Document:

SECOND
      AMENDMENT TO SHELLS SEAFOOD RESTAURANTS, INC.

    TECHNICAL
      CONSULTING AND SUPPORT SERVICES AGREEMENT

    

    This
      Second Amendment to Shells Seafood Restaurants, Inc. Technical
      Consulting and Support Services Agreement (“Second
      Amendment”) is made effective as of December 10, 2007, by and between Shells
      Seafood Restaurants, Inc., a Delaware corporation (“Shells”) and Food
      And
      Entertainment Co., Ltd.,
      a
      limited liability company with commercial register No. 2051024638 issued from
      Khobar Commercial Registration Office on 24/08/1421H (“F&E”). This Second
      Amendment contains modifications and additions to the terms and conditions
      of
      the Technical Consulting and Support Services Agreement dated 

    

    RECITALS:
      

    

    WHEREAS,
      F&E has recently executed and delivered to Shells that certain (i)
      Restaurant System Purchase agreement, dated September 27, 2007, between F&E
      and Shells (the “Original Agreement;”) and (ii) Amendment to Shells Seafood
      Restaurants, Inc. Restaurant System Purchase Agreement (the “First Amendment”);
      and 

    

    WHEREAS,
      prior to the date hereof, neither the Original Agreement nor First Amendment
      have been executed by Shells, and thus have not been effective prior to the
      date
      hereof; and 

    

    WHEREAS,
      the Original Agreement contemplated that Shells would receive a confirmed letter
      of credit by October 5, 2007; and 

    

    WHEREAS,
      such letter of credit was first received and confirmed on December 4, 2007;
      and

    

    WHEREAS,
      in accordance with the terms of the Original Agreement, such receipt and
      confirmation of the letter of credit by Shells was a condition to the execution
      and delivery of the Original Agreement by Shells; and 

    

    WHEREAS,
      the Original Agreement, First Amendment, and this Second Amendment
      (collectively, the “Agreement”) are being signed by Shells on December 10, 2007,
      which date F&E and Shells acknowledge is the effective date of each of the
      Original Agreement and both such amendments; and

    

    WHEREAS,
      in addition, F&E and Shells desire to modify the terms and conditions of the
      Agreement as further provided herein.

    

    NOW,
      THEREFORE, in consideration of the mutual covenants contained in the Agreement
      and herein, and for other good and valuable consideration, Shells and F&E
      hereby agree as follows:

    

    1.
       Summary
      Pages.
      The
      summary of the Effective Date in the Summary Pages to the Agreement is deleted
      in its entirety and replaced with the following:

    

    “2. Effective
      Date:
      December 10, 2007.” 

    

    
      
         

      

      
        1
          

        
          

        

      

      
         

      

       

    

    2.
       Summary
      Pages.
      The
      summary of the Development Schedule in the Summary Pages to the Agreement is
      deleted in its entirety and replaced with the following:

    

    “7.
       Development
      Schedule*:

     

    
      	
              Development
                Period 

            	
              Development
                Period Ending

            	
              Total
                Number of Restaurants That Must be Open and in Operation at the End
                of the
                Development Period

            
	
              1

            	
              December
                10, 2008

              (12
                months from the Effective Date of this Agreement)

            	
              1

            
	
              2

            	
              December
                10, 2009 

              (24
                months from the Effective Date of this Agreement)

            	
              2

            
	
              3

            	
              December
                10, 2010

              (36
                months from the Effective Date of this Agreement)

            	
              3

            
	
              4

            	
              December
                10, 2011 

              (48
                months from the Effective Date of this Agreement)

            	
              4

            
	
              5

            	
              December
                10, 2012 

              (60
                months from the Effective Date of this Agreement)

            	
              5

            
	
              6

            	
              December
                10, 2013 

              (72
                months from the Effective Date of this Agreement)

            	
              6

            
	
              7

            	
              December
                10, 2014 

              (84
                months from the Effective Date of this Agreement)

            	
              7

            
	
              8

            	
              December
                10, 2015 

              (96
                months from the Effective Date of this Agreement)

            	
              8

            
	
              9

            	
              December
                10, 2016

              (108
                months from the Effective Date of this Agreement)

            	
              9

            
	
              10

            	
              December
                10, 2017 

              (120
                months from the Effective Date of this Agreement)

            	
              10

            

    

     

    *F&E
      has no obligation to develop and operate Restaurants in all or any particular
      country(ies) located in the Territory.” 

    

    3. Construction.
      Any
      capitalized terms used but not defined in this Second Amendment shall have
      the
      meanings assigned in the Agreement. To the extent of any contradiction or
      inconsistency between the Agreement and this Second Amendment, the provisions
      of
      this Second Amendment will control.

    

    [COMPLETED
      AND EXECUTED ON THE FOLLOWING PAGE]

    

    
      
         

      

      
        2
          

        
          

        

      

      
         

      

       

    

    IN
      WITNESS WHEREOF,
      the
      undersigned have entered into this Second Amendment to Technical
      Consulting And Support Services Agreement
      as of
      the Effective Date.

     

    
      	 	
              Shells:

            
	 	 
	
              ATTEST:

            	
              SHELLS
                SEAFOOD RESTAURANTS, INC.

            
	 	 
	
              Witness
                # 1

            	 
	
              
                By:
                  ____________________________________

              

            	
              By:
                ____________________________________

            
	
              
                Name:
                  __________________________________

              

            	
              Name:
                __________________________________

            
	 	
              Title:
                ___________________________________

            
	 	 
	
              Witness
                # 2

            	 
	
              
                By:
                  ____________________________________

              

            	 
	
              
                Name:
                  __________________________________

              

            	 
	 	 
	 	
              F&E:

            
	 	 
	
              ATTEST:

            	
              FOOD
                AND ENTERTAINMENT CO., LTD.

            
	
            	
              a
                limited liability company with commercial register No. 2051024638
                issued
                from Khobar Commercial Registration Office on
                24/08/1421H

            
	 	 
	
              Witness
                # 1

            	 
	
              
                By:
                  ____________________________________

              

            	
              
                By:
                  ____________________________________

              

            
	
              
                Name:
                  __________________________________

              

            	
              
                Name:
                  __________________________________

              

            
	 	
              
                Title:
                  ___________________________________

              

            
	 	 
	
              Witness
                # 2

            	 
	
              
                By:
                  ____________________________________

              

            	 
	
              
                Name:
                  __________________________________

              

            	 

    

    

    
      
         

      

      
        3SECURED
      CONVERTIBLE PROMISSORY NOTE

     

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

     

    NEXUS
      NANO ELECTRONICS, INC.

