Document:

ex10-40.htm

 

Exhibit 10.40

Loan No. RX0024T6A

FIRST AMENDMENT TO

PROMISSORY NOTE AND SUPPLEMENT

(Revolving Term Loan Supplement)

THIS FIRST AMENDMENT TO PROMISSORY NOTE AND SUPPLEMENT (this "Amendment"), is entered into as of August 31, 2011, between TIDEWATER UTILITIES, INC., a Delaware corporation (the "Company"), and CoBANK, ACB, a federally chartered instrumentality of the United States ("CoBank").

BACKGROUND

The Company and CoBank are parties to a Promissory Note and Supplement dated as of March 17, 2009 and number RX0024T6 (the “Supplement”). The parties now desire to amend the Supplement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1.                                Defined Terms. All capitalized terms used herein and not otherwise defined herein shall have the meanings given to those terms in the Supplement.

 

SECTION 2.                                Amendments.

 

(A)           The Commitment. Section 1 of the Existing Supplement is hereby amended and restated to read as follows:

SECTION 1.       The Commitment.  On the terms and conditions set forth in the MLA and this Promissory Note and Supplement, CoBank agrees to make loans (each a “Loan”) to the Company during the period set forth below in an aggregate principal amount not to exceed $12,000,000 at any one time outstanding (the "Commitment").  Within the limits and during the term of the Commitment, the Company may borrow, prepay and reborrow.

(B)           Term. Section 3 of the Supplement is hereby amended and restated to read as follows:

 

Term. The term of the Commitment shall be from the date hereof up to and including November 30, 2014, or such later date as CoBank may, in its sole discretion, authorize in writing.

 

SECTION 3.         Representations and Warranties.  To induce CoBank to enter into this Amendment, the Company represents and warrants that: (A) no consent, permission, authorization, order or license of any governmental authority or of any party to any agreement to which the Company is a party or by which it or any of its property may be bound or affected, is necessary in connection with the execution, delivery, performance or enforcement of this Amendment; (B) the Company is in compliance with all of the terms of the Loan Documents, and no Default or Event of Default exists; and (C) this Amendment has been duly authorized, executed and delivered, and creates legal, valid, and binding

 

  

  

  

 

obligations of the Borrower which are enforceable in accordance with their terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the rights of creditors generally. Without limiting (B) above, the Company represents and warrants that it is in compliance with all notice provisions of the Agreement, including, without limitation, the requirement to notify CoBank of the commencement of material litigation and of certain environmental matters.

 

SECTION 4.          Confirmation. Except as amended hereby, the Supplement shall remain in full force and effect as written.

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized officers as of the date shown above.

 

	
CoBANK, ACB

	  	
TIDEWATER UTILITIES, INC.

	  	  	  	  	  
	
By:

	
/s/Shannon Davoren

	  	
By:

	
/s/A. Bruce O’Connor

	  	  	  	  	  
	
Title:

	
Assistant Corporate Secretary

	  	
Title:

	
TreasurerEXHIBIT 4.1

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

Original Issue Date: [________________________]

Original Conversion Price (subject to adjustment herein): $1.50

$_______________

10%
SENIOR SECURED CONVERTIBLE DEBENTURE

          THIS 10%
SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and
validly issued 10% Senior Secured Convertible
Debentures of Rodman & Renshaw Capital Group, Inc., a Delaware corporation,
(the “Company”), having its principal place of business at 1251 Avenue
of the Americas, New York, NY 10020, designated as its 10% Senior Secured
Convertible Debentures (this debenture, the “Debenture” and,
collectively with the other debentures of such series, the “Debentures”).

          FOR VALUE
RECEIVED, the Company promises to pay to the order of ________________________
or its registered assigns (the “Holder”) when due, whether upon the
Maturity Date (as defined below), acceleration, redemption or otherwise (in
each case in accordance with the terms of this Debenture) and to pay interest
on any outstanding Principal (as defined below) at the applicable Interest Rate
(as defined below) from the date set out above as the Original Issue Date until
the same becomes due and payable, whether upon any Interest Payment Date
(including, without limitation, the Maturity Date and each Conversion Date (as
defined below) or acceleration, conversion, redemption or otherwise (in each
case in accordance with the terms 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

1

meanings set forth in the Purchase Agreement and (b) the following
terms shall have the following meanings:

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “Bankruptcy
 Event” means any of the following events: (a) the Company, any
 Significant Subsidiary thereof or any Guarantor (as defined in the Security
 Agreement (as defined below)) 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, any Significant Subsidiary thereof or
 any Guarantor, (b) there is commenced against the Company, any Significant
 Subsidiary thereof or any Guarantor any such case or proceeding that is not
 dismissed within 60 days after commencement, (c) the Company, any Significant
 Subsidiary thereof or any Guarantor is adjudicated insolvent or bankrupt or
 any order of relief or other order approving any such case or proceeding is
 entered, (d) the Company, any Significant Subsidiary thereof or any Guarantor
 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, any Significant Subsidiary
 thereof or any Guarantor makes a general assignment for the benefit of
 creditors, (f) the Company, any Significant Subsidiary thereof or any
 Guarantor calls a meeting of its creditors with a view to arranging a
 composition, adjustment or restructuring of its debts or (g) the Company, any
 Significant Subsidiary thereof or any Guarantor, 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.

 
	
  

 	
  

 
	
  

 	
           “Bloomberg” means Bloomberg, L.P.

 
	
  

 	
  

 
	
  

 	
           “Business
 Day” means any day except any Saturday, any Sunday, any day which is 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.

 
	
  

 	
  

 
	
  

 	
           “Buy-In”
 shall have the meaning set forth in Section 4(c)(v).

 
	
  

 	
  

 
	
  

 	
           “Closing Bid Price” means, for
 any security as of any date, the last closing bid price for such security on
 the Principal Market, as reported by Bloomberg, or, if the Principal Market
 begins to operate on an extended hours basis and does not designate the
 closing bid price then the last bid price of such security prior to 4:00:00
 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is
 not the principal securities exchange or trading market for such security,
 the last closing bid price of such security on the principal securities
 exchange or trading market where such security is listed or traded as
 reported by Bloomberg, or if the foregoing do not apply, the last closing bid
 price of such security in the over-the-counter market on the electronic
 bulletin board for such security as reported by Bloomberg, or, if no closing
 bid price is reported for such security

 

2

	
  

 	
  

 
	
  

 	
 by Bloomberg, the average of the bid prices, or the ask prices,
 respectively, of any market makers for such security as reported in the “pink
 sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing
 Bid Price cannot be calculated for such security on such date on any of the
 foregoing bases, the Closing Bid Price of such security on such date shall be
 the fair market value as determined by an independent appraiser selected in
 good faith by the Holder and reasonably acceptable to the Company, the fees
 and expenses of which shall be paid by the Company. All such determinations
 shall be appropriately adjusted for any stock dividend, stock split, stock
 combination or other similar transaction during such period.

 
	
  

 	
  

 
	
  

 	
           “Contingent Obligation” means, as
 to any Person, any direct or indirect liability, contingent or otherwise, of
 that Person with respect to any indebtedness, lease, dividend or other
 obligation of another Person if the primary purpose or intent of the Person
 incurring such liability, or the primary effect thereof, is to provide
 assurance to the obligee of such liability that such liability will be paid
 or discharged, or that any agreements relating thereto will be complied with,
 or that the holders of such liability will be protected (in whole or in part)
 against loss with respect thereto.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “Conversion
 Date Market Price” means, as of the applicable Conversion Date, the
 greater of (i) the Closing Bid Price of the Common Stock on the Trading Day
 immediately preceding the applicable Conversion Date and (ii) the VWAP of the
 Common Stock on the Trading Day immediately preceding the applicable
 Conversion Date (in each case, as appropriately adjusted for any stock
 dividend, stock split, stock combination or other similar transaction occurring
 on such Trading Day).

 
	
  

 	
  

 
	
  

 	
           “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).

 
	
  

 	
  

 
	
  

 	
           “Effectiveness
 Period” shall have the meaning set forth in the Registration Rights
 Agreement. 

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “Fundamental
 Transaction” means that (i) the Company or any of its Significant
 Subsidiaries shall, directly or indirectly, in one or more related transactions,
 consolidate or merge with or into (whether or not the Company or any
 of its Significant Subsidiaries is
 the surviving corporation) any other Person, or (ii) the Company or
 any of its Significant Subsidiaries shall, directly or indirectly, in one or more related transactions,
 sell, lease, license, assign, transfer, convey or otherwise dispose of all or
 substantially all

 

3

	
  

 	
  

 
	
  

 	
 of its respective
 properties or assets to any other Person, or (iii) the Company
 or any of its Significant Subsidiaries shall, directly or indirectly, in one or more related transactions,
 allow any other Person to make a purchase, tender or exchange offer
 that is accepted by the holders of more than 50% of the outstanding shares of
 Voting Stock of the Company (not
 including any shares of Voting Stock of the Company held by the Person or
 Persons making or party to, or associated or affiliated with the Persons
 making or party to, such purchase, tender or exchange offer), or (iv) the
 Company or any of its Significant Subsidiaries shall, directly or indirectly, in one or more related transactions,
 consummate a stock or share purchase agreement or other business
 combination (including, without limitation, a reorganization,
 recapitalization, spin-off or scheme of arrangement) with any other Person whereby such
 other Person acquires more than 50% of the outstanding shares of
 Voting Stock of the Company
 (not including any shares of Voting Stock of the Company held by the other
 Person or other Persons making or party to, or associated or affiliated with
 the other Persons making or party to, such stock or share purchase agreement or
 other business combination),
 or (v) the Company shall,
 directly or indirectly, in one or more related transactions, reorganize,
 recapitalize or reclassify the Common Stock, or (vi) any “person” or
 “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
 the Exchange Act and the rules and regulations promulgated thereunder) is or
 shall become the “beneficial owner” (as defined in Rule 13d-3 under the
 Exchange Act), directly or indirectly, of 50% of the aggregate ordinary
 voting power represented by issued and outstanding Voting Stock of the
 Company.

