Document:

Unassociated Document

    CONVERSION
      SERVICES INTERNATIONAL, INC.

    10%
      CONVERTIBLE UNSECURED NOTE

    DUE
      ON DEMAND

     

    
 

    
      	$400,000	
              June
                27,
                2007

            

    

            

    

    THIS
      NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF
      THE
      SECURITIES ACT OF 1933 (THE "ACT") AND QUALIFICATION PROVISIONS OF APPLICABLE
      STATE SECURITIES LAWS. NEITHER IT NOR THE SHARES OF COMMON STOCK INTO WHICH
      IT
      CAN BE CONVERTED CAN BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
      REGISTERED PURSUANT TO THE ACT AND QUALIFIED UNDER APPLICABLE STATE LAW OR,
      IN
      THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO MAKER, AN EXEMPTION THEREFROM
      IS
      AVAILABLE.

    

    FOR
      VALUE
      RECEIVED, the undersigned, Conversion Services International, Inc., a Delaware
      corporation with an address at 100 Eagle Rock Avenue, East Hanover, New Jersey
      07936, ("Maker"), promises to pay to TAG
      Virgin Islands, Inc.,
      with
      an address at The
      Tunick Building, 1336 Beltjen Road, Suite 202,
      St.
      Thomas, VI 00802, as agent ("Payee"),
      on demand, or sooner as otherwise provided herein (the "Maturity Date"), the
      principal amount of Four
      Hundred Thousand ($400,000)
      Dollars
      in
      lawful money of the United States of America (the "Principal”). This Note bears
      interest (the "Interest"), payable on the earlier of the Maturity Date or the
      date on which this Note is converted into Maker's common stock as provided
      herein, at the annual rate of ten percent (10%), except as otherwise provided
      herein, until the Principal and all accrued Interest thereon (collectively
      the
“Obligations”) shall be paid in full. This Note is convertible into Maker's
      common stock,
      par
      value $0.001 per share (the "Common Stock"), as set forth below. 

    

    1. Interest;
      Repayment of Principal.
      

    

    Interest
      on the Note will accrue from the most recent date to which Interest has been
      paid or, if no Interest has been paid, from the date of delivery of the Note.
      It
      will be computed on the basis of a 360-day year of twelve 30-day months. Maker
      shall repay to Payee the full Principal, Four Hundred Thousand ($400,000)
      Dollars, on the Maturity Date plus accrued but unpaid Interest.

    

    2. Method
      of Payment.
      

    

    Maker
      will pay Principal and Interest in money of the United States that at the time
      of payment is legal tender for the payment of public and private debts. All
      payments shall be sent to Payee at its address first set forth above or such
      other address as Payee shall notify Maker pursuant to the provisions of
Paragraph
      12 (g)
      below.

    

    3. Conversion.
      

    

    (a) Conversion
      of Note. Except as provided in Paragraph
      (c)(iii)
      of this
Section
      3
      below,
      by or on the Maturity Date, the Obligations will either be: (1) repaid in full
      to the Payee, or (2) converted into Common Stock. The price for conversion
      (the
“Conversion Price”), subject to adjustment as provided in Section
      4
      below,
      shall be $0.30 per share. Maker will not issue a fractional share of Common
      Stock upon conversion but will round any fractional share to the nearest share
      so that if the fraction is less than 0.5 no share shall be issued and if the
      fraction is 0.5 or higher Maker shall issue one full share. Maker shall pay
      Payee all accrued but unpaid Interest (the “Outstanding Interest”) as of the
      Conversion Date, as defined in Paragraph
      3 (b)
      below,
      as provided in Paragraph
      3(b)
      below.
      The date on which the Maker shall deliver the Common Stock and outstanding
      Interest is herein referred to as the “Conversion Date.” After the Conversion
      Date, this Note shall be void and Payee shall have the sole right to receive
      the
      Common Stock and outstanding Interest

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      $400,000
        Convertible Unsecured Note 

      of
        Conversion
        Services International, Inc. 

      payable
        to TAG
        Virgin Islands, Inc.

      as
        agent
        dated June
        27,
        2007

    

     

    (b) Taxes
      on
      Shares Issued. The issue of stock certificates on conversion of this Note shall
      be made without charge to Payee for any tax in respect of such issue. Maker
      shall not, however, be required to pay any tax that may be payable in respect
      of
      any transfer involved in the issue and delivery of Common Stock in any name
      other than that of Payee, and Maker shall not be required to issue or deliver
      any certificates representing such Common Stock unless and until the person
      or
      persons requesting the issue thereof shall have paid to Maker the amount of
      such
      tax or shall have established to the satisfaction of Maker that such tax has
      been paid.

    

    (c) Covenants
      of Maker Relating to Conversion. Maker covenants and agrees that, except as
      provided in Subparagraphs (i) and (iv) of this Paragraph
      3(c),
      from
      and after the date hereof and until the date of repayment in full of the
      Obligations, or full conversion of the Obligations:

    

    (i) 
      On the
      Conversion Date it shall have, free from preemptive rights, out of its
      authorized but unissued shares, or out of shares held in its treasury,
      sufficient shares to effect the conversion of the Obligations;

    

    (ii) All
      Common Stock that may be issued upon conversion of the Obligations will upon
      issue be validly issued, fully paid and non-assessable, free from all taxes,
      liens and charges with respect to the issue thereof except as provided in
Paragraph
      3(c)
      above,
      and will not be subject to the preemptive rights of any stockholder of
      Maker;

    

    (iii) If
      any
      Common Stock to be provided for the purpose of conversion of the Obligations
      require registration with or approval of any governmental authority under any
      federal or state law before such shares may be validly issued upon conversion,
      Maker will in good faith and as expeditiously as possible attempt to secure
      such
      registration or approval, as the case may be, and Maker's obligation to deliver
      shares of the Common Stock upon conversion of the Obligations shall be abated
      until such registration or approval is obtained; provided,
      however,
      that
      this Note and the Obligations shall remain outstanding unless paid in full
      until
      Maker delivers the Common Stock and the outstanding Interest to Payee and in
      no
      event shall this Note be converted until Maker effects such delivery;
      and

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (iv) If
      on the
      Conversion Date, and thereafter so long as the Common Stock shall be listed
      on
      any securities exchange, market or other quotation system, Maker will, if
      permitted by the rules of such exchange, market or other quotation system,
      list
      and keep listed and for sale so long as the Common Stock shall be so listed
      on
      such exchange, market or other quotation system, upon official notice of
      issuance, all Common Stock issuable upon conversion of the
      Obligations.

    

    4. Adjustment
      in Conversion Price.
      

    

    (a) Adjustments
      for Change in Capital Stock. Except as provided in Paragraph
      4(n)
      below,
      if Maker shall (i) declare a dividend on all its outstanding Common Stock in
      shares of its capital stock, (ii) subdivide all its outstanding Common Stock,
      (iii) combine all its outstanding Common Stock into a smaller number of shares,
      or (iv) issue any shares of its capital stock by reclassification of its Common
      Stock (including any such reclassification in connection with a consolidation
      or
      merger in which Maker is the continuing corporation), then in each such case
      the
      conversion privilege and the Conversion Price in effect immediately prior to
      such action shall be adjusted so that if the Note is thereafter converted,
      Payee
      may receive the number and kind of shares that it would have owned immediately
      following such action if it had converted the Note immediately prior to such
      action. Such adjustment shall be made successively whenever such an event shall
      occur. The adjustment shall become effective immediately after the record date
      in the case of a dividend or distribution and immediately after the effective
      date in the case of a subdivision, combination or reclassification. If after
      an
      adjustment Payee upon conversion of this Note may receive shares of two or
      more
      classes of capital stock of Maker, Maker's Board of Directors, in good faith,
      shall determine the allocation of the adjusted Conversion Price between the
      classes of capital stock. After such allocation, the conversion privilege and
      Conversion Price of each class of capital stock shall thereafter be subject
      to
      adjustment on terms comparable to those applicable to Common Stock in this
      Section
      4.

