Document:

Amendment to Employment Agreement

            AMENDMENT effective as of the date hereof, to Employment Agreement,
dated April 17, 2004, by and between Iconix Brand Group, Inc., a Delaware
corporation (the "Company" or "Employer") and David Conn (the "Employee").

                               W I T N E S S E T H

            WHEREAS, the Employee is currently the Company's Executive Vice
President; and

            WHEREAS, the Company and Employee entered into an Employment
Agreement dated April 17, 2004 (the "Agreement"); and

            WHEREAS, the Company wishes, among other things, to extend the term
of the Employee's employment with the Company pursuant to the Agreement beyond
the term currently provided by the Agreement; and

            WHEREAS, the Company and Employee desire to amend the terms of the
Agreement as provided herein;

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Employer and
Employee hereby agree as set forth below. All capitalized terms used in this
Amendment and not otherwise defined shall have the meanings ascribed to them in
the Agreement:

            1. Section 3 of the Agreement is hereby deleted and replaced with
the following:

      "The Employee's engagement shall commence effective on the date hereof and
shall continue until May 18, 2008 (the "Term"), unless terminated for "cause"
(as hereafter defined) for any reason by the Company or Good reason (as
hereinafter defined) by the Employee upon 30 days written notice. The Company
may terminate the Agreement for cause at any time in the event that Employee is
convicted of a crime of moral turpitude, which may reasonably be expected to
have an adverse impact on the Company, Employee's dishonesty in his dealings
with the Company, or for the willful refusal of Employee to follow the
directives of the CEO of the Company. The Executive may terminate his employment
for good reason at any time. For purposes of this Agreement, "good reason" shall
mean:

<PAGE>

            the failure by the Company to comply with its material obligations
      and agreements contained in this Agreement;

            a material diminution of the responsibilities or title of the
      Employee with the Company without the express written consent of the
      Employee;

            a reduction by the Company in the Base Salary as in effect on the
      date hereof, or as the same may be increased from time to time, without
      the express written consent of the Employee; or

            the re-location of the Employee to an office outside of the greater
      New York metropolitan area, unless mutually agreed to;

provided, however, that the Employee shall have provided the Company with
written notice that such actions are occurring and the Company has been afforded
a reasonable opportunity of at least thirty (30) days to cure same. In the event
the Company elects to terminate this Agreement other than for cause or the
Employee terminates for good reason, Employee shall be entitled to receive his
current salary through the remainder of the Term.

            2. Section 4 of the Agreement is hereby amended to state:

      "The Company shall pay to the Employee for the period from now until May
17, 2006, an annual salary at a rate of $250,000, for the period commencing May
18, 2006 through May 17, 2007, an annual salary at the rate of $275,000, and for
the period commencing May 18, 2007 through May 17, 2008, an annual salary at a
rate of "$300,000."

            3. Section 5 of the Agreement shall be amended to add the following
sentence at the end:

      "In addition, the Employee shall receive a car allowance annually of
$18,000."

            4. Section 7 of the Agreement is hereby amended to add the following
sentence: "In addition, the Employee is hereby granted 100,000 options as of the
date hereof, which shall vest immediately."

            5. Section 8 of the Agreement is hereby deleted and replaced with
the following: " Employee is entitled to four weeks of paid vacation during each
year of his employment. Employee shall use his vacation in the calendar year in
which it is accrued."

            6. Section 9 of the Agreement is hereby deleted in its entirety and
replaced with the following:

         "If the Company terminates your employment without cause within 12
months after a Change in Control (as defined in herein), then the Company shall
pay to you in complete satisfaction of its obligations under this Agreement, as
severance pay and as liquidated damages (because actual damages are difficult to
ascertain), in a lump sum, in cash, within 15 days after the date of your
termination, an amount equal to $100 less than three times your "annualized

                                       2
<PAGE>

includable compensation for the base period" (as defined in Section 280G of the
Internal Revenue Code of 1986); provided, however, that if such lump sum
severance payment, either alone or together with other payments or benefits,
either cash or non-cash, that you have the right to receive from the Company,
including, but not limited to, accelerated vesting or payment of any deferred
compensation, options, stock appreciation rights or any benefits payable to you
under any plan for the benefit of employees, which would constitute an "excess
parachute payment" (as defined in Section 280G of the Internal Revenue Code of
1986), then such lump sum severance payment or other benefit shall be reduced to
the largest amount that will not result in receipt by you of a parachute
payment. A "Change in Control" shall mean any of the following:

            (1) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares of
the Company's common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the Company
common stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger;

            (2) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the assets
of the Company;

            (3) any approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company."

            6. Section 10 of the Agreement shall be deleted and replaced with
the following:

            "(1) The Company and the Employee acknowledge that the services to
be performed by the Employee under this Agreement are unique and extraordinary
and, as a result of such employment, the Employee shall be in possession of
confidential information relating to the business practices of the Company. The
term "confidential information" shall mean any and all information (oral and
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which (i) can be shown by the
Employee to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this paragraph 10 or (ii) the Employee is required to disclose
under any applicable laws, regulations or directives of any government agency,
tribunal or authority having jurisdiction in the matter or under subpoena or
other process of law. The Employee shall not, during the Term and for a period
of two (2) years thereafter, except as may be required in the course of the
performance of his duties hereunder, directly or indirectly, use, communicate,
disclose or disseminate to any person, firm or corporation any confidential
information regarding the clients, customers or business practices of the
Company acquired by the Employee, without the prior written consent of the
Company; provided, however, that the Employee understands that Employee shall be
prohibited from misappropriating any trade secret at any time during or after
the Term.

                                       3
<PAGE>

            (2) Upon the termination of the Employee's employment for any reason
      whatsoever, all documents, records, notebooks, equipment, price lists,
      specifications, programs, customer and prospective customer lists and
      other materials which refer or relate to any aspect of the business of the
      Company which are in the possession of the Employee, including all copies
      thereof, shall be promptly returned to the Company.

            (3) The Employee hereby agrees that he shall not, during the Term,
      and, in the event that the Employee's employment hereunder is terminated
      by the Company for cause, for a period of two years after the date of such
      termination, directly or indirectly, within any county (or adjacent
      county) in any State within a fifty (50) mile radius of the location of
      any of the Company's offices, engage, have an interest in or render any
      services to any business (whether as owner, manager, operator, licensor,
      licensee, lender, partner, stockholder, joint venturer, employee,
      consultant or otherwise) competitive with the business activities
      conducted by the Company, its subsidiaries, or affiliates during the Term.
      Notwithstanding the foregoing, nothing herein shall prevent the Employee
      from owning stock in a publicly traded corporation whose activities
      compete with those of the Company's, provided that such stock holdings are
      not greater than five percent (5%) of such corporation.

            (4) The Employee shall not, during the Term, and, in the event that
      the Employee's employment hereunder is terminated by the Company for
      cause, for a period of two years after the date of such termination,
      directly or indirectly, take any action which constitutes an interference
      with or a disruption of any of the Company's business activities
      including, without limitation, the solicitations of the Company's
      customers, or directly or indirectly, hiring, offering to hire, enticing,
      soliciting or in any other manner persuading or attempting to persuade any
      officer, employee, agent, lessor, lessee, licensor, licensee or customer
      of the Company (but only those suppliers existing during the time of the
      Employee's employment by the Company, or at the termination of his
      employment), to discontinue or alter his, her or its relationship with the
      Company."

            7. All of the other provisions of the Agreement (including Section
6) shall remain unchanged and in full force and effect.

                                       4
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this amendment as of
the 29th day of December 2005.