     

    SECURED
      CONVERTIBLE PROMISSORY NOTE

     

    
      
        	
                Issuance
                  Date: December 6, 2007

              	
                Original
                  Principal Amount: $444,961

              

      

    

     

    NEXUS
      NANO
      ELECTRONICS, INC.,
      a
      Nevada corporation (the “Company”),
      hereby promises to pay to the order of CSI
      BUSINESS FINANCE, INC.,
      a Texas
      corporation (the
      “Holder”)
      the
      amount set out above as the Original Principal Amount (as reduced pursuant
      to
      the terms hereof pursuant to redemption, conversion or otherwise, the
“Principal”)
      when
      due, whether upon the Maturity Date (as defined below), acceleration, redemption
      or otherwise (in each case in accordance with the terms hereof) and to pay
      interest (“Interest”)
      on the
      outstanding Principal at the applicable Interest Rate from the date set out
      above as the Issuance Date (the “Issuance
      Date”)
      until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below) or the Maturity Date or acceleration, conversion, redemption or otherwise
      (in each case in accordance with the terms hereof). Certain capitalized terms
      used herein are defined on Exhibit A
      hereto.

     

    On
      April
      30, 2007, a Promissory Note in the original principal amount of Four Hundred
      Two
      Thousand Six Hundred Eighty Dollars ($402,680) was issued by the Company to
      the
      Holder (the “Original
      Note”).
      The
      Original Note consolidated a note issued by the Company to the Holder on
      November 20, 2006 in the principal amount of One Hundred Thousand Dollars
      ($100,000) and a note issued on January 23, 2007 in the principal amount of
      Twenty-Five Thousand Dollars ($25,000), and included an additional funding
      amount of Two Hundred Seventy-Seven Thousand Six Hundred Eighty Dollars
      ($277,680). This Secured Convertible Note (this “Note”)
      is
      being issued to consolidate the Original Note plus accrued and unpaid interest
      to the date hereof totaling Forty-Two Thousand Two Hundred Eighty-One Dollars
      ($42,281) for a total amount of Four Hundred Forty-Four Thousand Nine Hundred
      Sixty-One Dollars ($444,961). All obligations under the Original Note are hereby
      extinguished, and replaced with this Note.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    FOR
      VALUE RECEIVED
      on April
      30, 2007 pursuant to the Original Note, which is hereby surrendered, and for
      consideration consisting solely of such surrender, the Company hereby promises
      to pay to the Holder or its successors and assigns the Principal together with
      accrued but unpaid Interest in accordance with the terms set forth herein
      below.

     

    The
      obligations of the Company to the Holder as evidenced by this Note are secured
      by (w) the collateral identified and described as security therefor in the
      Security Agreement. 

     

    (1) PAYMENTS
      OF PRINCIPAL.

     

    (a) On
      the
      Maturity Date, the Company shall pay to the Holder an amount in cash
      representing all outstanding Principal, accrued and unpaid Interest and accrued
      and unpaid Late Charges on such Principal and Interest. The “Maturity
      Date”
means,
      unless extended by the Holder, the earlier of (i) July 1, 2010, (ii) the
      consummation of a Change of Control and (iii) the occurrence of an Event of
      Default or any event that with the passage of time and the failure to cure
      would
      result in an Event of Default

     

    (b) The
      Company may prepay this Note at any time upon not less than thirty (30) days
      prior written notice to the Holder; provided, that any such prepayments shall
      applied first to unpaid Late Charges on Principal and Interest, if any, then
      to
      unpaid Interest and then unpaid Principal.

     

    (c) The
      Company, in its sole discretion, may redeem in cash any and all amounts owed
      hereunder prior to the Maturity Date upon not less than thirty (30) days prior
      written notice to the Holder; provided, that (i) the Common Stock is trading
      below the Fixed Conversion Price at the time of the redemption notice and (ii)
      no Event of Default has occurred and is continuing. 

     

    (2) PAYMENT
      OF INTEREST; INTEREST RATE.
      Interest on this Note shall commence accruing on the Issuance Date and shall
      be
      computed on the basis of a 360-day year comprised of twelve (12)
      thirty  (30) day months and shall be compounded monthly and added to the
      unpaid Principal hereunder at the rate of eighteen percent (18%). Unless
      required to be paid sooner hereunder, accrued and unpaid Interest shall be
      payable at Maturity. From and after the occurrence and during the continuance
      of
      an Event of Default, the Interest Rate shall be increased from eighteen percent
      (18%) to twenty percent (20%). In the event that such Event of Default is
      subsequently cured, the adjustment referred to in the preceding sentence shall
      cease to be effective as of the date of such cure; provided that the Interest
      as
      calculated and unpaid at such increased rate during the continuance of such
      Event of Default shall continue to apply to the extent relating to the days
      after the occurrence of such Event of Default through and including the date
      of
      cure of such Event of Default.

     

    (3) CONVERSION
      OF NOTES.
      This
      Note shall be convertible into shares of the Company’s common stock, par value
      $0.001 per share (the “Common
      Stock”),
      on
      the terms and conditions set forth in this Section 3.

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    i) “Conversion
      Amount”
means
      the portion of the Principal and Interest to be converted, redeemed or otherwise
      with respect to which this determination is being made.

     

    ii) “Conversion
      Price”
means,
      as of any Conversion Date (as defined below) or other date of determination,
      the
      lesser or (x) $0.01, subject to adjustment as provided herein (the “Fixed
      Conversion Price”)
      and
      (y) eighty percent (80%) of the lowest daily Weighted Average Price of the
      Common Stock during the ten (10) Trading Days immediately preceding the
      conversion date.

     

    (c) Mechanics
      of Conversion.

     

    (i) Optional
      Conversion.
      To
      convert any Conversion Amount into shares of Common Stock on any date (a
“Conversion
      Date”),
      the
      Holder shall (A) transmit by facsimile (or otherwise deliver) a copy of an
      executed notice of conversion in the form attached hereto as Exhibit B
      (the
“Conversion
      Notice”)
      to the
      Company and (B) if required by this Section 3(c), surrender this Note to
      the Company (or an indemnification undertaking with respect to this Note in
      the
      case of its loss, theft or destruction). Promptly following (but in any event
      not more than one Business Day following the date of receipt of a Conversion
      Notice), the Company shall transmit by facsimile a confirmation of receipt
      of
      such Conversion Notice to the Holder and the Company’s transfer agent (the
“Transfer
      Agent”).
      On or
      before the second Business Day following the date of receipt of a Conversion
      Notice (the “Share
      Delivery Date”),
      the
      Company shall (1) (X) if legends are not required to be placed on
      certificates of Common Stock hereof and provided that the Transfer Agent is
      participating in the Depository Trust Company’s (“DTC”)
      Fast
      Automated Securities Transfer Program, credit such aggregate number of shares
      of
      Common Stock to which the Holder shall be entitled to the Holder’s or its
      designee’s balance account with DTC through its Deposit Withdrawal Agent
      Commission system or (Y) if the Transfer Agent is not participating in the
      DTC Fast Automated Securities Transfer Program, issue and deliver to the address
      as specified in the Conversion Notice, a certificate, registered in the name
      of
      the Holder or its designee, for the number of shares of Common Stock to which
      the Holder shall be entitled which certificates shall not bear any restrictive
      legends; and (2) pay to the Holder in cash an amount equal to the accrued
      and unpaid Interest on the Conversion Amount up to and including the Conversion
      Date. If this Note is physically surrendered for conversion as required by
      this
      Section 3(c) and the outstanding Principal of this Note is greater than the
      Principal portion of the Conversion Amount being converted, then the Company
      shall as soon as practicable and in no event later than five (5) Business Days
      after receipt of this Note and at its own expense, issue and deliver to the
      holder a new Note representing the outstanding Principal not converted. The
      Person or Persons entitled to receive the shares of Common Stock issuable upon
      a
      conversion of this Note shall be treated for all purposes as the record holder
      or holders of such shares of Common Stock on the Conversion Date. 

