Document:

Lithium Exploration Group, Inc. - Exhibit 4.01 - Filed by newsfilecorp.com

Schedule “A” 

LITHIUM EXPLORATION GROUP. 

CERTIFICATE OF DESIGNATIONS OF PREFERENCES, 

RIGHTS AND LIMITATIONS 

OF 

SERIES B CONVERTIBLE PREFERRED STOCK 

     I, Alexander Walsh, Chief
Executive Officer of Lithium Exploration Group, Inc. , a Nevada corporation
(hereinafter called the "Corporation"), pursuant to the provisions of Section
78.1955of the Nevada General Corporation Law, hereby make this Certificate of
Designation under the corporate seal of the Corporation and hereby state and
certifies that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Articles of Incorporation, the Board of
Directors duly adopted the following resolutions on January 4, 2014: 

     RESOLVED, that pursuant to the
authority vested in the Board of Directors in accordance with the provisions of
the Corporation’s Articles of Incorporation, the Board hereby authorizes the
designation of Two Million (2,000,000) shares of a new series of preferred stock
entitled Series B Convertible Preferred Stock (the “Series B Preferred
Shares”) with which series shall have the following designations, powers,
preferences and relative and other special rights and the following
qualifications, limitations and restrictions: 

	1.1 	
      Designation and Rank.

	 	 
		
      1.1.1        The
      Series B Preferred Stock shall rank senior to the Corporation’s common
      stock, par value $0.001 per share (the "Common Stock"), and to all
      other classes and series of equity securities of the Corporation which by
      their terms do not rank senior to the Series B Preferred Stock ("Junior
      Stock"). The Series B Preferred Stock shall be subordinate to and rank
      junior to all indebtedness of the Corporation now or hereafter
      outstanding.

	 	 
		
      1.1.2        The
      Series B Preferred Shares shall be issuable only in consideration of the
      extinguishment of existing debt convertible into the Corporation's class A
      common stock, par value $0.001 per share (the "Common Stock")on the
      basis of 1 Series B Preferred Share for each $1 of such convertible debt.
      It is the Corporation‘s expectation that, for the purposes of Rule 144
      promulgated under the Securities Act of 1933, any Common Stock issued
      pursuant to the conversion of Series B Preferred Shares (including but not
      limited stock converted pursuant to original issue Series B Preferred
      Shares, or pursuant to Series B Preferred Shares subsequently issued
      pursuant to any penalty or returned conversion amounts hereunder) will
      tack back to the original date of the applicable convertible debt
      instrument extinguished in consideration of the Series B Preferred
      Shares.

	 	 
		
      1.1.3        The
      "Conversion Price" of the Series B Preferred Shares shall be the
      lower of 50% of the lowest reported sale price of the common stock for the
      20 trading days immediately prior to (i) the closing date of the
      applicable convertible debt instrument of the Corporation from which the
      applicable Series B Preferred Shares were converted, or (ii) 50 % of the
      lowest reported sale price for the 20 days prior the conversion date of
      the Series B Preferred Shares.

1.2        Conversion.
A holder, a holder of Series B Preferred Shares (collectively, the
"Holders" and each a "Holder") shall have the right, at such
Holder's option, to convert the Series B Preferred Shares into shares of the
Corporation's class A common stock, par value $0.001 per share (the "Common
Stock") (as converted, the "Conversion Shares"), on the following
terms and conditions: 

1.3        Conversion
Rights and Cashless Exercise. The Holder will have the right at its election
at any time, to convert all or part of the Series B Preferred Shares into fully
paid and non-assessable shares of common stock of Lithium Exploration Group,
Inc. (as such stock exists on the date of designation of the Series B Preferred
Shares, or any shares of capital stock of the Corporation into which such stock
is hereafter changed or reclassified, the "Common Stock") as per the Conversion
Formula set forth in Section 2.2. Any such conversion shall be cashless, and
shall not require further payment from Holder. Unless otherwise agreed in
writing by both the Corporation and the Holder, at no time will the Holder
convert any amount of the Series B Preferred Shares into common stock that would
result in the Holder owning more than 4.99% of the common stock outstanding of
the Corporation, as calculated in accordance with sections 13(d) and 13(g) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act’) Shares from
any such conversion will be delivered to Holder (in any name directed by Holder)
by 2:30pm EST within 3 (three) business days of conversion notice delivery (see
3.1) by “DWAC/FAST” electronic transfer. 

1.4.        Conversion
Formula. The number of shares issued through conversion is the conversion
amount divided by the conversion price, as illustrated below. The Holder and the
Corporation shall maintain records showing the principal amount(s) converted and
the date of such conversion(s). If no objection is delivered from the
Corporation to Holder regarding any variable or calculation of the conversion
notice within 24 (twenty-four) hours of delivery of the conversion notice in
substantially the form attached hereto as Exhibit A (the “Notice of
Conversion”), the Corporation shall have been thereafter deemed to have
irrevocably confirmed and irrevocably ratified such Notice of Conversion and
waive any objection thereto. The Corporation acknowledges and agrees that,
absent a duly delivered objection notice as required above, the Holder shall
materially rely on the confirmation and ratification of the conversion price
and, notwithstanding subsequent information to the contrary that such
computation was made in error, such deemed conversion price shall thereafter be
the conversion price for purposes of such conversion. 

# Shares = Conversion Amount (Number of Series B
Preferred Shares Tendered for Conversion) 
Conversion
Price                                                                                            

1.5        Reservation of
Shares. As of the issuance date of the Series B Preferred Shares and for the
remaining period during which the conversion right exists, the Corporation will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
the Series B Preferred Shares. The issuance of any Series B Preferred Shares
constitutes full authority to the officers, agents and transfer agents who are
charged with the duty of executing and issuing shares to execute and issue the
necessary shares of Common Stock upon the conversion of the Series B Preferred
Shares. 

1.6        Delivery of
Conversion Shares. Shares from any such conversion will be delivered to
Holder by 2:30pm EST within 3 (three) business days of conversion notice
delivery (see 3.1) by “DWAC/FAST” electronic transfer (such date, the “Share
Delivery Date”). For example, if Holder delivers a conversion notice to the
Corporation at 5:15 pm eastern time on Monday January 1st, the
Corporation ‘s transfer agent must deliver shares to Holder’s broker via
“DWAC/FAST” electronic transfer by no later than 2:30 pm eastern time on
Thursday January 4th. If those shares are not delivered in accordance with this
timeframe stated in this Section 2.6, Holder, at any time prior to selling those
shares (in whole or in part), may rescind that particular conversion (in whole
or in part) and have the conversion amount (in whole or in part) returned to the
balance of Series B Preferred Shares with the conversion shares (in whole or in
part) returned to the Corporation. The Corporation will make its best
efforts to deliver shares to Holder same day / next day. 

1.6.1 Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder (including
election to pursue its rights under this Section 2.6 and subsections), at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Corporation‘s failure to timely deliver
shares of Common Stock upon conversion of the Series B Preferred Shares as
required pursuant to the terms hereof. 

1.6.2 Conversion Delay
Penalties. Holder may assess, at its election, penalties or liquidated
damages (both referred to herein as “penalties”) as follows. 

1.6.2. A. For each conversion, the
Corporation agrees to deliver share issuance instructions to its transfer agent
same day or next day. In the event that the share issuance instructions are not
delivered to the Corporation‘s transfer agent by the next day, a penalty of
2,000 Series B Preferred Shares per day will be assessed for each day until
share issuance instructions are delivered to the transfer agent (2,000 Series B
Preferred Shares per day inclusive of the day of conversion); and such
additional Series B Preferred Shares will be promptly issued to the Holder
thereafter. 

1.6.2. B. For each conversion, in the
event that shares are not delivered by the third business day (inclusive of the
day of conversion), a penalty of 2,000 Series B Preferred Shares per day will be
assessed for each day after the third business day (inclusive of the day of the
conversion) until share delivery is made; and such additional Series B Preferred
Shares will be promptly issued to the Holder thereafter. The Corporation will
not be subjected to any penalties once its transfer agent processes the shares
to the DWAC system. 

1.6.3 If failure to deliver Conversion
Shares occurs as follows, the Holder may elect to enforce one or more of these
remedies at its sole election. 