ICONIX BRAND GROUP, INC.                    EMPLOYEE

   /s/ Neil Cole                               /s/ David Conn
----------------------------                -----------------------------------
By:  Neil Cole                              David Conn
Its: CEO

                                       5Exhibit
      4(a)

     

    Form
      of Senior Secured Exchangeable Convertible Note

     

    SENIOR
      SECURED EXCHANGEABLE CONVERTIBLE NOTE

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
      IN A
      GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF
      THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 17(a) HEREOF. THE PRINCIPAL AMOUNT
      REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
      CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
      PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

     

    
      
        UNIVERSAL
          FOOD & BEVERAGE COMPANY

         

        SENIOR
          SECURED EXCHANGEABLE CONVERTIBLE NOTE

         

      

    

    
      	
              Issuance
                Date: December 30, 2005

            	
              Principal:
                U.S. $_____________

            

    

    

    FOR
      VALUE RECEIVED,
      Universal Food & Beverage Company, a Nevada corporation (the "Company"),
      hereby promises to pay to the order of _____________________ or registered
      assigns ("Holder")
      the
      amount set out above as the Principal (as reduced pursuant to the terms hereof
      pursuant to redemption, conversion or otherwise, the "Principal")
      when
      due, whether upon the Maturity Date (as defined below), acceleration, redemption
      or otherwise (in each case in accordance with the terms hereof) and to pay
      interest ("Interest")
      on any
      outstanding Principal at a rate equal to ten percent (10.0%) per annum (the
      "Interest
      Rate"),
      from
      the date set out above as the Issuance Date (the "Issuance Date")
      until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below) or, the Maturity Date, acceleration, conversion, redemption or otherwise
      (in each case in accordance with the terms hereof). This Senior Secured
      Exchangeable Convertible Note (including all Senior Secured Exchangeable
      Convertible Notes issued in exchange, transfer or replacement hereof, this
      "Note")
      is one
      of an issue of Senior Secured Exchangeable Convertible Notes issued pursuant
      to
      the Securities Purchase Agreement (as defined below) on the Closing Date
      (collectively, the "Notes"
      and
      such other Senior Secured Exchangeable Convertible Notes, the "Other Notes").
      Certain capitalized terms used herein are defined in Section 28.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MATURITY.
      On the
      Maturity Date, the Holder shall surrender the Note to the Company and the
      Company shall pay to the Holder an amount in cash representing all outstanding
      Principal and accrued and unpaid Interest and accrued and unpaid Late Charges,
      if any. 

     

    INTEREST;
      INTEREST RATE.
      Interest on this Note shall commence accruing on the Issuance Date and shall
      be
      computed on the basis of a 365-day year and actual days elapsed and shall be
      payable semi-annually in arrears on each first day of a calendar month during
      the period beginning on the Issuance Date and ending on, and including, the
      Maturity Date (each, an "Interest Date")
      with
      the first Interest Date being February 1, 2006. Interest shall be payable on
      each Interest Date, to the record holder of this Note on the applicable Interest
      Date, in cash, and to the extent that any Principal amount of this Note is
      converted prior to such Interest Date, accrued and unpaid Interest with respect
      to such converted Principal amount and accrued and unpaid Late Charges with
      respect to such Principal and Interest shall be paid through the Conversion
      Date
      (as defined below) on the next succeeding Interest Date to the record holder
      of
      this Note on the applicable Conversion Date. Prior to the payment of Interest
      on
      an Interest Date, Interest on this Note shall accrue at the Interest Rate.
      Upon
      the occurrence and during the continuance of an Event of Default, the Interest
      Rate shall be increased to fifteen percent (15%). In the event that such Event
      of Default is subsequently cured, the adjustment referred to in the preceding
      sentence shall cease to be effective as of the date of such cure; provided
      that
      the Interest as calculated and unpaid at such increased rate during the
      continuance of such Event of Default shall continue to apply to the extent
      relating to the days after the occurrence of such Event of Default through
      and
      including the date of cure of such Event of Default. The Company shall pay
      any
      and all taxes that may be payable with respect to the issuance and delivery
      of
      Interest Shares; provided
      that the
      Company shall not be required to pay any tax that may be payable in respect
      of
      any issuance of Interest Shares to any Person other than the Holder or with
      respect to any income tax due by the Holder with respect to such Interest
      Shares.

     

    CONVERSION
      OF NOTES.
      This
      Note shall be convertible into shares of the Company's common stock, par value
      $0.01 per share (the "Common
      Stock"),
      on
      the terms and conditions set forth in this Section 3.

     

    Conversion
      Right.
      Subject
      to the provisions of Section 3(d), on the Maturity Date if a Qualified Financing
      shall not have occurred, the Holder shall be entitled to convert any portion
      of
      the outstanding and unpaid Conversion Amount (as defined below) into fully
      paid
      and nonassessable shares of Common Stock in accordance with Section 3(c), at
      the
      Conversion Rate (as defined below). The Company shall not issue any fraction
      of
      a share of Common Stock upon any conversion. If the issuance would result in
      the
      issuance of a fraction of a share of Common Stock, the Company shall round
      such
      fraction of a share of Common Stock up to the nearest whole share. The Company
      shall pay any and all taxes that may be payable with respect to the issuance
      and
      delivery of Common Stock upon conversion of any Conversion Amount.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

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

     

    "Conversion
      Amount"
      means
      the portion of the Principal to be converted, redeemed or otherwise with respect
      to which this determination is being made.

     

    "Conversion
      Price"
      means,
      as of any Conversion Date (as defined below) or other date of determination,
      $0.40, subject to adjustment as provided herein. 

     

    Mechanics
      of Conversion.

     

    Optional
      Conversion.
      To
      convert any Conversion Amount into shares of Common Stock on the Maturity Date
      (a "Conversion
      Date"),
      the
      Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or
      prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice
      of conversion in the form attached hereto as Exhibit
      I
      (the
      "Conversion
      Notice")
      to the
      Company and (B) if required by Section 3(c)(iii), surrender this Note to a
      common carrier for delivery to the Company as soon as practicable on or
      following such date (or an indemnification undertaking with respect to this
      Note
      in the case of its loss, theft or destruction). On or before the first
      (1st)
      Business Day following the date of receipt of a Conversion Notice, the Company
      shall transmit by facsimile a confirmation of receipt of such Conversion Notice
      to the Holder and the Transfer Agent. On or before the second (2nd)
      Business Day following the date of receipt of a Conversion Notice (the
      "Share
      Delivery Date"),
      the
      Company shall (X) provided that the Transfer Agent is participating in the
      DTC
      Fast Automated Securities Transfer Program, credit such aggregate number of
      shares of Common Stock to which the Holder shall be entitled to the Holder's
      or
      its designee's balance account with DTC through its Deposit Withdrawal Agent
      Commission system or (Y) if the Transfer Agent is not participating in the
      DTC
      Fast Automated Securities Transfer Program, issue and deliver to the address
      as
      specified in the Conversion Notice, a certificate, registered in the name of
      the
      Holder or its designee, for the number of shares of Common Stock to which the
      Holder shall be entitled. If this Note is physically surrendered for conversion
      as required by Section 3(c)(iii) and the outstanding Principal of this Note
      is
      greater than the Principal portion of the Conversion Amount being converted,
      then the Company shall as soon as practicable and in no event later than three
      (3) Business Days after receipt of this Note and at its own expense, issue
      and
      deliver to the holder a new Note (in accordance with Section 17(d)) representing
      the outstanding Principal not converted. The Person or Persons entitled to
      receive the shares of Common Stock issuable upon a conversion of this Note
      shall
      be treated for all purposes as the record holder or holders of such shares
      of
      Common Stock on the Conversion Date. 