 
	
  

 	
  

 
	
  

 	
           “Indebtedness” of any Person
 means, without duplication (A) all indebtedness for borrowed money in excess
 of $50,000 individually or $250,000 in the aggregate at any given time, (B)
 all obligations issued, undertaken or assumed as the deferred purchase price
 of property or services (including, without limitation, “capital leases” in
 accordance with generally accepted accounting principles) (other than trade
 payables entered into in the ordinary course of business), (C) all
 reimbursement or payment obligations with respect to letters of credit,
 surety bonds and other similar instruments, (D) all obligations evidenced by
 notes, bonds, debentures or similar instruments, including obligations so
 evidenced incurred in connection with the acquisition of property, assets or
 businesses, (E) all indebtedness created or arising under any conditional
 sale or other title retention agreement, or incurred as financing, in either
 case with respect to any property or assets acquired with the proceeds of
 such indebtedness (even though the rights and remedies of the seller or bank
 under such agreement in the event of default are limited to repossession or
 sale of such property), (F) all monetary obligations under any leasing or
 similar arrangement which, in connection with generally accepted accounting
 principles, consistently applied for the periods covered thereby, is
 classified as a capital lease, (G) all indebtedness referred to in clauses
 (A) through (F) above secured by (or for which the holder of such
 Indebtedness has an existing right, contingent or otherwise, to be secured
 by) any mortgage, lien, pledge, charge, security interest or other encumbrance
 upon or in any property or assets (including accounts and contract rights)
 owned by any Person, even though the Person which owns such assets or
 property has not assumed or become liable for the payment of such
 indebtedness, and (H) all Contingent Obligations in respect 

 

4

	
  

 	
  

 
	
  

 	
 of indebtedness or obligations of others of the kinds referred to in
 clauses (A) through (G) above.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “Majority
 in Interest” means, at any time of determination, holders holding not
 less than 67% of the then-outstanding principal amounts of Debentures at the
 time of such determination.

 
	
  

 	
  

 
	
  

 	
           “Mandatory
 Redemption” shall have the meaning set forth in Section 6(a).

 
	
  

 	
  

 
	
  

 	
           “Mandatory
 Redemption Date” shall have the meaning set forth in Section 6(b).

 
	
  

 	
  

 
	
  

 	
           “Mandatory
 Redemption Event” means the receipt, directly or indirectly, by the
 Company and/or any of its Subsidiaries of any Proceeds arising out of, related
 to or in connection with (i) the sale or other disposition by Aceras
 BioMedical LLC of Huxley Pharmaceuticals, Inc. (all such Proceeds so received
 are referred to herein as “Aceras Proceeds”), (ii) any Subsequent
 Placement (as defined in the Purchase Agreement) consummated that involves
 the Company (other than the issuance and sale of the Debentures or the
 issuance by a Subsidiary or an Affiliate of the Company of its own respective
 securities (and not involving any securities of the Company, any Common Stock
 Equivalents (as defined in the Purchase Agreement), any guaranty by the
 Company of any securities or any Indebtedness or other obligations or any
 payment of any amount by the Company in connection with such issuance by such
 Subsidiary or Affiliate of the Company (as the case may be)) (each a “Subsequent
 Placement Event” and all such Proceeds so received with respect to each
 such Subsequent Placement Event are referred to herein as “Subsequent
 Placement Proceeds”) or (iii) any sale or other disposition of any
 warrant received as compensation for investment banking services by Rodman
 & Renshaw, LLC (“RR”), any sale or other disposition of any common
 stock or other equity interests acquired upon exercise of any such warrant or
 any other amounts received under or in connection with any such warrants
 (each a “Warrant Event” and all such Proceeds so received with respect
 to each such Warrant Event are referred to herein as “Warrant Proceeds”)
 (it being understood and agreed that to the extent that RR would violate Rule
 15c3-1 promulgated by the Commission under the Exchange Act (“net capital
 requirement”) by dividending or otherwise distributing to the Company any
 portion of any amount which would otherwise constitute Warrant Proceeds, then
 only such portion of such amount shall not constitute Warrant Proceeds until
 such time as such portion of such amount (or any portion thereof) may be so
 dividended or otherwise distributed by RR to the Company without so violating
 such rule at which point such portion (or such portion thereof) shall become
 Warrant Proceeds).

 
	
  

 	
  

 
	
  

 	
           “Mandatory
 Redemption Notice” shall have the meaning set forth in Section 6(b).

 
	
  

 	
  

 
	
  

 	
           “Mandatory
 Redemption Notice Date” shall have the meaning set forth in Section 6(b).

 

5

	
  

 	
  

 
	
  

 	
           “Maturity Date” shall mean the earliest to occur of (x) October 31,
 2013, (y) the date on which neither Edward Rubin nor Michael Vasinkevich are
 members of the board of directors of the Company or (z) the date on which
 either Edward Rubin or Michael Vasinkevich cease to devote substantially all
 of his business time and attention to the principal business affairs of the
 Company and its Subsidiaries, taken as a whole.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “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 (a) the Indebtedness evidenced by the Debentures, (b)
 the Indebtedness existing on the Original Issue Date that is set forth in the
 SEC Reports, (c) lease obligations and purchase money Indebtedness of up to
 $5,000,000, in the aggregate, incurred solely in connection with the
 acquisition of capital assets and lease obligations with respect to newly
 acquired or leased assets, (d) Indebtedness that (i) is expressly subordinate
 to the Debentures pursuant to a written subordination agreement with the
 Holder that is reasonably acceptable to each holder of Debentures and (ii)
 matures at a date later than the 91st day following the Maturity
 Date, (e) Indebtedness incurred in connection with an issuance or issuances
 contemplated by clause (d) under the definition of Exempt Issuance (as
 defined in the Purchase Agreement), (f) short-term subordinated Indebtedness
 of RR incurred solely for the purpose of increasing regulatory net capital to
 effect an underwritten transaction and (g) Indebtedness incurred in connection with
 the execution of short sales.

 
	
  

 	
  

 
	
  

 	
           “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, (c) Liens incurred in connection with Permitted
 Indebtedness under clauses (a) and (b) thereunder and (d) Liens incurred in
 connection with Permitted Indebtedness under clause (c) thereunder, provided
 that such Liens are not secured by assets of the Company or any of its
 Subsidiaries other than the assets so acquired or leased.

 

6

	
  

 	
  

 
	
  

 	
           “Pre-Payment Amount” means, with respect to the
 applicable date of determination, an amount equal to 50% of the interest
 that, but for either (as the case may be) (i) the applicable Company
 Redemption pursuant to Section 2(d) or (ii) the applicable Mandatory
 Redemption pursuant to Section 6, would have accrued with respect to the
 applicable principal amount of this Debenture being redeemed at the Interest
 Rate for the period from the applicable Redemption Date or the applicable
 Mandatory Redemption Date (as the case may be) through October 31, 2013.

 
	
  

 	
  

 
	
  

 	
           “Principal
 Market” means the Nasdaq Global Market.

 
	
  

 	
  

 
	
  

 	
           “Proceeds” means all consideration (including, without limitation, cash,
 cash equivalents and publicly-traded securities). 

 
	
  

 	
  

 
	
  

 	
           “Purchase
 Agreement” means the Securities Purchase Agreement, dated as of October
 31, 2011, among the Company and the original holders of Debentures, as
 amended, modified or supplemented from time to time in accordance with its
 terms.

 
	
  

 	
  

 
	
  

 	
           “Registration
 Rights Agreement” means the Registration Rights Agreement, dated as of
 the date of the Purchase Agreement, among the Company and the original
 holders of Debentures, as amended, modified or supplemented from time to time
 in accordance with its terms.

 
	
  

 	
  

 
	
  

 	
           “Registration
 Statement” means a registration statement meeting the requirements set
 forth in the Registration Rights Agreement and covering the resale of all the
 Conversion Shares and all the Warrant Shares by each Holder as provided for
 in 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(c)(ii).

 
	
  

 	
  

 
	
  

 	
           “Significant
 Subsidiary” shall have the meaning ascribed to such term in Rule 1-02(w)
 of Regulation S-X under the Securities Act.

