Document:

EXECUTION
        VERSION

    

     

    THIS
      NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
      OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR
      OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE
      COMPANY OF A WRITTEN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE
      REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE AND THE SECURITIES
      ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
      OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES
      LAWS.

     

    JUMA
      TECHNOLOGY CORP.

    

    Senior
      Secured 10% Convertible Promissory Note

    

    Date:
      November 29, 2007

    $2,500,000

    

    For
      value
      received, JUMA TECHNOLOGY CORP., a Delaware corporation (the “Company”),
      and
      AGN NETWORKS, INC., a Delaware corporation (“AGN
      Networks”
and
      together with the Company, the “Makers”)
      hereby
      promises to pay to the order of Vision Opportunity Master Fund, Ltd. (together
      with its successors, representatives, and permitted assigns, the “Holder”),
      in
      accordance with the terms hereinafter provided, the principal amount of two
      million five hundred thousand ($2,500,000) dollars, together with interest
      thereon. The Makers are issuing this senior secured 10% convertible promissory
      note to the Holder pursuant to the Purchase Agreement (as defined in
Section
      1.1
      hereof).
      Any other senior secured 10% convertible promissory notes issued pursuant to
      the
      Purchase Agreement shall hereinafter be referred to as the “Other
      Notes”
and
      such Holders as the “Other
      Holders;”
      collectively, this note and the Other Notes are referred to as the “Notes.”

     

    All
      payments under or pursuant to this Note shall be made in United States Dollars
      in immediately available funds to the Holder at
      the
      address of the Holder as set forth in the Purchase Agreement or at such other
      place as the Holder may designate from time to time in writing to the Makers
      or
      by wire transfer of funds to the Holder's account, instructions for which are
      attached hereto as Exhibit
      A. The
      outstanding principal balance of this Note shall be due and payable on the
      three-year anniversary of the Issuance Date (the “Maturity
      Date”)
      or at
      such earlier time as provided herein. 

     

    This
      Note
      is secured by a Security Agreement dated the date hereof (the “Security
      Agreement”)
      of the
      Makers in favor of the Holder covering certain collateral (the “Collateral”),
      all
      as more particularly described and provided therein, and is entitled to the
      benefits thereof. The Security Agreement, the Uniform Commercial Code financing
      statements in connection with the Security Agreement and any and all other
      documents executed and delivered by the Makers to the Holder under which the
      Holder is granted liens on assets of the Makers are collectively referred to
      as
      the “Security
      Documents.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      I

     

    Section
      1.1 Purchase
      Agreement. This Note has been executed and delivered pursuant to the Note
      and Warrant Purchase Agreement dated as of November 29, 2007 (the “Purchase
      Agreement”)
      by and
      among the Makers
      and the
      purchasers listed therein. Capitalized terms used and not otherwise defined
      herein shall have the meanings set forth for such terms in the Purchase
      Agreement. 

     

    Section
      1.2 Interest.
      Beginning on the issuance date of this Note (the “Issuance
      Date”),
      the
      outstanding principal balance of this Note shall bear interest (“Interest”),
      in
      arrears, at a rate per annum equal to ten percent (10%), payable in cash
      quarterly commencing on December
      31, 2007 and on the last business day of each March, June, September and
      December thereafter so long as any principal amount evidenced by this Note
      remains outstanding. Interest shall be computed on the basis of a 360-day year
      of twelve (12) 30-day months and shall accrue commencing on the Issuance Date.
      Furthermore,
      upon the occurrence of an Event of Default (as defined in Section
      2.1
      hereof),
      then to the extent permitted by law, the Makers will pay interest in cash to
      the
      Holder, payable on demand, on the outstanding principal balance of this Note
      from the date of the Event of Default through the Maturity Date at a new rate
      of
      the lesser of twelve percent (12%) and the maximum applicable legal rate per
      annum. 

     

    Section
      1.3 Cash
      or Stock.  At
      the
      option of the Makers, Interest may be paid in cash or registered shares of
      Common Stock. Upon the payment of Interest in registered shares of Common Stock,
      the number of shares of Common Stock to be issued to the Holder shall be an
      amount equal to the quotient of (x) the Interest payment due divided
      by
      (y)
      eighty-five percent (85%) of the average of the VWAP (as defined below) of
      the
      closing trading price for the ten (10) trading days immediately preceding the
      date the Interest payment is due. For purposes hereof, “VWAP”
shall
      mean, for any date, (i) the daily volume weighted average price of the Common
      Stock for such date on the OTC Bulletin Board as reported by Bloomberg Financial
      L.P. (“Bloomberg”)
      (based
      on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (ii)
      if
      the Common Stock is not then listed or quoted on the OTC Bulletin Board and
      if
      prices for the Common Stock are then reported in the “Pink Sheets” published by
      the Pink Sheets, LLC (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of the
      Common Stock so reported; or (iii) in all other cases, the fair market value
      of
      a share of Common Stock as determined by an independent appraiser selected
      in
      good faith by the Holder and reasonably acceptable to the Makers. Any shares
      of
      Common Stock issued as Interest shall have piggyback registration rights if
      not
      otherwise registered pursuant to an effective registration statement.

     

    Section
      1.4 Ranking
      and Covenants. 

     

    (a) Subject
      to the pay-off of the M & T Bank and the concomitant release of its lien, no
      indebtedness of any of the Makers is senior to this Note in right of payment,
      whether with respect to interest, damages or upon liquidation or dissolution
      or
      otherwise; provided that any indebtedness pursuant to the ScanSource, Inc.
      Computer Hardware Purchase Agreement and Credit Line, (the “Existing
      ScanSource Indebtedness”),
      shall
      rank senior to the Note and Other Notes only with respect to the types of
      collateral currently covered under such agreement (the “ScanSource
      Collateral”).
      Other
      than the Existing ScanSource Indebtedness the Makers will not, and will not
      permit any Subsidiary to, directly or indirectly, enter into, create, incur,
      assume or suffer to exist any indebtedness of any kind, that is senior in any
      respect to the Makers’ obligations under the Notes, and the Makers will not, and
      will not permit any Subsidiary to, directly or indirectly, incur any Lien on
      or
      with respect to any of its property or assets now owned or hereafter acquired
      or
      any interest therein or any income or profits therefrom, except for indebtedness
      with respect to capital leases incurred in the ordinary course of
      business.

     

    
      
        
        

      

      
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    (b) So
      long
      as any Notes are outstanding, none of the Makers nor any Subsidiary shall,
      directly or indirectly, (i) redeem, purchase or otherwise acquire any of the
      Company’s capital stock or set aside any monies for such a redemption, purchase
      or other acquisition or (ii) issue any Options or Convertible Securities with
      an
      exercise price or a conversion price or a number of underlying shares that
      floats or resets or otherwise varies or is subject to adjustment based (directly
      or indirectly) on market prices of the Common Stock. 