     

    Company's
      Failure to Timely Convert.
      If the
      Company shall fail to issue a certificate to the Holder or credit the Holder's
      balance account with DTC for the number of shares of Common Stock to which
      the
      Holder is entitled upon conversion of any Conversion Amount on or prior to
      the
      date which is three (3) Trading Days after the Conversion Date (a "Conversion
      Failure"),
      then
      (A) the Company shall pay damages to the Holder in cash for each day of such
      Conversion Failure in an amount equal to 3.0% of the product of (I) the sum
      of
      the number of shares of Common Stock not issued to the Holder on or prior to
      the
      Share Delivery Date and to which the Holder is entitled, and (II) the Closing
      Sale Price of the shares of Common Stock on the Share Delivery Date and (B)
      the
      Holder, upon written notice to the Company, may void its Conversion Notice
      with
      respect to, and retain or have returned, as the case may be, any portion of
      this
      Note that has not been converted pursuant to such Conversion Notice;
provided
      that the
      voiding of a Conversion Notice shall not affect the Company's obligations to
      make any payments which have accrued prior to the date of such notice pursuant
      to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if within
      three (3) Trading Days after the Company's receipt of the facsimile copy of
      a
      Conversion Notice the Company shall fail to issue and deliver a certificate
      to
      the Holder or credit the Holder's balance account with DTC for the number of
      shares of Common Stock to which the Holder is entitled upon such holder's
      conversion of any Conversion Amount (a "Conversion
      Failure"),
      and
      if on or after such Trading Day the Holder purchases (in an open market
      transaction or otherwise) Common Stock to deliver in satisfaction of a sale
      by
      the Holder of Common Stock issuable upon such conversion that the Holder
      anticipated receiving from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Business Days after the Holder's request
      and
      in the Holder's discretion, either (i) pay cash to the Holder in an amount
      equal
      to the Holder's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to the Holder a certificate or certificates representing such Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the Closing Bid Price on the Conversion Date.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    Book-Entry.
      Notwithstanding anything to the contrary set forth herein, upon conversion
      of
      any portion of this Note in accordance with the terms hereof, the Holder shall
      not be required to physically surrender this Note to the Company unless (A)
      the
      full Conversion Amount represented by this Note is being converted or (B) the
      Holder has provided the Company with prior written notice (which notice may
      be
      included in a Conversion Notice) requesting reissuance of this Note upon
      physical surrender of this Note. The Holder and the Company shall maintain
      records showing the Principal, Interest and Late Charges converted and the
      dates
      of such conversions or shall use such other method, reasonably satisfactory
      to
      the Holder and the Company, so as not to require physical surrender of this
      Note
      upon conversion.

     

    Pro
      Rata Conversion; Disputes.
      In the
      event that the Company receives a Conversion Notice from more than one holder
      of
      Notes for the same Conversion Date and the Company can convert some, but not
      all, of such portions of the Notes submitted for conversion, the Company,
      subject to Section 3(d), shall convert from each holder of Notes electing to
      have Notes converted on such date a pro rata amount of such holder's portion
      of
      its Notes submitted for conversion based on the principal amount of Notes
      submitted for conversion on such date by such holder relative to the aggregate
      principal amount of all Notes submitted for conversion on such date. In the
      event of a dispute as to the number of shares of Common Stock issuable to the
      Holder in connection with a conversion of this Note, the Company shall issue
      to
      the Holder the number of shares of Common Stock not in dispute and resolve
      such
      dispute in accordance with Section 22.

     

    Limitations
      on Conversions.
      The
      Company shall not effect any conversion of this Note, and the Holder of this
      Note shall not have the right to convert any portion of this Note pursuant
      to
      Section 3(a), to the extent that after giving effect to such conversion, the
      Holder (together with the Holder's affiliates) would beneficially own in excess
      of 9.99% (the "Maximum
      Percentage")
      of the
      number of shares of Common Stock outstanding immediately after giving effect
      to
      such conversion. For purposes of the foregoing sentence, the number of shares
      of
      Common Stock beneficially owned by the Holder and its affiliates shall include
      the number of shares of Common Stock issuable upon conversion of this Note
      with
      respect to which the determination of such sentence is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon (A)
      conversion of the remaining, nonconverted portion of this Note beneficially
      owned by the Holder or any of its affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any Other Notes or warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its affiliates. Except as
      set
      forth in the preceding sentence, for purposes of this Section 3(d)(i),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended. For purposes of this Section
      3(d)(i), in determining the number of outstanding shares of Common Stock, the
      Holder may rely on the number of outstanding shares of Common Stock as reflected
      in (x) the Company's most recent Form 10-Q or Form 8-K, as the case may be
      (y) a
      more recent public announcement by the Company or (z) any other notice by the
      Company or the Transfer Agent setting forth the number of shares of Common
      Stock
      outstanding. For any reason at any time, upon the written or oral request of
      the
      Holder, the Company shall within one Business Day confirm orally and in writing
      to the Holder the number of shares of Common Stock then outstanding. In any
      case, the number of outstanding shares of Common Stock shall be determined
      after
      giving effect to the conversion or exercise of securities of the Company,
      including this Note, by the Holder or its affiliates since the date as of which
      such number of outstanding shares of Common Stock was reported. By written
      notice to the Company, the Holder may increase or decrease the Maximum
      Percentage to any other percentage not in excess of 9.99% specified in such
      notice; provided that (i) any such increase will not be effective until the
      sixty-first (61st)
      day
      after such notice is delivered to the Company, and (ii) any such increase or
      decrease will apply only to the Holder and not to any other holder of
      Notes.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    RIGHTS
      UPON EVENT OF DEFAULT.

     

    Event
      of Default.
      Each of
      the following events shall constitute an "Event
      of Default":

     

    the
      failure of the applicable Registration Statement required to be filed pursuant
      to the Registration Rights Agreement to be declared effective by the SEC on
      or
      prior to the date that is forty-five (45) days after the applicable
      Effectiveness Deadline (as defined in the Registration Rights Agreement), or,
      while the applicable Registration Statement is required to be maintained
      effective pursuant to the terms of the Registration Rights Agreement, the
      effectiveness of the applicable Registration Statement lapses for any reason
      (including, without limitation, the issuance of a stop order) or is unavailable
      to any holder of the Notes for sale of all of such holder's Registrable
      Securities (as defined in the Registration Rights Agreement) in accordance
      with
      the terms of the Registration Rights Agreement, and such lapse or unavailability
      continues for a period of ten (10) consecutive days or for more than an
      aggregate of thirty (30) days in any 365-day period (other than days during
      an
      Allowable Grace Period (as defined in the Registration Rights
      Agreement));

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    the
      suspension from trading or failure of the Common Stock to be listed on an
      Eligible Market for a period of five (5) consecutive days or for more than
      an
      aggregate of ten (10) days in any 365-day period;

     

    the
      Company's (A) failure to cure a Conversion Failure by delivery of the required
      number of shares of Common Stock within ten (10) Business Days after the
      applicable Conversion Date or (B) notice, written or oral, to any holder of
      the
      Notes, including by way of public announcement or through any of its agents,
      at
      any time, of its intention not to comply with a request for conversion of any
      Notes into shares of Common Stock that is tendered in accordance with the
      provisions of the Notes, other than pursuant to Section 3(d);

     

    at
      any
      time following the tenth (10th)
      consecutive Business Day that the Holder's Authorized Share Allocation is less
      than the number of shares of Common Stock that the Holder would be entitled
      to
      receive upon a conversion of the full Conversion Amount of this Note (without
      regard to any limitations on conversion set forth in Section 3(d) or
      otherwise);

     

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

     

    any
      default under, redemption of or acceleration prior to maturity of any
      Indebtedness (as defined in Section 3(s) of the Securities Purchase Agreement)
      of the Company or any of its Subsidiaries (as defined in Section 3(a) of the
      Securities Purchase Agreement) other than with respect to any Other
      Notes;