    

    (b) Subscription
      Offerings. In case Maker shall issue to all of its existing stockholders or
      otherwise grant rights, options, or warrants entitling the holders thereof
      to
      subscribe for or purchase Common Stock (or securities convertible into or
      exchangeable for Common Stock) at a price per share (or having a conversion
      price per share, in the case of a security convertible into or exchangeable
      for
      Common Stock) less than the Current Market Price per share (as defined in
Paragraph
      4(d)
      below)
      on the record date for the determination of stockholders entitled to receive
      such rights or granting date, as the case may be, then in each such case the
      Conversion Price in effect immediately prior to such action (the “Existing
      Conversion Price”) shall be adjusted by multiplying the Existing Conversion
      Price in effect immediately prior to such record or granting date by a fraction,
      of which the numerator shall be the number of shares of Common Stock outstanding
      on such record or granting date plus the number of shares of Common Stock which
      the aggregate offering price of the total number of shares of Common Stock
      so to
      be offered (or the aggregate initial conversion price of the convertible
      securities so to be offered) would purchase at such Current Market Price and
      of
      which the denominator shall be the number of shares of Common Stock outstanding
      on such record or granting date plus the number of additional shares of Common
      Stock to be offered for subscription or purchase (or into which the convertible
      or exchangeable securities so to be offered are initially convertible or
      exchangeable). Such adjustment shall become effective at the close of business
      on such record or granting date; provided,
      however,
      that,
      to the extent the shares of Common Stock (or securities convertible into or
      exchangeable for shares of Common Stock) are not delivered, the Conversion
      Price
      shall be readjusted after the expiration of such rights, options, or warrants
      (but only to the extent that this Note is not converted after such expiration),
      to the Conversion Price which would then be in effect had the adjustments made
      upon the issuance of such rights or warrants been made upon the basis of
      delivery of only the number of shares of Common Stock (or securities convertible
      into or exchangeable for shares of Common Stock) actually issued. In case any
      subscription price may be paid in a consideration part or all of which shall be
      in a form other than cash, the value of such consideration shall be as
      determined by Maker's Board of Directors, in good faith. Shares of Common Stock
      owned by or held for the account of Maker or any majority-owned subsidiary
      shall
      not be deemed outstanding for the purpose of any such computation. 

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (c) Other
      Rights to Acquire Common Stock. In case Maker shall distribute to all holders
      of
      its Common Stock evidences of its indebtedness or assets (excluding cash
      dividends or distributions paid from retained earnings of Maker) or rights
      or
      warrants to subscribe for or purchase Common Stock (excluding those referred
      to
      in Paragraph
      4(b)
      above),
      then in each such case the Conversion Price shall be adjusted so that the same
      shall equal the price determined by multiplying the Conversion Price in effect
      immediately prior to the date of such distribution by a fraction of which the
      numerator shall be the Current Market Price per share (as defined in
Paragraph
      4(d)
      below)
      of the Common Stock on the record date mentioned below less the then fair market
      value (as determined in good faith by the Board of Directors of Maker) of the
      portion of the assets or evidences of indebtedness so distributed or of such
      rights or warrants applicable to one share of Common Stock, and the denominator
      shall be the Current Market Price per share of the Common Stock. Such adjustment
      shall become effective immediately after the record date for the determination
      of shareholders entitled to receive such distribution. 

    

    (d) Current
      Market Price. For the purpose of any computation under Paragraphs
      4(b) and
      (c)
      above,
      the "Current Market Price" per share of Common Stock on any date shall be deemed
      to be the average of the daily “Closing Price” for the thirty (30) consecutive
      trading days commencing forty five (45) trading days before such date. The
      "Closing Price" for each day shall mean the last reported sales price regular
      way or, in case no such reported sale takes place on such day, the closing
      bid
      price regular way, in either case on the principal national securities exchange
      on which the Common Stock is listed or admitted to trading or, if the Common
      Stock is not listed or admitted to trading on any national securities exchange,
      the highest reported bid price as furnished by the National Association of
      Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is
      no
      longer reporting such information, or by the Pink Sheets, LLC or similar
      organization if the Common Stock is not then quoted on an inter-dealer quotation
      system. If on any such date the Common Stock is not quoted by any such
      organization, the fair value of the Common Stock on such date, as determined
      in
      good faith by Maker's Board of Directors, shall be used. 

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (e) Action
      to
      Permit Valid Issuance of Common Stock. Before taking any action which would
      cause an adjustment reducing the Conversion Price below the then par value,
      if
      any, of the shares of Common Stock issuable upon conversion of this Note, Maker
      will take all corporate action which may, in the opinion of its counsel, be
      necessary in order that Maker may validly and legally issue shares of such
      Common Stock at such adjusted Conversion Price. 

    

    (f) Minimum
      Adjustment. No adjustment in the Conversion Price shall be required if such
      adjustment is less than 1% of the then Existing Conversion Price; provided,
      however,
      that
      any adjustments which by reason of this Paragraph
      4(f)
      are not
      required to be made shall be carried forward and taken into account in any
      subsequent adjustment. All calculations under this Section
      4
      shall be
      made to the nearest cent or to the nearest one-hundredth of a share, as the
      case
      may be. Anything to the contrary notwithstanding, Maker shall be entitled to
      make such reductions in the Conversion Price, in addition to those required
      by
      this Paragraph
      4(f),
      as it
      in its discretion shall determine to be advisable in order that any stock
      dividends, subdivision of shares, distribution of rights to purchase stock
      or
      securities, or distribution of securities convertible into or exchangeable
      for
      stock hereafter made by Maker to its stockholders shall not be taxable.

    

    (g) Referral
      of Adjustment. In any case in which this Section
      4
      shall
      require that an adjustment in the Conversion Price be made effective as of
      a
      record date for a specified event, if the Note shall have been converted after
      such record date Maker may elect to defer until the occurrence of such event
      issuing to Payee the shares, if any, issuable upon such conversion event over
      and above the shares, if any, issuable upon such conversion on the basis of
      the
      Conversion Price in effect prior to such adjustment; provided,
      however,
      that
      Maker shall deliver to Payee a due bill or other appropriate instrument
      evidencing Payee's right to receive such additional shares upon the occurrence
      of the event requiring such adjustment. 

    

    (h) Number
      of
      Shares. Upon each adjustment of the Conversion Price as a result of the
      calculations made in Paragraphs
      4(a)
      through
(c)
      above,
      this Note shall thereafter evidence the right to purchase, at the adjusted
      Conversion Price, that number of shares (calculated to the nearest
      one-hundredth) obtained by dividing (i) the product obtained by multiplying
      the
      number of shares issuable upon conversion of this Note prior to adjustment
      of
      the number of shares by the Conversion Price in effect prior to adjustment
      of
      the Conversion Price by (ii) the Conversion Price in effect after such
      adjustment of the Conversion Price. 

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (i) When
      No
      Adjustment Required. No adjustment need be made for a transaction referred
      to in
Paragraphs
      4(a)
      through
(c)
      above if
      Payee is permitted to participate in the transaction on a basis no less
      favorable than any other party and at a level which would preserve Payee's
      percentage equity participation in the Common Stock upon conversion of the
      Note.
      No adjustment need be made for sales of Common Stock pursuant to any Maker
      plan
      for reinvestment of dividends or interest, the granting of options and/or the
      exercise of options outstanding under any of Maker's stock option plans, the
      exercise of any other of Maker's currently outstanding options, or any currently
      authorized warrants, whether or not outstanding. No adjustment need be made
      for
      a change in the par value of the Common Stock, or from par value to no par
      value. If the Note becomes convertible solely into cash, no adjustment need
      be
      made thereafter. Interest will not accrue on the cash. 

    

    (j) Notice
      of
      Adjustment. Whenever the Conversion Price is adjusted, Maker shall promptly
      mail
      to Payee a notice of the adjustment together with a certificate from Maker's
      Chief Financial Officer briefly stating (i) the facts requiring the adjustment,
      (ii) the adjusted Conversion Price and the manner of computing it, and the
      date
      on which such adjustment becomes effective. The certificate shall be evidence
      that the adjustment is correct, absent manifest error. 

    

    (k) Voluntary
      Reduction. Maker from time to time may reduce the Conversion Price by any amount
      for any period of time if the period is at least twenty (20) days and if the
      reduction is irrevocable during the period. Whenever the Conversion Price is
      reduced, Maker shall mail to Payee a notice of the reduction. Maker shall mail
      the notice at least fifteen (15) days before the date the reduced Conversion
      Price takes effect. The notice shall state the reduced Conversion Price and
      the
      period it will be in effect. A reduction of the Conversion Price does not change
      or adjust the Conversion Price otherwise in effect for purposes of Paragraphs
      4(a)
      through
(c)
      above.
      Anything to the contrary notwithstanding, this Paragraph
      4(k)
      shall be
      void and of no effect if it violates the rules and/or regulations of any
      exchange on which the Common Stock is then listed for trading. 

