Document:

Exhibit 10.11

    
      

    

    Exhibit
      10.11

     

    MATAMOROS
      LPG MIX PURCHASE AND SALES AGREEMENT

     

     

    BETWEEN

     

     

    RIO
      VISTA OPERATING PARTNERSHIP L.P. AND P.M.I. TRADING
      LIMITED

     

    
      
        
        

      

      
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    This
      Matamoros LPG Mix Purchase and Sales Agreement (the "Agreement"), made and
      entered into as of April 28th,
      2006,
      by and between Rio Vista Operating Partnership L.P., a corporation organized
      under the laws of the State of Delaware, United States of America, having its
      principal place of business at 820 Gessner Road, Suite 1285, Houston Texas,
      77024, United States of America ("Seller") and P.M.I. Trading Limited, a
      corporation organized under the laws of Ireland, having the administration
      of
      its business and place of address at Av. Marina Nacional No. 329, Torre
      Ejecutiva Piso 20, Col. Huasteca, C.P. 11311, in Mexico City, Mexico ("Buyer")
      (each of Buyer and Seller, "Party" and, collectively, the
      "Parties").

    

    NOW,
      THEREFORE, in
      consideration of the representations, warranties, covenants and agreements
      hereinafter set forth, the Parties hereby agree as follows:

    

    ARTICLE
      I

    DEFINITIONS

    

    1.01
      Definitions. 
      For
      purposes of this Agreement, the following terms shall have the meanings
      indicated below:

    

    "Affiliate"
      shall mean, with respect to any Person, any other Person controlling, controlled
      by, or under common control with such Person;

    

    "Agreement"
      shall mean this Agreement, including all Exhibits attached hereto, as the same
      may be amended, modified or supplemented from time to time;

    

    "Alternative
      Delivery Point" shall mean Seller's terminal located at 902 Chemical Road,
      Port
      of Brownsville, 78521 Texas, United States of America.;

    

    "ASTM"
      shall mean the American Society for Testing and Materials;

    

    "Banking
      Day" shall mean any day on which the banks are open for business in the
      jurisdiction in which payment is to be made;

    

    "Butane"
      shall comply with the specifications set forth by the GPA;

    

    "Buyer's
      Representatives" shall mean Pemex-Gas y Petroquímica Básica's
      personnel
      authorized to supervise the operations described in this Agreement at the
      Delivery Point or at the Alternative Delivery Point;

    

    "DDU"
      shall mean Delivered Duty Unpaid, according to Incoterms 2000;

    

    "Day"
      shall mean a twenty-four (24) hour period, starting at zero hours local
      time in Matamoros on the morning of each calendar day and ending at
      zero
      hours local time in Matamoros on the morning of the following calendar
      day;

    
      
        
        

      

      
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    "Delivery
      Point" shall mean Seller's terminal located at Carr. Sendero Nacional Km. 9,
      desviación Carr. La Rosita-Lucio Blanco Km. 3.4, desviación brecha 22 s/n (a 500
      mts.), Ejido La Gloria, C.P. 87560, Matamoros, Tamaulipas, México;

    

    "FCA"
      shall mean Free Carrier, according to Incoterms 2000;

    

    "Gallon(s)"
      shall mean one (1) U.S. standard gallon of two hundred and thirty one (231)
      cubic inches at sixty degrees Fahrenheit (60°F);

    

    "GPA"
      shall mean the Gas Processors Association;

    

    "Injection
      Point" shall mean Seller's terminal located at 902 Chemical Road, Port of
      Brownsville, Texas, 78521, United States of America;

    

    "Product"
      shall mean the LPG Mix meeting the specification parameters set forth in
Exhibit
      A.

    

    "Mexico"
      shall mean the United Mexican States; 

     

    "MMgal"
      shall mean millions of Gallons;

    

    "Month"
      shall mean a calendar month;

    

    "Person"
      shall mean an individual, partnership, company, firm, trust, joint venture,
      unincorporated organization or government or any department or agency
      thereof;

    

    "PGPB"
      shall mean Pemex-Gas y Petroquímica Básica;

    

    "U.S.
      Dollars" or "U.S.$" shall mean dollars of the United States of
      America;

    

    "U.S."
      shall mean the United States of America.

    
      
        
        

      

      
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    ARTICLE
      II

    PURPOSE;
      TERM

    

    2.01  Purpose.  Seller
      agrees to sell, transfer, convey and deliver to Buyer and Buyer agrees to
      purchase and accept receipt from Seller, of Product in accordance with the
      terms
      and conditions of this Agreement.

    

    2.02  Term.  Unless
      earlier terminated in accordance with this Agreement, the term of this Agreement
      (the "Term") shall commence on May 1st,
      2006
      (the "Effective Date") and end on March 31st,
      2007.

    

    ARTICLE
      III

     

    PRODUCT

    

    3.01  Product
      Specifications.  Product
      shall, at all times, meet the specification parameters set forth in Exhibit
      A.

    

    Seller
      warrants and guarantees that (i) the Product will conform to the specifications
      described in Exhibit
      A
      at the
      time and place of delivery; (ii) that Seller has free and clear title to the
      Product sold hereunder, and (iii) that the Product shall be delivered to Buyer
      free from security interests, liens or other encumbrances.

    

    3.02  Product
      Quantity.   In
      accordance with the following table:

    

    
      	
              5
                MMgal per Month

              +/-
                10% at Buyer's option

            	
              FROM
                MAY 1st
                THROUGH SEPTEMBER 30th,
                2006.

            
	
              9
                MMgal per Month

              +/-
                10% at Buyer's option

            	
              FROM
                OCTOBER 1st
                THROUGH NOVEMBER 30th,
                2006.

            
	
              10
                MMgal per Month

              +/-
                10% at Buyer's option

            	
              FROM
                DECEMBER 1st
                2006 THROUGH JANUARY 31st,
                2007.

            
	
              9
                MMgal per Month

              +/-
                10% at Buyer's option

            	
              FROM
                FEBRUARY 1st
                THROUGH MARCH 31st,
                2007.

            

    

    

    Ten
      (10)
      Days prior to the beginning of each Month, Buyer shall inform to Seller the
      volume to be delivered on such Month ("Nominated Volume").

    

    3.02.1   Early
      Termination.   If
      this
      Agreement is terminated by either Party prior to the expiration of the Term
      in
      accordance with the terms and conditions of this Agreement, Nominated Volume
      shall be prorated through the termination date on the basis of this Article
      3.02.

    

    3.03   Product
      Quality and Quantity Inspection.   Buyer
      and
      Seller shall appoint an independent inspection company the ("Inspector")
      mutually agreeable to Buyer and Seller to determine quality and quantity of
      the
      Product at the Delivery Point. The Inspector's findings shall be final and
      binding on the Parties
      in the absence of fraud, bad faith or manifest error. Buyer shall pay the gross
      amount of the Inspector's fees, however Seller agrees that Buyer shall monthly
      deduct the amount of U.S.$8,500.00 from amounts due to Seller, such amount
      representing Seller's share of the Inspector's fees.

    
      
        
        

      

      
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    3.03.1   Product
      Quality Inspection.   All
      Product shall be monitored to ensure compliance with the specification
      parameters in Exhibit
      A.
      Determination of quality shall follow the procedures set forth in the latest
      revision of ASTM procedures (the "Compliance Procedures"). A sample of Product
      will be drawn in accordance with the Compliance Procedures (the "Sampling")
      by
      the Inspector at the Delivery Point for approximately every 50,000 Gallons
      injected at the Injection Point. A gas chromatography ("GC") analysis (as
      defined hereunder) shall be performed by the Inspector on the sample in
      accordance with the ASTM D-2163 method to assess the sample's compliance with
      the specification parameters in Exhibit
      A.
      If the
      sample analysis is found to be non-compliant, the entire 50,000 Gallons of
      Product, from which the sample was taken, will be deemed non-compliant (the
      "Non-Compliant Product"), and the Inspector shall immediately notify both
      Parties. All Non- Compliant Product shall be deemed not delivered and Buyer
      shall not be responsible for payment unless both parties agree to receive such
      volumes. Seller shall use its best efforts to dispose of any Non-Compliant
      Product promptly upon notification of its non-compliance by the Inspector and
      shall be responsible for any and all costs and liabilities relating to or
      arising from the Non- Compliant Product. The gas chromatograph utilized shall
      be
      calibrated in accordance with the latest ASTM and GPA procedures.

    

    3.03.2   Product
      Quantity Inspection.   The
      Inspector shall determine the quantity of Product for payment purposes as
      follows:

    

    (a) Each
      empty tank truck shall be weighed on the platform scale at the Delivery
      Point/Alternative Delivery Point, or an alternative independent platform scale
      mutually acceptable to the Parties. Once Product is completely loaded onto
      the
      tank trucks, such tank truck will be weighed at the same platform scale upon
      its
      departure. The weight obtained by the differential between these two
      measurements shall be converted into volume in Gallons and corrected at 60°F in
      accordance with the Compliance Procedures, through the determination of the
      specific gravity through gas chromatograph provided by Seller or by
      Inspector.

    

    (b) Seller's
      terminal platform scale at the Delivery Point/Alternative Delivery Point will
      be
      tested and adjusted for accuracy at least once every six (6) Months. Seller
      will
      be required to comply with the calibration and certification procedures
      adopted by Mexican authorities in accordance with Official Standards
      (NOM-010-SCFI latest version). Buyer's Representatives and Inspector may witness
      the calibration and certification procedures. Seller shall provide Buyer via
      fax
      a copy of the above-mentioned certificates. If Seller's terminal platform scale
      at the Delivery Point/Alternative Delivery Point is used, and/or any claim
      is
      received by Buyer from PGPB, Buyer reserves the following rights: To execute
      evaluation procedures on a random basis sending tank trucks to an independent
      scale to test the accuracy of such scale and recover damages from Seller for
      any
      discrepancy found.

    
      
        
        

      

      
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    (c) If
      Seller's platform scale at the Delivery Point/Alternative Delivery Point is
      not
      suitable for the service due to non- compliance with the above-mentioned
      Official Standards and an independent platform scale is used, the Parties will
      share equally the cost of weighing the tank trucks before and after
      loading.

    

    (d) If
      Seller
      at any time replaces the platform scales at its terminal at the Delivery
      Point/Alternative Delivery Point, such new scales shall be used to weigh all
      tank trucks receiving Product at the Delivery Point/Alternative Delivery Point,
      and shall be operated and maintained in accordance with the above provisions.
      Seller shall be responsible for all costs and expenses associated with such
      new
      scales.

    

    (e) For
      customs and inventory-management purposes, Product pumped through Seller's
      pipeline from the Injection Point to the Delivery Point shall be measured on
      a
      daily basis at the micromotion measurement device installed at the Delivery
      Point. Readings by such device shall be registered by the Inspector, Mexican
      authorities, PGPB's customs broker, Buyer's Representative and Seller's
      representative. A reading of the quantity of Product pumped will be calculated
      on the basis of the differential between the readings taken at 00:00 hrs. and
      the reading taken the previous Day at 00:00 hrs., converted to volume in Gallons
      and corrected at 60°F, through the determination of the specific gravity by
      samples taken at the Delivery Point (at the micromotion measurement device
      installed at the connection point between Seller's pipeline and the Delivery
      Point) for approximately every 50,000 Gallons received at the Delivery Point,
      through GC.

    

    Additionally,
      for verification and customs purposes, Product pumped through Seller's pipeline
      from the Injection Point to the Delivery Point shall be measured on a weekly
      basis every Monday at the micromotion measurement device installed at the
      Delivery Point. Readings by such device shall be witnessed by the Inspector,
      Mexican authorities, PGPB's customs broker Buyer's Representative and Seller's
      representative. A reading of the
      quantity of Product pumped will be calculated on the basis of the differential
      between the current reading and the reading taken the previous Monday at the
      same time converted to volume in Gallons and corrected at 60°F, through the
      determination of the specific gravity by samples taken at the Delivery Point
      (at
      the micromotion measurement device installed at the connection point between
      Seller's pipeline and the Delivery Point) for approximately every 50,000 Gallons
      received at the Delivery Point on the immediate preceding five (5) Days, through
      GC. The Inspector shall take line samples and shall test the batch pumped at
      the
      time of the readings.

    
      
        
        

      

      
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    ARTICLE
      IV

    PRODUCT
      DELIVERY; TRANSFER OF TITLE; CUSTODY

    RISK
      OF LOSS AND CONTAMINATION

    

    4.01   Product
      Delivered at Delivery Point.   Product
      shall be
      delivered DDL) at the Delivery Point. Title of Product shall pass from Seller
      to
      Buyer at the point in the Seller's pipeline where Product passes into México at
      the U.S./México border in Matamoros, Tamaulipas, México. The custody, risk of
      loss and contamination with respect to Product shall pass from Seller to Buyer
      at the moment Product passes the flange connection between the Delivery Point
      hose and the tank trucks provided by Buyer.