     

    the
      Company or any of its Subsidiaries, pursuant to or within the meaning of Title
      11, U.S. Code, or any similar Federal, foreign or state law for the relief
      of
      debtors (collectively, "Bankruptcy
      Law"),
      (A)
      commences a voluntary case, (B) consents to the entry of an order for relief
      against it in an involuntary case, (C) consents to the appointment of a
      receiver, trustee, assignee, liquidator or similar official (a "Custodian"),
      (D)
      makes a general assignment for the benefit of its creditors or (E) admits in
      writing that it is generally unable to pay its debts as they become
      due;

     

    a
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that (A) is for relief against the Company or any of its Subsidiaries in an
      involuntary case, (B) appoints a Custodian of the Company or any of its
      Subsidiaries or (C) orders the liquidation of the Company or any of its
      Subsidiaries;

     

    a
      final
      judgment or judgments for the payment of money aggregating in excess of $100,000
      are rendered against the Company or any of its Subsidiaries and which judgments
      are not, within sixty (60) days after the entry thereof, bonded, discharged
      or
      stayed pending appeal, or are not discharged within sixty (60) days after the
      expiration of such stay; provided, however, that any judgment which is covered
      by insurance or an indemnity from a credit worthy party shall not be included
      in
      calculating the $100,000 amount set forth above so long as the Company provides
      the Holder a written statement from such insurer or indemnity provider (which
      written statement shall be reasonably satisfactory to the Holder) to the effect
      that such judgment is covered by insurance or an indemnity and the Company
      will
      receive the proceeds of such insurance or indemnity within thirty (30) days
      of
      the issuance of such judgment;

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    the
      Company breaches any representation, warranty, covenant or other term or
      condition of any Transaction Document, except, in the case of a breach of a
      covenant or other term or condition of any Transaction Document which is
      curable, only if such breach continues for a period of at least ten (10)
      consecutive Business Days;

     

    any
      breach or failure in any respect to comply with either of Section 13 of this
      Note; 

     

    any
      Event
      of Default (as defined in the Other Notes) occurs with respect to any Other
      Notes; or

     

    the
      Company's failure to enter into the Security Documents (as defined in the
      Securities Purchase Agreement) within 30 days of the Issuance Date.

     

    Redemption
      Right.
      Promptly after the occurrence of an Event of Default with respect to this Note
      or any Other Note, the Company shall deliver written notice thereof via
      facsimile and overnight courier (an "Event
      of Default Notice")
      to the
      Holder. At any time after the earlier of the Holder's receipt of an Event of
      Default Notice and the Holder becoming aware of an Event of Default, the Holder
      may require the Company to redeem all or any portion of this Note by delivering
      written notice thereof (the "Event
      of Default Redemption Notice")
      to the
      Company, which Event of Default Redemption Notice shall indicate the portion
      of
      this Note the Holder is electing to redeem. Each portion of this Note subject
      to
      redemption by the Company pursuant to this Section 4(b) shall be redeemed by
      the
      Company at a price equal to the greater of (i) the product of (x) the sum of
      the
      Conversion Amount to be redeemed together with accrued and unpaid Interest
      with
      respect to such Conversion Amount and accrued and unpaid Late Charges with
      respect to such Conversion Amount and Interest and (y) the Redemption Premium
      and (ii) the product of (A) the Conversion Rate with respect to such sum of
      the
      Conversion Amount together with accrued and unpaid Interest with respect to
      such
      Conversion Amount and accrued and unpaid Late Charges with respect to such
      Conversion Amount and Interest in effect at such time as the Holder delivers
      an
      Event of Default Redemption Notice and (B) the Closing Sale Price of the Common
      Stock on the date immediately preceding such Event of Default (the "Event
      of Default Redemption
      Price").
      Redemptions required by this Section 4(b) shall be made in accordance with
      the
      provisions of Section 11. To the extent redemptions required by this Section
      4(b) are deemed or determined by a court of competent jurisdiction to be
      prepayments of the Note by the Company, such redemptions shall be deemed to
      be
      voluntary prepayments. The parties hereto agree that in the event of the
      Company's redemption of any portion of the Note under this Section 4(b), the
      Holder's damages would be uncertain and difficult to estimate because of the
      parties' inability to predict future interest rates and the uncertainty of
      the
      availability of a suitable substitute investment opportunity for the Holder.
      Accordingly, any Redemption Premium due under this Section 4(b) is intended
      by
      the parties to be, and shall be deemed, a reasonable estimate of the Holder's
      actual loss of its investment opportunity and not as a penalty. 

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    RIGHTS
      UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

     

    Assumption.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (i)  the Successor Entity assumes in writing all of the obligations of the
      Company under this Note and the other Transaction Documents in accordance with
      the provisions of this Section 5(a) pursuant to written agreements in form
      and
      substance reasonably satisfactory to the Required Holders and approved by the
      Required Holders prior to such Fundamental Transaction, including agreements
      to
      deliver to each holder of Notes in exchange for such Notes a security of the
      Successor Entity evidenced by a written instrument substantially similar in
      form
      and substance to the Notes, including, without limitation, having a principal
      amount and interest rate equal to the principal amounts and the interest rates
      of the Notes held by such holder and having similar ranking to the Notes, and
      satisfactory to the Required Holders and (ii)  the Successor Entity
      (including its Parent Entity) is a publicly traded corporation whose common
      stock is quoted on or listed for trading on an Eligible Market (a "Public
      Successor Entity").
      Upon
      the occurrence of any Fundamental Transaction, the Successor Entity shall
      succeed to, and be substituted for (so that from and after the date of such
      Fundamental Transaction, the provisions of this Note referring to the "Company"
      shall refer instead to the Successor Entity), and may exercise every right
      and
      power of the Company and shall assume all of the obligations of the Company
      under this Note with the same effect as if such Successor Entity had been named
      as the Company herein. Upon consummation of the Fundamental Transaction, the
      Successor Entity shall deliver to the Holder confirmation that there shall
      be
      issued upon conversion or redemption of this Note at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      shares of the Company's Common Stock (or
      other
      securities, cash, assets or other property) purchasable
      upon the conversion or redemption of the Notes prior to such Fundamental
      Transaction,
      such
      shares of the publicly traded common stock (or its equivalent) of the Successor
      Entity (including its Parent Entity), as adjusted in accordance with the
      provisions of this Note. The
      provisions of this Section shall apply similarly and equally to successive
      Fundamental Transactions and shall be applied without regard to any limitations
      on the conversion or redemption of this Note.

     