    

    (l) Prohibition
      against Certain Reductions of Exercise Price. Anything to the contrary
      notwithstanding, in no event shall the Conversion Price be reduced below the
      par
      value of the Common Stock. 

    

    (m) Notice
      of
      Certain Transactions. If (i) Maker takes any action that would require an
      adjustment in the Conversion Price pursuant to this Section
      4;
      or (ii)
      there is a liquidation or dissolution of Maker, Maker shall mail to Payee a
      notice stating the proposed record date for a distribution or effective date
      of
      a reclassification, consolidation, merger, transfer, lease, liquidation or
      dissolution. Maker shall mail the notice at least fifteen (15) days before
      such
      date. Failure to mail the notice or any defect in it shall not affect the
      validity of the transaction. 

    

    (n) Reorganization
      of Company. If Maker and/or the holders of Common Stock are parties to a merger,
      consolidation or a transaction in which (i) Maker transfers or leases
      substantially all of its assets; (ii) Maker reclassifies or changes its
      outstanding Common Stock; or (iii) the Common Stock is exchanged for securities,
      cash or other assets; the person who is the transferee or lessee of such assets
      or is obligated to deliver such securities, cash or other assets shall assume
      the obligations under this Note. If the issuer of securities deliverable upon
      conversion of the Note is an affiliate of the surviving, transferee or lessee
      corporation, that issuer shall join in such assumption. The assumption agreement
      shall provide that the Payee may convert the Obligations into the kind and
      amount of securities, cash or other assets which it would have owned immediately
      after the consolidation, merger, transfer, lease or exchange if it had converted
      the Note immediately before the effective date of the transaction. The
      assumption agreement shall provide for adjustments that shall be as nearly
      equivalent as may be practical to the adjustments provided for in this
Section
      4.
      The
      successor company shall mail to Payee a notice briefly describing the assumption
      agreement. If this Paragraph applies, Paragraph
      4(a)
      above
      does not apply. 

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    5. Covenants.
      

    

    Maker
      covenants and agrees that from and after the date hereof and until the date
      of
      repayment in full of the Obligations it shall comply with the following
      conditions:

    

    (i) Maintenance
      of Existence and Conduct of Business. Maker shall, and shall cause each of
      its
      subsidiaries, if
      any,
      to (A)
      do or cause to be done all things necessary to preserve and keep in full force
      and effect its legal existence and rights and maintain its property; and (B)
      continue to conduct its business so that the business carried on in connection
      therewith may be properly and advantageously conducted at all
      times.

    

    (ii) Books
      and
      Records. Maker shall, and shall cause each of its subsidiaries, if any, to
      keep
      adequate books and records of account with respect to its business
      activities.

    

    (iii) Insurance.
      Maker shall, and shall cause each of its subsidiaries, if any, to maintain
      insurance policies insuring such risks as are customarily insured against by
      companies engaged in businesses and/or with property similar to those operated
      and/or owned or leased by Maker or any such subsidiaries, as the case may be,
      including but not limited to, insurance policies covering real property
      acceptable to Payee on which Payee is named as an additional insured. All such
      policies are to be carried with reputable insurance carriers and shall be in
      such amounts as are customarily insured against by companies with similar assets
      and properties engaged in a similar business.

    

    (iv) Compliance
      with Law. Maker shall, and shall cause each of its subsidiaries, if any, to
      comply in all material respects with all federal, state, local and other laws
      and regulations applicable to it or any such subsidiaries, as the case may
      be,
      which, if breached, would have a material adverse effect on Maker's or any
      such
      subsidiaries', as the case may be, business or financial condition.

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    6. Reorganization
      of Maker.

    

    If
      Maker
      is party to a merger, consolidation or a transaction in which it is not the
      surviving or continuing entity or transfers or leases all or substantially
      all
      of its assets, the person who is the surviving or continuing entity or is the
      transferee or lessee of such assets shall assume the terms of this Note and
      the
      Obligations.

    

    7. Representations
      and Warranties of Maker.

    

    Maker
      represents and warrants that (i) it is a corporation duly organized, validly
      existing and in good standing under the laws of Delaware and has all requisite
      power to carry on its business as now conducted and to own its properties and
      assets it now owns; (ii) it is duly qualified or licensed to do business as
      a
      foreign corporation in good standing in the jurisdictions in which ownership
      of
      property or the conduct of its business requires such qualification except
      jurisdictions in which the failure to qualify to do business will have no
      material adverse effect on its business, prospects, operations, properties,
      assets or condition (financial or otherwise); (iii) it has full power and
      authority to execute and deliver this Note, and that the execution and delivery
      of this Note will not result in the breach of or default under, with or without
      the giving of notice and/or the passage of time, any other agreement, financial
      instrument, arrangement or indenture to which it is a party or by which it
      may
      be bound, or the violation of any law, statute, rule, decree, judgment or
      regulation binding upon it; (iv) it has filed all reports, schedules, forms,
      statements and other documents required to be filed by it with the Securities
      and Exchange Commission (the “Commission”)
      pursuant to the Securities Act of 1933 (the “Securities Act”) and the Securities
      Exchange Act of 1934 (the “Exchange
      Act”)
      (the
“SEC
      Documents”);
      (v)
      the SEC Documents have complied in all material respects with the requirements
      of the Securities Act or the Exchange Act, as the case may be, and the rules
      and
      regulations of the Commission promulgated thereunder applicable to the SEC
      Documents, and none of the SEC Documents, at the time they were filed with
      the
      Commission, contained any untrue statement of a material fact or omitted to
      state a material fact required to be stated therein or necessary in order to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; (vi) as of their respective dates, Maker’s financial
      statements included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the Commission with respect thereto, such financial statements
      have been prepared in accordance with accounting principles generally accepted
      in the United States as in effect from time to time, consistently applied,
      during the periods involved (except (a) as may be otherwise indicated in such
      financial statements or the notes thereto, or (b) in the case of unaudited
      interim statements, to the extent they may exclude footnotes or may be condensed
      or summary statements) and fairly present in all material respects the financial
      condition of Maker as of the respective dates thereof and the results of its
      operations and cash flows for the respective periods then ended (subject, in
      the
      case of unaudited statements, to normal year-end audit adjustments); (vii)
      except as set forth in the SEC Documents, Maker has not received notification
      from the Commission, the American Stock Exchange and/or any federal or state
      securities bureaus that any investigation (informal or formal), inquiry or
      claim
      is pending, threatened or in process against Maker and/or relating to any of
      Maker’s securities; (viii) except as set forth in the SEC Documents, there is no
      action, suit, proceeding, or investigation pending or currently threatened
      against Maker, and (ix) it has taken and will take all acts required, including
      but not limited to authorizing the signatory hereof on its behalf to execute
      this Note, so that upon the execution and delivery of this Note, it shall
      constitute the valid and legally binding obligation of Maker enforceable in
      accordance with the terms thereof.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    8. Defaults
      and Remedies.
      

