Document:

Exhibit 10.2
    

    

    

    
      NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
      CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
      COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
      EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
      TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
      AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
      EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF
      THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
    

    
      THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. PURSUANT TO
      TREASURY REGULATION §1.1275-3(b)(1), A REPRESENTATIVE OF THE BORROWER
      HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUE DATE OF THIS NOTE,
      PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION
      DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i).
    

    

    

    
      Original Issue Date: September 25, 2009
Original Conversion Price
      (subject to adjustment herein): $0.25
Original Principal
      Amount: $1,100,000
    

    

    

    
      12% SENIOR SECURED CONVERTIBLE DEBENTURE
    

    
      DUE September 25, 2011
    

    

    

    
      THIS 12% SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly
      authorized and validly issued debentures of Net Talk.com, Inc., a
      Florida corporation, having its principal place of business at 1100 NW
      163 Drive, Miami, Florida 33169 (the “Company”), designated
      as its 12% Senior Secured Convertible Debenture, due September 25, 2011
      (this debenture, the “Debenture” and collectively with the
      other such series of debentures, the “Debentures”).
    

    
      FOR VALUE RECEIVED, the Company promises to pay to Debt Opportunity
      Fund, LLLP, or its registered assigns (the “Holder”), or
      shall have paid pursuant to the terms hereunder, the principal sum of
      $1,100,000, by September 25, 2011, or such earlier date as this
      Debenture is required or permitted to be repaid as provided hereunder
      (the “Maturity Date”), and to pay interest to the Holder on
      the aggregate unconverted and then outstanding principal amount of this
      Debenture in accordance with the provisions hereof.  This Debenture is
      subject to the following additional provisions:
    

    
      Section 1.          Definitions.
      For the purposes hereof, in addition to the terms defined elsewhere in
      this Debenture, (a) capitalized terms not otherwise defined herein shall
      have the meanings set forth in the Purchase Agreement (as defined below)
      and (b) the following terms shall have the following meanings:
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      “Alternate Consideration” shall have the meaning set forth
      in Section 5(e).
    

    
      “Bankruptcy Event” means any of the following events: (a)
      the Company or any Significant Subsidiary (as such term is defined in
      Rule 1-02(w) of Regulation S-X) thereof commences a case or other
      proceeding under any bankruptcy, reorganization, arrangement, adjustment
      of debt, relief of debtors, dissolution, insolvency or liquidation or
      similar law of any jurisdiction relating to the Company or any
      Significant Subsidiary thereof; (b) there is commenced against the
      Company or any Significant Subsidiary thereof any such case or
      proceeding that is not dismissed within 60 days after commencement; (c)
      the Company or any Significant Subsidiary thereof is adjudicated
      insolvent or bankrupt or any order of relief or other order approving
      any such case or proceeding is entered; (d) the Company or any
      Significant Subsidiary thereof suffers any appointment of any custodian
      or the like for it or any substantial part of its property that is not
      discharged or stayed within 60 calendar days after such appointment; (e)
      the Company or any Significant Subsidiary thereof makes a general
      assignment for the benefit of creditors; (f) the Company or any
      Significant Subsidiary thereof calls a meeting of its creditors with a
      view to arranging a composition, adjustment or restructuring of its
      debts; or (g) the Company or any Significant Subsidiary thereof, by any
      act or failure to act, expressly indicates its consent to, approval of
      or acquiescence in any of the foregoing or takes any corporate or other
      action for the purpose of effecting any of the foregoing.
    

    
      “Base Conversion Price” shall have the meaning set forth in
      Section 5(b).
    

    
      “Business Day” means any day except Saturday, Sunday, any
      day which shall be a federal legal holiday in the United States or any
      day on which banking institutions in the State of New York are
      authorized or required by law or other governmental action to close.
    

    
      “Change of Control Transaction” means the occurrence after
      the date hereof of any of (i) an acquisition after the date hereof by an
      individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
      promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Company,
      by contract or otherwise) of in excess of 45% of the voting securities
      of the Company (other than by means of conversion or exercise of the
      Debentures and the Securities issued together with the Debentures), or
      (ii) the Company merges into or consolidates with any other Person, or
      any Person merges into or consolidates with the Company and, after
      giving effect to such transaction, the stockholders of the Company
      immediately prior to such transaction own less than 55% of the aggregate
      voting power of the Company or the successor entity of such transaction,
      or (iii) the Company sells or transfers all or substantially all of its
      assets to another Person and the stockholders of the Company immediately
      prior to such transaction own less than 55% of the aggregate voting
      power of the acquiring entity immediately after the transaction, or (iv)
      a replacement at one time or within a two year period of more than
      one-half of the members of the Company’s board of directors (except as
      such replacement may be required pursuant to the rules and regulations
      of a Trading Market) which is not approved by a majority of those
      individuals who are members of the board of directors on the date hereof
      (or by those individuals who are serving as members of the board of
      directors on any date whose nomination to the board of directors was
      approved by a majority of the members of the board of directors who are
      members on the date hereof), or (v) the execution by the Company of an
      agreement to which the Company  is a party or by which it is bound,
      providing for any of the events set forth in clauses (i) through (iv)
      above.
    

    
      
        

        

      

      
        
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      “Common Stock” means the common stock, par value $.001 per
      share, of the Company and stock of any other class of securities into
      which such securities may hereafter be reclassified or changed into.
    

    
      “Conversion Date” shall have the meaning set forth in
      Section 4(a).
    

    
      “Conversion Price” shall have the meaning set forth in
      Section 4(b).
    

    
      “Conversion Shares” means, collectively, the shares of
      Common Stock issuable upon conversion of this Debenture in accordance
      with the terms hereof.
    

    
      “Debenture Register” shall have the meaning set forth in
      Section 2(b).
    

    
      “Dilutive Issuance” shall have the meaning set forth in
      Section 5(b).
    

    
      “Dilutive Issuance Notice” shall have the meaning set forth
      in Section 5(b).
    

    
      “Event of Default” shall have the meaning set forth in
      Section 8.
    

    
      “Exchange Act” means the Securities Exchange Act of 1934,
      as amended, and the rules and regulations promulgated thereunder.
    

    
      “Fundamental Transaction” shall have the meaning set forth
      in Section 5(e).
    

    
      “Interest Payment Date” shall have the meaning set forth in
      Section 2(a).
    

    
      “Late Fees” shall have the meaning set forth in Section
      2(c).
    

    
      “Mandatory Default Amount”  means the sum of (i) the
      greater of (A) 110% of the outstanding principal amount of this
      Debenture, plus all accrued and unpaid interest hereon, or (B) the
      outstanding principal amount of this Debenture, plus all accrued and
      unpaid interest hereon, divided by the Conversion Price on the date the
      Mandatory Default Amount is either (a) demanded (if demand or notice is
      required to create an Event of Default) or otherwise due or (b) paid in
      full, whichever has a lower Conversion Price, multiplied by the VWAP on
      the date the Mandatory Default Amount is either (x) demanded or
      otherwise due or (y) paid in full, whichever has a higher VWAP, and (ii)
      all other amounts, costs, expenses and liquidated damages due in respect
      of this Debenture.
    

    
      “New York Courts” shall have the meaning set forth in
      Section 9(d).
    

    
      “Notice of Conversion” shall have the meaning set forth in
      Section 4(a).
    

    
      
        

        

      

      
        
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      “Optional Redemption” shall have the meaning set forth in
      Section 6.
    

    
      “Optional Redemption Amount” means the sum of (i) 100% of
      the principal amount of the Debenture then outstanding, (ii) accrued but
      unpaid interest and (iii) all liquidated damages and other amounts due
      in respect of the Debenture.
    

    
      “Optional Redemption Date” shall have the meaning set forth
      in Section 6.
    

    
      “Optional Redemption Notice” shall have the meaning set
      forth in Section 6.
    

    
      “Optional Redemption Notice Date” shall have the meaning
      set forth in Section 6.
    

    
      “Original Issue Date” means the date of the first issuance
      of the Debentures, regardless of any transfers of any Debenture and
      regardless of the number of instruments which may be issued to evidence
      such Debentures.
    

    
      “Permitted Indebtedness” means the Indebtedness existing on
      the Original Issue Date and set forth on Schedule 3.1(t) attached
      to the Purchase Agreement.
    

    
      “Permitted Lien” means the individual and collective
      reference to the following: (a) Liens for taxes, assessments and other
      governmental charges or levies not yet due or Liens for taxes,
      assessments and other governmental charges or levies being contested in
      good faith and by appropriate proceedings for which adequate reserves
      (in the good faith judgment of the management of the Company) have been
      established in accordance with GAAP; (b) Liens imposed by law which were
      incurred in the ordinary course of the Company’s business, such as
      carriers,’ warehousemen’s and mechanics’ Liens, statutory landlords’
      Liens, and other similar Liens arising in the ordinary course of the
      Company’s business, and which (x) do not individually or in the
      aggregate materially detract from the value of such property or assets
      or materially impair the use thereof in the operation of the business of
      the Company and its consolidated Subsidiaries or (y) are being contested
      in good faith by appropriate proceedings, which proceedings have the
      effect of preventing for the foreseeable future the forfeiture or sale
      of the property or asset subject to such Lien; and (c) Liens incurred in
      connection with Permitted Indebtedness under (i) clause (b), provided
      that such Lien is junior in priority to the Lien granted to the Holders
      of the Debentures and (ii) clause (c), provided that such Liens are not
      secured by assets of the Company or its Subsidiaries other than the
      assets so acquired or leased.
    

    
      “Person” means an individual or corporation, partnership,
      trust, incorporated or unincorporated association, joint venture,
      limited liability company, joint stock company, government (or an agency
      or subdivision thereof) or other entity of any kind.
    

    
      “Purchase Agreement” means the Securities Purchase
      Agreement among the Company and the original Holders, dated as of
      September 25, 2009, as amended, modified or supplemented from time to
      time in accordance with its terms.
    

    
      
        

        

      

      
        
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      “Registration Rights Agreement” means the Registration
      Rights Agreement among the Company and the original Holders, dated
      September 25, 2009, as amended, modified or supplemented from time to
      time in accordance with its terms.
    

    
      “Registration Statement” means a registration statement
      that registers the resale of all Conversion Shares of the Holder, who
      shall be named as a “selling stockholder” therein, and meets the
      requirements of the Registration Rights Agreement.
    

    
      “Securities Act” means the Securities Act of 1933, as
      amended, and the rules and regulations promulgated thereunder.
    

    
      “Share Delivery Date” shall have the meaning set forth in
      Section 4(d).
    

    
      “Subsidiary” shall have the meaning set forth in the
      Purchase Agreement.
    

    
       “Trading Day” means a day on which the principal
      Trading Market is open for business.
    

    
      “Trading Market” means the following markets or exchanges
      on which the Common Stock is listed or quoted for trading on the date in
      question: the American Stock Exchange, the Nasdaq Capital Market, the
      Nasdaq National Market, the New York Stock Exchange or the OTC Bulletin
      Board.
    

    
      “Transaction Documents” shall have the meaning set forth in
      the Purchase Agreement.
    

