  other  Person)  upon the

                                       10
<PAGE>
     granting  or sale of such  Option,  upon  exercise  of such Option and upon
     conversion,  exercise or exchange of any Convertible Security issuable upon
     exercise of such Option plus the value of any other consideration  received
     or  receivable  by, or benefit  conferred on, the holder of such Option (or
     any other Person).  Except as contemplated  below, no further adjustment of
     the Conversion  Price shall be made upon the actual  issuance of such share
     of Common Stock or of such Convertible Securities upon the exercise of such
     Options or upon the  actual  issuance  of such  share of Common  Stock upon
     conversion, exercise or exchange of such Convertible Securities.

          (ii) Issuance of Convertible Securities.  If the Company in any manner
     issues or sells any  Convertible  Securities and the lowest price per share
     for  which  one  share of Common  Stock is  issuable  upon the  conversion,
     exercise or exchange thereof is less than the Applicable  Price,  then such
     share of Common  Stock shall be deemed to be  outstanding  and to have been
     issued and sold by the Company at the time of the  issuance or sale of such
     Convertible  Securities for such price per share.  For the purposes of this
     Section 6(a)(ii), the "lowest price per share for which one share of Common
     Stock is issuable upon the conversion,  exercise or exchange thereof" shall
     be  equal  to (1)  the  lower  of (x)  the  sum of the  lowest  amounts  of
     consideration  (if any)  received or receivable by the Company with respect
     to one share of Common Stock upon the  issuance or sale of the  Convertible
     Security  and upon  conversion,  exercise or  exchange of such  Convertible
     Security and (y) the lowest  conversion price set forth in such Convertible
     Security for which one share of Common Stock is issuable  upon  conversion,
     exercise  or  exchange  thereof  minus (2) the sum of all  amounts  paid or
     payable to the holder of such  Convertible  Security (or any other  Person)
     upon the issuance or sale of such  Convertible  Security  plus the value of
     any other consideration received or receivable by, or benefit conferred on,
     the holder of such  Convertible  Security (or any other Person).  Except as
     contemplated  below, no further adjustment of the Conversion Price shall be
     made  upon  the  actual  issuance  of  such  share  of  Common  Stock  upon
     conversion, exercise or exchange of such Convertible Securities, and if any
     such issue or sale of such Convertible  Securities is made upon exercise of
     any Options for which  adjustment of the Conversion Price has been or is to
     be made  pursuant  to other  provisions  of this  Section  6(a),  except as
     contemplated  below, no further adjustment of the Conversion Price shall be
     made by reason of such issue or sale.

          (iii) Change in Option Price or Rate of Conversion. If the purchase or
     exercise price provided for in any Options,  the additional  consideration,
     if any,  payable  upon the issue,  conversion,  exercise or exchange of any
     Convertible Securities, or the rate at which any Convertible Securities are
     convertible  into or exercisable or exchangeable for shares of Common Stock
     increases or decreases at any time, the  Conversion  Price in effect at the
     time of such increase or decrease shall be adjusted to the Conversion Price
     which  would  have  been in  effect  at  such  time  had  such  Options  or
     Convertible  Securities  provided for such increased or decreased  purchase
     price,  additional  consideration or increased or decreased conversion rate
     (as the case may be) at the time  initially  granted,  issued or sold.  For
     purposes  of  this  Section  6(a)(iii),  if  the  terms  of any  Option  or
     Convertible  Security  that  was  outstanding  as of the  Closing  Date are

                                       11
<PAGE>
     increased or decreased in the manner described in the immediately preceding
     sentence, then such Option or Convertible Security and the shares of Common
     Stock deemed issuable upon exercise,  conversion or exchange  thereof shall
     be deemed to have been issued as of the date of such  increase or decrease.
     No  adjustment  pursuant  to  this  Section  6(a)  shall  be  made  if such
     adjustment  would  result in an  increase of the  Conversion  Price then in
     effect.

          (iv)  Calculation  of  Consideration   Received.   If  any  Option  or
     Convertible  Security  or  Adjustment  Right is issued or deemed  issued in
     connection  with the  issuance  or sale or deemed  issuance  or sale of any
     other  securities  of  the  Company,  together  comprising  one  integrated
     transaction,  (x) such Option or  Convertible  Security (as  applicable) or
     Adjustment  Right (as  applicable)  will be deemed to have been  issued for
     consideration  equal to the Black Scholes  Consideration  Value thereof and
     (y) the other  securities  issued or sold or deemed to have been  issued or
     sold in such integrated transaction shall be deemed to have been issued for
     consideration  equal to the  difference of (I) the aggregate  consideration
     received  or  receivable  by the  Company  minus  (II)  the  Black  Scholes
     Consideration  Value  of each  such  Option  or  Convertible  Security  (as
     applicable) or Adjustment  Right (as  applicable).  If any shares of Common
     Stock,  Options or  Convertible  Securities are issued or sold or deemed to
     have been issued or sold for cash, the consideration received therefor will
     be deemed to be the net amount of  consideration  received  by the  Company
     therefor. If any shares of Common Stock, Options or Convertible  Securities
     are issued or sold for a consideration  other than cash, the amount of such
     consideration  received  by the  Company  will be the  fair  value  of such
     consideration,  except where such consideration consists of publicly traded
     securities,  in which  case the  amount of  consideration  received  by the
     Company for such securities will be the average of the Closing Bid Price of
     such  security  for each Trading Day during the five (5) Trading Day period
     immediately  preceding the date of receipt.  If any shares of Common Stock,
     Options  or  Convertible  Securities  are  issued  to  the  owners  of  the
     non-surviving  entity in connection with any merger in which the Company is
     the surviving entity,  the amount of consideration  therefor will be deemed
     to be the fair value of such  portion of the net assets and business of the
     non-surviving  entity as is  attributable  to such shares of Common  Stock,
     Options or  Convertible  Securities (as the case may be). The fair value of
     any  consideration  other than cash or publicly  traded  securities will be
     determined  jointly by the  Company  and the  Holder.  If such  parties are
     unable to reach  agreement  within ten (10) days after the occurrence of an
     event requiring valuation (the "VALUATION  EVENT"),  the fair value of such
     consideration  will be  determined  within five (5) Trading  Days after the
     tenth  (10th)  day  following  such  Valuation  Event  by  an  independent,
     reputable  appraiser  jointly  selected by the Company and the Holder.  The
     determination of such appraiser shall be final and binding upon all parties
     absent  manifest error and the fees and expenses of such appraiser shall be
     borne by the Company.

          (v)  Record  Date.  If the  Company  takes a record of the  holders of
     shares of Common Stock for the purpose of  entitling  them (A) to receive a
     dividend or other distribution  payable in shares of Common Stock,  Options
     or in Convertible  Securities or (B) to subscribe for or purchase shares of
     Common Stock, Options or Convertible Securities, then such record date will

                                       12
<PAGE>
     be deemed to be the date of the issue or sale of the shares of Common Stock
     deemed to have been issued or sold upon the declaration of such dividend or
     the making of such other  distribution  or the date of the granting of such
     right of subscription or purchase (as the case may be).

     (b)  Adjustment of Conversion  Price upon  Subdivision  or  Combination  of
Common  Stock.  Without  limiting any provision of Section 5 or Section 6(a), if
the Company at any time on or after the Closing  Date  subdivides  (by any stock
split,  stock dividend,  stock  combination,  recapitalization  or other similar
transaction) one or more classes of its outstanding  shares of Common Stock into
a greater number of shares,  the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced. Without limiting any provision
of Section 5 or Section 6(a), if the Company at any time on or after the Closing
Date  combines  (by  any  stock  split,   stock  dividend,   stock  combination,
recapitalization  or  other  similar  transaction)  one or more  classes  of its
outstanding  shares  of  Common  Stock  into a smaller  number  of  shares,  the
Conversion  Price  in  effect  immediately  prior  to such  combination  will be
proportionately  increased.  Any adjustment  pursuant to this Section 6(b) shall
become  effective  immediately  after the effective date of such  subdivision or
combination. If any event requiring an adjustment under this Section 6(b) occurs
during the period that a  Conversion  Price is  calculated  hereunder,  then the
calculation of such Conversion Price shall be adjusted  appropriately to reflect
such event.

     (c) Other Events.  In the event that the Company (or any Subsidiary)  shall
take any action to which the provisions hereof are not strictly applicable,  or,
if  applicable,  would not operate to protect the Holder from dilution or if any
event occurs of the type  contemplated  by the  provisions of this Section 6 but
not expressly provided for by such provisions  (including,  without  limitation,
the granting of stock appreciation rights,  phantom stock rights or other rights
with equity features), then the Company's board of directors shall in good faith
determine and implement an appropriate  adjustment in the Conversion Price so as
to protect the rights of the Holder,  provided that no such adjustment  pursuant
to this Section 6(c) will increase the Conversion Price as otherwise  determined
pursuant to this Section 6, provided  further that if the Holder does not accept
such adjustments as  appropriately  protecting its interests  hereunder  against
such dilution, then the Company's board of directors and the Holder shall agree,
in good faith,  upon an  independent  investment  bank of nationally  recognized
standing to make such  appropriate  adjustments,  whose  determination  shall be
final and binding and whose fees and expenses shall be borne by the Company.

     7.  NONCIRCUMVENTION.  The  Company  hereby  covenants  and agrees that the
Company will not, by amendment of its Certificate of  Incorporation  (as defined
in the Note  Purchase  Agreement),  Bylaws  (as  defined  in the  Note  Purchase
Agreement)  or through any  reorganization,  transfer of assets,  consolidation,
merger, scheme of arrangement,  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 of this Note, and will at all times in good faith carry out all
of the provisions of this Note and take all action as may be required to protect
the rights of the Holder of this Note.  Without  limiting the  generality of the
foregoing,  the  Company (i) shall not  increase  the par value of any shares of
Common Stock  receivable upon conversion of this Note above the Conversion Price
then in  effect,  (ii)  shall  take  all such  actions  as may be  necessary  or
appropriate  in order that the Company may validly and legally  issue fully paid
and  nonassessable  shares of Common Stock upon the conversion of this Note, and

                                       13
<PAGE>
(iii)  shall,  so long as any of the  Notes  are  outstanding,  take all  action
necessary  to reserve and keep  available  out of its  authorized  and  unissued
shares of Common Stock,  solely for the purpose of effecting  the  conversion of
the Notes,  the maximum  number of shares of Common  Stock as shall from time to
time be  necessary  to  effect  the  conversion  of the Notes  then  outstanding
(without regard to any limitations on conversion).

     8. RESERVATION OF AUTHORIZED SHARES.

     (a) Reservation.  The Company shall initially reserve out of its authorized
and  unissued  Common  Stock a number of shares of Common  Stock for each of the
Notes  equal to 150% of the entire  Conversion  Rate with  respect to the entire
Conversion  Amount of each such Note as of the Issuance  Date. So long as any of
the Notes are  outstanding,  the  Company  shall  take all action  necessary  to
reserve and keep  available  out of its  authorized  and unissued  Common Stock,
solely for the purpose of effecting  the  conversion  of the Notes,  150% of the
number  of shares of Common  Stock as shall  from time to time be  necessary  to
effect the conversion of all of the Notes then outstanding,  provided that at no
time shall the  number of shares of Common  Stock so  reserved  be less than the
number of shares  required  to be  reserved by the  previous  sentence  (without
regard to any limitations on conversions) (the "REQUIRED RESERVE AMOUNT").