    

    4.02   Product
      Delivered at the Alternative Delivery Point.   If,
      by
      any reason of a programmed maintenance at the Delivery Point or Injection Point,
      or an event different from Force Majeure at the Delivery Point, Seller is not
      able to deliver Product at the Delivery Point, Seller shall immediately notify
      Buyer, and Buyer shall have the option of loading Product at the Alternative
      Delivery Point, in which case Buyer shall so notify Seller. The Product shall
      be
      then delivered FCA at the Alternative Delivery Point. Title of Product, as
      well
      as custody, risk of loss and contamination with respect to Product shall pass
      from Seller to Buyer as the Product passes the flange connecting the Seller's
      Alternative Delivery Point with Buyer's tank trucks.

    

    For
      Product delivered at the Alternative Delivery Point, Buyer shall nominate tank
      truck transportation services. Seller shall discount from the sales price,
      the
      Service Fee described in Article 5.01 and 5.02, by an amount equal to the
      transportation costs incurred by Buyer, such transportation costs to be
      determined based on the prevailing market conditions at the time that Buyer
      must
      arrange for transportation and as mutually agreed by the Parties.

    

    In
      the
      event of a Force Majeure condition at the Delivery Point, Buyer shall also
      have
      the option of loading Product at the Alternative Delivery Point. The Parties
      agree that in this event, Seller shall discount from the Product's price
      (including the Service Fee), as set forth in Article 5.01 and 5.02, an amount
      equal to the operational costs of the terminal at the Delivery Point plus costs
      related to the transportation of Product through Seller's pipeline from the
      Alternative Delivery Point to the Delivery Point. Seller shall inform Buyer
      of
      its. calculation
      of the amounts to be discounted, such final discount amount to be mutually
      agreed between the Parties.

    
      
        
        

      

      
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    In
      the
      event Buyer elects not to exercise its option to take delivery at the
      Alternative Delivery Point, Seller shall still be obligated to deliver to Buyer
      the Nominated Volume.

    

    ARTICLE
      V

     

    PRICING;
      INVOICING; PAYMENT TERMS

    

    
      	 	
              5.01

            	
              Price
                of Product; Service Fees.   Product
                pricing shall be calculated monthly in accordance with the Propane
                and
                Butane content of the mix actually received by Buyer. Price shall
                be the
                sum of (i) the average price of Propane multiplied by its actual
                fraction
                and Butane multiplied by its actual fraction during the delivery
                Month as
                published by OPIS (Oil Price Information Service) for Mont Belvieu
                non-TET
                daily spot postings, and (ii) a premium (the "Service Fee") as provided
                in
                Exhibit B; it being understood that in no event shall the Butane
                component
                shall be greater than 10%.

            

    

    

    
      	 	
              5.02

            	
              Price
                of Additional Volume.   the
                Service Fee for additional volume, will be as provided in Exhibit
                B.

            

    

    

    The
      estimated prices (the "Estimated Prices") to be used for interim invoicing
      purposes shall be determined in accordance with Sections 5.01 and 5.02
      (including the Service Fee), except that the price of Product shall be based
      on
      the closing posting price of the Mt. Belvieu non-TET as of the fifth Day prior
      to the delivery Month in which a posting price is published assuming ninety
      percent (90%) of Propane and ten percent (10%) normal Butane. At the end of
      the
      delivery Month, an adjustment shall be made so
      as
      to
      reflect the differences between the Estimated Prices as invoiced and the actual
      Month-end prices as determined in Sections 5.01 and 5.02 (the "True
      Up").

    

    5.03  Invoicing.   Seller
      shall invoice and send Buyer every Friday, the total volume loaded during the
      immediately preceeding week, using the Estimated Prices (the "Estimated
      Invoices"), as set forth under Article 5.01.

    

    The
      Month-End True Up shall be invoiced (the "True Up Invoice") at the end of the
      delivery Month. This True Up invoice shall include (i) the volume delivered
      from
      Seller to Buyer, and (ii) the realized price as per this Section. The True
      Up
      invoice must contain a deduction of US$8,500, representing Seller's payment
      of
      its share of Inspector's fees, as provided under Article 3.03.

    

    All
      invoices shall comply with Buyer's treasury policies and shall be sent in
      original to Buyer's financial contact set forth in the notice provision of
      this Agreement.
      Neither faxed nor copied invoices will be acceptable to Buyer.

    
      
        
        

      

      
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    5.04   Payment
      Terms.   Except
      as
      otherwise agreed in this Agreement, payments shall be made by Buyer in net
      U.S.
      Dollars without set-off, deduction or counterclaim, and by wire transfer to
      Seller's designated account, as follows.

    

    5.04.1  Estimated
      Invoices Payment.   Payment
      of each of the Estimated Invoices shall be made by Buyer ten (10) Days after
      the
      date on which such Estimated Invoices are received by Buyer. In case that
      payment date falls on a Sunday or holiday, then payment date will be the next
      Banking Day. In case that payment date falls on a Saturday, then payment date
      will be the prior Banking Day.

    

    5.04.2  True
      Up Invoice Payment.   Payment
      of any amount due, either from Buyer to Seller or from Seller to Buyer shall
      be
      made in U.S. Dollars within ten (10) Days after receipt of the original invoice.
      In case that payment date falls on a Sunday or holiday, then payment date will
      be the next Banking Day. In case that payment date falls on a Saturday, then
      payment date will be the prior Banking Day.

    

    5.04.3  Other
      Payments.   Except
      as
      provided in Articles 5.04.1 and 5.04.2 above, any amount due from one Party
      to
      the other shall be paid in U.S. Dollars within ten (10) Days after receipt
      of
      the original invoice. In case that payment date falls on a Sunday or holiday,
      then payment date will be the next Banking Day. In case that payment date falls
      on a Saturday, then payment date will be the prior Banking Day.

    

    5.04.4  Office
      Expenses.   Seller
      shall provide Buyer with a list detailing certain expenses which Buyer shall
      be
      liable for and which may include telephone, telefax, cleaning and secretarial
      services, as well as expenses incurred by Buyer's Representatives supervising
      receipt of the Product deliveries at the Delivery Point. Buyer's Representatives
      must approve such detailed list. Seller shall invoice Buyer at the end of the
      Month U.S. $2,500 for such expenses, and Buyer shall pay Seller within twelve
      (12) Days after receipt of the original invoice at Buyer's offices. If payment
      date falls on a weekend or U.S. or Mexican holiday, payment shall be made on
      the
      following Banking Day. Extraordinary expenses shall be mutually agreed by the
      Parties.

    

    5.04.5  Late
      payments.   If
      either
      Party does not make timely payments of any amount due under this Agreement,
      then
      any such late payment shall accrue interest at a rate equal to the Prime Rate
      announced by Citibank N.A., New York, New York, U.S., pro-rated for the number
      of days a payment is late. If either Party, for any reason, disputes an amount
      which is invoiced or claimed to be owed, then such Party shall promptly pay
      the
      undisputed amount to the extent that such amount is undisputed. Buyer
      and
      Seller shall resolve the disputed amount, and a replacement invoice shall be
      issued and payment of the replacement invoice shall be made in accordance with
      Section 5.03. The failure of a Party to object to an invoice within ten (10)
      Days after receipt of the invoice shall de deemed considered a waiver of such
      Party's right to contest the invoiced amount. If a timely objection is raised
      and not resolved within thirty (30) Days thereafter, the dispute may then be
      submitted to the American Arbitration Association through its expedited
      arbitration procedures.

    
      
        
        

      

      
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    ARTICLE
      VI

    REPRESENTATIONS
      AND WARRANTIES

    

    Seller
      hereby represents and warrants to Buyer as follows:

    

    6.01  Organization
      and Qualification.   Seller
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its incorporation and has all requisite corporate
      power and authority to own and operate its assets and properties and to carry
      on
      its business as currently conducted. Seller is duly qualified to do business
      and
      is in good standing as a foreign corporation in each jurisdiction where the
      ownership or operation of its assets and properties or the conduct of its
      business requires such qualification.

    

    6.02  Corporate
      Authorization.   Seller
      has full corporate power and authority to execute and deliver this Agreement,
      and to perform its obligations hereunder. The execution, delivery, and
      performance by Seller of this Agreement have been duly and validly authorized
      and no additional corporate authorization or consent is required in connection
      with the execution, delivery and performance by it of this
      Agreement.

    

    6.03  Consents
      and Approvals.   No
      consent, approval, waiver or authorization is required to be obtained by Seller
      from, and no notice or filing is required to be given by Seller or made by
      Seller with, any federal, state, local or foreign governmental authority or
      other person in connection with the execution, delivery and performance of
      this
      Agreement.

    

    6.04  Non-Contravention.   The
      execution, delivery and performance by Seller of this Agreement, and the
      consummation of the transactions contemplated hereby, do not and will not (i)
      violate any provision of the organizational documents of Seller; (ii) conflict
      with, or result in the breach of, or constitute a default under, or result
      in
      the termination, cancellation or acceleration (whether after the filing of
      notice or the lapse of time or both) of any right or obligation of Seller under,
      or to a loss of any benefit to which Seller is entitled under, any contract;
      or
      (iii) or result in a breach of or constitute a default under any law of any
      court or governmental authority to which Seller is subject.

    
      
        
        

      

      
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    6.05  Binding
      Effect.   This
      Agreement constitutes a valid and legally binding obligation of Seller
      enforceable against Seller in accordance with the terms of this Agreement,
      subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
      of general applicability relating to or affecting creditors' rights and to
      general equity principles.

    

    Buyer
      hereby represents and warrants to Seller as follows:

    

    6A.01  Organization
      and Qualification.   Buyer
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its incorporation and has all requisite corporate
      power and authority to own and operate its assets and properties and to carry
      on
      its business as currently conducted. Buyer is duly qualified to do business
      and
      is in good standing as a foreign corporation in each jurisdiction where the
      ownership or operation of its assets and properties or the conduct of its
      business requires such qualification.

    

    6A.02  Corporate
      Authorization.   Buyer
      has
      full corporate power and authority to execute and deliver this Agreement, and
      to
      perform its obligations hereunder. The execution, delivery and performance
      by
      Buyer of this Agreement have been duly and validly authorized and no additional
      corporate authorization or consent is required in connection with the execution,
      delivery and performance by it of this Agreement.

    

    6A.03  Consents
      and Approvals.   No
      consent, approval, waiver or authorization is required to be obtained by Buyer
      from, and no notice or filing is required to be given by Buyer or made by Buyer
      with, any federal, state, local or foreign governmental authority or other
      person in connection with the execution, delivery and performance of this
      Agreement.

    

    6A.04  Non-Contravention.   The
      execution, delivery and performance by Buyer of this Agreement, and the
      consummation of the transactions contemplated hereby, do not and will not (i)
      violate any provision of the organizational documents of Buyer; (ii) conflict
      with, or result in the breach of, or constitute a default under, or result
      in
      the termination, cancellation or acceleration (whether after the filing of
      notice or the lapse of time or both) of any right or obligation of Buyer under,
      or to a loss of any benefit to which Buyer is entitled under, any contract;
      or
      (iii) or result in a breach of or constitute a default under any law of any
      court or governmental authority to which Buyer is subject.

    

    6A.05  Binding
      Effect.   This
      Agreement constitutes a valid and legally binding obligation of Buyer
      enforceable against Buyer in accordance with the terms of this Agreement,
      subject to bankruptcy, insolvency, reorganization moratorium and similar laws
      of
      general applicability relating to or affecting creditors' rights and to general
      equity principles.

    
      
        
        

      

      
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    ARTICLE
      VII

    TERMINAL-RELATED
      PROVISIONS; REGULATORY COMPLIANCE

    

    7.01  Terminal
      Safety.   Buyer
      will comply, and will cause Buyer's Representatives entering into the Delivery
      Point (or the Alternative Delivery Point, if such is the case) to comply, with
      all applicable terminal safety and health regulations. Seller will furnish
      to
      Buyer prior to accepting any Product at the Delivery Point (or the Alternative
      Delivery Point, if such is the case), all information (including applicable
      material safety data sheets), documents, labels, placards, container, and other
      materials which are required to be furnished pursuant to statutes, ordinances,
      rules or regulations of any public authority relating to the describing,
      packaging, receiving, storing, handling, or shipping of Product at or from
      the
      Delivery Point (or the Alternative Delivery Point, if such is the case). Seller
      shall provide such information on the date of execution of this
      Agreement.

    

    7.02  Loading.   Seller
      will provide loading services at the Delivery Point (or the Alternative Delivery
      Point, if such is the case) seven (7) Days a week, twenty-four (24) hours per
      Day. If the Parties determine that it is not necessary to have personnel 24
      hours a Day based upon operational experience developed on site, hours of
      service shall be subject to availability of Buyer's Representatives to dispatch
      Product from the Delivery Point (or the Alternative Delivery Point, if such
      is
      the case).

    

    Seller
      will provide Buyer, in addition to the Inspector's report, with a daily activity
      report specifying the quantity (weight and volume) and quality of Product
      delivered to Buyer at the Delivery Point (or the Alternative Delivery Point,
      if
      such is the case).