    
      “VWAP” means, for any date, the price determined by the
      first of the following clauses that applies: (a) if the Common Stock is
      then listed or quoted on a Trading Market, the daily volume weighted
      average price of the Common Stock for such date (or the nearest
      preceding date) on the Trading Market on which the Common Stock is then
      listed or quoted for trading as reported by Bloomberg L.P. (based on a
      Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York
      City time)); (b)  if the OTC Bulletin Board is not a Trading Market, the
      volume weighted average price of the Common Stock for such date (or the
      nearest preceding date) on the OTC Bulletin Board; (c) if the Common
      Stock is not then quoted for trading on the OTC Bulletin Board and if
      prices for the Common Stock are then reported in the “Pink Sheets”
      published by Pink Sheets, LLC (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid
      price per share of the Common Stock so reported; or (d) in all other
      cases, the fair market value of a share of Common Stock as determined by
      an independent appraiser selected in good faith by the Holder and
      reasonably acceptable to the Company.
    

    
      Section 2.          Interest.
    

    
      a)  Payment of Interest in Cash or Kind.  The Company
      shall pay interest to the Holder on the aggregate unconverted and then
      outstanding principal amount of this Debenture at the rate of 12% per
      annum, payable quarterly on March 31, June 30, September 30 and December
      31, beginning on December 31, 2009, on each Conversion Date (as to that
      principal amount then being converted), on each Optional Redemption Date
      (as to that principal amount then being redeemed) and on the Maturity
      Date (except that, if any such date is not a Business Day, then such
      payment shall be due on the next succeeding Business Day) (each such
      date, an “Interest Payment Date”), in cash.
    

    
      
        

        

      

      
        
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      b)  Interest Calculations.  Interest shall be
      calculated on the basis of a 360-day year and shall accrue daily
      commencing on the Original Issue Date until payment in full of the
      principal sum, together with all accrued and unpaid interest, liquidated
      damages and other amounts which may become due hereunder, has been
      made.  Interest shall cease to accrue with respect to any principal
      amount converted, provided that the Company actually delivers the
      Conversion Shares within the time period required by Section 4(d)(ii);
      if the Company fails to deliver shares within the time period required
      by Section 4(d)(ii), interest shall cease to accrue upon the actual
      delivery of the Conversion Shares.  Interest hereunder will be paid to
      the Person in whose name this Debenture is registered on the records of
      the Company regarding registration and transfers of this Debenture (the “Debenture
      Register”).
    

    
      c)  Late Fee. All overdue accrued and unpaid interest
      to be paid hereunder shall be subject to a late fee at an interest rate
      equal to the lesser of 18% per annum or the maximum rate permitted by
      applicable law (“Late Fees”) which shall accrue daily from
      the date such interest is due hereunder through and including the date
      of payment in full.
    

    
      d)  Prepayment.  The Company shall have the privilege
      and option to prepay the then outstanding principal amount of this
      Debenture in full, and not in part, at any time prior to the Maturity
      Date, upon payment of 110% of the then outstanding principal amount,
      plus all accrued and unpaid interest hereon, plus all other amounts,
      costs, expenses and liquidated damages due in respect of this
      Debenture.  Except as otherwise set forth in the preceding sentence, the
      Company may not prepay any portion of the principal amount of this
      Debenture without the prior written consent of the Holder
    

    
      Section 3.          Registration
      of Transfers and Exchanges.
    

    
      a)  Different Denominations. This Debenture is
      exchangeable for an equal aggregate principal amount of Debentures of
      different authorized denominations, as requested by the Holder
      surrendering the same.  No service charge will be payable for such
      registration of transfer or exchange.
    

    
      b)  Investment Representations. This Debenture has been
      issued subject to certain investment representations of the original
      Holder set forth in the Purchase Agreement and may be transferred or
      exchanged only in compliance with the Purchase Agreement and applicable
      federal and state securities laws and regulations.
    

    
      c)  Reliance on Debenture Register. Prior to due
      presentment for transfer to the Company of this Debenture, the Company
      and any agent of the Company may treat the Person in whose name this
      Debenture is duly registered on the Debenture Register as the owner
      hereof for the purpose of receiving payment as herein provided and for
      all other purposes, whether or not this Debenture is overdue, and
      neither the Company nor any such agent shall be affected by notice to
      the contrary.
    

    
      
        

        

      

      
        
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      Section 4.         Conversion.
    

    
      a)  Voluntary Conversion.  At any time after the
      Original Issue Date until this Debenture is no longer outstanding, this
      Debenture shall be convertible, in whole or in part, into shares of
      Common Stock at the option of the Holder, at any time and from time to
      time (subject to the conversion limitations set forth in Section 4(c)
      hereof).  The Holder shall effect conversions by delivering to the
      Company a Notice of Conversion, the form of which is attached hereto as Annex
      A (a “Notice of Conversion”), specifying therein the
      principal amount of this Debenture to be converted and the date on which
      such conversion shall be effected (a “Conversion Date”).  If
      no Conversion Date is specified in a Notice of Conversion, the
      Conversion Date shall be the date that such Notice of Conversion is
      deemed delivered hereunder.  To effect conversions hereunder, the Holder
      shall not be required to physically surrender this Debenture to the
      Company unless the entire principal amount of this Debenture plus all
      accrued and unpaid interest thereon has been so converted. Conversions
      hereunder shall have the effect of lowering the outstanding principal
      amount of this Debenture in an amount equal to the applicable
      conversion.  The Holder and the Company shall maintain records showing
      the principal amount(s) converted and the date of such
      conversion(s).  The Company may deliver an objection to any Notice of
      Conversion within 1 Business Day of delivery of such Notice of
      Conversion.  The Holder, and any assignee by acceptance of
      this Debenture, acknowledge and agree that, by reason of the provisions
      of this paragraph, following conversion of a portion of this Debenture,
      the unpaid and unconverted principal amount of this Debenture may be
      less than the amount stated on the face hereof.
    

    
      b)  Conversion Price.  The conversion price in effect
      on any Conversion Date shall be equal to $0.25 (subject to
      adjustment herein) (the “Conversion Price”).
    

    
      c)  Conversion Limitations.
    

    
      
        

        

      

      
        
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      i.  Holder’s Restriction on Conversion. At any
      time after the Company has had a registration statement filed pursuant
      to the Securities Act or the Exchange Act declared effective, the
      Company shall not effect any conversion of this Debenture, and a Holder
      shall not have the right to convert any portion of this Debenture, to
      the extent that after giving effect to the conversion set forth on the
      applicable Notice of Conversion, such Holder (together with such
      Holder’s Affiliates, and any other person or entity acting as a group
      together with such Holder or any of such Holder’s Affiliates) would
      beneficially own in excess of the Beneficial Ownership Limitation (as
      defined below).  For purposes of the foregoing sentence, the number of
      shares of Common Stock beneficially owned by such Holder and its
      Affiliates shall include the number of shares of Common Stock issuable
      upon conversion of this Debenture with respect to which such
      determination is being made, but shall exclude the number of shares of
      Common Stock which are issuable upon (A) conversion of the remaining,
      unconverted principal amount of this Debenture beneficially owned by
      such Holder or any of its Affiliates and (B) exercise or conversion of
      the unexercised or unconverted portion of any other securities of the
      Company subject to a limitation on conversion or exercise analogous to
      the limitation contained herein (including, without limitation, any
      other Debentures or the Warrants) beneficially owned by such Holder or
      any of its Affiliates.  Except as set forth in the preceding sentence,
      for purposes of this Section 4(c)(i), beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Exchange Act and the
      rules and regulations promulgated thereunder.  To the extent that the
      limitation contained in this Section 4(c)(i) applies, the determination
      of whether this Debenture is convertible (in relation to other
      securities owned by such Holder together with any Affiliates) and of
      which principal amount of this Debenture is convertible shall be in the
      sole discretion of such Holder, and the submission of a Notice of
      Conversion shall be deemed to be such Holder’s determination of whether
      this Debenture may be converted (in relation to other securities owned
      by such Holder together with any Affiliates) and which principal amount
      of this Debenture is convertible, in each case subject to such aggregate
      percentage limitations. To ensure compliance with this restriction, each
      Holder will be deemed to represent to the Company each time it delivers
      a Notice of Conversion that such Notice of Conversion has not violated
      the restrictions set forth in this paragraph and the Company shall have
      no obligation to verify or confirm the accuracy of such
      determination.  In addition, a determination as to any group status as
      contemplated above shall be determined in accordance with Section 13(d)
      of the Exchange Act and the rules and regulations promulgated
      thereunder.   For purposes of this Section 4(c)(i), in determining the
      number of outstanding shares of Common Stock, a Holder may rely on the
      number of outstanding shares of Common Stock as stated in the most
      recent of the following: (A) the Company’s most recent Form 10-Q or Form
      10-K, as the case may be; (B) a more recent public announcement by the
      Company; or (C) a more recent notice by the Company or the Company’s
      transfer agent setting forth the number of shares of Common Stock
      outstanding.  Upon the written or oral request of a Holder, the Company
      shall within two Trading Days confirm orally and in writing to such
      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 Debenture, by such Holder or
      its Affiliates since the date as of which such number of outstanding
      shares of Common Stock was reported. The “Beneficial Ownership
      Limitation” shall be 4.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of
      Common Stock issuable upon conversion of this Debenture held by the
      Holder.  The Beneficial Ownership Limitation provisions of this Section
      4(c)(i) may be waived by such Holder, at the election of such Holder,
      upon not less than 61 days’ prior notice to the Company, to change the
      Beneficial Ownership Limitation to 9.99% of the number of shares of the
      Common Stock outstanding immediately after giving effect to the issuance
      of shares of Common Stock upon conversion of this Debenture held by the
      Holder and the provisions of this Section 4(c)(ii) shall continue to
      apply.  Upon such a change by a Holder of the Beneficial Ownership
      Limitation from such 4.99% limitation to such 9.99% limitation, the
      Beneficial Ownership Limitation may not be further waived by such
      Holder.  The provisions of this paragraph shall be construed and
      implemented in a manner otherwise than in strict conformity with the
      terms of this Section 4(c)(i) to correct this paragraph (or any portion
      hereof) which may be defective or inconsistent with the intended
      Beneficial Ownership Limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such
      limitation. The limitations contained in this paragraph shall apply to a
      successor holder of this Debenture.
    