 
	
  

 	
  

 
	
  

 	
           “Subsidiaries” means,
 collectively, (i) any Person in which the Company on the Original Issue Date,
 directly or indirectly, (A) owns 50% or more of any of the outstanding
 capital stock or holds 50% or more of any equity or similar interest of such
 Person or (B) controls or operates all or any part of the business,
 operations or administration of such Person and (ii) as of any date of
 determination, any Person in which the Company after the Original Issue Date,
 directly or indirectly, (Y) owns or acquires 50% or more of any of the
 outstanding capital stock or holds 50% or more of any equity or similar
 interest of such Person or (Z) controls or operates all or any part of the
 business, operations or administration of such Person, and each of the
 foregoing are 

 

7

	
  

 	
  

 
	
  

 	
 referred to herein individually as a “Subsidiary.”
 Notwithstanding anything herein to the contrary, “Subsidiary” shall not
 include Aceras BioMedical LLC.

 
	
  

 	
  

 
	
  

 	
           “Successor
 Entity” shall have the meaning set forth in Section 5(d).

 
	
  

 	
  

 
	
  

 	
           “Trading
 Day” means, as applicable, (x) with respect to all price determinations
 relating to the Common Stock, any day on which the Common Stock is traded on
 the Principal Market, or, if the Principal Market is not the principal
 trading market for the Common Stock, then on the principal securities
 exchange or securities market on which the Common Stock is then traded,
 provided that “Trading Day” shall not include any day on which the Common
 Stock is scheduled to trade on such exchange or market for less than 4.5
 hours or any day that the Common Stock is suspended from trading during the
 final hour of trading on such exchange or market (or if such exchange or
 market does not designate in advance the closing time of trading on such
 exchange or market, then during the hour ending at 4:00:00 p.m., New York
 time) unless such day is otherwise designated as a Trading Day in writing by
 the Holder or (y) with respect to all determinations other than price
 determinations relating to the Common Stock, any day on which The New York
 Stock Exchange (or any successor thereto) is open for trading of securities.

 
	
  

 	
  

 
	
  

 	
           “Trading
 Market” means the NYSE AMEX, the Nasdaq Capital Market, the Principal
 Market, the Nasdaq Global Select Market, the New York Stock Exchange or the
 OTC Bulletin Board (or any successors to any of the foregoing).

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “VWAP”
 means, for any security as of any date, the dollar volume-weighted average
 price for such security on the Principal Market (or, if the Principal Market
 is not the principal trading market for such security, then on the principal
 securities exchange or securities market on which such security is then
 traded) during the period beginning at 9:30:01 a.m., New York time, and
 ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its
 “Volume at Price” function or, if the foregoing does not apply, the dollar
 volume-weighted average price of such security in the over-the-counter market
 on the electronic bulletin board for such security during the period
 beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New
 York time, as reported by Bloomberg, or, if no dollar volume-weighted average
 price is reported for such security by Bloomberg for such hours, the average
 of the highest closing bid price and the lowest closing ask price of any of
 the market makers for such security as reported in the “pink sheets” by OTC
 Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be
 calculated for such security on such date on any of the foregoing bases, the
 VWAP of such security on such date shall be the fair market value as
 determined by an independent 

 

8

	
  

 	
  

 
	
  

 	
 appraiser selected in good faith by the Holder and reasonably
 acceptable to the Company, the fees and expenses of which shall be paid by
 the Company. All such determinations shall be appropriately adjusted for any
 stock dividend, stock split, stock combination or other similar transaction
 during such period.

 

	
  

 	
  

 	
  

 
	
  

 	
 Section 2.
 Interest; Late Fees and Prepayment.

 
	
  

 	
  

 
	
  

 	
           a) Payment
 of Interest. The Company shall pay interest to the Holder on the
 aggregate outstanding principal amount of this Debenture at the rate of 10%
 per annum (the “Interest Rate”), payable semi-annually in arrears on
 June 1 and December 1 of each year, commencing June 1, 2012, on each
 Conversion Date (but only as to that principal amount then being converted)
 and on the Maturity Date (each such date, an “Interest Payment Date”)
 (if any Interest Payment Date is not a Business Day, then the applicable
 payment shall be due on the next succeeding Business Day), in cash.

 
	
  

 	
  

 
	
  

 	
           b) Interest
 Calculations. Interest shall be calculated on the basis of a 360-day
 year, consisting of twelve 30 calendar day periods and shall commence
 accruing daily on the Original Issue Date on the principal amount outstanding
 from time to time. 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. Any amount of principal or any other amount to be paid hereunder
 which is not paid when due shall entail a late fee at an interest rate equal
 to the lesser of 15% per annum or the maximum rate permitted by applicable
 law (the “Late Fees”) which shall accrue daily from the date such
 amount was due hereunder through and including the date of actual payment in
 full of such amount.

 
	
  

 	
  

 
	
  

 	
           d) Company
 Early Redemption Right. 

 
	
  

 	
  

 
	
  

 	
  

 	
           i. Right
 to Cause Early Redemption. At any time while the Registration Statement
 is effective (and the prospectus contained therein is available for use) or
 all of the Conversion Shares under all Debentures are eligible for resale
 under Rule 144 (without volume limitations or manner of sale restriction),
 the Company shall have the right to redeem all or any portion of the
 then-remaining principal amount outstanding under this Debenture on the
 applicable Redemption Date (as defined below) (each a “Company Redemption”).
 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           ii. Mechanics
 of Company Redemption. The Company may exercise its right to require
 redemption under this Section 2(d) by delivering a written notice thereof by
 facsimile and overnight courier to all, but not less than all, of the holders
 of Debentures (each a “Redemption Notice” and the date all of the
 holders of Debentures received such notice is referred to as the applicable “Redemption
 Notice Date”). The applicable Redemption Notice shall (x) state the
 date on which the applicable Company Redemption shall occur (the “Redemption
 Date”), 

 

9

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 which date shall not be less than ten (10) Business Days nor more
 than sixty (60) Business Days following the applicable Redemption Notice
 Date, (y) state the principal amount to be paid on the applicable Redemption
 Date (such stated principal amount is referred to herein as the “Stated
 Principal”) and (z) contain a certification from the Chief Executive
 Officer of the Company that the Company has simultaneously taken the same
 action with respect to all of the Debentures. Each Redemption Notice shall be
 irrevocable.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           iii. Right
 to Cause Redemption. The amount to be paid to the Holder in respect of
 this Debenture on the applicable Redemption Date shall be determined as of
 the applicable Redemption Date and shall be an amount in cash equal to the
 sum of (i) the applicable Stated Principal, (ii) all accrued and unpaid
 interest on such Stated Principal, (iii) all other amounts due under this
 Debenture with respect to the Stated Principal, (iv) all accrued and unpaid
 Late Fees due under this Debenture and (v) the applicable Pre-Payment Amount
 (the “Redemption Price”). On the applicable Redemption Date, the
 Company shall pay the applicable Redemption Price to the Holder in cash by
 wire transfer of immediately available funds. Notwithstanding anything to the
 contrary in this Section 2(d), but subject to Section 4(d) and the last
 sentence of this Section 2(d)(iii), until the applicable Redemption Price
 (together with any Late Fees thereon) is paid in full, all or any portion of
 the principal amount of this Debenture may be converted, in whole or in part,
 by the Holder into shares of Common Stock pursuant to Section 4, and all such
 principal amounts so converted shall reduce the applicable Stated Principal
 required to be redeemed on the applicable Redemption Date unless otherwise
 indicated by the Holder. In the event of the Company’s redemption of any
 portion of this Debenture under this Section 2(d), the Holder’s damages would
 be uncertain and difficult to estimate because of the parties’ inability to
 predict future interest rates and the uncertainty of the availability of a
 suitable substitute investment opportunity for the Holder. Accordingly, any
 redemption premium due under this Section 2(d) is intended by the parties to
 be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of
 its investment opportunity and not as a penalty. In the event that the
 Company does not pay to the Holder the applicable Redemption Price in full on
 the applicable Redemption Date, then, in addition to all other rights and remedies
 available to the Holder, the Company shall pay to the Holder Late Fees in
 respect of the applicable Redemption Price until paid in full.
 Notwithstanding anything contained in this Section 2(d) to the contrary, if
 the Registration Statement ceases to be effective (or the prospectus
 contained therein ceases to be available for use) or any of the Conversion
 Shares under any of the Debentures are not eligible for resale under Rule 144
 (without volume limitations or manner of sale restriction) on any day during
 the period commencing on the applicable Redemption Notice Date and ending on
 the date on which the applicable Redemption Price is paid in full in cash to
 the Holder, then the applicable Redemption Notice delivered to the Holder
 shall be null and void ab initio and the Company Redemption 

 

10

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 contemplated by such Redemption Notice shall not occur without the
 prior written consent of the Holder.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           iv. Pro
 Rata Redemption Right. If the Company elects to cause a Company
 Redemption pursuant to this Section 2(d), then it must simultaneously cause a
 Company Redemption (as defined in the other Debentures) to occur under each
 of the other Debentures in the same proportion as the applicable Stated
 Principal bears to the outstanding principal amount of this Debenture on the
 Redemption Notice Date.

 
	
  

 	
  

 	
  

 
	
  

 	
 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.

 
	
  

 	
  

 
	
  

 	
 Section
 4. Conversion.

