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Exhibit 10.1    
  

 
 

MUTUAL RELEASE AND SETTLEMENT AGREEMENT    
  

        This Mutual Release and Settlement Agreement (this "Agreement") is entered into as of March 22, 2002 (the "Effective Date"), by and between
ASPEON, INC., a Delaware corporation (the "Company"), ASPEON SOLUTIONS, INC., a Delaware corporation and a wholly-owned subsidiary of the Company ("Aspeon Solutions"), and CASTLE CREEK
TECHNOLOGY PARTNERS LLC, a Delaware limited liability company ("Castle"). 

 
 

RECITALS    
  

        A.    Castle
purchased from Marshall Capital Management, Inc. ("Marshall"), and now is the record holder of, (i) 9,850 shares (the "Shares") of the Company's
Series A Convertible Exchangeable Preferred Stock (the "Series A Preferred Stock"), which Series A Preferred Stock is subject to the rights, preferences and privileges contained
in the Company's Certificate of Designations, Preferences and Rights relating to the Series A Convertible Exchangeable Preferred Stock (the "Certificate of Designation"), (ii) a warrant
to purchase 583,334 shares of common stock of the Company (the "Company Warrant") and (iii) a warrant to purchase 1,250,000 shares of common stock of Aspeon Solutions (the "Aspeon Solutions
Warrant"). In connection with such purchase, Marshall claims that it assigned to Castle its rights under (a) the Securities Purchase Agreement dated as of March 7, 2000 (the "Securities
Purchase Agreement") pursuant to which the Company sold to Marshall, and Marshall purchased from the Company, shares of Series A Preferred Stock and (b) the Registration Rights Agreement
dated as of March 7, 2000 (the "Registration Rights Agreement") pursuant to which Marshall was granted certain registration rights under the Securities Act of 1933, as amended, and under
applicable state securities laws. The Securities Purchase Agreement, the Company Warrant, Aspeon Solutions Warrant and Registration Rights Agreement are collectively referred to as the "Transaction
Documents." 

        B.    Castle
has alleged that the Company is in default under certain provisions of the Transaction Documents (the "Defaults"). Castle has agreed to waive any such Defaults, on
the terms and subject to the conditions hereof. 

        NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 

 
 

AGREEMENT    
  

        1.    Cancellation of Stock and Transaction Documents; Closing.    Effective upon the delivery of the Consideration
(as defined below) by the Company and Aspeon Solutions to Castle (the "Closing"), the Shares and the Transaction Documents shall be cancelled and of no further force or effect and Castle hereby waives
any and all rights it has under the Transaction Document and the Shares. At the Closing, Castle agrees to deliver to the Company and Aspeon Solutions an executed copy of the Stock Assignment Separate
From Certificate in the form attached hereto as Exhibit A. The Closing is contemplated to take place on March 25, 2002, or as soon
thereafter as agreed to by the Company, Aspeon Solutions and Castle. 

        2.    Consideration.    In consideration of the cancellation of the Shares and the Transaction Documents, Castle's
waiver of any and all rights it has under the Transaction Documents and the Shares and the general release of Castle provided herein, the Company and Aspeon Solutions shall pay or cause to be paid to,
or deliver to, Castle at the Closing $447,500 by a wire transfer of immediately available funds. 

        3.    General Release by the Company and Aspeon Solutions.    Effective at the time of the Closing, other than the
express duties and obligations created by this Agreement, the Company and Aspeon Solutions, on behalf of themselves, their agents, legal representatives, affiliates, successors, predecessors 

and assigns, fully and completely release and discharge Castle, and its corporations, trusts, officers, directors, employees, agents, attorneys, representatives, shareholders, successors,
predecessors and assigns, and any of their respective past, present, successor and future corporations, officers, directors, employees, agents, representatives, attorneys, successors, predecessors,
assigns and affiliates (collectively, the "Castle Released Parties"), from any and all claims, causes of action, demands or liability of any and every character, known or unknown, contingent or
matured, that they may have had to the Castle Released Parties that have occurred on or before the date of the Closing, including without limitation, any claims directly or indirectly related to the
Transaction Documents, the Shares or the Defaults. Effective at the time of the Closing, the Company and Aspeon Solutions agree not to initiate a lawsuit or bring a claim against any of the Castle
Released Parties, in any court, or otherwise, relating to the Transaction Documents, the Shares or the Defaults or relating to any other relationship between them (other than this Agreement),
including, but not limited to, any claim under any common law, whether in law or equity, or federal, state or local statute, ordinance or rule of law. 