    

    7.03  Spill/Environmental
      Pollution.   If
      any
      Propane and/or Butane or Product spill or other environmental polluting
      discharge occurs in connection with or relating to any Product prior to delivery
      of such Product, all containment and clean-up operations (including those
      required by any governmental authority), shall be at Seller's
      expense.

    

    If
      such
      spill or environmental polluting discharge occurs after delivery at the Delivery
      Point (or the Alternative Delivery Point, is such is the case), Buyer authorizes
      Seller to commence containment or clean-up operations as deemed appropriate
      or
      necessary by Seller or as may be required by any governmental authority. Seller
      will notify Buyer immediately of such operations. Seller shall have the right
      to
      direct all containment and clean-up operations.

    

    All
      costs
      of containment and clean-up for any spill or environmental pollution will be
      borne by the Party responsible for such spill or environmental pollution, and
      such Party shall indemnify and hold harmless the other Party from any and all
      expenses, claims, liabilities, damages, penalties, fines and other costs
      (including, without limitation, attorneys' fees) resulting from or related
      to
      such incident.

    
      
        
        

      

      
        Page
          12 of
          21

        
          

        

      

      
        
        

      

    

    7.04  Terminal
      Regulatory Compliance.   Seller
      warrants that the terminals at the Delivery Point and the Alternative Delivery
      Point, respectively, comply, and covenants that such terminals will comply
      at
      all times during the Term of the Agreement, with all local, state and federal
      laws, rules or regulations applicable to terminals, including without
      limitation, all such laws, rules or regulations concerning permits and insurance
      required for owning, leasing, using, or operating a terminal at the Delivery
      Point or Alternative Delivery Point.

    

    ARTICLE
      VIII

    CHANGE
      OF CIRCUMSTANCES

    

    In
      case
      of issuance of licenses by the Mexican government allowing private companies
      to
      import Product into Mexico, any party shall have the right to notify the other
      party its desire to reduce the quantity stated in this Agreement or its desire
      to terminate this Agreement in advance. The negotiation process shall last
      no
      more than thirty (30) Days. If, by the end of such period, the parties do not
      reach a mutual consent, this Agreement shall be deemed terminated

    

    ARTICLE
      IX

    MISCELLANEOUS

    

    9.01  Notices.   All
      notices or other communications hereunder shall
      be
      deemed to have been duly given and made, if in writing and if served by personal
      delivery upon the Party for whom it is intended, if delivered by registered
      or
      certified mail, return receipt requested, or by a national courier service,
      or
      if sent by telecopier; provided that the telecopy is promptly confirmed by
      telephone confirmation thereof, to the person at the address set forth below,
      or
      such other address as may be designated in writing hereafter, in the same
      manner, by such person:

    

    
      	
              BUYER:

            	
              P.M.I.
                TRADING LIMITED

            
	
              ADDRESS: 

            	
              Av.
                Marina Nacional No. 329

              Torre
                Ejecutiva, Piso 20

              Col.
                Huasteca

              11311
                México D.F. 

            

    

     

    Commercial
      Contact

    

    
      	
              Name:

            	
              Rodrigo
                Aranda / Diana Salmón

            
	
              Telephone:
                

            	
              (52-55)
                1944-0124/0158/0240 / (713) 567-0124/0158/0240

            
	
              Telex
                No.: 

            	
              1773671

            
	
              Fax
                No.:

            	
              (52-55)
                1944-0134 / (713) 567 0134

            

    

    

      
        
          
          

        

        
          Page
            13 of
            21

          
            

          

        

        
          
          

        

      

Operations
      Contact

    

    
      	
              Name:

            	
              Cesar
                Covarrubias/Manuel Villarino/Salvador Huertas

            
	
              Telephone:
                

            	
              (52-55)
                1944-0114/0142/0119 / (713) 567-0114/0142/0119

            
	
              Telex
                No.: 

            	
              1773671/1773509

            
	
              Fax
                No.:

            	
              (52-55)
                1944-0111 / (713) 567-0111

            

    

    

    Financial
      Contact

    

    
      	
              Name:

            	
              Juan
                Carlos Caballero/Francisco Cervantes

            
	
              Telephone:

            	
              (52-55)
                1944-0074/0077 / (713) 567-0074/0077

            
	
              Telex
                No.:

            	
              1773671-1773509

            
	
              Fax
                No.:

            	
              (52-55)
                1944-0072 / (713) 567-0072

            

    

    

    
      	
              SELLER:

            	
              RIO
                VISTA OPERATING PARTNERSHIP L.P.

            
	
              ADDRESS:

            	
              820
                Gessner Rd. Ste. 1285

            
	 	
              Houston,
                Texas, 77024

            

    

    

    
      	
              Commercial
                Contacts

            
	 	 
	
              Name:

            	
              Charlie
                Handly

            
	
              Telephone
                No.:

            	
              (713)
                467-8235

            
	
              Fax
                No.:

            	
              (713)
                467-8258

            
	 	 
	
              Name:

            	
              Vicente
                Soriano

            
	
              Telephone
                No.:

            	
              (52-55)
                5661-9408

            
	
              Fax
                No.:

            	
              (52-55)
                5661-2776

            
	 	 
	
              Operations
                Contact

            
	 	 
	
              Name:

            	
              Charlie
                Handly

            
	
              Telephone
                No.:

            	
              (713)
                467-8235

            
	
              Fax
                No.:

            	
              (713)
                467-8258

            
	 	 
	
              Name:

            	
              Vicente
                Soriano

            
	
              Telephone
                No.:

            	
              (52-55)
                5661-9408

            
	
              Fax
                No.:

            	
              (52-55)
                5661-2776

            
	 	 
	
              Name:

            	
              Pedro
                Prado

            
	
              Telephone
                No.:

            	
              (868)
                919-2364

            
	
              Fax
                No.:

            	
              (868)
                819-2365

            
	 	
              Carretera
                La Rosita - Lucio Blanco KM. 34

            
	 	
              La
                Gloria, Tamaulipas

            
	 	 
	
              Financial
                Contact

            
	 	 
	
              Name:

            	
              Ian
                Bothwell

            
	
              Telephone
                No.:

            	
              (310)
                563-1830

            
	
              Fax
                No.:

            	
              (310)
                563-6290

            

    

    
      
        
        

      

      
        Page
          14 of
          21

        
          

        

      

      
        
        

      

    

    9.02  Amendment;
      Waiver.   Any
      provision of this Agreement may be amended or waived if, and only if, such
      amendment or waiver is in writing and signed, in the case of an amendment,
      by
      Buyer and Seller, or in the case of a waiver, by the Party against whom the
      waiver is to be effective. In the event of any such attempted assignment or
      delegation by any Party without the consent of the other Party, such Party
      shall
      have the right, without prejudice to any other rights or remedies it may have
      hereunder or otherwise, to terminate the Agreement effective immediately upon
      notice to the other Party.

    

    No
      failure or delay by any Party in exercising any right, power or privilege
      hereunder shall operate as a waiver thereof nor shall any single or partial
      exercise thereof preclude any other or further exercise thereof or the exercise
      of any other right, power or privilege. The rights and remedies herein provided
      shall be cumulative and not exclusive of any rights or remedies provided by
      law.

    

    9.03  Assignment.   No
      Party
      to this Agreement may assign any of its rights or obligations under this
      Agreement without the prior written consent of the other Party hereto.
      Notwithstanding the foregoing, Buyer may freely assign the Agreement to any
      affiliate thereof and Seller will have the right to assign this Agreement if
      substantially all of its assets are sold or in the event a merger with another
      entity in which it is not the surviving entity, provided that Seller receives
      the prior written consent from Buyer.

    

    9.04  Entire
      Agreement.   This
      Agreement (including
      all Exhibits hereto) contains the entire agreement between the Parties hereto
      with respect to the subject matter hereof and supersedes all prior agreements
      and understandings, oral or written, with respect to such matters.

    

    9.05  Fulfillment
      of Obligations.   Any
      obligation of any Party to any other Party under this Agreement, which
      obligation is performed, satisfied or fulfilled by an Affiliate of such Party,
      shall be deemed to have been performed, satisfied or fulfilled by such
      Party.

    

    9.06  Parties
      in Interest.   This
      Agreement shall inure to the benefit of and be binding upon the Parties hereto
      and their respective successors and permitted assigns. Nothing in this
      Agreement, express or implied, is intended to confer upon any Person other
      than
      Buyer, Seller or their respective successors or permitted assigns, any rights
      or
      remedies under or by reason of this Agreement.

    

    9.07  Disclosure.   Notwithstanding
      anything herein to the contrary, each of the Parties hereby agrees with the
      other Party or Parties hereto that, except as may be required to comply with
      the
      requirements of any applicable Laws and the rules and regulations of any stock
      exchange upon which the securities of one of the Parties is listed, no press
      release or announcement or communication of any kind shall ever, whether prior
      to or subsequent to the execution
      of this Agreement, be made or caused to be made concerning the execution,
      performance or terms of this Agreement unless specifically approved in advance
      by all Parties hereto.

    
      
        
        

      

      
        Page
          15 of
          21

        
          

        

      

      
        
        

      

    

    9.08  Expenses.   Except
      as
      otherwise expressly provided in this Agreement, whether or not the transactions
      contemplated by this Agreement are consummated, all costs and expenses incurred
      in connection with this Agreement and the transactions contemplated hereby
      shall
      be borne by the Party incurring such expenses.

    

    9.09  Governing
      Law.   This
      agreement shall be governed by, and construed in accordance with the internal
      laws of the state of New York without regard to its conflicts of law
      principals.

    

    9.10  Arbitration.   Any
      and
      all disputes, claims or controversies arising under or relating to this
      Agreement shall be settled by arbitration administered by the American
      Arbitration Association ("AAA") under its International Arbitration Rules.
      The
      place of the arbitration shall be New York City, New York, U.S. The Parties
      agree that the number of arbitrators shall be three. Each Party shall nominate
      a
      neutral and independent arbitrator, and the two arbitrators so appointed shall
      appoint the third neutral and independent arbitrator, who shall act as the
      Chairperson. If the arbitrators selected by the Parties are unable or fail
      to
      agree upon the third arbitrator, the third arbitrator shall be selected by
      the
      AAA. The award shall be in writing, shall be signed by a majority of the
      arbitrators, and shall include a statement regarding the reasons for the
      disposition of any claim. A judgment of the court having jurisdiction may be
      entered on the award. Except as may be required by law, neither a Party nor
      an
      arbitrator may disclose the existence, content, or results of any arbitration
      hereunder without the prior written consent of both Parties.

    

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

    

    9.12  Headings.   The
      heading references herein and the table of contents hereto are for convenience
      purposes only, do not constitute a part of this Agreement and shall not be
      deemed to limit or affect any of the provisions hereof.

    

    9.13  Severability.   The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof. If any provision of this
      Agreement, or the application thereof to any Person or any circumstance, is
      invalid or unenforceable, (a) a suitable and equitable provision shall be
      substituted therefore in order to carry out, so far as may be valid and
      enforceable, the intent and purpose of such invalid or unenforceable provision
      and (b) the remainder of this Agreement and the application of such provision
      to
      other Persons or circumstances shall not be affected by such invalidity or
      unenforceability, nor shall such invalidity or unenforceability affect the
      validity, or enforceability of such provision, or the application thereof,
      in
      any other jurisdiction.

    
      
        
        

      

      
        Page
          16 of
          21

        
          

        

      

      
        
        

      

    

    9.14  Third
      Party Beneficiaries.   Nothing
      in the Agreement is intended or shall be construed to confer upon or give to
      any
      Person or entity any rights as a third party beneficiary of the Agreement or
      any
      part thereof.

    

    9.15  Taxes
      and Documents.   Each
      Party shall be responsible for paying any taxes, duties, fees or whichever
      other
      similar to which they are obliged to pay in accordance with the applicable
      law.

    

    Seller
      will be obliged to provide Buyer with a valid North American Free Trade
      Agreement certificate of origin. If for any reason Seller does not provide
      Buyer
      with such certificate of origin, Buyer shall have the right to discount from
      the
      final purchase price of Product, any and all taxes, duties or fees imposed
      by
      the Mexican governmental authorities which must be paid in excess by Buyer,
      due
      to the lack of the above-mentioned certificate.

    

    9.16  Other
      Terms and Conditions.   Except
      as
      would conflict or except as otherwise provided in this Agreement, Incoterms
      2000
      for DDU or FCA, as appropriate, shall apply. In no event shall the United
      Nations Convention for the International Sales of Goods apply to this
      Agreement.