 
	
  

 	
  

 
	
  

 	
           a) Voluntary
 Conversion Right. 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 validly issued, fully paid and non-assessable 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(d)
 hereof). To convert any all or any portion of the principal amount of this
 Debenture on any date (a “Conversion
 Date”), the Holder shall deliver (whether via facsimile or
 otherwise), for receipt on or prior to 11:59 p.m., New York time, on such
 date, a copy of a fully-completed and executed notice of conversion in the
 form attached hereto as Annex A (the “Conversion Notice”) to the Company. The Holder shall not be
 required to physically surrender this Debenture to the Company to effect any
 conversion hereunder. Following conversion of the entire principal amount of
 this Debenture and the payment to the Holder by the Company of all accrued
 and unpaid interest thereon and all other amounts due hereunder, the Holder
 shall surrender this Debenture to a nationally recognized overnight delivery
 service for 

 

11

	
  

 	
  

 	
  

 
	
  

 	
 delivery to the Company (or an indemnification undertaking with
 respect to this Debenture in the case of its loss, theft or destruction as
 contemplated by Section 9(c) hereof). Conversions hereunder shall have the
 effect of lowering the outstanding principal amount of this Debenture in an
 amount equal to the principal amount actually converted in the applicable
 conversion. The Holder and the Company shall maintain records showing the
 principal amount(s) converted and the date of such conversion(s). In the
 event of any dispute or discrepancy, the records of the Holder shall be
 controlling and determinative in the absence of manifest error. 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 $1.50, subject to adjustment herein (the “Conversion
 Price”).

 
	
  

 	
  

 
	
  

 	
           c) Mechanics
 of Conversion.

 
	
  

 	
  

 
	
  

 	
  

 	
           i. Conversion
 Shares Issuable Upon Conversion of Principal Amount. The number of
 Conversion Shares issuable upon a conversion hereunder shall be determined as
 set forth in this Section 4(c)(i).

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           1) Non-Election
 of Net Settlement. If by 9:15 a.m. (New York time) on the first (1st)
 Trading Day immediately following the applicable Conversion Date the Company
 has either (i) delivered (via facsimile or e-mail) a written notice stating
 that the number of Conversion Shares with respect to the Conversion Notice
 delivered on such Conversion Date will be determined pursuant to this Section
 4(c)(i)(1) or (ii) failed to deliver either the written notice described in
 the immediately preceding clause (i) or the written notice described in
 Section 4(c)(i)(2) below, then the number of Conversion Shares issuable with
 respect to such Conversion Notice shall be equal to the quotient (x) the
 principal amount of this Debenture specified in such Conversion Notice to be
 converted divided by (y) the Conversion Price in effect on such Conversion
 Date.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           2) Election
 of Net Settlement. If by 9:15 a.m. (New York time) on the first (1st)
 Trading Day immediately following the applicable Conversion Date the Company
 has delivered (via facsimile or e-mail) a written notice stating that the
 number of Conversion Shares with respect to the Conversion Notice delivered
 on such Conversion Date will be determined pursuant to this Section
 4(c)(i)(2), then, in lieu of delivering the number of Conversion Shares
 specified in such Conversion Notice, the Company shall deliver to the Holder
 all the following:

 

12

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (A) an amount equal to the principal amount specified in such
 Conversion Notice to be converted;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (B) all accrued and unpaid interest on such principal amount through
 such Conversion Date;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (C) all other amounts due under this Debenture with respect to such
 principal amount;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (D) all accrued and unpaid Late Fees under this Debenture through
 such Conversion Date; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 (E) if the applicable Conversion Date Market Price is greater than
 the Conversion Price in effect on such Conversion Date, a number of
 Conversion Shares equal to:

 

	
  

 	
  

 
	
  

 	
 [(P/CP)*(CMP-CP)]/CMP
 where:

 
	
  

 	
  

 
	
  

 	
 P = the
 principal amount of specified in the applicable Conversion Notice.

 
	
  

 	
  

 
	
  

 	
 CP = the
 Conversion Price in effect on the applicable Conversion Date.

 
	
  

 	
  

 
	
  

 	
 CMP =
 applicable Conversion Date Market Price.

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           ii. Delivery
 of Conversion Shares Upon Conversion and Payment of Required Payments. On
 or before the second (2nd) Trading Day following the date of
 receipt of a Conversion Notice, the Company shall transmit by facsimile a
 copy of such Conversion Notice to the Company’s transfer agent (the “Transfer Agent”). On or before
 the third (3rd) Trading Day following the date of receipt of a
 Conversion Notice (the “Share Delivery Date”), the Company shall (1)
 (A) provided that the Transfer Agent is participating in The Depository Trust
 Company’s (“DTC”) Fast
 Automated Securities Transfer Program and the applicable Conversion Date is
 on or after the earlier to occur of (x) six month anniversary of the Original
 Issue Date and (y) the Effective Date, credit such aggregate number of shares
 of Common Stock to which the Holder shall be entitled to the Holder’s or its
 designee’s balance account with DTC through its Deposit/Withdrawal at
 Custodian system or (B) if the Transfer Agent is not participating in the DTC
 Fast Automated Securities Transfer Program or if the applicable Conversion
 Date is prior to the six month anniversary of the Original Issue Date or the
 Effective Date, issue and deliver (via reputable overnight courier) to the
 address as specified in the Conversion Notice, a certificate, registered in
 the name of the Holder or its designee, for the number of shares of Common
 Stock to which the Holder shall be entitled (and if required by the terms of
 the Purchase Agreement, such certificate will contained the legend set forth
 in 

 

13

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 the Purchase Agreement), (2) if Section 4(c)(i)(1) is applicable to
 such conversion, pay to the Holder in cash an amount equal to the accrued and
 unpaid interest on the principal amount specified in the applicable
 Conversion Notice up to and including the applicable Conversion Date by wire
 transfer of immediately available funds and (3) if Section 4(c)(i)(2) is
 applicable to such conversion, pay to the Holder in cash the amounts required
 to be paid to the Holder pursuant to Section 4(c)(i)(2) by wire transfer of
 immediately available funds.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           iii. Failure
 to Deliver Certificates or Pay Required Amount. If, in the case of any
 Conversion Notice, the Company fails for any reason to deliver to the Holder
 by the Share Delivery Date (x) the certificate or certificates required to be
 delivered pursuant to Section 4(d)(ii) or to credit the Holder’s or its
 designee’s balance account with DTC for the number of shares of Common Stock
 to which the Holder is entitled upon the Holder’s conversion hereunder
 pursuant to Section 4(d)(ii) (as the case may be), then in addition to all
 other remedies available to the Holder or (y) any of the amounts required to
 be paid to the Holder pursuant to Section 4(d)(ii), the Holder shall be
 entitled to elect by written notice to the Company at any time on or before
 its receipt of all the deliveries any payments required by Section 4(d)(ii),
 to rescind such Conversion Notice, in which event the Company shall promptly
 return to the Holder any original Debenture delivered to the Company and the
 Holder shall promptly return to the Company (a) any certificates so issued or
 any shares of Common Stock so credited to such Holder and (b) any amounts so
 paid pursuant to the Holder pursuant to Section 4(d)(ii), in each case, with
 respect to such rescinded Conversion Notice.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           iv. Obligation
 Absolute. 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. In the absence of such injunction, the Company
 shall issue Conversion Shares upon receipt of a Conversion Notice.

 

14

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 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
 the 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.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           v. Compensation
 for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In
 addition to any other rights available to the Holder, if the Company fails
 for any reason to deliver to the Holder by the Share Delivery Date the
 certificate or certificates required to be delivered pursuant to Section or
 to credit the Holder’s or its designee’s balance account with DTC for the
 number of shares of Common Stock to which the Holder is entitled upon the
 Holder’s conversion hereunder (as the case may be), and if on or after the
 Share Delivery Date, the Holder (or any other Person in respect, or on
 behalf, of the Holder) is required by its broker to purchase (in an open
 market transaction or otherwise) or the Holder’s brokerage firm otherwise
 purchases (in an open market transaction or otherwise) shares of Common Stock
 to deliver in satisfaction of a sale by the Holder of all or any portion of
 the number of shares of Common Stock, or a sale of a number of shares of
 Common Stock equal to all or any portion of the number of shares of Common
 Stock, issuable upon such conversion that the Holder so anticipated receiving
 from the Company, then, in addition to all other remedies available to the
 Holder, (a “Buy-In”) the Company shall, within three (3) Business Days
 after receipt of the Holder’s written request and in the Holder’s discretion,
 promptly honor its obligation to so issue and deliver to the Holder a
 certificate or certificates representing such shares of Common Stock or
 credit the Holder’s balance account with DTC for the number of shares of
 Common Stock to which the Holder is entitled upon the Holder’s conversion
 hereunder (as the case may be) and pay cash to the Holder in an amount equal
 to the excess (if any) of the Holder’s total purchase price (including
 brokerage commissions (if any) and other out-of-pocket expenses, if any) for
 the shares of Common Stock so purchased (including, without limitation, by
 any other Person in respect, or on behalf, of the Holder) over the product of
 (A) such number of shares of Common Stock multiplied by (B) the actual sale
 price at which the sell order giving rise to such purchase obligation was
 executed (including any brokerage commissions). The Holder shall provide the
 Company written notice indicating the amounts payable to the Holder in respect
 of the Buy-In and, upon request of the Company, evidence of the amount of
 such loss. Nothing herein shall limit a Holder’s right to pursue any other
 remedies available to it hereunder, at law or in equity including, without
 limitation, a decree of specific performance and/or injunctive relief with
 respect to the Company’s failure to timely deliver certificates representing
 shares of Common Stock upon conversion of this Debenture as required pursuant
 to the terms hereof.