        4.    General Release by Castle.    Effective at the time of the Closing, other than the express duties and
obligations created by this Agreement, Castle, on behalf of itself, its agents, legal representatives, affiliates (including, without limitation, Castle Creek Partners, LLC), successors, predecessors
and assigns, fully and completely releases and discharges the Company and Aspeon Solutions, and their corporations, trusts, officers, directors, employees, agents, attorneys, representatives,
shareholders, successors, predecessors and assigns, and any of their respective past, present, successor and future corporations, officers, directors, employees, agents, representatives, attorneys,
successors, predecessors, assigns and affiliates (collectively, the "Aspeon Released Parties"), from any and all claims, causes of action, demands or liability of any and every character, known or
unknown, contingent or matured, that they may have had to the Aspeon Released Parties that have occurred on or before the date of the Closing, including without limitation, any claims directly or
indirectly related to the Transaction Documents, the Shares or the Defaults. Effective at the time of the Closing, Castle agrees, on behalf of itself and its affiliates (including, without limitation,
Castle Creek Partners, LLC) not to initiate a lawsuit or bring a claim against any of the Aspeon Released Parties, in any court, or otherwise, relating to the Transaction Documents, the Shares or the
Defaults or relating to any other relationship between them (other than this Agreement), including, but not limited to, any claim under any common law, whether in law or equity, or federal, state or
local statute, ordinance or rule of law. 

        5.    Waiver of California Civil Code Section 1542.    Section 1542 of the California Civil Code
provides as follows: 

A
general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected
his settlement with the debtor. 

        Effective
at the time of the Closing, Castle, on the one hand, and the Company and Aspeon Solutions, on the other hand, on behalf of themselves and their agents, legal representatives,
affiliates (including, without limitation, Castle Creek Partners, LLC), successors, predecessors and assigns, acknowledge that any claims they may have against the other are fully settled and
compromised by this Agreement, and they expressly waive all rights under Section 1542 of the California Civil Code insofar as it would otherwise apply to the general releases given in
paragraphs 3 and 4 above. 

        6.    Covenant Regarding Assignment.    The parties hereto, and each of them, represent and warrant to each other that
each is the sole and lawful owner of all right, title and interest in and to every claim and other matter which each purports to release herein, and that they have not heretofore assigned or
transferred, or purported to assign or transfer, to any person, firm, association, corporation or other entity, any right, title or interest in any such claim or other matter. In the event that such
representation is false, and any such claim or matter is asserted against any party released hereunder (and/or the successor of such party) by any party or entity who is the assignee or transferee of
such claim or matter, then the party hereto who assigned or transferred such claim or matter shall fully indemnify, defend and hold harmless the party against whom such claim or matter is asserted
(and its successors) from and against such claim or matter and from all actual costs, fees, expenses, liabilities 

and damages which that party (and/or its successors) incurs as a result of the assertion of such claim or matter. 

        7.    Attorneys' Fees and Costs.    The parties hereto each agree to bear their own costs and attorneys' fees in
connection with this Agreement. Notwithstanding this provision, however, if any action or arbitration is brought for the enforcement or interpretation of this Agreement, or in connection with any
dispute arising out of it or the claims that are the subject of this Agreement, the prevailing party or parties shall be entitled to recover reasonable attorneys' fees and other costs in that action
in addition to any other relief to which the prevailing party or parties may be entitled, whether or not such action proceeds to final judgment. 

        8.    Governing Law.    The validity, construction, interpretation, performance and enforcement of this Agreement, and
all disputes arising out of this Agreement, shall be governed by Delaware law, without giving effect to the conflict of laws principles thereof. 

        9.    Integration Clause.    This Agreement constitutes and embodies the full and final agreement and understanding
between the parties hereto, and supersede all prior agreements, understandings, negotiations, representations and discussions. The parties hereto acknowledge that there are no representations,
promises, warranties, conditions or obligations of the parties hereto concerning the Defaults or Transaction Documents not contained herein, and that they have not executed this Agreement in reliance
on any representation, promise, warranty, condition, or obligation not contained herein. 