    
      
        

        

      

      
        
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      d)  Mechanics of Conversion.
    

    
      i.  Conversion Shares Issuable Upon Conversion of Principal
      Amount.  The number of shares of Common Stock issuable upon a
      conversion hereunder shall be determined by the quotient obtained by
      dividing (x) the outstanding principal amount of this Debenture to be
      converted by (y) the Conversion Price.
    

    
      ii.  Delivery of Certificate Upon Conversion.  Not
      later than 3 Trading Days after each Conversion Date (the “Share
      Delivery Date”), the Company shall deliver, or cause to be
      delivered, to the Holder (A) a certificate or certificates representing
      the Conversion Shares which, on or after the effective date of the
      Registration Statement, shall be free of restrictive legends and trading
      restrictions (other than those which may then be required by the
      Purchase Agreement) representing the number of shares of Common Stock
      being acquired upon the conversion of this Debenture and (B) a bank
      check in the amount of accrued and unpaid interest. On or after the
      effective date of the Registration Statement, the Company shall use its
      best efforts to deliver any certificate or certificates required to be
      delivered by the Company under this Section 4 electronically through the
      Depository Trust Company or another established clearing corporation
      performing similar functions.
    

    
      iii.  Failure to Deliver Certificates. If in the case
      of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the fifth
      Trading Day after the Conversion Date, the Holder shall be entitled to
      elect by written notice to the Company at any time on or before its
      receipt of such certificate or certificates, to rescind such Conversion,
      in which event the Company shall promptly return to the Holder any
      original Debenture delivered to the Company and the Holder shall
      promptly return the Common Stock certificates representing the principal
      amount of this Debenture tendered for conversion to the Company.
    

    
      iv.  Obligation Absolute; Partial Liquidated Damages.  The
      Company’s obligations to issue and deliver the Conversion Shares upon
      conversion of this Debenture in accordance with the terms hereof are
      absolute and unconditional, irrespective of any action or inaction by
      the Holder to enforce the same, any waiver or consent with respect to
      any provision hereof, the recovery of any judgment against any Person or
      any action to enforce the same, or any setoff, counterclaim, recoupment,
      limitation or termination, or any breach or alleged breach by the Holder
      or any other Person of any obligation to the Company or any violation or
      alleged violation of law by the Holder or any other Person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Company to the Holder in connection with the issuance
      of such Conversion Shares; provided, however, that such
      delivery shall not operate as a waiver by the Company of any such action
      the Company may have against the Holder.  In the event the Holder of
      this Debenture shall elect to convert any or all of the outstanding
      principal amount hereof, the Company may not refuse conversion based on
      any claim that the Holder or anyone associated or affiliated with the
      Holder has been engaged in any violation of law, agreement or for any
      other reason, unless an injunction from a court, on notice to Holder,
      restraining and or enjoining conversion of all or part of this Debenture
      shall have been sought and obtained, and the Company posts a surety bond
      for the benefit of the Holder in the amount of 150% of the outstanding
      principal amount of this Debenture, which is subject to the injunction,
      which bond shall remain in effect until the completion of
      arbitration/litigation of the underlying dispute and the proceeds of
      which shall be payable to such Holder to the extent it obtains
      judgment.  In the absence of such injunction, the Company shall issue
      Conversion Shares or, if applicable, cash, upon a properly noticed
      conversion.  If the Company fails for any reason to deliver to the
      Holder such certificate or certificates pursuant to Section 4(d)(ii) by
      the fifth Trading Day after the Conversion Date, the Company shall pay
      to such Holder, in cash, as liquidated damages and not as a penalty, for
      each $1000 of principal amount being converted, $10 per Trading Day
      (increasing to $20 per Trading Day on the tenth Trading Day after such
      liquidated damages begin to accrue) for each Trading Day after the
      second Trading Day following the Share Delivery Date until such
      certificates are delivered. Nothing herein shall limit a Holder’s right
      to pursue actual damages or declare an Event of Default pursuant to
      Section 8 hereof for the Company’s failure to deliver Conversion Shares
      within the period specified herein and such Holder shall have the right
      to pursue all remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief.  The exercise of any such rights shall not prohibit
      the Holder from seeking to enforce damages pursuant to any other Section
      hereof or under applicable law.
    

    
      
        

        

      

      
        
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      v.  Reservation of Shares Issuable Upon Conversion.  The
      Company covenants that it will at all times reserve and keep available
      out of its authorized and unissued shares of Common Stock for the sole
      purpose of issuance upon conversion of this Debenture and payment of
      interest on this Debenture, each as herein provided, free from
      preemptive rights or any other actual contingent purchase rights of
      Persons other than the Holder (and the other holders of the Debentures),
      not less than such aggregate number of shares of the Common Stock as
      shall (subject to the terms and conditions set forth in the Purchase
      Agreement) be issuable (taking into account the adjustments and
      restrictions of Section 5) upon the conversion of the outstanding
      principal amount of this Debenture and payment of interest
      hereunder.  The Company covenants that all shares of Common Stock that
      shall be so issuable shall, upon issue, be duly authorized, validly
      issued, fully paid and nonassessable and, if the Registration Statement
      is then effective under the Securities Act, shall be registered for
      public sale in accordance with such Registration Statement.
    

    
      vi. Fractional Shares. Upon a conversion hereunder the Company
      shall not be required to issue stock certificates representing fractions
      of shares of Common Stock, but may if otherwise permitted, make a cash
      payment in respect of any final fraction of a share based on the VWAP at
      such time. If the Company elects not, or is unable, to make such a cash
      payment, the Holder shall be entitled to receive, in lieu of the final
      fraction of a share, 1 whole share of Common Stock.
    

    
      vii. Transfer Taxes. The issuance of certificates for shares of
      the Common Stock on conversion of this Debenture shall be made without
      charge to the Holder hereof for any documentary stamp or similar taxes
      that may be payable in respect of the issue or delivery of such
      certificates, provided that the Company shall not be required to pay any
      tax that may be payable in respect of any transfer involved in the
      issuance and delivery of any such certificate upon conversion in a name
      other than that of the Holder of this Debenture so converted and the
      Company shall not be required to issue or deliver such certificates
      unless or until the person or persons requesting the issuance thereof
      shall have paid to the Company the amount of such tax or shall have
      established to the satisfaction of the Company that such tax has been
      paid.
    

    
      Section 5.         Certain
      Adjustments.
    

    
      a)  Stock Dividends and Stock Splits.  If the Company,
      at any time while this Debenture is outstanding: (A) subdivides
      outstanding shares of Common Stock into a larger number of shares; (B)
      combines (including by way of a reverse stock split) outstanding shares
      of Common Stock into a smaller number of shares; or (C) issues, in the
      event of a reclassification of shares of the Common Stock, any shares of
      capital stock of the Company, then the Conversion Price shall be
      multiplied by a fraction of which the numerator shall be the number of
      shares of Common Stock (excluding any treasury shares of the Company)
      outstanding immediately before such event and of which the denominator
      shall be the number of shares of Common Stock outstanding immediately
      after such event.  Any adjustment made pursuant to this Section shall
      become effective immediately after the record date for the determination
      of stockholders entitled to receive such dividend or distribution and
      shall become effective immediately after the effective date in the case
      of a subdivision, combination or re-classification.
    

    
      b)  Subsequent Equity Sales. If the Company or any
      Subsidiary thereof, as applicable, at any time while this Debenture is
      outstanding, sells or grants any option to purchase or sells or grants
      any right to reprice its securities, or otherwise disposes of or issues
      (or announces any sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any
      Person to acquire shares of Common Stock at an effective price per share
      that is lower than the then Conversion Price (such lower price, the “Base
      Conversion Price” and such issuances collectively, a “Dilutive
      Issuance”) (if the holder of the Common Stock or Common Stock
      Equivalents so issued shall at any time, whether by operation of
      purchase price adjustments, reset provisions, floating conversion,
      exercise or exchange prices or otherwise, or due to warrants, options or
      rights per share which are issued in connection with such issuance, be
      entitled to receive shares of Common Stock at an effective price per
      share that is lower than the Conversion Price, such issuance shall be
      deemed to have occurred for less than the Conversion Price on such date
      of the Dilutive Issuance), then the Conversion Price shall be reduced to
      equal the Base Conversion Price.  Such adjustment shall be made whenever
      such Common Stock or Common Stock Equivalents are
      issued.  Notwithstanding the foregoing, no adjustment will be made under
      this Section 5(b) in respect of an Exempt Issuance.  The Company shall
      notify the Holder in writing, no later than the Business Day following
      the issuance of any Common Stock or Common Stock Equivalents subject to
      this Section 5(b), indicating therein the applicable issuance price, or
      applicable reset price, exchange price, conversion price and other
      pricing terms (such notice, the “Dilutive Issuance Notice”).  For
      purposes of clarification, whether or not the Company provides a
      Dilutive Issuance Notice pursuant to this Section 5(b), upon the
      occurrence of any Dilutive Issuance, the Holder is entitled to receive a
      number of Conversion Shares based upon the Base Conversion Price on or
      after the date of such Dilutive Issuance, regardless of whether the
      Holder accurately refers to the Base Conversion Price in the Notice of
      Conversion.
    

    
      
        

        

      

      
        
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      c)  Subsequent Rights Offerings. If the Company, at any
      time while the Debenture is outstanding, shall issue rights, options or
      warrants to all holders of Common Stock (and not to Holders) entitling
      them to subscribe for or purchase shares of Common Stock at a price per
      share that is lower than the VWAP on the record date referenced below,
      then the Conversion Price shall be multiplied by a fraction of which the
      denominator shall be the number of shares of the Common Stock
      outstanding on the date of issuance of such rights or warrants plus the
      number of additional shares of Common Stock offered for subscription or
      purchase, and of which the numerator shall be the number of shares of
      the Common Stock outstanding on the date of issuance of such rights or
      warrants plus the number of shares which the aggregate offering price of
      the total number of shares so offered (assuming delivery to the Company
      in full of all consideration payable upon exercise of such rights,
      options or warrants) would purchase at such VWAP.  Such adjustment shall
      be made whenever such rights or warrants are issued, and shall become
      effective immediately after the record date for the determination of
      stockholders entitled to receive such rights, options or warrants.
    

    
      d)  Pro Rata Distributions.  If the Company, at any
      time while this Debenture is outstanding, distributes to all holders of
      Common Stock (and not to the Holders) evidences of its indebtedness or
      assets (including cash and cash dividends) or rights or warrants to
      subscribe for or purchase any security (other than the Common Stock,
      which shall be subject to Section 5(b)), then in each such case the
      Conversion Price shall be adjusted by multiplying such Conversion Price
      in effect immediately prior to the record date fixed for determination
      of stockholders entitled to receive such distribution by a fraction of
      which the denominator shall be the VWAP determined as of the record date
      mentioned above, and of which the numerator shall be such VWAP on such
      record date less the then fair market value at such record date of the
      portion of such assets or evidence of indebtedness so distributed
      applicable to 1 outstanding share of the Common Stock as determined by
      the Board of Directors of the Company in good faith.  In either case the
      adjustments shall be described in a statement delivered to the Holder
      describing the portion of assets or evidences of indebtedness so
      distributed or such subscription rights applicable to 1 share of Common
      Stock.  Such adjustment shall be made whenever any such distribution is
      made and shall become effective immediately after the record date
      mentioned above.
    

    
      
        

        

      

      
        
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      e)  Fundamental Transaction. If, at any time while this
      Debenture is outstanding, (A) the Company effects any merger or
      consolidation of the Company with or into another Person, (B) the
      Company effects any sale of all or substantially all of its assets in
      one transaction or a series of related transactions, (C) any tender
      offer or exchange offer (whether by the Company or another Person) is
      completed pursuant to which holders of Common Stock are permitted to
      tender or exchange their shares for other securities, cash or property,
      or (D) the Company effects any reclassification of the Common Stock or
      any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or
      property (in any such case, a “Fundamental Transaction”),
      then, upon any subsequent conversion of this Debenture, the Holder shall
      have the right to receive, for each Conversion Share that would have
      been issuable upon such conversion immediately prior to the occurrence
      of such Fundamental Transaction, the same kind and amount of securities,
      cash or property as it would have been entitled to receive upon the
      occurrence of such Fundamental Transaction if it had been, immediately
      prior to such Fundamental Transaction, the holder of 1 share of Common
      Stock (the “Alternate Consideration”).  For purposes of any
      such conversion, the determination of the Conversion Price shall be
      appropriately adjusted to apply to such Alternate Consideration based on
      the amount of Alternate Consideration issuable in respect of 1 share of
      Common Stock in such Fundamental Transaction, and the Company shall
      apportion the Conversion Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different
      components of the Alternate Consideration.  If holders of Common Stock
      are given any choice as to the securities, cash or property to be
      received in a Fundamental Transaction, then the Holder shall be given
      the same choice as to the Alternate Consideration it receives upon any
      conversion of this Debenture following such Fundamental Transaction.  To
      the extent necessary to effectuate the foregoing provisions, any
      successor to the Company or surviving entity in such Fundamental
      Transaction shall issue to the Holder a new debenture consistent with
      the foregoing provisions and evidencing the Holder’s right to convert
      such debenture into Alternate Consideration. The terms of any agreement
      pursuant to which a Fundamental Transaction is effected shall include
      terms requiring any such successor or surviving entity to comply with
      the provisions of this Section 5(e) and insuring that this Debenture (or
      any such replacement security) will be similarly adjusted upon any
      subsequent transaction analogous to a Fundamental Transaction.
    

    
      f)  Calculations. All calculations under this Section 5
      shall be made to the nearest cent or the nearest 1/100th of a share, as
      the case may be.  For purposes of this Section 5, the number of shares
      of Common Stock deemed to be issued and outstanding as of a given date
      shall be the sum of the number of shares of Common Stock (excluding any
      treasury shares of the Company) issued and outstanding.
    

    
      g)  Notice to the Holder.
    