     (b) Insufficient  Authorized Shares. If, notwithstanding  Section 8(a), and
not in limitation thereof, at any time while any of the Notes remain outstanding
the Company  does not have a  sufficient  number of  authorized  and  unreserved
shares of Common Stock to satisfy its  obligation  to reserve for issuance  upon
conversion of the Notes at least a number of shares of Common Stock equal to the
Required Reserve Amount (an "AUTHORIZED SHARE FAILURE"),  then the Company shall
immediately  take all action  necessary  to increase  the  Company's  authorized
shares of Common Stock to an amount  sufficient  to allow the Company to reserve
the Required Reserve Amount for the Notes then outstanding. Without limiting the
generality of the foregoing  sentence,  as soon as practicable after the date of
the occurrence of an Authorized Share Failure,  but in no event later than sixty
(60) days after the occurrence of such  Authorized  Share  Failure,  the Company
shall hold a meeting of its  stockholders for the approval of an increase in the
number of authorized  shares of Common Stock.  In connection  with such meeting,
the Company shall provide each  stockholder with a proxy statement and shall use
its best  efforts to solicit  its  stockholders'  approval  of such  increase in
authorized  shares of  Common  Stock  and to cause  its  board of  directors  to
recommend to the stockholders that they approve such proposal. In the event that
the  Company  is  prohibited  from  issuing  shares  of  Common  Stock  upon any
conversion due to the failure by the Company to have sufficient shares of Common
Stock  available out of the authorized but unissued shares of Common Stock (such
unavailable  number  of  shares  of Common  Stock,  the  "AUTHORIZATION  FAILURE
SHARES"), in lieu of delivering such Authorization Failure Shares to the Holder,
the Company shall pay cash in exchange for the redemption of such portion of the
Conversion  Amount  convertible  into such Authorized  Failure Shares at a price
equal to the sum of (i) the product of (x) such number of Authorization  Failure
Shares  and (y) the  greatest  Closing  Sale  Price of the  Common  Stock on any
Trading Day during the period  commencing  on the date the Holder  delivers  the
applicable  Conversion Notice with respect to such Authorization  Failure Shares
to the Company and ending on the date of such  issuance  and payment  under this
Section  8(b) and (ii) to the  extent the Holder  purchases  (in an open  market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a

                                       14
<PAGE>
sale by the Holder of Authorization  Failure Shares,  any brokerage  commissions
and other out-of-pocket  expenses,  if any, of the Holder incurred in connection
therewith.  Nothing  contained  in Section 8(a) or this Section 8(b) shall limit
any  obligations  of the  Company  under  any  provision  of the  Note  Purchase
Agreement.

     9. Company  Optional  Redemption.  At any time after the Issuance Date, the
Company  shall  have the right to  redeem  all,  but not less  than all,  of the
Conversion  Amount  then  remaining  under  this  Note  (the  "COMPANY  OPTIONAL
REDEMPTION  AMOUNT") on the Company Optional  Redemption Date (as defined below)
(a  "COMPANY  OPTIONAL  Redemption").  The  portion  of  this  Note  subject  to
redemption  pursuant to this  Section 9 shall be redeemed by the Company in cash
at a price  (the  "COMPANY  OPTIONAL  REDEMPTION  PRICE")  equal  to 140% of the
Conversion  Amount of this Note then  outstanding.  The Company may exercise its
right to require  redemption  under this Section 9 by delivering an  irrevocable
written  notice  thereof by facsimile and  overnight  courier to the Holder (the
"COMPANY  OPTIONAL  REDEMPTION  NOTICE"  and the date the Holder  receives  such
notice is referred to as the "COMPANY  OPTIONAL  REDEMPTION  NOTICE DATE").  The
Company may deliver only one Company  Optional  Redemption  Notice in any ninety
(90) day period. The Company Optional Redemption Notice shall (x) state the date
on which the Company  Optional  Redemption  shall occur (the  "COMPANY  OPTIONAL
REDEMPTION DATE") which date shall not be less than sixty (60) calendar days nor
more than ninety (90) calendar days  following the Company  Optional  Redemption
Notice Date, and (y) state the aggregate Conversion Amount of the Notes which is
being redeemed in such Company  Optional  Redemption from the Holder pursuant to
this Section 9 on the Company Optional Redemption Date. Notwithstanding anything
herein  to the  contrary,  at any time  prior to the date the  Company  Optional
Redemption Price is paid, in full, the Company Optional Redemption Amount may be
converted,  in whole or in part,  by the  Holder  into  shares of  Common  Stock
pursuant to Section 3. All Conversion  Amounts converted by the Holder after the
Company  Optional  Redemption  Notice  Date shall  reduce the  Company  Optional
Redemption  Amount of this Note required to be redeemed on the Company  Optional
Redemption  Date.  Redemptions  made pursuant to this Section 9 shall be made in
accordance with Section 10.

     10. REDEMPTIONS.

     (a) Mechanics.  The Company shall deliver the  applicable  Event of Default
Redemption  Price to the Holder in cash within five (5) Business  Days after the
Company's  receipt of the  Holder's  Event of  Default  Redemption  Notice.  The
Company shall deliver the applicable  Company  Optional  Redemption Price to the
Holder in cash on the applicable Company Optional  Redemption Date. In the event
of a  redemption  of less than all of the  Conversion  Amount of this Note,  the
Company shall promptly cause to be issued and delivered to the Holder a new Note
(in accordance with Section 17(d)) representing the outstanding  Principal which
has not been  redeemed.  The Holder's  delivery of a notice voiding a Redemption
Notice and  exercise of its rights  following  such notice  shall not affect the
Company's  obligations  to make any payments of Late Charges  which have accrued
prior to the date of such notice with respect to the  Conversion  Amount subject
to such notice.

     11. VOTING RIGHTS.  The Holder shall have no voting rights as the holder of
this Note, except as required by law (including,  without limitation, the Nevada
Revised Statutes) and as expressly provided in this Note.

                                       15
<PAGE>
     12. NOTE REDUCTIONS.

     (a) Filing Date Reduction.  As of the Trading Day immediately following the
Filing Deadline (as such term is defined in the Registration  Rights Agreement),
if (i) the Company has properly filed a  registration  statement with the SEC on
or prior to the Filing Deadline  covering the resale by the Holder of all of the
shares of  Common  Stock  issued or  issuable  upon  conversion  of this Note or
otherwise pursuant to the terms of this Note in accordance with the 1933 Act and
the Registration  Rights Agreement and (ii) no Event of Default or an event that
with the  passage  of time or  giving  of notice  would  constitute  an Event of
Default has occurred on or prior to such date,  then $20,000 of the  outstanding
Principal  hereunder (together with any accrued and unpaid Interest with respect
to such portion of the Principal amount and accrued and unpaid Late Charges with
respect  to  such  portion  of  such  Principal  and  such  Interest)  shall  be
automatically  extinguished  and shall no longer  remain  outstanding  hereunder
without any payment thereof by the Company.

     (b) Effective Date Reduction.  As of the Trading Day immediately  following
the Effectiveness  Deadline (as such term is defined in the Registration  Rights
Agreement),  if (i) the Company has filed a registration  statement with the SEC
that has been  declared  effective  by the SEC on or prior to the  Effectiveness
Deadline and the prospectus contained therein is available for use by the Holder
for the  resale by the  Holder of all of the  shares of Common  Stock  issued or
issuable upon conversion of this Note or otherwise pursuant to the terms of this
Note and (ii) no Event of Default  or an event that with the  passage of time or
giving of notice would  constitute  an Event of Default has occurred on or prior
to such date, then $22,500 of the outstanding Principal hereunder (together with
any accrued and unpaid  Interest  with respect to such portion of the  Principal
amount and accrued and unpaid Late  Charges with respect to such portion of such
Principal and such Interest) shall be  automatically  extinguished  and shall no
longer remain outstanding hereunder without any payment thereof by the Company.

     (c) Disputes. In the event of a dispute as to the arithmetic calculation of
any Note  Reduction,  the Company and the Holder  shall  resolve such dispute in
accordance with Section 22.

     13.  COVENANTS.  Until all of the Notes have been  converted,  redeemed  or
otherwise satisfied in accordance with their terms:

     (a) Restricted Payments. The Company shall not, and the Company shall cause
each of its  Subsidiaries  to not,  directly  or  indirectly,  redeem,  defease,
repurchase,  repay or make any payments in respect of, by the payment of cash or
cash equivalents (in whole or in part,  whether by way of open market purchases,
tender offers,  private  transactions  or otherwise),  all or any portion of any
Indebtedness,  whether by way of payment in respect of principal of (or premium,
if any) or interest on, such  Indebtedness if at the time such payment is due or
is  otherwise  made  or,  after  giving  effect  to such  payment,  (i) an event
constituting an Event of Default has occurred and is continuing or (ii) an event
that with the passage of time and without being cured would  constitute an Event
of Default has occurred and is continuing.

     (b) Restricted  Issuances.  The Company shall not,  directly or indirectly,
without the prior  written  consent of the  holders of a majority  in  aggregate

                                       16
<PAGE>
principal amount of the Notes then outstanding,  (i) issue any Notes (other than
as contemplated by the Note Purchase  Agreement and the Notes) or (ii) issue any
other securities that would cause a breach or default under the Notes.

     14.  PARTICIPATION.  In addition to any adjustments  pursuant to Section 6,
the  Holder,  as the  holder of this Note,  shall be  entitled  to receive  such
dividends paid and distributions made to the holders of Common Stock to the same
extent as if the Holder  had  converted  this Note into  Common  Stock  (without
regard to any  limitations on conversion  herein or elsewhere) and had held such
shares of Common Stock on the record date for such dividends and  distributions.
Payments  under  the  preceding  sentence  shall be made  concurrently  with the
dividend or distribution to the holders of Common Stock (provided,  however,  to
the extent  that the  Holder's  right to  participate  in any such  dividend  or
distribution would result in the Holder exceeding the Maximum  Percentage,  then
the Holder shall not be entitled to participate in such dividend or distribution
to such extent (or the  beneficial  ownership of any such shares of Common Stock
as a result of such dividend or  distribution  to such extent) and such dividend
or  distribution to such extent shall be held in abeyance for the benefit of the
Holder until such time,  if ever,  as its right  thereto would not result in the
Holder exceeding the Maximum Percentage).

     15.  AMENDING  THE TERMS OF THIS  NOTE.  The prior  written  consent of the
Holder shall be required for any change or amendment to this Note.

     16.  TRANSFER.  This  Note and any  shares  of  Common  Stock  issued  upon
conversion of this Note may be offered,  sold,  assigned or  transferred  by the
Holder  without the consent of the Company,  subject only to the  provisions  of
Section 4.4 of the Note Purchase Agreement.

     17. REISSUANCE OF THIS NOTE.

     (a) Transfer. If this Note is to be transferred, the Holder shall surrender
this Note to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the  Holder a new Note (in  accordance  with  Section  17(d)),
registered as the Holder may request,  representing  the  outstanding  Principal
being  transferred  by the  Holder  and,  if less  than the  entire  outstanding
Principal is being transferred, a new Note (in accordance with Section 17(d)) to
the Holder  representing the outstanding  Principal not being  transferred.  The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason  of the  provisions  of  Section  3(c)(iii)  following  conversion  or
redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note.

     (b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation  of  this  Note  (as  to  which  a  written   certification  and  the
indemnification  contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction,  of any  indemnification  undertaking by the
Holder to the  Company in  customary  and  reasonable  form and,  in the case of
mutilation,  upon  surrender and  cancellation  of this Note,  the Company shall
execute and deliver to the Holder a new Note (in accordance  with Section 17(d))
representing the outstanding Principal.

                                       17
<PAGE>
     (c)  Note   Exchangeable   for  Different   Denominations.   This  Note  is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company,  for a new Note or Notes (in  accordance  with Section 17(d) and in
principal  amounts  of at  least  $1,000)  representing  in  the  aggregate  the
outstanding  Principal of this Note,  and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

     (d) Issuance of New Notes.  Whenever the Company is required to issue a new
Note  pursuant  to the  terms of this  Note,  such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note, the Principal  remaining  outstanding  (or in the case of a new Note being
issued pursuant to Section 17(a) or Section 17(c),  the Principal  designated by
the Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding  under this Note  immediately  prior to such issuance of new Notes),
(iii) shall have an issuance  date,  as  indicated on the face of such new Note,
which is the same as the  Issuance  Date of this Note,  (iv) shall have the same
rights and conditions as this Note, and (v) shall  represent  accrued and unpaid
Interest and Late Charges on the Principal  and Interest of this Note,  from the
Issuance Date.