1.6.3. A. In addition to any other
rights available to the Holder, if the Corporation fails to cause its transfer
agent to transmit to the Holder the shares on or before the Share Delivery Date,
and if after such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise) or if the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the shares which the Holder anticipated receiving upon such
conversion (a “Buy-In”), then the Corporation shall (A) pay in cash to
the Holder the amount, if any, by which (x) the Holder’s total purchase price
(including brokerage commissions and other fees, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Shares that the Corporation was required to deliver to the Holder in
connection with the conversion at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either (x) reinstate the portion of the Series B Preferred
Shares and equivalent number of shares for which such conversion was not honored
(in which case such conversion shall be deemed rescinded), (y) deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Corporation timely complied with its conversion and delivery obligations
hereunder, or (z) pay in cash to the Holder the amount obtained by multiplying
(1) the number of Shares that the Corporation was required to deliver to the
Holder in connection with the conversion at issue times (2) the price at which
the sell order giving rise to such purchase obligation was executed. The Holder
shall provide the Corporation written notice indicating the amounts payable to
the Holder in respect of the Buy-In and, upon request of the Corporation,
evidence of the amount of such loss. 

1.6.3. B. If the Corporation fails for
any reason to deliver to the Holder the Shares by DWAC/FAST electronic transfer
(such as by delivering a physical stock certificate) and if the Holder incurs a
Market Price Loss, then at any time subsequent to incurring the loss the Holder
may provide the Corporation written notice indicating the amounts payable to the
Holder in respect of the Market Price Loss and the Corporation must make the
Holder whole by either of the following options at Holder’s election: 

Market Price Loss = [(VWAP on the day
of conversion) x (Number of shares receivable from the conversion)] – [(Sales
price realized by Holder) x (Number of shares receivable from the conversion)].

Option A – Pay Market Price Loss in
Cash. The Corporation must pay the Market Price Loss by cash payment, and any
such cash payment must be made by the third business day from the time of the
Holder’s written notice to the Corporation. 

Option B – Add Market Price Loss to
Principal Sum. The Corporation must pay the Market Price Loss by converting the
Market Price Loss into Series B Preferred Shares at the rate of $1 per Series B
Preferred Share and promptly issuing said Series B Preferred Shares to the
Holder.

1.6.3. C. If the Corporation fails for
any reason to deliver to the Holder the Shares within 2 (two) business days of
the Share Delivery Date and if the Holder incurs a Failure to Deliver Loss, then
at any time subsequent to incurring the loss the Holder may provide the
Corporation written notice indicating the amounts payable to the Holder in
respect of the Failure to Deliver Loss and the Corporation must make the Holder
whole as follows: 

Failure to Deliver Loss = [(High trade
price at any time on or after the day of conversion) x (Number of shares
receivable from the conversion)]. 

The Corporation must pay the Failure
to Deliver Loss by cash payment, and any such cash payment must be made by the
third business day from the time of the Holder’s written notice to the
Corporation. 

2.1        Par value.
The Series B Preferred Shares shall have a par value of $.001 per share. 

2.2        Dividends
and Distributions. Holders of Series B Preferred Shares will be entitled to
cash dividends as declared by the Board of Directors on the Common Stock on an
as-converted basis with the Common Stock. If the Corporation shall declare or
pay to the holders of the Common Stock a dividend or other distribution payable
in shares of Common Stock or any other security convertible into or exchangeable
for shares of Common Stock, each Holder shall be entitled to receive the number
of shares of Common Stock or other securities convertible into or exchangeable
for shares of Common Stock, as applicable, which such Holder would have owned or
been entitled to receive after the declaration and payment of such dividend or
other distribution as if the Series B Preferred Shares then held by such Holder
had been immediately prior to the record date for the determination of
stockholders entitled to receive such dividend or other distribution. 

2.3        Other Dilutive
Events. In case any event shall occur as to which the provisions of this
Section 2(d) are not strictly applicable or if strictly applicable would not
fairly protect the conversion rights of the Holder in accordance with the
essential intent and principles of this Section 2.3, then, in each such case,
the Board of Directors of the Corporation shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to preserve, without dilution, the conversion rights
represented by this Section 2. 

2.4        No Dilution or
Impairment. The Corporation shall not, by amendment of its articles of
incorporation or through any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Certificate of
Designations, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holders against dilution or
other impairment. Without limiting the generality of the foregoing, the
Corporation (A) shall take all such action as may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock, free from all taxes, liens, security
interests, encumbrances, preemptive rights and charges on the conversion of the
Series B Preferred Shares, (B) shall not take any action which results in any
adjustment of the number of shares of Common Stock issuable upon conversion of
Series B Preferred Shares if the total number of shares of Common Stock issuable
after the action upon the conversion of the Series B Preferred Shares would
exceed the total number of shares of Common Stock then authorized by the
Corporation's articles of incorporation and available for the purpose of issue
upon such exercise, (C) shall not permit the par value of any shares of stock
receivable upon the conversion of the Series B Preferred Shares to exceed the
amount payable therefor upon such exercise, and (D) shall not issue any capital
stock of any class which, as to the Holders, is preferred as to the distribution
of assets upon voluntary or involuntary dissolution, liquidation or winding-up.

2.5        Notices.
The Corporation will give written notice to each Holder with respect to any
matter on which holders of Common Stock are entitled to written notice on
an-converted basis with the Common Stock. Any notice required or permitted
hereunder must be in writing and either personally served, sent by facsimile or
email transmission, or sent by overnight courier. Notices will be
deemed effectively delivered at the time of transmission if by facsimile or
email, and if by overnight courier the business day after such notice is
deposited with the courier service for delivery. 

2.6        Record
Holder. The Person or Persons entitled to receive the shares of Common Stock
issuable upon a conversion of Series B Preferred Shares shall be treated for all
purposes as the record Holder or Holders of such shares of Common Stock on the
Conversion Date. "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof. 

2.7       
Book-Entry. Notwithstanding anything to the contrary set forth herein,
upon conversion of the Series B Preferred Shares in accordance with the terms
hereof, the Holder thereof shall not be required to physically surrender the
certificate representing the Series B Preferred Shares to the Corporation unless
the full number of Series B Preferred Shares represented by the certificate are
being converted. The Holder and the Corporation shall maintain records showing
the number of Series B Preferred Shares so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to the
Holder and the Corporation, so as not to require physical surrender of the
certificate representing the Series B Preferred Shares upon each such
conversion. In the event of any dispute or discrepancy, the Conversion Notices
and the Receipt Confirmations shall be controlling and determinative (in the
absence of manifest error) in establishing the number of Series B Preferred
Shares to which the record holder is entitled. Notwithstanding the foregoing, if
Series B Preferred Shares represented by a certificate are converted as
aforesaid, the Holder may not transfer the certificate representing the Series B
Preferred Shares unless the holder first physically surrenders the certificate
representing the Series B Preferred Shares to the Corporation, whereupon the
Corporation will forthwith issue and deliver upon the order of the Holder a new
certificate of like tenor, registered as the Holder may request, representing in
the aggregate the remaining number of Series B Preferred Shares represented by
such certificate. The Holder and any assignee, by acceptance of a certificate,
acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of any Series B Preferred Shares, the number of Series B
Preferred Shares represented by such certificate may be less than the number of
Series B Preferred Shares stated on the face thereof. 

2.8        Fractional
Shares. The Corporation shall not issue any fraction of a share of Common
Stock upon any conversion. All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one Series B Preferred Share by a
Holder shall be aggregated for purposes of determining whether the conversion
would result in the issuance of a fraction of a share of Common Stock. If, after
the aforementioned aggregation, the issuance would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall round such fraction
of a share of Common Stock up or down to the nearest whole share. 

2.9        Taxes. The
Corporation shall pay any and all taxes which may be imposed upon it with
respect to the issuance and delivery of Common Stock upon the conversion of the
Series B Preferred Shares. 

3.1        Treatment in
the Event of Major Transaction. In the event of a Major Transaction (as
defined in Section 3.1.1 below), Series B Preferred Shares will be treated (on
an as-converted basis) in all respects as Common Stock. 

3.1.1        A "Major
Transaction" means the occurrence at such time of any of the following
events: 

(i) the consolidation or merger of the
Corporation with or into another Person whereby the Corporation is not the
surviving entity (other than pursuant to a migratory merger effected solely for
the purpose of changing the jurisdiction of incorporation of the Corporation or
pursuant to a merger after which the holders of the Corporation's outstanding
capital stock immediately prior to the merger own a number of shares of the
resulting company's outstanding capital stock sufficient to elect a majority of
the resulting company's board of directors); 

(ii) the sale, transfer, lease,
disposal or abandonment (whether in one transaction or in a series of
transactions) of all or substantially all of the Corporation's assets (other
than a sale or transfer to an entity controlling, controlled by or under common
control with the Corporation); or 

(iii) a purchase, tender or exchange
offer for more than 50% of the outstanding shares of Common Stock or other
voting securities of the Corporation is made and accepted by the holders
thereof. 