    Redemption
      Right.
      No
      sooner than fifteen (15) days nor later than ten (10) days prior to the
      consummation of a Change of Control, but not prior to the public announcement
      of
      such Change of Control, the Company shall deliver written notice thereof via
      facsimile and overnight courier to the Holder (a "Change
      of Control Notice").
      At
      any time during the period beginning after the Holder's receipt of a Change
      of
      Control Notice and ending on the date of the consummation of such Change of
      Control (or, in the event a Change of Control Notice is not delivered at least
      ten (10) days prior to a Change of Control, at any time on or after the date
      which is ten (10) days prior to a Change of Control and ending ten (10) days
      after the consummation of such Change of Control), the Holder may require the
      Company to redeem all or any portion of this Note by delivering written notice
      thereof ("Change
      of Control Redemption Notice")
      to the
      Company, which Change of Control Redemption Notice shall indicate the Conversion
      Amount the Holder is electing to redeem. The portion of this Note subject to
      redemption pursuant to this Section 5 shall be redeemed by the Company at a
      price equal to the greater of (i) the product of (x) 125% of the sum of the
      Conversion Amount being redeemed together with accrued and unpaid Interest
      with
      respect to such Conversion Amount and accrued and unpaid Late Charges with
      respect to such Conversion Amount and Interest and (y) the quotient determined
      by dividing (A) the Closing Sale Price of the Common Stock immediately following
      the public announcement of such proposed Change of Control by (B) the Conversion
      Price and (ii) 125% of the sum of the Conversion Amount being redeemed together
      with accrued and unpaid Interest with respect to such Conversion Amount and
      accrued and unpaid Late Charges with respect to such Conversion Amount and
      Interest (the "Change
      of Control Redemption Price").
      Redemptions required by this Section 5 shall be made in accordance with the
      provisions of Section 11 and shall have priority to payments to stockholders
      in
      connection with a Change of Control. To the extent redemptions required by
      this
      Section 5(b) are deemed or determined by a court of competent jurisdiction
      to be
      prepayments of the Note by the Company, such redemptions shall be deemed to
      be
      voluntary prepayments. Notwithstanding anything to the contrary in this Section
      5, but subject to Section 3(d), until the Change of Control Redemption Price
      (together with any interest thereon) is paid in full, the Conversion Amount
      submitted for redemption under this Section 5(c) (together with any interest
      thereon) may be converted, in whole or in part, by the Holder into Common Stock
      pursuant to Section 3. The parties hereto agree that in the event of the
      Company's redemption of any portion of the Note under this Section 5(b), the
      Holder's damages would be uncertain and difficult to estimate because of the
      parties' inability to predict future interest rates and the uncertainty of
      the
      availability of a suitable substitute investment opportunity for the Holder.
      Accordingly, any redemption premium due under this Section 5(b) is intended
      by
      the parties to be, and shall be deemed, a reasonable estimate of the Holder's
      actual loss of its investment opportunity and not as a penalty. 

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    RIGHTS
      UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

     

    Purchase
      Rights.
      If at
      any time the Company grants, issues or sells any Options, Convertible Securities
      or rights to purchase stock, warrants, securities or other property pro rata
      to
      the record holders of any class of Common Stock (the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete conversion of this Note (without taking into account any
      limitations or restrictions on the convertibility of this Note) 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.

     

    Other
      Corporate Events.
      In
      addition to and not in substitution for any other rights hereunder, prior to
      the
      consummation of any Fundamental Transaction pursuant to which holders of shares
      of Common Stock are entitled to receive securities or other assets with respect
      to or in exchange for shares of Common Stock (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon a conversion of this Note, (i) in
      addition to the shares of Common Stock receivable upon such conversion, such
      securities or other assets to which the Holder would have been entitled with
      respect to such shares of Common Stock had such shares of Common Stock been
      held
      by the Holder upon the consummation of such Corporate Event (without taking
      into
      account any limitations or restrictions on the convertibility of this Note)
      or
      (ii) in lieu of the shares of Common Stock otherwise receivable upon such
      conversion, such securities or other assets received by the holders of shares
      of
      Common Stock in connection with the consummation of such Corporate Event in
      such
      amounts as the Holder would have been entitled to receive had this Note
      initially been issued with conversion rights for the form of such consideration
      (as opposed to shares of Common Stock) at a conversion rate for such
      consideration commensurate with the Conversion Rate. Provision made pursuant
      to
      the preceding sentence shall be in a form and substance satisfactory to the
      Required Holders. The provisions of this Section shall apply similarly and
      equally to successive Corporate Events and shall be applied without regard
      to
      any limitations on the conversion or redemption of this Note.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    RIGHTS
      UPON ISSUANCE OF OTHER SECURITIES.

     

    Adjustment
      of Conversion Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the
      Conversion Price in effect immediately prior to such subdivision will be
      proportionately reduced. If the Company at any time on or after the Subscription
      Date combines (by combination, reverse stock split or otherwise) one or more
      classes of its outstanding shares of Common Stock into a smaller number of
      shares, the Conversion Price in effect immediately prior to such combination
      will be proportionately increased.

     

    Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 7 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company's Board of Directors will make an
      appropriate adjustment in the Conversion Price so as to protect the rights
      of
      the Holder under this Note; provided that no such adjustment will increase
      the
      Conversion Price as otherwise determined pursuant to this Section
      7.

     

    HOLDERS
      RIGHT OF EXCHANGE.
      Upon
      the consummation of a Qualified Financing, the Holder shall have the right
      to
      exchange all or any part of this Note for the securities issued in such
      Qualified Financing. The Notes shall purchase such securities at a price equal
      to 110% of the Conversion Amount plus accrued and unpaid Interest on this Note
      being exchanged.

     

    NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Certificate of Incorporation, Bylaws or through any reorganization, transfer
      of assets, consolidation, merger, scheme of arrangement, dissolution, issue
      or
      sale of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Note, and will at all
      times in good faith carry out all of the provisions of this Note and take all
      action as may be required to protect the rights of the Holder of this Note.
      

     

    RESERVATION
      OF AUTHORIZED SHARES.

     

    Reservation.
      The
      Company shall initially reserve out of its authorized and unissued Common Stock
      a number of shares of Common Stock for each of the Notes equal to 110% of the
      Conversion Rate with respect to the Conversion Amount of each such Note as
      of
      the Issuance Date.
      So
      long as any of the Notes are outstanding, the Company shall take all action
      necessary to reserve and keep available out of its authorized and unissued
      Common Stock, solely for the purpose of effecting the conversion of the Notes,
      125% of the number of shares of Common Stock as shall from time to time be
      necessary to effect the conversion of all of the Notes then outstanding;
      provided that at no time shall the number of shares of Common Stock so reserved
      be less than the number of shares required to be reserved by the previous
      sentence (without regard to any limitations on conversions) (the "Required
      Reserve Amount").
      The
      initial number of shares of Common Stock reserved for conversions of the Notes
      and each increase in the number of shares so reserved shall be allocated pro
      rata among the holders of the Notes based on the principal amount of the Notes
      held by each holder at the Closing (as defined in the Securities Purchase
      Agreement) or increase in the number of reserved shares, as the case may be
      (the
      "Authorized
      Share Allocation").
      In
      the event that a holder shall sell or otherwise transfer any of such holder's
      Notes, each transferee shall be allocated a pro rata portion of such holder's
      Authorized Share Allocation. Any shares of Common Stock reserved and allocated
      to any Person which ceases to hold any Notes shall be allocated to the remaining
      holders of Notes, pro rata based on the principal amount of the Notes then
      held
      by such holders.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    Insufficient
      Authorized Shares.
      If at
      any time while any of the Notes remain outstanding the Company does not have
      a
      sufficient number of authorized and unreserved shares of Common Stock to satisfy
      its obligation to reserve for issuance upon conversion of the Notes at least
      a
      number of shares of Common Stock equal to the Required Reserve Amount (an
      "Authorized
      Share Failure"),
      then
      the Company shall immediately take all action necessary to increase the
      Company's authorized shares of Common Stock to an amount sufficient to allow
      the
      Company to reserve the Required Reserve Amount for the Notes then outstanding.
      Without limiting the generality of the foregoing sentence, as soon as
      practicable after the date of the occurrence of an Authorized Share Failure,
      but
      in no event later than sixty (60) days after the occurrence of such Authorized
      Share Failure, the Company shall hold a meeting of its stockholders for the
      approval of an increase in the number of authorized shares of Common Stock.
      In
      connection with such meeting, the Company shall provide each stockholder with
      a
      proxy statement and shall use its best efforts to solicit its stockholders'
      approval of such increase in authorized shares of Common Stock and to cause
      its
      board of directors to recommend to the stockholders that they approve such
      proposal.

     

    HOLDER'S
      REDEMPTIONS.