    

    9.17  Force
      Majeure.   Neither
      Party shall be liable for losses, damages, claims or demands of any nature
      arising out of delays or defaults in performance under the Agreement due to
      any
      unforeseeable impediment beyond the reasonable control of the Parties ("Force
      Majeure"), which shall include, but not be limited to: acts of god or public
      enemy; floods or fire; hostilities or war (whether declared or undeclared);
      blockades; labor disturbances, strikes, riots, insurrections or civil commotion;
      quarantine restrictions or epidemics; electrical shortages or blackouts;
      earthquakes; tides, storms or bad weather; accidents; breakdown or injury to
      Buyer's (or Seller's) facilities; or laws, decrees, regulations, orders or
      other
      directives or actions of either general or particular application of the
      government of México or the U. S. or any agency thereof or of a person or
      authority purporting to act therefore, or request of any such person or
      authority. Any Party claiming Force Majeure shall promptly notify the other
      of
      the occurrence of the event of Force Majeure relied upon and shall estimate
      the
      length of time that the Force Majeure condition is expected to continue. Such
      Party shall also promptly notify the other Party of the cessation of the Force
      Majeure condition. Nothing in this Article shall relieve Buyer of its obligation
      to pay in full for product sold and effectively delivered and to pay all other
      amounts due to Seller under the Agreement.

    

    The
      occurrence of an event of Force Majeure shall not operate to extend the period
      of this Agreement. Should any such event curtail or suspend the performance
      of
      either Party hereunder for a period in excess of seven (7) Days, either Party
      shall have the right to terminate this Agreement upon notice to the other
      Party.

    

    If,
      as a
      result of Force Majeure, Seller at any time does not have available a sufficient
      amount of Product to be sold to Buyer, Seller shall be obligated
      to equally prorate the available amount it holds for export among its customers,
      including Buyer, or shall make reasonable commercial efforts to purchase Product
      from any third party to sell to Buyer.

    
      
        
        

      

      
        Page
          17 of
          21

        
          

        

      

      
        
        

      

    

    9.18  Confidentiality.   The
      Parties agree to keep all terms and conditions of this Agreement, including
      the
      Parties' identities, private and confidential except to the extent that
      disclosure is required under any rule or regulation to which the Party shall
      be
      subject. This obligation shall be of a continuing nature and shall not be
      canceled by the termination of this Agreement.

    

    9.19  Limitation
      of Liability.   Neither
      Party shall be liable for special, indirect, incidental or consequential damages
      of any kind arising out of or in any way connected with the performance of
      or
      failure to perform this Agreement.

    

    9.20  Indemnity.   Seller
      agrees to indemnify, defend and fully hold harmless Buyer and/or any of its
      officers, directors, representatives, employees, shareholders, subsidiaries,
      agents, invitees, or licensees thereof, from and against any and all claims,
      liabilities, damages, losses, costs, expenses (including reasonable attorney's
      fees) demands, fines, suits, causes of action or judgments, directly or
      indirectly, arising out of, in connection with, or resulting from, Product
      related incident causing property damage, personal injury or death, whether
      or
      not claimants allege Seller's negligence as a cause, while Seller has custody
      of
      Product.

    

    Likewise,
      Seller shall indemnify, defend and hold harmless Buyer from and against all
      actual or alleged liability, loss, or damage to Buyer or third parties resulting
      from Seller's breach of this Agreement.

    

    ARTICLE
      X

    TERMINATION

    

    Termination
      for Various Events. Notwithstanding
      anything herein to the contrary, either Party may (in addition to any other
      rights or remedies provided to the other Party under this Agreement) terminate
      this Agreement, effective immediately upon notice to the other Party, if any
      of
      the following events occurs, and no alternative payment arrangement has been
      made to secure payment to the terminating Party:

    

    
      	 	
              (a)

            	
              The
                other Party (or any guarantor of the other Party's obligations hereunder)
                institutes proceeding to be adjudged bankrupt or insolvent, seeks
                or
                suffers reorganization under court order, seeks the benefit of any
                law for
                the relief of debtors, makes an assignment for the benefit of creditors,
                admits in writing its inability to pay its debts generally, when
                become
                due, or performs any other generally recognized act of insolvency
                or
                bankruptcy, or there shall be declared a moratorium
                on the payment of the other Party's (or such guarantor's)
                debts;

            

    

    
      
        
        

      

      
        Page
          18 of
          21

        
          

        

      

      
        
        

      

    

    
      	 	
              (b)

            	
              There
                is entered any decree or order by a court adjudging the other Party
                (or
                any guarantor of any of the other Party's obligations hereunder)
                bankrupt
                or insolvent, approving a petition for reorganization, approving
                a
                petition seeking the benefit of any law for the relief of debtors,
                appointing a receiver, or decreeing or ordering the winding-up or
                liquidation of the other Party's (or such guarantor's)
                affairs;

            

    

    

    
      	 	
              (c)

            	
              Any
                law, rule, regulation or decree of any competent authority restricts
                the
                ability of the other Party (or any guarantor of any of the other
                Party's
                obligations hereunder) to obtain U.S. Dollars for payments to be
                made
                under the Agreement (or any guaranty);
                and

            

    

    

    
      	 	
              (d)

            	
              Any
                material representation or material warranty made by the other Party
                (or
                any guarantor of any of the other Party's obligations hereunder)
                hereunder
                or otherwise proves to be false or incorrect in any material
                respect.

            

    

    

    In
      witness whereof, the parties have duly executed this agreement as of day first
      above written.

    

    
      	
              Rio
                Vista Operating Partnership L.P.

            	 	
              P.M.I.
                Trading Limited

            
	 	 	 
	
              /s/
                Charles C. Handly

            	 	
              /s/
                Rodrigo Aranda

            
	 	 	 
	
              Charles
                C. Handly

            	 	
              Rodrigo
                Aranda

            
	 	 	 
	
              Title:

            	 	
              Title:

            
	
              President

            	 	
              Signatory

            

    

    
 

    
       

      Page
        19 of
        21Unassociated Document

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      OR REGULATION S UNDER SAID ACT.

     

     

    CALLABLE
      SECURED CONVERTIBLE NOTE

     

    
      	
              [                    
                ]

              April 28, 2006

            	
              $88,800

            

    

     

    FOR
      VALUE RECEIVED,
      EMTA HOLDINGS, INC.,
      a
      Nevada Corporation (hereinafter called the “Borrower”),
      hereby promises to pay to the order of AJW PARTNERS, LLC or registered assigns
      (the “Holder”)
      the
      sum of $88,800, on April 28, 2009 (the “Maturity
      Date”),
      and
      to pay interest on the unpaid principal balance hereof at the rate of six
      percent (6%) (the “Interest
      Rate”)
      per
      annum from April 28, 2006 (the “Issue
      Date”)
      until
      the same becomes due and payable, whether at maturity or upon acceleration
      or by
      prepayment or otherwise. Any amount of principal or interest on this Note which
      is not paid when due shall bear interest at the rate of fifteen percent (15%)
      per annum from the due date thereof until the same is paid (“Default
      Interest”).
      Interest shall commence accruing on the Issue Date, shall be computed on the
      basis of a 365-day year and the actual number of days elapsed and shall be
      payable quarterly provided that no interest shall be due and payable for any
      month in which the Trading Price (as such term is defined below) is greater
      than
      $6.25 for each Trading Day (as such term is defined below) of the month. All
      payments due hereunder (to the extent not converted into common stock, $.001
      par
      value per share (the “Common
      Stock”)
      in
      accordance with the terms hereof) shall be made in lawful money of the United
      States of America. All payments shall be made at such address as the Holder
      shall hereafter give to the Borrower by written notice made in accordance with
      the provisions of this Note. 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 and, in the
      case of any interest payment date which is not the date on which this Note
      is
      paid in full, the extension of the due date thereof shall not be taken into
      account for purposes of determining the amount of interest due on such date.
      As
      used in this Note, the term “business day” shall mean any day other than a
      Saturday, Sunday or a day on which commercial banks in the city of New York,
      New
      York are authorized or required by law or executive order to remain closed.
      Each
      capitalized term used herein, and not otherwise defined, shall have the meaning
      ascribed thereto in that certain Securities Purchase Agreement, dated April
      28,
      2006, pursuant to which this Note was originally issued (the “Purchase
      Agreement”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      Note
      is free from all taxes, liens, claims and encumbrances with respect to the
      issue
      thereof and shall not be subject to preemptive rights or other similar rights
      of
      shareholders of the Borrower and will not impose personal liability upon the
      holder thereof. The obligations of the Borrower under this Note shall be secured
      by that certain Security Agreement and Intellectual Property Security Agreement,
      each dated April 28, 2006 by and between the Borrower and the
      Holder.

     

    The
      following terms shall apply to this Note:

     

    ARTICLE
      I.  CONVERSION
      RIGHTS

     

    1.1  Conversion
      Right.
      The
      Holder shall have the right from time to time, and at any time on or prior
      to
      the earlier of (i) the Maturity Date and (ii) the date of payment of the Default
      Amount (as defined in Article III) pursuant to Section 1.6(a) of Article III,
      the Optional Prepayment Amount (as defined in Section 5.1 or any payments
      pursuant to Section 1.7, each in respect of the remaining outstanding principal
      amount of this Note to convert all or any part of the outstanding and unpaid
      principal amount of this Note into fully paid and non-assessable shares of
      Common Stock, as such Common Stock exists on the Issue Date, or any shares
      of
      capital stock or other securities of the Borrower into which such Common Stock
      shall hereafter be changed or reclassified at the conversion price (the
“Conversion
      Price”)
      determined as provided herein (a “Conversion”);
      provided,
      however,
      that in
      no event shall the Holder be entitled to convert any portion of this Note in
      excess of that portion of this Note upon conversion of which the sum of (1)
      the
      number of shares of Common Stock beneficially owned by the Holder and its
      affiliates (other than shares of Common Stock which may be deemed beneficially
      owned through the ownership of the unconverted portion of the Notes or the
      unexercised or unconverted portion of any other security of the Borrower
      (including, without limitation, the warrants issued by the Borrower pursuant
      to
      the Purchase Agreement) subject to a limitation on conversion or exercise
      analogous to the limitations contained herein) and (2) the number of shares
      of
      Common Stock issuable upon the conversion of the portion of this Note with
      respect to which the determination of this proviso is being made, would result
      in beneficial ownership by the Holder and its affiliates of more than 4.99%
      of
      the outstanding shares of Common Stock and provided further
      that the
      Holder shall not be entitled to convert any portion of this Note during any
      month immediately succeeding a Determination Date on which the Borrower
      exercises its prepayment option pursuant to Section 5.2 of this Note. For
      purposes of the proviso to the immediately preceding sentence, beneficial
      ownership shall be determined in accordance with Section 13(d) of the Securities
      Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except
      as
      otherwise provided in clause (1) of such proviso. The number of shares of Common
      Stock to be issued upon each conversion of this Note shall be determined by
      dividing the Conversion Amount (as defined below) by the applicable Conversion
      Price then in effect on the date specified in the notice of conversion, in
      the
      form attached hereto as Exhibit A (the “Notice
      of Conversion”),
      delivered to the Borrower by the Holder in accordance with Section 1.4 below;
      provided that the Notice of Conversion is submitted by facsimile (or by other
      means resulting in, or reasonably expected to result in, notice) to the Borrower
      before 6:00 p.m., New York, New York time on such conversion date (the
“Conversion
      Date”).
      The
      term “Conversion
      Amount”
means,
      with respect to any conversion of this Note, the sum of (1) the principal amount
      of this Note to be converted in such conversion plus
      (2)
      accrued and unpaid interest, if any, on such principal amount at the interest
      rates provided in this Note to the Conversion Date, provided, however, that
      the
      Company shall have the right to pay any or all interest in cash plus
      (3)
      Default Interest, if any, on the amounts referred to in the immediately
      preceding clauses (1) and/or (2) plus
      (4) at
      the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and
      1.4(g) hereof or pursuant to Section 2(c) of that certain Registration Rights
      Agreement, dated as of April 28, 2006, executed in connection with the initial
      issuance of this Note and the other Notes issued on the Issue Date (the
“Registration
      Rights Agreement”).
      The
      term “Determination
      Date” means
      the
      last business day of each month after the Issue Date.

     

    
      
        
        

      

      
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    1.2  Conversion
      Price.