3.2        Liquidation,
Dissolution, Winding-Up.

	3.2.1 	
      In the event of the liquidation, dissolution or winding
      up of the affairs of the Corporation, whether voluntary or involuntary,
      the holders of shares of Series B Preferred Stock then outstanding shall
      be entitled to receive, out of the assets of the Corporation available for
      distribution to its stockholders, an amount equal to $1.00 per share (the
      "Liquidation Preference Amount") of the Series B Preferred Stock
      plus any accrued and unpaid dividends before any payment shall be made or
      any assets distributed to the holders of the Common Stock or any other
      Junior Stock. If the assets of the Corporation are not sufficient to pay
      in full the Liquidation Preference Amount plus any accrued and unpaid
      dividends payable to the holders of outstanding shares of the Series B
      Preferred Stock and any series of Preferred Stock or any other class of
      stock ranking pari passu, as to rights on liquidation, dissolution or
      winding up, with the Series B Preferred Stock, then all of said assets
      will be distributed among the holders of the Series B Preferred Stock and
      the other classes of stock ranking pari passu with the Series B Preferred
      Stock, if any, ratably in accordance with the respective amounts that
      would be payable on such shares if all amounts payable thereon were paid
      in full. The liquidation payment with respect to each outstanding
      fractional share of Series B Preferred Stock shall be equal to a ratably
      proportionate amount of the liquidation payment with respect to each
      outstanding share of Series B Preferred Stock. All payments for which this
      Section 3.2.1 provides shall be in cash, property (valued at its fair
      market value as determined by an independent appraiser reasonably
      acceptable to the holders of a majority of the Series B Preferred Stock)
      or a combination thereof; provided, however, that no cash
      shall be paid to holders of Junior Stock unless each holder of the
      outstanding shares of Series B Preferred Stock has been paid in cash the
      full Liquidation Preference Amount plus any accrued and unpaid dividends
      to which such holder is entitled as provided herein. After payment of the
      full Liquidation Preference Amount plus any accrued and unpaid dividends
      to which each holder is entitled, such holders of shares of Series B
      Preferred Stock will not be entitled to any further participation as such
      in any distribution of the assets of the Corporation.

	 	 
	3.2.2 	
      A consolidation or merger of the Corporation with or into
      any other corporation or corporations, or a sale of all or substantially
      all of the assets of the Corporation, or the effectuation by the
      Corporation of a transaction or series of related transactions in which
      more than 50% of the voting shares of the Corporation is disposed of or
      conveyed, shall not be deemed to be a liquidation, dissolution, or winding
      up within the meaning of this Section 4. In the event of the merger or
      consolidation of the Corporation with or into another corporation, the
      Series B Preferred Stock shall maintain its relative powers, designations
      and preferences provided for herein and no merger shall result which is
      inconsistent therewith.

	 	 
	3.2.3 	
      Written notice of any voluntary or involuntary
      liquidation, dissolution or winding up of the affairs of the Corporation,
      stating a payment date and the place where the distributable amounts shall
      be payable, shall be given by mail, postage prepaid, no less than
      forty-five (45) days prior to the payment date stated therein, to the
      holders of record of the Series B Preferred Stock at their respective
      addresses as the same shall appear on the books of the
  Corporation.

	 	 
	3.3 	
      Voting Rights and Related
  Matters.

3.3.1        Holder of the
outstanding Series B Preferred Shares shall not have the right to vote with the
Common Stock on any matters that the holders of the Common Stock are entitled to
vote. 

3.3.2        The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the holders of not less than two-thirds (2/3) of
the then outstanding Series B Preferred Shares shall be required for any change
to this Certificate of Designations or the Corporation's Articles of Incorporation which would amend, alter, change or repeal any of the powers, designations, preferences and rights of the Series B Preferred Shares. 

3.4        Lost or Stolen
Certificates. Upon receipt by the Corporation of evidence satisfactory to
the Corporation of the loss, theft, destruction or mutilation of any Preferred
Stock Certificates representing the Series B Preferred Shares, and, in the case
of loss, theft or destruction, of any indemnification undertaking by the holder
to the Corporation and, in the case of mutilation, upon surrender and
cancellation of the Preferred Stock Certificate(s), the Corporation shall
execute and deliver new Preferred Stock Certificate(s) of like tenor and date;
provided, however, the Corporation shall not be obligated to re-issue Preferred
Stock Certificates if the holder contemporaneously requests the Corporation to
convert such Series B Preferred Shares into Common Stock. 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate this 4th day of January, 2014. 

	/s/ Alexander
      Walsh 	 
	Name: Alexander Walsh 	 
	Title: Chief Executive Officer 	 

8 

EXHIBIT I 

LITHIUM EXPLORAITON GROUP, INC. 
CONVERSION NOTICE

Reference is made to the Certificate of the Designations,
Preferences, Rights and Privileges of the Series B Preferred Shares pursuant to
the Nevada Business General Corporation Law (the "Certificate of
Designations"). In accordance with and pursuant to the Certificate of
Designations, the undersigned hereby elects to convert the number of shares of
Series B Convertible Preferred Stock (the "Series B Preferred Shares"),
of Lithium Exploration Group, Inc., a Nevada corporation (the
"Corporation"), indicated below into shares of Common Stock, par value
$0.001 per share (the "Common Stock"), of the Corporation, by tendering
the stock certificate(s) representing the share(s) of Series B Preferred Shares
specified below as of the date specified below. 

	   Date of Conversion: 	 
	   Number of Series B 	 
	   Preferred Shares to be converted: 	 
	   Stock certificate no(s). of Series B Preferred
    	 
	   Shares to be converted: 	 
	Please confirm the following information: 	 
	   Number of shares of Common Stock 	 
	   to be issued: 	 

Please issue and deliver the Common Stock into which the Series
B Preferred Shares are being converted in the following name and to the
following address: 

	Issue to: 	 
	 	 
	 	 
	  	 
	  	 
	Facsimile Number: 	 
	 	 
	Authorization: 	 
	 	 
	By:   	 
	Title: 	 
	 	 
	Dated: 	 

9Echo Automotive, Inc.: Exhibit 4-1 - Filed by newsfilecorp.com

Execution Version 

SENIOR CONVERTIBLE 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 TO THE HOLDER (IF REQUESTED BY THE
COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT
TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS
NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS
3(c)(iii) AND 17(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND,
ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE
AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

ECHO AUTOMOTIVE, INC. 

SENIOR CONVERTIBLE
NOTE

	Issuance Date: January 3, 2014 	Original Principal Amount: U.S. $375,000
  

          FOR
VALUE RECEIVED, ECHO AUTOMOTIVE, INC., a Nevada corporation (the
“Company”), hereby promises to pay to the order of HANOVER
HOLDINGS I, LLC or its registered assigns (“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 any
outstanding Principal (as defined below) at the applicable Interest Rate (as
defined below) from the date set out above as the Issuance Date (the
“Issuance Date”) until the same becomes due
and payable, whether upon the Maturity Date or acceleration, conversion,
redemption or otherwise (in each case in accordance with the terms hereof). This
Senior Convertible Note (this “Note”, including all Senior
Convertible Notes issued in exchange, transfer or replacement hereof,
collectively, the “Notes”) was initially issued pursuant to the
Note Purchase Agreement (as defined below) on the Closing Date (as defined
below). Certain capitalized terms used herein are defined in Section 28. 

          1.     
PAYMENTS OF PRINCIPAL. 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 (as defined in Section
23(c)) on such Principal and Interest (as adjusted with respect to any Note
Reduction (as defined in Section 12)). Other than as specifically permitted by
this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and
Interest, if any. 

          2.     
INTEREST; INTEREST RATE.

                    (a)     
Interest on this Note shall commence accruing on the Issuance Date and shall be
computed on the basis of a 360-day year and twelve 30-day months and shall be
payable in cash on the Maturity Date or any applicable Redemption Date, subject
to adjustment with respect to any Note Reduction. 