     

    Mechanics.
      The
      Company shall deliver the applicable Event of Default Redemption Price to the
      Holder within five Business Days after the Company's receipt of the Holder's
      Event of Default Redemption Notice. If the Holder has submitted a Change of
      Control Redemption Notice in accordance with Section 5(b), the Company shall
      deliver the applicable Change of Control Redemption Price to the Holder
      concurrently with the consummation of such Change of Control if such notice
      is
      received prior to the consummation of such Change of Control and within five
      (5)
      Business Days after the Company's receipt of such notice otherwise. In the
      event
      of a redemption of less than all of the Conversion Amount of this Note, the
      Company shall promptly cause to be issued and delivered to the Holder a new
      Note
      (in accordance with Section 17(d)) representing the outstanding Principal which
      has not been redeemed. In the event that the Company does not pay the applicable
      Redemption Price to the Holder within the time period required, at any time
      thereafter and until the Company pays such unpaid Redemption Price in full,
      the
      Holder shall have the option, in lieu of redemption, to require the Company
      to
      promptly return to the Holder all or any portion of this Note representing
      the
      Conversion Amount that was submitted for redemption and for which the applicable
      Redemption Price (together with any Late Charges thereon) has not been paid.
      Upon the Company's receipt of such notice, (x) the applicable Redemption Notice
      shall be null and void with respect to such Conversion Amount, (y) the Company
      shall immediately return this Note, or issue a new Note (in accordance with
      Section 17(d)) to the Holder representing the sum of such Conversion Amount
      to
      be redeemed together with accrued and unpaid Interest with respect to such
      Conversion Amount and accrued and unpaid Late Charges with respect to such
      Conversion Amount and Interest and (z) the Conversion Price of this Note or
      such
      new Notes shall be adjusted to the lesser of (A) the Conversion Price as in
      effect on the date on which the applicable Redemption Notice is voided and
      (B)
      the lowest Closing Bid Price of the Common Stock during the period beginning
      on
      and including the date on which the applicable Redemption Notice is delivered
      to
      the Company and ending on and including the date on which the applicable
      Redemption Notice is voided. The Holder's delivery of a notice voiding a
      Redemption Notice and exercise of its rights following such notice shall not
      affect the Company's obligations to make any payments of Late Charges which
      have
      accrued prior to the date of such notice with respect to the Conversion Amount
      subject to such notice.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    Redemption
      by Other Holders.
      Upon
      the Company's receipt of notice from any of the holders of the Other Notes
      for
      redemption or repayment as a result of an event or occurrence substantially
      similar to the events or occurrences described in Section 4(b) or Section 5(b)
      (each, an "Other
      Redemption Notice"),
      the
      Company shall immediately forward to the Holder by facsimile a copy of such
      notice. If the Company receives a Redemption Notice and one or more Other
      Redemption Notices, during the seven (7) Business Day period beginning on and
      including the date which is three (3) Business Days prior to the Company's
      receipt of the Holder's Redemption Notice and ending on and including the date
      which is three (3) Business Days after the Company's receipt of the Holder's
      Redemption Notice and the Company is unable to redeem all principal, interest
      and other amounts designated in such Redemption Notice and such Other Redemption
      Notices received during such seven (7) Business Day period, then the Company
      shall redeem a pro rata amount from each holder of the Notes (including the
      Holder) based on the principal amount of the Notes submitted for redemption
      pursuant to such Redemption Notice and such Other Redemption Notices received
      by
      the Company during such seven Business Day period.

     

    VOTING
      RIGHTS.
      The
      Holder shall have no voting rights as the holder of this Note, except as
      required by law, including, but not limited to, the General Corporation Law
      of
      the State of Delaware, and as expressly provided in this Note.

     

    COVENANTS.

     

    Rank. All
      payments due under this Note (a) shall rank pari
      passu
      with all
      Other Notes and (b) shall be senior to all other Indebtedness of the Company
      and
      its Subsidiaries, other than the Mortgage (as defined below) and the Equipment
      Line (as defined below).

     

    Incurrence
      of Indebtedness.
      So long
      as this Note is outstanding, the Company shall not, and the Company shall not
      permit any of its Subsidiaries to, directly or indirectly, incur or guarantee,
      assume or suffer to exist any Indebtedness, other than (i) the Indebtedness
      evidenced by this Note and the Other Notes and (ii) Permitted
      Indebtedness.

     

    Existence
      of Liens.
      So long
      as this Note is outstanding, the Company shall not, and the Company shall not
      permit any of its Subsidiaries to, directly or indirectly, allow or suffer
      to
      exist any mortgage, lien, pledge, charge, security interest or other encumbrance
      upon or in any property or assets (including accounts and contract rights)
      owned
      by the Company or any of its Subsidiaries (collectively, "Liens")
      other
      than Permitted Liens.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

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

     

    Restriction
      on Transfer of Assets.
      Other
      than in connection with a Fundamental Transaction, the Company shall not, and
      shall not permit any Subsidiary to sell, lease, convey or otherwise dispose
      of
      any assets or rights of the Company, or Subsidiaries taken as a whole, owned
      or
      hereafter acquired whether in a single transaction or a series of related
      transactions, that have fair market value in excess of $100,000 in any twelve
      (12) month period.

     

    Indebtedness.
      The
      Company shall not permit any Indebtedness to mature or accelerate prior to
      the
      Maturity Date.

     

    PARTICIPATION.
      The
      Holder, as the holder of this Note, shall be entitled to receive such dividends
      paid and distributions made to the holders of Common Stock to the same extent
      as
      if the Holder had converted this Note into Common Stock (without regard to
      any
      limitations on conversion herein or elsewhere) and had held such shares of
      Common Stock on the record date for such dividends and distributions. Payments
      under the preceding sentence shall be made concurrently with the dividend or
      distribution to the holders of Common Stock. 

     

    VOTE
      TO ISSUE, OR CHANGE THE TERMS OF, NOTES.
      The
      affirmative vote at a meeting duly called for such purpose or the written
      consent without a meeting of the Required Holders shall be required for any
      change or amendment to this Note or the Other Notes.

     

    TRANSFER.
      This
      Note and any shares of Common Stock issued upon conversion of this Note may
      be
      offered, sold, assigned or transferred by the Holder without the consent of
      the
      Company, subject only to the provisions of Section 2(f) of the Securities
      Purchase Agreement.

     

    REISSUANCE
      OF THIS NOTE.

     

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

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

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

     

    Note
      Exchangeable for Different Denominations.
      This
      Note is exchangeable, upon the surrender hereof by the Holder at the principal
      office of the Company, for a new Note or Notes (in accordance with Section
      17(d)
      and in principal amounts of at least $100,000) representing in the aggregate
      the
      outstanding Principal of this Note, and each such new Note will represent such
      portion of such outstanding Principal as is designated by the Holder at the
      time
      of such surrender.

     

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

     

    REMEDIES,
      CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
      RELIEF.
      The
      remedies provided in this Note shall be cumulative and in addition to all other
      remedies available under this Note and any of the other Transaction Documents
      at
      law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the Holder's right to pursue
      actual and consequential damages for any failure by the Company to comply with
      the terms of this Note. Amounts set forth or provided for herein with respect
      to
      payments, conversion and the like (and the computation thereof) shall be the
      amounts to be received by the Holder and shall not, except as expressly provided
      herein, be subject to any other obligation of the Company (or the performance
      thereof). The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the Holder shall be entitled,
      in
      addition to all other available remedies, to an injunction restraining any
      breach, without the necessity of showing economic loss and without any bond
      or
      other security being required.

     

    PAYMENT
      OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
      If (a)
      this Note is placed in the hands of an attorney for collection or enforcement
      or
      is collected or enforced through any legal proceeding or the Holder otherwise
      takes action to collect amounts due under this Note or to enforce the provisions
      of this Note or (b) there occurs any bankruptcy, reorganization, receivership
      of
      the Company or other proceedings affecting Company creditors' rights and
      involving a claim under this Note, then the Company shall pay the costs incurred
      by the Holder for such collection, enforcement or action or in connection with
      such bankruptcy, reorganization, receivership or other proceeding, including,
      but not limited to, attorneys' fees and disbursements.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    CONSTRUCTION;
      HEADINGS.
      This
      Note shall be deemed to be jointly drafted by the Company and all the Purchasers
      and shall not be construed against any person as the drafter hereof. The
      headings of this Note are for convenience of reference and shall not form part
      of, or affect the interpretation of, this Note.