    
      Adjustment to Conversion Price. Whenever the Conversion Price is
      adjusted pursuant to any provision of this Section 5, the Company shall
      promptly mail to each Holder a notice setting forth the Conversion Price
      after such adjustment and setting forth a brief statement of the facts
      requiring such adjustment. 
    

    
      
        

        

      

      
        
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      i.  Notice to Allow Conversion by Holder.  If (A) the
      Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock, (B) the Company shall declare a special
      nonrecurring cash dividend on or a redemption of the Common Stock, (C)
      the Company shall authorize the granting to all holders of the Common
      Stock of rights or warrants to subscribe for or purchase any shares of
      capital stock of any class or of any rights, (D) the approval of any
      stockholders of the Company shall be required in connection with any
      reclassification of the Common Stock, any consolidation or merger to
      which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share
      exchange whereby the Common Stock is converted into other securities,
      cash or property or (E) the Company shall authorize the voluntary or
      involuntary dissolution, liquidation or winding up of the affairs of the
      Company, then, in each case, the Company shall cause to be delivered to
      the Holder at its last address as it shall appear upon the Debenture
      Register, at least twenty (20) calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the
      date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to
      be taken, the date as of which the holders of the Common Stock of record
      to be entitled to such dividend, distributions, redemption, rights or
      warrants are to be determined or (y) the date on which such
      reclassification, consolidation, merger, sale, transfer or share
      exchange is expected to become effective or close, and the date as of
      which it is expected that holders of the Common Stock of record shall be
      entitled to exchange their shares of the Common Stock for securities,
      cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange, provided that
      the failure to deliver such notice or any defect therein or in the
      delivery thereof shall not affect the validity of the corporate action
      required to be specified in such notice.  The Holder is entitled to
      convert this Debenture during the twenty (20) day period commencing on
      the date of such notice through the effective date of the event
      triggering such notice.
    

    
      

      Section 6.          Optional
      Redemption at Election of Holder; Forced Conversion.
    

    
      (a)  Optional Redemption at Election of Holder.  Subject
      to the provisions of this Section 6, upon a Change of Control
      Transaction and at any time on or before the 90th calendar
      day following the consummation of such Change of Control Transaction,
      the Holder may deliver a notice to the Company (an “Optional
      Redemption Notice” and the date such notice is deemed delivered
      hereunder, the “Optional Redemption Notice Date”) of its
      election to require the Company to redeem all or a portion of the then
      outstanding Debentures for an amount in cash equal to the Optional
      Redemption Amount on the 5th Trading Day following the
      Optional Redemption Notice Date (such date, the “Optional
      Redemption Date” and such redemption, the “Optional
      Redemption”). The Optional Redemption Amount is due in full on the
      Optional Redemption Date. The Holder may rescind the Optional Redemption
      Notice at any time until the later of (i) the Optional Redemption Date
      or (ii) the date on which the Optional Redemption Amount is actually
      paid in full.  The Holder may elect to convert the outstanding principal
      amount of the Debenture pursuant to Section 4 prior to actual payment in
      cash for any redemption under this Section 6 by the delivery of a Notice
      of Conversion to the Company. The Company covenants and agrees that it
      will honor all Notices of Conversion tendered from the time of delivery
      of the Optional Redemption Notice through the date all amounts owing
      thereon are due and paid in full.  If any portion of the cash payment
      for an Optional Redemption shall not be paid by the Company by the
      respective due date, interest shall accrue thereon at the rate of 18%
      per annum (or the maximum rate permitted by applicable law, whichever is
      less) until the payment of the Optional Redemption Amount plus all
      amounts owing thereon is paid in full.
    

    
      
        

        

      

      
        
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      Section 7.         Negative
      Covenants. As long as any portion of this Debenture remains
      outstanding, unless Purchasers holding in the aggregate at least 66% of
      the principal amount of the then outstanding Debentures shall otherwise
      consent in writing, the Company shall not, and shall not permit any of
      its Subsidiaries to, directly or indirectly:
    

    
      a)  other than Permitted Indebtedness, enter into, create, incur,
      assume, guarantee or suffer to exist any indebtedness for borrowed money
      of any kind, including but not limited to, a guarantee, on or with
      respect to any of its property or assets now owned or hereafter acquired
      or any interest therein or any income or profits therefrom;
    

    
      b)  other than Permitted Liens, enter into, create, incur, assume or
      suffer to exist any Liens of any kind, on or with respect to any of its
      property or assets now owned or hereafter acquired or any interest
      therein or any income or profits therefrom;
    

    
      c)  amend its charter documents, including without limitation, the
      certificate of incorporation and bylaws, in any manner that materially
      and adversely affects any rights of the Holder;
    

    
      d)  repay, repurchase or offer to repay, repurchase or otherwise acquire
      more than a de minimis number of shares of its Common
      Stock or Common Stock Equivalents other than as to (a) the Conversion
      Shares or Warrant Shares as permitted or required under the Transaction
      Documents and (b) repurchases of Common Stock or Common Stock
      Equivalents of departing officers and directors of the Company, provided
      that such repurchases shall not exceed an aggregate of $100,000 for all
      officers and directors during the term of this Debenture;
    

    
      e)  none of the officers, directors or other Affiliates of the Company
      shall enter into any transaction with the Company or any Subsidiary
      (other than for services as employees, officers and directors),
      including entering into any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental
      of real or personal property to or from, or otherwise requiring payments
      to or from any officer, director or other Affiliates or any entity in
      which any officer, director, or other Affiliates has a substantial
      interest or is an officer, director, trustee or partner;
    

    
      f)  on an annualized basis, none of the officers of the Company or a
      Subsidiary shall receive an increase in salary or bonus in excess of 15%
      of the prior year’s salary or bonus, as applicable;
    

    
      g)  enter into any agreement with respect to any of the foregoing; or
    

    
      
        

        

      

      
        
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      h)  pay cash dividends or distributions on any equity securities of the
      Company.
    

    
      Section 8.       Events of
      Default.
    

    
      a)  “Event of Default” means, wherever used
      herein, any of the following events (whatever the reason for such event
      and whether such event shall be voluntary or involuntary or effected by
      operation of law or pursuant to any judgment, decree or order of any
      court, or any order, rule or regulation of any administrative or
      governmental body):
    

    
      i. any default in the payment of (A) the principal amount of any
      Debenture or (B) interest, liquidated damages and other amounts owing to
      a Holder on any Debenture, as and when the same shall become due and
      payable (whether on a Conversion Date or the Maturity Date or by
      acceleration or otherwise) which default, solely in the case of an
      interest payment or other default under clause (B) above, is not cured
      within five (5) Trading Days;
    

    
      ii.  the Company shall fail to observe or perform any other covenant or
      agreement contained in the Debentures which failure is not cured, if
      possible to cure, within the earlier to occur of (A) Fifteen (15)
      Trading Days after notice of such failure sent by the Holder or by any
      other Holder and (B) 30 Trading Days after the Company has become or
      should have become aware of such failure;
    

    
      iii.  a default or event of default (subject to any grace or cure period
      provided in the applicable agreement, document or instrument) shall
      occur under (A) any of the Transaction Documents or (B) any other
      material agreement, lease, document or instrument to which the Company
      or any Subsidiary is obligated (and not covered by clause (vi) below);
    

    
      iv.  any representation or warranty made in this Debenture, any other
      Transaction Documents, any written statement pursuant hereto or thereto
      or any other report, financial statement or certificate made or
      delivered to the Holder or any other Holder shall be untrue or incorrect
      in any material respect as of the date when made or deemed made;
    

    
      v.  the Company or any Significant Subsidiary shall be subject to a
      Bankruptcy Event;
    

    
      vi. the Company or any Subsidiary shall default on any of its
      obligations under any mortgage, credit agreement or other facility,
      indenture agreement, factoring agreement or other instrument under which
      there may be issued, or by which there may be secured or evidenced, any
      indebtedness for borrowed money or money due under any long term leasing
      or factoring arrangement that (a) involves an obligation greater than
      $250,000, whether such indebtedness now exists or shall hereafter be
      created, and (b) results in such indebtedness becoming or being declared
      due and payable prior to the date on which it would otherwise become due
      and payable;
    

    
      
        

        

      

      
        
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      vii. the Common Stock shall not be eligible for listing or quotation for
      trading on a Trading Market (as defined above) and shall not be eligible
      to resume listing or quotation for trading thereon within ten (10)
      Trading Days;
    

    
      viii. the Company shall fail for any reason to deliver certificates to a
      Holder prior to the tenth (10th) Trading Day after a
      Conversion Date pursuant to Section 4(d) or the Company shall provide at
      any time notice to the Holder, including by way of public announcement,
      of the Company’s intention to not honor requests for conversions of any
      Debentures in accordance with the terms hereof; or
    

    
      ix.  any monetary judgment, writ or similar final process shall be
      entered or filed against the Company, any Subsidiary or any of their
      respective property or other assets for more than $150,000, and such
      judgment, writ or similar final process shall remain unvacated, unbonded
      or unstayed for a period of forty five (45) calendar days.
    

    
      b)  Remedies Upon Event of Default. If any Event of
      Default occurs, the outstanding principal amount of this Debenture, plus
      accrued but unpaid interest, liquidated damages and other amounts owing
      in respect thereof through the date of acceleration, shall become, at
      the Holder’s election, immediately due and payable in cash at the
      Mandatory Default Amount.  Commencing five (5) days after the occurrence
      of any Event of Default that results in the eventual acceleration of
      this Debenture, the interest rate on this Debenture shall accrue at an
      interest rate equal to the lesser of 18% per annum or the maximum rate
      permitted under applicable law.  Upon the payment in full of the
      Mandatory Default Amount, the Holder shall promptly surrender this
      Debenture to or as directed by the Company. In connection with such
      acceleration described herein, the Holder need not provide, and the
      Company hereby waives, any presentment, demand, protest or other notice
      of any kind, and the Holder may immediately and without expiration of
      any grace period enforce any and all of its rights and remedies
      hereunder and all other remedies available to it under applicable
      law.  Such acceleration may be rescinded and annulled by Holder at any
      time prior to payment hereunder and the Holder shall have all rights as
      a holder of the Debenture until such time, if any, as the Holder
      receives full payment pursuant to this Section 8(b).  No such rescission
      or annulment shall affect any subsequent Event of Default or impair any
      right consequent thereon.
    