 

15

	
  

 	
  

 	
  

 
	
  

 	
  

 	
           vi. 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 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 other Debentures), not less than such aggregate number
 of shares of the Common Stock as shall be issuable upon the conversion of the
 then outstanding principal amount of this Debenture (disregarding any
 limitations on conversion set forth in Section 4(d)). 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.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           vii. Fractional
 Shares. No fractional shares or scrip representing fractional shares
 shall be issued upon the conversion of this Debenture. As to any fraction of
 a share which the Holder would otherwise be entitled to purchase upon such
 conversion, the Company shall round up to the next whole share.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           viii. Transfer
 Taxes and Expenses. 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.
 The Company shall pay all Transfer Agent fees required for same-day
 processing of any Conversion Notice.

 
	
  

 	
  

 	
  

 
	
  

 	
           d) Holder’s
 Conversion Limitations. Notwithstanding anything to the contrary
 contained in this Debenture, this Debenture shall not be convertible by the
 Holder hereof to the extent (but only to the extent) that the Holder or any
 of its affiliates would beneficially own in excess of 4.9% (the “Maximum
 Percentage”) of the Common Stock. To the extent the above limitation
 applies, the determination of whether this Debenture shall be convertible
 (vis-à-vis other convertible, exercisable or exchangeable securities owned by
 the Holder or any of its affiliates) and of which such securities shall be
 convertible, exercisable or exchangeable (as among all such securities owned
 by the Holder and its affiliates) shall, subject to such Maximum Percentage
 limitation, be determined on the basis of the first submission to the Company
 for conversion, exercise or exchange (as the case may be). No prior inability
 to convert this Debenture pursuant to this paragraph shall have any effect on
 the applicability of the provisions of this paragraph with respect to
 any subsequent determination of convertibility. For purposes of this
 paragraph, beneficial ownership and all determinations and calculations (including,
 without limitation, with respect to

 

16

	
  

 	
  

 
	
  

 	
 calculations of percentage ownership) shall be determined in
 accordance with Section 13(d) of the Exchange Act and the rules and
 regulations promulgated thereunder. The provisions of this paragraph shall be
 implemented in a manner otherwise than in strict conformity with the terms of
 this paragraph to correct this paragraph (or any portion hereof) which may be
 defective or inconsistent with the intended Maximum Percentage beneficial
 ownership limitation herein contained or to make changes or supplements
 necessary or desirable to properly give effect to such Maximum Percentage
 limitation. The limitations contained in this paragraph shall apply to a
 successor holder of this Debenture. The holders of Common Stock shall be
 third party beneficiaries of this paragraph and the Company may not waive
 this paragraph without the consent of holders of a majority of its Common
 Stock. For any reason at any time, upon the written or oral request of the
 Holder, the Company shall within one (1) Business Day confirm orally and in
 writing to the Holder the number of shares of Common Stock then outstanding,
 including by virtue of any prior conversion or exercise of convertible or
 exercisable securities into Common Stock, including, without limitation,
 pursuant to this Debenture or securities issued pursuant to the Purchase
 Agreement.

 
	
  

 	
  

 
	
  

 	
           e) Principal
 Market Regulation. The Company shall not issue any shares of Common Stock
 upon conversion of this Debenture if the issuance of such shares of Common
 Stock would exceed the aggregate number of shares of Common Stock which the
 Company may issue upon conversion or exercise (as the case may be) of the
 Debentures and the Series B Warrants without breaching the Company’s obligations
 under the rules or regulations of the Principal Market (the number of shares
 which may be issued without violating such rules and regulations, the “Exchange
 Cap”), except that such limitation shall not apply in the event that the
 Company (A) obtains the approval of its stockholders as required by the
 applicable rules of the Principal Market for issuances of shares of Common
 Stock in excess of such amount or (B) obtains a written opinion from outside
 counsel to the Company that such approval is not required, which opinion
 shall be reasonably satisfactory to the Holder. Until such approval or such
 written opinion is obtained, no Purchaser (as defined in the Purchase
 Agreement) shall be issued in the aggregate, upon exercise or conversion (as
 the case may be) of any Series B Warrants or any of the Debentures, shares of
 Common Stock in an amount greater than the product of (i) the Exchange Cap
 multiplied by (ii) the quotient of (1) the original principal amount of
 Debentures issued to the Holder pursuant to the Purchase Agreement on the
 Original Issue Date divided by (2) the aggregate original principal amount of
 all Debentures issued to all the Purchasers pursuant to the Purchase
 Agreement on the Original Issue Date (with respect to each Purchaser, the “Exchange
 Cap Allocation”). Each Purchaser’s Exchange Cap Allocation shall be
 allocated by such Purchaser among the Debentures and Series B Warrants held
 by such Purchaser. Upon exercise and conversion in full of a Purchaser’s
 Series B Warrants and Debentures, the difference (if any) between such
 Purchaser’s Exchange Cap Allocation and the number of shares of Common Stock
 actually issued to such Purchaser upon such Purchaser’s exercise in full of
 such Purchaser’s Series B Warrants and such Purchaser’s conversion in full of
 such Debentures shall be allocated to the respective Exchange Cap Allocations
 of the remaining holders of Series B Warrants and Debentures on a pro rata
 basis in proportion

 

17

	
  

 	
  

 
	
  

 	
 to the shares of Common Stock underlying the Series B Warrants and
 Debentures then held by each such Purchaser.

 
	
  

 	
  

 
	
           Section
 5. Certain Adjustments.

 
	
  

 
	
  

 	
           a) Stock
 Dividends and Stock Splits. If the Company, at any time while this
 Debenture is outstanding: (i) pays a stock dividend or otherwise makes a
 distribution or distributions payable in shares of Common Stock on shares of
 Common Stock or any Common Stock Equivalents (which, for avoidance of doubt,
 shall not include any shares of Common Stock issued by the Company upon
 conversion of, or payment of interest on, the Debentures), (ii) subdivides
 outstanding shares of Common Stock into a larger number of shares, (iii)
 combines (including by way of a reverse stock split) outstanding shares of
 Common Stock into a smaller number of shares or (iv) issues, in the event of
 a reclassification of shares of the Common Stock, any shares of capital stock
 of the Company, then, in each case, the Conversion Price then in effect 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 Rights
Offerings. In addition to any adjustments pursuant to Section 5(a) above, if the Company grants, issues or sells any Common
Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the
record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account
any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that
the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares
of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage,
provided further, such Purchase Right shall be held in abeyance for the benefit of the Holder until
such time as the Holder converts this Debenture (whether in whole or in part), and subject to the foregoing proviso, upon each
conversion of this Debenture the Company shall distribute such Purchase Right to the Holder with respect to each Conversion Share
issuable upon each such conversion (with the number of such Conversion Shares so issuable being determined for purposes of this
Section 5(b) as if the number of Conversion Shares issuable upon each such conversion was determined pursuant to Section 4(c)(i)(1)
and not Section 4(c)(i)(2)) until such time as this Debenture has been converted in full).

 

18

	
  
 	
  
 	
  
 
	
  
 	
           c) Pro Rata Distributions.
In addition to any adjustments pursuant to Section 5(a) above, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Debenture, then, in each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on conversion hereof, including
without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if
no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distributions would
result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution
to such extent (or the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent)
and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Maximum Percentage, provided further, such Distribution
shall be held in abeyance for the benefit of the Holder until such time as the Holder converts this Debenture (whether in whole
or in part), and subject to the foregoing proviso, upon each conversion of this Debenture, the Company shall make such Distribution
to the Holder with respect to each Conversion Share issuable upon each such conversion (with the number of such Conversion Shares
so issuable being determined for purposes of this Section 5(c) as if the number of Conversion Shares issuable upon each such conversion
was determined pursuant to Section 4(c)(i)(1) and not Section 4(c)(i)(2)) until such time as this Debenture has been converted
in full).
 
	
  
 	
  
 
	
  
 	
           d) Fundamental
 Transactions. 
 