                    (b)     
Prior to the payment of Interest on the Maturity Date or any applicable
Redemption Date, Interest on this Note shall accrue at the Interest Rate and be
payable by way of inclusion of the Interest in the Conversion Amount on
each Conversion Date in accordance with Section 3(b)(i). From and after the
occurrence and during the continuance of any Event of Default, the Interest Rate
shall automatically be increased to eighteen percent (18.0%) per annum. 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 calendar day
immediately following 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
such cure of such Event of Default. 

          3.      CONVERSION
OF NOTES. This Note shall be convertible into validly issued, fully paid and
non-assessable shares of Common Stock (as defined below), on the terms and
conditions set forth in this Section 3. 

                    (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 validly
issued, fully paid and non-assessable 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, issuance
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 to be converted, redeemed or otherwise with
respect to which this determination is being made, plus all accrued and unpaid
Interest with respect to such portion of the Principal amount and accrued and
unpaid Late Charges with respect to such portion of such Principal and such
Interest. 

2

                    (ii)      “Conversion
Price” means, as of any Conversion Date or other date of determination,
$0.15223, subject to adjustment as provided herein. 

               (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
deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59
p.m., New York time, on such date, a copy of an executed notice of conversion in
the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company. If required by Section 3(c)(iii), the Holder
shall surrender this Note to a nationally recognized overnight delivery service
for delivery to the Company (or an indemnification undertaking with respect to
this Note in the case of its loss, theft or destruction as contemplated by
Section 17(b)). On or before the first (1st) Trading Day following
the date of receipt of a Conversion Notice, the Company shall transmit by
facsimile an acknowledgment of confirmation, in the form attached hereto as
Exhibit II, of receipt of such Conversion Notice to the Holder and the
Company’s transfer agent (the “Transfer Agent”) . On or before the
second (2nd) Trading Day following the date of receipt of a
Conversion Notice, the Company shall (1) 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 at Custodian
system or (2) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver (via reputable
overnight courier) to the address as specified in the Conversion Notice, a
certificate, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder shall be entitled. If this
Note is physically surrendered for conversion as required by Section 3(c)(iii)
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 three (3) Trading Days after receipt of
this Note and at its own expense, issue and deliver to the Holder (or its
designee) a new Note (in accordance with Section 17(d)) 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. 

3

                    (ii)      Company’s Failure to Timely Convert. If the Company shall fail, for any
reason or for no reason, to issue to the Holder within three (3) Trading Days
after the Company’s receipt of a Conversion Notice (whether via facsimile or
otherwise) (the “Share Delivery Deadline”), a certificate for the
number of shares of Common Stock to which the Holder is entitled and register
such shares of Common Stock on the Company’s share register
or to credit the Holder’s or its designee’s balance account with DTC for such
number of shares of Common Stock to which the Holder is entitled upon the
Holder’s conversion of any Conversion Amount (as the case may be) (a
“Conversion Failure”) then, in addition to all other remedies
available to the Holder, (1) the Company shall pay in cash to the Holder on each
day after such Share Delivery Deadline that the issuance of such shares of
Common Stock is not timely effected an amount equal to 2% of the product of (A)
the sum of the number of shares of Common Stock not issued to the Holder on a
timely basis and to which the Holder is entitled multiplied by (B) the Closing
Sale Price of the Common Stock on the Trading Day immediately preceding the last
possible date which the Company could have issued such shares of Common Stock to
the Holder without violating Section 3(c)(i) and (2) the Holder, upon written
notice to the Company, may void its Conversion Notice with respect to, and
retain or have returned (as the case may be) any portion of this Note that has
not been converted pursuant to such Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s obligations to make any
payments which have accrued prior to the date of such notice pursuant to this
Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to
the Share Delivery Deadline, the Company shall fail to issue and deliver a
certificate to the Holder and register such shares of Common Stock on the
Company’s share register or credit the Holder’s or its designee’s balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s conversion hereunder (as the case may be), and if on
or after such Share Delivery Deadline the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all or any
portion of the number of shares of Common Stock, issuable upon such conversion
that the Holder so anticipated receiving from the Company, then, in addition to
all other remedies available to the Holder, the Company shall, within three (3)
Business Days after receipt of the Holder’s written request, 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 (including, without limitation, by any other Person
in respect, or on behalf, of the Holder) (the “Buy-In Price”), at
which point the Company’s obligation to so issue and deliver such certificate or
credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as
the case may be) (and to issue such shares of Common Stock) shall terminate.

                    (iii)   
Book-Entry. Notwithstanding anything to the contrary set forth in this
Section 3, following 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 (in which event this Note shall be delivered to the
Company following conversion thereof as contemplated by Section 3(c)(i)) 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/or paid and/or adjusted (as the case may be) and the dates of such
conversions and/or payments and/or adjustments (as the case may be) 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. 

4

                    (iv)     
Pro Rata Conversion; Disputes. In the event of a dispute as to the number
of shares of Common Stock issuable to the Holder in connection with a conversion
of this Note, the Company shall issue to the Holder the number of shares of
Common Stock not in dispute and resolve such dispute in accordance with Section
22. 

                    (d)     
Limitations on Conversions. Notwithstanding anything to the contrary
contained in this Note, this Note shall not be convertible by the Holder hereof,
and the Company shall not effect any conversion of this Note or otherwise issue
any shares of Common Stock pursuant hereto, to the extent (but only to the
extent) that after giving effect to such conversion or other share issuance
hereunder the Holder (together with its affiliates) would beneficially own in
excess of 9.99% (the “Maximum Percentage”) of the Common Stock. To
the extent the above limitation applies, the determination of whether this Note
shall be convertible (vis-à-vis other convertible, exercisable or exchangeable
securities owned by the Holder or any of its affiliates) and of which such
securities shall be convertible, exercisable or exchangeable (as among all such
securities owned by the Holder and its affiliates) shall, subject to such
Maximum Percentage limitation, be determined on the basis of the first
submission to the Company for conversion, exercise or exchange (as the case may
be). No prior inability to convert this Note, or to issue shares of Common
Stock, pursuant to this paragraph shall have any effect on the applicability of
the provisions of this paragraph with respect to any subsequent determination of
convertibility. For purposes of this paragraph, beneficial ownership and all
determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in accordance with
Section 13(d) of the 1934 Act (as defined in the Note Purchase Agreement) and
the rules and regulations promulgated thereunder. The provisions of this
paragraph shall be implemented in a manner otherwise than in strict conformity
with the terms of this paragraph to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such Maximum
Percentage limitation. The limitations contained in this paragraph shall apply
to a successor Holder of this Note. The holders of Common Stock shall be third
party beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its Common Stock. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation, pursuant to this
Note or securities issued pursuant to the Note Purchase Agreement. 

          4.      RIGHTS
UPON EVENT OF DEFAULT. 

5

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

                    (i)     
the suspension (or threatened suspension) from trading or the failure (or
threatened failure) of the Common Stock to be trading or listed (as applicable)
on an Eligible Market for a period of five (5) consecutive days or for more than
an aggregate of ten (10) days in any 365-day period, or the imposition of any
suspension of, or restriction on, accepting additional deposits of the Common
Stock, or electronic trading or book-entry services by DTC with respect to the
Common Stock; 

                    (ii)     
the Company’s or any Subsidiary’s (as defined in the Note Purchase Agreement)
failure to pay to the Holder any amount of Principal, Interest, Late Charges or
other amounts when and as due under this Note (including, without limitation,
the Company’s or any Subsidiary’s failure to pay any redemption payments or
amounts hereunder) or any other Transaction Document (as defined in the Note
Purchase Agreement) or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated hereby and
thereby, except, in the case of a failure to pay Interest and Late Charges when
and as due, in which case only if such failure remains uncured for a period of
at least five (5) days; 

                    (iii)  
 the occurrence of any default under, redemption of or acceleration prior
to maturity of an aggregate of any Indebtedness (as defined in the Note Purchase
Agreement) of the Company or any of its Subsidiaries; 

                    (iv)     bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
the relief of debtors shall be instituted by or against the Company or any
Subsidiary and, if instituted against the Company or any Subsidiary by a third
party, shall not be dismissed within thirty (30) days of their initiation; 

                    (v)    
 the commencement by the Company or any Subsidiary of a voluntary case or
proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree, order, judgment or other similar document in respect of
the Company or any Subsidiary in an involuntary case or proceeding under any
applicable federal, state or foreign bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Subsidiary or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the execution of a composition of debts, or the
occurrence of any other similar federal, state or foreign proceeding, or the
admission by it in writing of its inability to pay its debts generally as they
become due, the taking of corporate action by
the Company or any Subsidiary in furtherance of any such action or the taking of
any action by any Person to commence a Uniform Commercial Code foreclosure sale
or any other similar action under federal, state or foreign law; 