        10.    Construction.    Each party to this Agreement and their respective counsel have taken part in the drafting and
preparation of this Agreement, and therefore any ambiguity or uncertainty in this Agreement shall not be construed against any party to it. To ensure this Agreement is not construed against any party,
Castle, the Company and Aspeon Solutions expressly agree that any common law or statutory provision providing that an ambiguous or uncertain term will be construed against the drafting party is waived
and shall not apply to the construction of this Agreement. 

        11.    No Oral Modifications.    This Agreement may only be further modified, amended or supplemented by a subsequent
writing executed by each of the parties hereto. 

        12.    Authority to Execute.    Each person whose signature appears on this Agreement warrants and guarantees that he
or she has been duly authorized and has full authority to execute this Agreement on behalf of the entity for which his or her signature appears. 

        13.    Voluntary Execution.    Each of Castle, the Company and Aspeon Solutions acknowledges that it has executed this
Agreement voluntarily and without any duress or undue influence. Each of Castle, the Company and Aspeon Solutions further acknowledges that it has: (1) had the opportunity to be
represented and advised by counsel of its own choice in connection with the negotiation and execution of this Agreement; (2) read this entire Agreement; (3) had the opportunity to have
this Agreement explained to it by counsel of its choice; and (4) executed this Agreement solely on the basis of advice of its own counsel of choice and on the basis of its own independent
investigation of the facts, laws and circumstances material to this Agreement. 

        14.    Arbitration.    With the exception of any matter involving a request for injunctive relief, the parties agree
that any and all disputes, claims or controversies arising out of or relating to this Agreement that are not resolved by their mutual agreement shall be submitted to final and binding arbitration
before J.A.M.S./Endispute in Orange County, California or Chicago, Illinois before an arbitrator to be agreed to by the parties or appointed by J.A.M.S./Endispute in the event of
non-agreement. Provisional remedies may be ordered by the arbitrator or an appropriate court in Orange County, California, or Chicago, Illinois (and the parties each hereby irrevocably
submits to the non-exclusive jurisdiction thereof, and waives any claim of venue or inconvenient forum with respect thereto). The arbitration shall be conducted pursuant to the arbitration
rules of J.A.M.S./Endispute then in effect. Following the time period for any notice that may be required to be given under paragraph 16 of this Agreement, either party may commence the
arbitration process called for in this Agreement by filing a written demand for arbitration with J.A.M.S./Endispute or such other arbitrator, 

with a copy to the other party. The parties covenant that they shall participate in the arbitration in good faith, and that they shall share equally in advancing its fees and costs. The provisions of
this Section 14 may be enforced by any court of competent jurisdiction, and the prevailing party(s) shall be entitled to an award of all costs, fees and expenses, including the arbitrator's
fees and costs and attorneys' fees and costs, to be paid by the non-prevailing party. 

        15.    No Admission of Liability.    Each of the parties understands and agrees that this Agreement is a compromise
and settlement of disputed claims and that this Agreement shall not be construed as an admission of liability by any party. 

        16.    Notices.    All notices or other communications which are required or permitted hereunder shall be in writing
and shall be deemed to have been duly given (a) on the date of receipt, if delivered personally or if sent by registered or certified mail, postage prepaid, return receipt requested or
(b) the first business day following deposit of the notice or communication for delivery by a nationally recognized overnight courier service, or (c) on the date of delivery (or if not a
business day, on the next immediate business day) if sent via verifiable facsimile, as follows: 

	If to Castle:	 	Castle Creek Technology Partners LLC

111 West Jackson Blvd. Suite 2020

Chicago, Illinois 60604

Facsimile: (312) 499-6999

Attn: Tom Frei
	

With a copy to:	
 	

Duval & Stachenfeld LLP

300 East 42nd Street

3rd Floor

New York, NY 10017

Attn: Robert L. Mazzeo

Facsimile: (212) 883-8883
	

If to the Company or Aspeon Solutions:	
 	

Aspeon, Inc. or

Aspeon Solutions, Inc.

16832 Red Hill

Irvine, California 92606

Attention: President

Facsimile: (949) 440-8087
	

with a copy to:	
 	

Paul, Hastings, Janofsky & Walker LLP

695 Town Center Drive, 17th Floor

Costa Mesa, California 92626

Attention: Ralph H. Winter

Facsimile: (714) 979-1921

        Such
addresses may be changed by either party by notice to the other parties pursuant to the notice methods above. 