     

    (c) The
      Makers shall perform any and all acts and execute any and all documents
      (including, without limitation, the execution, amendment or supplementation
      of
      any financing statement and continuation statement) for filing under the
      provisions of the Uniform Commercial Code (the “UCC”),
      and
      the rules and regulations thereunder, or any other statute, rule or regulation
      of any applicable jurisdiction which are necessary and/or advisable at the
      request of the Holders or its counsel in order to maintain in favor of the
      Holders of the Notes, a valid and perfected lien on the Collateral (as defined
      in the Security Agreement), subject only to the prior first priority security
      interest on the ScanSource Collateral.

     

    Section
      1.5 Payment
      on Non-Business Days. Whenever any payment 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 on the next succeeding business day and such next
      succeeding day shall be included in the calculation of the amount of accrued
      interest payable on such date.

     

    Section
      1.6 Transfer.
      This Note may be transferred or sold, subject to the provisions of Section
      4.8
      of this
      Note, or pledged, hypothecated or otherwise granted as security by the Holder.
      

     

    Section
      1.7 Replacement.
      Upon receipt of a duly executed, notarized and unsecured written statement
      from
      the Holder with respect to the loss, theft or destruction of this Note (or
      any
      replacement hereof) and a standard indemnity reasonably satisfactory to the
      Maker, or, in the case of a mutilation of this Note, upon surrender and
      cancellation of such Note, the Maker shall issue a new Note, of like tenor
      and
      amount, in lieu of such lost, stolen, destroyed or mutilated Note.

     

    ARTICLE
      II

     

    EVENTS
      OF DEFAULT; REMEDIES

     

    Section
      2.1 Events
      of Default. The occurrence of any of the following events shall be an
“Event
      of Default”
under
      this Note:

     

    (a) the
      Makers shall fail to make any principal or interest payments due under this
      Note
      on the date such payments are due and such default is not fully cured within
      ten
      (10) business days after the occurrence thereof; or

     

    
      
        
        

      

      
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    (b) the
      failure of a registration statement (the “Registration
      Statement”)
      providing for the resale of shares of the Company’s common stock, $0.0001 par
      value per share (the “Common
      Stock”)
      issuable upon conversion of this Note to be declared effective by the Securities
      and Exchange Commission on or prior to the Effectiveness Date applicable to
      such
      registration statement (as defined in the Registration Rights Agreement);
      or

     

    (c) the
      suspension from listing, without subsequent listing on any one of, or the
      failure of the Common Stock to be listed or quoted on at least one of the OTC
      Bulletin Board, the American Stock Exchange, the NASDAQ Global Market, the
      NASDAQ Capital Market or The New York Stock Exchange, Inc. for a period of
      ten
      (10) consecutive Trading Days; or

     

    (d) the
      Company’s notice to the Holder, including by way of public announcement, at any
      time, of its inability to comply (including for any of the reasons described
      in
Section
      3.8(a)
      hereof)
      or its intention not to comply with proper requests for conversion of this
      Note
      into shares of Common Stock; or

     

    (e) either
      (i) the Makers shall fail to timely deliver the shares of Common Stock upon
      conversion of the Note, (ii) the Makers shall fail to make the payment of any
      fees and/or liquidated damages under this Note, the Purchase Agreement or the
      Registration Rights Agreement, which failure is not remedied within ten (10)
      business days after the incurrence thereof; or

     

    (f) while
      the
      Registration Statement is required to be maintained effective pursuant to the
      terms of the Registration Rights Agreement, the effectiveness of the
      Registration Statement lapses for any reason (including, without limitation,
      the
      issuance of a stop order) or is unavailable to the Holder for sale of the
      Registrable Securities (as defined in the Registration Rights Agreement) in
      accordance with the terms of the Registration Rights Agreement, and such lapse
      or unavailability continues for a period of ten (10) consecutive Trading Days,
      provided
      that the
      Company has not exercised its rights pursuant to Section
      3(n)
      of the
      Registration Rights Agreement; or

     

    (g) default
      shall be made in the performance or observance of (i) any covenant, condition
      or
      agreement contained in this Note (other than as set forth in clause (f) of
      this
Section
      2.1)
      and
      such default is not fully cured within ten (10) business days after the Holder
      delivers written notice to the Makers of the occurrence thereof or (ii) any
      covenant, condition or agreement contained in the Purchase Agreement, the Other
      Notes, the Warrants, the Security Documents, the Registration Rights Agreement
      or any other Transaction Document which is not covered by any other provisions
      of this Section
      2.1
      and such
      default is not fully cured within ten (10) business days after the Holder
      delivers written notice to the Makers of the occurrence thereof; or

     

    
      
        
        

      

      
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    (h) any
      material representation or warranty made by either of the Makers herein or
      in
      the Purchase Agreement, the Registration Rights Agreement, the Other Notes,
      the
      Warrants, the Security Documents or any other Transaction Document shall prove
      to have been false or incorrect or breached in a material respect on the date
      as
      of which made and the Holder delivers written notice to the Maker of the
      occurrence thereof; or

     

    (i) either
      of
      the Makers shall after the Issuance Date (A) default in any payment of any
      amount or amounts of principal of or interest on any indebtedness (other than
      the indebtedness hereunder) the aggregate principal amount of which indebtedness
      is in excess of $100,000 or
      (B)
      default in the observance or performance of any other agreement or condition
      relating to any indebtedness or contained in any instrument or agreement
      evidencing, securing or relating thereto, or any other event shall occur or
      condition exist, the effect of which default or other event or condition is
      to
      cause, or to permit the holder or holders or beneficiary or beneficiaries of
      such indebtedness to cause with the giving of notice if required, such
      indebtedness to become due prior to its stated maturity; or 

     

    (j) either
      of
      the Makers shall (i) apply for or consent to the appointment of, or the taking
      of possession by, a receiver, custodian, trustee or liquidator of itself or
      of
      all or a substantial part of its property or assets, (ii) make a general
      assignment for the benefit of its creditors, (iii) commence a voluntary case
      under the United States Bankruptcy Code (as now or hereafter in effect) or
      under
      the comparable laws of any jurisdiction (foreign or domestic), (iv) file a
      petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
      reorganization or other similar law affecting the enforcement of creditors'
      rights generally, (v) acquiesce in writing to any petition filed against it
      in
      an involuntary case under United States Bankruptcy Code (as now or hereafter
      in
      effect) or under the comparable laws of any jurisdiction (foreign or domestic),
      or (vi) issue a notice of bankruptcy or winding down of its operations or issue
      a press release regarding same; or 

     