    
      Section 9.          Miscellaneous.
    

    
      a)  Notices.  Any and all notices or other
      communications or deliveries to be provided by the Holder hereunder,
      including, without limitation, any Notice of Conversion, shall be in
      writing and delivered personally, by facsimile, or sent by a nationally
      recognized overnight courier service, addressed to the Company, at the
      address set forth above, or such other address as the Company may
      specify for such purpose by notice to the Holder delivered in accordance
      with this Section 9.  Any and all notices or other communications or
      deliveries to be provided by the Company hereunder shall be in writing
      and delivered personally, by facsimile, or sent by a nationally
      recognized overnight courier service addressed to each Holder at the
      facsimile number or address of such Holder appearing on the books of the
      Company, or if no such facsimile number or address appears, at the
      principal place of business of the Holder.  Any notice or other
      communication or deliveries hereunder shall be deemed given and
      effective on the earliest of (i) the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile
      number specified in this Section 9 prior to 5:30 p.m. (New York City
      time), (ii) the date immediately following the date of transmission, if
      such notice or communication is delivered via facsimile at the facsimile
      number specified in this Section 9 between 5:30 p.m. (New York City
      time) and 11:59 p.m. (New York City time) on any date, (iii) the second
      Business Day following the date of mailing, if sent by nationally
      recognized overnight courier service, or (iv) upon actual receipt by the
      party to whom such notice is required to be given.
    

    
      
        

        

      

      
        
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      b)  Absolute Obligation.  Except as expressly provided
      herein, no provision of this Debenture shall alter or impair the
      obligation of the Company, which is absolute and unconditional, to pay
      the principal of, liquidated damages and accrued interest, as
      applicable, on this Debenture at the time, place, and rate, and in the
      coin or currency, herein prescribed. This Debenture is a direct debt
      obligation of the Company. This Debenture ranks pari passu
      with all other Debentures now or hereafter issued under the terms set
      forth herein.
    

    
      c)  Lost or Mutilated Debenture.  If this Debenture
      shall be mutilated, lost, stolen or destroyed, the Company shall execute
      and deliver, in exchange and substitution for and upon cancellation of a
      mutilated Debenture, or in lieu of or in substitution for a lost, stolen
      or destroyed Debenture, a new Debenture for the principal amount of this
      Debenture so mutilated, lost, stolen or destroyed, but only upon receipt
      of evidence of such loss, theft or destruction of such Debenture, and of
      the ownership hereof, reasonably satisfactory to the Company.
    

    
      d)  Governing Law. All questions concerning the
      construction, validity, enforcement and interpretation of this Debenture
      shall be governed by and construed and enforced in accordance with the
      internal laws of the State of New York, without regard to the principles
      of conflict of laws thereof.  Each party agrees that all legal
      proceedings concerning the interpretation, enforcement and defense of
      the transactions contemplated by any of the Transaction Documents
      (whether brought against a party hereto or its respective Affiliates,
      directors, officers, shareholders, employees or agents) shall be
      commenced in the state and federal courts sitting in the City of New
      York, Borough of Manhattan (the “New York Courts”).  Each
      party hereto hereby irrevocably submits to the exclusive jurisdiction of
      the New York Courts for the adjudication of any dispute hereunder or in
      connection herewith or with any transaction contemplated hereby or
      discussed herein (including with respect to the enforcement of any of
      the Transaction Documents), and hereby irrevocably waives, and agrees
      not to assert in any suit, action or proceeding, any claim that it is
      not personally subject to the jurisdiction of such New York Courts, or
      such New York Courts are improper or inconvenient venue for such
      proceeding.  Each party hereby irrevocably waives personal service of
      process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the
      address in effect for notices to it under this Debenture and agrees that
      such service shall constitute good and sufficient service of process and
      notice thereof.  Nothing contained herein shall be deemed to limit in
      any way any right to serve process in any other manner permitted by
      applicable law. Each party hereto hereby irrevocably waives, to the
      fullest extent permitted by applicable law, any and all right to trial
      by jury in any legal proceeding arising out of or relating to this
      Debenture or the transactions contemplated hereby.  If either party
      shall commence an action or proceeding to enforce any provisions of this
      Debenture, then the prevailing party in such action or proceeding shall
      be reimbursed by the other party for its attorneys’ fees and other costs
      and expenses incurred in the investigation, preparation and prosecution
      of such action or proceeding.
    

    
      
        

        

      

      
        
          -17-
        

        
          

        

      

      
        

        

      

    

    
      e)  Waiver.  Any waiver by the Company or the Holder of
      a breach of any provision of this Debenture shall not operate as or be
      construed to be a waiver of any other breach of such provision or of any
      breach of any other provision of this Debenture.  The failure of the
      Company or the Holder to insist upon strict adherence to any term of
      this Debenture on one or more occasions shall not be considered a waiver
      or deprive that party of the right thereafter to insist upon strict
      adherence to that term or any other term of this Debenture.  Any waiver
      by the Company or the Holder must be in writing.
    

    
      f)  Severability. If any provision of this Debenture is
      invalid, illegal or unenforceable, the balance of this Debenture shall
      remain in effect, and if any provision is inapplicable to any Person or
      circumstance, it shall nevertheless remain applicable to all other
      Persons and circumstances.  If it shall be found that any interest or
      other amount deemed interest due hereunder violates the applicable law
      governing usury, the applicable rate of interest due hereunder shall
      automatically be lowered to equal the maximum rate of interest permitted
      under applicable law.  The Company covenants (to the extent that it may
      lawfully do so) that it shall not at any time insist upon, plead, or in
      any manner whatsoever claim or take the benefit or advantage of, any
      stay, extension or usury law or other law which would prohibit or
      forgive the Company from paying all or any portion of the principal of
      or interest on this Debenture as contemplated herein, wherever enacted,
      now or at any time hereafter in force, or which may affect the covenants
      or the performance of this indenture, and the Company (to the extent it
      may lawfully do so) hereby expressly waives all benefits or advantage of
      any such law, and covenants that it will not, by resort to any such law,
      hinder, delay or impeded the execution of any power herein granted to
      the Holder, but will suffer and permit the execution of every such as
      though no such law has been enacted.
    

    
      g)  Next Business Day.  Whenever any payment or other
      obligation hereunder shall be due on a day other than a Business Day,
      such payment shall be made on the next succeeding Business Day.
    

    
      h)  Headings.  The headings contained herein are for
      convenience only, do not constitute a part of this Debenture and shall
      not be deemed to limit or affect any of the provisions hereof.
    

    
      
        

        

      

      
        
          -18-
        

        
          

        

      

      
        

        

      

    

    

    

    
      i)  Assumption.  Any successor to the Company or any
      surviving entity in a Fundamental Transaction shall (i) assume, prior to
      such Fundamental Transaction, all of the obligations of the Company
      under this Debenture and the other Transaction Documents pursuant to
      written agreements in form and substance satisfactory to the Holder
      (such approval not to be unreasonably withheld or delayed) and (ii)
      issue to the Holder a new debenture of such successor entity evidenced
      by a written instrument substantially similar in form and substance to
      this Debenture, including, without limitation, having a principal amount
      and interest rate equal to the principal amount and the interest rate of
      this Debenture and having similar ranking to this Debenture, which shall
      be satisfactory to the Holder (any such approval not to be unreasonably
      withheld or delayed).  The provisions of this Section 9(i) shall apply
      similarly and equally to successive Fundamental Transactions and shall
      be applied without regard to any limitations of this Debenture.
    

    
      j)  Secured Obligation. The obligations of the Company
      under this Debenture are secured by all assets of the Company pursuant
      to the Security Agreement, dated as of January 30, 2009, between the
      Company, the Subsidiaries of the Company and the Secured Parties (as
      defined therein), as amended.  
    

    

    

    
      *********************
    

    
      
        

        

      

      
        
          -19-
        

        
          

        

      

      
        

        

      

    

    

    

    
      IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
      executed by a duly authorized officer as of the date first above
      indicated.
    

    

    

    
    	
           
        	
          NET TALK.COM, INC.
        
	

        	
           
        
	

        	
           
        
	

        	
          
            By:
          

        	
          
             
          

          
             
          

        
	

        	

        	
          
            Name: Anastasios Kyriakides
          

        
	

        	

        	
          
            Title: Chief Executive Officer
          

        

    

    

    

    

    

    
      
        

        

      

      
        
          -20-
        

        
          

        

      

      
        

        

      

    

    
      ANNEX A
    

    

    

    
      NOTICE OF CONVERSION
    

    

    

    
      The undersigned hereby elects to convert principal under the 12% Senior
      Secured Convertible Debenture of NET TALK.COM, INC., a Florida
      corporation (the “Company”), due on September 25, 2011,
      into shares of common stock, par value $.001 per share (the “Common
      Stock”), of the Company according to the conditions hereof, as of
      the date written below. If shares are to be issued in the name of a
      person other than the undersigned, the undersigned will pay all transfer
      taxes payable with respect thereto and is delivering herewith such
      certificates and opinions as reasonably requested by the Company in
      accordance therewith. No fee will be charged to the holder for any
      conversion, except for such transfer taxes, if any.
    

    
      By the delivery of this Notice of Conversion the undersigned represents
      and warrants to the Company that its ownership of the Common Stock does
      not exceed the amounts determined in accordance with Section 13(d) of
      the Exchange Act, specified under Section 4 of this Debenture.
    

    
      The undersigned agrees to comply with the prospectus delivery
      requirements under the applicable securities laws in connection with any
      transfer of the aforesaid shares of Common Stock.
    

    
      Conversion calculations:
    

    
    	
           
        	
          Date to Effect Conversion:
        
	
           
        
	

        	
          Principal Amount of Debenture to be Converted:
        
	
           
        
	

        	
          
            Payment of Interest in Common Stock __ yes __ no
          

        
	

        	
           
        	
          If yes, $_____ of Interest Accrued on Account of
        
	

        	

        	
          Conversion at Issue.
        
	
           
        
	

        	
          Number of shares of Common Stock to be issued:
        
	
           
        
	
           
        
	

        	
          Signature:
        
	
           
        
	

        	
          Name:
        
	
           
        
	

        	
          Address:
        

    

    
      
        

        

      

      
        
          -21-
        

        
          

        

      

      
        

        

      

    

    

    

    
      Schedule 1
    

    
      CONVERSION SCHEDULE
    

    

    

    
      The 12% Senior Secured Convertible Debentures due on September 25, 2011,
      in the aggregate principal amount of $1,100,000 issued by Net Talk.com,
      Inc.  This Conversion Schedule reflects conversions made under Section 4
      of the above referenced Debenture.
    

    
      Dated:
    

    

    

    
    	
          
            Date of Conversion
          

          
            (or for first entry,
Original Issue Date)
          

        	
          
            Amount of
Conversion
          

        	
          
            Aggregate
Principal
Amount
Remaining
Subsequent to
Conversion
          

          
            (or original
Principal
Amount)
          

        	
          
            Company Attest
          

        

    

    
      

      

      

      

      

      

      

      

      

    

    
      -22-Exhibit 10.3
    

    
      NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
      EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
      COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
      EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
      TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
      AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
      EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
      THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
    

    

    

    
      SERIES C COMMON STOCK PURCHASE WARRANT
    

    
      Warrant No.: C-6
    

    
      to Purchase 4,400,000 Shares
of Common Stock of
NetTalk.com,
      Inc.
    

    

    

    
      THIS SERIES C COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, Debt Opportunity Fund, LLLP (the “Holder”),
      is entitled, upon the terms and subject to the limitations on exercise
      and the conditions hereinafter set forth, at any time on or after the
      date hereof (the “Initial Exercise Date”) and on or prior
      to the close of business on the fifth (5th) anniversary of the Initial
      Exercise Date (the “Termination Date”) but not thereafter,
      to subscribe for and purchase from NetTalk.com, Inc., a Florida
      corporation (the “Company”), up to 4,400,000 shares (the “Warrant
      Shares”) of Common Stock, par value $.001 per share, of the Company
      (the “Common Stock”).  The purchase price of one share of
      Common Stock under this Warrant shall be equal to the Exercise Price, as
      defined in Section 2(b).  
    