        17.    Further Documents.    The parties agree to execute any and all documents that may be reasonably necessary to
effectuate the terms of this Agreement. 

        18.    Severability and Miscellaneous.    The provisions of this Agreement shall be considered severable, such that if
any provision or part of this Agreement is adjudicated to be invalid, it shall not affect the validity or enforceability of any remaining provisions or parts of this Agreement. This Agreement shall be
binding upon and inure to the benefit of the legal representatives, successors and assigns of the
parties hereto. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 

        IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. 

	 	 	ASPEON, INC.
	

 	
 	

/s/ Bob Nichols
 Title: President, CFO
	

 	
 	

ASPEON SOLUTIONS, INC.
	

 	
 	

/s/ Richard Stack
 Title: Director
	

 	
 	

CASTLE CREEK TECHNOLOGY PARTNERS LLC
	

 	
 	

/s/ Thomas A. Frei
 Title: Managing Director

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Exhibit 10.1

MUTUAL RELEASE AND SETTLEMENT AGREEMENT

RECITALS

AGREEMENT<Page>

                                                                     EXHIBIT 4.9

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES
LAWS (COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE LAWS.

                               DATE: MARCH 8, 2002

NOTE #  100                                               Up to U.S. $ 1,200,000

                                   CYNET, INC.

              EIGHT PERCENT (8%) CONVERTIBLE NOTE DUE MARCH 8, 2004

     THIS NOTE of Cynet, Inc., a corporation duly organized and validly existing
under the laws of the State of Texas, U.S.A. (the "Company") designated as its
Eight Percent (8%) Convertible Notes due two years from the date of issuance, in
a principal face value of the actual amount lent to the Company up to $
1,200,000.

     FOR VALUE RECEIVED, the Company promises to pay to AUGUSTINE FUND, L.P.,
the registered holder hereof and its successors and assigns (the "Holder"), the
aggregate principal sum of all advances made by the Holder to the Company from
time to time as mutually agreed as reflected by the Schedule A, attached hereto,
plus interest hereon as hereinafter provided. The parties agree and acknowledge
that absent mutual agreement, the Holder is not required to provide any funding
hereunder, and that the highest amount that the Holder would advance by mutual
agreement is $1,200,000. The Company agrees to pay the aggregate principal sum
outstanding on the second anniversary date of the date hereof (the "Maturity
Date"), and to pay interest on the principal sum outstanding, at the rate of 8%
per annum due and payable in quarterly installments in arrears, on March 31,
June 30, September 30, and December 31 of each year during the term of this
Note, with the first such payment to be made on June 30, 2002. Accrual of
interest on the outstanding principal amount, payable in cash or common stock of
the Company as set forth herein at the Company's option, shall commence on the
date hereof and shall continue until payment in full of the outstanding
principal amount has been made or duly provided for. The interest so payable
will be paid to the person in whose name this Note (or one or more predecessor
Notes) is registered on the records of the Company regarding registration of the
Note (the "Note Register").

<Page>

     The principal of, and interest on, this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Note Register of the Company as designated in writing by the Holder hereof
from time to time. The Company will pay the outstanding principal of and any and
all accrued and unpaid interest due upon this Note on the Maturity Date, less
any amounts required by law to be deducted or withheld, to the record Holder of
this Note as of the fifth business day prior to the Maturity Date and addressed
to such Holder at the last address appearing on the Note Register. The
forwarding of such funds shall constitute a payment of outstanding principal and
interest hereunder and shall satisfy and discharge the liability for principal
and interest on this Note to the extent of the sum represented by such payment
plus any amounts so deducted or withheld. Except as herein provided, this Note
may not be prepaid without the prior written consent of the Holder.

     This Note is subject to the following additional provisions:

     1.   NOTE EXCHANGEABLE. The Note is exchangeable commencing thirty (30)
days from the date hereof for an equal aggregate principal amount of Notes of
different authorized denominations, as requested by the Holder surrendering the
same without the Company's written consent. No service charge will be made for
such registration or transfer or exchange.

     2.   WITHHOLDING. The Company shall be entitled to withhold from all
payments of principal or interest pursuant to this Note any amounts required to
be withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.