     18. 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 and any of the other Transaction
Documents at law or in equity (including a decree of specific performance and/or
other injunctive  relief),  and nothing herein shall limit the Holder's right to
pursue actual and consequential damages for any failure by the Company to comply
with the terms of this Note.  The  Company  covenants  to the Holder  that there
shall be no characterization  concerning this instrument other than as expressly
provided  herein.  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 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  harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled,  in
addition to all other available remedies, to an injunction  restraining any such
breach or any such threatened breach,  without the necessity of showing economic
loss and without any bond or other  security being  required.  The Company shall
provide all information and documentation to the Holder that is requested by the
Holder to enable the Holder to confirm the Company's  compliance  with the terms
and conditions of this Note  (including,  without  limitation,  compliance  with
Section 6).

     19. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise takes action to
collect amounts due under this Note or to enforce the provisions of this Note or
(b) there occurs any bankruptcy, reorganization,  receivership of the Company or
other  proceedings  affecting  Company  creditors'  rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for
such  collection,  enforcement or action or in connection with such  bankruptcy,

                                       18
<PAGE>
reorganization, receivership or other proceeding, including, without limitation,
attorneys' fees and disbursements. The Company expressly acknowledges and agrees
that no amounts due under this Note shall be affected,  or limited,  by the fact
that the purchase price paid for this Note was less than the original  Principal
amount hereof.

     20. CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted
by the Company and the Holder and shall not be  construed  against any Person as
the drafter  hereof.  The headings of this Note are for convenience of reference
and shall not form part of, or affect the  interpretation  of, this Note.  Terms
used in this Note but defined in the other Transaction  Documents shall have the
meanings  ascribed to such terms on the Closing  Date in such other  Transaction
Documents unless otherwise consented to in writing by the Holder.

     21.  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.  No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.

     22. DISPUTE RESOLUTION. In the case of a dispute as to the determination of
the Conversion Price (including,  without  limitation,  any disputed  adjustment
thereto or any dispute as to whether any issuance or sale or deemed  issuance or
sale was an issuance or sale or deemed issuance or sale of Excluded Securities),
the Company  Conversion  Price, any Redemption Price, the Closing Bid Price, the
Closing Sale Price or fair market  value (as the case may be) or the  arithmetic
calculation  of the  Conversion  Rate,  any  Note  Reduction  or the  applicable
Redemption  Price (as the case may be),  the  Company or the Holder (as the case
may be) shall submit the disputed  determinations or arithmetic calculations (as
the case may be) via facsimile (i) within two (2) Business Days after receipt of
the  applicable  notice giving rise to such dispute to the Company or the Holder
(as the case may be) or (ii) if no notice gave rise to such dispute, at any time
after the Holder learned of the  circumstances  giving rise to such dispute.  If
the  Holder and the  Company  are  unable to agree  upon such  determination  or
calculation  within two (2)  Business  Days of such  disputed  determination  or
arithmetic  calculation  (as the case may be) being  submitted to the Company or
the Holder (as the case may be), then the Company shall, within two (2) Business
Days,  submit via facsimile  (a) the disputed  determination  of the  Conversion
Price,  the Company  Conversion  Price,  any Redemption  Price,  the Closing Bid
Price,  the Closing  Sale Price or fair market  value (as the case may be) to an
independent,  reputable  investment bank selected by the Company and approved by
the Holder or (b) the disputed  arithmetic  calculation of the Conversion  Rate,
any  Note  Reduction  or  any  Redemption  Price  (as  the  case  may  be) to an
independent,  outside  accountant  selected  by the  Holder  that is  reasonably
acceptable to the Company. The Company shall cause at its expense the investment
bank or the  accountant  (as the case may be) to perform the  determinations  or
calculations  (as the case may be) and notify the  Company and the Holder of the
results  no later than ten (10)  Business  Days from the time it  receives  such
disputed  determinations  or calculations  (as the case may be). Such investment
bank's or accountant's  determination  or calculation (as the case may be) shall
be binding upon all parties absent demonstrable error.

                                       19
<PAGE>
     23. NOTICES; CURRENCY; PAYMENTS.

     (a)  Notices.  Whenever  notice is  required  to be given  under this Note,
unless otherwise provided herein,  such notice shall be given in accordance with
Section  9(f) of the Note  Purchase  Agreement.  The Company  shall  provide the
Holder with prompt  written  notice of all actions taken  pursuant to this Note,
including  in  reasonable  detail a  description  of such  action and the reason
therefore.  Without  limiting the generality of the foregoing,  the Company will
give written  notice to the Holder (i)  immediately  upon any  adjustment of the
Conversion  Price,  setting  forth in reasonable  detail,  and  certifying,  the
calculation of such  adjustment and (ii) at least fifteen (15) days prior to the
date on which the Company closes its books or takes a record (A) with respect to
any  dividend or  distribution  upon the Common  Stock,  (B) with respect to any
grant, issuances,  or sales of any Options,  Convertible Securities or rights to
purchase stock,  warrants,  securities or other property to holders of shares of
Common  Stock  or (C)  for  determining  rights  to  vote  with  respect  to any
Fundamental Transaction,  dissolution or liquidation, provided in each case that
such  information  shall be made known to the public prior to or in  conjunction
with such notice being provided to the Holder.

     (b)  Currency.  All dollar  amounts  referred to in this Note are in United
States Dollars ("U.S. DOLLARS"),  and all amounts owing under this Note shall be
paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted  into the U.S.  Dollar  equivalent  amount in  accordance  with the
Exchange Rate on the date of calculation.  "EXCHANGE RATE" means, in relation to
any amount of currency to be converted into U.S.  Dollars pursuant to this Note,
the U.S.  Dollar  exchange  rate as published in the Wall Street  Journal on the
relevant  date of  calculation  (it being  understood  and agreed  that where an
amount is calculated  with  reference to, or over, a period of time, the date of
calculation shall be the final date of such period of time).

     (c) Payments.  Whenever any payment of cash is to be made by the Company to
any Person pursuant to this Note,  unless otherwise  expressly set forth herein,
such payment  shall be made in lawful money of the United States of America by a
certified  check  drawn on the  account of the  Company  and sent via  overnight
courier  service to such Person at such  address as  previously  provided to the
Company in writing  (which  address,  in the case of each of the  Buyers,  shall
initially  be as set  forth  on the  Schedule  of  Buyers  attached  to the Note
Purchase Agreement),  provided that the Holder may elect to receive a payment of
cash via wire transfer of immediately  available  funds by providing the Company
with prior  written  notice  setting  out such  request  and the  Holder's  wire
transfer  instructions.  Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a Business  Day, the same shall instead
be due on the next  succeeding  day  which is a  Business  Day.  Any  amount  of
Principal or other amounts due under the Transaction Documents which is not paid
when due shall result in a late charge being incurred and payable by the Company
in an amount  equal to interest  on such amount at the rate of eighteen  percent
(18%) per annum from the date such amount was due until the same is paid in full
("LATE CHARGE").

     24. CANCELLATION.  After all Principal,  accrued Interest, Late Charges and
other  amounts  at any time owed on this Note have been paid in full,  this Note
shall automatically be deemed canceled,  shall be surrendered to the Company for
cancellation and shall not be reissued.

                                       20
<PAGE>
     25. WAIVER OF NOTICE.  To the extent  permitted by law, the Company  hereby
irrevocably waives demand,  notice,  presentment,  protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Note Purchase Agreement.

     26.  GOVERNING LAW. This Note shall be construed and enforced in accordance
with, and all questions  concerning the construction,  validity,  interpretation
and  performance  of this Note shall be governed  by, the  internal  laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other  jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.  The  Company  hereby  irrevocably  submits to the  exclusive
jurisdiction  of the state and federal  courts  sitting in The City of New York,
Borough of  Manhattan,  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein,  and hereby  irrevocably  waives,  and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court,  that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule of
law, then such provision  shall be deemed  inoperative to the extent that it may
conflict  therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or  unenforceable  under
any law shall not affect the validity or  enforceability  of any other provision
of this Note.  Nothing  contained  herein shall be deemed or operate to preclude
the Holder from bringing  suit or taking other legal action  against the Company
in any other jurisdiction to collect on the Company's obligations to the Holder,
to realize on any collateral or any other security for such  obligations,  or to
enforce a judgment  or other court  ruling in favor of the  Holder.  THE COMPANY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE  ADJUDICATION OF ANY DISPUTE  HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

     27. MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish
or require the  payment of a rate of interest or other  charges in excess of the
maximum  permitted  by  applicable  law.  In the event that the rate of interest
required to be paid or other charges  hereunder exceed the maximum  permitted by
such law,  any  payments in excess of such  maximum  shall be  credited  against
amounts owed by the Company to the Holder and thus refunded to the Company.

     28. CERTAIN  DEFINITIONS.  For purposes of this Note,  the following  terms
shall have the following meanings:

     (a)  "ADJUSTMENT  RIGHT"  means  any  right  granted  with  respect  to any
securities  issued in connection  with, or with respect to, any issuance or sale
(or deemed  issuance or sale in  accordance  with Section 6) of shares of Common
Stock that could result in a decrease in the net  consideration  received by the
Company in  connection  with,  or with respect to, such  securities  (including,

                                       21
<PAGE>
without limitation, any cash settlement rights, cash adjustment or other similar
rights).

     (b) "APPROVED  STOCK PLAN" means any employee  benefit plan  (including any
equity  compensation  agreement  not issued  pursuant  to a plan) which has been
approved by the board of directors of the Company  prior to or subsequent to the
date hereof  pursuant to which shares of Common  Stock and  standard  options to
purchase  Common  Stock may be issued to any  employee,  officer or director for
services provided to the Company in their capacity as such.

     (c) "BLACK SCHOLES  CONSIDERATION  VALUE" means the value of the applicable
Option,  Convertible Security or Adjustment Right (as the case may be) as of the
date of issuance thereof calculated using the Black Scholes Option Pricing Model
obtained from the "OV" function on Bloomberg  utilizing (i) an underlying  price
per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately  preceding  the public  announcement  of the execution of definitive
documents with respect to the issuance of such Option,  Convertible  Security or
Adjustment  Right  (as  the  case  may  be),  (ii)  a  risk-free  interest  rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of such Option, Convertible Security or Adjustment Right (as the case may be) as
of the date of issuance of such Option, Convertible Security or Adjustment Right
(as  the  case  may  be),  (iii) a zero  cost of  borrow  and  (iv) an  expected
volatility equal to the greater of 100% and the 100 day volatility obtained from
the HVT  function on  Bloomberg  (determined  utilizing a 365 day  annualization
factor) as of the Trading Day immediately following the date of issuance of such
Option, Convertible Security or Adjustment Right (as the case may be).

     (d) "BLOOMBERG" means Bloomberg, L.P.

     (e) "BUSINESS DAY" means any day other than  Saturday,  Sunday or other day
on which  commercial banks in The City of New York are authorized or required by
law to remain closed.

     (f) "CHANGE OF CONTROL" means any  Fundamental  Transaction  other than (i)
any  merger  of the  Company  or any of its,  direct or  indirect,  wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization  or  reclassification  of the  shares of Common  Stock in which
holders of the Company's voting power immediately prior to such  reorganization,
recapitalization  or  reclassification   continue  after  such   reorganization,
recapitalization  or  reclassification  to hold publicly traded  securities and,
directly or indirectly, are, in all material respects, the holders of the voting
power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a
corporation)   of  such   entity  or   entities)   after  such   reorganization,
recapitalization  or  reclassification,  or (iii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of
the Company or any of its Subsidiaries.

     (g) "CLOSING BID PRICE" and "CLOSING SALE PRICE" means, for any security as
of any  date,  the  last  closing  bid  price  and  last  closing  trade  price,
respectively,  for  such  security  on the  Principal  Market,  as  reported  by
Bloomberg,  or, if the Principal  Market begins to operate on an extended  hours
basis and does not  designate  the closing bid price or the closing  trade price
(as the case may be) then the last bid price or last trade price,  respectively,

                                       22
<PAGE>
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal  securities exchange or trading
market  for such  security,  the last  closing  bid price or last  trade  price,
respectively,  of such security on the principal  securities exchange or trading
market where such security is listed or traded as reported by  Bloomberg,  or if
the  foregoing  do not apply,  the last  closing bid price or last trade  price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade  price,  respectively,  is  reported  for such  security  by
Bloomberg,  the average of the bid prices, or the ask prices,  respectively,  of
any market  makers for such  security as  reported  in the "pink  sheets" by OTC
Markets Group Inc. (formerly Pink Sheets LLC).