    
      Section 1.          Definitions.  Capitalized
      terms used and not otherwise defined herein shall have the meanings set
      forth in that certain Securities Purchase Agreement of even date
      herewith (the “Purchase Agreement”).
    

    
      Section 2.          Exercise.
    

    
      a)  Exercise of Warrant. Exercise of the purchase
      rights represented by this Warrant may be made, in whole or in part, at
      any time or times on or after the Initial Exercise Date and on or before
      the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise form annexed hereto (or such
      other office or agency of the Company as it may designate by notice in
      writing to the registered Holder at the address of such Holder appearing
      on the books of the Company); and, within three (3) Trading Days of the
      date said Notice of Exercise is delivered to the Company, the Company
      shall have received payment of the aggregate Exercise Price of the
      shares thereby purchased by wire transfer or cashier’s check drawn on a
      United States bank.  Notwithstanding anything herein to the contrary,
      the Holder shall not be required to physically surrender this Warrant to
      the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in full, in which
      case, the Holder shall surrender this Warrant to the Company for
      cancellation within three (3) Trading Days of the date the final Notice
      of Exercise is delivered to the Company.  Partial exercises of this
      Warrant resulting in purchases of a portion of the total number of
      Warrant Shares available hereunder shall have the effect of lowering the
      outstanding number of Warrant Shares purchasable hereunder in an amount
      equal to the applicable number of Warrant Shares purchased.  The Holder
      and the Company shall maintain records showing the number of Warrant
      Shares purchased and the date of such purchases.  The Company shall
      deliver any objection to any Notice of Exercise within two (2) Trading
      Days of receipt of such notice.  THE HOLDER AND ANY
      ASSIGNEE, BY ACCEPTANCE OF THIS WARRANT, ACKNOWLEDGE AND AGREE THAT, BY
      REASON OF THE PROVISIONS OF THIS PARAGRAPH, FOLLOWING THE PURCHASE OF A
      PORTION OF THE WARRANT SHARES HEREUNDER, THE NUMBER OF WARRANT SHARES
      AVAILABLE FOR PURCHASE HEREUNDER AT ANY GIVEN TIME MAY BE LESS THAN THE
      AMOUNT STATED ON THE FACE HEREOF.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      b)  Exercise Price.  The exercise price per share of
      the Common Stock under this Warrant shall be $0.50, subject to
      adjustment hereunder (the “Exercise Price”).
    

    
      c)  Exercise Limitations.
    

    
      i.  Holder’s Restrictions.  At any time after the
      Company has had a registration statement filed pursuant to the
      Securities Act or the Exchange Act declared effective, the Company shall
      not effect any exercise of this Warrant, and a  Holder shall not have
      the right to exercise any portion of this Warrant, pursuant to Section
      2 or otherwise, to the extent that after giving effect to such
      issuance after exercise as set forth on the applicable Notice of
      Exercise, such Holder (together with such Holder’s Affiliates, and any
      other person or entity acting as a group together with such Holder or
      any of such Holder’s Affiliates), as set forth on the applicable Notice
      of Exercise, would beneficially own in excess of the Beneficial
      Ownership Limitation (as defined below).  For purposes of the foregoing
      sentence, the number of shares of Common Stock beneficially owned by
      such Holder and its Affiliates shall include the number of shares of
      Common Stock issuable upon exercise of this Warrant with respect to
      which such determination is being made, but shall exclude the number of
      shares of Common Stock which would be issuable upon (A) exercise of the
      remaining, nonexercised portion of this Warrant beneficially owned by
      such 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 Series A Preferred
      Stock or Warrants) subject to a limitation on conversion or exercise
      analogous to the limitation contained herein beneficially owned by such
      Holder or any of its Affiliates. Except as set forth in the preceding
      sentence, for purposes of this Section 2(c)(i), beneficial
      ownership shall be calculated in accordance with Section 13(d) of the
      Exchange Act and the rules and regulations promulgated thereunder, it
      being acknowledged by a Holder that the Company is not representing to
      such Holder that such calculation is in compliance with Section 13(d) of
      the Exchange Act and such Holder is solely responsible for any schedules
      required to be filed in accordance therewith.  To the extent that the
      limitation contained in this Section 2(c)(i) applies, the
      determination of whether this Warrant is exercisable (in relation to
      other securities owned by such Holder together with any Affiliates) and
      of which a portion of this Warrant is exercisable shall be in the sole
      discretion of a Holder, and the submission of a Notice of Exercise shall
      be deemed to be each Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by such Holder
      together with any Affiliates) and of which portion of this Warrant is
      exercisable, in each case subject to such aggregate percentage
      limitation, and the Company shall have no obligation to verify or
      confirm the accuracy of such determination.  In addition, a
      determination as to any group status as contemplated above shall be
      determined in accordance with Section 13(d) of the Exchange Act and the
      rules and regulations promulgated thereunder.  For purposes of this Section
      2(c), in determining the number of outstanding shares of Common
      Stock, a Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (X) the Company’s most recent Form 10-Q or Form
      10-K, as the case may be, (Y) a more recent public announcement by the
      Company or (Z) any other notice by the Company or the Company’s transfer
      agent setting forth the number of shares of Common Stock
      outstanding.  Upon the written or oral request of a Holder, the Company
      shall within two (2) Trading Days confirm orally and in writing to such
      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 Warrant, by such Holder or its
      Affiliates since the date as of which such number of outstanding shares
      of Common Stock was reported. The “Beneficial Ownership
      Limitation” shall be 4.99% of the number of shares of the Common
      Stock outstanding immediately after giving effect to the issuance of
      shares of Common Stock issuable upon exercise of this Warrant.  The
      Beneficial Ownership Limitation provisions of this Section 2(c)(i)
      may be waived by such Holder, at the election of such Holder, upon not
      less than 61 days’ prior notice to the Company to change the Beneficial
      Ownership Limitation to 9.99% of the number of shares of the Common
      Stock outstanding immediately after giving effect to the issuance of
      shares of Common Stock upon exercise of this Warrant, and the provisions
      of this Section 2(c)(i) shall continue to apply. Upon such a
      change by a Holder of the Beneficial Ownership Limitation from such
      4.99% limitation to such 9.99% limitation, the Beneficial Ownership
      Limitation may not be further waived by such Holder.  The provisions of
      this paragraph shall be construed and implemented in a manner otherwise
      than in strict conformity with the terms of this Section 2(c)(i)
      to correct this paragraph (or any portion hereof) which may be defective
      or inconsistent with the intended Beneficial Ownership Limitation herein
      contained or to make changes or supplements necessary or desirable to
      properly give effect to such limitation. The limitations contained in
      this paragraph shall apply to a successor holder of this Warrant.  Notwithstanding
      anything herein to the contrary, this provision shall not apply to any
      Holder that has elected to waive this provision on its signature page to
      the Securities Purchase Agreement, on or before the date of closing.
    

    
      
        

        

      

      
        
          2
        

        
          

        

      

      
        

        

      

    

    
      d)  Mechanics of Exercise.
    

    
      i.  Authorization of Warrant Shares.  The Company
      covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise
      of the purchase rights represented by this Warrant, be duly authorized,
      validly issued, fully paid and nonassessable and free from all taxes,
      liens and charges created by the Company in respect of the issue thereof
      (other than taxes in respect of any transfer occurring contemporaneously
      with such issue).
    

    
      ii.  Delivery of Certificates Upon Exercise.
      Certificates for Warrant Shares purchased hereunder shall be transmitted
      by the transfer agent of the Company to the Holder by crediting the
      account of the Holder’s prime broker with the Depository Trust Company
      through its Deposit/Withdrawal at Custodian (“DWAC”) system
      if the Company is a participant in such system, and otherwise by
      delivery to the address specified by the Holder in the Notice of
      Exercise, within five (5) Trading Days from the delivery to the Company
      of the Notice of Exercise form, surrender of this Warrant (if required)
      and payment of the aggregate Exercise Price as set forth above (“Warrant
      Share Delivery Date”).  This Warrant shall be deemed to have been
      exercised on the date the Exercise Price is received by the
      Company.  The Warrant Shares shall be deemed to have been issued, and
      Holder or any other person so designated to be named therein shall be
      deemed to have become a holder of record of such shares for all
      purposes, as of the date the Warrant has been exercised by payment to
      the Company of the Exercise Price (or by cashless exercise, if
      permitted) and all taxes required to be paid by the Holder, if any,
      pursuant to Section 2(d)(vii) prior to the issuance of such
      shares, have been paid.  
    

    
      iii.  Delivery of New Warrants Upon Exercise.  If this
      Warrant shall have been exercised in part, the Company shall, at the
      request of a Holder and upon surrender of this Warrant certificate, at
      the time of delivery of the certificate or certificates representing
      Warrant Shares, deliver to Holder a new Warrant evidencing the rights of
      Holder to purchase the unpurchased Warrant Shares called for by this
      Warrant, which new Warrant shall in all other respects be identical with
      this Warrant.
    

    
      
        

        

      

      
        
          3
        

        
          

        

      

      
        

        

      

    

    
      iv.  Rescission Rights.  If the Company fails to cause
      its transfer agent to transmit to the Holder a certificate or
      certificates representing the Warrant Shares pursuant to Section
      2(d)(ii) above by the Warrant Share Delivery Date, then the Holder
      will have the right to rescind such exercise.
    

    
      v.  Obligation Absolute;  Damages.  The
      Company’s obligations to issue and deliver the certificates representing
      the Warrant Shares upon exercise of the Warrant in accordance with the
      terms hereof are absolute and unconditional, irrespective of any action
      or inaction by the Holder to enforce the same, any waiver or consent
      with respect to any provision hereof, the recovery of any judgment
      against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or
      alleged breach by the Holder or any other Person of any obligation to
      the Company or any violation or alleged violation of law by the Holder
      or any other person, and irrespective of any other circumstance which
      might otherwise limit such obligation of the Company to the Holder in
      connection with the issuance of such certificates representing the
      Warrant Shares.  The Company shall issue the certificates representing
      the Warrant Shares or, if applicable, cash, upon a properly noticed
      exercise.  If the Company fails to deliver to the Holder such
      certificate or certificates pursuant to Section 2(d) within five
      (5) Trading Days of the Warrant Share Delivery Date applicable to such
      exercise, the Company shall pay to such Holder, in cash, as liquidated
      damages and not as a penalty, for each $1,000 of VWAP of the Common
      Stock, $10 per Trading Day (increasing to $20 per Trading Day after ten
      (10) Trading Days after the Warrant Share Delivery Date) for each
      Trading Day after the Warrant Share Delivery Date until such
      certificates are delivered.
    

    
      vi. No Fractional Shares or Scrip. No fractional shares or scrip
      representing fractional shares shall be issued upon the exercise of this
      Warrant. As to any fraction of a share which Holder would otherwise be
      entitled to purchase upon such exercise, the Company shall at its
      election, either pay a cash adjustment in respect of such final fraction
      in an amount equal to such fraction multiplied by the Exercise Price or
      round up to the next whole share.
    

    
      vii. Charges, Taxes and Expenses. Issuance of certificates for
      Warrant Shares shall be made without charge to the Holder or other
      incidental expense in respect of the issuance of such certificate, and
      such certificates shall be issued in the name of the Holder or in such
      name or names as may be directed by the Holder; provided, however,
      that in the event certificates for Warrant Shares are to be issued in a
      name other than the name of the Holder, this Warrant when surrendered
      for exercise shall be accompanied by the Assignment Form attached hereto
      duly executed by the Holder; the assignment shall be subject to Section
      4 below, and the Company may require, as a condition thereto, the
      payment of a sum sufficient to reimburse it for any transfer tax
      incidental thereto.
    

    
      viii. Closing of Books. The Company will not close its
      stockholder books or records in any manner which prevents the timely
      exercise of this Warrant, pursuant to the terms hereof.
    