6

                    (vi)    
the entry by a court of (i) a decree, order, judgment or other similar document
in respect of the Company or any Subsidiary of a voluntary or involuntary case
or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree, order,
judgment or other similar document adjudging the Company or any Subsidiary as
bankrupt or insolvent, or approving as properly filed a petition seeking
liquidation, reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary under any applicable federal, state or
foreign law or (iii) a decree, order, judgment or other similar document
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Subsidiary or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree, order, judgment or other similar
document or any such other decree, order, judgment or other similar document
unstayed and in effect for a period of thirty (30) consecutive days; 

                    (vii)   
a final judgment or judgments for the payment of money aggregating in excess of
$300,000 are rendered against the Company and/or any of its Subsidiaries and
which judgments are not, within thirty (30) days after the entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within thirty
(30) days after the expiration of such stay; provided, however, any judgment
which is covered by insurance or an indemnity from a credit worthy party shall
not be included in calculating the $300,000 amount set forth above so long as
the Company provides the Holder a written statement from such insurer or
indemnity provider (which written statement shall be reasonably satisfactory to
the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company or such Subsidiary (as the case may be) will receive
the proceeds of such insurance or indemnity within thirty (30) days of the
issuance of such judgment; 

                    (viii)  
except with respect to the Indebtedness set forth on Schedule A hereto
(provided, however, that all disputes and/or extensions relating
to such Indebtedness set forth on Schedule A hereto are resolved or
obtained (as applicable) prior to the 90th day after the Issuance
Date, it being acknowledged and agreed that if all disputes and/or extensions
relating to such Indebtedness set forth on Schedule A hereto are not
resolved or obtained (as applicable) prior to the 90th day after the
Issuance Date, then such Indebtedness shall not be an exception to this
paragraph 4(a)(viii)), the Company and/or any Subsidiary, individually or in the
aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $100,000 due
to any third party (other than, with respect to unsecured Indebtedness only,
payments contested by the Company and/or such Subsidiary (as the case may be) in
good faith by proper proceedings and with respect to which adequate reserves
have been set aside for the payment thereof in accordance with GAAP) or is
otherwise in breach or violation of any agreement for monies owed or owing
in an amount in excess of $100,000, which breach or violation permits the other
party thereto to declare a default or otherwise accelerate amounts due
thereunder, or (ii) suffer to exist any other circumstance or event that would,
with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary,
which default or event of default would or is likely to have a material adverse
effect on the business, assets, operations (including results thereof),
liabilities, properties, condition (including financial condition) or prospects
of the Company or any of its Subsidiaries, individually or in the aggregate;

7

                    (ix)    
other than as specifically set forth in another clause of this Section 4(a), the
Company or any Subsidiary breaches any representation, warranty, covenant or
other term or condition of any Transaction Document, except, in the case of a
breach of a covenant or other term or condition that is curable, only if such
breach remains uncured for a period of three (3) consecutive Trading Days; 

                    (x)     
any Material Adverse Effect (as defined in the Note Purchase Agreement) occurs;
or 

                    (xi)     
any Change of Control occurs. 

                    (b)     
Notice of an Event of Default; Redemption Right. Upon the occurrence of
an Event of Default with respect to this Note, the Company shall within one (1)
Business Day deliver written notice thereof via facsimile and overnight courier
(with next day delivery specified) (an “Event of Default Notice”)
to the Holder. At any time after the earlier of the Holder’s receipt of an Event
of Default Notice and the Holder becoming aware of an Event of Default, the
Holder may require the Company to redeem (regardless of whether such Event of
Default has been cured) all or any portion of this Note by delivering written
notice thereof (the “Event of Default Redemption Notice”) to the
Company, which Event of Default Redemption Notice shall indicate the portion of
this Note the Holder is electing to redeem. Each portion of this Note subject to
redemption by the Company pursuant to this Section 4(b) shall be redeemed by the
Company at a price equal to the greater of (i) the product of (A) the Conversion
Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the
product of (X) the Conversion Rate with respect to the Conversion Amount in
effect at such time as the Holder delivers an Event of Default Redemption Notice
multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2)
the greatest Closing Sale Price of the Common Stock on any Trading Day during
the period commencing on the date immediately preceding such Event of Default
and ending on the date the Company makes the entire payment required to be made
under this Section 4(b) (the “Event of Default
Redemption Price”). Redemptions required by this Section 4(b)
shall be made in accordance with the provisions of Section 10. To the extent
redemptions required by this Section 4(b) are deemed or determined by a court of
competent jurisdiction to be prepayments of this Note by the Company, such
redemptions shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 4, but subject to Section 3(d), until
the Event of Default Redemption Price (together with any Late Charges thereon)
is paid in full, the Conversion Amount submitted for redemption under this
Section 4(b) (together with any Late Charges thereon) may be converted, in whole
or in part, by the Holder into Common Stock pursuant to the terms of this Note.
In the event of the Company’s redemption of any portion of this Note under this
Section 4(b), the Holder’s damages would be uncertain and difficult to estimate
because of the parties’ inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 4(b)
is intended by the parties to be, and shall be deemed, a reasonable estimate of
the Holder’s actual loss of its investment opportunity and not as a penalty. 

8

          5.     
RIGHTS UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS. 

                    (a)      Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless
(i) the Successor Entity assumes in writing all of the obligations of the
Company under this Note and the other Transaction Documents in accordance with
the provisions of this Section 5(a) pursuant to written agreements in form and
substance satisfactory to the Holder and approved by the Holder prior to such
Fundamental Transaction, including agreements to deliver to each holder of Notes
in exchange for such Notes a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to the Notes,
including, without limitation, having a principal amount and interest rate equal
to the principal amounts then outstanding and the interest rates of the Notes
held by such holder, having similar conversion rights as the Notes and having
similar ranking to the Notes, and satisfactory to the Holder and (ii) the
Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market.
Upon the occurrence of any Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Note and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume
all of the obligations of the Company under this Note and the other Transaction
Documents with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of a Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon
conversion or redemption of this Note at any time after the consummation of such
Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or
other securities, cash, assets or other property (except such items still
issuable under Section 14, which shall continue to be receivable thereafter)
issuable upon the conversion or redemption of the Notes prior to such
Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity) which
the Holder would have been entitled to receive upon the happening of such
Fundamental Transaction had this Note been converted immediately prior to such
Fundamental Transaction (without regard to any limitations on the conversion of
this Note), as adjusted in accordance with the provisions of this Note.
Notwithstanding the foregoing, the Holder may elect, at its sole option, by
delivery of written notice to the Company to waive this Section 5(a) to permit
the Fundamental Transaction without the assumption of this Note.

                    (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 (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. Provision made pursuant to the preceding sentence shall be in a
form and substance satisfactory to the Holder.

9

                    (c)      The
provisions of this Section 5 shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events and shall be applied without
regard to any limitations on the conversion 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 Closing Date the Company issues or sells, or in accordance with this
Section 6(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 any Excluded Securities issued or
sold or deemed to have been issued or sold) for a consideration per share (the
“New Issuance Price”) less than a price equal to the Conversion
Price in effect immediately prior to such issue or sale or deemed issuance or
sale (such Conversion Price then in effect is referred to herein as the
“Applicable Price”) (the foregoing a “Dilutive
Issuance”), then, immediately after such Dilutive Issuance, the
Conversion Price then in effect shall be reduced to an amount equal to the New
Issuance Price. For all purposes of the foregoing (including, without
limitation, determining the adjusted Conversion Price and consideration per
share under this Section 6(a)), the following shall be applicable: 

                    (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, exercise or
exchange of any Convertible Securities issuable upon exercise of any 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 6(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, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option” shall be equal to (1) the lower of (x) 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 granting or sale
of such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option and
(y) the lowest exercise price set forth in such Option for which one share of Common Stock is
issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such
Option, minus (2) the sum of all amounts paid or payable to the holder of such
Option (or any other Person) upon the granting or sale of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option plus the value of any
other consideration received or receivable by, or benefit conferred on, the
holder of such Option (or any other Person). Except as contemplated below, 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 share of Common
Stock upon conversion, exercise or exchange of such Convertible Securities.