    

    (a) Events
      of
      Default. The occurrence or existence of any one or more of the following events
      or conditions (regardless of the reasons therefor) shall constitute an "Event
      of
      Default" hereunder:

    

    (i) Maker
      shall fail to make any payment of Principal or Interest when due and payable
      or
      declared due and payable pursuant to the terms hereof;

    

    (ii) Maker
      shall fail at any time to be in material compliance with any of the covenants
      set forth in Paragraph
      3(d) or
      Section
      5
      of this
      Note, or shall fail at any time to be in material compliance with or neglect
      to
      perform, keep or observe any of the provisions of this
      Note,
      to be
      complied with, performed, kept or observed by Maker and such failure shall
      remain uncured for a period of five (5) days after notice thereof has been
      given
      by Payee to Maker;

    

    (iii) Any
      representation or warranty made in this Note by Maker shall be untrue or
      incorrect in any material respect as of the date when made or deemed
      made;

    

    (iv) Maker
      shall have received a written notice of default related to any material
      agreement to which it is a party, and such act of default shall remain uncured
      after any applicable cure period;

    

    (v) A
      case or
      proceeding shall have been commenced against Maker or any of its subsidiaries,
      if any, (each a “Proceeding
      Company”)
      in a
      court having competent jurisdiction seeking a decree or order in respect of
      a
      Proceeding Company (A) under Title 11 of the United States Code, as now
      constituted or hereafter amended, or any other applicable federal, state or
      foreign bankruptcy or other similar law; (B) appointing a custodian, receiver,
      liquidator, assignee, trustee or sequestrator (or similar official) of a
      Proceeding Company, or any of its properties; or (C) ordering the winding-up
      or
      liquidation of the affairs of a Proceeding Company, and such case or proceeding
      shall remain unstayed or undismissed for a period of ten (10) consecutive days
      or such court shall enter a decree or order granting the relief sought in such
      case or proceeding; or

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (vi) A
      Proceeding Company shall (A) file a petition seeking relief under Title 11
      of
      the United States Code, as now constituted or hereafter amended, or any other
      applicable federal, state or foreign bankruptcy or other similar law; or (B)
      consent to the institution of proceedings thereunder or to the filing of any
      such petition or to the appointment of or the taking of possession by a
      custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
      official) of such Proceeding Company, or any of its properties.

    

    (b) Remedies.
      Upon the occurrence of an Event of Default specified in Paragraph
      8(a)
      above,
      all Obligations then remaining unpaid hereunder shall immediately become due
      and
      payable in full, plus interest on the unpaid portion of the Obligations at
      the
      highest rate permitted by applicable law, without notice to Maker and without
      presentment, demand, protest or notice of protest, all of which are hereby
      waived by Maker together with all reasonable costs and expenses of the
      collection and enforcement of this Note, including reasonable attorney's fees
      and expenses, all of which shall be added to the amount due under this Note.
      The
      rights, powers, privileges and remedies of Payee pursuant to the terms hereof
      are cumulative and not exclusive of any other rights, powers, privileges and
      remedies which Payee may have under this Note or any other instrument or
      agreement.

    

    9. Acknowledgment
      of Payee's Investment Representations.

    

    By
      accepting this Note, Payee acknowledges that, except as provided in the
      Registration Rights Agreement dated as of the date hereof between Maker and
      Payee, neither this Note nor the Common Stock have been or will be registered
      under the Act or qualified under any state securities laws and that the
      transferability thereof is restricted by the registration provisions of the
      Act
      as well as such state laws. Based upon the representations and agreements being
      made by it herein, this Note is being and any Common Stock will be issued to
      it
      pursuant to an exemption from such registration provided by Section 4(2) of
      the
      Act, and applicable state securities law qualification exemptions. Payee
      represents that it (i) is an “Accredited Investor” as that term is defined in
      Rule 501 (a) of Regulation D promulgated under the Act, and (ii) is acquiring
      this Note and will acquire any Common Stock for its own account, for investment
      purposes only and not with a view to resale or other distribution thereof,
      nor
      with the intention of selling, transferring or otherwise disposing of all or
      any
      part of these securities for any particular event or circumstance, except
      selling, transferring or disposing of them only upon full compliance with all
      applicable provisions of the Act, the Securities Exchange Act of 1934, the
      Rules
      and Regulations promulgated by the Commission thereunder, and any applicable
      state securities laws. In addition, Payee understands and acknowledges that
      any
      routine sales of these securities made in reliance upon Rule 144 promulgated
      by
      the Commission under the Act can be effected only in the amounts set forth
      in
      and pursuant to the other terms and conditions, including applicable holding
      periods, of that Rule. Payee further understands and agrees that no transfer
      of
      this Note shall be valid unless made in compliance with the restrictions set
      forth on the front of this Note, effected on Maker's books by the registered
      holder hereof, in person or by an attorney duly authorized in writing, and
      similarly noted hereon as provided in Paragraph
      12(h)
      below.

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    10. Limitation
      of Interest Payments.

    

    Nothing
      contained in this Note or in any other agreement between Maker and Payee
      requires Maker to pay or Payee to accept interest in an amount that would
      subject Payee to any penalty or forfeiture under applicable law. In no event
      shall the total of all charges payable hereunder, whether of interest or of
      such
      other charges, which may or might be characterized as interest, exceed the
      maximum rate permitted to be charged under the laws of the States of New Jersey,
      New York, Delaware, North Carolina, the United States Virgin Islands or any
      other state or domestic or other jurisdiction in which either Maker or Payee
      may
      be located or may conduct business. Should Payee receive any payment that is
      or
      would be in excess of that permitted to be charged under such laws, such payment
      shall have been and shall be deemed to have been made in error and shall
      automatically be applied to reduce the Principal outstanding on this
      Note.

    

    11.  Maker’s
      Obligation to Prepay.

    

    If
      at
      anytime prior to the repayment of all of the Obligations Maker shall obtain
      financing of at least $500,000, whether in the form of equity or debt, (the
      “Financing”), Maker shall notify Payee of the date (the “Closing Date”) on which
      the Financing is to be closed (the “Closing”) no less than fifteen (15) business
      days prior to the Closing Date and shall prepay the Obligations at the Closing
      to the extent of the amount of the Financing. 

    

    12. Miscellaneous.

    

    (a) Effect
      of
      Forbearance. No forbearance, indulgence, delay or failure to exercise any right
      or remedy by Payee with respect to this Note shall operate as a waiver or as
      an
      acquiescence in any default.

    

    (b) Effect
      of
      Single or Partial Exercise of Right. No single or partial exercise of any right
      or remedy by Payee shall preclude any other or further exercise thereof or
      any
      exercise of any other right or remedy by Payee.

    

    (c) Governing
      Law; Waiver of Right to Jury Trial; Venue. This Note shall be construed and
      enforced in accordance with, and the rights of the parties shall be governed
      by,
      the internal laws of the jurisdiction to be determined by Payee applicable
      to
      contracts made and to be performed entirely within such jurisdiction. Maker
      hereby waives all right to trial by jury in any action, suit or proceeding
      brought to enforce or defend any rights or remedies under this Note, and agrees
      that any lawsuit brought to enforce or interpret the provisions of this Note
      shall be instituted in state or federal courts, as appropriate, in the
      jurisdiction to be determined by Payee, and Maker further agrees to submit
      to
      the personal jurisdiction of such court and waives
      any objection which it may have, based on improper venue, forum non conveniens
      or sufficiency of contact with the forum state, to the conduct of any proceeding
      in any such court and waives personal service of any and all process upon it,
      and consents that all such service of process be made by mail or messenger
      directed to it at the address set forth in Paragraph
      12(g)
      below
      and that service so made shall be deemed to be completed upon the earlier of
      actual receipt or three (3) days after the same shall have been posted to its
      address. Nothing contained in this Paragraph
      12(c)
      affects
      the right of Payee to serve legal process in any other manner permitted by
      law
      or affects the right of Payee to bring any action or proceeding against
Maker
      or
      its
      property in the courts of any other jurisdiction. 

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (d) Headings.
      The headings and captions of the various sections herein are for convenience
      of
      reference only and shall in no way modify any of the terms or provisions of
      this
      Note.

    

    (e) Loss,
      Theft, Destruction or Mutilation of Note. Upon receipt by Maker of evidence
      reasonably satisfactory to it of loss, theft, destruction or mutilation of
      this
      Note, Maker shall make and deliver or caused to be made and delivered to Payee
      a
      new Note of like tenor in lieu of this Note. 

    

    (f) Modification
      of Note or Waiver of Terms Thereof Relating to Payee. No modification or waiver
      of any of the provisions of this Note shall be effective unless in writing
      and
      signed by Payee and then only to the extent set forth in such writing, or shall
      any such modification or waiver be applicable except in the specific instance
      for which it is given. This Note may not be discharged orally but only in
      writing duly executed by Payee.

    

    (g) Notice.
      All offers, acceptances, notices, requests, demands and other communications
      under this Note shall be in writing and, except as otherwise provided herein,
      shall be deemed to have been given only when delivered in person, via nationally
      recognized overnight courier service, via facsimile transmission if receipt
      thereof is confirmed by the recipient, or, if mailed, when mailed by certified
      or registered mail prepaid, to the parties at their respective addresses first
      set forth above, or at such other address as may be given in writing in future
      by either party to the other. 

