Document:

EXHIBIT
      10.10

    EXECUTION
      COPY

    

     

    REINSURANCE
      BROKERAGE AGREEMENT

     

    This
      REINSURANCE BROKERAGE AGREEMENT (this “Agreement”) is made and entered into as
      of July 3, 2007 by and between Maiden Insurance Company, Ltd., a Bermuda company
      (“Maiden”), and AII Reinsurance Broker Ltd., a Bermuda company
      (“ARBL”).

     

    WHEREAS,
      Maiden is duly licensed in Bermuda to transact insurance business as a Class
      3
      insurer; and

    

    WHEREAS,
      ARBL is duly licensed in Bermuda to transact business as an insurance broker;
      and

    

    WHEREAS,
      ARBL is a subsidiary of AmTrust Financial Services, Inc. (“AmTrust”);
      and

     

    WHEREAS,
      Maiden wishes to appoint ARBL as its broker for procurement or placement of
      reinsurance to be assumed by Maiden from insurance company subsidiaries of
      AmTrust (the “AmTrust Ceding Insurers”), and ARBL wishes to accept such
      appointment; and

     

    WHEREAS,
      (a) AmTrust International Underwriters, Ltd. and IGI Insurance Company (being
      AmTrust Ceding Insurers), as ceding companies, and Maiden, as reinsurer, have
      entered into that certain Quota Share Reinsurance Agreement, dated the date
      hereof, and (b) Rochdale Insurance Company, Technology Insurance Company, Inc.
      and Wesco Insurance Company (being AmTrust Ceding Insurers), as ceding
      companies, and Maiden, as reinsurer, intend to enter into a Quota Share
      Reinsurance Agreement following receipt of regulatory approvals therefor (the
      agreements described in (a) and (b), together, the “Initial Reinsurance
      Agreements”); and

     

    WHEREAS,
      ARBL has provided, and desires to continue to provide, certain of the Services
      (as defined below) to Maiden in connection with the Initial Reinsurance
      Agreements.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements herein
      contained, Maiden and ARBL agree as follows:

     

    
      	1.  	
              APPOINTMENT
                AND AUTHORITY

            

    

     

    
      	1.1  	
              Maiden
                hereby engages and appoints ARBL, and ARBL hereby accepts appointment,
                as
                a reinsurance broker to provide, as requested from time to time by
                Maiden,
                the following services with respect to the assumption of reinsurance
                by
                Maiden from AmTrust Ceding Insurers (collectively, the
                “Services”):

            

    

     

    
      	a.  	
              At
                the direction of Maiden, to submit proposals for reinsurance and
                reinsurance markets approved by
                Maiden;

            

    

     

    
      	b.  	
              To
                make recommendations to Maiden regarding such reinsurance
                coverage;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	c.  	
              To
                maintain records regarding reinsurance procured and administered
                on behalf
                of Maiden as required by applicable law and regulation;
                and

            

    

     

    
      	d.  	
              If
                directed by Maiden, to administer reporting requirements in connection
                with reinsurance placed on behalf of
                Maiden.

            

    

     

    
      	1.2  	
              ARBL
                shall perform all Services in accordance with any standards and guidelines
                developed by Maiden from time to time and communicated to ARBL. ARBL
                shall
                perform all Services in a professional and timely manner.
                

            

    

     

    
      	1.3  	
              Nothing
                contained herein shall create the relationship of employer and employee
                between Maiden and ARBL. Except as set forth herein, Maiden shall
                have no
                right of control over personnel supplied by ARBL as to the time,
                means, or
                manner of performance of such personnel’s duties hereunder. ARBL shall
                conduct itself and its business under the terms of this Agreement
                solely
                as an independent contractor. 

            

    

     

    
      	2.  	
              TERM
                OF AGREEMENT & TERMINATION

            

    

     

    This
      Agreement is effective as of July 3, 2007, and may be terminated by Maiden
      at
      any time upon not less than 15 days prior written notice to ARBL. 

     

    
      	3.  	
              RECORDS

            

    

     

    ARBL
      shall comply with Maiden's request for any information relating to this
      Agreement. Additionally, Maiden, or its authorised representatives, shall have
      the right to inspect at any reasonable time at ARBL's offices, and shall be
      permitted to make and retain copies of, all papers, books, accounts, documents,
      claims files and other records of ARBL relating to this Agreement. Maiden's
      right of inspection shall continue to exist after the termination of this
      Agreement. The books, accounts, and records of each party shall be so maintained
      as to clearly and accurately disclose the nature and details of the transactions
      under this Agreement. In any event, each party shall own and have custody of
      its
      own general corporate accounts and records. Upon termination of this Agreement,
      each party shall deliver to the other party all books and records that are,
      or
      are deemed by this Agreement to be, the property of such other
      party.

     

    
      	4.  	
              COMPENSATION

            

    

     

    Maiden
      shall pay to ARBL during the term of this Agreement, as consideration for the
      provision of the Services, 1.25% of all gross written premium ceded by AmTrust
      Ceding Insurers to Maiden pursuant to reinsurance agreements entered between
      Maiden and such AmTrust Ceding Insurers from time to time. For greater
      certainty, ARBL shall be entitled to the foregoing rate of compensation with
      respect to Maiden’s quota share of the Subject Premium (as defined in the
      Initial Reinsurance Agreements) ceded to it from time to time under the Initial
      Reinsurance Agreements.