    (k) a
      proceeding or case shall be commenced in respect of either of the Makers,
      without its application or consent, in any court of competent jurisdiction,
      seeking (i) the liquidation, reorganization, moratorium, dissolution, winding
      up, or composition or readjustment of its debts, (ii) the appointment of a
      trustee, receiver, custodian, liquidator or the like of it or of all or any
      substantial part of its assets in connection with its liquidation or dissolution
      or (iii) similar relief in respect of it under any law providing for the relief
      of debtors, and such proceeding or case described in clause (i), (ii) or (iii)
      shall continue undismissed, or unstayed and in effect, for a period of thirty
      (30) days or any order for relief shall be entered in an involuntary case under
      United States Bankruptcy Code (as now or hereafter in effect) or under the
      comparable laws of any jurisdiction (foreign or domestic) against either of
      the
      Makers or action under the laws of any jurisdiction (foreign or domestic)
      analogous to any of the foregoing shall be taken with respect to either of
      the
      Makers and shall continue undismissed, or unstayed and in effect for a period
      of
      thirty (30) days; or

     

    (l) the
      failure of the Company to instruct its transfer agent to remove any legends
      from
      shares of Common Stock eligible to be sold under Rule 144 of the Securities
      Act
      and issue such unlegended certificates to the Holder within five (5) business
      days of the Holder’s request so long as the Holder has provided reasonable
      assurances to the Company, and based thereon the Company has determined, that
      such shares of Common Stock can be sold pursuant to Rule 144; or

     

    
      
        
        

      

      
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    (m) the
      failure of either of the Makers to pay any amounts due to the Holder herein
      or
      any other Transaction Document within ten (10) business days of the date such
      payments are due and such default is not fully cured within ten (10)business
      days after the Holder delivers written notice to the Maker of the occurrence
      thereof; or

     

    (n) the
      occurrence of an event of default under any other Transaction
      Document.

     

    Section
      2.2 Remedies
      Upon An Event of Default. If an Event of Default shall have occurred and
      shall be continuing, the Holder of this Note may at any time at its option,
      (a)
      declare the entire unpaid principal balance of this Note, together with all
      interest accrued hereon, due and payable, and thereupon, the same shall be
      accelerated and so due and payable, without presentment, demand, protest, or
      notice, all of which are hereby expressly unconditionally and irrevocably waived
      by the Makers; provided,
      however,
      that
      upon the occurrence of an Event of Default described in (i) Sections
      2.1(j)
      or
(k),
      the
      outstanding principal balance and accrued interest hereunder shall be
      automatically due and payable and (ii) Sections
      2.1(b)-(i),
      (l),
      (m)and
      (n),
      demand
      the prepayment of this Note pursuant to Section
      3.7
      hereof,
      (b) demand that the principal amount of this Note then outstanding shall be
      converted into shares of Common Stock at a Conversion Price per share calculated
      pursuant to Section
      3.1
      hereof
      assuming that the date that the Event of Default occurs is the Conversion Date
      (as defined in Section
      3.1
      hereof),
      or (c) exercise or otherwise enforce any one or more of the Holder's rights,
      powers, privileges, remedies and interests under this Note, the Purchase
      Agreement, the Registration Rights Agreement, the Security Agreement or
      applicable law. No course of delay on the part of the Holder shall operate
      as a
      waiver thereof or otherwise prejudice the right of the Holder. No remedy
      conferred hereby shall be exclusive of any other remedy referred to herein
      or
      now or hereafter available at law, in equity, by statute or
      otherwise.

     

    ARTICLE
      III

     

    CONVERSION;
      ANTIDILUTION; PREPAYMENT; COVENANTS

     

    Section
      3.1 Conversion.
      At any time on or after the Issuance Date, this Note shall be convertible (in
      whole or in part), at the option of the Holder (the “OptionalConversion”),
      into
      such number of fully paid and non-assessable shares of Common Stock (the
“Conversion
      Rate”)
      as is
      determined by dividing (x) that portion of the outstanding principal balance
      under this Note as of such date that the Holder elects to convert by (y) the
      Conversion Price (as defined in Section
      3.2(a)
      hereof)
      then in effect on the date on which the Holder faxes a notice of conversion
      (the
“Optional
      Conversion Notice”),
      duly
      executed, to the Company (facsimile number (631) 270-1105, Attn.: Chief
      Executive Officer) (the “Optional
      Conversion Date”);
      provided,
      however,
      that
      the Conversion Price shall be subject to adjustment as described in Section
      3.6
      of this
      Note. The Holder shall deliver this Note to the Company at the address
      designated in the Purchase Agreement as soon as practicable after such time
      that
      this Note is fully converted. With respect to partial conversions of this Note,
      the Company shall keep and attach hereto written records of the amount of this
      Note converted as of each Conversion Date. 

     

    
      
        
        

      

      
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    Section
      3.2 Conversion
      Price.

     

    (a) The
      term
“Conversion
      Price”
shall
      mean $0.75, subject to adjustment under Section
      3.6
      hereof.

     

    (b) The
      term
“Conversion
      Shares”
shall
      mean such shares of Common Stock issuable upon Conversion of this
      Note.

     

    (c) Notwithstanding
      any of the foregoing to the contrary, if during any period (a “Black-out
      Period”),
      the
      Holder is unable to trade any Common Stock issued or issuable upon conversion
      of
      this Note immediately due to the postponement of filing or delay or suspension
      of effectiveness of the Registration Statement or because the Company has
      otherwise informed such Holder that an existing prospectus cannot be used at
      that time in the sale or transfer of such Common Stock (provided that such
      postponement, delay, suspension or fact that the prospectus cannot be used
      is
      not due to factors solely within the control of the Holder of this Note or
      due
      to the Company exercising its rights under Section
      3(n)
      of the
      Registration Rights Agreement), such Holder shall have the option but not the
      obligation on any Conversion Date within ten (10) Trading Days following the
      expiration of the Black-out Period of using the Conversion Price applicable
      on
      such Optional Conversion Date or any Conversion Price selected by the Holder
      that would have been applicable had such Optional Conversion Date been at any
      earlier time during the Black-out Period or within the ten (10) Trading Days
      thereafter. In no event shall the Black-out Period have any effect on the
      Maturity Date of this Note. 

     

    Section
      3.3 Mechanics
      of Conversion. 

     

    (a) Not
      later
      than three (3) Trading Days after any Optional Conversion Date (the
“Delivery
      Date”),
      the
      Company or its designated transfer agent, as applicable, shall issue and deliver
      to the Depository Trust Company (“DTC”)
      account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
      System (“DWAC”)
      as
      specified in the Optional Conversion Notice, 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. Notwithstanding the foregoing, in the alternative,
      not
      later than the Delivery Date, the Company shall deliver to the applicable Holder
      by express courier a certificate or certificates which shall be free of
      restrictive legends and trading restrictions (other than those required by
      Section
      5.1
      of the
      Purchase Agreement) representing the number of shares of Common Stock being
      acquired upon the conversion of this Note. If in the case of any Optional
      Conversion such DWAC transfer or certificate or certificates are not delivered
      to or as directed by the applicable Holder by the Delivery Date, the Holder
      shall be entitled by written notice to the Company at any time on or before
      its
      receipt of such certificate or certificates thereafter, to rescind such
      conversion, in which event the Company shall immediately return this Note
      tendered for conversion, whereupon the Company and the Holder shall each be
      restored to their respective positions immediately prior to the delivery of
      such
      notice of revocation, except that any amounts described in Sections
      3.3(b)
      and
(c)
      shall be
      payable through the date notice of rescission is given to the Maker.