10

                    (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 the conversion, exercise or
exchange 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 6(a)(ii), the “lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x)
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to one share of Common Stock upon the issuance or
sale of the Convertible Security and upon conversion, exercise or exchange of
such Convertible Security and (y) the lowest conversion price set forth in such
Convertible Security for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof minus (2) the sum of all amounts paid
or payable to the holder of such Convertible Security (or any other Person) upon
the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of
such Convertible Security (or any other Person). Except as contemplated below,
no further adjustment of the Conversion Price shall be made upon the actual
issuance of such share of Common Stock upon conversion, exercise or exchange 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 has been or is to be made pursuant to other provisions of this
Section 6(a), except as contemplated below, no further adjustment of the
Conversion Price shall be made by reason of such issue or sale. 

                    (iii)  
 Change in Option Price or Rate of Conversion. If the purchase or
exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Conversion Price in effect at the time of such increase or
decrease 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
increased or decreased purchase price, additional
consideration or increased or decreased conversion rate (as the case may be) at
the time initially granted, issued or sold. For purposes of this Section
6(a)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the Closing Date are increased or decreased in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such increase or decrease. No adjustment pursuant to this Section 6(a)
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect. 

11

                    (iv)   
 Calculation of Consideration Received. If any Option or Convertible
Security or Adjustment Right is issued or deemed issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the
Company, together comprising one integrated transaction, (x) such Option or
Convertible Security (as applicable) or Adjustment Right (as applicable) will be
deemed to have been issued for consideration equal to the Black Scholes
Consideration Value thereof and (y) the other securities issued or sold or
deemed to have been issued or sold in such integrated transaction shall be
deemed to have been issued for consideration equal to the difference of (I) the
aggregate consideration received or receivable by the Company minus (II) the
Black Scholes Consideration Value of each such Option or Convertible Security
(as applicable) or Adjustment Right (as applicable). If any shares of 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 net amount of consideration received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are issued or sold for
a consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company for such securities will be the average
of the Closing Bid Price of such security for each Trading Day during the five
(5) Trading Day period immediately preceding the date of receipt. If any shares
of 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 shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair value of any
consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Trading Days after the tenth
(10th) day following such Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the Holder. The
determination of such appraiser shall be final and 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 shares of Common Stock for the purpose
of entitling them (A) to receive a dividend or other distribution payable in
shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options or Convertible Securities, then
such record date will be deemed to be the date of the issue or sale of the
shares of 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). 

12

                    (b)      Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock.
Without limiting any provision of Section 5 or Section 6(a), if the Company at
any time on or after the Closing Date subdivides (by any stock split, stock
dividend, stock combination, recapitalization or other similar transaction) 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. Without limiting any provision of Section 5 or
Section 6(a), if the Company at any time on or after the Closing Date combines
(by any stock split, stock dividend, stock combination, recapitalization or
other similar transaction) 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. Any
adjustment pursuant to this Section 6(b) shall become effective immediately
after the effective date of such subdivision or combination. If any event
requiring an adjustment under this Section 6(b) occurs during the period that a
Conversion Price is calculated hereunder, then the calculation of such
Conversion Price shall be adjusted appropriately to reflect such event. 

                    (c)     
Other Events. In the event that the Company (or any Subsidiary) shall
take any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect the Holder from dilution or if any
event occurs of the type contemplated by the provisions of this Section 6 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 shall in good faith
determine and implement an appropriate adjustment in the Conversion Price so as
to protect the rights of the Holder, provided that no such adjustment pursuant
to this Section 6(c) will increase the Conversion Price as otherwise determined
pursuant to this Section 6, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding and whose fees and expenses shall be borne by the Company.

          7.      NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation (as defined in the Note Purchase Agreement),
Bylaws (as defined in the Note Purchase Agreement) 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. Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable
upon conversion of this Note above the Conversion Price then in effect, (ii)
shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the conversion of this Note, and (iii) shall, so long as any
of the Notes are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the Notes, the maximum number of
shares of Common Stock as shall from time to time be necessary to effect the
conversion of the Notes then outstanding (without regard to any limitations on
conversion). 

13

          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 for each of the Notes equal to 150% of
the entire Conversion Rate with respect to the entire Conversion Amount of each
such Note as of the Issuance Date. So long as any of the Notes are
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 Notes, 150% of the number of shares
of Common Stock as shall from time to time be necessary to effect the conversion
of all of the Notes then outstanding, 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”). 

                    (b)      Insufficient
Authorized Shares. If, notwithstanding Section 8(a), and not in limitation
thereof, at any time while any of the Notes remain 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 Notes
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 for the Notes then outstanding. 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 sixty
(60) 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
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 its board of directors to
recommend to the stockholders that they approve such proposal. In the event that
the Company is prohibited from issuing shares of Common Stock upon any
conversion due to the failure by the Company to have sufficient shares of Common
Stock available out of the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the “Authorization Failure
Shares”), in lieu of delivering such Authorization Failure Shares to the
Holder, the Company shall pay cash in exchange for the redemption of such
portion of the Conversion Amount convertible into such Authorized Failure Shares
at a price equal to the sum of (i) the product of (x) such number of
Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable
Conversion Notice with respect to such Authorization Failure Shares to the
Company and ending on the date of such issuance and payment under this Section
8(b) and (ii) to the extent the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of Authorization Failure Shares, any brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
Nothing contained in Section 8(a) or this Section 8(b) shall limit any
obligations of the Company under any provision of the Note Purchase Agreement.

14

          9.     
COMPANY OPTIONAL REDEMPTION. At any time after the Issuance Date, the
Company shall have the right to redeem all, but not less than all, of the
Conversion Amount then remaining under this Note (the “Company Optional
Redemption Amount”) on the Company Optional Redemption Date (as defined
below) (a “Company Optional Redemption”). The portion of this Note
subject to redemption pursuant to this Section 9 shall be redeemed by the
Company in cash at a price (the “Company Optional Redemption
Price”) equal to 130% of the Conversion Amount of this Note then
outstanding. The Company may exercise its right to require redemption under this
Section 9 by delivering an irrevocable written notice thereof by facsimile and
overnight courier to the Holder (the “Company Optional Redemption
Notice” and the date the Holder receives such notice is referred to as
the “Company Optional Redemption Notice Date”). The Company may
deliver only one Company Optional Redemption Notice in any ninety (90) day
period. The Company Optional Redemption Notice shall (x) state the date on which
the Company Optional Redemption shall occur (the “Company Optional
Redemption Date”) which date shall not be less than sixty (60) calendar
days nor more than ninety (90) calendar days following the Company Optional
Redemption Notice Date, and (y) state the aggregate Conversion Amount of the
Notes which is being redeemed in such Company Optional Redemption from the
Holder pursuant to this Section 9 on the Company Optional Redemption Date.
Notwithstanding anything herein to the contrary, at any time prior to the date
the Company Optional Redemption Price is paid, in full, the Company Optional
Redemption Amount may be converted, in whole or in part, by the Holder into
shares of Common Stock pursuant to Section 3. All Conversion Amounts converted
by the Holder after the Company Optional Redemption Notice Date shall reduce the
Company Optional Redemption Amount of this Note required to be redeemed on the
Company Optional Redemption Date. Redemptions made pursuant to this Section 9
shall be made in accordance with Section 10. 

          10.   
 REDEMPTIONS. 

                    (a)     
Mechanics. The Company shall deliver the applicable Event of Default
Redemption Price to the Holder in cash within five (5) Business Days after the
Company’s receipt of the Holder’s Event of Default Redemption Notice. The
Company shall deliver the applicable Company Optional Redemption Price to the
Holder in cash on the applicable Company Optional Redemption Date. In the event
of a redemption of less than all of the Conversion Amount of this Note, the
Company shall promptly cause to be issued and delivered to the Holder a new Note
(in accordance with Section 17(d)) representing the outstanding Principal which
has not been redeemed. The Holder’s delivery of a notice voiding a Redemption
Notice and exercise of its rights following such notice shall not affect the
Company’s obligations to make any payments of Late Charges which have accrued
prior to the date of such notice with respect to the Conversion Amount subject
to such notice. 

15

          11.    
VOTING RIGHTS. The Holder shall have no voting rights as the holder of
this Note, except as required by law (including, without limitation, the Nevada
Revised Statutes) and as expressly provided in this Note. 