     

    
      
        
        

      

      
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      	5.  	
              ARBITRATION

            

    

     

    
      	5.1  	
              As
                a condition precedent to any right of action hereunder, any dispute
                arising out of the interpretation, performance or breach of this
                Agreement, including the formation or validity thereof, shall be
                submitted
                for decision to a panel of three arbitrators. Notice requesting
                arbitration will be in writing and sent certified or registered mail,
                return receipt requested.

            

    

     

    
      	5.2  	
              Each
                party shall choose one arbitrator and the two arbitrators shall,
                before
                instituting the hearing, choose an impartial third arbitrator who
                shall
                preside at the hearing. If either party fails to appoint its arbitrator
                within thirty (30) days after being requested to do so by the other
                party,
                the latter, after ten (10) days notice by certified or registered
                mail of
                its intention to do so, may appoint the second
                arbitrator.

            

    

     

    
      	5.3  	
              If
                the first two arbitrators are unable to agree upon the third arbitrator
                within thirty (30) days of their appointment, each arbitrator shall
                name
                three candidates within ten days thereafter, two of whom shall be
                declined
                by the other arbitrator within fifteen days after receiving their
                names,
                and within five days the choice shall be made between the two remaining
                candidates by drawing lots. All arbitrators shall be disinterested
                active
                or former executive officers of insurance or reinsurance companies
                or
                Underwriters at Lloyd’s.

            

    

     

    
      	5.4  	
              Within
                thirty (30) days after notice of appointment of all arbitrators,
                the panel
                shall meet and determine timely periods for briefs, discovery procedures
                and schedules for hearings. The panel shall be relieved of all judicial
                formality and shall not be bound by the strict rules of procedure
                and
                evidence. Unless the panel agrees otherwise, arbitration shall take
                place
                in New York, New York, but the venue may be changed when deemed by
                the
                panel to be in the best interest of the arbitration proceeding. Insofar
                as
                the arbitration panel looks to substantive law, it shall consider
                the law
                of the New York. The decision of any two arbitrators when rendered
                in
                writing shall be final and binding. The panel is empowered to grant
                interim relief as it may deem
                appropriate.

            

    

     

    
      	5.5  	
              The
                panel shall make its decision considering the custom and practice
                of the
                applicable insurance and reinsurance business as promptly as possible
                following the termination of hearings. Judgement upon the award may
                be
                entered in any court having jurisdiction thereof. Except
                as provided above, arbitration shall be based, insofar as applicable,
                upon
                the arbitration procedures of ARIAS
                US.

            

    

     

    
      	5.6  	
              Each
                party shall bear the expense of its own arbitrator and shall jointly
                and
                equally bear with the other party the cost of the third arbitrator.
                In the
                event that both arbitrators are chosen by one party, the fees of
                all
                arbitrators shall be equally divided between the parties. The panel
                shall
                allocate the remaining costs of the arbitration.
                

            

    

     

    
      
        
        

      

      
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    6.  MISCELLANEOUS

     

    
      	6.1  	
              Governing
                Law.
                This Agreement shall
                be governed as to all disputes arising under this Agreement by the
                laws of
                the State of New York without regard to the principles of conflicts
                of
                laws.

            

    

     

    
      	6.2  	
              Entire
                Agreement.
                This Agreement contains the entire agreement between the parties
                hereto
                relating to the subject matter hereof and supersedes and replaces
                all oral
                statements and prior writings with respect
                thereto.

            

    

     

    
      	6.3  	
              Assignment
                and Amendment.
                Neither party hereto may assign any of its rights or obligations
                hereunder
                without the prior written consent of the other party hereto. No
                amendment or modification of this Agreement will be effective unless
                it is
                in writing and signed by both parties
                hereto.

            

    

     

    
      	6.4  	
              Counterparts.
                This Agreement may be executed in any number of counterparts, and
                by the
                parties on separate counterparts, but will not be effective until
                each
                party has executed at least one counterpart. Each counterpart will
                constitute an original of this Agreement, but all the counterparts
                will
                together constitute but one and the same instrument. All signatures
                of the
                parties to this Agreement may be transmitted by facsimile, and such
                facsimile will, for all purposes, be deemed to be the original signature
                of such party whose signature it reproduces and will be binding upon
                such
                party.

            

    

     

    
      	6.5  	
              Waiver.
                Except as otherwise expressly set forth in this Agreement, there
                shall be
                no waiver of any breach of the terms of this Agreement, nor waiver
                of any
                right, remedy, power or privilege conferred by this Agreement, except
                as
                notified in writing by the party waiving to the other party, or as
                otherwise expressly provided for in this Agreement. Notwithstanding
                this,
                and for the avoidance of doubt:

            

    

     

    a.  any
      waiver of a breach of any term of this Agreement or of any default hereunder
      shall not be deemed a waiver of any subsequent breach or default and shall
      in no
      way affect the other terms of this Agreement; and

     

    b.  no
      failure to exercise and no delay on the part of any party in exercising any
      right, remedy, power or privilege of that party under this Agreement and no
      course of dealing between the parties shall be construed or operate as a waiver
      thereof, nor shall any single or partial exercise of any right, remedy, power
      or
      privilege preclude any other or further exercise thereof or the exercise of
      any
      right, remedy, power or privilege. The rights and remedies provided by this
      Agreement are cumulative and are not exclusive of any rights or remedies
      provided by law.