    
      
        

        

      

      
        
          4
        

        
          

        

      

      
        

        

      

    

    
      e)  Cashless Exercise.  If at any time after six months
      from the date of issuance of this Warrant there is no effective
      Registration Statement registering, or no current prospectus available
      for, the resale of the Warrant Shares by the Holder (a “Cashless
      Exercise Trigger”), then this Warrant may also be exercised at such
      time by means of a “cashless exercise” in which the Holder shall be
      entitled to receive a certificate for the number of Warrant Shares equal
      to the quotient obtained by dividing [(A-B) (X)] by (A), where:
    

    
      (A) = the VWAP on the Trading Day immediately preceding the date of such
      election;
    

    
      (B) =  the Exercise Price of this Warrant, as adjusted; and
    

    
      (X) = the number of Warrant Shares issuable upon exercise of this
      Warrant in accordance with the terms of this Warrant by means of a cash
      exercise rather than a cashless exercise.
    

    
      Section 3.          Certain
      Adjustments.
    

    
      a)  Stock Dividends and Splits.  If the Company, at any
      time while this Warrant is outstanding: (i) pays a stock dividend or
      otherwise makes a distribution or distributions on shares of its Common
      Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include
      any shares of Common Stock issued by the Company upon exercise of this
      Warrant), provided that this clause (i) shall not apply to shares of
      Common Stock issued solely in connection with dividends required to be
      paid under the terms and conditions of the Series D Convertible
      Preferred Stock, and/ or other securities issued and outstanding on the
      date of this Warrant, provided that such stock dividend or distribution
      shall be issued pursuant to the terms of such other securities as of the
      date of this Warrant, (ii) subdivides outstanding shares of Common Stock
      into a larger number of shares, (iii) combines (including by way of
      reverse stock split) outstanding shares of Common Stock into a smaller
      number of shares, or (iv) issues by reclassification of shares of the
      Common Stock any shares of capital stock of the Company, then in each
      case the Exercise Price shall be multiplied by a fraction of which the
      numerator shall be the number of shares of Common Stock (excluding
      treasury shares, if any) outstanding immediately before such event and
      of which the denominator shall be the number of shares of Common Stock
      outstanding immediately after such event and the number of shares
      issuable upon exercise of this Warrant shall be proportionately
      adjusted.  Any adjustment made pursuant to this Section 3(a)
      shall become effective immediately after the record date for the
      determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective
      date in the case of a subdivision, combination or re-classification.
    

    
      
        

        

      

      
        
          5
        

        
          

        

      

      
        

        

      

    

    
      b)  Subsequent Equity Sales.  If the Company or any
      Subsidiary thereof, as applicable, at any time while this Warrant is
      outstanding, sells, grants or otherwise issues (or announces any sale,
      grant or other issuance related to the foregoing) any Common Stock or
      Common Stock Equivalents entitling any Person to acquire shares of
      Common Stock, at an effective price per share less than the then
      Exercise Price (such lower price, the “Base Share Price”
      and such issuances collectively, a “Dilutive Issuance”) (if
      the holder of the Common Stock or Common Stock Equivalents so issued
      shall at any time, whether by operation of purchase price adjustments,
      reset provisions, floating conversion, exercise or exchange prices or
      otherwise, or due to warrants, options or rights per share which are
      issued in connection with such issuance, be entitled to receive shares
      of Common Stock at an effective price per share which is less than the
      Exercise Price, such issuance shall be deemed to have occurred for less
      than the Exercise Price on such date of the Dilutive Issuance), then the
      Exercise Price shall be reduced and only reduced to equal the Base Share
      Price.  As a point of clarification, the number of Warrant Shares
      issuable hereunder shall not be increased upon an adjustment to
      the Exercise Price under this Section 3(b). Such adjustment to
      the Exercise Price shall be made whenever such Common Stock or Common
      Stock Equivalents are issued. Notwithstanding the foregoing, no
      adjustments shall be made, paid or issued under this Section 3(b)
      in respect of an Exempt Issuance or issuances subject to Section 3(a)
      above.  The Company shall notify the Holder in writing, no later than
      the third (3rd) Trading Day following the issuance of any
      Common Stock or Common Stock Equivalents subject to this section,
      indicating therein the applicable issuance price, or applicable reset
      price, exchange price, conversion price and other pricing terms (such
      notice the “Dilutive Issuance Notice”).  For purposes of
      clarification, whether or not the Company provides a Dilutive Issuance
      Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance, the Holder
      is entitled to receive a number of Warrant Shares based upon the Base
      Share Price regardless of whether the Holder accurately refers to the
      Base Share Price in the Notice of Exercise.
    

    
      c)  Subsequent Rights Offerings.  If the Company, at
      any time while this Warrant is outstanding, shall issue rights, options
      or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a
      price per share less than the VWAP as of the record date mentioned
      below, then the Exercise Price shall be multiplied by a fraction, of
      which the denominator shall be the number of shares of the Common Stock
      outstanding on the date of issuance of such rights or warrants plus the
      number of additional shares of Common Stock offered for subscription or
      purchase, and of which the numerator shall be the number of shares of
      the Common Stock outstanding on the date of issuance of such rights,
      options or warrants plus the number of shares which the aggregate
      offering price of the total number of shares so offered (assuming
      receipt by the Company in full of all consideration payable upon
      exercise of such rights, options or warrants) would purchase at such
      VWAP.  Such adjustment shall be made whenever such rights, options or
      warrants are issued, and shall become effective immediately after the
      record date for the determination of stockholders entitled to receive
      such rights, options or warrants.
    

    
      
        

        

      

      
        
          6
        

        
          

        

      

      
        

        

      

    

    
      d)  Pro Rata Distributions. If the Company, at any time
      prior to the Termination Date, shall distribute to all holders of Common
      Stock (and not to Holders of the Warrants) evidences of its indebtedness
      or assets (including cash and cash dividends), then in each such case
      the Exercise Price shall be adjusted by multiplying the Exercise Price
      in effect immediately prior to the record date fixed for determination
      of stockholders entitled to receive such distribution by a fraction of
      which the denominator shall be the VWAP determined as of the record date
      mentioned above, and of which the numerator shall be such VWAP as of
      such record date less the then per share fair market value at such
      record date of the portion of such assets or evidence of indebtedness so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith.  In either case the
      adjustments shall be described in a statement provided to the Holder of
      the portion of assets or evidences of indebtedness so distributed or
      such subscription rights applicable to one share of Common Stock.  Such
      adjustment shall be made whenever any such distribution is made and
      shall become effective immediately after the record date mentioned above.
    

    
      e)  Fundamental Transaction. If, at any time while this
      Warrant is outstanding, (i) the Company effects any merger or
      consolidation of the Company with or into another Person, (ii) the
      Company effects any sale of all or substantially all of its assets in
      one or a series of related transactions, (iii) any tender offer or
      exchange offer (whether by the Company or another Person) is completed
      pursuant to which holders of Common Stock are permitted to tender or
      exchange their shares for other securities, cash or property, or (iv)
      the Company effects any reclassification of the Common Stock or any
      compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or
      property (in any such case, a “Fundamental Transaction”),
      then, upon any subsequent exercise of this Warrant, the Holder shall
      have the right to receive, for each Warrant Share that would have been
      issuable upon such exercise immediately prior to the occurrence of such
      Fundamental Transaction, at the option of the Holder, upon exercise of
      this Warrant, the number of shares of Common Stock of the successor or
      acquiring corporation or of the Company, if it is the surviving
      corporation, and any additional consideration (the “Alternate
      Consideration”) receivable upon or as a result of such
      reorganization, reclassification, merger, consolidation or disposition
      of assets by a Holder of the number of shares of Common Stock for which
      this Warrant is exercisable immediately prior to such event.  For
      purposes of any such exercise, the determination of the Exercise Price
      shall be appropriately adjusted to apply to such Alternate Consideration
      based on the amount of Alternate Consideration issuable in respect of
      one share of Common Stock in such Fundamental Transaction, and the
      Company shall apportion the Exercise Price among the Alternate
      Consideration in a reasonable manner reflecting the relative value of
      any different components of the Alternate Consideration.  If holders of
      Common Stock are given any choice as to the securities, cash or property
      to be received in a Fundamental Transaction, then the Holder shall be
      given the same choice as to the Alternate Consideration it receives upon
      any exercise of this Warrant following such Fundamental Transaction.  To
      the extent necessary to effectuate the foregoing provisions, any
      successor to the Company or surviving entity in such Fundamental
      Transaction shall issue to the Holder a new warrant consistent with the
      foregoing provisions and evidencing the Holder’s right to exercise such
      warrant into Alternate Consideration. The terms of any agreement
      pursuant to which a Fundamental Transaction is effected shall include
      terms requiring any such successor or surviving entity to comply with
      the provisions of this Section 3(e) and insuring that this
      Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental Transaction.
    

    
      
        

        

      

      
        
          7
        

        
          

        

      

      
        

        

      

    

    
      f)  Calculations.  All calculations under this Section
      3 shall be made to the nearest cent or the nearest 1/100th of a
      share, as the case may be. For purposes of this Section 3, the
      number of shares of Common Stock deemed to be issued and outstanding as
      of a given date shall be the sum of the number of shares of Common Stock
      (excluding treasury shares, if any) issued and outstanding.
    

    
      g)  Voluntary Adjustment By Company.  The Company may
      at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed
      appropriate by the Board of Directors of the Company.
    

    
      h)  Notice to Holders.
    

    
      i.  Adjustment to Exercise Price.  Whenever the
      Exercise Price is adjusted pursuant to any provision of this Section 3,
      the Company shall promptly mail to each Holder a notice setting forth
      the Exercise Price after such adjustment and setting forth a brief
      statement of the facts requiring such adjustment.
    

    
      ii.  Notice to Allow Exercise by Holder.  If (A) the
      Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock; (B) the Company shall declare a special
      nonrecurring cash dividend on or a redemption of the Common Stock; (C)
      the Company shall authorize the granting to all holders of the Common
      Stock rights or warrants to subscribe for or purchase any shares of
      capital stock of any class or of any rights; (D) the approval of any
      stockholders of the Company shall be required in connection with any
      reclassification of the Common Stock, any consolidation or merger to
      which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share
      exchange whereby the Common Stock is converted into other securities,
      cash or property; (E) the Company shall authorize the voluntary or
      involuntary dissolution, liquidation or winding up of the affairs of the
      Company; then, in each case, the Company shall cause to be mailed to the
      Holder at its last address as it shall appear upon the Warrant Register
      of the Company, at least ten (10) calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (X) the
      date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to
      be taken, the date as of which the holders of the Common Stock of record
      to be entitled to such dividend, distributions, redemption, rights or
      warrants are to be determined or (Y) the date on which such
      reclassification, consolidation, merger, sale, transfer or share
      exchange is expected to become effective or close, and the date as of
      which it is expected that holders of the Common Stock of record shall be
      entitled to exchange their shares of the Common Stock for securities,
      cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange; provided that
      the failure to mail such notice or any defect therein or in the mailing
      thereof shall not affect the validity of the corporate action required
      to be specified in such notice.  The Holder is entitled to exercise this
      Warrant during the ten (10) day period commencing on the date of such
      notice to the effective date of the event triggering such notice.
    