     (h)  "CLOSING  DATE" shall have the meaning set forth in the Note  Purchase
Agreement, which date is the date the Company initially issued the Note pursuant
to the terms of the Note Purchase Agreement.

     (i) "COMMON STOCK" means (i) the Company's common stock,  $0.0001 par value
per share,  and (ii) any capital  stock into which such common  stock shall have
been changed or any share  capital  resulting  from a  reclassification  of such
common stock.

     (j) "CONVERTIBLE  SECURITIES" means any stock or other security (other than
Options)  that  is  at  any  time  and  under  any  circumstances,  directly  or
indirectly,   convertible  into,  exercisable  or  exchangeable  for,  or  which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

     (k) "ELIGIBLE  MARKET" means the NASDAQ  Global  Market,  the NASDAQ Global
Select Market,  the NASDAQ Capital  Market,  the New York Stock  Exchange,  NYSE
Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB  Marketplace  operated by
OTC  Markets  Group  Inc.  (or any  successor  to any of the  foregoing)  or the
Principal Market.

     (l) "EXCLUDED  SECURITIES" means any (i) shares of Common Stock or standard
options to purchase  Common  Stock to  directors,  officers or  employees of the
Company in their capacity as such pursuant to an Approved Stock Plan (as defined
below),  provided that (A) all such issuances (taking into account the shares of
Common Stock  issuable upon  exercise of such options  granted after the date of
this Note,  but not such shares  issuable upon exercise of such options  granted
before the date of this Note) after the date hereof  pursuant to this clause (i)
do not, in the  aggregate,  exceed more than 5.0% of the Common Stock issued and
outstanding  immediately  prior to the date hereof and (B) the exercise price of
any such  options is not  lowered,  none of such options are amended to increase
the number of shares issuable  thereunder and none of the terms or conditions of
any such options are otherwise  materially  changed in any manner that adversely
affects  any of the  Buyers;  (ii)  shares  of  Common  Stock  issued  upon  the
conversion or exercise of Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by  clause  (i)  above)  issued  prior to the  date  hereof,  provided  that the
conversion price of any such Convertible Securities (other than standard options
to purchase  Common  Stock  issued  pursuant to an Approved  Stock Plan that are
covered by clause (i) above) is not lowered, none of such Convertible Securities
(other than  standard  options to purchase  Common Stock  issued  pursuant to an
Approved  Stock  Plan that are  covered  by clause  (i)  above)  are  amended to

                                       23
<PAGE>
increase the number of shares issuable thereunder or extend the maturity date or
expiration date of such Convertible  Securities  (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved  Stock Plan that are  covered by clause (i) above) are  otherwise
materially changed in any manner that adversely affects any of the Buyers; (iii)
the shares of Common Stock  issuable  upon  conversion of the Notes or otherwise
pursuant to the terms of the Notes and (iv) any shares of Common Stock issued to
the Holder or any of its affiliates.

     (m)  "FUNDAMENTAL  TRANSACTION"  means  that (i) the  Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions,
(1)  consolidate or merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease,
license, assign,  transfer,  convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any
other  Person to make a purchase,  tender or exchange  offer that is accepted by
the holders of more than 50% of the  outstanding  shares of Voting  Stock of the
Company  (not  including  any shares of Voting  Stock of the Company held by the
Person or  Persons  making or party to, or  associated  or  affiliated  with the
Persons making or party to, such  purchase,  tender or exchange  offer),  or (4)
consummate a stock or share  purchase  agreement or other  business  combination
(including, without limitation, a reorganization,  recapitalization, spin-off or
scheme of arrangement)  with any other Person whereby such other Person acquires
more than 50% of the  outstanding  shares of Voting  Stock of the  Company  (not
including  any shares of Voting Stock of the Company held by the other Person or
other Persons  making or party to, or  associated  or affiliated  with the other
Persons  making or party to,  such stock or share  purchase  agreement  or other
business combination),  or (ii) any "person" or "group" (as these terms are used
for  purposes  of  Sections  13(d)  and  14(d) of the 1934 Act and the rules and
regulations  promulgated  thereunder) is or shall become the "beneficial  owner"
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of
the aggregate ordinary voting power represented by issued and outstanding Voting
Stock of the Company.

     (n) "GAAP" means United States generally  accepted  accounting  principles,
consistently applied.

     (o)  "INTEREST  RATE" means  twelve  percent  (12.0%) per annum,  as may be
adjusted from time to time in accordance with Section 2.

     (p) "MATURITY DATE" shall mean September 2, 2014;  provided,  however,  the
Maturity Date may be extended at the option of the Holder (i) in the event that,
and for so long as, an Event of Default shall have occurred and be continuing or
any event shall have  occurred and be  continuing  that with the passage of time
and the failure to cure would  result in an Event of Default or (ii) through the
date that is twenty (20) Business Days after the  consummation  of a Fundamental
Transaction in the event that a Fundamental Transaction is publicly announced or
a  Fundamental  Transaction  Notice is  delivered  prior to the  Maturity  Date,
provided  further  that if a Holder  elects to convert  some or all of this Note
pursuant  to  Section 3  hereof,  and the  Conversion  Amount  would be  limited
pursuant to Section 3(d)  hereunder,  the Maturity Date shall  automatically  be

                                       24
<PAGE>
extended  until such time as such  provision  shall not limit the  conversion of
this Note.

     (q) "NOTE PURCHASE  AGREEMENT" means that certain Note Purchase  Agreement,
dated as of the Closing Date, by and between the Company and the Holder pursuant
to which the Company issued this Note, as may be amended from time to time.

     (r)  "OPTIONS"  means any rights,  warrants or options to subscribe  for or
purchase shares of Common Stock or Convertible Securities.

     (s)  "PARENT  ENTITY"  of a  Person  means  an  entity  that,  directly  or
indirectly,  controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market,  or, if there is more
than one such  Person or Parent  Entity,  the Person or Parent  Entity  with the
largest  public  market  capitalization  as of the date of  consummation  of the
Fundamental Transaction.

     (t)  "PERSON"  means  an  individual,   a  limited  liability   company,  a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization,  any other  entity or a  government  or any  department  or agency
thereof.

     (u)  "PRINCIPAL  MARKET"  means the OTC  Bulletin  Board (or any  successor
thereto).

     (v)  "REDEMPTION  NOTICES"  means,  collectively,   the  Event  of  Default
Redemption Notices and the Company Optional Redemption Notices,  and each of the
foregoing, individually, a "REDEMPTION NOTICE."

     (w)  "REDEMPTION  PREMIUM"  means (i) in the case of the  Events of Default
described in Section 4(a) (other than Sections 4(a)(iv) through 4(a)(vi)),  125%
or (ii) in the case of the  Events of Default  described  in  Sections  4(a)(iv)
through 4(a)(vi), 100%.

     (x) "REDEMPTION  PRICES" means,  collectively,  Event of Default Redemption
Prices,  and the Company Optional  Redemption  Prices and each of the foregoing,
individually, a "REDEMPTION PRICE."

     (y) "REGISTRATION  RIGHTS AGREEMENT" means that certain registration rights
agreement,  dated as of the  Closing  Date,  by and  between the Company and the
Holder  relating to, among other things,  the  registration of the resale of the
Common Stock issuable upon conversion of the Notes or otherwise  pursuant to the
terms of the Notes, as may be amended from time to time.

     (z) "SEC" means the United States Securities and Exchange Commission or the
successor thereto.

     (aa)  "SUBSIDIARIES"  shall all corporations or other entities,  if any, of
which at least a majority of the securities or other  ownership  interest having
ordinary voting power for the election of directors or other persons  performing
similar  functions  are at the time owned  directly or indirectly by the Company
and/or any of its other Subsidiaries.

                                       25
<PAGE>
     (bb) "SUCCESSOR  ENTITY" means the Person (or, if so elected by the Holder,
the Parent  Entity)  formed by,  resulting  from or  surviving  any  Fundamental
Transaction  or the Person (or, if so elected by the Holder,  the Parent Entity)
with which such Fundamental Transaction shall have been entered into.

     (cc) "TRADING DAY" means any day on which the Common Stock is traded on the
Principal  Market,  or, if the  Principal  Market is not the  principal  trading
market  for the Common  Stock,  then on the  principal  securities  exchange  or
securities  market on which  the  Common  Stock is then  traded,  provided  that
"TRADING  DAY" shall not include any day on which the Common  Stock is scheduled
to trade on such  exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended  from trading during the final hour of trading on such
exchange or market (or if such  exchange or market does not designate in advance
the closing  time of trading on such  exchange  or market,  then during the hour
ending at 4:00:00 p.m.,  New York time) unless such day is otherwise  designated
as a Trading Day in writing by the Holder.

     (dd) "VOTING  STOCK" of a Person means  capital stock of such Person of the
class or classes  pursuant to which the holders  thereof have the general voting
power to elect,  or the  general  power to  appoint,  at least a majority of the
board of directors,  managers,  trustees or other similar governing body of such
Person  (irrespective  of whether or not at the time capital  stock of any other
class or  classes  shall  have or might  have  voting  power  by  reason  of the
happening of any contingency).

     29.  DISCLOSURE.  Upon  receipt or delivery by the Company of any notice in
accordance  with the terms of this Note,  unless the  Company  has in good faith
determined that the matters relating to such notice do not constitute  material,
non-public  information relating to the Company or any of its Subsidiaries,  the
Company  shall  within one (1)  Business  Day after any such receipt or delivery
publicly disclose such material,  non-public  information on a Current Report on
Form 8-K or  otherwise.  In the event that the  Company  believes  that a notice
contains material,  non-public information relating to the Company or any of its
Subsidiaries,  the Company so shall  indicate  to such Holder  contemporaneously
with  delivery of such notice,  and in the absence of any such  indication,  the
Holder shall be allowed to presume  that all matters  relating to such notice do
not constitute material,  non-public  information relating to the Company or its
Subsidiaries.  Nothing  contained in this Section 29 shall limit any obligations
of the  Company,  or any rights of the  Holder,  under  Section  4.3 of the Note
Purchase Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       26
<PAGE>
     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as
of the Issuance Date set out above.

TUNGSTEN CORP.

By:
   -----------------------------------
Name:
Title:

                SENIOR SECURED CONVERTIBLE NOTE - SIGNATURE PAGE

<PAGE>
                                    EXHIBIT I

                                 TUNGSTEN CORP.
                                CONVERSION NOTICE

     Reference  is made to the  Convertible  Note  (the  "NOTE")  issued  to the
undersigned by Tungsten Corp. (the  "COMPANY").  In accordance with and pursuant
to the Note, the undersigned  hereby elects to convert the Conversion Amount (as
defined in the Note) of the Note  indicated  below into shares of Common  Stock,
$0.0001 par value per share (the "COMMON STOCK"), of the Company, as of the date
specified below  Capitalized  terms not defined herein shall have the meaning as
set forth in the Note.

     Date of Conversion:
                        --------------------------------------------------------

     Aggregate Principal to be converted:
                                         ---------------------------------------

     Aggregate    accrued   and   unpaid
     Interest  and  accrued  and unpaid
     Late Charges  with respect to such
     portion of the  Aggregate  Principal
     and such Aggregate Interest to be
     converted:
                                         ---------------------------------------

     AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:
                                                 -------------------------------

Please confirm the following information:

     Conversion Price:
                      ----------------------------------------------------------

     Number of shares of Common Stock to be issued:
                                                   -----------------------------

Please  issue the Common  Stock into  which the Note is being  converted  in the
following name and to the following address:

     Issue to:

              ------------------------------------------------------------------

              ------------------------------------------------------------------

              ------------------------------------------------------------------

     Facsimile Number:
                      ----------------------------------------------------------

     Holder:

              ------------------------------------------------------------------
     By:

              ------------------------------------------------------------------
     Title:
              ------------------------------------------------------------------
<PAGE>
Dated:
      --------------------------------------------------------------------------

     Account Number:
                    ------------------------------------------------------------
     (if electronic book entry transfer)

     Transaction Code Number:
                             ---------------------------------------------------
     (if electronic book entry transfer)

<PAGE>
                                 ACKNOWLEDGMENT

     The Company hereby  acknowledges  this Conversion Notice and hereby directs
_________________  to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent  Instructions  dated  _____________,  20__
from the Company and acknowledged and agreed to by ________________________.