     

    
      
        
        

      

      
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      	6.6  	
              Headings.
                The headings of this Agreement are inserted for convenience only,
                and
                shall not affect the meaning or construction of any provision of
                this
                Agreement.

            

    

     

    
      	6.7  	
              Notices.
                Any notice and other communication required or permitted hereunder
                shall
                be in writing and shall be delivered personally, sent by facsimile
                transmission (and immediately after transmission confirmed by telephone),
                or sent by certified, registered or express mail, postage prepaid;
                provided, however, that the party delivering a communication by facsimile
                transmission shall retain the electronically generated confirmation
                of
                delivery, showing the telephone number to which the transmission
                was sent
                and the date and time of the transmission. Any such notice shall
                be deemed
                given when so delivered personally or sent by facsimile transmission
                (and
                immediately after transmission confirmed by telephone), or, if mailed,
                on
                the date shown on the receipt therefor, as follows (or to such other
                address or facsimile number as the party shall furnish the other
                party in
                accordance with this paragraph):

            

    

     

    If
      to
      Maiden, to:

     

    7
      Reid
      Street

    Hamilton
      HM 12, Bermuda

     

    Attention:
      Bentzion S. Turin

    Fax
      No.:
      441-292-5796

     

    If
      to
      ARBL, to:

     

    7
      Reid
      Street

    Hamilton
      HM 12, Bermuda

     

    Attention:
      Michael Bott

    Fax
      No.:
      441-292-5796

     

    

     

    [Remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement by their
      respective duly authorized officers.

     

    

    MAIDEN
      INSURANCE COMPANY, LTD.

    

    

    By:___/s/
      Bentzion S. Turin___  

    Dated:
      July 3, 2007__________________      

    

    

    

    AII
      REINSURANCE BROKER LTD.

    

    

    By:____/s/
      Andre Dill________   

    Dated:
      July 3, 2007__________________       

    

    
      
        
        

      

      
        6NEITHER
      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
      (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
      FORM,
      THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
      TO
      RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER
      LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. 

     

    
      	
              Principal
                Amount: $____________

            	 	
              Issue
                Date: September ___, 2007

            
	
              Purchase
                Price: $______________

            	 	 

    

     

    SECURED
      CONVERTIBLE PROMISSORY NOTE

    

    FOR
      VALUE
      RECEIVED, PAY88, INC., a Nevada corporation (hereinafter called “Borrower”),
      hereby promises to pay to ____________________________,
      ___________________________________________________________, (the “Holder”) or
      its registered assigns or successors in interest or order, without demand,
      the
      sum of ____________________________ Dollars ($__________) (“Principal Amount”),
      on March ___, 2009 (the “Maturity Date”), if not sooner paid.

    

    This
      Note
      has been entered into pursuant to the terms of a subscription agreement between
      the Borrower, the Holder and certain other holders (the “Other Holders”) of
      convertible promissory notes (the “Other Notes”), dated of even date herewith
      (the “Subscription Agreement”), and shall be governed by the terms of such
      Subscription Agreement. Unless otherwise separately defined herein, all
      capitalized terms used in this Note shall have the same meaning as is set forth
      in the Subscription Agreement. The following terms shall apply to this
      Note:

    

    ARTICLE
      I

    

    INTEREST;
      AMORTIZATION

    

    1.1. Interest
      Rate.
      Interest on the outstanding Principal Amount shall accrue from the date of
      this
      Note and shall be payable in arrears together with, at the same time and in
      the
      same manner as payment of Principal Amount and on the Maturity Date, whether
      by
      acceleration or otherwise. Interest on the outstanding principal balance of
      this
      Note shall accrue at the Primate Rate plus four percent (4.0%) per annum (the
      “Interest Rate”). “Prime Rate” means the rate per annum equal to the Prime Rate
      as published in the US edition of the Wall Street Journal on the business day
      immediately preceding the day of the calculation of applicable interest rate.
      The Interest Rate shall be calculated on September 15 and March 15 of each
      year.
      The Interest Rate, as calculated from time to time shall, in all events, be
      not
      less than eight percent (8%) per annum. Interest on the outstanding principal
      balance of the Note shall be computed on the basis of the actual number of
      days
      elapsed and a year of three hundred and sixty (360) days.

    

       
      1.2. Minimum
      Monthly Principal and Interest Payments.
      Amortizing payments of the outstanding Principal Amount of this Note shall
      commence on the 180th
      days
      after the Issue date and on the same day of each month thereafter (each a
“Repayment Date”) until the Principal Amount has been repaid in full, whether by
      the payment of cash or by the conversion of such Principal Amount into Common
      Stock pursuant to the terms hereof. Subject to Section 2.1 and Article 3 below,
      on each Repayment Date, the Borrower shall make payments to the Holder in an
      amount equal to eight and one-third percent (8.333%) of the initial Principal
      Amount of this Note, and any other amounts which are then owing under this
      Note
      that have not been paid
      (collectively, the “Monthly Amount”). Amounts of conversions made by the Holder
      or Borrower pursuant to Section 2.1 or Article III shall be applied first
      against outstanding fees and damages, then outstanding interest and then to
      Principal Amounts of any not yet due Monthly Amounts at the discretion of the
      Holder. Any Principal Amount, interest and any other sum arising under this
      Note
      and the Subscription Agreement that remains outstanding on the Maturity Date
      shall be due and payable on the Maturity Date.