    

    (h) Transfer.
      This Note shall be transferable only on the books of Maker upon delivery thereof
      duly endorsed by Payee or by its duly authorized attorney or representative,
      or
      accompanied by proper evidence of succession, assignment, or authority to
      transfer. In all cases of transfer by an attorney, executor, administrator,
      guardian, or other legal representative, duly authenticated evidence of his
      authority shall be produced. Upon any registration of transfer, Maker shall
      deliver a new Note or Notes to the person entitled thereto. Notwithstanding
      the
      foregoing, Maker shall have no obligation to cause Notes to be transferred
      on
      its books to any person if, in the opinion of counsel to Maker, such transfer
      does not comply with the provisions of the Act and the rules and regulations
      thereunder.

     

    (i) Successors
      and Assigns. This Note shall be binding upon Maker, its successors, assigns
      and
      transferees, and shall inure to the benefit of and be enforceable by Payee
      and
      its successors and assigns.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    
      
        $400,000
          Convertible Unsecured Note 

        of
          Conversion
          Services International, Inc. 

        payable
          to TAG
          Virgin Islands, Inc.

        as
          agent
          dated June
          27,
          2007

      

    

     

    (j) Severability.
      If one or more of the provisions or portions of this Note shall be deemed by
      any
      court or quasi-judicial authority to be invalid, illegal or unenforceable in
      any
      respect, the invalidity, illegality or unenforceability of the remaining
      provisions, or portions of provisions contained herein shall not in any way
      be
      affected or impaired thereby.

    

    (k) Gender.
      The use herein of the masculine pronouns or similar terms shall be deemed to
      include the feminine and neuter genders as well and the use of the singular
      pronouns shall be deemed to include the plural as well.

    

    IN
      WITNESS WHEREOF, Maker has caused this Note to be executed on its behalf by
      an
      officer thereunto duly authorized as of the date set forth above.

    
      	 	 	 
	 	
              CONVERSION
                SERVICES INTERNATIONAL, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Scott Newman
	 	
              

              Name: Scott
                Newman

              Title: President
                and Chief Executive Officer

            
	 	 

    

    
      
        
        

      

      
        -13-Unassociated Document

    THIS
      WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD
      OR
      OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
      UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

    

    CONVERSION
      SERVICES INTERNATIONAL, INC.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    June
      27, 2007

    

    THIS
      COMMON STOCK PURCHASE WARRANT (this “Warrant”)
      of
      Conversion Services International, Inc., a corporation duly organized and
      validly existing under the laws of the State of Delaware (the “Company”),
      is
      issued to the Holder (as defined below).

    

    FOR
      VALUE
      RECEIVED, the Company hereby certifies that the registered holder hereof and
      its
      successors and assigns, TAG
      Virgin Islands, Inc., as agent
      (the
“Holder”)
      is
      entitled to purchase from the Company 1,333,333 duly authorized, validly issued,
      fully paid and nonassessable shares of common stock of the Company, par value
      $0.001 per share (the “Common
      Stock”),
      at a
      purchase price per share equal to $0.33, as may be adjusted pursuant to the
      anti-dilution provisions set forth herein (the “Warrant
      Price”).
      The
      person or entity in whose name this Warrant (or one or more predecessor
      Warrants) is registered on the records of the Company regarding registration
      and
      transfers of the Warrant (the “Warrant
      Register”)
      is the
      owner and holder thereof for all purposes, except as described in Section
      11
      hereof.

    

    1. Vesting
      of Warrant.
      This
      Warrant shall vest and become exercisable as of the date hereof.

    

    2.
       Expiration
      of Warrant.
      This
      Warrant shall expire on June 26, 2012 (the “Expiration
      Date”).

    

    3.
       Exercise
      of Warrant.
      This
      Warrant shall be exercisable pursuant to the terms of Section
      1
      and this
Section
      3
      hereof.

    

    3.1
      Manner
      of
      Exercise. This Warrant may only be exercised by the Holder hereof, in accordance
      with the terms and conditions hereof, in whole or in part with respect to any
      portion of the Warrant, into shares of Common Stock, during normal business
      hours on any day other than a Saturday or a Sunday or a day on which commercial
      banking institutions in New York, New York are authorized by law to be closed
      (a
“Business
      Day”)
      on or
      prior to the Expiration Date with respect to such portion of the Warrant, by
      surrender of this Warrant to the Company at its office maintained pursuant
      to
Section
      11.2(a)
      hereof,
      accompanied by an exercise notice in substantially the form attached to this
      Warrant as Exhibit
      A
      (or a
      reasonable facsimile thereof) duly executed by the Holder, together with the
      payment of the Warrant Price. Anything to the contrary not withstanding,
at
      any
      time that a Registration Statement under the Securities Act of 1933 (the
“Act”)
      covering the shares issuable upon exercise of this Warrant is not
      effective,
      the
      Holder shall have the right, at his election exercised in his sole discretion,
      to exercise the Warrant, in whole or in part, and, in lieu of making the cash
      payment otherwise contemplated to be made to the Company upon such exercise
      in
      payment of the Exercise Price, elect instead to receive upon such exercise
      the
      "Net Number" of shares of Common Stock determined according to the following
      formula (a "Cashless
      Exercise"):
      

     

    Net
      Number = (A x B) - (A x C)

    ---------------------

    B

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    For
      purposes of the foregoing formula: 

    

    A
      = the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B
      = the
      Closing Sale Price of the Common Stock on the trading day immediately preceding
      the date of the Exercise Notice. 

     

    C
      = the
      Warrant Exercise Price then in effect for the applicable Warrant Shares at
      the
      time of such exercise.

    

    3.2
        When
      Exercise Effective. Each exercise of this Warrant shall be deemed to have been
      effected immediately prior to the close of business on the Business Day on
      which
      this Warrant shall have been surrendered to the Company as provided in
Section
      3.1
      hereof,
      and, at such time, the corporation, association, partnership, organization,
      business, individual, government or political subdivision thereof or a
      governmental agency (a “Person”
or
      the
“Persons”)
      in
      whose name or names any certificate or certificates for shares of Common Stock
      shall be issuable upon exercise as provided in Section
      3.3
      hereof
      shall be deemed to have become the holder or holders of record thereof.

    

    3.3
        Delivery
      of Stock Certificates. As soon as practicable after each exercise of this
      Warrant, in whole or in part, and in any event within 15 Business Days
      thereafter, the Company at its expense (including the payment by it of any
      applicable issue taxes) will cause to be issued in the name of and delivered
      to
      the Holder hereof or, subject to Section
      10
      hereof,
      as the Holder (upon payment by the Holder of any applicable transfer taxes)
      may
      direct:

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (a)
      a
      certificate or certificates (with appropriate restrictive legends, as
      applicable) for the number of duly authorized, validly issued, fully paid and
      nonassessable shares of Common Stock to which the Holder shall be entitled
      upon
      exercise plus, in lieu of any fractional share to which the Holder would
      otherwise be entitled, all issuances of Common Stock shall be rounded up to
      the
      nearest whole share.

    

    (b)
      in
      case exercise is in part only, a new Warrant of like tenor, dated the date
      hereof and calling in the aggregate on the face thereof for the number of shares
      of Common Stock equal to the number of shares called for on the face of this
      Warrant minus the number of shares designated by the Holder upon exercise as
      provided in Section
      3.1
      hereof
      (without giving effect to any adjustment thereof).

    

    3.4  Company
      to Reaffirm Obligations. The Company will, at the time of each exercise of
      this
      Warrant, upon the written request of the Holder hereof, acknowledge in writing
      its continuing obligation to afford to the Holder all rights (including without
      limitation any rights to registration of the shares of Common Stock issued
      upon
      exercise) to which the Holder shall continue to be entitled after exercise
      in
      accordance with the terms of this Warrant; provided,
      however,
      that if
      the Holder shall fail to make a request, the failure shall not affect the
      continuing obligation of the Company to afford the rights to such
      Holder.