     

    
      
        
        

      

      
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          3
          -

        
          

        

      

      
        
        

      

    

     

    (ii) Company’s
      Failure to Timely Convert.
      If
      within five (5) Trading Days after the Company’s receipt of the facsimile copy
      of a Conversion Notice the Company shall fail to issue and deliver a certificate
      to the Holder or credit the Holder’s balance account with DTC for the number of
      shares of Common Stock to which the Holder is entitled upon such holder’s
      conversion of any Conversion Amount (a “Conversion
      Failure”),
      and
      if on or after such Trading Day the Holder purchases (in an open market
      transaction or otherwise) Common Stock to deliver in satisfaction of a sale
      by
      the Holder of Common Stock issuable upon such conversion that the Holder
      anticipated receiving from the Company (a “Buy-In”),
      then
      the Company shall, within five (5) Business Days after the Holder’s request and
      in the Holder’s discretion, either (i) pay cash to the Holder in an amount
      equal to the Holder’s total purchase price (including brokerage commissions and
      other out of pocket expenses, if any) for the shares of Common Stock so
      purchased (the “Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation
      to deliver to the Holder a certificate or certificates representing such Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common
      Stock, times (B) the Closing Bid Price on the Conversion Date.

     

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

     

    
      
        
        

      

      
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          4
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    (d) Limitations
      on Conversions - Beneficial Ownership.
      The
      Company shall not effect any conversion of this Note, and the Holder of this
      Note shall not have the right to convert any portion of this Note pursuant
      to
      Section 3(a), to the extent that after giving effect to such conversion,
      the Holder (together with the Holder’s affiliates) would beneficially own in
      excess of 4.99% (the “Maximum
      Percentage”)
      of the
      number of shares of Common Stock outstanding immediately after giving effect
      to
      such conversion. For purposes of the foregoing sentence, the number of shares
      of
      Common Stock beneficially owned by the Holder and its affiliates shall include
      the number of shares of Common Stock issuable upon conversion of this Note
      with
      respect to which the determination of such sentence is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon
      (A) conversion of the remaining, nonconverted portion of this Note
      beneficially owned by the Holder or any of its affiliates and (B) exercise
      or conversion of the unexercised or nonconverted portion of any other securities
      of the Company (including, without limitation, any warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its affiliates. Except as
      set
      forth in the preceding sentence, for purposes of this Section 3(d)(i),
      beneficial ownership shall be calculated in accordance with Section 13(d)
      of the Securities Exchange Act of 1934, as amended (the “1934
      Act”).
      For
      purposes of this Section 3(d)(i), in determining the number of outstanding
      shares of Common Stock, the Holder may rely on the number of outstanding shares
      of Common Stock as reflected in any notice by the Company or the Transfer Agent
      setting forth the number of shares of Common Stock outstanding. For any reason
      at any time, upon the written request of the Holder, the Company shall within
      one (1) Business Day confirm in writing to the Holder the number of shares
      of
      Common Stock then outstanding. In any case, the number of outstanding shares
      of
      Common Stock shall be determined after giving effect to the conversion or
      exercise of securities of the Company, including this Note, by the Holder or
      its
      affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported.

    

      (4) RIGHTS
        UPON EVENT OF DEFAULT.

       

      (a) Event
        of Default.
        Each of
        the following events shall constitute an “Event
        of Default”:

       

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

       

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

       

      (iii) at
        any
        time following the tenth (10th)
        consecutive Business Day following the Company’s failure to have a sufficient
        number of shares of Common Stock authorized and available for delivery to
        the
        Holder upon a conversion of the full Conversion Amount of this Note (without
        regard to any limitations on conversion set forth in Section 3(d) or
        otherwise);

       

      (iv) the
        Company’s failure to pay to the Holder any amount of Principal, Interest, Late
        Charges or other amounts when and as due under this Note, any other indebtedness
        of the Company or any of its Subsidiaries to the Holder, or any other agreement,
        document, certificate or other instrument delivered in connection with the
        transactions contemplated hereby to which the Holder is a party, except,
        in the
        case of a failure to pay Interest and Late Charges when and as due, in which
        case only if such failure continues for a period of at least ten (10)
        Business Days;

       

      
        
          
          

        

        
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            5
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      (v) the
        occurrence of any default under, redemption of or acceleration prior to maturity
        of any Indebtedness of the Company or any of its Subsidiaries which,
        individually or in the aggregate, exceeds Two Hundred Fifty Thousand Dollars
        ($250,000);

       

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

       

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

       

      (viii) a
        final
        judgment or judgments for the payment of money aggregating in excess of Two
        Hundred Fifty Thousand Dollars ($250,000) for any one creditor are rendered
        against the Company or any of its Subsidiaries and which judgments are not,
        within sixty (60) calendar days after the entry thereof, bonded, discharged
        or stayed pending appeal, or are not discharged within sixty (60) calendar
        days after the expiration of such stay;

       

      (ix) the
        Company or any Subsidiary breaches any representation, warranty, covenant
        or
        other term or condition of this Note, any other indebtedness or agreement
        of the
        Company or any of its Subsidiaries with the Holder, or any Transaction Document,
        except, in the case of a breach of a covenant or other term or condition
        which
        is curable, only if such breach continues for a period of at least five (5)
        consecutive Business Days; or

       

      (x) the
        Company’s breach or failure in any material respect to comply with any covenant
        in this Note.