     

    
      
         

      

      
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    1.3. Default
      Interest Rate.
      Following the occurrence and during the continuance of an Event of Default
      (as
      defined in Article IV), which, if susceptible to cure is not cured within the
      cure periods (if any) set forth in Article IV, otherwise then from the first
      date of such occurrence, the annual interest rate on this Note shall (subject
      to
      Section 6.7) be the Interest Rate set forth in Section 1.2 and an additional
      five percent (5%), and be due on demand. 

    

    ARTICLE
      II

    

    CONVERSION
      AND REPAYMENT

    

    2.1. Payment
      of Monthly Amount in Cash or Common Stock.
      Subject
      to Section 3.2 hereof, the Borrower shall pay the Monthly Amount on the
      applicable Repayment Date, at the Borrower’s election, in either of the
      following manners: (i) in cash equal to 110% of the principal portion of the
      Monthly Amount together with all other amounts payable with such principal,
      or
      (ii) in registered Common Stock at an applied conversion rate equal to the
      lesser of (A) the Fixed Conversion Price (as defined in section 3.1 hereof),
      or
      (B) 80% of the average of the five lowest closing bid prices for the Common
      Stock as reported by Bloomberg L.P. for the Principal Market for the twenty
      trading days preceding such Repayment Date (“Lookback Period”) (“Minimum
      Conversion Price”), as such amount may be adjusted as described herein. In the
      event the closing price of the Common Stock as reported by Bloomberg L.P. for
      the ten trading days preceding the Repayment Date is equal to or greater than
      200% of the Fixed Conversion Price, then the Company may not elect to pay the
      corresponding Monthly Amount with cash but must instead pay with shares of
      Common Stock valued at the Fixed Conversion Price. Amounts paid with shares
      of
      Common Stock must be delivered to the Holder not later than three business
      days
      after the applicable Repayment Date. The Borrower must send notice to the Holder
      by confirmed telecopier not later than 6:00 PM, New York City time on the
      thirtieth trading day preceding a Repayment Date notifying Holder of Borrower’s
      election to pay the Monthly Amount in cash or Common Stock. The Notice must
      state the amount of the Monthly Amount including a description of the components
      of such Monthly Amount and include supporting calculations. Elections by the
      Borrower must be made to all Other Holders in proportion to the initial relative
      Note principal held by the Holder and the Other Holders. If such notice is
      not
      given, or is not timely sent or if the Monthly Redemption Amount is not timely
      delivered or if the Borrower elects to pay the Monthly Amount with Common Stock,
      then Holder shall have the right, instead of the Company, to elect in writing
      prior to three trading days before the applicable Repayment Date, whether to
      be
      paid in cash or Common Stock or defer the payment of the relevant Monthly Amount
      until three business days after demand therefore by the Holder. If notice by
      the
      Company is not given, or is not timely given, then, unless notice is given
      by
      the Holder pursuant to the preceding sentence, the relevant Monthly Amount
      must
      be paid in cash. The conversion price in connection with such deferred Monthly
      Amount, if the Holder elects to convert such deferred Monthly Amount, shall
      be
      the lowest Conversion Price or Minimum Conversion Price that could be calculated
      for any Repayment Date from the Repayment Date for such deferred Monthly Amount
      until such Monthly Amount is actually paid. Such Holder’s election shall not be
      construed to be a waiver of any default by Borrower relating to non-timely
      compliance by Borrower with any of its obligations under this Note. In no event
      may the calculated value of the Common Stock actually paid in connection with
      a
      Repayment Date to the Holder and Other Holders, in the aggregate, exceed 35%
      of
      the lesser of (i) the average of the VWAPs during the Lookback Period, or (ii)
      the closing bid price of the Common Stock as reported by Bloomberg L.P. for
      the
      Principal Market for the trading day immediately preceding such Repayment Date,
      multiplied by the daily reported trading volume during the Lookback Period.
      “VWAP”
shall
      mean the sum of the dollars traded for every purchase and sale of the Common
      Stock on the Principal Market (determined as the price per share of Common
      Stock
      at which such purchase and sale occurred multiplied by the number of shares
      of
      Common Stock so purchased and sold) divided by the total shares of Common Stock
      traded during the period.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    2.2.
       Effective
      Registration Statement.
      Notwithstanding anything to the contrary herein, no amount payable hereunder
      may
      be
      paid in
      shares
      of Common
      Stock by
      the Borrower nor may the Borrower exercise its right to give a Notice of
      Mandatory Conversion without the Holder’s consent unless (a) either (i) an
      effective current Registration Statement covering the shares of Common Stock
      to
      be issued in satisfaction of such obligations exists, or (ii) an exemption
      from
      registration of the resale of shares of Common Stock to be issued in
      satisfaction of such obligations is available pursuant to Rule 144(k) of the
      1933 Act, (b) an Event of Default hereunder (or an event that with the passage
      of time or the giving of notice could become an Event of Default), is pending
      or
      is otherwise waived in writing by the Holder in whole or in part at the Holder’s
      option, and (c) the Principal Market is either the OTC Bulletin Board, American
      Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, or New York Stock
      Exchange (“Listing Condition”) from and after thirty (30) days prior to the
      relevant Repayment Date.