    

    4.
       Adjustment
      of Common Stock Issuable Upon Exercise.
      The
      Warrant Price shall be subject to be adjusted and re-adjusted from time to
      time
      as provided in this Section
      4
      and, as
      so adjusted or re-adjusted, shall remain in effect until a further adjustment
      or
      re-adjustment thereof is required by this Section
      4:

    

    4.1
        Stock
      Dividends; Stock Splits. In case the Company at any time or from time to time
      after the date hereof shall declare or pay any dividend or otherwise make a
      distribution or distributions on the Common Stock payable in Common Stock,
      or
      shall effect a subdivision of the outstanding shares of Common Stock into a
      greater number of shares of Common Stock (by reclassification or otherwise
      than
      by payment of a dividend in Common Stock), then, and in each case, subject
      to
Section
      4.3
      hereof,
      the Warrant Price shall be reduced, concurrently with the dividend or
      subdivision, to a price determined by multiplying the Warrant Price by a
      fraction:

    

    (a)
      the
      numerator of which shall be the number of shares of Common Stock outstanding
      immediately prior to the dividend or subdivision; and 

    

    (b)
      the
      denominator of which shall be the number of shares of Common Stock outstanding
      immediately after the dividend or subdivision.

    

       Additional
      shares of Common Stock shall be deemed to have been issued and to be outstanding
      (a) in the case of any dividend, immediately after the close of business on
      the
      record date for the determination of holders of any class of securities entitled
      to receive the dividend, or (b) in the case of any subdivision, at the close
      of
      business on the day immediately prior to the day upon which the corporate action
      becomes effective. Additional shares of Common Stock deemed to have been issued
      pursuant to this Section
      4.1
      shall be
      deemed to have been issued for no consideration.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    4.2 Subscription
      Offerings. In case the Company shall issue to stockholders or otherwise rights,
      options, or warrants entitling the holders thereof to subscribe for or purchase
      Common Stock (or securities convertible into or exchangeable for Common Stock)
      at a price per share (or having a conversion price per share, in the case of
      a
      security convertible into or exchangeable for Common Stock) less than the lower
      of the then Exercise Price or the Current Market Price per share (as defined
      in
Paragraph
      4.4
      below)
      on the record date for the determination of stockholders entitled to receive
      such rights, or otherwise on the granting date, as the case may be, then in
      each
      such case the Exercise Price shall be adjusted by multiplying the Exercise
      Price
      in effect immediately prior to such record or granting date, as the case may
      be,
      by a fraction, of which the numerator shall be the number of shares of Common
      Stock outstanding on such record or granting date plus the number of shares
      of
      Common Stock which the aggregate offering price of the total number of shares
      of
      Common Stock so to be offered (or the aggregate initial conversion price of
      the
      convertible securities so to be offered) would purchase at such Exercise Price
      or Current Market Price, as the case may be, and of which the denominator shall
      be the number of shares of Common Stock outstanding on such record or granting
      date plus the number of additional shares of Common Stock to be offered for
      subscription or purchase (or into which the convertible or exchangeable
      securities so to be offered are initially convertible or exchangeable). Such
      adjustment shall become effective at the close of business on such record date
      or granting date, as the case may be; provided,
      however,
      that,
      to the extent the shares of Common Stock (or securities convertible into or
      exchangeable for shares of Common Stock) are not delivered, the Exercise Price
      shall be readjusted after the expiration of such rights, options, or warrants
      (but only to the extent that the B Warrants are not exercised after such
      expiration), to the Exercise Price which would then be in effect had the
      adjustments made upon the issuance of such rights or warrants been made upon
      the
      basis of delivery of only the number of shares of Common Stock (or securities
      convertible into or exchangeable for shares of Common Stock) actually issued.
      In
      case any subscription price may be paid in a consideration part or all of which
      shall be in a form other than cash, the value of such consideration shall be
      as
      determined in good faith by the Company's Board of Directors. Shares of Common
      Stock owned by or held for the account of the Company or any majority-owned
      subsidiary shall not be deemed outstanding for the purpose of any such
      computation. 

    

    4.3 Other
      Rights to Acquire Common Stock. In case the Company shall distribute to all
      holders of its Common Stock evidences of its indebtedness or assets (excluding
      cash dividends or distributions paid from retained earnings of Maker) or rights
      or warrants to subscribe or purchase Common stock (excluding those referred
      to
      in Paragraph
      4.2
      above),
      then in each such case the Exercise Price shall be adjusted so that the same
      shall equal the price determined by multiplying the Exercise Price in effect
      immediately prior to the date of such distribution by a fraction of which the
      numerator shall be the Current Market Price per share (as defined in
Paragraph
      4.4
      below)
      of the Common Stock on the Record Date mentioned below less the then fair market
      value (as determined in good faith by the Board of Directors of the Company)
      of
      the portion of the assets or evidences of indebtedness so distributed or of
      such
      rights or warrants applicable to one share of Common Stock, and the denominator
      shall be the Current Market Price per share of the Common Stock. Such adjustment
      shall become effective immediately after the Record Date for the determination
      of shareholders entitled to receive such distribution. 

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    4.4  Current
      Market Price. For the purpose of any computation under Paragraph
      4.2 and 3
      of this
Section
      4,
      the
Current
      Market Price
      per
      share of Common Stock on any date shall be deemed to be the average of the
      daily
      closing prices for the 30 consecutive trading days commencing 45 trading days
      before such date. The closing price for each day shall be the last reported
      sales price regular way or, in case no such reported sale takes place on such
      day, the closing bid price regular way, in either case on the principal national
      securities exchange on which the Common Stock is listed or admitted to trading
      or, if the Common Stock is not listed or admitted to trading on any national
      securities exchange, the highest reported bid price as furnished by the National
      Association of Securities Dealers, Inc. through NASDAQ or similar organization
      if NASDAQ is no longer reporting such information, or by the Pink Sheets, LLC
      or
      similar organization if the Common Stock is not then quoted on an inter-dealer
      quotation system. If on any such date the Common Stock is not quoted by any
      such
      organization, the fair value of the Common Stock on such date, as determined
      in
      good faith by the Company's Board of Directors, shall be used.

    

    4.5  Adjustments
      for Combinations. In case the outstanding shares of Common Stock shall be
      combined or consolidated, by reclassification or otherwise, into a lesser number
      of shares of Common Stock, the Warrant Price in effect immediately prior to
      the
      combination or consolidation shall, concurrently with the effectiveness of
      such
      combination or consolidation, be proportionately increased. Adjustment under
      this Section
      4.5
      shall
      become effective at the close of business on the day immediately prior to the
      day upon which the corporate action becomes effective.

    

    4.6
        Minimum
      Adjustment of Warrant Price. If the amount of any adjustment of the Warrant
      Price required pursuant to this Section
      4
      would be
      less than one percent (1%) of the Warrant Price in effect at the time of the
      adjustment is otherwise so required to be made, the amount shall be carried
      forward and adjustment with respect thereto made at the time of and together
      with any subsequent adjustment which, together with the amount and any other
      amount or amounts so carried forward, shall aggregate at least one percent
      (1%)
      of the Warrant Price.

    

    5.  Adjustments
      for Consolidation, Merger, Sale of Assets or Reorganization.
      In case
      the Company after the date hereof (a) shall consolidate with or merge into
      any
      other Person and shall not be the continuing or surviving corporation following
      the consolidation or merger, or (b) shall permit any other Person to consolidate
      with or merge into the Company and the Company shall be the continuing or
      surviving Person but, in connection with the consolidation or merger, the Common
      Stock shall be changed into or exchanged for stock or other securities of any
      other Person or cash or any other property, or (c) shall transfer all or
      substantially all of its properties or assets to any other Person, or (d) shall
      effect a capital reorganization or reclassification of the Common Stock, then,
      and in the case of each such transaction, proper provision shall be made so
      that, upon the basis and the terms and in the manner provided in this Warrant,
      the Holder, upon the exercise hereof at any time after the consummation of
      the
      transaction, shall be entitled to receive (at the aggregate Warrant Price in
      effect at the time of such consummation for all Common Stock issuable upon
      exercise immediately prior to the consummation), in lieu of the Common Stock
      issuable upon exercise prior to the consummation, the greatest amount of
      securities, cash or other property to which the Holder would actually have
      been
      entitled as a stockholder upon such consummation if the Holder had exercised
      the
      rights represented by this Warrant immediately prior thereto, subject to
      adjustments (subsequent to the consummation) as nearly equivalent as possible
      to
      the adjustments provided for in Sections
      4
      and
5
      hereof.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    6.
       No
      Dilution or Impairment.