	
  
 	
  
 
	
  
 	
  
 	
           i. Assumption.
 If, at any time while this Debenture is outstanding, a Fundamental
 Transaction occurs, 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 (without regard to any limitation
 in Section 4(d) on the conversion of this Debenture), 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 as a result of such Fundamental Transaction by
 a holder of the number of shares of Common Stock for which this Debenture is 
 

19

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 convertible immediately prior to such Fundamental Transaction (without
 regard to any limitation in Section 4(d) on the conversion of this Debenture).
 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 one (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. The Company shall
 cause any successor entity in a Fundamental Transaction (the “Successor
 Entity”) to assume in writing all of the obligations of the Company under
 this Debenture and the other Transaction Documents (as defined in the
 Purchase Agreement) in accordance with the provisions of this Section 5(d)
 pursuant to written agreements in form and substance reasonably satisfactory
 to the Holder and approved by the Holder (without unreasonable delay) prior
 to such Fundamental Transaction and shall, at the option of the holder of
 this Debenture, deliver to the Holder in exchange for this Debenture a
 security of the Successor Entity evidenced by a written instrument
 substantially similar in form and substance to this Debenture which is
 convertible for a corresponding number of shares of capital stock of such
 Successor Entity (or its parent entity) equivalent to the shares of Common
 Stock acquirable and receivable upon conversion of this Debenture (without
 regard to any limitations on the conversion of this Debenture) prior to such
 Fundamental Transaction, and with a conversion price which applies the
 conversion price hereunder to such shares of capital stock (but taking into
 account the relative value of the shares of Common Stock pursuant to such
 Fundamental Transaction and the value of such shares of capital stock, such
 number of shares of capital stock and such conversion price being for the
 purpose of protecting the economic value of this Debenture immediately prior
 to the consummation of such Fundamental Transaction), and which is reasonably
 satisfactory in form and substance to the Holder. Upon the occurrence of any
 such Fundamental Transaction, the Successor Entity shall succeed to, and be
 substituted for (so that from and after the date of such Fundamental
 Transaction, the provisions of this Debenture and the other Transaction
 Documents referring to the “Company” shall refer instead to the Successor
 Entity), and may exercise every right and power of the Company and shall
 assume all of the obligations of the Company under this Debenture and the
 other Transaction Documents with the same effect as if such Successor Entity
 had been named as the Company herein. The provisions of this Section 5(d)
 shall apply similarly and equally to successive Fundamental Transactions and
 shall be applied without regard to any limitations on the conversion of this
 Debenture.

 

20

	
  

 	
  

 	
  

 
	
  

 	
  

 	
           ii. Notice
 of Fundamental Transaction; Redemption Right. The Company shall, no
 sooner than twenty (20) Trading Days nor later than ten (10) Trading Days
 prior to the consummation of Fundamental Transaction (but not prior to the
 public announcement of such Fundamental Transaction) deliver written notice
 thereof via facsimile and overnight courier to the Holder (a “Fundamental Transaction Notice”). At any time during the period beginning after the
 Holder’s receipt of a Transaction Notice or the Holder becoming aware of a Fundamental
 Transaction if a Fundamental Transaction Notice is not delivered to the
 Holder in accordance with the immediately preceding sentence (as applicable)
 and ending on the later of twenty (20) Trading Days after (A) consummation of
 such Fundamental Transaction or (B) the date of receipt of such Fundamental
 Transaction Notice, the Holder may require the Company to redeem all or any
 portion of this Debenture by delivering written notice thereof (“Fundamental
 Transaction Redemption Notice”)
 to the Company, which Fundamental Transaction Redemption Notice shall
 indicate the principal amount the Holder is electing to redeem. The portion
 of this Debenture subject to redemption pursuant to this Section 5(d)(ii)
 shall be redeemed by the Company in cash at a price equal to the sum of (I)
 the principal amount being redeemed, (II) all accrued and unpaid interest on
 the principal amount being redeemed, (III) all other amounts due under this
 Debenture with respect to the principal amount being redeemed and (IV) all accrued
 and unpaid Late Fees due under this Debenture (the “Fundamental
 Transaction Redemption Price”). The Company shall deliver the applicable
 Fundamental Transaction Redemption Price to the Holder in cash by wire
 transfer of immediately available funds concurrently with the consummation of
 such Fundamental Transaction if the applicable Fundamental Transaction
 Redemption Notice is sent to the Company prior to the consummation of such
 Fundamental Transaction and within two (2) Business Days after the Company’s
 receipt of such notice otherwise. Redemptions required by this Section
 5(d)(ii) shall have priority to payments to stockholders in connection with
 such Fundamental Transaction. To the extent redemptions required by this
 Section 5(d)(ii) are deemed or determined by a court of competent
 jurisdiction to be prepayments of this Debenture by the Company, such
 redemptions shall be deemed to be voluntary prepayments. Notwithstanding
 anything to the contrary in this Section 5(d)(ii), but subject to Section
 4(d), until the applicable Fundamental Transaction Redemption Price (together
 with any Late Fees thereon) is paid in full, all or any portion of the
 principal amount submitted for redemption under this Section 5(d)(ii) may be
 converted, in whole or in part, by the Holder into Common Stock pursuant to
 Section 4, and all such principal amounts so converted shall reduce the
 applicable principal amount required to be redeemed on the applicable
 Mandatory Redemption Date unless otherwise indicated by the Holder. In the
 event of the Company’s redemption of any portion of this Debenture under this
 Section 5(d)(ii) the Holder’s damages would be uncertain and difficult to
 estimate because of the parties’ inability to predict future interest rates
 and the uncertainty of the availability of a suitable substitute investment
 opportunity for the Holder. Accordingly, any redemption 

 

21

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 premium due under this Section 5(d)(ii) is intended by the parties to
 be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of
 its investment opportunity and not as a penalty. In the event that the
 Company does not pay the applicable Fundamental Transaction Redemption Price
 to the Holder within the time period required, at any time thereafter and
 until the Company pays such unpaid Fundamental Transaction Redemption Price
 in full, the Holder shall have the option, in lieu of redemption, to require
 the Company to promptly return to the Holder all or any portion of this
 Debenture representing the principal amount that was submitted for redemption
 and for which the applicable Fundamental Transaction Redemption Price has not
 been paid. Upon the Company’s receipt of such notice, (x) the applicable
 Fundamental Transaction Redemption Notice shall be null and void with respect
 to such principal amount and (y) the Company shall immediately return this
 Debenture to the Holder.

 
	
  

 	
  

 	
  

 
	
  

 	
           e) 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.

 
	
  

 	
  

 
	
  

 	
           f) Notice
 to the Holder.

 
	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           ii. 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, or 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 filed at each office or agency maintained for
 the purpose of conversion of this Debenture, and 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) 

 

22

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 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. To the extent that any notice
 provided hereunder constitutes, or contains, material, non-public information
 regarding the Company or any of the Subsidiaries, the Company shall
 simultaneously file such notice with the Commission pursuant to a Current
 Report on Form 8-K. The Holder shall remain entitled to convert this
 Debenture during the 20-day period commencing on the date of such notice
 through the effective date of the event triggering such notice except as may
 otherwise be expressly set forth herein.

 
	
  

 	
  

 	
  

 
	
           Section
 6. Mandatory Redemption. 

 
	
  

 
	
  

 	
           a) Occurrence
 of Mandatory Redemptions. Upon the occurrence of each Mandatory
 Redemption Event, the Company shall use the following Proceeds with respect
 to such Mandatory Redemption Event to redeem this Debenture and all other
 then outstanding Debentures in the manner and in such amounts as are set
 forth herein and therein (each being a “Mandatory Redemption”) (as applicable), (i) 100% of the
 Aceras Proceeds, (ii) 33.3% of the applicable Subsequent Placement Proceeds
 and (iii) 100% of the applicable Warrant Proceeds (less, in the case of this
 clause (iii), applicable customary selling brokerage commissions and
 applicable exercise prices paid in cash (if any) in respect of the applicable
 Warrant Event resulting in the applicable Mandatory Redemption Event) (the “Applicable Net Proceeds”). 

 
	
  

 	
  

 
	
  

 	
           b) Mandatory
 Notices. With respect to each Mandatory Redemption Event, the Company
 shall deliver a written notice by confirmed facsimile and overnight courier
 (with next day delivery specified) to all, but not less than all, of the
 holders of Debentures (the “Mandatory
 Redemption Notice” and the date such notice is delivered to all
 such holders is referred to as the “Mandatory Redemption Notice Date”) (a) stating the date on
 which the applicable Mandatory Redemption shall occur (the “Mandatory Redemption Date”),
 which date shall be three (3) Business Days following such Mandatory
 Redemption Event, (b) stating the amount of Applicable Net Proceeds with
 respect to such Mandatory Redemption Event and (c) contain a certification
 from the Chief Executive Officer of the Company that the Company has
 simultaneously taken the same action with respect to all of the Debentures.
 The applicable Mandatory Redemption Notice shall be delivered no later than
 the first (1st) Business Day following such 

 

23

	
  

 	
  

 	
  

 
	
  

 	
 Mandatory Redemption Event, and the Company shall make a public
 announcement containing the information set forth in such Mandatory
 Redemption Notice on or before the applicable Mandatory Redemption Notice
 Date to the extent that the notice contains any, or constitutes, material,
 non-public information.