          12.    
NOTE REDUCTIONS.

                    (a)     
Filing Date Reduction. As of the Trading Day immediately following the
Filing Deadline (as such term is defined in the Registration Rights Agreement),
if (i) the Company has properly filed a registration statement with the SEC on
or prior to the Filing Deadline covering the resale by the Holder of all of the
shares of Common Stock issued or issuable upon conversion of this Note or
otherwise pursuant to the terms of this Note in accordance with the 1933 Act and
the Registration Rights Agreement and (ii) no Event of Default or an event that
with the passage of time or giving of notice would constitute an Event of
Default has occurred on or prior to such date, then $40,000 of the outstanding
Principal hereunder (together with any accrued and unpaid Interest with respect
to such portion of the Principal amount and accrued and unpaid Late Charges with
respect to such portion of such Principal and such Interest) shall be
automatically extinguished and shall no longer remain outstanding hereunder
without any payment thereof by the Company. 

                    (b)     
Effective Date Reduction. As of the Trading Day immediately following the
Effectiveness Deadline (as such term is defined in the Registration Rights
Agreement), if (i) the Company has filed a registration statement with the SEC
that has been declared effective by the SEC on or prior to the Effectiveness
Deadline and the prospectus contained therein is available for use by the Holder
for the resale by the Holder of all of the shares of Common Stock issued or
issuable upon conversion of this Note or otherwise pursuant to the terms of this
Note and (ii) no Event of Default or an event that with the passage of time or
giving of notice would constitute an Event of Default has occurred on or prior
to such date, then $85,000 of the outstanding Principal hereunder (together with
any accrued and unpaid Interest with respect to such portion of the Principal
amount and accrued and unpaid Late Charges with respect to such portion of such
Principal and such Interest) shall be automatically extinguished and shall no
longer remain outstanding hereunder without any payment thereof by the Company.

                    (c)      Disputes.
In the event of a dispute as to the arithmetic calculation of any Note
Reduction, the Company and the Holder shall resolve such dispute in accordance
with Section 22. 

          13.    
COVENANTS. Until all of the Notes have been converted, redeemed or
otherwise satisfied in accordance with their terms: 

                    (a)     
Restricted Payments. The Company shall not, and the Company shall cause
each of its Subsidiaries to not, 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, (i) an event
constituting an Event of Default has occurred and is continuing or (ii) an event that
with the passage of time and without being cured would constitute an Event of
Default has occurred and is continuing. 

16

                    (b)      Restricted
Issuances. The Company shall not, directly or indirectly, without the prior
written consent of the holders of a majority in aggregate principal amount of
the Notes then outstanding, (i) issue any Notes (other than as contemplated by
the Note Purchase Agreement and the Notes) or (ii) issue any other securities
that would cause a breach or default under the Notes.

          14.   
 PARTICIPATION. In addition to any adjustments pursuant to Section
6, 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 (provided, however, to
the extent that the Holder’s right to participate in any such dividend or
distribution would result in the Holder exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such dividend or distribution
to such extent (or the beneficial ownership of any such shares of Common Stock
as a result of such dividend or distribution to such extent) and such dividend
or distribution to such extent shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage). 

          15.    
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder
shall be required for any change or amendment to this Note. 

          16.   
 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
Section 4.4 of the Note Purchase Agreement. 

          17.    
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 forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 17(d)),
registered as the Holder may request, representing the outstanding Principal
being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 17(d)) to
the Holder representing the outstanding Principal not being transferred. The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of Section 3(c)(iii) following conversion or
redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note. 

                    (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 (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary and
reasonable 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 Section 17(d)) representing the outstanding Principal. 

17

                    (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 Section 17(d) and in principal amounts of
at least $1,000) 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. 

                    (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 Section 17(a) or Section 17(c), 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. 

          18.   
 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. The Company covenants to the
Holder that there shall be no characterization concerning this instrument other
than as expressly provided herein. 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 such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required.
The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company’s
compliance with the terms and conditions of this Note (including, without
limitation, compliance with Section 6). 

          19.    
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,
without limitation, attorneys’ fees and disbursements. The Company expressly
acknowledges and agrees that no amounts due under this Note shall be affected,
or limited, by the fact that the purchase price paid for this Note was less than
the original Principal amount hereof. 

18

          20.   
 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. Terms used in this Note but defined in the other Transaction Documents
shall have the meanings ascribed to such terms on the Closing Date in such other
Transaction Documents unless otherwise consented to in writing by the Holder.

          21.    
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. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party. 

          22.   
 DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Conversion Price (including, without limitation, any
disputed adjustment thereto or any dispute as to whether any issuance or sale or
deemed issuance or sale was an issuance or sale or deemed issuance or sale of
Excluded Securities), the Company Conversion Price, any Redemption Price, the
Closing Bid Price, the Closing Sale Price or fair market value (as the case may
be) or the arithmetic calculation of the Conversion Rate, any Note Reduction or
the applicable Redemption Price (as the case may be), the Company or the Holder
(as the case may be) shall submit the disputed determinations or arithmetic
calculations (as the case may be) via facsimile (i) within two (2) Business Days
after receipt of the applicable notice giving rise to such dispute to the
Company or the Holder (as the case may be) or (ii) if no notice gave rise to
such dispute, at any time after the Holder learned of the circumstances giving
rise to such dispute. If the Holder and the Company are unable to agree upon
such determination or calculation within two (2) Business Days of such disputed
determination or arithmetic calculation (as the case may be) being submitted to
the Company or the Holder (as the case may be), then the Company shall, within
two (2) Business Days, submit via facsimile (a) the disputed determination of
the Conversion Price, the Company Conversion Price, any Redemption Price, the
Closing Bid Price, the Closing Sale Price or fair market value (as the case may
be) 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, any Note Reduction or any Redemption Price (as the case may be)
to an independent, outside accountant selected by the Holder that is reasonably
acceptable to the Company. The Company shall cause at its expense the investment
bank or the accountant (as the case may be) to perform the determinations or
calculations (as the case may be) and notify the Company and the Holder of the
results no later than ten (10) Business Days from the time it receives such
disputed determinations or calculations (as the case may be). 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

          23.   
 NOTICES; CURRENCY; PAYMENTS. 

                    (a)      Notices.
Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f) of
the Note Purchase Agreement. 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 fifteen (15) 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 grant, issuances, or
sales of any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of shares 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)      Currency.
All dollar amounts referred to in this Note are in United States Dollars
(“U.S. Dollars”), and all amounts owing under this Note shall be
paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. “Exchange Rate”
means, in relation to any amount of currency to be converted into U.S.
Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the
Wall Street Journal on the relevant date of calculation (it being understood and
agreed that where an amount is calculated with reference to, or over, a period
of time, the date of calculation shall be the final date of such period of
time). 

                    (c)     
Payments. Whenever any payment of cash is to be made by the Company to
any Person pursuant to this Note, unless otherwise expressly set forth herein,
such payment shall be made in lawful money of the United States of America by a
certified 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 (which address, in the case of each of the Buyers, shall
initially be as set forth on the Schedule of Buyers attached to the Note
Purchase Agreement), 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. 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. Any amount of
Principal or other amounts due under the Transaction Documents 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 eighteen percent
(18%) per annum from the date such amount was due until the same is paid in full
(“Late Charge”). 

          24.   
 CANCELLATION. After all Principal, accrued Interest, Late Charges
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. 

20

          25.    
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby
irrevocably waives demand, notice, presentment, protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Note Purchase Agreement. 

          26.    
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 New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, 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 TO, 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. 

          27.    
MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Holder and thus refunded to the Company. 

          28.    
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall
have the following meanings: 

                    (a)      “Adjustment
Right” means any right granted with respect to any securities issued in
connection with, or with respect to, any issuance or sale (or deemed issuance or
sale in accordance with Section 6) of shares of Common Stock that could
result in a decrease in the net consideration received by the Company in
connection with, or with respect to, such securities (including, without
limitation, any cash settlement rights, cash adjustment or other similar
rights). 

21

                    (b)     
“Approved Stock Plan” means any employee benefit plan which has
been approved by the board of directors of the Company prior to or subsequent to
the date hereof pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer or director for
services provided to the Company in their capacity as such.

                    (c)     
“Black Scholes Consideration Value” means the value of the
applicable Option, Convertible Security or Adjustment Right (as the case may be)
as of the date of issuance thereof calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the Closing Sale Price of the Common Stock
on the Trading Day immediately preceding the public announcement of the
execution of definitive documents with respect to the issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of such Option, Convertible Security or Adjustment Right (as the
case may be) as of the date of issuance of such Option, Convertible Security or
Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an
expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following the date of
issuance of such Option, Convertible Security or Adjustment Right (as the case
may be). 