    

    ARTICLE
      III

    

    CONVERSION
      RIGHTS

    

    3.1. Holder’s
      Conversion Rights.
      Subject
      to Section 3.2, the Holder shall have the right, but not the obligation, to
      convert all or any portion of the then aggregate outstanding Principal Amount
      of
      this Note, together with interest, if any, and fees due hereon, and any sum
      arising under the Subscription Agreement, and the Transaction Documents,
      including but not limited to Liquidated Damages, into shares of Common Stock,
      subject to the terms and conditions set forth in this Article III, at the rate
      of $1.00 per
      share
      of Common Stock (“Fixed Conversion Price”), as the same may be adjusted pursuant
      to this Note and the Subscription Agreement. The Holder may exercise such right
      by delivery to the Borrower of a written Notice of Conversion pursuant to
      Section 3.3.

    

    3.2. Conversion
      Limitation.
      Neither
Holder
      nor the Borrower may convert (including a Mandatory Conversion) on any date
      that
      amount of the Note Principal or interest in connection with that number of
      shares of Common Stock which would be in excess of the sum of (i) the number
      of
      shares of Common Stock beneficially owned by the Holder and its affiliates
      on a
      Conversion Date, Repayment Date, or interest payment date, as the case may
      be,
      (ii) any Common Stock issuable in connection with the unconverted portion of
      the
      Note, and (iii) the number of shares of Common Stock issuable upon the
      conversion of the Note with respect to which the determination of this provision
      is being made, which would result in beneficial ownership by the Holder and
      its
      affiliates of more than 4.99% of the outstanding shares of Common Stock of
      the
      Borrower on such Conversion Date. For the purposes of the provision to the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
      shall not be limited to aggregate conversions of only 4.99% and aggregate
      conversion by the Holder may exceed 4.99%. The Holder shall have the authority
      and obligation to determine whether the restriction contained in this Section
      3.2 will limit any conversion hereunder and to the extent that the Holder
      determines that the limitation contained in this Section applies, the
      determination of which portion of the Notes are convertible shall be the
      responsibility and obligation of the Holder. The Holder may waive the conversion
      limitation described in this Section 3.2, in whole or in part, upon and
      effective after 61 days prior written notice to the Borrower to increase such
      percentage to up to 9.99%.

     

    
      
         

      

      
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    3.3. Mechanics
      of Holder’s Conversion.
      

    

    (a) In
      the
      event that the Holder elects to convert any amounts outstanding under this
      Note
      into Common Stock, the Holder shall give notice of such election by delivering
      an executed and completed notice of conversion (a “Notice of Conversion”) to the
      Borrower, which Notice of Conversion shall provide a breakdown in reasonable
      detail of the Principal Amount, accrued interest and amounts being converted.
      The original Note is not
      required
      to be surrendered to the Borrower
      until
      all sums due under the Note have been paid. On each Conversion Date (as
      hereinafter defined) and in accordance with its Notice of Conversion, the Holder
      shall make the appropriate reduction to the Principal Amount, accrued interest
      and fees as entered in its records.
      Each
      date
      on which a Notice of Conversion is delivered or telecopied to the Borrower
      in
      accordance with the provisions hereof shall be deemed a “Conversion Date.” A
      form of Notice of Conversion
      to be employed by the Holder is annexed hereto as Exhibit A.

    

    (b) Pursuant
      to the terms of a Notice of Conversion, the Borrower will issue instructions
      to
      the transfer agent accompanied by an opinion of counsel (if so required by
      the
      Borrower’s transfer agent), and, except as otherwise provided below, shall cause
      the transfer agent to transmit the certificates representing the Conversion
      Shares to the Holder by crediting the account of the Holder’s designated broker
      with the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal
      Agent Commission (“DWAC”) system within three (3) business days after receipt by
      the Borrower of the Notice of Conversion (the “Delivery Date”). In the case of
      the exercise of the conversion rights set forth herein, the conversion privilege
      shall be deemed to have been exercised and the Conversion Shares issuable upon
      such conversion shall be deemed to have been issued upon the date of receipt
      by
      the Borrower of the Notice of Conversion. The Holder shall be treated for all
      purposes as the beneficial holder of such shares of Common Stock, or, in the
      case that Borrower delivers physical certificates as set forth below, the record
      holder of such shares of Common Stock, unless the Holder provides the Borrower
      written instructions to the contrary.  Notwithstanding
      the foregoing to the contrary, the Borrower or its transfer agent shall only
      be
      obligated to issue and deliver the shares to the DTC on the Holder’s behalf via
      DWAC (or certificates free of restrictive legends) if the registration statement
      providing for the resale of the shares of Common Stock issuable upon the
      conversion of this Note is effective and the Holder has complied with all
      applicable securities laws in connection with the sale of the Common Stock,
      including, without limitation, the prospectus delivery requirements and has
      provided representations accordingly. In the event that Conversion Shares cannot
      be delivered to the Holder via DWAC, the Borrower shall deliver physical
      certificates representing the Conversion Shares by the Delivery Date to an
      address designated by Holder in the U.S.