TUGSTEN CORP.

By:
   --------------------------------------
   Name:
   Title:Exhibit 10.1

                                                               EXECUTION VERSION

                             NOTE PURCHASE AGREEMENT

     THIS NOTE PURCHASE AGREEMENT (the "AGREEMENT") is made as of the 2nd day of
January,  2014  by  and  between  Tungsten  Corp.,  a  Nevada  corporation  (the
"COMPANY"),  and Hanover Holdings I, LLC, a New York limited  liability  company
(the "INVESTOR").

     WHEREAS, the Investor is willing to lend the Company $85,000, which loan is
evidenced by a promissory  note, in  substantially  the form attached  hereto as
Exhibit A (the "NOTE"), which is convertible into shares of the Company's common
stock,  $0.0001 par value (the "COMMON STOCK"),  in accordance with the terms of
this Agreement and such Note;

     WHEREAS,  upon the terms and condition stated in the Agreement and pursuant
to Section 4(a)(2) of the 1933 Act (as defined below) and Rule 506 of Regulation
D  promulgated  thereunder,  the Investor  wishes to  purchase,  and the Company
wishes to sell, the Note with the principal amount equal to $127,500 (the shares
of  Common  Stock  issuable  upon  conversion  of the  Note,  collectively,  the
"CONVERSION  SHARES").  The  Note,  together  with the  Conversion  Shares,  are
referred to herein as the "SECURITIES" and the offering  contemplated  hereby is
referred to herein as the "OFFERING";

     WHEREAS,  the parties  have agreed  that the  obligation  to repay the Note
shall be an unsecured obligation of the Company; and

     WHEREAS,  at the Closing  (as defined  below),  the  parties  hereto  shall
execute and deliver a Registration Rights Agreement, in the form attached hereto
as  Exhibit  B (the  "REGISTRATION  RIGHTS  AGREEMENT"),  pursuant  to which the
Company has agreed to provide  certain  registration  rights with respect to the
Registrable Securities (as defined in the Registration Rights Agreement),  under
the 1933 Act (as  defined  below)  and the  rules  and  regulations  promulgated
thereunder, and applicable state securities laws.

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
sufficiency  of which  are  hereby  acknowledged,  and in  consideration  of the
premises and the mutual agreements,  representations and warranties,  provisions
and covenants  contained  herein,  the parties  hereto,  intending to be legally
bound hereby, agree as follows:

     1. Purchase and Sale of Note. On the Closing Date (as hereinafter defined),
subject to the terms and  conditions  of this  Agreement,  the  Investor  hereby
agrees to purchase,  and the Company  hereby agrees to sell and issue, a Note in
the principal amount of $127,500 (the "PRINCIPAL AMOUNT").

     2. Purchase  Price.  The purchase price for the Note to be purchased by the
Investor at the Closing shall be $85,000 (the "PURCHASE  PRICE").  The Note will
be issued with an original issue discount of approximately  33.33%. The Investor
shall pay  approximately  $0.6666 for each $1.00 of principal amount of the Note
to be  purchased at the Closing.  At the  Closing,  the Investor  shall fund the
Purchase  Price by wire transfer of immediately  available  funds to the account
specified in writing by the Company prior to the date hereof.
<PAGE>
     3. The Closing. Subject to the conditions set forth below, the purchase and
sale of the Note shall take place at the offices of Greenberg Traurig,  LLP, The
MetLife Building,  200 Park Avenue, New York, New York 10166, on the date hereof
(the  "CLOSING"  and the  "CLOSING  DATE").  At the Closing,  the Company  shall
deliver to the Investor:  (i) this Agreement duly executed by the Company,  (ii)
the Note in the Principal  Amount duly executed by the Company and registered in
the name of the  Investor  and  (iii) the  Registration  Rights  Agreement  duly
executed by the Company.  At the  Closing,  the  Investor  shall  deliver to the
Company  (i)  this  Agreement  duly  executed  by  the  Investor  and  (ii)  the
Registration Rights Agreement duly executed by the Investor.

     4. Closing Conditions; Certain Covenants.

     4.1  Conditions  to  the  Investor's  Obligations.  The  obligation  of the
Investor  to  purchase  the Note to be issued to the  Investor at the Closing is
subject to the fulfillment, to the Investor's reasonable satisfaction,  prior to
or at the Closing, of each of the following conditions:

     (a) Representations  and Warranties.  The representations and warranties of
the  Company  contained  in this  Agreement  shall  be true and  correct  in all
material respects on the date hereof.

     (b) Note.  At the Closing,  the Company shall have tendered to the Investor
the Note.

     (c) Registration Rights Agreement. The Company shall have duly executed and
delivered the Registration Rights Agreement to the Investor.

     (d)  No  Actions.  No  action,  proceeding,  investigation,  regulation  or
legislation shall have been instituted, threatened or proposed before any court,
governmental  agency or  authority  or  legislative  body to  enjoin,  restrain,
prohibit or obtain  substantial  damages in respect of,  this  Agreement  or the
consummation of the transactions contemplated by this Agreement.

     (e)  Proceedings  and Documents.  All  proceedings  in connection  with the
transactions  contemplated hereby and all documents and instruments  incident to
such transactions shall be reasonably  satisfactory in substance and form to the
Investor, and the Investor shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.

     4.2 Conditions to the Company's Obligations.  The obligation of the Company
to sell and issue the Note to the  Investor  at the  Closing  is  subject to the
fulfillment,  to  the  Company's  reasonable  satisfaction,  prior  to or at the
Closing, of each of the following conditions:

     (a) Representations  and Warranties.  The representations and warranties of
the  Investor  contained  in this  Agreement  shall be true and  correct  in all
material respects on the date hereof.

     (b) Purchase Price. At the Closing, the Investor shall have tendered to the
Company  the  Purchase  Price,   less  $27,500  for  the  Investor's  legal  fee
reimbursement and $4,250 of the finder's fee payable to Garden State Securities,

                                       2
<PAGE>
by wire  transfer of  immediately  available  funds to the account  specified in
writing by the Company prior to the date hereof.

     (c) Registration  Rights  Agreement.  The Investor shall have duly executed
and delivered the Registration Rights Agreement to the Company.

     (d)  No  Actions.  No  action,  proceeding,  investigation,  regulation  or
legislation shall have been instituted, threatened or proposed before any court,
governmental  agency or  authority  or  legislative  body to  enjoin,  restrain,
prohibit,  or obtain  substantial  damages in respect of, this  Agreement or the
consummation of the transactions contemplated by this Agreement.

     (e)  Proceedings  and Documents.  All  proceedings  in connection  with the
transactions  contemplated hereby and all documents and instruments  incident to
such transactions shall be satisfactory in substance and form to the Company and
the Company shall have received all such  counterpart  originals or certified or
other copies of such documents as the Company may reasonably request.

     4.3 Securities  Law  Disclosure;  Publicity.  The Company shall (a) by 9:00
a.m.  (New York City time) on the business day  immediately  following  the date
hereof,  issue a press release disclosing the material terms of the transactions
contemplated  hereby and (b) issue a Current  Report on Form 8-K  disclosing the
material  terms of the  transactions  contemplated  hereby,  and  including  the
Transaction Documents as exhibits thereto,  within the time required by the 1934
Act. From and after the issuance of such press release,  the Company  represents
to the Investor  that the Company  shall have  publicly  disclosed all material,
non-public  information  delivered  to the Investor by the Company or any of its
subsidiaries,  or any of their  respective  officers,  directors,  employees  or
agents in  connection  with the  transactions  contemplated  by the  Transaction
Documents.  The  Company  shall  afford  the  Investor  and its  counsel  with a
reasonable  opportunity  to review and  comment  upon,  shall  consult  with the
Investor  and its  counsel  on the form and  substance  of,  and shall  give due
consideration  to all such  comments  from the  Investor  or its counsel on, any
press release,  Commission  filing or any other public  disclosure made by or on
behalf of the Company relating to the Investor,  its purchases  hereunder or any
aspect of the Transaction  Documents or the transactions  contemplated  thereby,
prior to the issuance, filing or public disclosure thereof. For the avoidance of
doubt,  the  Company  shall  not be  required  to  submit  for  review  any such
disclosure  contained in periodic  reports filed with the  Commission  under the
Exchange Act if it shall have previously provided the same disclosure for review
in connection with a previous filing.

     4.4 Legends.  The  Securities  may only be disposed of in  compliance  with
state and federal securities laws. In connection with any transfer of Securities
other than  pursuant  to an  effective  registration  statement  or Rule 144 (as
defined  below),  to  the  Company  or to an  affiliate  of the  Investor  or in
connection  with a pledge,  the Company may  require the  transferor  thereof to
provide to the  Company an opinion of counsel  selected  by the  transferor  and
reasonably  acceptable  to the Company,  the form and substance of which opinion
shall be  reasonably  satisfactory  to the  Company,  to the  effect  that  such
transfer does not require registration of such transferred  Securities under the
1933 Act. The Investor  understands  that the  certificate  or other  instrument
representing  the Note and, the stock  certificates  representing the Conversion
Shares,  except as set forth  below,  shall  bear any  legends  as  required  by
applicable  state  securities  or "Blue Sky" laws in addition  to a  restrictive

                                       3
<PAGE>
legend in  substantially  the following form (and a  stop-transfer  order may be
placed against transfer of such stock certificates):

          NEITHER THE ISSUANCE AND SALE OF THE  SECURITIES  REPRESENTED  BY THIS
     CERTIFICATE   NOR  THE   SECURITIES   INTO  WHICH  THESE   SECURITIES   ARE
     [CONVERTIBLE]  HAVE BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS
     AMENDED,  OR APPLICABLE  STATE  SECURITIES  LAWS. THE SECURITIES MAY NOT BE
     OFFERED FOR SALE,  SOLD,  TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
     AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
     ACT OF 1933,  AS  AMENDED,  OR (B) AN  OPINION OF COUNSEL TO THE HOLDER (IF
     REQUESTED BY THE COMPANY),  IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
     THAT  REGISTRATION  IS NOT  REQUIRED  UNDER SAID ACT OR (II) UNLESS SOLD OR
     ELIGIBLE  TO BE SOLD  PURSUANT  TO RULE 144 OR RULE  144A  UNDER  SAID ACT.
     NOTWITHSTANDING THE FOREGOING,  THE SECURITIES MAY BE PLEDGED IN CONNECTION
     WITH A BONA FIDE  MARGIN  ACCOUNT  OR OTHER LOAN OR  FINANCING  ARRANGEMENT
     SECURED BY THE SECURITIES.