    

    6.1  The
      Company will not, by amendment of its certificate of incorporation or through
      any consolidation, merger, reorganization, transfer of assets, 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 Warrant, but
      will at all times in good faith assist in the carrying out of all of the terms
      and in the taking of all actions necessary or appropriate in order to protect
      the rights of the Holder. Without limiting the generality of the foregoing,
      the
      Company (a) will not permit the par value of any shares of Common Stock
      receivable upon the exercise of this Warrant to exceed the amount payable
      therefor upon exercise, (b) will take all actions necessary or appropriate
      in
      order that the Company may validly and legally issue fully paid and
      nonassessable shares of Common Stock on the exercise of the Warrant and (c)
      will
      not take any action which results in any adjustment of the Warrant Price if
      the
      total number of shares of Common Stock issuable after the action upon the
      exercise of the Warrant would exceed the total number of shares of Common Stock
      then authorized by the Company's certificate of incorporation and available
      for
      the purpose of issuance upon exercise.

    

    6.2  The
      Company acknowledges that its obligation to issue shares of Common Stock
      issuable upon exercise of this Warrant is binding upon it and enforceable
      regardless of the dilution that such issuance may have on the ownership
      interests of other stockholders.

    

    7.
       Chief
      Financial Officer’s Report as to Adjustments.
      In the
      case of any adjustment or re-adjustment in the shares of Common Stock issuable
      upon the exercise of this Warrant, the Company at its expense will promptly
      compute the adjustment or re-adjustment in accordance with the terms of this
      Warrant and cause its Chief Financial Officer to certify the computation (other
      than any computation of the fair value of property as determined in good faith
      by the Board of Directors of the Company) and prepare a report setting forth
      the
      adjustment or re-adjustment and showing in reasonable detail the method of
      calculation thereof and the facts upon which the adjustment or re-adjustment
      is
      based, including a statement of (a) the number of shares of Common Stock
      outstanding or deemed to be outstanding and (b) the Warrant Price in effect
      immediately prior to the deemed issuance or sale and as adjusted and re-adjusted
      (if required by Section
      4
      hereof)
      on account thereof. The Company will forthwith mail a copy of each report to
      each holder of a Warrant and will, upon the written request at any time of
      any
      holder of a Warrant, furnish to the holder a like report setting forth the
      Warrant Price at the time in effect and showing in reasonable detail how it
      was
      calculated. The Company will also keep copies of all reports at its office
      maintained pursuant to Section
      11.2(a)
      hereof
      and will cause them to be available for inspection at the office during normal
      business hours upon reasonable notice by any holder of a Warrant or any
      prospective purchaser of a Warrant designated by the holder
      thereof.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    8. Reservation
      of Shares.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of Common Stock, free from all taxes, liens and charges with
      respect to the issue thereof and not be subject to preemptive rights or other
      similar rights of stockholders of the Company, solely for the purpose of
      effecting the exercise of this Warrant, such number of its shares of Common
      Stock as shall from time to time be sufficient to effect the exercise thereof,
      and if at any time the number of authorized but unissued shares of Common Stock
      shall not be sufficient to effect the exercise of this Warrant, in addition
      to
      such other remedies as shall be available to Holder, the Company will take
      such
      corporate action as may, in the opinion of its counsel, be necessary to increase
      the number of authorized but unissued shares of Common Stock to such number
      of
      shares as shall be sufficient for such purposes, including without limitation,
      using its best efforts to obtain the requisite stockholder approval necessary
      to
      increase the number of authorized shares of the Company’s Common Stock. All
      shares of Common Stock issuable upon exercise of the Warrant shall be duly
      authorized and, when issued upon exercise, shall be validly issued and, in
      the
      case of shares, fully paid and nonassessable.

    

    9. Listing.
      The
      Company shall at all times comply in all respects with the Company’s reporting,
      filing and other obligations under the by-laws or rules of the upon each
      national securities exchange or automated quotation system upon which shares
      of
      Common Stock are then listed and shall list the shares issuable upon the
      exercise of this Warrant on such national securities exchange.

    

    10.
       Restrictions
      on Transfer.

    

    10.1
       Restrictive
      Legends. This Warrant and each Warrant issued upon transfer or in substitution
      for this Warrant pursuant to Section
      11,
      each
      certificate for Common Stock issued upon the exercise of any Warrant and each
      certificate issued upon the transfer of any such Common Stock shall be
      transferable only upon satisfaction of the conditions specified in this
Section
      10.
      Each of
      the foregoing securities shall be stamped or otherwise imprinted with a legend
      reflecting the restrictions on transfer set forth in this Section
      10
      and any
      restrictions required under the Act.

    

    10.2 Notice
      of
      Proposed Transfer; Opinion of Counsel. Prior to any transfer of any securities
      that are not registered under an effective registration statement under the
      Act
      (“Restricted
      Securities”),
      the
      Holder will give written notice to the Company of the Holder's intention to
      affect a transfer and to comply in all other respects with this Section
      10.2.
      Each
      notice (a) shall describe the manner and circumstances of the proposed transfer,
      and (b) shall designate counsel for the Holder giving the notice (who may be
      in-house counsel for the Holder). The Holder giving notice will submit a copy
      thereof to the counsel designated in the notice. The following provisions shall
      then apply:

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (i)
      If in
      the opinion of counsel for the Holder reasonably satisfactory to the Company
      the
      proposed transfer (i.e. private sale of Restricted Securities) may be effected
      without registration of Restricted Securities under the Act (which opinion
      shall
      state the basis of the legal conclusions reached therein), the Holder shall
      thereupon be entitled to transfer the Restricted Securities in accordance with
      the terms of the notice delivered by the Holder to the Company. Each certificate
      representing the Restricted Securities issued upon or in connection with any
      transfer shall bear the restrictive legends required by Section
      10.1
      hereof.

    

    (ii)
      If
      the opinion called for in (i) above is not delivered, the Holder shall not
      be
      entitled to transfer the Restricted Securities until either (x) receipt by
      the
      Company of a further notice from such Holder pursuant to the foregoing
      provisions of this Section
      10.2
      and
      fulfillment of the provisions of clause (i) above, or (y) such Restricted
      Securities have been effectively registered under the Act.

     

       10.3
       Termination
      of Restrictions. The restrictions imposed by this Section
      10
      upon the
      transferability of Restricted Securities shall cease and terminate as to any
      particular Restricted Securities: (a) which Restricted Securities shall have
      been effectively registered under the Act, or (b) when, in the opinions of
      both
      counsel for the holder thereof and counsel for the Company, which opinion shall
      not be unreasonably withheld, such restrictions are no longer required in order
      to insure compliance with the Act or this Section
      10.
      Whenever such restrictions shall cease and terminate as to any Restricted
      Securities, the Holder thereof shall be entitled to receive from the Company,
      without expense (other than applicable transfer taxes, if any), new securities
      of like tenor not bearing the applicable legends required by Section
      10.1
      hereof.

    

    11.
       Ownership,
      Transfer and Substitution of Warrant.

    

       11.1
       Ownership
      of Warrant. The Company may treat the person in whose name this Warrant is
      registered to in the Warrant Register maintained pursuant to Section
      11.2(a)
      hereof
      as the owner and holder thereof for all purposes, notwithstanding any notice
      to
      the contrary, except that, if and when any Warrant is properly assigned by
      a
      notice in substantially the form attached to this Warrant as Exhibit
      B
      (or a
      reasonable facsimile thereof) duly executed by the Holder in blank, the Company
      shall treat the bearer thereof as the owner of such Warrant for all purposes,
      notwithstanding any notice to the contrary. Subject to Section
      10
      hereof,
      this Warrant, if properly assigned, may be exercised by a new holder without
      a
      new Warrant first having been issued.

    

    11.2
       Office;
      Transfer and Exchange of Warrant.

    

    (a)
      The
      Company will maintain an office (which may be an agency maintained at a bank)
      at
      100 Eagle Rock Avenue, East Hanover, New Jersey 07936 (until the Company
      notifies the Holder of any change of location of the office) where notices,
      presentations and demands in respect of this Warrant may be made upon
      it.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (b)
      The
      Company shall cause to be kept at its office maintained pursuant to Section
      11.2(a)
      hereof a
      Warrant Register for the registration and transfer of the Warrant. The names
      and
      addresses of holders of the Warrant, the transfers thereof and the names and
      addresses of transferees of the Warrant shall be registered in such Warrant
      Register. The Person in whose name any Warrant shall be so registered shall
      be
      deemed and treated as the owner and holder thereof for all purposes of this
      Warrant, and the Company shall not be affected by any notice or knowledge to
      the
      contrary.