     

    (a)  Calculation
      of Conversion Price.
      The
      Conversion Price shall be the Variable Conversion Price (as defined herein)
      (subject, in each case, to equitable adjustments for stock splits, stock
      dividends or rights offerings by the Borrower relating to the Borrower’s
      securities or the securities of any subsidiary of the Borrower, combinations,
      recapitalization, reclassifications, extraordinary distributions and similar
      events). The “Variable
      Conversion Price”
shall
      mean the Applicable Percentage (as defined herein) multiplied by the Market
      Price (as defined herein). “Market
      Price”
means
      the average of the lowest three (3) Trading Prices (as defined below) for the
      Common Stock during the twenty (20) Trading Day period ending one Trading Day
      prior to the date the Conversion Notice is sent by the Holder to the Borrower
      via facsimile (the “Conversion
      Date”).
      “Trading
      Price”
means,
      for any security as of any date, the VWAP on the Over-the-Counter Bulletin
      Board
      (the “OTCBB”)
      as
      reported by a reliable reporting service (“Reporting
      Service”)
      mutually acceptable to Borrower and Holder and hereafter designated by Holders
      of a majority in interest of the Notes and the Borrower or, if the OTCBB is
      not
      the principal trading market for such security, the VWAP of such security on
      the
      principal securities exchange or trading market where such security is listed
      or
      traded or, if no intraday trading price of such security is available in any
      of
      the foregoing manners, the average of the intraday trading prices of any market
      makers for such security that are listed in the “pink sheets” by the National
      Quotation Bureau, Inc. If the Trading Price cannot be calculated for such
      security on such date in the manner provided above, the Trading Price shall
      be
      the fair market value as mutually determined by the Borrower and the holders
      of
      a majority in interest of the Notes being converted for which the calculation
      of
      the Trading Price is required in order to determine the Conversion Price of
      such
      Notes. “Trading
      Day”
shall
      mean any day on which the Common Stock is traded for any period on the OTCBB,
      or
      on the principal securities exchange or other securities market on which the
      Common Stock is then being traded. “Applicable
      Percentage”
shall
      mean 50%; provided, however, that the Applicable Percentage shall be increased
      to (i) 55% in the event that the Registration Statement (as defined in the
      Registration Rights Agreement) is filed on or before the Filing Date (as defined
      in the in the Registration Rights Agreement) and (ii) 60% in the event that
      the
      Registration Statement (as defined in the Registration Rights Agreement) becomes
      effective on or before the Effectiveness Deadline (as defined in the
      Registration Rights Agreement).

     

    
      
        
        

      

      
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    (b)  Conversion
      Price During Major Announcements.
      Notwithstanding
      anything contained in Section 1.2(a) to the contrary, in the event the Borrower
      (i) makes a public announcement that it intends to consolidate or merge with
      any
      other corporation (other than a merger in which the Borrower is the surviving
      or
      continuing corporation and its capital stock is unchanged) or sell or transfer
      all or substantially all of the assets of the Borrower or (ii) any person,
      group
      or entity (including the Borrower) publicly announces a tender offer to purchase
      50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
      date of the announcement referred to in clause (i) or (ii) is hereinafter
      referred to as the “Announcement
      Date”),
      then
      the Conversion Price shall, effective upon the Announcement Date and continuing
      through the Adjusted Conversion Price Termination Date (as defined below),
      be
      equal to the lower of (x) the Conversion Price which would have been applicable
      for a Conversion occurring on the Announcement Date and (y) the Conversion
      Price
      that would otherwise be in effect. From and after the Adjusted Conversion Price
      Termination Date, the Conversion Price shall be determined as set forth in
      this
      Section 1.2(a). For purposes hereof, “Adjusted
      Conversion Price Termination Date”
shall
      mean, with respect to any proposed transaction or tender offer (or takeover
      scheme) for which a public announcement as contemplated by this Section 1.2(b)
      has been made, the date upon which the Borrower (in the case of clause (i)
      above) or the person, group or entity (in the case of clause (ii) above)
      consummates or publicly announces the termination or abandonment of the proposed
      transaction or tender offer (or takeover scheme) which caused this Section
      1.2(b) to become operative.

     

    1.3  Authorized
      Shares.
      Subject
      to Stockholder Approval (as such term is defined in Section 4(n) of the
      Securities Purchase Agreement), the Borrower covenants that during the period
      the conversion right exists, the Borrower will reserve from its authorized
      and
      unissued Common Stock a sufficient number of shares, free from preemptive
      rights, to provide for the issuance of Common Stock upon the full conversion
      of
      this Note and the other Notes issued pursuant to the Purchase Agreement. The
      Borrower is required at all times to have authorized and reserved two times
      the
      number of shares that is actually issuable upon full conversion of the Notes
      (based on the Conversion Price of the Notes or the Exercise Price of the
      Warrants in effect from time to time) (the “Reserved
      Amount”).
      The
      Reserved Amount shall be increased from time to time in accordance with the
      Borrower’s obligations pursuant to Section 4(h) of the Purchase Agreement. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. In addition, if the Borrower shall issue
      any securities or make any change to its capital structure which would change
      the number of shares of Common Stock into which the Notes shall be convertible
      at the then current Conversion Price, the Borrower shall at the same time make
      proper provision so that thereafter there shall be a sufficient number of shares
      of Common Stock authorized and reserved, free from preemptive rights, for
      conversion of the outstanding Notes. The Borrower (i) acknowledges that it
      has
      irrevocably instructed its transfer agent to issue certificates for the Common
      Stock issuable upon conversion of this Note, and (ii) agrees that its
      issuance of this Note shall constitute full authority to its officers and agents
      who are charged with the duty of executing stock certificates to execute and
      issue the necessary certificates for shares of Common Stock in accordance with
      the terms and conditions of this Note.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    If,
      at
      any time a Holder of this Note submits a Notice of Conversion, and the Borrower
      does not have sufficient authorized but unissued shares of Common Stock
      available to effect such conversion in accordance with the provisions of this
      Article I (a “Conversion
      Default”),
      subject to Section 4.8, the Borrower shall issue to the Holder all of the shares
      of Common Stock which are then available to effect such conversion. The portion
      of this Note which the Holder included in its Conversion Notice and which
      exceeds the amount which is then convertible into available shares of Common
      Stock (the “Excess
      Amount”)
      shall,
      notwithstanding anything to the contrary contained herein, not be convertible
      into Common Stock in accordance with the terms hereof until (and at the Holder’s
      option at any time after) the date additional shares of Common Stock are
      authorized by the Borrower to permit such conversion, at which time the
      Conversion Price in respect thereof shall be the lesser of (i) the Conversion
      Price on the Conversion Default Date (as defined below) and (ii) the Conversion
      Price on the Conversion Date thereafter elected by the Holder in respect
      thereof. In addition, the Borrower shall pay to the Holder payments
      (“Conversion
      Default Payments”)
      for a
      Conversion Default in the amount of (x) the sum
      of
      (1) the
      then outstanding principal amount of this Note plus
      (2)
      accrued and unpaid interest on the unpaid principal amount of this Note through
      the Authorization Date (as defined below) plus
      (3)
      Default Interest, if any, on the amounts referred to in clauses (1) and/or
      (2),
multiplied
      by
      (y) .24,
multiplied
      by
      (z)
      (N/365), where N = the number of days from the day the holder submits a Notice
      of Conversion giving rise to a Conversion Default (the “Conversion
      Default Date”)
      to the
      date (the “Authorization
      Date”)
      that
      the Borrower authorizes a sufficient number of shares of Common Stock to effect
      conversion of the full outstanding principal balance of this Note. The Borrower
      shall use its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable following the earlier of (i) such time that the
      Holder notifies the Borrower or that the Borrower otherwise becomes aware that
      there are or likely will be insufficient authorized and unissued shares to
      allow
      full conversion thereof and (ii) a Conversion Default. The Borrower shall send
      notice to the Holder of the authorization of additional shares of Common Stock,
      the Authorization Date and the amount of Holder’s accrued Conversion Default
      Payments. The accrued Conversion Default Payments for each calendar month shall
      be paid in cash or shall be convertible into Common Stock (at such time as
      there
      are sufficient authorized shares of Common Stock) at the applicable Conversion
      Price, at the Borrower’s option, as follows:

     

    (a)  In
      the
      event Holder elects to take such payment in cash, cash payment shall be made
      to
      Holder by the fifth (5th)
      day of
      the month following the month in which it has accrued; and

     

    (b)  In
      the
      event Holder elects to take such payment in Common Stock, the Holder may convert
      such payment amount into Common Stock at the Conversion Price (as in effect
      at
      the time of conversion) at any time after the fifth day of the month following
      the month in which it has accrued in accordance with the terms of this Article
      I
      (so long as there is then a sufficient number of authorized shares of Common
      Stock).

     

    The
      Holder’s election shall be made in writing to the Borrower at any time prior to
      6:00 p.m., New York, New York time, on the third day of the month following
      the
      month in which Conversion Default payments have accrued. If no election is
      made,
      the Holder shall be deemed to have elected to receive cash. Nothing herein
      shall
      limit the Holder’s right to pursue actual damages (to the extent in excess of
      the Conversion Default Payments) for the Borrower’s failure to maintain a
      sufficient number of authorized shares of Common Stock, and each holder shall
      have the right to pursue all remedies available at law or in equity (including
      degree of specific performance and/or injunctive relief).

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    1.4  Method
      of Conversion.

     

    (a)  Mechanics
      of Conversion.
      Subject
      to Section 1.1, this Note may be converted by the Holder in whole or in part
      at
      any time from time to time after the Issue Date, by (A) submitting to the
      Borrower a Notice of Conversion (by facsimile or other reasonable means of
      communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
      New York time) and (B) subject to Section 1.4(b), surrendering this Note at
      the principal office of the Borrower. 

     

    (b)  Surrender
      of Note Upon Conversion.
      Notwithstanding
      anything to the contrary set forth herein, upon conversion of this Note in
      accordance with the terms hereof, the Holder shall not be required to physically
      surrender this Note to the Borrower unless the entire unpaid principal amount
      of
      this Note is so converted. The Holder and the Borrower shall maintain records
      showing the principal amount so converted and the dates of such conversions
      or
      shall use such other method, reasonably satisfactory to the Holder and the
      Borrower, so as not to require physical surrender of this Note upon each such
      conversion. In the event of any dispute or discrepancy, such records of the
      Borrower shall be controlling and determinative in the absence of manifest
      error. Notwithstanding the foregoing, if any portion of this Note is converted
      as aforesaid, the Holder may not transfer this Note unless the Holder first
      physically surrenders this Note to the Borrower, whereupon the Borrower will
      forthwith issue and deliver upon the order of the Holder a new Note of like
      tenor, registered as the Holder (upon payment by the Holder of any applicable
      transfer taxes) may request, representing in the aggregate the remaining unpaid
      principal amount of this Note. The Holder and any assignee, by acceptance of
      this Note, acknowledge and agree that, by reason of the provisions of this
      paragraph, following conversion of a portion of this Note, the unpaid and
      unconverted principal amount of this Note represented by this Note may be less
      than the amount stated on the face hereof.

     

    (c)  Payment
      of Taxes.
      The
      Borrower shall not be required to pay any tax which may be payable in respect
      of
      any transfer involved in the issue and delivery of shares of Common Stock or
      other securities or property on conversion of this Note in a name other than
      that of the Holder (or in street name), and the Borrower shall not be required
      to issue or deliver any such shares or other securities or property unless
      and
      until the person or persons (other than the Holder or the custodian in whose
      street name such shares are to be held for the Holder’s account) requesting the
      issuance thereof shall have paid to the Borrower the amount of any such tax
      or
      shall have established to the satisfaction of the Borrower that such tax has
      been paid.

     

    (d)  Delivery
      of Common Stock Upon Conversion.
      Upon
      receipt by the Borrower from the Holder of a facsimile transmission (or other
      reasonable means of communication) of a Notice of Conversion meeting the
      requirements for conversion as provided in this Section 1.4, the Borrower shall
      issue and deliver or cause to be issued and delivered to or upon the order
      of
      the Holder certificates for the Common Stock issuable upon such conversion
      within three (3) business days after such receipt (and, solely in the case
      of
      conversion of the entire unpaid principal amount hereof, surrender of this
      Note)
      (such third business day being hereinafter referred to as the “Deadline”)
      in
      accordance with the terms hereof and the Purchase Agreement (including, without
      limitation, in accordance with the requirements of Section 2(g) of the Purchase
      Agreement that certificates for shares of Common Stock issued on or after the
      effective date of the Registration Statement upon conversion of this Note shall
      not bear any restrictive legend).

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (e)  Obligation
      of Borrower to Deliver Common Stock.
      Upon
      receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed
      to
      be the holder of record of the Common Stock issuable upon such conversion,
      the
      outstanding principal amount and the amount of accrued and unpaid interest
      on
      this Note shall be reduced to reflect such conversion, and, unless the Borrower
      defaults on its obligations under this Article I, all rights with respect to
      the
      portion of this Note being so converted shall forthwith terminate except the
      right to receive the Common Stock or other securities, cash or other assets,
      as
      herein provided, on such conversion. If the Holder shall have given a Notice
      of
      Conversion as provided herein, the Borrower’s obligation to issue and deliver
      the certificates for Common Stock shall be absolute and unconditional,
      irrespective of the absence of any action by the Holder to enforce the same,
      any
      waiver or consent with respect to any provision thereof, the recovery of any
      judgment against any person or any action to enforce the same, any failure
      or
      delay in the enforcement of any other obligation of the Borrower to the holder
      of record, or any setoff, counterclaim, recoupment, limitation or termination,
      or any breach or alleged breach by the Holder of any obligation to the Borrower,
      and irrespective of any other circumstance which might otherwise limit such
      obligation of the Borrower to the Holder in connection with such conversion.
      The
      Conversion Date specified in the Notice of Conversion shall be the Conversion
      Date so long as the Notice of Conversion is received by the Borrower before
      6:00
      p.m., New York, New York time, on such date.