    

    3.4. Conversion
      Mechanics.

    

    (a) The
      number of shares of Common Stock to be issued upon each conversion of this
      Note
      pursuant to this Article III shall be determined by dividing that portion of
      the
      Principal Amount and interest and fees to be converted, if any, by the then
      applicable Fixed Conversion Price.

    

    (b) The
      Fixed
      Conversion Price and number and kind of shares or other securities to be issued
      upon conversion shall be subject to adjustment from time to time upon the
      happening of certain events while this conversion right remains outstanding,
      as
      follows:

     

    A. Merger,
      Sale of Assets, etc.
      If (A)
      the Company effects any merger or consolidation of the Company with or into
      another entity, (B) the Company effects any sale of all or substantially all
      of
      its assets in one or a series of related transactions, (C) any tender offer
      or
      exchange offer (whether by the Company or another entity) is completed pursuant
      to which holders of Common Stock are permitted to tender or exchange their
      shares for other securities, cash or property, (D) the Company consummates
      a
      stock purchase agreement or other business combination (including, without
      limitation, a reorganization, recapitalization, spin-off or scheme of
      arrangement) with one or more persons or entities whereby such other persons
      or
      entities acquire more than the 50% of the outstanding shares of Common Stock
      (not including any shares of Common Stock held by such other persons or entities
      making or party to, or associated or affiliated with the other persons or
      entities making or party to, such stock purchase agreement or other business
      combination), (E) any "person" or "group" (as these terms are used for purposes
      of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the "beneficial
      owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly,
      of
      50% of the aggregate Common Stock of the Company, or (F) the Company effects
      any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (in any such case, a "Fundamental Transaction"),
      this Note, as to the unpaid principal portion thereof and accrued interest
      thereon, shall thereafter be deemed to evidence the right to convert into such
      number and kind of shares or other securities and property as would have been
      issuable or distributable on account of such Fundamental Transaction, upon
      or
      with respect to the securities subject to the conversion right immediately
      prior
      to such Fundamental Transaction. The foregoing provision shall similarly apply
      to successive Fundamental Transactions of a similar nature by any such successor
      or purchaser. Without limiting the generality of the foregoing, the
      anti-dilution provisions of this Section shall apply to such securities of
      such
      successor or purchaser after any such Fundamental Transaction.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    B. Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid principal portion hereof and accrued interest
      hereon, shall thereafter be deemed to evidence the right to convert into an
      adjusted number of such securities and kind of securities as would have been
      issuable as the result of such change with respect to the Common Stock
      immediately prior to such reclassification or other change.

    

    C. Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      in shares of Common Stock, the Conversion Price shall be proportionately reduced
      in case of subdivision of shares or stock dividend or proportionately increased
      in the case of combination of shares, in each such case by the ratio which
      the
      total number of shares of Common Stock outstanding immediately after such event
      bears to the total number of shares of Common Stock outstanding immediately
      prior to such event.

    

    D. Share
      Issuance.
      So long
      as this Note is outstanding, if the Borrower shall issue any Common Stock except
      for the Excepted Issuances (as defined in the Subscription Agreement), prior
      to
      the complete conversion or payment of this Note, for a consideration less than
      the Fixed Conversion Price that would be in effect at the time of such issue,
      then, and thereafter successively upon each such issuance, the Fixed Conversion
      Price shall be reduced to such other lower issue price. For purposes of this
      adjustment, the issuance of any security or debt instrument of the Borrower
      carrying the right to convert such security or debt instrument into Common
      Stock
      or of any warrant, right or option to purchase Common Stock shall result in
      an
      adjustment to the Fixed Conversion Price upon the issuance of the
      above-described security, debt instrument, warrant, right, or option and again
      upon the issuance of shares of Common Stock upon exercise of such conversion
      or
      purchase rights if such issuance is at a price lower than the then applicable
      Fixed Conversion Price. The reduction of the Fixed Conversion Price described
      in
      this paragraph is in addition to the other rights of the Holder described in
      the
      Subscription Agreement.

    

    (c) Whenever
      the Conversion Price is adjusted pursuant to Section 3.4(b) above, the Borrower
      shall promptly mail to the Holder a notice setting forth the Conversion Price
      after such adjustment and setting forth a statement of the facts requiring
      such
      adjustment.

    

    3.5. Reservation.
      During
      the period the conversion right exists, Borrower will reserve from its
      authorized and unissued Common Stock not less than
      one
      hundred
      and
      seventy-five
      percent (175%)
      of the
      number of shares to provide for the issuance of Common Stock upon the full
      conversion of this Note.
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully
      paid and
      non-assessable. Borrower agrees that its issuance of this Note shall constitute
      full authority to its officers, agents, and transfer agents who are charged
      with
      the duty of executing and issuing stock certificates to execute and issue the
      necessary certificates for shares of Common Stock upon the conversion of this
      Note.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    3.6 Issuance
      of Replacement Note.
      Upon
      any partial conversion of this Note, a replacement Note containing the same
      date
      and provisions of this Note shall,
      at the
      written request of the Holder, be
      issued
      by the Borrower to the Holder for the outstanding Principal Amount of this
      Note
      and accrued interest which shall not have been converted or paid, provided
      Holder has surrendered an original Note to the Borrower. In the event that
      the
      Holder elects not to surrender a Note for reissuance upon partial payment or
      conversion, the Holder hereby indemnifies the Borrower against any and all
      loss
      or damage attributable to a third-party claim in an amount in excess of the
      actual amount then due under the Note, and the
      Borrower is hereby expressly authorized to offset any such amounts mutually
      agreed upon by Borrower and Holder or pursuant to a judgment in Borrower’s favor
      against amounts then due under the Note.