     

    
      
        
        

      

      
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    (b) The
      Company understand that a delay in the delivery of the shares of Common Stock
      upon conversion of this Note beyond the Delivery Date could result in economic
      loss to the Holder. If the Company fails to deliver to the Holder such shares
      via DWAC or a certificate or certificates pursuant to this Section hereunder
      by
      the Delivery Date, the Makers shall pay to such Holder, in cash, an amount
      per
      Trading Day for each Trading Day until such shares are delivered via DWAC or
      certificates are delivered, together with interest on such amount at a rate
      of
      10% per annum, accruing until such amount and any accrued interest thereon
      is
      paid in full, equal to the greater of (A) (i) 1% of the aggregate principal
      amount of the Notes requested to be converted for the first five (5) Trading
      Days after the Delivery Date and (ii) 2% of the aggregate principal amount
      of
      the Notes requested to be converted for each Trading Day thereafter and (B)
      $5,000 per day (which amount shall be paid as liquidated damages and not as
      a
      penalty). Nothing herein shall limit a Holder's right to pursue actual damages
      for the Company’s failure to deliver certificates representing shares of Common
      Stock (as the case may be) upon conversion within the period specified herein
      and such Holder shall have the right to pursue all remedies available to it
      at
      law or in equity (including, without limitation, a decree of specific
      performance and/or injunctive relief). Notwithstanding anything to the contrary
      contained herein, the Holder shall be entitled to withdraw an Optional
      Conversion Notice, and upon such withdrawal the Makers shall only be obligated
      to pay the liquidated damages accrued in accordance with this Section
      3.3(b)
      through
      the date the Optional Conversion Notice is withdrawn.

     

    (c) In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the shares of Common Stock issuable upon conversion of this Note
      on
      or before the Delivery Date, and if after such date the Holder is required
      by
      its broker to purchase (in an open market transaction or otherwise) shares
      of
      Common Stock to deliver in satisfaction of a sale by the Holder of the shares
      of
      Common Stock issuable upon conversion of this Note which the Holder anticipated
      receiving upon such exercise (a “Buy-In”),
      then
      the Makers shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of shares of Common Stock issuable upon conversion
      of
      this Note that the Company was required to deliver to the Holder in connection
      with the conversion at issue times (B) the price at which the sell order giving
      rise to such purchase obligation was executed, and (2) at the option of the
      Holder, either reinstate the portion of the Note and equivalent number of shares
      of Common Stock for which such conversion was not honored or deliver to the
      Holder the number of shares of Common Stock that would have been issued had
      the
      Company timely complied with its conversion and delivery obligations hereunder.
      For example, if the Holder purchases Common Stock having a total purchase price
      of $11,000 to cover a Buy-In with respect to an attempted conversion of shares
      of Common Stock with an aggregate sale price giving rise to such purchase
      obligation of $10,000, under clause (1) of the immediately preceding sentence
      the Makers shall be required to pay the Holder $1,000. The Holder shall provide
      the Makers written notice indicating the amounts payable to the Holder in
      respect of the Buy-In, together with applicable confirmations and other evidence
      reasonably requested by the Makers. Nothing herein shall limit a Holder’s right
      to pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon conversion of this Note
      as
      required pursuant to the terms hereof.

     

    
      
        
        

      

      
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    Section
      3.4 Ownership
      Cap and Certain Conversion Restriction. Notwithstanding
      anything to the contrary set forth in Section
      3
      of this
      Note, at no time may the Holder convert all or a portion of this Note if the
      number of shares of Common Stock to be issued pursuant to such conversion would
      exceed, when aggregated with all other shares of Common Stock owned by the
      Holder at such time, the number of shares of Common Stock which would result
      in
      the Holder beneficially owning (as determined in accordance with Section 13(d)
      of the Exchange Act and the rules thereunder) more than 4.99% of all of the
      Common Stock outstanding at such time; provided,
      however,
      that
      upon a Holder of this Note providing the Company with sixty-one (61) days notice
      (pursuant to Section
      4.1
      hereof)
      (the "Waiver
      Notice")
      that
      such Holder would like to waive this Section
      3.4
      with
      regard to any or all shares of Common Stock issuable upon conversion of this
      Note, this Section
      3.4
      will be
      of no force or effect with regard to all or a portion of the Note referenced
      in
      the Waiver Notice.

     

    Section
      3.5 Intentionally
      Omitted.

     

    Section
      3.6 Adjustment
      of Conversion Price.

     

    (a) The
      Conversion Price shall be subject to adjustment from time to time as
      follows:

     

    (i) Adjustments
      for Stock Splits and Combinations.
      If the
      Company shall at any time or from time to time after the Issuance Date, effect
      a
      stock split of the outstanding Common Stock, the applicable Conversion Price
      in
      effect immediately prior to the stock split shall be proportionately decreased.
      If the Company shall at any time or from time to time after the Issuance Date,
      combine the outstanding shares of Common Stock, the applicable Conversion Price
      in effect immediately prior to the combination shall be proportionately
      increased. Any adjustments under this Section
      3.6(a)(i)
      shall be
      effective at the close of business on the date the stock split or combination
      occurs.

     

    (ii) Adjustments
      for Certain Dividends and Distributions.
      If the
      Company shall at any time or from time to time after the Issuance Date, make
      or
      issue or set a record date for the determination of holders of Common Stock
      entitled to receive a dividend or other distribution payable in shares of Common
      Stock, then, and in each event, the applicable Conversion Price in effect
      immediately prior to such event shall be decreased as of the time of such
      issuance or, in the event such record date shall have been fixed, as of the
      close of business on such record date, by multiplying, the applicable Conversion
      Price then in effect by a fraction:

     

    (1) the
      numerator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date; and

     

    (2) the
      denominator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date plus the number of shares of Common Stock issuable
      in payment of such dividend or distribution.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (iii) Adjustment
      for Other Dividends and Distributions.
      If the
      Company shall at any time or from time to time after the Issuance Date, make
      or
      issue or set a record date for the determination of holders of Common Stock
      entitled to receive a dividend or other distribution payable in other than
      shares of Common Stock, then, and in each event, an appropriate revision to
      the
      applicable Conversion Price shall be made and provision shall be made (by
      adjustments of the Conversion Price or otherwise) so that the holders of this
      Note shall receive upon conversions thereof, in addition to the number of shares
      of Common Stock receivable thereon, the number of securities of the Company
      which they would have received had this Note been converted into Common Stock
      on
      the date of such event and had thereafter, during the period from the date
      of
      such event to and including the Conversion Date, retained such securities
      (together with any distributions payable thereon during such period), giving
      application to all adjustments called for during such period under this
Section
      3.6(a)(iii)
      with
      respect to the rights of the holders of this Note and the Other Notes;
provided,
      however,
      that if
      such record date shall have been fixed and such dividend is not fully paid
      or if
      such distribution is not fully made on the date fixed therefor, the Conversion
      Price shall be adjusted to the Conversion Price in effect immediately prior
      to
      such adjustment until the time of actual payment of such dividends or
      distributions.