     3.   TRANSFER/EXCHANGE OF NOTE; LEGEND. This Note has been issued subject
to investment representations of the original purchaser hereof and may be
transferred or exchanged only in compliance with the Securities Act of 1933, as
amended (the "1933 Act") and applicable state securities laws. Prior to due
presentment for transfer of this Note, the Company and any agent of the Company
may treat the person in whose name this Note is duly registered on the Company's
Note Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not his Note be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. If presentment for transfer is made, the parties agree hereunder
to execute any and all documents necessary to effectuate said transfer within
thirty days of presentment.

     The Holder understands and acknowledges by its acceptance hereof that (i)
except as provided herein, this Note and the shares of common stock in the
Company issuable upon conversion thereof as herein provided ("Conversion
Shares") have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, or (b) pursuant to an
exemption from such registration; (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other regulation and/or exemption under the 1933 Act or the rules and
regulations of the United States Securities and

                                       -2-
<Page>

Exchange Commission (the "SEC") thereunder; and (iii) neither the Company nor
any other person is under any obligation, other than as provided herein to
register such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.

     Any Conversion Shares issued upon conversion of this Note, and if
applicable, any common stock of the Company issued in payment of interest as
herein provided, shall, if and only to the extent required by law, bear legends
in similar form to the legends set forth on the first page of this Note.

     4.   CONVERSION OF NOTE INTO COMMON STOCK; REDEMPTION BY THE COMPANY.

     (a)  The Holder of this Note is entitled, at its option, at any time
commencing 120 days from the date hereof to convert all or a portion of the
original principal face amount of this Note into shares of Class A Common Stock,
no par value, in the Company, (defined hereinafter as the "Common Stock"), at a
conversion price (the "Conversion Price") equal to 75% of the average of the
three (3) lowest closing bid prices for the Common Stock for the thirty (30)
trading days immediately preceding the Conversion Date (as hereinafter defined)
as reported by the OTC Bulletin Board (or such other national securities
exchange or market as the Common Stock may trade at such time). Such conversion
shall be achieved by submitting to the Company the fully completed form of
conversion notice attached hereto as Exhibit I (a "Notice of Conversion"),
executed by the Holder of this Note evidencing such Holder's intention to
convert this Note or the specified portion (as herein provided) hereof. A Notice
of Conversion may be submitted via facsimile to the Company at the telecopier
number for the Company provided in the Securities Purchase Agreement (or at such
other number as requested in advance of such conversion in writing by the
Company), and if so submitted the original Notice of Conversion shall be
delivered to the Company within two (2) business days. The Company and the
Holder shall each keep records with respect to the portion of this Note then
being converted and all portions previously converted; upon receipt by the
Holder of the requisite Conversion Shares, the outstanding principal amount of
the Note shall be reduced by the amount specified in the Notice of Conversion
resulting in such Conversion Shares. The Company may from time to time, but is
not required to, instruct the Holder and the Holder shall surrender this Note
along with the Notice of Conversion for the purposes of making a notation
thereon as to the amount of principal being converted, or of canceling this Note
and issuing a new Note in the same form with the principal amount of such Note
reduced by the amount converted. Such new or notated Note shall be delivered to
the Holder within three (3) business days after such Holder's surrender to the
Company. No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded to the
nearest whole share. Accrued interest on the converted portion of the Note shall
be payable upon conversion thereof, in cash or Common Stock at the Conversion
Price, at the Holder's option. The date on which a notice of conversion is given
(the "Conversion Date") shall be deemed to be either the date on which the
Company receives from the Holder an original Notice of Conversion duly executed,
or, if earlier, the date set forth in such Notice of Conversion if the original
Notice of Conversion is received by the Company within three (3) business days
thereafter.

     Notwithstanding anything to the contrary set forth herein, in no event
shall the Holder of the Note be entitled to convert all or any portion of the
principal outstanding under this Note that, upon

                                       -3-
<Page>

giving effect to such conversion, would cause the aggregate number of shares of
Common Stock beneficially owned by the Holder to exceed 4.9% of the outstanding
shares of Common Stock following such conversion.

     In all cases, the Company shall deliver the Conversion Shares to the Holder
within five (5) business days after the Conversion Date with respect to such
Conversion Shares being delivered, and at the address specified in the Notice of
Conversion.