     

    FAILURE
      OR INDULGENCE NOT WAIVER.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privilege.

     

    DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Closing Bid Price, the Closing
      Sale Price or the Weighted Average Price or the arithmetic calculation of the
      Conversion Rate or the Redemption Price, the Company shall submit the disputed
      determinations or arithmetic calculations via facsimile within one (1) Business
      Day of receipt, or deemed receipt, of the Conversion Notice or Redemption Notice
      or other event giving rise to such dispute, as the case may be, to the Holder.
      If the Holder and the Company are unable to agree upon such determination or
      calculation within one (1) Business Day of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within one Business Day submit via facsimile (a) the disputed determination
      of
      the Closing Bid Price, the Closing Sale Price or the Weighted Average Price
      to
      an independent, reputable investment bank selected by the Company and approved
      by the Holder or (b) the disputed arithmetic calculation of the Conversion
      Rate
      or the Redemption Price to the Company's independent, outside accountant. The
      Company, at the Company's expense, shall cause the investment bank or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the Holder of the results no later than five (5)
      Business Days from the time it receives the disputed determinations or
      calculations. Such investment bank's or accountant's determination or
      calculation, as the case may be, shall be binding upon all parties absent
      demonstrable error.

     

    NOTICES;
      PAYMENTS.

     

    Notices.
      Whenever notice is required to be given under this Note, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Note, including
      in
      reasonable detail a description of such action and the reason therefore. Without
      limiting the generality of the foregoing, the Company will give written notice
      to the Holder (i) immediately upon any adjustment of the Conversion Price,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment and (ii) at least twenty (20) days prior to the date on which the
      Company closes its books or takes a record (A) with respect to any dividend
      or
      distribution upon the Common Stock, (B) with respect to any pro rata
      subscription offer to holders of Common Stock or (C) for determining rights
      to
      vote with respect to any Fundamental Transaction, dissolution or liquidation,
      provided in each case that such information shall be made known to the public
      prior to or in conjunction with such notice being provided to the
      Holder.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    GOVERNING
      LAW.
      This
      Note shall be construed and enforced in accordance with, and all questions
      concerning the construction, validity, interpretation and performance of this
      Note shall be governed by, the internal laws of the State of New York, without
      giving effect to any choice of law or conflict of law provision or rule (whether
      of the State of New York or any other jurisdictions) that would cause the
      application of the laws of any jurisdictions other than the State of New
      York.

     

    [INTENTIONALLY
      OMITTED]

     

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

     

    "Approved
      Stock Plan"
      means
      any employee benefit plan which has been approved by the Board of Directors
      of
      the Company, pursuant to which the Company's securities may be issued to any
      employee, officer or director for services provided to the Company.

     

    "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

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

     

    "Change
      of Control"
      means
      any Fundamental Transaction other than (i) any
      reorganization, recapitalization or reclassification of the Common Stock in
      which holders of the Company’s voting power immediately prior to such
      reorganization, recapitalization or reclassification continue after such
      reorganization, recapitalization or reclassification to hold publicly traded
      securities and, directly or indirectly, the voting power of the surviving entity
      or entities necessary to elect a majority of the members of the board of
      directors (or their equivalent if other than a corporation) of such entity
      or
      entities, or (ii) pursuant to a migratory merger effected solely for the purpose
      of changing the jurisdiction of incorporation of the Company.

     

    "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or last trade price,
      respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
      by Bloomberg, or, if the Principal Market is not the principal securities
      exchange or trading market for such security, the last closing bid price or
      last
      trade price, respectively, of such security on the principal securities exchange
      or trading market where such security is listed or traded as reported by
      Bloomberg, or if the foregoing do not apply, the last closing bid price or
      last
      trade price, respectively, of such security in the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg, or,
      if
      no closing bid price or last trade price, respectively, is reported for such
      security by Bloomberg, the average of the bid prices, or the ask prices,
      respectively, of any market makers for such security as reported in the "pink
      sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
      If
      the Closing Bid Price or the Closing Sale Price cannot be calculated for a
      security on a particular date on any of the foregoing bases, the Closing Bid
      Price or the Closing Sale Price, as the case may be, of such security on such
      date shall be the fair market value as mutually determined by the Company and
      the Holder. If the Company and the Holder are unable to agree upon the fair
      market value of such security, then such dispute shall be resolved pursuant
      to
      Section 22. All such determinations to be appropriately adjusted for any stock
      dividend, stock split, stock combination or other similar transaction during
      the
      applicable calculation period.

     

    "Closing
      Date"
      shall
      have the meaning set forth in the Securities Purchase Agreement, which date
      is
      the date the Company initially issued Notes pursuant to the terms of the
      Securities Purchase Agreement.

     

    "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for Common Stock.

     

    "Eligible
      Market"
      means
      the Principal Market, The New York Stock Exchange, Inc., the American Stock
      Exchange, the Nasdaq National Market or The Nasdaq Capital Market.

     

    "Equipment
      Line"
      means
      an equipment line of financing in an aggregate amount outstanding at any time
      not to exceed $500,000.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    "Excluded
      Securities"
      means
      any Common Stock issued or issuable: (i) in connection with any Approved Stock
      Plan; (ii) upon conversion of the Notes or the exercise of the Warrants; and
      (iii) upon conversion of any Options or Convertible Securities which are
      outstanding on the day immediately preceding the Subscription Date, provided
      that the terms of such Options or Convertible Securities are not amended,
      modified or changed on or after the Subscription Date.

     

    "Fundamental
      Transaction"
      means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) allow another Person to make
      a
      purchase, tender or exchange offer that is accepted by the holders of more
      than
      the 50% of the outstanding shares of Common Stock (not including any shares
      of
      Common Stock held by the Person or Persons making or party to, or associated
      or
      affiliated with the Persons making or party to, such purchase, tender or
      exchange offer), or (iv) consummate a stock purchase agreement or other business
      combination (including, without limitation, a reorganization, recapitalization,
      spin-off or scheme of arrangement) with another Person whereby such other Person
      acquires more than the 50% of the outstanding shares of Common Stock (not
      including any shares of Common Stock held by the other Person or other Persons
      making or party to, or associated or affiliated with the other Persons making
      or
      party to, such stock purchase agreement or other business combination), or
      (v)
      reorganize, recapitalize or reclassify its Common Stock.

     

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

     

    "Maturity Date"
      means
      the earlier of (i) March 15, 2006 and (ii) the date of consummation of a
      Qualified Financing; provided,
      however,
      that
      the Maturity Date may be extended at the option of the Holder (i) in the event
      that, and for so long as, an Event of Default shall have occurred and be
      continuing or any event shall have occurred and be continuing which with the
      passage of time and the failure to cure would result in an Event of Default
      and
      (ii) through the date that is ten (10) Business Days after the consummation
      of a
      Change of Control in the event that a Change of Control is publicly announced
      or
      a Change of Control Notice is delivered prior to the Maturity Date; provided,
      further,
      that if
      a Holder elects to convert some or all of this Note pursuant to Section 3
      hereof, and the Conversion Amount would be limited pursuant to Section 3(d)
      hereunder, the Maturity Date shall automatically be extended until such time
      as
      such provision shall not limit the conversion of this Note.

     

    "Mortgage"
      means
      the mortgage of the Company outstanding on the Issuance Date for
      $2,484,385.

     

    "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities.