     

    (f)  Delivery
      of Common Stock by Electronic Transfer.
      In
      lieu
      of delivering physical certificates representing the Common Stock issuable
      upon
      conversion, provided the Borrower’s transfer agent is participating in the
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer (“FAST”)
      program, upon request of the Holder and its compliance with the provisions
      contained in Section 1.1 and in this Section 1.4, the Borrower shall use its
      best efforts to cause its transfer agent to electronically transmit the Common
      Stock issuable upon conversion to the Holder by crediting the account of
      Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system.

     

    (g)  Failure
      to Deliver Common Stock Prior to Deadline.
      Without
      in any way limiting the Holder’s right to pursue other remedies, including
      actual damages and/or equitable relief, the parties agree that if delivery
      of
      the Common Stock issuable upon conversion of this Note is more than three (3)
      business days after the Deadline (other than a failure due to the circumstances
      described in Section 1.3 above, which failure shall be governed by such Section)
      the Borrower shall pay to the Holder $1,000 per day in cash, for each day beyond
      the Deadline that the Borrower fails to deliver such Common Stock. Such cash
      amount shall be paid to Holder by the fifth day of the month following the
      month
      in which it has accrued or, at the option of the Holder (by written notice
      to
      the Borrower by the first day of the month following the month in which it
      has
      accrued), shall be added to the principal amount of this Note, in which event
      interest shall accrue thereon in accordance with the terms of this Note and
      such
      additional principal amount shall be convertible into Common Stock in accordance
      with the terms of this Note.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    1.5  Concerning
      the Shares.
      The
      shares of Common Stock issuable upon conversion of this Note may not be sold
      or
      transferred unless (i) such shares are sold pursuant to an effective
      registration statement under the Act or (ii) the Borrower or its transfer agent
      shall have been furnished with an opinion of counsel (which opinion shall be
      in
      form, substance and scope customary for opinions of counsel in comparable
      transactions) to the effect that the shares to be sold or transferred may be
      sold or transferred pursuant to an exemption from such registration or
      (iii) such shares are sold or transferred pursuant to Rule 144 under the
      Act (or a successor rule) (“Rule
      144”)
      or
      (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of
      the Borrower who agrees to sell or otherwise transfer the shares only in
      accordance with this Section 1.5 and who is an Accredited Investor (as defined
      in the Purchase Agreement). Except as otherwise provided in the Purchase
      Agreement (and subject to the removal provisions set forth below), until such
      time as the shares of Common Stock issuable upon conversion of this Note have
      been registered under the Act as contemplated by the Registration Rights
      Agreement or otherwise may be sold pursuant to Rule 144 without any restriction
      as to the number of securities as of a particular date that can then be
      immediately sold, each certificate for shares of Common Stock issuable upon
      conversion of this Note that has not been so included in an effective
      registration statement or that has not been sold pursuant to an effective
      registration statement or an exemption that permits removal of the legend,
      shall
      bear a legend substantially in the following form, as appropriate:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
      OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
      SCOPE
      CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION
      IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION
      S
      UNDER SAID ACT.”

     

    The
      legend set forth above shall be removed and the Borrower shall issue to the
      Holder a new certificate therefor free of any transfer legend if (i) the
      Borrower or its transfer agent shall have received an opinion of counsel, in
      form, substance and scope customary for opinions of counsel in comparable
      transactions, to the effect that a public sale or transfer of such Common Stock
      may be made without registration under the Act and the shares are so sold or
      transferred, (ii) such Holder provides the Borrower or its transfer agent with
      reasonable assurances that the Common Stock issuable upon conversion of this
      Note (to the extent such securities are deemed to have been acquired on the
      same
      date) can be sold pursuant to Rule 144 or (iii) in the case of the Common Stock
      issuable upon conversion of this Note, such security is registered for sale
      by
      the Holder under an effective registration statement filed under the Act or
      otherwise may be sold pursuant to Rule 144 without any restriction as to the
      number of securities as of a particular date that can then be immediately sold.
      Nothing in this Note shall (i) limit the Borrower’s obligation under the
      Registration Rights Agreement or (ii) affect in any way the Holder’s obligations
      to comply with applicable prospectus delivery requirements upon the resale
      of
      the securities referred to herein.

     

    
      
        
        

      

      
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    1.6  Effect
      of Certain Events.

     

    (a)  Effect
      of Merger, Consolidation, Etc.
      At the
      option of the Holder, the sale, conveyance or disposition of all or
      substantially all of the assets of the Borrower, the effectuation by the
      Borrower of a transaction or series of related transactions in which more than
      50% of the voting power of the Borrower is disposed of, or the consolidation,
      merger or other business combination of the Borrower with or into any other
      Person (as defined below) or Persons when the Borrower is not the survivor
      shall
      either: (i) be deemed to be an Event of Default (as defined in Article III)
      pursuant to which the Borrower shall be required to pay to the Holder upon
      the
      consummation of and as a condition to such transaction an amount equal to the
      Default Amount (as defined in Article III) or (ii) be treated pursuant to
      Section 1.6(b) hereof. “Person”
shall
      mean any individual, corporation, limited liability company, partnership,
      association, trust or other entity or organization.

     

    (b)  Adjustment
      Due to Merger, Consolidation, Etc.
      If,
      at
      any time when this Note is issued and outstanding and prior to conversion of
      all
      of the Notes, there shall be any merger, consolidation, exchange of shares,
      recapitalization, reorganization, or other similar event, as a result of which
      shares of Common Stock of the Borrower shall be changed into the same or a
      different number of shares of another class or classes of stock or securities
      of
      the Borrower or another entity, or in case of any sale or conveyance of all
      or
      substantially all of the assets of the Borrower other than in connection with
      a
      plan of complete liquidation of the Borrower, then the Holder of this Note
      shall
      thereafter have the right to receive upon conversion of this Note, upon the
      basis and upon the terms and conditions specified herein and in lieu of the
      shares of Common Stock immediately theretofore issuable upon conversion, such
      stock, securities or assets which the Holder would have been entitled to receive
      in such transaction had this Note been converted in full immediately prior
      to
      such transaction (without regard to any limitations on conversion set forth
      herein), and in any such case appropriate provisions shall be made with respect
      to the rights and interests of the Holder of this Note to the end that the
      provisions hereof (including, without limitation, provisions for adjustment
      of
      the Conversion Price and of the number of shares issuable upon conversion of
      the
      Note) shall thereafter be applicable, as nearly as may be practicable in
      relation to any securities or assets thereafter deliverable upon the conversion
      hereof. The Borrower shall not effect any transaction described in this Section
      1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days
      prior written notice (but in any event at least fifteen (15) days prior written
      notice) of the record date of the special meeting of shareholders to approve,
      or
      if there is no such record date, the consummation of, such merger,
      consolidation, exchange of shares, recapitalization, reorganization or other
      similar event or sale of assets (during which time the Holder shall be entitled
      to convert this Note) and (b) the resulting successor or acquiring entity (if
      not the Borrower) assumes by written instrument the obligations of this Section
      1.6(b). The above provisions shall similarly apply to successive consolidations,
      mergers, sales, transfers or share exchanges.

     

    (c)  Adjustment
      Due to Distribution.
      If
      the
      Borrower shall declare or make any distribution of its assets (or rights to
      acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
      by way of return of capital or otherwise (including any dividend or distribution
      to the Borrower’s shareholders in cash or shares (or rights to acquire shares)
      of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”),
      then
      the Holder of this Note shall be entitled, upon any conversion of this Note
      after the date of record for determining shareholders entitled to such
      Distribution, to receive the amount of such assets which would have been payable
      to the Holder with respect to the shares of Common Stock issuable upon such
      conversion had such Holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      Distribution.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

       

    

    (d)  Adjustment
      Due to Dilutive Issuance.
      If, at
      any time when any Notes are issued and outstanding, the Borrower issues or
      sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued
      or sold, any shares of Common Stock for no consideration or for a consideration
      per share (before deduction of reasonable expenses or commissions or
      underwriting discounts or allowances in connection therewith) less than the
      Fixed Conversion Price in effect on the date of such issuance (or deemed
      issuance) of such shares of Common Stock (a “Dilutive
      Issuance”),
      then
      immediately upon the Dilutive Issuance, the Variable Conversion Price will
      be
      reduced to the amount of the consideration per share received by the Borrower
      in
      such Dilutive Issuance; provided
      that
      only one adjustment will be made for each Dilutive Issuance.

     

    The
      Borrower shall be deemed to have issued or sold shares of Common Stock if the
      Borrower in any manner issues or grants any warrants, rights or options (not
      including employee stock option plans), whether or not immediately exercisable,
      to subscribe for or to purchase Common Stock or other securities convertible
      into or exchangeable for Common Stock (“Convertible
      Securities”)
      (such
      warrants, rights and options to purchase Common Stock or Convertible Securities
      are hereinafter referred to as “Options”)
      and
      the price per share for which Common Stock is issuable upon the exercise of
      such
      Options is less than the Variable Conversion Price then in effect, then the
      Variable Conversion Price shall be equal to such price per share. For purposes
      of the preceding sentence, the “price per share for which Common Stock is
      issuable upon the exercise of such Options” is determined by dividing (i) the
      total amount, if any, received or receivable by the Borrower as consideration
      for the issuance or granting of all such Options, plus the minimum aggregate
      amount of additional consideration, if any, payable to the Borrower upon the
      exercise of all such Options, plus, in the case of Convertible Securities
      issuable upon the exercise of such Options, the minimum aggregate amount of
      additional consideration payable upon the conversion or exchange thereof at
      the
      time such Convertible Securities first become convertible or exchangeable,
      by
      (ii) the maximum total number of shares of Common Stock issuable upon the
      exercise of all such Options (assuming full conversion of Convertible
      Securities, if applicable). No further adjustment to the Conversion Price will
      be made upon the actual issuance of such Common Stock upon the exercise of
      such
      Options or upon the conversion or exchange of Convertible Securities issuable
      upon exercise of such Options.

     

    Additionally,
      the Borrower shall be deemed to have issued or sold shares of Common Stock
      if
      the Borrower in any manner issues or sells any Convertible Securities, whether
      or not immediately convertible (other than where the same are issuable upon
      the
      exercise of Options), and the price per share for which Common Stock is issuable
      upon such conversion or exchange is less than the Variable Conversion Price
      then
      in effect, then the Variable Conversion Price shall be equal to such price
      per
      share. For the purposes of the preceding sentence, the “price per share for
      which Common Stock is issuable upon such conversion or exchange” is determined
      by dividing (i) the total amount, if any, received or receivable by the Borrower
      as consideration for the issuance or sale of all such Convertible Securities,
      plus the minimum aggregate amount of additional consideration, if any, payable
      to the Borrower upon the conversion or exchange thereof at the time such
      Convertible Securities first become convertible or exchangeable, by (ii) the
      maximum total number of shares of Common Stock issuable upon the conversion
      or
      exchange of all such Convertible Securities. No further adjustment to the
      Variable Conversion Price will be made upon the actual issuance of such Common
      Stock upon conversion or exchange of such Convertible Securities.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    (e)  Purchase
      Rights.
      If,
      at
      any time when any Notes are issued and outstanding, the Borrower issues any
      convertible securities or rights to purchase stock, warrants, securities or
      other property (the “Purchase
      Rights”)
      pro
      rata to the record holders of any class of Common Stock, then the Holder of
      this
      Note will be entitled to acquire, upon the terms applicable to such Purchase
      Rights, the aggregate Purchase Rights which such Holder could have acquired
      if
      such Holder had held the number of shares of Common Stock acquirable upon
      complete conversion of this Note (without regard to any limitations on
      conversion contained herein) immediately before the date on which a record
      is
      taken for the grant, issuance or sale of such Purchase Rights or, if no such
      record is taken, the date as of which the record holders of Common Stock are
      to
      be determined for the grant, issue or sale of such Purchase Rights.

     

    (f)  Notice
      of Adjustments.
      Upon
      the
      occurrence of each adjustment or readjustment of the Conversion Price as a
      result of the events described in this Section 1.6, the Borrower, at its
      expense, shall promptly compute such adjustment or readjustment and prepare
      and
      furnish to the Holder of a certificate setting forth such adjustment or
      readjustment and showing in detail the facts upon which such adjustment or
      readjustment is based. The Borrower shall, upon the written request at any
      time
      of the Holder, furnish to such Holder a like certificate setting forth (i)
      such
      adjustment or readjustment, (ii) the Conversion Price at the time in effect
      and
      (iii) the number of shares of Common Stock and the amount, if any, of other
      securities or property which at the time would be received upon conversion
      of
      the Note.