                    (d)      “Bloomberg”
means Bloomberg, L.P. 

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

                    (f)      “Change
of Control” means any Fundamental Transaction other than (i) any merger
of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with
or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the
Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization,
recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, are, in all material respects, the holders of the voting
power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a
corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, or (iii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of
the Company or any of its Subsidiaries. 

                    (g)      “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 OTC Markets Group Inc. (formerly Pink Sheets
LLC). 

22

                    (h)      “Closing
Date” shall have the meaning set forth in the Note Purchase Agreement,
which date is the date the Company initially issued the Note pursuant to the
terms of the Note Purchase Agreement. 

                    (i)     
“Common Stock” means (i) the Company’s common stock, $0.001 par
value per share, and (ii) any capital stock into which such common stock shall
have been changed or any share capital resulting from a reclassification of such
common stock. 

                    (j)     
“Convertible Securities” means any stock or other security (other
than Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

                    (k)     
“Eligible Market” means the NASDAQ Global Market, the NASDAQ
Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange,
NYSE Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB Marketplace operated
by OTC Markets Group Inc. (or any successor to any of the foregoing) or the
Principal Market. 

                    (l)     
“Excluded Securities” means any (i) shares of Common Stock or
standard options to purchase Common Stock to directors, officers or employees of
the Company in their capacity as such pursuant to an Approved Stock Plan (as
defined below), provided that (A) all such issuances (taking into account the
shares of Common Stock issuable upon exercise of such options granted after the
date of this Note, but not such shares issuable upon exercise of such options
granted before the date of this Note) after the date hereof pursuant to this
clause (i) do not, in the aggregate, exceed more than 5.0% of the Common Stock
issued and outstanding immediately prior to the date hereof and (B) the exercise
price of any such options is not lowered, none of such options are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such options are otherwise materially changed in any manner
that adversely affects any of the Buyers; (ii) shares of Common Stock issued
upon the conversion or exercise of Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) issued prior to the date hereof, provided that
the conversion price of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (i) above) are amended to increase the number of shares issuable
thereunder or extend the maturity date or expiration date of such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) and none of the
terms or conditions of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) are otherwise materially changed in any manner
that adversely affects any of the Buyers; (iii) the shares of Common Stock
issuable upon conversion of the Notes or otherwise pursuant to the terms of the
Notes and (iv) any shares of Common Stock issued to the Holder or any of its
affiliates. 

23

                    (m)     
“Fundamental Transaction” means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions,
(1) consolidate or merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease,
license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any
other Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Voting Stock of the
Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4)
consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other Person whereby such other Person acquires
more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (ii) any “person” or “group” (as these terms are used
for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and
regulations promulgated thereunder) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of
the aggregate ordinary voting power represented by issued and outstanding Voting
Stock of the Company. 

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

                    (o)      “Interest
Rate” means twelve percent (12.0%) per annum, as may be
adjusted from time to time in accordance with Section 2. 

                    (p)      “Maturity
Date” shall mean July 3, 2014; provided, however, the Maturity
Date may be extended at the option of the Holder (i) in the event that, and for
so long as, an Event of Default shall have occurred and be continuing or any
event shall have occurred and be continuing that with the passage of time and
the failure to cure would result in an Event of Default or (ii) through the date
that is twenty (20) Business Days after the consummation of a Fundamental
Transaction in the event that a Fundamental Transaction is publicly announced or
a Fundamental Transaction Notice is delivered prior to the Maturity Date,
provided further that if a Holder elects to convert some or all of this Note
pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d)
hereunder, the Maturity Date shall automatically be extended until such time as
such provision shall not limit the conversion of this Note. 

24

                    (q)      “Note
Purchase Agreement” means that certain Note Purchase Agreement, dated as
of the Closing Date, by and between the Company and the Holder pursuant to which
the Company issued this Note, as may be amended from time to time. 

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

                    (s)      “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. 

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

                    (u)     
“Principal Market” means the OTC Bulletin Board (or any successor
thereto). 

                    (v)     
“Redemption Notices” means, collectively, the Event of Default
Redemption Notices and the Company Optional Redemption Notices, and each of the
foregoing, individually, a “Redemption Notice.” 

                    (w)      “Redemption
Premium” means (i) in the case of the Events of Default described in
Section 4(a) (other than Sections 4(a)(iv) through 4(a)(vi)), 125% or (ii) in
the case of the Events of Default described in Sections 4(a)(iv) through
4(a)(vi), 100%. 

                    (x)      “Redemption
Prices” means, collectively, Event of Default Redemption Prices, and the
Company Optional Redemption Prices and each of the foregoing, individually, a
“Redemption Price.” 

                    (y)     
“Registration Rights Agreement” means that certain registration
rights agreement, dated as of the Closing Date, by and between the Company and
the Holder relating to, among other things, the registration of the resale of
the Common Stock issuable upon conversion of the Notes or otherwise pursuant to
the terms of the Notes, as may be amended from time to time. 

                    (z)     
“SEC” means the United States Securities and Exchange Commission
or the successor thereto. 

                    (aa)   
 “Subsidiaries” shall all corporations or other entities, if
any, of which at least a majority of the securities or other ownership interest
having ordinary voting power for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other Subsidiaries. 

25

                    (bb)   
 “Successor Entity” means the Person (or, if so elected by
the Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into. 

                    (cc)   
 “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) unless such day is
otherwise designated as a Trading Day in writing by the Holder. 

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

          29.   
 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,
non-public information relating to the Company or any of its Subsidiaries, the
Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, non-public information on a Current Report on
Form 8-K or otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company or any of its
Subsidiaries, the Company so shall indicate to such 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, non-public information relating to the Company or its
Subsidiaries. Nothing contained in this Section 29 shall limit any obligations
of the Company, or any rights of the Holder, under Section 4.3 of the Note
Purchase Agreement. 

[signature page follows] 

26

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

ECHO
AUTOMOTIVE, INC. 

 

By:_________________________________
Name: 
Title: 

Senior Secured Convertible Note - Signature Page 

EXHIBIT I 

ECHO AUTOMOTIVE, INC. 
CONVERSION NOTICE 

          Reference
is made to the Convertible Note (the “Note”) issued to the undersigned by
Echo Automotive, Inc. (the “Company”). In accordance with and pursuant to
the Note, the undersigned hereby elects to convert the Conversion Amount (as
defined in the Note) of the Note indicated below into shares of Common Stock,
$0.001 par value per share (the “Common Stock”), of the Company, as of
the date specified below Capitalized terms not defined herein shall have the
meaning as set forth in the Note. 

	          Date
      of Conversion: __________________________________________________________________________________________________________________________________________
	  	 
	                   Aggregate
      Principal to be converted: 	  
	  	 
	                   Aggregate
      accrued and unpaid Interest and 	 
	                   accrued
      and unpaid Late Charges with 	 
	                   respect
      to such portion of the Aggregate 	 
	                   Principal
      and such Aggregate Interest to be 	 
	                   converted:    	 
	  	 
	          AGGREGATE
      CONVERSION AMOUNT TO BE CONVERTED: 	 

Please confirm the following information: 

	          Conversion
      Price: _________________________________________________________________________________________________________________________________________________
	  	 
	          Number
      of shares of Common Stock to be issued: 	 

Please issue the Common Stock into which the Note is being
converted in the following name and to the following address: 

	          Issue
      to: 	 
	 	 
	 	 
	 	 
	 	 

	Facsimile Number:
      _________________________________________________________________________________________________
	 
	Holder:            
      ____________________________________________________________________________________________________
	 
	                By:   
      ____________________________________________________________________________________________________
	 
	                         Title:
      ________________________________________________________________________________________________

          Dated:
___________________________________________________________________________________________________

Account Number:
_________________________________________________________________________________________
(if
electronic book entry transfer) 

Transaction Code Number:
__________________________________________________________________________________
(if
electronic book entry transfer) 

ACKNOWLEDGMENT 

          The
Company hereby acknowledges this Conversion Notice and hereby directs
_________________to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated _____________, 20__
from the Company and acknowledged and agreed to by ________________________.

ECHO
AUTOMOTIVE, INC. 

 

By:_________________________________
Name: 
Title:

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