     The Company  shall use its  reasonable  best  efforts to cause its transfer
agent to remove the legend set forth  above and to issue a  certificate  without
such  legend to the holder of the  Securities  upon which it is  stamped,  or to
issue to such holder by electronic delivery at the applicable balance account at
the  Depository  Trust  Company  ("DTC"),  unless  otherwise  required  by state
securities  or  "blue  sky"  laws,  at such  time  as (i)  such  Securities  are
registered  for  resale  under the 1933  Act,  (ii) in  connection  with a sale,
assignment or other  transfer,  such holder provides the Company with an opinion
of counsel,  in a form generally  acceptable to the Company's legal counsel,  to
the effect that such sale,  assignment or transfer of the Securities may be made
without  registration  under the 1933 Act,  or (iii) such  holder  provides  the
Company and its legal  counsel  with  reasonable  assurance  in writing that the
Securities  can be sold,  assigned or  transferred  pursuant to Rule 144 or Rule
144A. In furtherance of the  foregoing,  the Company agrees that,  following the
Effective  Date or at such time as such legend is not required  pursuant to this
Section 4.4, the Company  shall,  no later than five Trading Days  following the
delivery by the  Investor to the Company or the  Company's  transfer  agent of a
certificate  representing  Conversion  Shares issued with a  restrictive  legend
(such third  Trading  Day, the "LEGEND  REMOVAL  Date"),  either:  (A) issue and
deliver  (or cause to be issued and  delivered)  to the  Investor a  certificate
representing  such Conversion Shares that is free from all restrictive and other
legends or (B) cause the Company's  transfer  agent to credit the  Investor's or
its designee's account at DTC through its Deposit/Withdrawal at Custodian (DWAC)
system with a number of shares of Common Stock equal to the number of Conversion
Shares  represented  by the  certificate  so delivered by the  Investor.  If the
Company  fails on or prior to the  Legend  Removal  Date to either (i) issue and
deliver  (or cause to be issued and  delivered)  to the  Investor a  certificate
representing  the Conversion  Shares that is free from all restrictive and other
legends or (ii) cause the Company's transfer agent to credit the balance account
of the  Investor  or its  designee  at DTC  through  its  Deposit/Withdrawal  at
Custodian  (DWAC)  system  with a number of shares of Common  Stock equal to the
number of Conversion  Shares  represented  by the  certificate  delivered by the
Investor pursuant hereto,  then, in addition to all other remedies  available to
the Investor (but without  duplication of the remedies  provided in Section 8 of

                                       4
<PAGE>
this Agreement), the Company shall pay in cash to the Investor on each day after
the Legend Removal Date that the issuance or credit of such shares is not timely
effected an amount  equal to 2.0% of the product of (A) the sum of the number of
Conversion  Shares not issued to the Investor on a timely basis and to which the
Investor  is  entitled  and (B)  the  VWAP  for  the  five  Trading  Day  period
immediately preceding the Legend Removal Date. In addition to the foregoing,  if
the Company  fails to so properly  deliver such  unlegended  certificates  or so
properly credit the account of the Investor or its designee at DTC by the Legend
Removal Date, and if on or after the Legend Removal Date the Investor  purchases
(in an open market  transaction or otherwise)  shares of Common Stock to deliver
in  satisfaction  of a sale by the  Investor of shares of Common  Stock that the
Investor anticipated  receiving from the Company without any restrictive legend,
then the Company shall,  within three Trading Days after the Investor's request,
pay cash to the Investor in an amount  equal to the  Investor's  total  purchase
price (including brokerage  commissions,  if any) for the shares of Common Stock
so purchased,  at which point the Company's  obligation to deliver a certificate
or credit the  Investor's  or its  designee's  account at DTC for such shares of
Common Stock shall terminate and such shares shall be cancelled.

     5.  Representations  and Warranties of the Company.  Except as set forth in
the Disclosure  Schedules,  which  Disclosure  Schedules  shall be deemed a part
hereof and shall  qualify any  representation  or  otherwise  made herein to the
extent  of  the  disclosure  contained  in  the  corresponding  section  of  the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to the Investors:

     5.1  Organization,  Good  Standing  and  Qualification.  The  Company  is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada.  The Company is duly qualified to transact  business and
is in good  standing  in each  jurisdiction  in which the  failure to so qualify
would have a Material Adverse Effect.

     5.2  Capitalization  and Voting Rights. The authorized capital stock of the
Company and the shares thereof issued and  outstanding  were as set forth in the
Public Reports as of the dates reflected therein.  All of the outstanding shares
of Common Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. Except as set forth in the Public Reports, this Agreement and
the Registration Rights Agreement, there are no agreements or arrangements under
which the Company is obligated to register the sale of any securities  under the
Securities Act.  Except as set forth in the Public Reports,  no shares of Common
Stock are  entitled  to  preemptive  rights  and there are no  outstanding  debt
securities and no contracts,  commitments,  understandings,  or  arrangements by
which the  Company  is or may  become  bound to issue  additional  shares of the
capital stock of the Company or options,  warrants,  scrip,  rights to subscribe
to, calls or commitments of any character  whatsoever relating to, or securities
or rights  convertible into or exchangeable  for, any shares of capital stock of
the  Company  other than  those  issued or  granted  in the  ordinary  course of
business pursuant to the Company's equity incentive and/or compensatory plans or
arrangements. Except for customary transfer restrictions contained in agreements
entered into by the Company to sell restricted securities or as set forth in the
Public  Reports,  the Company is not a party to, and it has no knowledge of, any
agreement  restricting the voting or transfer of any shares of the capital stock
of the Company. Except as set forth in the Public Reports, the offer and sale of
all capital stock, convertible or exchangeable  securities,  rights, warrants or
options of the  Company  issued  prior to the  Closing  Date  complied  with all
applicable  federal and state  securities laws, and no stockholder has any right

                                       5
<PAGE>
of rescission or damages or any "put" or similar right with respect thereto that
would have a Material Adverse Effect. Except as set forth in the Public Reports,
there are no  securities  or  instruments  containing  anti-dilution  or similar
provisions   that  will  be  triggered  by  the  Note,  this  Agreement  or  the
Registration Rights Agreement or the consummation of the transactions  described
herein or therein.

     5.3  Authorization;  Enforcement.  All corporate  action on the part of the
Company,   its   officers,   directors  and   stockholders   necessary  for  the
authorization,   execution  and  delivery  of  this  Agreement,  the  Note,  the
Registration Rights Agreement (the "TRANSACTION  DOCUMENTS") and the performance
of  all  obligations  of  the  Company   hereunder  and   thereunder,   and  the
authorization (or reservation for issuance),  sale and issuance of the Note, and
the Common Stock into which the Note is  convertible or  exercisable,  have been
taken on or prior to the date hereof. Each of the Transaction Documents has been
duly  executed by the Company and, when  delivered in accordance  with the terms
hereof and thereof,  will  constitute  the valid and binding  obligation  of the
Company  enforceable  against the Company in accordance with its terms,  except:
(i) as  limited by  general  equitable  principles  and  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  and other laws of general  application
affecting  enforcement of creditors' rights  generally,  (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable  remedies  and  (iii)  insofar  as  indemnification  and  contribution
provisions may be limited by applicable law.

     5.4 Valid Issuance of the  Conversion  Shares;  Reservation of Shares.  The
Note is duly  authorized  and, when issued and paid for in accordance  with this
Agreement,  will be duly and validly issued,  fully paid and nonassessable,  and
free and clear of all Liens  imposed by the Company other than  restrictions  on
transfer under this Agreement and under applicable state and federal  securities
laws.  The  Conversion  Shares when issued and delivered in accordance  with the
terms of this Agreement and the Note for the consideration  expressed herein and
therein, will be duly and validly issued, fully paid and non-assessable and free
and clear of all  Liens  imposed  by the  Company  other  than  restrictions  on
transfer under this Agreement and under applicable state and federal  securities
laws.  The  Company  has  reserved  from its  duly  authorized  capital  stock a
sufficient  number  of shares of Common  Stock for  issuance  of the  Conversion
Shares.

     5.5  Offering.  Subject  to  the  truth  and  accuracy  of  the  Investor's
representations set forth in Section 6 of this Agreement, the offer and issuance
of the Note,  together  with the  Conversion  Shares,  as  contemplated  by this
Agreement are exempt from the registration requirements of the Securities Act of
1933,  as amended  (the  "1933  Act"),  and the  qualification  or  registration
requirements of state securities laws or other applicable blue sky laws. Neither
the Company nor any  authorized  agent acting on its behalf will take any action
hereafter that would cause the loss of such exemptions.

     5.6 Public Reports.  The Company is current in its filing obligations under
the 1934 Act,  including without  limitation as to its filings of Annual Reports
on Form 10-K,  Quarterly  Reports on Form 10-Q and  Current  Reports on Form 8-K
(collectively,  the  "PUBLIC  REPORTS").  The Public  Reports do not contain any
untrue  statement of a material fact or omit to state any fact necessary to make
any statement therein not misleading.  The financial  statements included within
the Public  Reports  for the fiscal  year ended  January  31,  2013 and for each
quarterly period  thereafter (the "FINANCIAL  STATEMENTS") have been prepared in

                                       6
<PAGE>
accordance  with generally  accepted  accounting  principles  ("GAAP")  applied,
except as  indicated  therein,  on a  consistent  basis  throughout  the periods
indicated and with each other,  and except that unaudited  Financial  Statements
may  not  contain  all  footnote  required  by  generally  accepted   accounting
principles.  The Financial  Statements fairly present, in all material respects,
the financial  condition  and operating  results of the Company as of the dates,
and for  the  periods,  indicated  therein,  subject  in the  case of  unaudited
Financial Statements to normal year-end audit adjustments.

     5.7  Compliance  With Laws.  The  Company has not  violated  any law or any
governmental  regulation  or  requirement  which  violation  has  had  or  would
reasonably be expected to have a Material Adverse Effect on its business and the
Company has not received written notice of any such violation.

     5.8 Violations.  The consummation of the  transactions  contemplated by the
Transaction  Documents and all other  documents and  instruments  required to be
delivered in connection  therewith  will not result in or constitute  any of the
following: (a) a violation of any provision of the certificate of incorporation,
bylaws or other  governing  documents  of the  Company;  (b) a violation  of any
provisions  of any  applicable  law or of any  writ or  decree  of any  court or
governmental  instrumentality;  (c) a default or an event  that,  with notice or
lapse of time or both,  would be a default,  breach,  or  violation  of a lease,
license,  promissory note,  conditional sales contract,  commitment,  indenture,
mortgage, deed of trust, or other agreement, instrument, or arrangement to which
the Company is a party or by which the Company or its property is bound;  (d) an
event that would permit any party to terminate  any  agreement or to  accelerate
the maturity of any indebtedness or other obligation of the Company;  or (e) the
creation or imposition of any lien, pledge, option, security agreement,  equity,
claim,  charge,  encumbrance  or other  restriction or limitation on the capital
stock or on any of the properties or assets of the Company.

     5.9 Consents;  Waivers.  No consent,  waiver,  approval or authority of any
nature,  or other formal  action,  by any person,  firm or  corporation,  or any
agency,  bureau or department of any government or any subdivision  thereof, not
already  obtained,  is required in connection with the execution and delivery of
the Transaction  Documents by the Company or the  consummation by the Company of
the transactions provided for herein and therein.

     5.10 Sarbanes-Oxley Act. The Company is in material compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the  date  hereof,  and any  and  all  applicable  rules  and  regulations
promulgated  by the  Commission  thereunder  that are  effective  as of the date
hereof.

     5.11 Absence of Litigation.  There is no action, suit, proceeding,  inquiry
or  investigation  before or by any  court,  public  board,  government  agency,
self-regulatory  organization  or  body  pending  or,  to the  knowledge  of the
Company, threatened against or affecting the Company, the Common Stock or any of
the Company's officers or directors in their capacities as such.

     5.12 Material  Changes;  Undisclosed  Events,  Liabilities or Developments.
Since the date of the latest audited  financial  statements  included within the
Public Reports,  except as specifically  disclosed in a subsequent Public Report
filed  prior to the date  hereof:  (i) there has been no  event,  occurrence  or

                                       7
<PAGE>
development  that has had or that could  reasonably  be  expected to result in a
Material  Adverse  Effect,  (ii) the Company has not  incurred  any  liabilities
(contingent  or otherwise)  other than (A) trade  payables and accrued  expenses
incurred in the ordinary  course of business  consistent  with past practice and
(B)  liabilities  not  required  to be  reflected  in  the  Company's  financial
statements  pursuant to GAAP or disclosed  in filings made with the  Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has
not declared or made any dividend or  distribution  of cash or other property to
its  stockholders  or purchased,  redeemed or made any agreements to purchase or
redeem any shares of its  capital  stock and (v) the  Company has not issued any
equity  securities  to any officer,  director or affiliate,  except  pursuant to
existing Company stock option plans (including  equity  compensation  agreements
that are issued  outside a plan).  The Company does not have pending  before the
Commission any request for confidential treatment of information. Except for the
issuance of the Securities  contemplated by this Agreement, no event, liability,
fact,  circumstance,  occurrence  or  development  has  occurred or exists or is
reasonably  expected  to occur or  exist  with  respect  to the  Company  or its
Subsidiaries or their respective businesses,  properties,  operations, assets or
financial condition, that would be required to be disclosed by the Company under
applicable  securities  laws at the time this  representation  is made or deemed
made that has not been publicly  disclosed at least one Trading Day prior to the
date that this representation is made.