 
	
  

 	
  

 	
  

 
	
  

 	
           c) Calculation
 and Payment of Mandatory Redemption Price. The amount to be paid to the
 Holder under this Section 6 in respect of this Debenture with respect to each
 Mandatory Redemption Event shall be calculated on the applicable Mandatory
 Redemption Date and shall be equal to the sum of (i) such amount of principal
 under this Debenture, (ii) such amount of accrued and unpaid interest in
 respect of such principal amount as of the applicable Mandatory Redemption
 Date, (iii) all other amounts due and payable with respect to such principal
 amount and interest as of the applicable Mandatory Redemption and (iv) the
 applicable Pre-Payment Amount in respect of such principal amount, such that
 after the payment of such sum of (i) though (iv) above to the Holder in
 respect of such Mandatory Redemption Event and the payment of the applicable
 Mandatory Redemption Prices (as defined in the other Debentures) under all
 the other then-outstanding Debentures in respect of such Mandatory Redemption
 Event, with the payment of such amounts hereunder and thereunder being made
 pro rata on the basis of then-outstanding principal amounts hereunder and
 thereunder, all Applicable Net Proceeds shall be utilized in respect of such
 Mandatory Redemption Event under this Debenture and all other
 then-outstanding Debentures (it being understood and agreed that for purposes
 of such calculation any Debentures, including without limitation, this
 Debenture, as to which a Void Election (as defined herein and in the other
 Debentures) has been made in respect of such Mandatory Redemption Event shall
 be treated as if not outstanding for purposes of such calculation) (such
 amount to be so paid to the Holder as calculated in accordance with the
 foregoing shall be referred to here the “Mandatory Redemption Price”).
 The Company shall deliver the applicable Mandatory Redemption Price to the
 Holder in cash by wire transfer of immediately available funds on the
 applicable Mandatory Redemption Date, together with a written notice
 containing the calculation of such Mandatory Redemption Price that specifies
 each amount under clauses (i) through (iv) above. Upon receipt of the
 applicable Mandatory Redemption Price by the Holder, such Mandatory
 Redemption Price shall be applied to the principal, interest and other items
 set forth in clauses (i) through (iv) above in accordance with such required
 calculation. To the extent redemptions required by this Section 6 are deemed
 or determined by a court of competent jurisdiction to be prepayments of this
 Debenture by the Company, such redemptions shall be deemed to be voluntary
 prepayments. Notwithstanding anything to the contrary in this Section 6, but
 subject to Section 4(d), until the applicable Mandatory Redemption Price
 (together with any Late Fees thereon) is paid in full, the principal amount
 subject to redemption under this Section 6 may be converted, in whole or in
 part, by the Holder into Common Stock pursuant to Section 4. In the event of
 the Company’s redemption of any portion of this Debenture under this Section
 6, the Holder’s damages would be uncertain and difficult to estimate because
 of the parties’ inability to predict future interest rates and the
 uncertainty of the availability of a suitable substitute investment
 opportunity for the Holder. Accordingly, any redemption premium due under
 this Section 6 is intended by the parties to be, and shall 

 

24

	
  

 	
  

 
	
  

 	
 be deemed, a reasonable estimate of the Holder’s actual loss of its
 investment opportunity and not as a penalty. In the event that the Company
 does not pay the applicable Mandatory Redemption Price to the Holder on the
 Mandatory Redemption Date, at any time thereafter and until the Company pays
 such unpaid Mandatory Redemption Price in full, the Holder shall have the
 option, in lieu of redemption, to require the Company to promptly return to
 the Holder all or any portion of this Debenture representing the principal
 amount subject to redemption and for which the applicable Mandatory
 Redemption Price has not been paid. Upon the Company’s receipt of such
 notice, (x) the applicable Mandatory Redemption Notice shall be null and void
 with respect to the principal amount subject thereto and (y) the Company
 shall immediately return this Debenture to the Holder. Notwithstanding
 anything contained in this Section 6 to the contrary, if the Registration
 Statement ceases to be effective (or the prospectus contained therein ceases
 to be available for use) or any of the Conversion Shares under any of the
 Debentures are not eligible for resale under Rule 144 (without volume
 limitations or manner of sale restriction) on any day during the period
 commencing on the applicable Mandatory Redemption Notice Date and ending on
 the date on which the applicable Mandatory Redemption Price is paid in full
 in cash to the Holder, then the Holder may void the applicable Mandatory
 Redemption contemplated by such Mandatory Redemption Notice by delivering
 written notice to the Company thereof prior to the later of the applicable
 Mandatory Redemption Date and payment in full of the applicable Mandatory
 Redemption Price (such election by the Holder is referred to herein as a “Void
 Election”).

 
	
  

 	
  

 
	
  

 	
           d) Pro
 Rata Requirement. To the extent the Company effects a Mandatory
 Redemption under this Debenture, then the Company must simultaneously take
 the same action with respect to all the other Debentures (other than with
 respect to those Debentures pursuant to which the Company received a Void
 Election (as defined in the other Debentures)).

 
	
  

 	
  

 
	
           Section
 7. Negative Covenants. As long as any portion of this Debenture
 remains outstanding, unless a Majority in Interest shall have otherwise given
 prior written consent, the Company shall not, and shall not permit any of the
 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) 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, other than
 Permitted Liens (provided that no Permitted Liens shall be permitted to be
 entered into, created, incurred, assumed or suffered to exist on any of the
 Collateral (as defined in the Security Agreement));

 

25

	
  

 	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           d) other
 than the repayment of short-term subordinated Indebtedness of RR incurred
 solely for the purpose of increasing regulatory net capital to effect an
 underwritten transaction, redeem, defease, repay, repurchase or make any
 payments in respect of or otherwise acquire, or offer to redeem, defease,
 repay, repurchase or make any payments in respect of or otherwise acquire, by
 the payment of cash or cash equivalents (in whole or in part, whether by way
 of open market purchases, tender offers, private transactions or otherwise),
 all or any portion of any Indebtedness, other than (i) the Debentures if on a
 pro-rata basis and (ii) regularly scheduled principal and interest payments
 under Indebtedness that is outstanding on the Original Issue Date, provided that
 such regularly scheduled payments are pursuant to the terms of such
 Indebtedness that were in effect on the Original Issue Date and such
 regularly scheduled payments shall not be permitted if, (1) at the time such
 payment is due or is otherwise made an event constituting an Event of Default
 has occurred and is continuing or an event that with the passage of time and
 without being cured would constitute an Event of Default has occurred and is
 continuing or (2) if after giving effect to such payment, an Event of Default
 would exist or occur;

 
	
  

 	
  

 
	
  

 	
           e)
 declare or pay cash dividends or cash distributions on any equity securities
 or equity interests of the Company or any Subsidiaries or redeem, repurchase
 or the like any equity securities or equity interests of the Company or any
 Subsidiary, provided the following cash dividends, cash distributions and
 repurchases shall not be prohibited hereunder: (i) cash dividends or cash
 distributions by a Subsidiary to the Company or another directly or indirectly
 wholly-owned Subsidiary of the Company, (ii) cash dividends or cash distributions on preferred
 stock issued by a Subsidiary to one
 or more Persons who are not
 Affiliates of the Company or any Subsidiary in
 an arm’s length transaction or (iii) repurchases of Common Stock by the
 Company approved by the Board of Directors and in compliance with Rule
 10(b)(18);

 
	
  

 	
  

 
	
  

 	
           f) enter
 into any transaction with any Affiliate of the Company or such Subsidiary
 which would be required to be disclosed in any public filing with the
 Commission, unless such transaction is made on an arm’s-length basis and
 expressly approved by a majority of the disinterested directors of the
 Company or such Subsidiary, as applicable, (even if less than a quorum
 otherwise required for board approval);

 
	
  

 	
  

 
	
  

 	
           g) permit
 any Indebtedness of the Company or any of its Subsidiaries to mature or
 accelerate prior to the Maturity Date; or

 
	
  

 	
  

 
	
  

 	
           h) enter
 into any agreement with respect to any of the foregoing.

 
	
  

 	
  

 

26

	
  

 	
  

 	
  

 
	
           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 and other amounts (other than principal) 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 3 Trading Days;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           ii. the
 Company or any Guarantor shall materially fail to observe or perform any
 other covenant or agreement contained in any of the Transaction Documents
 which failure is not cured, if possible to cure, within 10 Trading Days after
 such failure occurs;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           iii. a
 material default or event of default (subject to any grace or cure period
 provided in the applicable agreement, document or instrument) shall occur
 under any of the Transaction Documents;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           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
 occurrence of any Bankruptcy Event;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           vi. a
 monetary default or acceleration shall occur under any other material
 agreement, lease, document or instrument to which the Company or any
 Subsidiary is obligated which involves an amount or amounts greater than
 $500,000, individually or in the aggregate;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           vii. 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 $500,000, 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; 

 

27

	
  

 	
  

 	
  

 
	
  

 	
  

 	
           viii. the
 Common Stock shall be suspended from trading, or shall not be eligible for
 listing or quotation for trading, on a Trading Market and shall not resume
 trading, or be eligible to resume listing or quotation for trading, on a
 Trading Market within five Trading Days after the occurrence thereof;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           ix. the
 Company does not meet the current public information requirements under Rule
 144 in respect of all the Conversion Shares and all the Warrant Shares; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           x. the
 Security Documents shall for any reason fail or cease to create a valid and
 perfected (provided, that, for purposes of the Pledged Securities (as defined
 in the Security Agreement), the filing of a UCC-1 financing statement shall
 be deemed sufficient for purposes of perfection of the Pledged Securities
 under this clause (x)) except to the extent permitted by the terms hereof or
 thereof, first priority Lien on the Collateral in favor of each of the
 Secured Parties (as defined in the Security Agreement) and the Agent (as
 defined in the Security Agreement) and such failure remains uncured for a period
 of three (3) Business Days;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           xi. 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 $500,000, individually or in the aggregate, and such
 judgment, writ or similar final process shall remain unpaid, unvacated,
 unbonded or unstayed for a period of 45 calendar days;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           xii. (1)
 the Company amends, modifies, waives compliance with or terminates, revokes
 or rescinds in any manner or respect (or takes any action, or permits any
 action to be taken (whether through the Company’s inaction or otherwise),
 that has a similar effect to any of the foregoing) any provision of any of
 the agreements set forth on either Schedule 3.1(p) attached to the Purchase
 Agreement or (2) any Person that is party to any such agreements breaches, or
 fails to comply with, in any manner or respect any provision of any such
 agreements;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           xiii. the
 shares of Common Stock cease to be freely tradable as a result of a Guarantor
 being a non-wholly owned Subsidiary of the Company; or

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           xiv. any
 Event of Default (as defined in the other Debentures) occurs with respect to
 any of the other Debentures and any such holder accelerates the Company’s
 obligations thereunder.