       

      (b) Rights
        Upon Default.
        During
        the time that any portion of this Note is outstanding, if any Event of Default
        has occurred, or the Company shall be party to a Fundamental Transaction,
        the
        full unpaid Principal amount of this Note, together with interest and other
        amounts owing in respect thereof, to the date of acceleration shall become
        at
        the Holder's election, immediately due and payable in cash; provided however,
        the Holder may request (but shall have no obligation to request) payment
        of such
        amounts in Common Stock of the Company. Furthermore, in addition to any other
        remedies, the Holder shall have the right (but not the obligation) to convert
        this Note at any time after (x) an Event of Default or (y) the Maturity Date
        at
        the applicable Conversion Price. The Holder need not provide and the Company
        hereby waives any presentment, demand, protest or other notice of any kind,
        (other than required notice of conversion) 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 declaration may be rescinded and annulled by Holder at any time prior
        to
        payment hereunder. No such rescission or annulment shall affect any subsequent
        Event of Default or impair any right consequent thereon.

       

      
        
          
          

        

        
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            6
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      (5) RIGHTS
        UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

       

      (a) Purchase
        Rights.
        If at
        any time the Company grants, issues or sells any Options, Convertible Securities
        or rights to purchase stock, warrants, securities or other property pro rata
        to
        the record holders of any class of Common Stock (the “Purchase
        Rights”),
        then
        the Holder will be entitled to acquire, upon the terms applicable to such
        Purchase Rights, the aggregate Purchase Rights which the Holder could have
        acquired if the Holder had held the number of shares of Common Stock acquirable
        upon complete conversion of this Note (without taking into account any
        limitations or restrictions on the convertibility of this Note) immediately
        before the date on which a record is taken for the grant, issuance or sale
        of
        such Purchase Rights, or, if no such record is taken, the date as of which
        the
        record holders of Common Stock are to be determined for the grant, issue
        or sale
        of such Purchase Rights.

       

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

       

      (6) RIGHTS
        UPON ISSUANCE OF OTHER SECURITIES.

       

      (a) Adjustment
        of Conversion Price upon Issuance of Common Stock.
        If and
        whenever on or after the Subscription Date, the Company issues or sells,
        or in
        accordance with this Section 7(a) is deemed to have issued or sold, any
        shares of Common Stock (including the issuance or sale of shares of Common
        Stock
        owned or held by or for the account of the Company, but excluding shares
        of
        Common Stock deemed to have been issued or sold by the Company in connection
        with any Excluded Security) for a consideration per share less than a price
        equal to the Fixed Conversion Price in effect immediately prior to such issue
        or
        sale (such price the “Applicable
        Price”)
        (the
        foregoing a “Dilutive
        Issuance”),
        then
        immediately after such Dilutive Issuance the Fixed Conversion Price for purposes
        of Section 3(b)(ii)(x) then in effect shall be reduced to an amount equal
        to the issuance price of such Dilutive Issuance. For purposes of determining
        the
        adjusted Conversion Price under this Section 7(a), the following shall be
        applicable:

       

      
        
          
          

        

        
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      (i) Issuance
        of Options.
        If the
        Company in any manner grants or sells any Options and the lowest price per
        share
        for which one share of Common Stock is issuable upon the exercise of any
        such
        Option or upon conversion or exchange or exercise of any Convertible Securities
        issuable upon exercise of such Option is less than the Applicable Price,
        then
        such share of Common Stock shall be deemed to be outstanding and to have
        been
        issued and sold by the Company at the time of the granting or sale of such
        Option for such price per share. For purposes of this Section 7(a)(i), the
“lowest price per share for which one share of Common Stock is issuable upon
        the
        exercise of any such Option or upon conversion or exchange or exercise of
        any
        Convertible Securities issuable upon exercise of such Option” shall be equal to
        the sum of the lowest amounts of consideration (if any) received or receivable
        by the Company with respect to any one share of Common Stock upon granting
        or
        sale of the Option, upon exercise of the Option and upon conversion or exchange
        or exercise of any Convertible Security issuable upon exercise of such Option.
        No further adjustment of the Conversion Price shall be made upon the actual
        issuance of such share of Common Stock or of such Convertible Securities
        upon
        the exercise of such Options or upon the actual issuance of such Common Stock
        upon conversion or exchange or exercise of such Convertible
        Securities.

       

      (ii) Issuance
        of Convertible Securities.
        If the
        Company in any manner issues or sells any Convertible Securities and the
        lowest
        price per share for which one share of Common Stock is issuable upon such
        conversion or exchange or exercise thereof is less than the Applicable Price,
        then such share of Common Stock shall be deemed to be outstanding and to
        have
        been issued and sold by the Company at the time of the issuance or sale of
        such
        Convertible Securities for such price per share. For the purposes of this
        Section 7(a)(ii), the “lowest price per share for which one share of Common
        Stock is issuable upon such conversion or exchange or exercise” shall be equal
        to the sum of the lowest amounts of consideration (if any) received or
        receivable by the Company with respect to any one share of Common Stock upon
        the
        issuance or sale of the Convertible Security and upon the conversion or exchange
        or exercise of such Convertible Security. No further adjustment of the
        Conversion Price shall be made upon the actual issuance of such share of
        Common
        Stock upon conversion or exchange or exercise of such Convertible Securities,
        and if any such issue or sale of such Convertible Securities is made upon
        exercise of any Options for which adjustment of the Conversion Price had
        been or
        are to be made pursuant to other provisions of this Section 7(a), no
        further adjustment of the Conversion Price shall be made by reason of such
        issue
        or sale.

       

      
        
          
          

        

        
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      (iii) Change
        in Option Price or Rate of Conversion.
        If the
        purchase price provided for in any Options, the additional consideration,
        if
        any, payable upon the issue, conversion, exchange or exercise of any Convertible
        Securities, or the rate at which any Convertible Securities are convertible
        into
        or exchangeable or exercisable for Common Stock changes at any time, the
        Conversion Price in effect at the time of such change shall be adjusted to
        the
        Conversion Price which would have been in effect at such time had such Options
        or Convertible Securities provided for such changed purchase price, additional
        consideration or changed conversion rate, as the case may be, at the time
        initially granted, issued or sold. For purposes of this Section 7(a)(iii),
        if the terms of any Option or Convertible Security that was outstanding as
        of
        the Subscription Date are changed in the manner described in the immediately
        preceding sentence, then such Option or Convertible Security and the Common
        Stock deemed issuable upon exercise, conversion or exchange thereof shall
        be
        deemed to have been issued as of the date of such change. No adjustment shall
        be
        made if such adjustment would result in an increase of the Conversion Price
        then
        in effect.