     5.13 Intellectual  Property.  Each of the Company and its Subsidiaries has,
or has rights to use, all patents,  patent applications,  trademarks,  trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual  property rights and similar rights as described
in the Public Reports as necessary or required for use in connection  with their
respective  businesses  and which the  failure  to so have could have a Material
Adverse Effect (collectively,  the "INTELLECTUAL PROPERTY RIGHTS").  Neither the
Company nor its  Subsidiaries  has received a notice (written or otherwise) that
any of,  the  Intellectual  Property  Rights  has  expired,  terminated  or been
abandoned, or is expected to expire or terminate or be abandoned, within two (2)
years from the date of this Agreement.  The Company has not received,  since the
date of the  latest  audited  financial  statements  included  within the Public
Reports,  a written  notice of a claim or otherwise has any  knowledge  that the
Intellectual  Property Rights violate or infringe upon the rights of any Person,
except  as could  not have or  reasonably  be  expected  to not have a  Material
Adverse Effect. To the knowledge of the Company, all such Intellectual  Property
Rights are enforceable  and there is no existing  infringement by another Person
of any of the  Intellectual  Property  Rights.  The Company has taken reasonable
security  measures to protect the secrecy,  confidentiality  and value of all of
their  intellectual  properties,  except  where  failure  to  do so  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

     5.14  Registration  Rights.  Other than the Investor or as set forth in the
Public  Reports,  no person  has any right to cause the  Company  to effect  the
registration under the 1933 Act of any securities of the Company.

     5.15  Disclosure.  Except with respect to the material terms and conditions
of the  transactions  contemplated  by the  Transaction  Documents,  the Company
confirms  that neither it nor any other Person acting on its behalf has provided
the  Investor  or its agents or counsel  with any  information  that it believes
constitutes or might constitute material,  non-public  information.  The Company

                                       8
<PAGE>
understands   and  confirms  that  the  Investor  will  rely  on  the  foregoing
representation  in effecting  transactions in securities of the Company.  All of
the  disclosure  furnished  by or on  behalf  of the  Company  to  the  Investor
regarding the Company and its Subsidiaries,  their respective businesses and the
transactions  contemplated  hereby,  including the Disclosure  Schedules to this
Agreement,  does not contain any untrue  statement of a material fact or omit to
state any material fact necessary in order to make the statements  made therein,
in light of the  circumstances  under which they were made, not misleading.  The
press releases  disseminated  by the Company during the twelve months  preceding
the date of this Agreement taken as a whole do not contain any untrue  statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein or necessary in order to make the  statements  therein,  in light of the
circumstances  under  which they were made and when made,  not  misleading.  The
Company acknowledges and agrees that the Investor does not make nor has made any
representations  or  warranties  with respect to the  transactions  contemplated
hereby other than those specifically set forth in Section 6 hereof.

     5.16 No  Integrated  Offering.  Assuming  the  accuracy  of the  Investor's
representations and warranties set forth in Section 6, neither the Company,  nor
any of its  affiliates,  nor any  Person  acting  on its or  their  behalf  has,
directly or  indirectly,  made any offers or sales of any  security or solicited
any  offers to buy any  security,  under  circumstances  that  would  cause this
offering of the Securities to be integrated  with prior offerings by the Company
for  purposes of (i) the 1933 Act which would  require the  registration  of any
such securities under the 1933 Act, or (ii) any applicable  shareholder approval
provisions of any Trading  Market on which any of the  securities of the Company
are listed or designated.

     5.17  Seniority.  As of the Closing  Date, no  Indebtedness  or other claim
against  the  Company is senior to the Note in right of  payment,  whether  with
respect to interest or upon liquidation or dissolution, or otherwise, other than
indebtedness  secured by purchase money security interests (which is senior only
as to underlying assets covered thereby) and capital lease obligations (which is
senior only as to the property covered thereby).

     5.18 Bankruptcy Status; Indebtedness.  The Company has no current intention
or expectation to file for reorganization or liquidation under the bankruptcy or
reorganization  laws of any jurisdiction  within one year from the Closing Date.
Schedule  5.18 sets forth as of the date  hereof  all  outstanding  secured  and
unsecured  Indebtedness (as defined below) of the Company or any Subsidiary,  or
for which the Company or any  Subsidiary  has  commitments.  For the purposes of
this Agreement,  "INDEBTEDNESS"  means (x) any liabilities for borrowed money or
amounts owed in excess of $100,000 (other than trade accounts  payable  incurred
in the ordinary course of business), (y) all guaranties,  endorsements and other
contingent  obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Company's  consolidated balance sheet (or
the notes thereto),  except guaranties by endorsement of negotiable  instruments
for deposit or  collection  or similar  transactions  in the ordinary  course of
business;  and (z) the present value of any lease payments in excess of $100,000
due under leases required to be capitalized in accordance with GAAP. The Company
is not in default with respect to any Indebtedness.

     5.19 Regulation M Compliance.  The Company has not, and to its knowledge no
one acting on its behalf  has,  (i) taken,  directly or  indirectly,  any action
designed to cause or to result in the stabilization or manipulation of the price
of any  security of the Company to  facilitate  the sale or resale of any of the

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<PAGE>
Securities,  (ii)  sold,  bid  for,  purchased,  or paid  any  compensation  for
soliciting  purchases of, any of the Securities,  or (iii) paid or agreed to pay
to any Person any  compensation  for  soliciting  another to purchase  any other
securities  of the Company,  other than,  in the case of clauses (ii) and (iii),
compensation  paid to the  Company's  placement  agent  in  connection  with the
placement of the Securities.

     5.20  No  Disqualification   Events.  None  of  the  Company,  any  of  its
predecessors,  any affiliated  issuer, any director,  executive  officer,  other
officer of the Company  participating in the offering  contemplated  hereby, any
beneficial  owner  of 20% or more of the  Company's  outstanding  voting  equity
securities,  calculated on the basis of voting power,  nor any promoter (as that
term is defined in Rule 405 under the 1933 Act)  connected  with the  Company in
any capacity at the time of sale (each, an "ISSUER  COVERED  PERSON") is subject
to any of the "Bad Actor"  disqualifications  described in Rule  506(d)(1)(i) to
(viii)  under  the  1933  Act  (a  "DISQUALIFICATION   EVENT"),   except  for  a
Disqualification  Event covered by Rule  506(d)(2) or (d)(3) under the 1933 Act.
The  Company  has  exercised  reasonable  care to  determine  whether any Issuer
Covered Person is subject to a Disqualification Event.

     6.  Representations  and  Warranties of the Investor.  The Investor  hereby
represents, warrants and covenants that:

     6.1 Authorization.  The Investor has full power and authority to enter into
this  Agreement,  to perform its  obligations  hereunder and to  consummate  the
transactions contemplated hereby and has taken all action necessary to authorize
the  execution  and  delivery  of this  Agreement  and the  Registration  Rights
Agreement,  the performance of its obligations  hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby.

     6.2 No Public Sale or Distribution.  The Investor is (i) acquiring the Note
and (ii) upon conversion of the Note will acquire the Conversion  Shares for its
own  account,  not as a nominee or agent,  and not with a view  towards,  or for
resale in connection  with, the public sale or distribution of any part thereof,
except pursuant to sales registered or exempted under the 1933 Act. The Investor
is acquiring the  Securities  hereunder in the ordinary  course of its business.
The Investor  does not  presently  have any  contract,  agreement,  undertaking,
arrangement or  understanding,  directly or indirectly,  with any individual,  a
limited liability  company,  a partnership,  a joint venture,  a corporation,  a
trust,  an  unincorporated  organization  and a government or any  department or
agency  thereof (a  "PERSON")  to sell,  transfer,  pledge,  assign or otherwise
distribute any of the Securities.

     6.3 Accredited Investor Status;  Investment Experience.  The Investor is an
"accredited  investor" as that term is defined in Rule 501(a) of  Regulation  D.
The Investor can bear the economic risk of its investment in the Securities, and
has such knowledge and  experience in financial and business  matters that it is
capable of evaluating the merits and risks of an investment in the Securities.

     6.4 Reliance on Exemptions.  The Investor  understands  that the Securities
are being  offered and sold to it in reliance  on specific  exemptions  from the
registration requirements of United States federal and state securities laws and
that the  Company  is relying  in part upon the truth and  accuracy  of, and the
Investor's  compliance  with,  the  representations,   warranties,   agreements,

                                       10
<PAGE>
acknowledgments  and understandings of the Investor set forth herein in order to
determine  the  availability  of  such  exemptions  and the  eligibility  of the
Investor to acquire the Securities.

     6.5 Information. The Investor and its advisors, if any, have been furnished
with all  materials  relating to the  business,  finances and  operations of the
Company and  materials  relating to the offer and sale of the  Securities  which
have been requested by the Investor. The Investor and its advisors, if any, have
been  afforded the  opportunity  to ask  questions of the Company.  Neither such
inquiries nor any other due diligence  investigations  conducted by the Investor
or its advisors,  if any, or its representatives  shall modify,  amend or affect
the  Investor's  right to rely on the Company's  representations  and warranties
contained herein. The Investor understands that its investment in the Securities
involves a high degree of risk. The Investor has sought such  accounting,  legal
and tax advice as it has  considered  necessary  to make an informed  investment
decision  with respect to its  acquisition  of the  Securities.  The Investor is
relying  solely on its own  accounting,  legal and tax advisors,  and not on any
statements  of the  Company  or any of its agents or  representatives,  for such
accounting,  legal  and  tax  advice  with  respect  to its  acquisition  of the
Securities and the transactions contemplated by this Agreement.

     6.6 No Governmental  Review. The Investor understands that no United States
federal  or state  agency or any other  government  or  governmental  agency has
passed on or made any  recommendation  or  endorsement  of the Securities or the
fairness  or  suitability  of the  investment  in the  Securities  nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

     6.7  Validity;   Enforcement;   No  Conflicts.   This  Agreement  and  each
Transaction Document to which the Investor is a party have been duly and validly
authorized,  executed  and  delivered  on  behalf  of  the  Investor  and  shall
constitute the legal, valid and binding obligations of the Investor  enforceable
against the Investor in accordance with their respective  terms,  except as such
enforceability  may be limited by general  principles of equity or to applicable
bankruptcy,  insolvency,  reorganization,   moratorium,  liquidation  and  other
similar laws relating to, or affecting generally,  the enforcement of applicable
creditors' rights and remedies.  The execution,  delivery and performance by the
Investor of this Agreement and each  Transaction  Document to which the Investor
is a party and the consummation by the Investor of the transactions contemplated
hereby and  thereby  will not (i) result in a  violation  of the  organizational
documents of the Investor or (ii) conflict  with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of, any agreement, indenture or instrument to which the Investor is
a party,  or (iii) result in a violation of any law,  rule,  regulation,  order,
judgment or decree  (including  federal and state securities or "Blue Sky" laws)
applicable  to the Investor,  except in the case of clause (ii) above,  for such
conflicts, defaults or rights which would not, individually or in the aggregate,
reasonably be expected to have a material  adverse  effect on the ability of the
Investor to perform its obligations hereunder.

     6.8 Organization and Standing.  The Investor is a limited liability company
duly  organized,  validly  existing and in good  standing  under the laws of the
State of New York.

                                       11
<PAGE>
     7. Use of Proceeds. The Investor acknowledges that the Company will use the
proceeds  received from the purchase of the Note for,  among other  things,  (i)
costs and  expenses  relating to the sale of the Note to the  Investor  and (ii)
general working capital purposes.