     

    (iv) Adjustments
      for Reclassification, Exchange or Substitution.
      If the
      Common Stock issuable upon conversion of this Note at any time or from time
      to
      time after the Issuance Date shall be changed to the same or different number
      of
      shares of any class or classes of stock, whether by reclassification, exchange,
      substitution or otherwise (other than by way of a stock split or combination
      of
      shares or stock dividends provided for in Sections
      3.6(a)(i),
      (ii)
      and
(iii),
      or a
      reorganization, merger, consolidation, or sale of assets provided for in
Section
      3.6(a)(v)),
      then,
      and in each event, an appropriate revision to the Conversion Price shall be
      made
      and provisions shall be made (by adjustments of the Conversion Price or
      otherwise) so that the Holder shall have the right thereafter to convert this
      Note into the kind and amount of shares of stock and other securities receivable
      upon reclassification, exchange, substitution or other change, by holders of
      the
      number of shares of Common Stock into which such Note might have been converted
      immediately prior to such reclassification, exchange, substitution or other
      change, all subject to further adjustment as provided herein.

     

    (v) Adjustments
      for Reorganization, Merger, Consolidation or Sales of Assets.
      If at
      any time or from time to time after the Issuance Date there shall be a capital
      reorganization of the Company (other than by way of a stock split or combination
      of shares or stock dividends or distributions provided for in Section
      3.6(a)(i),
      (ii)
      and
(iii),
      or a
      reclassification, exchange or substitution of shares provided for in
Section
      3.6(a)(iv)),
      or a
      merger or consolidation of the Company with or into another corporation where
      the holders of outstanding voting securities of the Company prior to such merger
      or consolidation do not own over fifty percent (50%) of the outstanding voting
      securities of the merged or consolidated entity, immediately after such merger
      or consolidation, or the sale of all or substantially all of the Company's
      properties or assets to any other person (an “Organic
      Change”),
      then
      as a part of such Organic Change, (A) if the surviving entity in any such
      Organic Change is a public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, and its
      common stock is listed or quoted on a national exchange or the OTC Bulletin
      Board, an
      appropriate revision to the Conversion Price shall be made and provision shall
      be made (by adjustments of the Conversion Price) so that the Holder shall have
      the right thereafter to convert such Note into the kind and amount of shares
      of
      stock and other securities or property of the Company or any successor
      corporation as it would have received as a result of such Organic Change if
      it
      had converted this Note into Common Stock immediately prior to such Organic
      Change, and (B) if the surviving entity in any such Organic Change is not a
      public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, or
      its
      common stock is not listed or quoted on a national exchange or the OTC Bulletin
      Board,
      the
      Holder shall have the right to demand prepayment pursuant to Section
      3.7(b)
      hereof.
      In any such case, appropriate adjustment shall be made in the application of
      the
      provisions of this Section
      3.6(a)(v)
      with
      respect to the rights of the Holder after the Organic Change to the end that
      the
      provisions of this Section
      3.6(a)(v)
      (including any adjustment in the applicable Conversion Price then in effect
      and
      the number of shares of stock or other securities deliverable upon conversion
      of
      this Note) shall be applied after that event in as nearly an equivalent manner
      as may be practicable.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (vi) Adjustments
      for Issuance of Additional Shares of Common Stock. 

    

    (1) In
      the
      event the Company shall, at any time within one (1) year following the Issuance
      Date (the “Full
      Ratchet Period”),
      the
      Company shall issue or sell any additional shares of common stock (otherwise
      than as provided in the foregoing subsections (i) through (v) of this
Section
      3.6(a)
      or
      pursuant to Common Stock Equivalents (hereafter defined) granted or issued
      prior
      to the Issuance Date) (“Additional
      Shares of Common Stock”),
      at a
      price per share less than the Conversion Price then in effect or without
      consideration (the “New
      Conversion Price”),
      then
      the Conversion Price upon each such issuance shall be reduced to an amount
      equal
      to such New Conversion Price.

    

    (2) The
      provisions of paragraph (1) of this Section
      3.6(a)(vi)
      shall
      not apply to any issuance of Additional Shares of Common Stock for which an
      adjustment is provided under Section
      3.6(a)(vii).
      No
      adjustment of the number of shares of Common Stock for which this Note shall
      be
      convertible shall be made under paragraph (1) of this Section
      3.6(a)(vi)
      upon the
      issuance of any Additional Shares of Common Stock which are issued pursuant
      to
      the exercise of any Common Stock Equivalents, if any such adjustment shall
      previously have been made upon the issuance of such Common Stock Equivalents
      pursuant to Section
      3.6(a)(vii).

    