       

      (iv) Calculation
        of Consideration Received.
        In case
        any Option is issued in connection with the issue or sale of other securities
        of
        the Company, together comprising one integrated transaction in which no specific
        consideration is allocated to such Options by the parties thereto, the Options
        will be deemed to have been issued for the difference of (x) the aggregate
        fair market value of such Options and other securities issued or sold in
        such
        integrated transaction, less (y) the fair market value of the securities
        other than such Option, issued or sold in such transaction and the other
        securities issued or sold in such integrated transaction will be deemed to
        have
        been issued or sold for the balance of the consideration received by the
        Company. If any Common Stock, Options or Convertible Securities are issued
        or
        sold or deemed to have been issued or sold for cash, the consideration received
        therefor will be deemed to be the gross amount raised by the Company; provided,
        however, that such gross amount is not greater than 110% of the net amount
        received by the Company therefor. If any Common Stock, Options or Convertible
        Securities are issued or sold for a consideration other than cash, the amount
        of
        the consideration other than cash received by the Company will be the fair
        value
        of such consideration, except where such consideration consists of securities,
        in which case the amount of consideration received by the Company will be
        the
        Closing Sale Price of such securities on the date of receipt. If any Common
        Stock, Options or Convertible Securities are issued to the owners of the
        non-surviving entity in connection with any merger in which the Company is
        the
        surviving entity, the amount of consideration therefor will be deemed to
        be the
        fair value of such portion of the net assets and business of the non-surviving
        entity as is attributable to such Common Stock, Options or Convertible
        Securities, as the case may be. The fair value of any consideration other
        than
        cash or securities will be determined jointly by the Company and the Holder.
        If
        such parties are unable to reach agreement within ten (10) calendar days
        after
        the occurrence of an event requiring valuation (the “Valuation
        Event”),
        the
        fair value of such consideration will be determined within five (5) Business
        Days after the tenth (10th)
        calendar day following the Valuation Event by an independent, reputable
        appraiser jointly selected by the Company and the Holder. The determination
        of
        such appraiser shall be deemed binding upon all parties absent manifest error
        and the fees and expenses of such appraiser shall be borne by the
        Company.

       

      (v) Record
        Date.
        If the
        Company takes a record of the holders of Common Stock for the purpose of
        entitling them (A) to receive a dividend or other distribution payable in
        Common Stock, Options or in Convertible Securities or (B) to subscribe for
        or purchase Common Stock, Options or Convertible Securities, then such record
        date will be deemed to be the date of the issue or sale of the Common Stock
        deemed to have been issued or sold upon the declaration of such dividend
        or the
        making of such other distribution or the date of the granting of such right
        of
        subscription or purchase, as the case may be.

       

      
        
          
          

        

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

       

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

       

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

       

      (8) RESERVATION
        OF AUTHORIZED SHARES.

       

      (a) Reservation.
        The
        Company shall initially reserve out of its authorized and unissued Common
        Stock
        a number of shares of Common Stock equal to one hundred thirty percent (130%)
        of
        the Conversion Rate with respect to the Conversion Amount of the Note as
        of the
        Issuance Date. So long as the Note is outstanding, the Company shall take
        all
        action necessary to reserve and keep available out of its authorized and
        unissued Common Stock, solely for the purpose of effecting the conversion
        of the
        Note, one hundred thirty percent (130%) of the number of shares of Common
        Stock
        as shall from time to time be necessary to effect the conversion of the Note;
        provided that at no time shall the number of shares of Common Stock so reserved
        be less than the number of shares required to be reserved by the previous
        sentence (without regard to any limitations on conversions) (the “Required
        Reserve Amount”).

       

      
        
          
          

        

        
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      (b) Insufficient
        Authorized Shares.
        If at
        any time while the Note remains outstanding the Company does not have a
        sufficient number of authorized and unreserved shares of Common Stock to
        satisfy
        its obligation to reserve for issuance upon conversion of the Note at least
        a
        number of shares of Common Stock equal to the Required Reserve Amount (an
        “Authorized
        Share Failure”),
        then
        the Company shall immediately take all action necessary to increase the
        Company’s authorized shares of Common Stock to an amount sufficient to allow the
        Company to reserve the Required Reserve Amount. Without limiting the generality
        of the foregoing sentence, as soon as practicable after the date of the
        occurrence of an Authorized Share Failure, but in no event later than
        ninety (90) calendar days after the occurrence of such Authorized Share
        Failure, the Company shall hold a meeting of its stockholders for the approval
        of an increase in (the “Authorized
        Share Failure Deadline”),
        the
        number of authorized shares of Common Stock. In connection with such meeting,
        the Company shall provide each stockholder with a proxy statement and shall
        use
        its best efforts to solicit its stockholders’ approval of such increase in
        authorized shares of Common Stock and to cause the Board to recommend to
        the
        stockholders that they approve such proposal.

       

      (9) COVENANTS.

       

      (a) Rank.
        All
        payments due under this Note shall rank senior to all Indebtedness of the
        Company and its Subsidiaries other than Permitted Indebtedness.

       

      (b) Incurrence
        of Indebtedness.
        So long
        as this Note is outstanding and without the prior written consent of the
        Holder,
        the Company shall not, and the Company shall not permit any of its Subsidiaries
        to, directly or indirectly, incur or guarantee, assume or suffer to exist
        any
        Indebtedness, other than Permitted Indebtedness.

       

      (c) Existence
        of Liens.
        So long
        as this Note is outstanding and without the prior written consent of the
        Holder,
        the Company shall not, and the Company shall not permit any of its Subsidiaries
        to, directly or indirectly, allow or suffer to exist any mortgage, lien,
        pledge,
        charge, security interest or other encumbrance upon or in any property or
        assets
        (including accounts and contract rights) owned by the Company or any of its
        Subsidiaries (collectively, “Liens”)
        other
        than Permitted Liens.

       

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

       

      (e) Restriction
        on Redemption and Cash Dividends.
        Until
        the Note has been converted, redeemed or otherwise satisfied in full in
        accordance with its terms, the Company shall not, directly or indirectly,
        redeem, repurchase, or declare or pay any cash dividend or distribution on,
        its
        capital stock without the prior express written consent of the
        Holder.

       

      
        
          
          

        

        
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      (f) Restriction
        on Mergers, Etc..
        Until
        the Note has been converted, redeemed or otherwise satisfied in full in
        accordance with its terms, the Company shall not, directly or indirectly,
        (i)
        subject to Section 5 of this Note, merge, dissolve, liquidate, consolidate
        with
        or into another person, or dispose of or otherwise transfer (whether in one
        transaction or in a series of transactions) all or substantially all of its
        assets (whether now owned or hereafter acquired) to or in favor of any person,
        or (ii) acquire any assets or business or any interest in any person or entity
        in excess of One Hundred Thousand Dollars ($100,000), except for purchases
        of
        trade payables, inventory, raw materials and equipment in the ordinary course
        of
        business.

       

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

       

      (11) AMENDMENT.
        No
        provision of this Note shall be altered, amended or waived without the prior
        written consent of the Holder.

       

      (12) TRANSFER.
        This
        Note and any shares of Common Stock issued upon conversion of this Note may
        be
        offered, sold, assigned or transferred by the Holder without the consent
        of the
        Company, subject only to the provisions of applicable securities
        laws.

       

      (13) REISSUANCE
        OF THIS NOTE.