     

    1.7  Trading
      Market Limitations.
      Unless
      permitted by the applicable rules and regulations of the principal securities
      market on which the Common Stock is then listed or traded, in no event shall
      the
      Borrower issue upon conversion of or otherwise pursuant to this Note and the
      other Notes issued pursuant to the Purchase Agreement more than the maximum
      number of shares of Common Stock that the Borrower can issue pursuant to any
      rule of the principal United States securities market on which the Common Stock
      is then traded (the “Maximum
      Share Amount”),
      which
      shall be 19.99% of the total shares outstanding on the Closing Date (as defined
      in the Purchase Agreement), subject to equitable adjustment from time to time
      for stock splits, stock dividends, combinations, capital reorganizations and
      similar events relating to the Common Stock occurring after the date hereof.
      Once the Maximum Share Amount has been issued (the date of which is hereinafter
      referred to as the “Maximum
      Conversion Date”),
      if
      the Borrower fails to eliminate any prohibitions under applicable law or the
      rules or regulations of any stock exchange, interdealer quotation system or
      other self-regulatory organization with jurisdiction over the Borrower or any
      of
      its securities on the Borrower’s ability to issue shares of Common Stock in
      excess of the Maximum Share Amount (a “Trading
      Market Prepayment Event”),
      in
      lieu of any further right to convert this Note, and in full satisfaction of
      the
      Borrower’s obligations under this Note, the Borrower shall pay to the Holder,
      within fifteen (15) business days of the Maximum Conversion Date (the
“Trading
      Market Prepayment Date”),
      an
      amount equal to 130% times
      the
sum
      of (a)
      the then outstanding principal amount of this Note immediately following the
      Maximum Conversion Date, plus
      (b)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      Trading Market Prepayment Date, plus
      (c)
      Default Interest, if any, on the amounts referred to in clause (a) and/or (b)
      above, plus
      (d) any
      optional amounts that may be added thereto at the Maximum Conversion Date by
      the
      Holder in accordance with the terms hereof (the then outstanding principal
      amount of this Note immediately following the Maximum Conversion Date,
plus
      the
      amounts referred to in clauses (b), (c) and (d) above shall collectively be
      referred to as the “Remaining
      Convertible Amount”).
      With
      respect to each Holder of Notes, the Maximum Share Amount shall refer to such
      Holder’s pro rata
      share
      thereof determined in accordance with Section 4.8 below. In the event that
      the
      sum of (x) the aggregate number of shares of Common Stock issued upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement
      plus
      (y) the
      aggregate number of shares of Common Stock that remain issuable upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement,
      represents at least one hundred percent (100%) of the Maximum Share Amount
      (the
“Triggering
      Event”),
      the
      Borrower will use its best efforts to seek and obtain Shareholder Approval
      (or
      obtain such other relief as will allow conversions hereunder in excess of the
      Maximum Share Amount) as soon as practicable following the Triggering Event
      and
      before the Maximum Conversion Date. As used herein, “Shareholder
      Approval”
means
      approval by the shareholders of the Borrower to authorize the issuance of the
      full number of shares of Common Stock which would be issuable upon full
      conversion of the then outstanding Notes but for the Maximum Share
      Amount.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    1.8  Status
      as Shareholder.
      Upon
      submission of a Notice of Conversion by a Holder, (i) the shares covered thereby
      (other than the shares, if any, which cannot be issued because their issuance
      would exceed such Holder’s allocated portion of the Reserved Amount or Maximum
      Share Amount) shall be deemed converted into shares of Common Stock and (ii)
      the
      Holder’s rights as a Holder of such converted portion of this Note shall cease
      and terminate, excepting only the right to receive certificates for such shares
      of Common Stock and to any remedies provided herein or otherwise available
      at
      law or in equity to such Holder because of a failure by the Borrower to comply
      with the terms of this Note. Notwithstanding the foregoing, if a Holder has
      not
      received certificates for all shares of Common Stock prior to the tenth (10th)
      business day after the expiration of the Deadline with respect to a conversion
      of any portion of this Note for any reason, then (unless the Holder otherwise
      elects to retain its status as a holder of Common Stock by so notifying the
      Borrower) the Holder shall regain the rights of a Holder of this Note with
      respect to such unconverted portions of this Note and the Borrower shall, as
      soon as practicable, return such unconverted Note to the Holder or, if the
      Note
      has not been surrendered, adjust its records to reflect that such portion of
      this Note has not been converted. In all cases, the Holder shall retain all
      of
      its rights and remedies (including, without limitation, (i) the right to receive
      Conversion Default Payments pursuant to Section 1.3 to the extent required
      thereby for such Conversion Default and any subsequent Conversion Default and
      (ii) the right to have the Conversion Price with respect to subsequent
      conversions determined in accordance with Section 1.3) for the Borrower’s
      failure to convert this Note.

     

    
      
        
        

      

      
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    ARTICLE
      II.  CERTAIN
      COVENANTS

     

    2.1  Distributions
      on Capital Stock.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent, which consent will not be unreasonably
      withheld, (a) pay, declare or set apart for such payment, any dividend or other
      distribution (whether in cash, property or other securities) on shares of
      capital stock other than dividends on shares of Common Stock solely in the
      form
      of additional shares of Common Stock or (b) directly or indirectly or through
      any subsidiary make any other payment or distribution in respect of its capital
      stock except for distributions pursuant to any shareholders’ rights plan which
      is approved by a majority of the Borrower’s disinterested
      directors.

     

    2.2  Restriction
      on Stock Repurchases.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent, which consent will not be unreasonably
      withheld, redeem, repurchase or otherwise acquire (whether for cash or in
      exchange for property or other securities or otherwise) in any one transaction
      or series of related transactions any shares of capital stock of the Borrower
      or
      any warrants, rights or options to purchase or acquire any such
      shares.

     

    2.3  Borrowings.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, which consent will not be
      unreasonably withheld, create, incur, assume or suffer to exist any liability
      for borrowed money, except (a) borrowings in existence or committed on the
      date
      hereof and of which the Borrower has informed Holder in writing prior to the
      date hereof, (b) indebtedness to trade creditors or financial institutions
      incurred in the ordinary course of business or (c) borrowings, the proceeds
      of
      which shall be used to repay this Note.

     

    2.4  Sale
      of Assets.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, which consent will not be
      unreasonably withheld, sell, lease or otherwise dispose of any significant
      portion of its assets outside the ordinary course of business. Any consent
      to
      the disposition of any assets may be conditioned on a specified use of the
      proceeds of disposition.

     

    2.5  Advances
      and Loans.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, which consent will not be
      unreasonably withheld, lend money, give credit or make advances to any person,
      firm, joint venture or corporation, including, without limitation, officers,
      directors, employees, subsidiaries and affiliates of the Borrower, except loans,
      credits or advances (a) in existence or committed on the date hereof and which
      the Borrower has informed Holder in writing prior to the date hereof, (b) made
      in the ordinary course of business or (c) not in excess of $50,000.

     

    2.6  Contingent
      Liabilities.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, which shall not be unreasonably
      withheld, assume, guarantee, endorse, contingently agree to purchase or
      otherwise become liable upon the obligation of any person, firm, partnership,
      joint venture or corporation, except by the endorsement of negotiable
      instruments for deposit or collection and except assumptions, guarantees,
      endorsements and contingencies (a) in existence or committed on the date hereof
      and which the Borrower has informed Holder in writing prior to the date hereof,
      and (b) similar transactions in the ordinary course of business. 

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III.  EVENTS
      OF DEFAULT

     

    If
      any of
      the following events of default (each, an “Event
      of Default”)
      shall
      occur:

     

    3.1  Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay the principal hereof or interest thereon when due on
      this
      Note, whether at maturity, upon a Trading Market Prepayment Event pursuant
      to
      Section 1.7, upon acceleration or otherwise;

     

    3.2  Conversion
      and the Shares.
      The
      Borrower fails to issue shares of Common Stock to the Holder (or announces
      or
      threatens that it will not honor its obligation to do so) upon exercise by
      the
      Holder of the conversion rights of the Holder in accordance with the terms
      of
      this Note (for a period of at least sixty (60) days, if such failure is solely
      as a result of the circumstances governed by Section 1.3 and the Borrower is
      using its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable), fails to transfer or cause its transfer agent
      to
      transfer (electronically or in certificated form) any certificate for shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights
      Agreement, or fails to remove any restrictive legend (or to withdraw any stop
      transfer instructions in respect thereof) on any certificate for any shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights Agreement
      (or makes any announcement, statement or threat that it does not intend to
      honor
      the obligations described in this paragraph) and any such failure shall continue
      uncured (or any announcement, statement or threat not to honor its obligations
      shall not be rescinded in writing) for ten (10) days after the Borrower shall
      have been notified thereof in writing by the Holder;

     

    3.3  Failure
      to Timely File Registration or Effect Registration.
      The
      Borrower fails to file the Registration Statement within sixty (60) days
      following the Closing Date (as defined in the Purchase Agreement) or obtain
      effectiveness with the Securities and Exchange Commission of the Registration
      Statement within one hundred and eighty (180) days following the Closing Date
      (as defined in the Purchase Agreement) or such Registration Statement lapses
      in
      effect (or sales cannot otherwise be made thereunder effective, whether by
      reason of the Borrower’s failure to amend or supplement the prospectus included
      therein in accordance with the Registration Rights Agreement or otherwise)
      for
      more than ten (10) consecutive days or twenty (20) days in any twelve month
      period after the Registration Statement becomes effective;

     

    3.4  Breach
      of Covenants.
      The
      Borrower breaches any material covenant or other material term or condition
      contained in Sections 1.3, 1.6 or 1.7 of this Note, or Sections 4(c), 4(e),
      4(h), 4(i), 4(j) or 5 of the Purchase Agreement and such breach continues for
      a
      period of ten (10) days after written notice thereof to the Borrower from the
      Holder;

     

    3.5  Breach
      of Representations and Warranties.
      Any
      representation or warranty of the Borrower made herein or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      herewith (including, without limitation, the Purchase Agreement and the
      Registration Rights Agreement), shall be false or misleading in any material
      respect when made and the breach of which has (or with the passage of time
      will
      have) a material adverse effect on the rights of the Holder with respect to
      this
      Note, the Purchase Agreement or the Registration Rights Agreement;

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    3.6  Receiver
      or Trustee.
      The
      Borrower or any subsidiary of the Borrower shall make an assignment for the
      benefit of creditors, or apply for or consent to the appointment of a receiver
      or trustee for it or for a substantial part of its property or business, or
      such
      a receiver or trustee shall otherwise be appointed;

     

    3.7  Judgments.
      Any
      money judgment, writ or similar process shall be entered or filed against the
      Borrower or any subsidiary of the Borrower or any of its property or other
      assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
      for a period of twenty (20) days unless otherwise consented to by the Holder,
      which consent will not be unreasonably withheld;

     

    3.8  Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings for relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any subsidiary of
      the
      Borrower, unless such proceeding shall be stayed within thirty (30)
      days;

     

    3.9  Delisting
      of Common Stock.
      The
      Borrower shall fail to maintain the listing of the Common Stock on at least
      one
      of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market,
      the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock
      Exchange; or

     

    3.10  Default
      Under Other Notes.
      An Event
      of Default has occurred and is continuing under any of the other Notes issued
      pursuant to the Purchase Agreement,

     

    then,
      upon the occurrence and during the continuation of any Event of Default
      specified in Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
      of the Holders of a majority of the aggregate principal amount of the
      outstanding Notes issued pursuant to the Purchase Agreement exercisable through
      the delivery of written notice to the Borrower by such Holders (the
“Default
      Notice”),
      and
      upon the occurrence of an Event of Default specified in Section 3.6 or 3.8
      (unless, under Section 3.8, such proceeding shall be stayed within 30 days),
      the
      Notes shall become immediately due and payable and the Borrower shall pay to
      the
      Holder, in full satisfaction of its obligations hereunder, an amount equal
      to
      the greater of (i) 130% times
      the
sum
      of (w)
      the then outstanding principal amount of this Note plus
      (x)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      date of payment (the “Mandatory
      Prepayment Date”)
      plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and/or
      (x)
plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Default
      Sum”)
      or
      (ii) the “parity value” of the Default Sum to be prepaid, where parity value
      means (a) the highest number of shares of Common Stock issuable upon conversion
      of or otherwise pursuant to such Default Sum in accordance with Article I,
      treating the Trading Day immediately preceding the Mandatory Prepayment Date
      as
      the “Conversion Date” for purposes of determining the lowest applicable
      Conversion Price, unless the Default Event arises as a result of a breach in
      respect of a specific Conversion Date in which case such Conversion Date shall
      be the Conversion Date), multiplied
      by
      (b) the
      highest Closing Price for the Common Stock during the period beginning on the
      date of first occurrence of the Event of Default and ending one day prior to
      the
      Mandatory Prepayment Date (the “Default
      Amount”)
      and
      all other amounts payable hereunder shall immediately become due and payable,
      all without demand, presentment or notice, all of which hereby are expressly
      waived, together with all costs, including, without limitation, legal fees
      and
      expenses, of collection, and the Holder shall be entitled to exercise all other
      rights and remedies available at law or in equity. If the Borrower fails to
      pay
      the Default Amount within five (5) business days of written notice that such
      amount is due and payable, then the Holder shall have the right at any time,
      so
      long as the Borrower remains in default (and so long and to the extent that
      there are sufficient authorized shares), to require the Borrower, upon written
      notice, to immediately issue, in lieu of the Default Amount, the number of
      shares of Common Stock of the Borrower equal to the Default Amount divided
      by
      the Conversion Price then in effect.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV.  MISCELLANEOUS

     

    4.1  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 privileges. All rights
      and remedies existing hereunder are cumulative to, and not exclusive of, any
      rights or remedies otherwise available.