    

    ARTICLE
      IV

    

    EVENTS
      OF DEFAULT

    

    The
      occurrence of any of the following events of default (“Event of Default”) shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below:

    

    4.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay any installment of Principal Amount, interest or other
      sum
      due under this Note or any Transaction Document when due and such failure
      continues for a period of five (5) business days after the due
      date.

    

    4.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other term or condition of the
      Subscription Agreement, this Note or Transaction Document in any material
      respect and such breach, if subject to cure, continues for a period of ten
      (10)
      business days after written notice to the Borrower from the Holder.

    

    4.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in the
      Subscription Agreement, Transaction Document or in any agreement, statement
      or
      certificate given in writing pursuant hereto or in connection herewith or
      therewith shall be false or misleading in any material respect as of the date
      made and the Closing Date.

    

    4.4 Receiver
      or Trustee.
      The
      Borrower or any Subsidiary of Borrower shall make an assignment for the benefit
      of creditors, or apply for or consent to the appointment of a receiver or
      trustee for them or for a substantial part of their property or business; or
      such a receiver or trustee shall otherwise be appointed.

    

    4.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      Borrower or any subsidiary of Borrower or any of their property or other assets
      for more than $100,000,
      and
      shall remain unvacated, unbonded, unappealed, unsatisfied, or unstayed for
      a
      period of forty-five (45) days.

    

    4.6 Non-Payment.
      A
      default by the Borrower under any one or more obligations in an aggregate
      monetary amount in excess of $100,000 for more than twenty (20) days after
      the
      due date, unless the Borrower is contesting the validity of such obligation
      in
      good faith and has segregated cash funds equal to the contested
      amount.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    4.7 Bankruptcy.
      Bankruptcy, insolvency, reorganization, or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower or any Subsidiary of
      Borrower.

    

    4.8 Delisting.
      Delisting of the Common Stock from any Principal Market for a period of seven
      consecutive trading days; or notification from a Principal Market that the
      Borrower is not in compliance with the conditions for such continued listing
      on
      such Principal Market.

    

    4.9 Stop
      Trade.
      An SEC
      or judicial stop trade order or Principal Market trading suspension with respect
      to Borrower’s Common Stock that lasts for five or more consecutive trading
      days.

    

    4.10 Failure
      to Deliver Common Stock or Replacement Note.
      Borrower’s failure to timely deliver Common Stock to the Holder pursuant to and
      in the form required by this Note or the Subscription Agreement,
      or if
      required, a replacement Note.

    

    4.11 Non-Registration
      Event.
      The
      occurrence of a Non-Registration Event as described in Section 11.4 of the
      Subscription Agreement.

    

    4.12 Reverse
      Splits.
      The
      Borrower effectuates a reverse split of its Common Stock without twenty days
      prior written notice to the Holder.

     

    4.13 Cross
      Default.
      A
      default by the Borrower of a material term, covenant, warranty or undertaking
      of
      any Transaction Document or other agreement to which the Borrower and Holder
      are
      parties, or the occurrence of a material event of default under any such other
      agreement which is not cured after any required notice and/or cure
      period.

    

    4.14 Reservation
      Default.
      Failure
      by the Borrower to have reserved for issuance upon conversion of the Note the
      amount of Common Stock as set forth in this Note and the Subscription
      Agreement.

    

    4.15 Financial
      Statement Restatement.  
      The restatement of any financial statements filed by the Borrower for any date
      or period from two years prior to the Issue Date of this Note and until this
      Note is no longer outstanding, if the result of such restatement would, by
      comparison to the unrestated financial statements, have constituted a Material
      Adverse Effect.

    

    4.16 Other
      Note Default.
      The
      occurrence of any Event of Default under any Other Note.

    

    ARTICLE
      V

    

    SECURITY
      INTEREST

    