       

      (a) Transfer.
        If this
        Note is to be transferred, the Holder shall surrender this Note to the Company,
        whereupon the Company will, subject to the satisfaction of the transfer
        provisions of applicable securities laws, forthwith issue and deliver upon
        the
        order of the Holder a new Note (in accordance with subsection (d) of this
        Section), registered in the name of the registered transferee or assignee,
        representing the outstanding Principal being transferred by the Holder and,
        if
        less then the entire outstanding Principal is being transferred, a new Note
        (in
        accordance with subsection (d) of this Section) to the Holder representing
        the
        outstanding Principal not being transferred.

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

      
        
          
          

        

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

       

      (18) DISPUTE
        RESOLUTION.
        In the
        case of a dispute as to the determination of the Closing Bid Price, the Closing
        Sale Price or the Weighted Average Price or the arithmetic calculation of
        the
        Conversion Rate or any redemption price, the Company shall submit the disputed
        determinations or arithmetic calculations via facsimile within five (5)
        Business Days of receipt, or deemed receipt, of the Conversion Notice or
        redemption notice or other event giving rise to such dispute, as the case
        may
        be, to the Holder. If the Holder and the Company are unable to agree upon
        such
        determination or calculation within five (5) Business Days of such disputed
        determination or arithmetic calculation being submitted to the Holder, then
        the
        Company shall, within two (2) Business Days submit via facsimile
        (a) the disputed determination of the Closing Bid Price, the Closing Sale
        Price or the Weighted Average Price to an independent, reputable investment
        bank
        selected by the Company and approved by the Holder or (b) the disputed
        arithmetic calculation of the Conversion Rate to the Company’s independent,
        outside accountant. The Company, at the Company’s expense, shall cause the
        investment bank or the accountant, as the case may be, to perform the
        determinations or calculations and notify the Company and the Holder of the
        results no later than five (5) Business Days from the time it receives the
        disputed determinations or calculations. Such investment bank’s or accountant’s
        determination or calculation, as the case may be, shall be binding upon all
        parties absent demonstrable error.

       

      (19) NOTICES;
        PAYMENTS.

       

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

       

      (b) Payments.
        Whenever any payment of cash is to be made by the Company to any Person pursuant
        to this Note, such payment shall be made in lawful money of the United States
        of
        America by a check drawn on the account of the Company and sent via overnight
        courier service to such Person at such address as previously provided to
        the
        Company in writing; provided that the Holder may elect to receive a payment
        of
        cash via wire transfer of immediately available funds by providing the Company
        with prior written notice setting out such request and the Holder’s wire
        transfer instructions. Unless otherwise set forth herein, the Holder shall
        have
        the absolute right to allocate any payments to Principal, Interest, Late
        Charges, or otherwise, as it sees fit and will provide the Company with
        notification of its allocation. Whenever any amount expressed to be due by
        the
        terms of this Note is due on any day which is not a Business Day, the same
        shall
        instead be due on the next succeeding day which is a Business Day and, in
        the
        case of any Interest Date which is not the date on which this Note is paid
        in
        full, the extension of the due date thereof shall not be taken into account
        for
        purposes of determining the amount of Interest due on such date. Any amount
        of
        Principal or other amounts due under the Transaction Documents, other than
        Interest, which is not paid when due shall result in a late charge being
        incurred and payable by the Company in an amount equal to interest on such
        amount at the rate of twenty percent (20%) per annum from the date such
        amount was due until the same is paid in full (“Late
        Charge”).

       

      
        
          
          

        

        
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            14
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      (20) CANCELLATION.
        After
        all Principal, accrued Interest and other amounts at any time owed on this
        Note
        have been paid in full, this Note shall automatically be deemed canceled,
        shall
        be surrendered to the Company for cancellation and shall not be
        reissued.

       

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

       

      (22) GOVERNING
        LAW.
        This
        Note shall be construed and enforced in accordance with, and all questions
        concerning the construction, validity, interpretation and performance of
        this
        Note shall be governed by, the internal laws of the State of Texas, without
        giving effect to any choice of law or conflict of law provision or rule (whether
        of the State of Texas or any other jurisdictions) that would cause the
        application of the laws of any jurisdictions other than the State Texas.
        The
        Company hereby irrevocably submits to the exclusive jurisdiction of the state
        and federal courts sitting in Houston, Texas for the adjudication of any
        dispute
        hereunder or in connection herewith or with any transaction contemplated
        hereby
        or discussed herein, 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 any such court, that such suit, action or proceeding
        is
        brought in an inconvenient forum or that the venue of such suit, action or
        proceeding is improper. Nothing contained herein shall be deemed to limit
        in any
        way any right to serve process in any manner permitted by law. In the event
        that
        any provision of this Note is invalid or unenforceable under any applicable
        statute or rule of law, then such provision shall be deemed inoperative to
        the
        extent that it may conflict therewith and shall be deemed modified to conform
        with such statute or rule of law. Any such provision which may prove invalid
        or
        unenforceable under any law shall not affect the validity or enforceability
        of
        any other provision of this Note. Nothing contained herein shall be deemed
        or
        operate to preclude the Holder from bringing suit or taking other legal action
        against the Company in any other jurisdiction to collect on the Company’s
        obligations to the Holder, to realize on any collateral or any other security
        for such obligations, or to enforce a judgment or other court ruling in favor
        of
        the Holder. THE
        COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
        REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
        CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
        HEREBY.

       

      
        
          
          

        

        
          -
            15
            -

          
            

          

        

        
          
          

        

      

       

      (23) DISCLOSURE.
        Upon
        receipt or delivery by the Company of any notice in accordance with the terms
        of
        this Note, unless the Company has in good faith determined that the matters
        relating to such notice do not constitute material, nonpublic information
        relating to the Company or its Subsidiaries, the Company shall within
        four (4) Business Days after any such receipt or delivery publicly disclose
        such material, nonpublic information on a Current Report on Form 8-K or
        otherwise. In the event that the Company believes that a notice contains
        material, nonpublic information relating to the Company or its Subsidiaries,
        the
        Company so shall indicate to the Holder contemporaneously with delivery of
        such
        notice, and in the absence of any such indication, the Holder shall be allowed
        to presume that all matters relating to such notice do not constitute material,
        nonpublic information relating to the Company or its Subsidiaries. In the
        event
        of a breach of the foregoing covenant by the Company, any of its Subsidiaries,
        or any of its or their respective officers, directors, employees and agents,
        in
        addition to any other remedy provided herein or in the Transaction Documents,
        the Holder shall have the right to make a public disclosure, in the form
        of a
        press release, public advertisement or otherwise, of such material, nonpublic
        information without the prior approval by the Company, its Subsidiaries,
        or any
        of its or their respective officers, directors, employees or agents. The
        Holder
        shall have no liability to the Company, its Subsidiaries, or any of its or
        their
        respective officers, directors, employees, stockholders or agents for any
        such
        disclosure.