    

    (c)
      Upon
      the surrender of this Warrant, properly endorsed, for registration of transfer
      or for exchange at the office of the Company maintained pursuant to Section
      11.2(a)
      hereof,
      the Company at its expense will (subject to compliance with Section
      10
      hereof,
      if applicable) execute and deliver to or upon the order of the Holder thereof
      a
      new Warrant of like tenor, in the name of such holder or as such holder (upon
      payment by such holder of any applicable transfer taxes) may direct, calling
      in
      the aggregate on the face thereof for the number of shares of Common Stock
      called for on the face of the Warrant so surrendered.

    

    11.3
       Replacement
      of Warrant. Upon receipt of evidence reasonably satisfactory to the Company
      of
      the loss, theft, destruction or mutilation of the Warrant and, in the case
      of
      any such loss, theft or destruction of the Warrant, upon delivery of indemnity
      reasonably satisfactory to the Company in form and amount or, in the case of
      any
      mutilation, upon surrender of the Warrant for cancellation at the office of
      the
      Company maintained pursuant to Section
      11.2(a)
      hereof,
      the Company at its expense will execute and deliver, in lieu thereof, a new
      Warrant of like tenor and dated the date hereof.

    

    12.
       No
      Rights or Liabilities as Stockholder.
      Except
      as
      may otherwise be provided herein, no Holder shall be entitled to vote or receive
      dividends or be deemed the holder of any shares of Common Stock or any other
      securities of the Company which may at any time be issuable on the exercise
      hereof for any purpose, nor shall anything contained herein be construed to
      confer upon the Holder, as such, any of the rights of a stockholder of the
      Company or any right to vote for the election of directors or upon any matter
      submitted to stockholders at any meeting thereof, or to give or withhold consent
      to any corporate action (whether upon any recapitalization, issuance of stock,
      reclassification of stock, change of par value, consolidation, merger,
      conveyance, or otherwise) or to receive notice of meetings, or to receive
      dividends or subscription rights or otherwise until the Warrant shall have
      been
      exercised and the shares of Common Stock purchasable upon the exercise hereof
      shall have become deliverable, as provided herein. The Holder will not be
      entitled to share in the assets of the Company in the event of liquidation,
      dissolution or the winding up of the Company.

    

    13.
       Notices.
      Any
      notice or other communication in connection with this Warrant shall be deemed
      to
      be given if in writing (or in the form of a facsimile) addressed as hereinafter
      provided and actually delivered at such address: (a) if to any Holder, at the
      registered address of such holder as set forth in the Warrant Register kept
      at
      the office of the Company maintained pursuant to Section
      11.2(a)
      hereof,
      or (b)
      if to
      the Company, to the attention of its Chief Financial Officer at its office
      maintained pursuant to Section
      11.2(a)
      hereof;
provided,
      however,
      that
      the exercise of any Warrant shall be effective in the manner provided in
Section
      3
      hereof.

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    14. Payment
      of Taxes.
      The
      Company will pay all documentary stamp taxes attributable to the issuance of
      shares of Common Stock underlying this Warrant upon exercise of this Warrant;
      provided,
      however,
      that
      the Company shall not be required to pay any tax which may be payable in respect
      of any transfer involved in the registration of any certificate for shares
      of
      Common Stock underlying this Warrant in a name other that of the Holder. The
      Holder is responsible for all other tax liability that may arise as a result
      of
      holding or transferring this Warrant or receiving shares of Common Stock
      underlying this Warrant upon exercise hereof.

    

    15. Warrant
      Agent.
      The
      Company shall serve as warrant agent under this Warrant. Upon thirty (30) days
      notice to the Holder, the Company may appoint a new warrant agent. Any
      corporation into which the Company or any new warrant agent may be merged or
      any
      corporation resulting from any consolidation to which the Company or any new
      warrant agent shall be a party or any corporation to which the Company or any
      new warrant agent transfers substantially all of its corporate trust or
      stockholders services business shall be successor warrant agent under this
      Warrant without any further act. Any such successor warrant agent shall promptly
      cause notice of its succession as warrant agent to be mailed (by first class
      mail, postage prepaid) to the Holder at the Holder’s last address as shown on
      the Warrant Register.

    

    16. Miscellaneous.
      This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of the change, waiver, discharge or termination is sought. This Warrant shall
      be
      construed and enforced in accordance with and governed by the laws of the State
      of Delaware. The section headings in this Warrant are for purposes of
      convenience only and shall not constitute a part hereof.

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant
      to be
      duly executed as of the date first above written.

    
      	 	 	 
	 	CONVERSION
              SERVICES INTERNATIONAL, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Scott Newman
	 	
              

              Name:
                 Scott
                Newman

              Title:
                 President
                and Chief Executive Officer

            
	 	 

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    FORM
      OF
      EXERCISE NOTICE

    

    [To
      be
      executed only upon conversion of Warrant]

    

    

    To
      CONVERSION SERVICES INTERNATIONAL, INC.:

    

    The
      undersigned registered holder of the within Warrant hereby irrevocably exercises
      the Warrant pursuant to Section
      3.1
      of the
      Warrant with respect to __________(1) shares of the Common Stock, at an exercise
      price per share of Common Stock of $____, which the holder would be entitled
      to
      receive upon the cash exercise hereof, and requests that the certificates for
      the shares be issued in the name of, and delivered to, whose address
      is:

    

    

    
      Dated:
        _______________ 

      

      

      
        	 	
              
	 	Print or Type Name
	 	 
	 	 
	 	(Signature must conform in all respects
                to
                name of holder as specified on the face of Warrant)
	 	 
	 	 
	 	 (Street
                Address)
	 	 
	 	 
	 	 (City)       
                   (State)      
                    (Zip Code)

      

      
 

    

    _______________________

    (1)
      Insert here the number of shares called for on the face of this Warrant (or,
      in
      the case of a partial exercise, the portion thereof as to which this Warrant
      is
      being exercised), in either case without making any adjustment of shares of
      Common Stock or any other stock or other securities or property or cash which,
      pursuant to the adjustment provisions of this Warrant, may be delivered upon
      exercise. In the case of a partial exercise, a new Warrant or Warrants will
      be
      issued and delivered, representing the unconverted portion of the Warrant,
      to
      the holder surrendering the Warrant.

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    FORM
      OF
      ASSIGNMENT

    

    [To
      be
      executed only upon transfer of Warrant]

    

    For
      value
      received, the undersigned registered holder of the within Warrant hereby sells,
      assigns and transfers unto _____________________ the right represented by the
      Warrant to purchase __________(1) shares of Common Stock of CONVERSION SERVICES
      INTERNATIONAL, INC. to which the Warrant relates, and appoints
      _____________________ Attorney to make such transfer on the books of CONVERSION
      SERVICES INTERNATIONAL, INC. maintained for the purpose, with full power of
      substitution in the premises.

    

    

    
      

      
        	Date: 
                ____________________	 	
              
	 	 	Print or Type Name
	 	 	 
	 	 	 
	 	 	(Signature must conform in all respects to name of
                holder
                as specified on the face of Warrant)
	 	 	 
	 	 	 
	 	 	 (Street Address)
	 	 	 
	 	 	 
	 	 	 (City)       
                   (State)      
                    (Zip Code)    
	 	 	 
	Signed in the presence of:	 	 

      

      
        	
              	 	
              
	 	 	(Signature of Transferee)
	 	 	 
	 	 	 
	 	 	 (Street Address)
	 	 	 
	 	 	 
	 	 	 (City)       
                   (State)      
                    (Zip Code)    
	 	 	 
	Signed in the presence of:	 	 

    

    

    _______________________

    (1)
      Insert here the number of shares called for on the face of this Warrant (or,
      in
      the case of a partial exercise, the portion thereof as to which this Warrant
      is
      being exercised), in either case without making any adjustment of shares of
      Common Stock or any other stock or other securities or property or cash which,
      pursuant to the adjustment provisions of this Warrant, may be delivered upon
      exercise. In the case of a partial exercise, a new Warrant or Warrants will
      be
      issued and delivered, representing the unexercised portion of the Warrant,
      to
      the holder surrendering the Warrant.

     

     

    
      
        
        

      

      
        -13-

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