    
      
        

        

      

      
        
          8
        

        
          

        

      

      
        

        

      

    

    
      Section 4.          Transfer
      of Warrant.
    

    
      a)  Transferability.  Subject to compliance with any
      applicable securities laws and the conditions set forth in Section
      4(d) hereof, this Warrant and all rights hereunder (including,
      without limitation, any registration rights) are transferable, in whole
      or in part, upon surrender of this Warrant at the principal office of
      the Company or its designated agent, together with a written assignment
      of this Warrant substantially in the form attached hereto duly executed
      by the Holder or its agent or attorney and funds sufficient to pay any
      transfer taxes payable upon the making of such transfer.  Upon such
      surrender and, if required, such payment, the Company shall execute and
      deliver a new Warrant or Warrants in the name of the assignee or
      assignees and in the denomination or denominations specified in such
      instrument of assignment, and shall issue to the assignor a new Warrant
      evidencing the portion of this Warrant not so assigned, and this Warrant
      shall promptly be cancelled.  A Warrant, if properly assigned, may be
      exercised by a new holder for the purchase of Warrant Shares without
      having a new Warrant issued.  
    

    
      b)  New Warrants. This Warrant may be divided or
      combined with other Warrants upon presentation hereof at the aforesaid
      office of the Company, together with a written notice specifying the
      names and denominations in which new Warrants are to be issued, signed
      by the Holder or its agent or attorney.  Subject to compliance with Section
      4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or
      Warrants in exchange for the Warrant or Warrants to be divided or
      combined in accordance with such notice.
    

    
      c)  Warrant Register.  The Company shall register this
      Warrant, upon records to be maintained by the Company for that purpose
      (the “Warrant Register”), in the name of the record Holder hereof from
      time to time.  The Company may deem and treat the registered Holder of
      this Warrant as the absolute owner hereof for the purpose of any
      exercise hereof or any distribution to the Holder, and for all other
      purposes, absent actual notice to the contrary.
    

    
      d)  Transfer Restrictions.  If, at the time of the
      surrender of this Warrant in connection with any transfer of this
      Warrant, the transfer of this Warrant shall not be registered pursuant
      to an effective registration statement under the Securities Act and
      under applicable state securities or blue sky laws, the Company may
      require, as a condition of allowing such transfer (i) that the Holder or
      transferee of this Warrant, as the case may be, furnish to the Company a
      written opinion of counsel (which opinion shall be in form, substance
      and scope customary for opinions of counsel in comparable transactions)
      to the effect that such transfer may be made without registration under
      the Securities Act and under applicable state securities or blue sky
      laws, (ii) that the holder or transferee execute and deliver to the
      Company an investment letter in form and substance acceptable to the
      Company and (iii) that the transferee be an “accredited investor” as
      defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated
      under the Securities Act or a “qualified institutional buyer” as defined
      in Rule 144A(a) under the Securities Act.
    

    
      
        

        

      

      
        
          9
        

        
          

        

      

      
        

        

      

    

    
      Section 5.          Miscellaneous.
    

    
      a)  No Rights as Shareholder Until Exercise.  This
      Warrant does not entitle the Holder to any voting rights or other rights
      as a shareholder of the Company prior to the exercise hereof as set
      forth in Section 2.  
    

    
      b)  Loss, Theft, Destruction or Mutilation of Warrant.
      The Company covenants that upon receipt by the Company of evidence
      reasonably satisfactory to it of the loss, theft, destruction or
      mutilation of this Warrant or any stock certificate relating to the
      Warrant Shares, and in case of loss, theft or destruction, of indemnity
      or security reasonably satisfactory to it (which, in the case of the
      Warrant, shall not include the posting of any bond), and upon surrender
      and cancellation of such Warrant or stock certificate, if mutilated, the
      Company will make and deliver a new Warrant or stock certificate of like
      tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.
    

    
      c)  Saturdays, Sundays, Holidays, etc.  If the last or
      appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such
      action may be taken or such right may be exercised on the next
      succeeding Business Day.
    

    
      d)  Authorized Shares.  The Company covenants that,
      during the period the Warrant is outstanding, it will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to
      provide for the issuance of the Warrant Shares upon the exercise of any
      purchase rights under this Warrant.  The Company further covenants that
      its issuance of this Warrant shall constitute full authority to its
      officers who are charged with the duty of executing stock certificates
      to execute and issue the necessary certificates for the Warrant Shares
      upon the exercise of the purchase rights under this Warrant.  The
      Company will take all such reasonable action as may be necessary to
      assure that such Warrant Shares may be issued as provided herein without
      violation of any applicable law or regulation, or of any requirements of
      the Trading Market upon which the Common Stock may be listed.
    

    
      Before taking any action which would result in an adjustment in the
      number of Warrant Shares for which this Warrant is exercisable or in the
      Exercise Price, the Company shall obtain all such authorizations or
      exemptions thereof, or consents thereto, as may be necessary from any
      public regulatory body or bodies having jurisdiction thereof.
    

    
      
        

        

      

      
        
          10
        

        
          

        

      

      
        

        

      

    

    
      e)  Jurisdiction. All questions concerning the
      construction, validity, enforcement, venue, jurisdiction, and
      interpretation of this Warrant shall be determined in accordance with
      the provisions of the Securities Purchase Agreement.
    

    
      f)  Restrictions.  The Holder acknowledges that the
      Warrant Shares acquired upon the exercise of this Warrant, if not
      registered, will have restrictions upon resale imposed by state and
      federal securities laws.
    

    
      g)  Nonwaiver and Expenses.  No course of dealing or
      any delay or failure to exercise any right hereunder on the part of
      Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all
      rights hereunder terminate on the Termination Date.  If the Company
      willfully and knowingly fails to comply with any provision of this
      Warrant, which results in any material damages to the Holder, the
      Company shall pay to Holder such amounts as shall be sufficient to cover
      any costs and expenses including, but not limited to, reasonable
      attorneys’ fees, including those of appellate proceedings, incurred by
      Holder in collecting any amounts due pursuant hereto or in otherwise
      enforcing any of its rights, powers or remedies hereunder.
    

    
      h)  Notices.  Any notice, request or other document
      required or permitted to be given or delivered to the Holder by the
      Company shall be delivered in accordance with the notice provisions of
      the Securities Purchase Agreement.
    

    
      i)  Limitation of Liability. No provision hereof, in
      the absence of any affirmative action by Holder to exercise this Warrant
      to purchase Warrant Shares, and no enumeration herein of the rights or
      privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company,
      whether such liability is asserted by the Company or by creditors of the
      Company.
    

    
      j)  Remedies.  Holder, in addition to being entitled to
      exercise all rights granted by law, including recovery of damages, will
      be entitled to specific performance of its rights under this
      Warrant.  The Company agrees that monetary damages would not be adequate
      compensation for any loss incurred by reason of a breach by it of the
      provisions of this Warrant and hereby agrees to waive and not to assert
      the defense in any action for specific performance that a remedy at law
      would be adequate.
    

    
      k)  Successors and Assigns.  Subject to applicable
      securities laws, this Warrant and the rights and obligations evidenced
      hereby shall inure to the benefit of and be binding upon the successors
      of the Company and the successors and permitted assigns of Holder.  The
      provisions of this Warrant are intended to be for the benefit of all
      Holders from time to time of this Warrant and shall be enforceable by
      any such Holder or holder of Warrant Shares.
    

    
      l)  Amendment.  This Warrant may be modified or amended
      or the provisions hereof waived only with the written consent of the
      Company and the Holder.
    

    
      m)  Severability.  Wherever possible, each provision of
      this Warrant shall be interpreted in such manner as to be effective and
      valid under applicable law, but if any provision of this Warrant shall
      be prohibited by or invalid under applicable law, such provision shall
      be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.
    

    
      n)  Headings.  The headings used in this Warrant are
      for the convenience of reference only and shall not, for any purpose, be
      deemed a part of this Warrant.
    

    

    

    
      ********************
    

    

    

    
      
        

        

      

      
        
          11
        

        
          

        

      

      
        

        

      

    

    
      IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
      by its officer thereunto duly authorized.
    

    

    

    
      Dated:  September _, 2009
    

    

    

    
    	
           
        	
          NET TALK.COM, INC.
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          
            By:
          

        	
          
             
          

          
             
          

        
	

        	
          
            Name: Anastasios Kyriakides
          

        
	

        	
          
            Title: Chief Executive Officer
          

        

    

    

    

    
      
        

        

      

      
        
          12
        

        
          

        

      

      
        

        

      

    

    

    

    
      NOTICE OF EXERCISE
    

    

    

    
      TO:       [_______________________]
    

    

    

    
      (1)  The undersigned hereby elects to purchase ________ Warrant Shares
      of the Company pursuant to the terms of the attached Warrant (only if
      exercised in full), and tenders herewith payment of the exercise price
      in full, together with all applicable transfer taxes, if any.
    

    
      (2)  Payment will be made in lawful money of the United States.
    

    
      (3)  Please issue a certificate or certificates representing said
      Warrant Shares in the name of the undersigned or in such other name as
      is specified below:
    

    

    

    
      _______________________________
    

    

    

    
      The Warrant Shares shall be delivered to the following DWAC Account
      Number or by physical delivery of a certificate to:
    

    

    

    
      _______________________________
    

    

    

    
      _______________________________
    

    

    

    
      _______________________________
    

    

    

    
      (4)  Accredited Investor.  The undersigned certifies
      that it is an “accredited investor” as defined in Regulation D
      promulgated under the Securities Act of 1933, as amended.
    

    

    

    
      [SIGNATURE OF HOLDER]
    

    

    

    
      Name of Investing Entity:                                                                                                       
    

    
      Signature of Authorized Signatory of Investing Entity:                                                                          
    

    
      Name of Authorized Signatory:                                                                                                   
    

    
      Title of Authorized Signatory:                                                                                                  
    

    
      Date:                                                                                                                           
    

    

    

    
      
        

        

      

      
        
          13
        

        
          

        

      

      
        

        

      

    

    
      ASSIGNMENT FORM
    

    
      (To assign the foregoing warrant, execute
this form and supply
      required information.
Do not use this form to exercise the warrant.)
    

    

    

    
      FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing
      Warrant and all rights evidenced thereby are hereby assigned to
    

    

    

    
      _______________________________________________ whose address is
    

    

    

    
      _______________________________________________________________.
    

    

    

    
      _______________________________________________________________
    

    

    

    
                                                                            Dated:  ______________,
      _______
    

    

    

    

    

    
                                    Holder’s Signature:
      _____________________________
    

    

    

    
                                    Holder’s
      Address:   _____________________________
    

    

    

    
                                                                _____________________________
    

    

    

    

    

    
      Signature Guaranteed:  ___________________________________________
    

    

    

    

    

    
      NOTE:  The signature to this Assignment Form must correspond with the
      name as it appears on the face of the Warrant, without alteration or
      enlargement or any change whatsoever, and must be guaranteed by a bank
      or trust company.  Officers of corporations and those acting in a
      fiduciary or other representative capacity should file proper evidence
      of authority to assign the foregoing Warrant.
    

    

    

    

    

    
      14

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