       

      
        
          
          

        

        
          -
            16
            -

          
            

          

        

        
          
          

        

      

       

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

      

        
          	 	
                  NEXUS
                    NANO ELECTRONICS, INC.

                
	 	 	 	 
	 	 	 	 
	 	
                  By:

                	 	
                  /s/
                    W. Chris Mathers

                	 	 
	 	 	
                  Name:

                	
                  W.
                    Chris Mathers

                	 
	 	 	
                  Title:

                	
                  Chief
                    Financial Officer

                	 

        

      

      
         

      

      
        
          
          

        

        
          -
            17
            -

          
            

          

        

        
          
          

        

      

      Exhibit
        A - Certain Definitions

       

      For
        purposes of the Secured Convertible Promissory Note dated December __, 2007
        issued by Nexus Nano Electronics, Inc., the Nevada corporation to CSI Business
        Finance, Inc., the Texas corporation, the following terms have the following
        meanings:

       

      (a) “Approved
        Stock Plan”
means
        any employee benefit plan which has been approved by the Board, pursuant
        to
        which the Company’s securities may be issued to any employee, consultant,
        officer or director for services provided to the Company. 

       

      (b) “Bloomberg”
means
        Bloomberg Financial Markets.

       

      (c) “Business
        Day”
means
        any day other than Saturday, Sunday or other day on which commercial banks
        in
        New York, New York are authorized or required by law to remain
        closed.

       

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

       

      (e) “Closing
        Bid Price”
and
        “Closing
        Sale Price”
means,
        for any security as of any date, the last closing bid price and last closing
        trade price, respectively, for such security on the Principal Market, as
        reported by Bloomberg, or, if the Principal Market begins to operate on an
        extended hours basis and does not designate the closing bid price or the
        closing
        trade price, as the case may be, then the last bid price or last trade price,
        respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
        by Bloomberg, or, if the Principal Market is not the principal securities
        exchange or trading market for such security, the last closing bid price
        or last
        trade price, respectively, of such security on the principal securities exchange
        or trading market where such security is listed or traded as reported by
        Bloomberg, or if the foregoing do not apply, the last closing bid price or
        last
        trade price, respectively, of such security in the over-the-counter market
        on
        the electronic bulletin board for such security as reported by Bloomberg,
        or, if
        no closing bid price or last trade price, respectively, is reported for such
        security by Bloomberg, the average of the bid prices, or the ask prices,
        respectively, of any market makers for such security as reported in the
“pink
        sheets”
by
        Pink
        Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing
        Bid
        Price or the Closing Sale Price cannot be calculated for a security on a
        particular date on any of the foregoing bases, the Closing Bid Price or the
        Closing Sale Price, as the case may be, of such security on such date shall
        be
        the fair market value as mutually determined by the Company and the Holder.
        If
        the Company and the Holder are unable to agree upon the fair market value
        of
        such security, then such dispute shall be resolved pursuant to Section 19.
        All such determinations to be appropriately adjusted for any stock dividend,
        stock split, stock combination or other similar transaction during the
        applicable calculation period.

       

      
        
          
          

        

        
          -
            18
            -

          
            

          

        

        
          
          

        

      

       

      (f) “Common
        Stock Deemed Outstanding”
means,
        at any given time, the number of shares of Common Stock outstanding at such
        time, plus the number of shares of Common Stock deemed to be outstanding
        pursuant to Sections 7(a)(i) and 7(a)(ii) hereof regardless of whether the
        Options or Convertible Securities are actually exercisable at such time,
        but
        excluding any Common Stock owned or held by or for the account of the Company
        or
        issuable upon conversion of the Note.

       

      (g) “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.

       

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

       

      (i) “Eligible
        Market”
means
        the OTC Bulletin Board, the Nasdaq National Market or the Principal
        Market.

       

      (j) “Excluded
        Securities”
means
        any Common Stock issued or issuable: (i) in connection with any Approved
        Stock Plan; (ii) upon conversion, adjustment or redemption of the Note;
        (iii) pursuant to a bona fide firm commitment underwritten public offering
        with a nationally recognized underwriter which generates gross proceeds to
        the
        Company in excess of Fifty Million Dollars ($50,000,000) (other than an
“at-the-market
        offering”
as
        defined in Rule 415(a)(4) under the 1933 Act and “equity
        lines”);
        (iv) in connection with any acquisition by the Company, whether through an
        acquisition of stock or a merger of any business, assets or technologies
        the
        primary purpose of which is not to raise equity capital; (v) in connection
        with any other strategic transaction or alliance the primary purpose of which
        is
        not to raise equity capital, and (vi) upon conversion or exercise of any
        Options or Convertible Securities which are outstanding on the day immediately
        preceding the Subscription Date, provided that the conversion or exercise
        price
        of such Options or Convertible Securities is not amended, modified or changed
        on
        or after the Subscription Date. 

       

      
        
          
          

        

        
          -
            19
            -

          
            

          

        

        
          
          

        

      

       

      (k) “Fundamental
        Transaction”
means
        that the Company shall, directly or indirectly, in one or more related
        transactions, (i) consolidate or merge with or into (whether or not the
        Company is the surviving corporation) another Person or Persons, or
        (ii) sell, assign, transfer, convey or otherwise dispose of all or
        substantially all of the properties or assets of the Company to another Person,
        or (iii) allow another Person to make a purchase, tender or exchange offer
        that is accepted by the holders of more than fifty percent (50%) of the
        outstanding shares of Voting Stock (not including any shares of Voting Stock
        held by the Person or Persons making or party to, or associated or affiliated
        with the Persons making or party to, such purchase, tender or exchange offer),
        or (iv) consummate a stock purchase agreement or other business combination
        (including, without limitation, a reorganization, recapitalization, spin-off
        or
        scheme of arrangement) with another Person whereby such other Person acquires
        more than the fifty percent (50%) of the outstanding shares of Voting Stock
        (not
        including any shares of Voting Stock held by the other Person or other Persons
        making or party to, or associated or affiliated with the other Persons making
        or
        party to, such stock purchase agreement or other business combination), or
        (v) reorganize, recapitalize or reclassify its Common Stock, or
        (vi) any “person”
or
        “group”
(as
        these terms are used for purposes of Sections 13(d) and 14(d) of the 1934
        Act) is or shall become the “beneficial
        owner”
(as
        defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of fifty
        percent (50%) of the aggregate Voting Stock of the Company.

       

      (l) “GAAP”
means
        United States generally accepted accounting principles, consistently
        applied.