    5. Security
      Interest/Waiver of Automatic Stay.
      This
      Note is secured by a security interest granted to the Collateral Agent for
      the
      benefit of the Holder pursuant to a Security Agreement, as delivered by Borrower
      to Holder. The Borrower acknowledges and agrees that should a proceeding under
      any bankruptcy or insolvency law be commenced by or against the Borrower, or
      if
      any of the Collateral (as defined in the Security Agreement) should become
      the
      subject of any bankruptcy or insolvency proceeding, then the Holder should
      be
      entitled to, among other relief to which the Holder may be entitled under the
      Transaction Documents and any other agreement to which the Borrower and Holder
      are parties (collectively, "Loan Documents") and/or applicable law, an order
      from the court granting immediate relief from the automatic stay pursuant to
      11
      U.S.C. Section 362 to permit the Holder to exercise all of its rights and
      remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
      EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
      362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER
      11
      U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
      OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
      INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER
      TO
      ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
      APPLICABLE LAW. The Borrower hereby consents to any motion for relief from
      stay
      that may be filed by the Holder in any bankruptcy or insolvency proceeding
      initiated by or against the Borrower and, further, agrees not to file any
      opposition to any motion for relief from stay filed by the Holder. The Borrower
      represents, acknowledges and agrees that this provision is a specific and
      material aspect of the Loan Documents, and that the Holder would not agree
      to
      the terms of the Loan Documents if this waiver were not a part of this Note.
      The
      Borrower further represents, acknowledges and agrees that this waiver is
      knowingly, intelligently and voluntarily made, that neither the Holder nor
      any
      person acting on behalf of the Holder has made any representations to induce
      this waiver, that the Borrower has been represented (or has had the opportunity
      to he represented) in the signing of this Note and the Loan Documents and in
      the
      making of this waiver by independent legal counsel selected by the Borrower
      and
      that the Borrower has discussed this waiver with counsel.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    ARTICLE
      VI

    

    MISCELLANEOUS

    

    6.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of Holder hereof 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. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    

    6.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Borrower to: Pay88, Inc., 1053 North
      Barnstead Road, Barnstead, NH 03225, Attn: Guo Fan, CEO and
      President,
      telecopier: (603) 776-6151, with a copy by telecopier only to: David Lubin
&
Associates, 26 East Hawthorne Avenue, Valley Stream, NY 11580, Attn: David
      Lubin, Esq., telecopier: (516) 887-8250, and (ii) if to the Holder, to the
      name,
      address and telecopy number set forth on the front page of this Note, with
      a
      copy by telecopier
      only to
      Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
      10176, telecopier number: (212) 697-3575.

    

    6.3 Amendment
      Provision.
      The
      term “Note” and all reference thereto, as used throughout this instrument, shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented.

    

    6.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and
      assigns.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    6.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys’
fees.

    

    6.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York, including,
      but not limited to, New York statutes of limitations.
      Any
      action brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the civil or state
      courts of New York or in the federal courts located in the State and county
      of
      New York. Both parties and the individual signing this Agreement on behalf
      of
      the Borrower agree to submit to the jurisdiction of such courts. The prevailing
      party shall be entitled to recover from the other party its reasonable
      attorney's fees and costs. 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 unenforceability 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 Borrower in any other jurisdiction to
      collect on the Borrower's obligations to Holder, to realize on any collateral
      or
      any other security for such obligations, or to enforce a judgment or other
      decision in favor of the Holder. This
      Note shall be deemed an unconditional obligation of Borrower for the payment
      of
      money and, without limitation to any other remedies of Holder, may be enforced
      against Borrower by summary proceeding pursuant to New York Civil Procedure
      Law
      and Rules Section 3213 or any similar rule or statute in the jurisdiction where
      enforcement is sought. For purposes of such rule or statute, any other document
      or agreement to which Holder and Borrower are parties or which Borrower
      delivered to Holder, which may be convenient or necessary to determine Holder’s
      rights hereunder or Borrower’s obligations to Holder are deemed a part of this
      Note, whether or not such other document or agreement was delivered together
      herewith or was executed apart from this Note.

    

    6.7 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 Borrower to the
      Holder and thus refunded to the Borrower.

    

    6.8. Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party

    against
      the other.

    

    6.9 Redemption.
      This
      Note may not be redeemed or called without the consent of the Holder except
      as
      described in this Note or the Subscription Agreement.

    

    6.10 Shareholder
      Status.
      The
      Holder shall not have rights as a shareholder of the Borrower with respect
      to
      unconverted portions of this Note. However, the Holder will have the rights
      of a
      shareholder of the Borrower with respect to the Shares of Common Stock to be
      received after delivery by the Holder of a Conversion Notice to the
      Borrower.

    

    6.11 Non-Business
      Days.
      Whenever any payment or any action to be made shall be due on a Saturday, Sunday
      or a public holiday under the laws of the State of New York, such payment may
      be
      due or action shall be required on the next succeeding business day and, for
      such payment, such next succeeding day shall be included in the calculation
      of
      the amount of accrued interest payable on such date.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the ____ day of September, 2007.

     

    
      	 	 	 
	 	
              PAY88,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                

            
	 	
              Title:
                

            
	 	 
	
              WITNESS:

            	 
	
            	 
	
              ______________________________________

            	 

    

     

    
      
         

      

      
        10

        
          

        

      

       

    

    NOTICE
      OF CONVERSION

    

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

     

    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by Pay88, Inc. on September ___, 2007
      into Shares of Common Stock of Pay88, Inc. (the “Borrower”) according to the
      conditions set forth in such Note, as of the date written below.

     

    Date
      of
      Conversion:____________________________________________________________________

     

    Conversion
      Price:______________________________________________________________________

     

    Number
      of
      Shares of Common Stock Beneficially Owned on the Conversion Date:
      Less
      than 5% of the outstanding Common Stock of Pay88, Inc.

     

    Shares
      To
      Be
      Delivered:_________________________________________________________________

    

    

    Signature:____________________________________________________________________________

     

    Print
      Name:__________________________________________________________________________

     

    Address:_____________________________________________________________________________

    

    ____________________________________________________________________________

     

    
      
         

      

      
        11

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