     

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

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    "Permitted
      Indebtedness"
      means
      (i) the Equipment Line, (ii) the Mortgage and (iii) Indebtedness incurred by
      the
      Company that is made expressly subordinate in right of payment to the
      Indebtedness evidenced by this Note, as reflected in a written agreement
      acceptable to the Holder and approved by the Holder in writing, and which
      Indebtedness does not provide at any time for (1) the payment, prepayment,
      repayment, repurchase or defeasance, directly or indirectly, of any principal
      or
      premium, if any, thereon until ninety-one (91) days after the Maturity Date
      or
      later and (2) total interest and fees at a rate in excess of six percent (6.0%)
      per annum.

     

    "Permitted
      Liens"
      means
      (i) the Lien securing the Mortgage, (ii) the Lien securing the Equipment Line
      (provided that such Lien is limited to the equipment financed thereby), (iii)
      any Lien for taxes not yet due or delinquent or being contested in good faith
      by
      appropriate proceedings for which adequate reserves have been established in
      accordance with GAAP, (iv) any statutory Lien arising in the ordinary course
      of
      business by operation of law with respect to a liability that is not yet due
      or
      delinquent and (v) any Lien created by operation of law, such as materialmen's
      liens, mechanics' liens and other similar liens, arising in the ordinary course
      of business with respect to a liability that is not yet due or delinquent or
      that are being contested in good faith by appropriate proceedings.

     

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

     

    "Principal
      Market"
      means
      the OTC
      Bulletin Board.

     

    "Qualified
      Financing"
      means
      the issuance by the Company of any debt, equity or equity equivalent instrument,
      including Common Stock, Options or Convertible Securities, with aggregate gross
      proceeds to the Company of at least $6 million.

     

    "Redemption
      Premium"
      means
      (i) in the case of the Events of Default described in Section 4(a)(i) (vi)
      and
      (ix), (xii) 125% or (ii) in the case of the Events of Default described in
      Section 4(a)(vii), (viii) and (xiii), 100%.

     

    "Registration
      Rights Agreement"
      means
      that certain registration rights agreement dated as of the Subscription Date
      by
      and among the Company and the initial holders of the Notes relating to, among
      other things, the registration of the resale of the Common Stock issuable upon
      conversion of the Notes and exercise of the Warrants.

     

    "Required
      Holders"
      means
      the holders of Notes representing at least a majority of the aggregate principal
      amount of the Notes then outstanding.

     

    "SEC"
      means
      the United States Securities and Exchange Commission.

     

    "Securities
      Purchase Agreement"
      means
      that certain securities purchase agreement dated as of the Subscription Date
      by
      and among the Company and the initial holders of the Notes pursuant to which
      the
      Company issued the Notes.

     

    "Subscription
      Date"
      means
      December __, 2005.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    "Successor
      Entity"
      means
      the Person, which may be the Company, formed by, resulting from or surviving
      any
      Fundamental Transaction or the Person with which such Fundamental Transaction
      shall have been made, provided that if such Person is not a publicly traded
      entity whose common stock or equivalent equity security is quoted or listed
      for
      trading on an Eligible Market, Successor Entity shall mean such Person's Parent
      Entity.

     

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

     

    "Warrants"
      has the
      meaning ascribed to such term in the Securities Purchase Agreement, and shall
      include all warrants issued in exchange therefor or replacement
      thereof.

     

    "Weighted
      Average Price"
      means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market during the period beginning at 9:30:01
      a.m., New York Time (or such other time as the Principal Market publicly
      announces is the official open of trading), and ending at 4:00:00 p.m., New
      York
      Time (or such other time as the Principal Market publicly announces is the
      official close of trading) as reported by Bloomberg through its "Volume at
      Price" functions, or, if the foregoing does not apply, the dollar
      volume-weighted average price of such security in the over-the-counter market
      on
      the electronic bulletin board for such security during the period beginning
      at
      9:30:01 a.m., New York Time (or such other time as such market publicly
      announces is the official open of trading), and ending at 4:00:00 p.m., New
      York
      Time (or such other time as such market publicly announces is the official
      close
      of trading) as reported by Bloomberg, or, if no dollar volume-weighted average
      price is reported for such security by Bloomberg for such hours, the average
      of
      the highest closing bid price and the lowest closing ask price of any of the
      market makers for such security as reported in the "pink sheets" by Pink Sheets
      LLC (formerly the National Quotation Bureau, Inc.). If the Weighted Average
      Price cannot be calculated for a security on a particular date on any of the
      foregoing bases, the Weighted Average Price of such security on such date shall
      be the fair market value as mutually determined by the Company and the Holder.
      If the Company and the Holder are unable to agree upon the fair market value
      of
      such security, then such dispute shall be resolved pursuant to Section 22.
      All
      such determinations to be appropriately adjusted for any stock dividend, stock
      split, stock combination or other similar transaction during the applicable
      calculation period.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    DISCLOSURE.
      Upon
      receipt or delivery by the Company of any notice in accordance with the terms
      of
      this Note, unless the Company has in good faith determined that the matters
      relating to such notice do not constitute material, nonpublic information
      relating to the Company or its Subsidiaries, the Company shall within one (1)
      Business Day after any such receipt or delivery publicly disclose such material,
      nonpublic information on a Current Report on Form 8-K or otherwise. In the
      event
      that the Company believes that a notice contains material, nonpublic information
      relating to the Company or its Subsidiaries, the Company so shall indicate
      to
      such Holder contemporaneously with delivery of such notice, and in the absence
      of any such indication, the Holder shall be allowed to presume that all matters
      relating to such notice do not constitute material, nonpublic information
      relating to the Company or its Subsidiaries.

     

    [Signature
      Page Follows]

     

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	 	 
	 	
              UNIVERSAL
                FOOD & BEVERAGE COMPANY

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

            
	 	
              Title:

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
      I

     

    UNIVERSAL
      FOOD & BEVERAGE COMPANY

    CONVERSION
      NOTICE

     

    Reference
      is made to the Senior Convertible Note (the "Note")
      issued
      to the undersigned by Universal Food & Beverage Company (the "Company").
      In
      accordance with and pursuant to the Note, the undersigned hereby elects to
      convert the Conversion Amount (as defined in the Note) of the Note indicated
      below into shares of Common Stock par value $0.01 per share (the "Common
      Stock")
      of the
      Company, as of the date specified below.

     

    
      	
              Date
                of Conversion:
                _____________________________________________________________________

            
	 
	
              Aggregate
                Conversion Amount to be converted: 
                _______________________________________________

            
	 
	
              Please
                confirm the following information: 

            
	 
	
              Conversion
                Price:
                _______________________________________________________________________

            
	 
	
              Number
                of shares of Common Stock to be issued:
                _______________________________________________

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

            
	 
	
              Issue
                to: 
                ______________________________________________________________________________

            
	
               ______________________________________________________________________________

            
	
               ______________________________________________________________________________

            
	 
	
              Facsimile
                Number:
                _______________________________________________________________________

            
	 
	
              Authorization:
                __________________________________________________________________________

            
	 
	
              By: 
                ___________________________________________________________________________

            
	 
	
              Title:
                _____________________________________________________________________

            
	 
	
              Dated:
                _______________________________________________________________________________________

            
	 
	
              Account
                Number: 
                _______________________________________________________________________

            
	
                (if
                electronic book entry transfer)

            
	 
	
              Transaction
                Code Number: 
                ________________________________________________________________

            
	
                (if
                electronic book entry transfer)

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ACKNOWLEDGMENT

     

    The
      Company hereby acknowledges this Conversion Notice and hereby directs
[Transfer
      Agent]
      to issue
      the above indicated number of shares of Common Stock in accordance with the
      Transfer Agent Instructions dated December __, 2005 from the Company and
      acknowledged and agreed to by [Transfer
      Agent].

    
       

      
        	 	 	 
	 	
                UNIVERSAL
                  FOOD & BEVERAGE COMPANY

              
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name:

              
	 	
                Title:

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