       

      (m) “Indebtedness”
of
        any
        Person means, without duplication (i) all indebtedness for borrowed money,
        (ii) all obligations issued, undertaken or assumed as the deferred purchase
        price of property or services, including (without limitation) “capital
        leases”
in
        accordance with GAAP (other than trade payables entered into in the ordinary
        course of business), (iii) all reimbursement or payment obligations with
        respect to letters of credit, surety bonds and other similar instruments,
        (iv) 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, (v) 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), (vi) all monetary
        obligations under any leasing or similar arrangement which, in connection
        with
        GAAP, consistently applied for the periods covered thereby, is classified
        as a
        capital lease, (vii) all indebtedness referred to in clauses (i)
        through (vi) 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 (viii) all
        Contingent Obligations in respect of indebtedness or obligations of others
        of
        the kinds referred to in clauses (i) through (vii) above.

       

      (n) “Interest
        Rate”
means,
        initially eighteen percent (18%) per annum, subject to adjustment as provided
        herein.

       

      (o) “Options”
means
        any rights, warrants or options to subscribe for or purchase shares of Common
        Stock or Convertible Securities.

       

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

       

      
        
          
          

        

        
          -
            20
            -

          
            

          

        

        
          
          

        

      

       

      (q) “Permitted
        Indebtedness”
means
        the Indebtedness evidenced by this Note

       

      (r) “Permitted
        Liens”
means
        (i) any Lien for taxes not yet due or delinquent or being contested in good
        faith by appropriate proceedings for which adequate reserves have been
        established in accordance with GAAP, (ii) any statutory Lien arising in the
        ordinary course of business by operation of law with respect to a liability
        that
        is not yet due or delinquent, (iii) any Lien created by operation of law,
        such as materialmen’s liens, mechanics’ liens and other similar liens, arising
        in the ordinary course of business with respect to a liability that is not
        yet
        due or delinquent or that are being contested in good faith by appropriate
        proceedings, (iv) Liens (A) upon or in any equipment acquired or held
        by the Company or any of its Subsidiaries to secure the purchase price of
        such
        equipment or indebtedness incurred solely for the purpose of financing the
        acquisition or lease of such equipment, or (B) existing on such equipment
        at the time of its acquisition, provided that the Lien is confined solely
        to the
        property so acquired and improvements thereon, and the proceeds of such
        equipment, (v) leases or subleases and licenses and sublicenses granted to
        others in the ordinary course of the Company’s business, not interfering in any
        material respect with the business of the Company and its Subsidiaries taken
        as
        a whole and (vi) any Lien created under the Security Agreement.

       

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

       

      (t) “Principal
        Market”
means
        the
        pink
        sheets (as reported by Pink Sheets LLC).

       

      (u) “SEC”
means
        the United States Securities and Exchange Commission.

       

      (v) “Security
        Agreement”
means
        that certain Security Agreement, of even date herewith, by and between the
        Company and the Holder. 

       

      (w) “Subscription
        Date”
means
        the original issue date of this Note.

       

      (x) “Subsidiaries”
means
        subsidiaries of the Company which includes any joint venture or any other
        entity
        (i) in which the Company, directly or indirectly, owns fifty percent (50%)
        or more of the outstanding capital stock or holds an equity or similar interest
        representing fifty percent (50%) or more of the outstanding equity or similar
        interest of such entity, (ii) that is a “significant subsidiary” of the
        Company as defined under Regulation S-X of the 1934 Act or (iii) in
        which the Company controls or operates all or part of the business, operations
        or administration of such entity.

       

      
        
          
          

        

        
          -
            21
            -

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      (aa) “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
        or
        trustees 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).

       

      (bb) “Weighted
        Average Price”
means,
        for any security as of any date, the dollar volume-weighted average price
        for
        such security on the Principal Market during the period beginning at 9:30:01
        a.m., New York Time (or such other time as the Principal Market publicly
        announces is the official open of trading), and ending at 4:00:00 p.m., New
        York
        Time (or such other time as the Principal Market publicly announces is the
        official close of trading) as reported by Bloomberg through its “Volume
        at Price”
        functions, or, if the foregoing does not apply, the dollar volume-weighted
        average price of such security in the over-the-counter market on the electronic
        bulletin board for such security during the period beginning at 9:30:01 a.m.,
        New York Time (or such other time as such market publicly announces is the
        official open of trading), and ending at 4:00:00 p.m., New York Time (or
        such
        other time as such market publicly announces is the official close of trading)
        as reported by Bloomberg, or, if no dollar volume-weighted average price
        is
        reported for such security by Bloomberg for such hours, the average of the
        highest closing bid price and the lowest closing ask price of any of the
        market
        makers for such security as reported in the “pink
        sheets”
by
        Pink
        Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Weighted
        Average Price cannot be calculated for a security on a particular date on
        any of
        the foregoing bases, the Weighted Average Price of such security on such
        date
        shall be the fair market value as mutually determined by the Company and
        the
        Holder. If the Company and the Holder are unable to agree upon the fair market
        value of such security, then such dispute shall be resolved pursuant to
        Section 19. All such determinations to be appropriately adjusted for any
        stock dividend, stock split, stock combination or other similar transaction
        during the applicable calculation period.

       

      
        
          
          

        

        
          -
            22
            -

          
            

          

        

        
          
          

        

      

      EXHIBIT
        B

       

      NEXUS
        NANO ELECTRONICS, INC.

       

      (To
        be executed by the Holder in order to Convert the Note)

       

      
        	
                TO:
                  

              

      

      
 

      The
        undersigned hereby irrevocably elects to convert $     
        of the
        principal amount of Debenture No.NEXO __-__ into Shares of Common Stock of
        NEXO
        NANO ELECTRONICS, INC.,
        according to the conditions stated therein, as of the Conversion Date written
        below.

       

      
        	
                Conversion
                  Date:

              	 
	 	 
	
                Conversion
                  Amount to be converted:

              	
                $        

              
	 	 
	
                Conversion
                  Price:

              	
                $  

              
	 	 
	
                Number
                  of shares of Common Stock to be issued:

              	   

	 	 
	
                Amount
                  of Debenture Unconverted:

              	
                $   

              
	
                 

                 

                Please
                  issue the shares of Common Stock in the following name and to the
                  following address:

                 

              
	
                Issue
                  to:

              	 

      

       

      
        	
                Authorized
                  Signature:

              	 
	 	 
	
                Name:

              	 
	 	 
	
                Title:

              	 
	 	 
	
                Broker
                  DTC Participant Code:

              	 
	 	 
	
                Account
                  Number:

              	 

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ACKNOWLEDGMENT

       

      The
        Company hereby acknowledges this Conversion Notice and hereby directs
        ______________________ (the “Transfer
        Agent”)
        to
        issue the above indicated number of shares of Common Stock in accordance
        with
        the Transfer Agent Instructions dated _______ __, 200_ from the Company and
        acknowledged and agreed to by the Transfer Agent.

       

    

     

    
      	 	
              NEXUS
                NANO ELECTRONICS, INC.

            
	 	 
	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            
	 	 	
              Title:

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