 
	
  

 	
  

 	
  

 
	
  

 	
           b) Remedies
 Upon Event of Default. If any Event of Default occurs, the outstanding
 principal amount of this Debenture, plus accrued but unpaid interest, 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.
 Commencing 5 days after the 

 

28

	
  

 	
  

 	
  

 
	
  

 	
 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 15% per annum or the
 maximum rate permitted under applicable law. Upon the payment in full of this
 Debenture, 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, shall be delivered as set
 forth in the Purchase Agreement. For purposes of the delivery of Conversion
 Notices, the Company shall provide the Holder with the contact names, numbers
 and e-mails of the Persons to whom a Conversion Notice must be sent. Such
 names and numbers shall be provided on the Original Issue Date and any
 subsequent modification to such list shall be provided to the Holder in
 writing by the Company by both facsimile and e-mail.

 
	
  

 	
  

 
	
  

 	
           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, 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 

 

29

	
  

 	
  

 	
  

 
	
  

 	
 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 any 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.

 
	
  

 	
  

 
	
  

 	
           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 on any
 other occasion. 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 Debenture, and the Company (to the extent it may lawfully do so) 

 

30

	
  

 	
  

 	
  

 
	
  

 	
 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
 impede 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.

 
	
  

 	
  

 
	
  

 	
           i) Secured
 Obligation. The obligations of the Company under this Debenture are
 secured by certain specified assets of the Company and certain of its
 Subsidiaries as set forth in the Security Agreement, dated as of October 31,
 2011 between the Company, such Subsidiaries and the Secured Parties, as
 amended, modified or supplemented from time to time in accordance with its
 terms (the “Security Agreement”).

 
	
  

 	
  

 
	
  

 	
           j) Maximum
 Payments. Nothing contained in this Debenture shall, or shall be deemed
 to, establish or require the payment of a rate of interest or other charges
 in excess of the maximum permitted by applicable law. In the event that the
 rate of interest required to be paid or other charges under this Debenture
 exceeds the maximum permitted by such law, any payments in excess of such
 maximum shall be credited against amounts owed by the Company to the Holder
 and thus refunded to the Company.

 
	
  

 	
  

 
	
  

 	
           k) Noncircumvention.
 The Company hereby covenants and agrees that the Company will not, by
 amendment of its certificate of incorporation, bylaws or through any
 reorganization, transfer of assets, consolidation, merger, scheme of
 arrangement, dissolution, issue or sale of securities, or any other voluntary
 action, avoid or seek to avoid the observance or performance of any of the
 terms of this Debenture, and will at all times in good faith carry out all of
 the provisions of this Debenture and take all action as may be required to
 protect the rights of the Holder of this Debenture. Without limiting the
 generality of the foregoing, so long as any of the Debentures remain
 outstanding, the Company shall not increase the par value of any shares of
 Common Stock receivable upon conversion of this Debenture above the
 Conversion Price then in effect.

 
	
  

 	
  

 
	
  

 	
           l) Voting
 Rights. The Holder shall have no voting rights as the holder of this
 Debenture, except as required by law (including, without limitation, the
 Delaware General Corporation Law) and as expressly provided in this
 Debenture.

 
	
  

 	
  

 
	
  

 	
           m) Holder
 Option Redemption Right. The Company shall, no sooner than twenty (20)
 Trading Days nor later than ten (10) Trading Days prior to the date that the
 Company, directly or indirectly, declares or makes a Distribution (but not
 prior to the public announcement of such Distribution) deliver written notice
 thereof via facsimile 

 

31

	
  

 	
  

 	
  

 
	
  

 	
 and overnight courier to the Holder (a “Distribution Notice”). At any time during the
 period beginning after the Holder’s receipt of a Distribution Notice and
 ending five (5) Trading Days after the Holder receives the Distribution
 Notice, the Holder may require the Company to redeem all or any portion of
 this Debenture by delivering written notice thereof (“Distribution Redemption Notice”) to the
 Company, which Distribution Redemption Notice shall indicate the principal
 portion of this Debenture the Holder is electing to redeem. The portion of
 this Debenture subject to redemption pursuant to this Section 9(m) shall be
 redeemed by the Company in cash at a price equal to the sum of (I) the
 principal amount being redeemed, (II) all accrued and unpaid interest on the
 principal amount being redeemed, (III) all other amounts due under this
 Debenture with respect to the principal amount being redeemed and (IV) all
 accrued and unpaid Late Fees due under this Debenture (the “Distribution
 Redemption Price”). The Company shall pay the applicable Distribution
 Redemption Price to the Holder in cash by wire transfer of immediately
 available funds on or before the date of the Distribution (“Distribution
 Payment Date”). Redemptions required by this Section 9(m) shall have
 priority to payments to stockholders in connection with such Distribution.
 Notwithstanding anything to the contrary in this Section 9(m), but subject to
 Section 4(d), until the applicable Distribution Redemption Price (together
 with any Late Fees thereon) is paid in full, all or any portion of the
 principal amount submitted for redemption under this Section 9(m) may be
 converted, in whole or in part, by the Holder into shares of Common Stock
 pursuant to Section 4, and all such principal amounts so converted shall
 reduce the applicable principal amount required to be redeemed on the
 Distribution Payment Date (unless otherwise indicated by the Holder). In the event
 of the Company’s redemption of any portion of this Debenture under this
 Section 9(m) the Holder’s damages would be uncertain and difficult to
 estimate because of the parties’ inability to predict future interest rates
 and the uncertainty of the availability of a suitable substitute investment
 opportunity for the Holder. Accordingly, any redemption premium due under
 this Section 9(m) is intended by the parties to be, and shall be deemed, a
 reasonable estimate of the Holder’s actual loss of its investment opportunity
 and not as a penalty. In the event that the Company does not pay to the
 Holder the applicable Distribution Redemption Price in full on the applicable
 Distribution Payment Date, then, in addition to all other rights and remedies
 available to the Holder, the Company shall pay to the Holder Late Fees in
 respect of the applicable Distribution Redemption Price until paid in full.
 Notwithstanding anything contained in this Section 9(m) to the contrary, the
 Holder shall not be entitled to deliver a Redemption Notice if more than 50%
 of the original principal amount of this Debenture has been converted by the
 Holder or redeemed in cash by the Company from sources other than Aceras
 Proceeds or Warrant Proceeds. It is expressly understood and agreed that for
 all purposes of all Transaction Documents the debentures issued pursuant to
 clause (d) of Exempt Issuance (as defined in the Purchase Agreement) (i)
 shall be deemed to be Debentures and (ii) shall be deemed to have been
 issued, and shall be deemed to be outstanding, on the Original Issue Date (as
 defined in the Debentures).

 

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

32

 (Signature Page Follows)

33

          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.

	
  

 	
  

 	
  

 
	
  

 	
 Rodman
 & Renshaw Capital Group, Inc.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name:

 
	
  

 	
  

 	
 Title:

 

34

ANNEX
A

CONVERSION
NOTICE

          The
undersigned hereby elects to convert principal under the 10% Senior Secured
Convertible Debenture of Rodman & Renshaw Capital Group, Inc. a Delaware
corporation (the “Company”), into
shares of common stock (the “Common Stock”), of the Company according to
the conditions hereof, as of the date written below. If shares of Common Stock
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 Conversion Notice the undersigned represents and warrants to
the Company that its ownership of the Common Stock does not exceed the amounts
specified under Section 4 of this Debenture, as determined in accordance with
Section 13(d) of the Exchange Act.

          NOTICES MUST BE DELIVERED VIA FACSIMILE AND E-MAIL TO
THE PERSONS PREVIOUSLY PROVIDED TO THE HOLDER

          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:

 
	
  

 	
  

 
	
  

 	
 Number of
 Conversion Shares to be issued:

 
	
  

 	
  

 
	
  

 	
 Signature:

 
	
  

 	
  

 
	
  

 	
 Name:

 
	
  

 	
  

 
	
  

 	
 Address for
 Delivery of Common Stock Certificates:

 
	
  

 	
  

 
	
  

 	
 Or

 
	
  

 	
  

 
	
  

 	
 DWAC
 Instructions:

 
	
  

 	
  

 
	
  

 	
 Broker
 No:_______________

 
	
  

 	
 Account
 No:______________

 

35

Schedule
1

CONVERSION
SCHEDULE

The 10% Senior Secured Convertible
Debentures in the aggregate principal amount of $____________ are issued by
Rodman & Renshaw Capital Group, Inc. a Delaware corporation. This 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

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 	

 

 

36

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}]]