    (vii) Issuance
      of Common Stock Equivalents.
      In the
      event the Company shall at any time within the Full Ratchet Period issue any
      securities convertible into or exchangeable for, directly or indirectly, Common
      Stock (“Convertible
      Securities”),
      other
      than the Notes, or any rights or warrants or options to purchase any such Common
      Stock or Convertible Securities, shall be issued or sold (collectively, the
      “Common
      Stock Equivalents”)
      and
      the aggregate price per share for which Additional Shares of Common Stock may
      be
      issuable thereafter pursuant to such Common Stock Equivalent, plus the
      consideration received by the Company for issuance of such Common Stock
      Equivalent divided by the number of shares of Common Stock issuable pursuant
      to
      such Common Stock Equivalent (the “Aggregate
      Per Common Share Price”)
      shall
      be less than the applicable Conversion Price then in effect, or if, after any
      such issuance of Common Stock Equivalents, the price per share for which
      Additional Shares of Common Stock may be issuable thereafter is amended or
      adjusted, and such price as so amended shall make the Aggregate Per Common
      Share
      Price be less than the applicable Conversion Price in effect at the time of
      such
      amendment or adjustment, then the applicable Conversion Price upon each such
      issuance or amendment shall be adjusted as provided in the first sentence of
      subsection (vi) of this Section
      3.6(a)
      on the
      basis that (1) the maximum number of Additional Shares of Common Stock issuable
      pursuant to all such Common Stock Equivalents shall be deemed to have been
      issued (whether or not such Common Stock Equivalents are actually then
      exercisable, convertible or exchangeable in whole or in part) as of the earlier
      of (A) the date on which the Company shall enter into a firm contract for the
      issuance of such Common Stock Equivalent, or (B) the date of actual issuance
      of
      such Common Stock Equivalent. No adjustment of the applicable Conversion Price
      shall be made under this subsection (vii) upon the issuance of any Convertible
      Security which is issued pursuant to the exercise of any warrants or other
      subscription or purchase rights therefor, if any adjustment shall previously
      have been made to the exercise price of such warrants or other subscription
      or
      purchase rights therefor, then in effect upon the issuance of such warrants
      or
      other subscription or purchase rights therefor pursuant to this subsection
      (vii). No adjustment shall be made to the Conversion Price upon the issuance
      of
      Common Stock pursuant to the exercise, conversion or exchange of any Convertible
      Security or Common Stock Equivalent where an adjustment to the Conversion Price
      was made as a result of the issuance or purchase of any Convertible Security
      or
      Common Stock Equivalent.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (viii) Subsequent
      Common Stock and Common Stock Equivalents Issues.
      In the
      event the Company, shall, at any time after the Full Ratchet Period, issue
      or
      sell any Additional Shares of Common Stock or Common Stock Equivalents
      (otherwise than as provided in the foregoing subsections of this Section
      4),
      at a
      price per share less than the Conversion Price, or without consideration, the
      Conversion Price then in effect upon each such issuance shall be adjusted to
      that price (rounded to the nearest cent) determined by multiplying the
      Conversion Price by a fraction: (1) the numerator of which shall be equal to
      the
sum
      of (A)
      the number of shares of Common Stock outstanding immediately prior to the
      issuance of such Additional Shares of Common Stock plus
      (B) the
      number of shares of Common Stock (rounded to the nearest whole share) which
      the
      aggregate consideration for the total number of such Additional Shares of Common
      Stock so issued would purchase at a price per share equal to the then Conversion
      Price; and (2) the denominator of which shall be equal to the number of shares
      of Common Stock outstanding immediately after the issuance of such Additional
      Shares of Common Stock. No adjustment of the number of shares of Common Stock
      shall be made upon the issuance of any Additional Shares of Common Stock which
      are issued pursuant to the exercise of any warrants or other subscription or
      purchase rights or pursuant to the exercise of any conversion or exchange rights
      in any Common Stock Equivalents if any such adjustment shall previously have
      been made upon the issuance of such warrants or other rights or upon the
      issuance of such Common Stock Equivalents (or upon the issuance of any warrant
      or other rights therefore).

    

    (ix) Consideration
      for Stock.
      In case
      any shares of Common Stock or any Common Stock Equivalents shall be issued
      or
      sold:

    

    (1) in
      connection with any merger or consolidation in which the Company is the
      surviving corporation (other than any consolidation or merger in which the
      previously outstanding shares of Common Stock of the Company shall be changed
      to
      or exchanged for the stock or other securities of another corporation), the
      amount of consideration therefor shall be, deemed to be the fair market value,
      as determined reasonably and in good faith by the board of directors of the
      Company (the “Board”),
      of
      such portion of the assets and business of the nonsurviving corporation as
      the
      Board may determine to be attributable to such shares of Common Stock,
      Convertible Securities, rights or warrants or options, as the case may be;
      or

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (2) in
      the
      event of any consolidation or merger of the Company in which the Company is
      not
      the surviving corporation or in which the previously outstanding shares of
      Common Stock of the Company shall be changed into or exchanged for the stock
      or
      other securities of another corporation, or in the event of any sale of all
      or
      substantially all of the assets of the Company for stock or other securities
      of
      any corporation, the Company shall be deemed to have issued a number of shares
      of its Common Stock for stock or securities or other property of the other
      corporation computed on the basis of the actual exchange ratio on which the
      transaction was predicated, and for a consideration equal to the fair market
      value on the date of such transaction of all such stock or securities or other
      property of the other corporation. If any such calculation results in adjustment
      of the applicable Conversion Price, or the number of shares of Common Stock
      issuable upon conversion of the Notes, the determination of the applicable
      Conversion Price or the number of shares of Common Stock issuable upon
      conversion of the Notes immediately prior to such merger, consolidation or
      sale,
      shall be made after giving effect to such adjustment of the number of shares
      of
      Common Stock issuable upon conversion of the Notes. In the event Common Stock
      is
      issued with other shares or securities or other assets of the Company for
      consideration which covers both, the consideration computed as provided in
      this
Section
      3.6(viii)
      shall be
      allocated among such securities and assets as determined in good faith by the
      Board.

     

    (b) Record
      Date.
      In case
      the Company shall take record of the holders of its Common Stock for the purpose
      of entitling them to subscribe for or purchase Common Stock or Convertible
      Securities, then the date of the issue or sale of the shares of Common Stock
      shall be deemed to be such record date.

     

    (c) Certain
      Issues Excepted.
      Anything herein to the contrary notwithstanding, the Company shall not be
      required to make any adjustment to the Conversion Price in connection with
      (i)
      securities issued (other than for cash) in connection with a merger,
      acquisition, or consolidation that do not exceed 25% of the outstanding Common
      Stock of the Company as of the date of the Purchase Agreement (such percentage
      subject to adjustment in a manner consistent with the adjustments to the
      Conversion Price contemplated in Section
      3
      hereof)
      and such issuances are determined in the light of the whole transaction to
      which
      they are a part to be in the best interests of the Company, (ii) securities
      issued pursuant to the conversion or exercise of convertible or exercisable
      securities issued or outstanding on or prior to the date of the Purchase
      Agreement or issued pursuant to the Purchase Agreement (so long as the
      conversion or exercise price in such securities are not amended to lower such
      price and/or adversely affect the Holders), (iii) the Conversion Shares, (iv)
      Common
      Stock issued or the issuance or grants of options to purchase Common Stock
      pursuant to the Company’s stock option plans and employee stock purchase plans
      that either (x) exist on the date of the Purchase Agreement, or (y) do not
      exceed ten percent (10%) of the outstanding Common Stock of the Company as
      of
      the date of the Purchase Agreement,
      (v) any
      notes issued to the placement agent and its designees for the transactions
      contemplated by the Purchase Agreement, and (vi) securities issued in connection
      with bona
      fide
      strategic license agreements or other partnering agreements so long as such
      issuances are not for the purpose of raising capital which are approved by
      a
      majority of its independent directors and such issuances are determined in
      the
      light of the whole transaction to which they are a part to be in the best
      interests of the Company.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    (d) No
      Impairment.
      The
      Company shall not, by amendment of its Certificate of Incorporation or through
      any reorganization, transfer of assets, consolidation, merger, 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 to be observed or
      performed hereunder by the Company, but will at all times in good faith, assist
      in the carrying out of all the provisions of this Section
      3.6
      and in
      the taking of all such action as may be necessary or appropriate in order to
      protect the conversion rights of the Holder against impairment. In the event
      a
      Holder shall elect to convert any Notes as provided herein, the Company cannot
      refuse conversion based on any claim that such Holder or any one associated
      or
      affiliated with such Holder has been engaged in any violation of law, violation
      of an agreement to which such Holder is a party or for any reason whatsoever,
      unless, an injunction from a court, or notice, restraining and or adjoining
      conversion of all or of said Notes shall have issued and the Company posts
      a
      surety bond for the benefit of such Holder in an amount equal to one hundred
      percent (100%) of the amount of the Notes the Holder has elected to convert,
      which bond shall remain in effect until the completion of arbitration/litigation
      of the dispute and the proceeds of which shall be payable to such Holder (as
      liquidated damages) in the event it obtains judgment.