     8. Rule 144  Availability;  Public  Information.  At all times  during  the
period  commencing  on the six (6) month  anniversary  of the  Closing  Date and
ending  at  such  time  that  all of the  Securities  can be  sold  without  the
requirement  to be in  compliance  with  Rule  144(c)(1)  under the 1933 Act and
otherwise without  restriction or limitation pursuant to Rule 144 under the 1933
Act,  the  Company  shall  use  its  reasonable   best  efforts  to  ensure  the
availability  of Rule 144 under the 1933 Act to the Investor  with regard to the
Conversion Shares,  including compliance with Rule 144(c)(1) under the 1933 Act.
If,  (i) at any  time  during  the  period  commencing  from  the six (6)  month
anniversary  of the  Closing  Date and  ending on the first  anniversary  of the
Closing  Date,  the  Company  shall fail for any reason to satisfy  the  current
public  information  requirement under Rule 144(c) under the 1933 Act (a "PUBLIC
INFORMATION FAILURE"),  or (ii) the Company shall fail to take such action as is
reasonably  requested  by the  Investor  to  enable  the  Investor  to sell  the
Conversion  Shares pursuant to Rule 144 under the 1933 Act  (including,  without
limitation,   delivering  all  such  legal  opinions,  consents,   certificates,
resolutions  and  instructions  to  the  Company's  transfer  agent  as  may  be
reasonably  requested  from time to time by the  Investor  and  otherwise  fully
cooperate with Investor and Investor's  broker to effect such sale of securities
pursuant to Rule 144 under the 1933 Act),  then,  in either case, in addition to
the Investor's other available remedies (but without duplication of the remedies
provided in Section 4.4 of this Agreement), the Company shall pay to a Investor,
in cash, as liquidated damages and not as a penalty, by reason of any such delay
in or reduction of its ability to sell the  Securities,  an amount in cash equal
to two  percent  (2.0%)  of  the  aggregate  Purchase  Price  of the  Investor's
Securities on the day of a Public  Information  Failure or Process  Failure,  as
applicable,  and on every thirtieth  (30th) day (pro rated for periods  totaling
less than thirty days)  thereafter  until (a) in the case of a Process  Failure,
the  date  such  Process  Failure  is  cured,  or (b) in the  case  of a  Public
Information Failure, the earlier of (1) the date such Public Information Failure
is cured and (b) such time that such public  information  is no longer  required
for the Investor to transfer the  Conversion  Shares  pursuant to Rule 144 under
the 1933 Act. The payments to which the Investor  shall be entitled  pursuant to
this Section 8 are referred to herein as "RULE 144 FAILURE  PAYMENTS."  Rule 144
Failure  Payments  shall  be paid on the  earlier  of (i)  the  last  day of the
calendar month during which such Rule 144 Failure Payments are incurred and (ii)
the third (3rd)  Trading Day after the event or failure  giving rise to the Rule
144 Failure Payments is cured.

     9.  Indemnification.  The  Company  agrees  to  indemnify,  hold  harmless,
reimburse  and  defend  the  Investor,  and  its  officers,  directors,  agents,
affiliates,  members,  managers,  control persons,  and principal  shareholders,
against  any  claim,  cost,  expense,  liability,  obligation,  loss  or  damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Investor or any such person  which  results,  arises out of or is based upon (i)
any material  misrepresentation  by Company or breach of any  representation  or
warranty by Company in this  Agreement or in any exhibits or schedules  attached
hereto,  or  other  agreement  delivered  pursuant  hereto;  or (ii)  after  any
applicable  notice and/or cure periods,  any breach or default in performance by
the  Company of any  covenant  or  undertaking  to be  performed  by the Company
hereunder,  or any other agreement  entered into by the Company and the Investor
relating hereto.  Notwithstanding  anything herein to the contrary,  in no event
shall the Company be liable to the Investor (in the aggregate) for more than the
Purchase Price paid by the Investor.

                                       12
<PAGE>
     10. Miscellaneous

     10.1 Successors and Assigns. Except as otherwise provided herein, the terms
and  conditions of this  Agreement  shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of the Securities).  Nothing in this Agreement,  express or implied, is intended
to confer  upon any party,  other than the  parties  hereto or their  respective
successors and assigns, any rights,  remedies,  obligations or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

     10.2 Governing Law; Jurisdiction;  Jury Trial. All questions concerning the
construction,  validity,  enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law  provision or rule (whether of the State
of New York or any other  jurisdictions) that would cause the application of the
laws of any  jurisdictions  other than the State of New York.  Each party hereby
irrevocably  submits  to the  exclusive  jurisdiction  of the state and  federal
courts  sitting  in  The  City  of New  York,  Borough  of  Manhattan,  for  the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed  herein,  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit, action or proceeding is brought in an inconvenient  forum or that the
venue of such  suit,  action  or  proceeding  is  improper.  Each  party  hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any such suit,  action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner  permitted by law. EACH PARTY HEREBY  IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE,  AND AGREES NOT TO  REQUEST,  A JURY TRIAL FOR THE
ADJUDICATION  OF ANY DISPUTE  HEREUNDER OR IN CONNECTION  WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     10.3 Titles and Subtitles.  The titles and subtitles used in this Agreement
are used for  convenience  only and are not to be  considered  in  construing or
interpreting this Agreement.

     10.4  Notices.  All notices  required or  permitted  hereunder  shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be  notified,  (b) when sent by  confirmed  telex or  facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day,  (c) five (5)  business  days  after  having  been  sent by  registered  or
certified mail, return receipt  requested,  postage prepaid,  or (d) one (1) day
after deposit with a nationally  recognized  overnight courier,  specifying next
day delivery,  with written verification of receipt. All communications shall be
sent to (a) in the case of the Company,  to Tungsten  Corp.,  1671 Southwest 105
Lane, Davie, Florida 33324, Telephone Number: (954) 476-4638,  Attention:  Chief
Executive  Officer,  or (b) in the case of the Investor,  to Hanover Holdings I,
LLC, a New York limited  liability  company,  c/o Magna Group, 5 Hanover Square,
New York, NY 10004,  Telephone  Number:  (347)  491-4240,  Fax: (646)  737-9948,
Attention:  Marc  Manuel,  with a copy (which  shall not  constitute  notice) to

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<PAGE>
Greenberg  Traurig,  LLP, The MetLife Building,  200 Park Avenue,  New York, New
York 10166,  Telephone  Number (212) 801-9200,  Fax: (212) 801-6400,  Attention:
Anthony J. Marsico, Esq.

     10.5  Finder's  Fees.  Except for fees payable to Garden State  Securities,
each party  represents that it neither is nor will be obligated for any finders'
fee or  commission  in  connection  with this  transaction.  The  Company  shall
indemnify and hold harmless each Investor from any liability for any  commission
or  compensation  in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.

     10.6 Amendments and Waivers.  No provision of this Agreement may be amended
other than by a written  instrument  signed by both parties hereto. No provision
of this Agreement may be waived other than in a written instrument signed by the
party against whom enforcement of such waiver is sought.  No failure or delay 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  exercises thereof or of any other
right, power or privilege.

     10.7 Severability.  If one or more provisions of this Agreement are held to
be  unenforceable  under  applicable  law, such provision shall be excluded from
this Agreement and the balance of the Agreement  shall be interpreted as if such
provision  were so excluded  and shall be  enforceable  in  accordance  with its
terms.

     10.8 Entire Agreement.  This Agreement and the documents referred to herein
constitute the entire  agreement  among the parties and no party shall be liable
or bound to any other party in any manner by any warranties,  representations or
covenants except as specifically set forth herein or therein.

     10.9  Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     10.10 Interpretation. Unless the context of this Agreement clearly requires
otherwise,  (a) references to the plural include the singular,  the singular the
plural,  the part the whole,  (b)  references to any gender include all genders,
(c) "including" has the inclusive meaning frequently  identified with the phrase
"but not limited to" and (d)  references to  "hereunder"  or "herein"  relate to
this Agreement.

     10.11  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law, including  recovery of damages,  the Investor
and the Company will be entitled to specific  performance  under the Transaction
Documents.  The  parties  agree  that  monetary  damages  may  not  be  adequate
compensation  for any loss  incurred  by  reason of any  breach  of  obligations
contained  in the  Transaction  Documents  and hereby  agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

     10.12 Fees and  Expenses.  Each party shall bear its own fees and  expenses
related to the transactions contemplated by the Transaction Documents; provided,

                                       14
<PAGE>
however,  that the Company shall have paid prior to the Closing by wire transfer
of  immediately  available  funds to an account  designated by the  Investor,  a
non-accountable  and  non-refundable   document   preparation  fee  of  $27,500,
exclusive of disbursements and out-of-pocket expenses (the "DOCUMENT PREPARATION
FEE"), in connection with the preparation,  negotiation,  execution and delivery
of the  Transaction  Documents and legal due  diligence of the Company.  For the
avoidance of doubt, the Document Preparation Fee (and any portion thereof) shall
be  non-refundable  when paid.  The Company  shall pay all  transfer  agent fees
(including, without limitation, any fees required for same-day processing of any
instruction  letter  delivered  by the  Company and any  conversion  or exercise
notice  delivered by a Investor),  stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities to the Investor.

     11. Additional Defined Terms. In addition to the terms defined elsewhere in
this  Agreement,  the Note,  the following  terms have the meanings set forth in
this Section 11:

     11.1 "1934 ACT" means the Securities Exchange Act of 1934, as amended,  and
the rules and regulations promulgated thereunder.

     11.2   "COMMISSION"   means  the  United  States  Securities  and  Exchange
Commission.

     11.3  "EFFECTIVE  DATE" means the earliest of the date that (a) the initial
Registration Statement has been declared effective by the Commission, (b) all of
the  Registrable  Securities  have been sold pursuant to Rule 144 or may be sold
pursuant to Rule 144 without the requirement for the Company to be in compliance
with the current public  information  required under Rule 144 and without volume
or manner-of-sale  restrictions or (c) following the one year anniversary of the
Closing  Date  provided  that  a  holder  of  Registrable  Securities  is not an
Affiliate of the Company, all of the Registrable Securities may be sold pursuant
to an exemption  from  registration  under  Section 4(1) of the 1933 Act without
volume or manner-of-sale restrictions.

     11.4 "LIENS" means a lien, charge pledge,  security interest,  encumbrance,
right of first refusal, preemptive right or other restriction.

     11.5 "MATERIAL  ADVERSE EFFECT" means (i) a material  adverse effect on the
legality,  validity  or  enforceability  of  any  Transaction  Document,  (ii) a
material  adverse  effect  on  the  results  of  operations,  assets,  business,
prospects  or  condition  (financial  or  otherwise)  of  the  Company  and  the
Subsidiaries,  taken  as a whole,  or (iii) a  material  adverse  effect  on the
Company's  ability  to  perform in any  material  respect on a timely  basis its
obligations under any Transaction Document.

     11.6  "REGISTRABLE  SECURITIES"  shall  have the  meaning  set forth in the
Registration Rights Agreement.

     11.7 "TRADING DAY" means any day on which the Common Stock is traded on the
Trading  Market,  provided that "TRADING DAY" shall not include any day on which
the Common Stock is  scheduled to trade on the Trading  Market for less than 4.5
hours or any day that the Common  Stock is  suspended  from  trading  during the
final hour of trading on the Trading  Market (or if the Trading  Market does not

                                       15
<PAGE>
designate  in advance the closing  time of trading on the Trading  Market,  then
during the hour ending at 4:00:00  p.m.,  New York City time) unless such day is
otherwise designated as a Trading Day in writing by the Investor.

     11.8 "TRADING  MARKET"  means any of the following  markets or exchanges on
which the Common  Stock is listed or quoted for trading on the date in question:
the OTC Bulletin  Board,  the NASDAQ  Global  Market,  the NASDAQ  Global Select
Market, the NASDAQ Capital Market,  the New York Stock Exchange,  NYSE Arca, the
NYSE MKT,  or the OTCQX  Marketplace  or the OTCQB  Marketplace  operated by OTC
Markets Group Inc. (or any successor to any of the foregoing).

     11.9 "VWAP" means the volume  weighted  average price (the aggregate  sales
price of all trades of Common  Stock  during a Trading  Day divided by the total
number of shares of Common Stock  traded  during such Trading Day) of the Common
Stock during a Trading Day as reported by Bloomberg L.P. using the AQR function.

                       [SIGNATURES ON THE FOLLOWING PAGE]

                                       16
<PAGE>
     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed and delivered as of the date provided above.

                       THE COMPANY

                       TUNGSTEN CORP.

                       By:
                          ------------------------------------------------------
                          Name:
                          Title:

<PAGE>
     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed and delivered as of the date provided above.

                       THE INVESTOR:

                       HANOVER HOLDINGS I, LLC, A NEW YORK LIMITED
                       LIABILITY COMPANY

                       By:
                          ------------------------------------------------------
                          Name:
                          Title:

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