     

    4.2  Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the address of the Holder shall be as shown on the records of the
      Borrower; and the address of the Borrower shall be [ ], facsimile
      number: [
      ]. Both
      the Holder and the Borrower may change the address for service by service of
      written notice to the other as herein provided.

     

    4.3  Amendments.
      This
      Note and any provision hereof may only be amended by an instrument in writing
      signed by the Borrower and the Holder. The term “Note” and all reference
      thereto, as used throughout this instrument, shall mean this instrument (and
      the
      other Notes issued pursuant to the Purchase Agreement) as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

     

    4.4  Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to be the benefit of the Holder and its successors and assigns.
      Each
      transferee of this Note must be an “accredited investor” (as defined in Rule
      501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary,
      this Note may be pledged as collateral in connection with a bona fide
      margin
      account or other lending arrangement.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    4.5  Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof costs of collection, including reasonable attorneys’ fees.

     

    4.6  Governing
      Law.
      THIS
      NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
      WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
      BORROWER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
      FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
      UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
      TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE
      THE
      DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
      BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
      CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
      THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER
      PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH
      PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
      PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL
      FEES
      AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
      CONNECTION WITH SUCH DISPUTE.

     

    4.7  Certain
      Amounts.
      Whenever
      pursuant to this Note the Borrower is required to pay an amount in excess of
      the
      outstanding principal amount (or the portion thereof required to be paid at
      that
      time) plus accrued and unpaid interest plus Default Interest on such interest,
      the Borrower and the Holder agree that the actual damages to the Holder from
      the
      receipt of cash payment on this Note may be difficult to determine and the
      amount to be so paid by the Borrower represents stipulated damages and not
      a
      penalty and is intended to compensate the Holder in part for loss of the
      opportunity to convert this Note and to earn a return from the sale of shares
      of
      Common Stock acquired upon conversion of this Note at a price in excess of
      the
      price paid for such shares pursuant to this Note. The Borrower and the Holder
      hereby agree that such amount of stipulated damages is not plainly
      disproportionate to the possible loss to the Holder from the receipt of a cash
      payment without the opportunity to convert this Note into shares of Common
      Stock.

     

    4.8  Allocations
      of Maximum Share Amount and Reserved Amount.
      The
      Maximum Share Amount and Reserved Amount shall be allocated pro rata among
      the
      Holders of Notes based on the principal amount of such Notes issued to each
      Holder. Each increase to the Maximum Share Amount and Reserved Amount shall
      be
      allocated pro rata among the Holders of Notes based on the principal amount
      of
      such Notes held by each Holder at the time of the increase in the Maximum Share
      Amount or Reserved Amount. In the event a Holder shall sell or otherwise
      transfer any of such Holder’s Notes, each transferee shall be allocated a pro
      rata portion of such transferor’s Maximum Share Amount and Reserved Amount. Any
      portion of the Maximum Share Amount or Reserved Amount which remains allocated
      to any person or entity which does not hold any Notes shall be allocated to
      the
      remaining Holders of Notes, pro rata based on the principal amount of such
      Notes
      then held by such Holders.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    4.9  Damages
      Shares.
      The
      shares of Common Stock that may be issuable to the Holder pursuant to Sections
      1.3 and 1.4(g) hereof and pursuant to Section 2(c) of the Registration Rights
      Agreement (“Damages
      Shares”)
      shall
      be treated as Common Stock issuable upon conversion of this Note for all
      purposes hereof and shall be subject to all of the limitations and afforded
      all
      of the rights of the other shares of Common Stock issuable hereunder, including
      without limitation, the right to be included in the Registration Statement
      filed
      pursuant to the Registration Rights Agreement. For purposes of calculating
      interest payable on the outstanding principal amount hereof, except as otherwise
      provided herein, amounts convertible into Damages Shares (“Damages
      Amounts”)
      shall
      not bear interest but must be converted prior to the conversion of any
      outstanding principal amount hereof, until the outstanding Damages Amounts
      is
      zero.

     

    4.10  Denominations.
      At the
      request of the Holder, upon surrender of this Note, the Borrower shall promptly
      issue new Notes in the aggregate outstanding principal amount hereof, in the
      form hereof, in such denominations of at least $50,000 as the Holder shall
      request.

     

    4.11  Purchase
      Agreement.
      By its
      acceptance of this Note, each Holder agrees to be bound by the applicable terms
      of the Purchase Agreement.

     

    4.12  Notice
      of Corporate Events.
      Except
      as otherwise provided below, the Holder of this Note shall have no rights as
      a
      Holder of Common Stock unless and only to the extent that it converts this
      Note
      into Common Stock. The Borrower shall provide the Holder with prior notification
      of any meeting of the Borrower’s shareholders (and copies of proxy materials and
      other information sent to shareholders). In the event of any taking by the
      Borrower of a record of its shareholders for the purpose of determining
      shareholders who are entitled to receive payment of any dividend or other
      distribution, any right to subscribe for, purchase or otherwise acquire
      (including by way of merger, consolidation, reclassification or
      recapitalization) any share of any class or any other securities or property,
      or
      to receive any other right, or for the purpose of determining shareholders
      who
      are entitled to vote in connection with any proposed sale, lease or conveyance
      of all or substantially all of the assets of the Borrower or any proposed
      liquidation, dissolution or winding up of the Borrower, the Borrower shall
      mail
      a notice to the Holder, at least twenty (20) days prior to the record date
      specified therein (or thirty (30) days prior to the consummation of the
      transaction or event, whichever is earlier), of the date on which any such
      record is to be taken for the purpose of such dividend, distribution, right
      or
      other event, and a brief statement regarding the amount and character of such
      dividend, distribution, right or other event to the extent known at such time.
      The Borrower shall make a public announcement of any event requiring
      notification to the Holder hereunder substantially simultaneously with the
      notification to the Holder in accordance with the terms of this Section
      4.12.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    4.13  Remedies.
      The
      Borrower acknowledges that a breach by it of its obligations hereunder will
      cause irreparable harm to the Holder, by vitiating the intent and purpose of
      the
      transaction contemplated hereby. Accordingly, the Borrower acknowledges that
      the
      remedy at law for a breach of its obligations under this Note will be inadequate
      and agrees, in the event of a breach or threatened breach by the Borrower of
      the
      provisions of this Note, that the Holder shall be entitled, in addition to
      all
      other available remedies at law or in equity, and in addition to the penalties
      assessable herein, to an injunction or injunctions restraining, preventing
      or
      curing any breach of this Note and to enforce specifically the terms and
      provisions thereof, without the necessity of showing economic loss and without
      any bond or other security being required.

     

    ARTICLE
      V.  CALL
      OPTION

     

    5.1  Call
      Option.
      Notwithstanding anything to the contrary contained in this Article V, so long
      as
(i) no
      Event of Default or Trading Market Prepayment Event shall have occurred and
      be
      continuing, (ii) the
      Borrower has a sufficient number of authorized shares of Common Stock reserved
      for issuance upon full conversion of the Notes, then at any time after the
      Issue
      Date, and (iii) the
      Common Stock is trading at or below $5.00 per share, the Borrower shall have
      the
      right, exercisable on not less than ten (10) Trading Days prior written notice
      to the Holders of the Notes (which notice may not be sent to the Holders of
      the
      Notes until the Borrower is permitted to prepay the Notes pursuant to this
      Section 5.1), to prepay all of the outstanding Notes in accordance with this
      Section 5.1. Any notice of prepayment hereunder (an “Optional
      Prepayment”)
      shall
      be delivered to the Holders of the Notes at their registered addresses appearing
      on the books and records of the Borrower and shall state (1) that the Borrower
      is exercising its right to prepay all of the Notes issued on the Issue Date
      and
      (2) the date of prepayment (the “Optional
      Prepayment Notice”).
      On
      the date fixed for prepayment (the “Optional
      Prepayment Date”),
      the
      Borrower shall make payment of the Optional Prepayment Amount (as defined below)
      to or upon the order of the Holders as specified by the Holders in writing
      to
      the Borrower at least one (1) business day prior to the Optional Prepayment
      Date. If the Borrower exercises its right to prepay the Notes, the Borrower
      shall make payment to the holders of an amount in cash (the “Optional
      Prepayment Amount”)
      equal
      to either (i) 120% (for prepayments occurring within thirty (30) days of
      the Issue Date), (ii) 130% for prepayments occurring between thirty-one
      (31) and sixty (60) days of the Issue Date, or (iii) 140% (for prepayments
      occurring after the sixtieth (60th)
      day
      following the Issue Date), multiplied by the sum of (w) the then outstanding
      principal amount of this Note plus
      (x) accrued and unpaid interest on the unpaid principal amount of this Note
      to the Optional Prepayment Date plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and (x)
      plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Optional
      Prepayment Sum”).
      Notwithstanding notice of an Optional Prepayment, the Holders shall at all
      times
      prior to the Optional Prepayment Date maintain the right to convert all or
      any
      portion of the Notes in accordance with Article I and any portion of Notes
      so
      converted after receipt of an Optional Prepayment Notice and prior to the
      Optional Prepayment Date set forth in such notice and payment of the aggregate
      Optional Prepayment Amount shall be deducted from the principal amount of Notes
      which are otherwise subject to prepayment pursuant to such notice. If the
      Borrower delivers an Optional Prepayment Notice and fails to pay the Optional
      Prepayment Amount due to the Holders of the Notes within two (2) business days
      following the Optional Prepayment Date, the Borrower shall forever forfeit
      its
      right to redeem the Notes pursuant to this Section 5.1.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    5.2  Partial
      Call Option.
      Notwithstanding anything to the contrary contained in this Article V, in the
      event that the Average Daily Price of the Common Stock, as reported by the
      Reporting Service, for each day of the month ending on any Determination Date
      is
      below the Initial Market Price, the Borrower may, at its option, prepay a
      portion of the outstanding principal amount of the Notes equal to 101% of the
      principal amount hereof divided by thirty-six (36) plus one month’s interest.
      The term “Initial
      Market Price”
      shall
      mean the volume weighted average price of the Common Stock for the five (5)
      Trading Days immediately preceding the Closing which is $5.00. 

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by its duly authorized
      officer this 28th
      day of
      April, 2006.

     

    

    EMTA
      HOLDINGS, INC.

    

    

    

    By: ______________________________

    Edmond
      L.
      Lonergan

    Chief
      Executive Officer

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

    (To
      be
      Executed by the Registered Holder

    in
      order
      to Convert the Notes)

     

    The
      undersigned hereby irrevocably elects to convert $__________ principal amount
      of
      the Note (defined below) into shares of common stock, par value $.001 per share
      (“Common
      Stock”),
      of
      EMTA Holdings, Inc., a Nevada corporation (the “Borrower”)
      according to the conditions of the convertible Notes of the Borrower dated
      as of
      April 28, 2006 (the “Notes”),
      as of
      the date written below. If securities are to be issued in the name of a person
      other than the undersigned, the undersigned will pay all transfer taxes payable
      with respect thereto and is delivering herewith such certificates. No fee will
      be charged to the Holder for any conversion, except for transfer taxes, if
      any.
      A copy of each Note is attached hereto (or evidence of loss, theft or
      destruction thereof).

     

    The
      Borrower shall electronically transmit the Common Stock issuable pursuant to
      this Notice of Conversion to the account of the undersigned or its nominee
      with
      DTC through its Deposit Withdrawal Agent Commission system (“DWAC
      Transfer”).

     

    Name
      of
      DTC Prime Broker:________________________________________

    Account
      Number:_______________________________________________

     

    In
      lieu
      of receiving shares of Common Stock issuable pursuant to this Notice of
      Conversion by way of a DWAC Transfer, the undersigned hereby requests that
      the
      Borrower issue a certificate or certificates for the number of shares of Common
      Stock set forth below (which numbers are based on the Holder’s calculation
      attached hereto) in the name(s) specified immediately below or, if additional
      space is necessary, on an attachment hereto:

     

    Name:__________________________________________________________

    Address:________________________________________________________

     

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable to the undersigned upon conversion of the Notes
      shall
      be made pursuant to registration of the securities under the Securities Act
      of
      1933, as amended (the “Act”),
      or
      pursuant to an exemption from registration under the Act.

     

    Date
      of
      Conversion:___________________________

    Applicable
      Conversion Price:____________________

    Number
      of
      Shares of Common Stock to be Issued Pursuant to

    Conversion
      of the Notes:______________

    Signature:___________________________________

    Name:______________________________________

    Address:____________________________________

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    The
      Borrower shall issue and deliver shares of Common Stock to an overnight courier
      not later than three business days following receipt of the original Note(s)
      to
      be converted, and shall make payments pursuant to the Notes for the number
      of
      business days such issuance and delivery is late.

     

    
      
        
        

      

      
        -23-

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