    

    (e) Certificates
      as to Adjustments.
      Upon
      occurrence of each adjustment or readjustment of the Conversion Price or number
      of shares of Common Stock issuable upon conversion of this Note pursuant to
      this
Section
      3.6,
      the
      Company at its expense shall promptly compute such adjustment or readjustment
      in
      accordance with the terms hereof and furnish to the Holder a certificate setting
      forth such adjustment and readjustment, showing in detail the facts upon which
      such adjustment or readjustment is based. The Company shall, upon written
      request of the Holder, at any time, furnish or cause to be furnished to the
      Holder a like certificate setting forth such adjustments and readjustments,
      the
      applicable Conversion Price in effect at the time, and the number of shares
      of
      Common Stock and the amount, if any, of other securities or property which
      at
      the time would be received upon the conversion of this Note. Notwithstanding
      the
      foregoing, the Company shall not be obligated to deliver a certificate unless
      such certificate would reflect an increase or decrease of at least one percent
      (1%) of such adjusted amount.

     

    (f) Issue
      Taxes.
      The
      Makers shall pay any and all issue and other taxes, excluding federal, state
      or
      local income taxes, that may be payable in respect of any issue or delivery
      of
      shares of Common Stock on conversion of this Note pursuant thereto; provided,
      however,
      that
      the Makers shall not be obligated to pay any transfer taxes resulting from
      any
      transfer requested by the Holder in connection with any such
      conversion.

     

    (g) Fractional
      Shares.
      No
      fractional shares of Common Stock shall be issued upon conversion of this Note.
      In lieu of any fractional shares to which the Holder would otherwise be
      entitled, the Maker shall pay cash equal to the product of the fraction that
      would evidence such fractional shares multiplied by the average of the Closing
      Bid Prices of the Common Stock for the five (5) consecutive Trading Days
      immediately preceding the Conversion Date. The term “Closing
      Bid Price”
shall
      mean, on any particular date (i) the last closing bid price per share of the
      Common Stock on such date on the OTC
      Bulletin Board or
      another registered national stock exchange on which the Common Stock is then
      listed, or if there is no such price on such date, then the last closing bid
      price on such exchange or quotation system on the date nearest preceding such
      date, or (ii) if the Common Stock is not listed then on the OTC Bulletin Board
      or any registered national stock exchange, the last trading price for a share
      of
      Common Stock in the over-the-counter market, as reported by the OTC Bulletin
      Board or in the National Quotation Bureau Incorporated or similar organization
      or agency succeeding to its functions of reporting prices) at the close of
      business on such date, or (iii) if the Common Stock is not then reported by
      the
      OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar
      organization or agency succeeding to its functions of reporting prices), then
      the average of the “Pink Sheet” quotes for the relevant conversion period, as
      determined in good faith by the Holder and reasonably acceptable to the Company,
      or (iv) if the Common Stock is not then publicly traded the fair market value
      of
      a share of Common Stock as determined by the Holder and reasonably acceptable
      to
      the Company.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (h) Reservation
      of Common Stock.
      The
      Company shall at all times when this Note shall be outstanding, reserve and
      keep
      available out of its authorized but unissued Common Stock, one hundred twenty
      percent (120%) of such number of shares of Common Stock as shall from time
      to
      time be sufficient to effect the conversion of this Note. The Company shall,
      from time to time in accordance with Delaware law, increase the authorized
      number of shares of Common Stock if at any time the unissued number of
      authorized shares shall not be sufficient to satisfy the Company’s obligations
      under this Section
      3.6(h).

     

    (i) Regulatory
      Compliance.
      If any
      shares of Common Stock to be reserved for the purpose of conversion of this
      Note
      require registration or listing with or approval of any governmental authority,
      stock exchange or other regulatory body under any federal or state law or
      regulation or otherwise before such shares may be validly issued or delivered
      upon conversion, the Company shall, at its sole cost and expense, in good faith
      and as expeditiously as possible, endeavor to secure such registration, listing
      or approval, as the case may be.

    

    Section
      3.7 Prepayment.

     

    (a) Prepayment
      Upon an Event of Default.
      Notwithstanding anything to the contrary contained herein, upon the occurrence
      of an Event of Default described in Sections
      2.1(b)-(k)
      hereof,
      the Holder shall have the right, at such Holder's option, to require the Makers
      to prepay in cash all or a portion of this Note at a price equal to one hundred
      percent (100%) of the aggregate principal amount of this Note plus all accrued
      and unpaid interest applicable at the time of such request. Nothing in this
      Section
      3.7(a)
      shall
      limit the Holder's rights under Section
      2.2
      hereof.

     

    (b) Prepayment
      Option Upon Major Transaction. In addition to all other rights of the Holder
      contained herein, simultaneous with the occurrence of a Major Transaction (as
      defined below), the Holder shall have the right, at the Holder's option, to
      require the Makers to prepay in cash all or a portion of the Holder's Notes
      at a
      price equal to one hundred percent twenty (120%) of the aggregate principal
      amount of this Note plus all accrued and unpaid interest (the “Major
      Transaction Prepayment Price”).
      

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (c) Prepayment
      Option Upon Triggering Event.
      In
      addition to all other rights of the Holder contained herein, after a Triggering
      Event (as defined below), the Holder shall have the right, at the Holder's
      option, to require the Makers to prepay all or a portion of this Note in cash
      at
      a price equal to one hundred twenty percent (120%) of the aggregate principal
      amount of this Note plus all accrued and unpaid interest (the “Triggering
      Event Prepayment Price,”
and,
      collectively with the Major Transaction Prepayment Price, the “Prepayment
      Price”).
      

     

    (d) Intentionally
      Omitted.

     

    (e) “Major
      Transaction.”
A
      “Major
      Transaction”
shall
      be deemed to have occurred at such time as any of the following
      events:

     

    (i) the
      consolidation, merger or other business combination of the Company with or
      into
      another Person (as defined in Section
      4.13
      hereof)
      (other than (A) pursuant to a migratory merger effected solely for the purpose
      of changing the jurisdiction of incorporation of the Company or (B) a
      consolidation, merger or other business combination in which holders of the
      Company’s voting power immediately prior to the transaction continue after the
      transaction to hold, directly or indirectly, the voting power of the surviving
      entity or entities necessary to elect a majority of the members of the board
      of
      directors (or their equivalent if other than a corporation) of such entity
      or
      entities); or

     

    (ii) the
      sale
      or transfer of more than fifty percent (50%) of the Company’s assets (based on
      the fair market value as determined in good faith by the Board) other than
      inventory in the ordinary course of business in one or a related series of
      transactions; or

     

    (iii) closing
      of a purchase, tender or exchange offer made to the holders of more than fifty
      percent (50%) of the outstanding shares of Common Stock in which more than
      fifty
      percent (50%) of the outstanding shares of Common Stock were tendered and
      accepted; or

     

    (iv) a
      change
      in more than fifty percent (50%) of the current members of the Company’s Board
      of Directors as of the Issuance Date, except for such changes approved by the
      Holder of this Note.