     (b)  The Company shall have the right (but not the obligation) to prepay
all or any portion of this Note, provided the Company is not then in violation
of any of its obligations under this Note under the following conditions. At any
time prior to delivery of any Notice of Conversion (in this Section 4(b), a
"Notice") to the Company by the Holder in accordance with the terms of this
Note, the Company may give to the Holder notice (a "Prepayment Notice") that it
intends to pay the Holder the Cash Prepayment Amount (as hereinafter defined)
with respect to all or such portion of the Note referred to in the Prepayment
Notice. The "Cash Prepayment Amount" shall be equal to 125% of the face amount
of the portion of the Note to be prepaid pursuant to the Prepayment Notice, and
shall be paid to the Holder according to the Holder's written instructions to
the Company within three (3) business days after delivery of the Prepayment
Notice with respect to such Note or portion thereof to be prepaid. If the
Company does not prepay within the time limits herein specified and according to
the terms of this Section 4(b), then unless waived by the Holder, the Prepayment
Notice shall be null and void, and the Holder may convert all or such portion of
this Note as the Holder in its discretion determines.

     5.   OBLIGATIONS OF THE COMPANY HEREIN ARE UNCONDITIONAL. No provision of
this Note shall alter or impair the obligation of the Company, which obligation
is absolute and unconditional, to repay the principal amount of this Note at the
time, place, rate, and in the coin currency, hereinabove stated. This Note and
all other Notes now or hereafter issued in replacement of this Note on the same
or similar terms are direct obligations of the Company. This Note ranks at least
equally with all other Notes now or hereafter issued under the terms set forth
herein. The Conversion Price and number of shares of Common Stock issuable upon
conversion shall be subject to adjustment from time to time as provided in
Section 6 below.

     6.   ADJUSTMENTS.

     (a)  In the event the Company should at any time or from time to time,
after the date of this Note, fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock (equal to at least 1% or more of
the Company's then issued and outstanding shares of Common Stock) or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend, distribution, split or subdivision if no record date is fixed),
the Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of this Note shall be increased in

                                       -4-
<Page>

proportion to such increase in the aggregate number of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.

     (b)  If the number of shares of Common Stock outstanding at any time after
the date of this Note is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable upon conversion of this Note shall be decreased in
proportion to such decrease in outstanding shares.

     (c)  In the event the Company, at any time while all or any portion of this
Note is outstanding, shall be consolidated with or merged into any other
corporation or corporations or shall sell or lease all or substantially all of
its property and business as an entirety, then lawful provisions shall be made
as part of the terms of such consolidation, merger, sale or lease so that the
holder of this Note may thereafter receive in lieu of such Common Stock
otherwise issuable to such holder upon conversion of this Note, but at the
conversion rate which would otherwise be in effect at the time of conversion, as
hereinbefore provided, the same kind and amount of securities or assets as may
be issuable, distributable or payable upon such consolidation, merger, sale or
lease with respect to Common Stock of the Company.

     7.   RESERVATION OF SHARES. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Note, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the outstanding principal amount, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Note, in addition to such other remedies as
shall be available to Holder, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase the number of
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including without limitation, using its best
efforts to obtain the requisite stockholder approval necessary to increase the
number of authorized shares of the Company's Common Stock.

     8.   NOTE HOLDER NOT DEEMED A STOCKHOLDER. No Holder, as such, of this Note
shall be entitled (prior to conversion of this Note into Common Stock, and only
then to the extent of such conversion) to vote or receive dividends or be deemed
the holder of shares of the Company for any purpose, nor shall anything
contained in this Note be construed to confer upon the Holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Note of the
Conversion Shares which he or she is then entitled to receive upon the due
conversion of all or a portion of this Note. Notwithstanding the foregoing, the
Company will provide the Holder with copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.

     9.   NO LIMITATION ON CORPORATE ACTION. No provisions of this Note and no
right or option granted or conferred hereunder shall in any way limit, affect or
abridge the exercise by the

                                       -5-
<Page>

Company of any of its corporate rights or powers to recapitalize, amend its
Certificate of Incorporation, reorganize, consolidate or merge with or into
another corporation, or to transfer all or any part of its property or assets,
or the exercise of any other of its corporate rights and powers.

     10.  REPRESENTATIONS OF HOLDER. Upon conversion of all or a portion of this
Note, the Holder shall confirm in writing, in a form reasonably satisfactory to
the Company, that the Conversion Shares so purchased are being acquired solely
for the Holder's own account and not as a nominee for any other party, and that
such Holder is an Accredited Investor (as defined in Rule 501(a) of Regulation D
promulgated under the 1933 Act). The Company acknowledges that Holder's duly
executed certification on the Notice of Conversion is satisfactory confirmation
of the facts set forth in the immediately preceding sentence. If such Holder
cannot make such representations because they would be factually incorrect, it
shall be a condition to such Holder's conversion of all or a portion of the Note
that the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon conversion of the Note shall not violate any United States or state
securities laws.

     11.  WAIVER OF DEMAND, PRESENTMENT, ETC. The Company hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.

     12.  ATTORNEY'S FEES. The Company agrees to pay all costs and expenses,
including without limitation reasonable attorney's fees, which may be incurred
by the Holder in collecting any amount due under this Note or in enforcing any
of Holder's conversion rights as described herein.

     13.  DEFAULT. If one or more of the following described "Events of Default"
shall occur:

     (a)  The Company shall continue in default in the payment of principal or
interest on this Note for a period of ten (10) days after a notice of default is
received by the Company with respect to any such payment; or

     (b)  Any of the representations or warranties made by the Company herein,
or in any certificate or financial or other written statement heretofore or
hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Note shall be false or misleading in any material
respect at the time made and the Holder shall have provided seven (7) days prior
written notice to the Company of the alleged misrepresentation or breach of
warranty and the same shall continue uncured for a period of seven (7) days
after such written notice from the Holder; or

     (c)  The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of the
Company under this Note and such failure shall continue uncured for a period of
seven (7) days after written notice from the Holder of such failure; or

                                       -6-
<Page>

     (d)  The Company shall either: (i) become insolvent; (ii) admit in writing
its inability to pay its debts generally or as they become due; (iii) make an
assignment for the benefit of creditors or commence proceedings for its
dissolution; or (iv) apply for, or consent to the appointment of, a trustee,
liquidator, or receiver for its or for a substantial part of its property or
business; or

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

     (f)  Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the whole
or any substantial portion of the properties or assets of the Company and shall
not be dismissed within sixty (60) days thereafter; or

     (g)  After the date of this Agreement, any money judgment, writ or Note of
attachment, or similar process in excess of $100,000 in the aggregate shall be
entered or filed against the Company or any of its properties or assets and
shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen
(15) days or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or

     (h)  Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty days after such
institution or the Company shall by any action or answer approve of, consent to,
or acquiesce in any such proceedings or admit the material allegations of, or
default in answering a petition filed in, any such proceeding; or

     (i)  The Company shall have its Common Stock delisted from the OTC Bulletin
Board Market or suspended from trading thereon, and shall not have its Common
Stock relisted on the same or another national securities exchange, or have such
suspension lifted, as the case may be, within ten (10) business days; or

     (j)  After the date of this Agreement and to the extent that the Company
has not received notice prior to the date of this Agreement, the Company shall
have received a notice of default on the payment of any debt(s) aggregating in
excess of $100,000 beyond any applicable grace period;

then, or at any time thereafter, and in any and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
in one instance shall not be deemed to be a waiver in another instance or for
any other prior or subsequent Event of Default) at the option of the Holder and
in the Holder's sole discretion, the Holder may immediately accelerate the
maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Company, anything
herein or in any Note or other instrument contained to the contrary
notwithstanding, and the Holder may immediately, and upon the expiration of any

                                       -7-
<Page>

period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law or equity.

     14.  NOTE A GENERAL UNSECURED OBLIGATION OF THE COMPANY. This Note
represents a general unsecured obligation of the Company. No recourse shall be
had for the payment of the principal of, or the interest on, this Note, or for
any claim based thereon, or otherwise in respect hereof, against any
incorporator, shareholder, officer, director, or agent of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

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

     16.  ENTIRE AGREEMENT. This Note and constitutes the full and entire
understanding between the Company and the Holder with respect to the subject
matter hereof and thereof. Neither this Note nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and the Holder.

     17.  GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the state of Delaware without giving effect to
applicable principles of conflict of law.

     18.  HEADINGS. Headings in this Note are for convenience only, and shall
not be used in the construction of this Note.

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized, all as of the date first
hereinabove written.

                                          CYNET, INC.

                                          By:   /s/ Vincent W. Beale, Sr.
                                              ---------------------------------
                                                 (authorized signatory)

                                       -8-
<Page>

                                   SCHEDULE A

DATE OF ADVANCE                        AMOUNT OF ADVANCE

                                       -9-

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