     

    (v) the
      occurrence of a “Qualified
      Financing”
which
      shall mean an
      underwritten public offering of the Company’s common stock pursuant to which the
      gross proceeds of at least $10 million is raised.

    

    (f) “Triggering
      Event.”
A
      “Triggering
      Event”
shall
      be deemed to have occurred at such time as any of the following
      events:

     

    (i) so
      long
      as any Notes are outstanding, the effectiveness of the Registration Statement,
      after it becomes effective, (i) lapses for any reason (including, without
      limitation, the issuance of a stop order) or (ii) is unavailable to the Holder
      for sale of the shares of Common Stock, and such lapse or unavailability
      continues for a period of twenty (20) consecutive Trading Days, and the shares
      of Common Stock into which the Holder's Notes can be converted cannot be sold
      in
      the public securities market pursuant to Rule 144(k) under the Securities Act,
      provided
      that the
      cause of such lapse or unavailability is not due to factors primarily within
      the
      control of the Holder of the Notes; and provided
      further
      that a
      Triggering Event shall not have occurred if and to the extent the Company
      exercised its rights set forth in Section
      3(n)
      of the
      Registration Rights Agreement; 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (ii) the
      suspension from listing, without subsequent listing on any one of, or the
      failure of the Common Stock to be listed on at least one of the OTC Bulletin
      Board, the American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital
      Market or The New York Stock Exchange, Inc., for a period of ten (10)
      consecutive Trading Days;

     

    (iii) the
      Company’s notice to the Holder or any Other Holders, including by way of public
      announcement, at any time, of its inability to comply (including for any of
      the
      reasons described in Section
      3.8(a)
      hereof)
      or its intention not to comply with proper requests for conversion of any Notes
      into shares of Common Stock; or

     

    (iv) the
      Company’s failure to comply with a Conversion Notice tendered in accordance with
      the provisions of this Note within five (5) Trading Days after the receipt
      by
      the Company of the Conversion Notice; or

     

    (v) the
      Company deregisters its shares of Common Stock and as a result such shares
      of
      Common Stock are no longer publicly traded; or

     

    (vi) the
      Company consummates a “going private” transaction and as a result the Common
      Stock is no longer registered under Sections 12(b) or 12(g) of the Exchange
      Act;
      or

     

    (vii) either
      of
      the Makers breach any representation, warranty, covenant or other term or
      condition of the Purchase Agreement, this Note, the Security Agreement or any
      other agreement, document, certificate or other instrument delivered in
      connection with the transactions contemplated thereby or hereby, except to
      the
      extent that such breach would not have a Material Adverse Effect (as defined
      in
      the Purchase Agreement) and except, in the case of a breach of a covenant which
      is curable, only if such breach continues for a period of a least twenty (20)
      business days.

     

    (g) Intentionally
      Omitted.

    

    (h) Mechanics
      of Prepayment at Option of Holder Upon Major Transaction. No sooner than
      fifteen (15) days nor later than ten (10) days prior to the consummation of
      a
      Major Transaction, but in no event prior to the public announcement of such
      Major Transaction, the Makers shall deliver written notice thereof via facsimile
      and overnight courier (“Notice
      of Major Transaction”)
      to the
      Holder of this Note and the Other Holders. At any time after receipt of a Notice
      of Major Transaction (or, in the event a Notice of Major Transaction is not
      delivered at least ten (10) days prior to a Major Transaction, at any time
      during the ten (10) day period prior to a Major Transaction), the Holder of
      this
      Note and the Other Holders of the Other Notes then outstanding may require
      the
      Makers to prepay, effective immediately prior to the consummation of such Major
      Transaction, all or any portion of this Note then outstanding by delivering
      written notice thereof via facsimile and overnight courier (“Notice
      of Prepayment at Option of Holder Upon Major
      Transaction”)
      to the
      Makers, which Notice of Prepayment at Option of Holder Upon Major Transaction
      shall indicate (i) the principal amount of this Note that the Holder is electing
      to have prepaid and (ii) the applicable Major Transaction Prepayment Price,
      as
      calculated pursuant to Section
      3.7(b)
      above.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (i) Mechanics
      of Prepayment at Option of Holder Upon Triggering Event. Within three (3)
      business days after the occurrence of a Triggering Event, the Makers shall
      deliver written notice thereof via facsimile and overnight courier
      (“Notice
      of Triggering Event”)
      to the
      Holder and the Other Holders. At any time after the earlier of the Holder's
      receipt of a Notice of Triggering Event and the Holder becoming aware of a
      Triggering Event, the Holder of this Note and the Other Holders of the Other
      Notes then outstanding may require the Makers to prepay all or any portion
      of
      this Note then outstanding by delivering written notice thereof via facsimile
      and overnight courier (“Notice
      of Prepayment at Option of Holder Upon Triggering Event”)
      to the
      Makers, which Notice of Prepayment at Option of Holder Upon Triggering Event
      shall indicate (i) the amount of the Note that the Holder is electing to have
      prepaid and (ii) the applicable Triggering Event Prepayment Price, as calculated
      pursuant to Section
      3.7(c)
      above.
      The Holder shall only be permitted to require the Makers to prepay this Note
      pursuant to Section
      3.7
      hereof
      for the greater of a period of ten (10) days after receipt by the Holder of
      a
      Notice of Triggering Event or for so long as such Triggering Event is
      continuing.

     

    (j) Payment
      of Prepayment Price.
      Upon
      the Makers’ receipt of a Notice(s) of Prepayment at Option of Holder Upon
      Triggering Event or a Notice(s) of Prepayment at Option of Holder Upon Major
      Transaction from the Holder or the Other Holders, the Makers shall notify the
      Holder or such Other Holder, as the case may be, by facsimile of the Maker’s
      receipt of such Notice(s) of Prepayment at Option of Holder Upon Triggering
      Event or Notice(s) of Prepayment at Option of Holder Upon Major Transaction
      within two (2) business days of the Makers’ receipt of the same and the Holder
      and each Other Holder which has sent such a notice shall promptly thereafter
      submit to the Makers this Note (or certificates representing a portion of this
      Note if the Holder elects not to have all of the outstanding principal and
      accrued interest hereunder prepaid) or the Other Notes (or certificates
      representing a portion of the Other Notes if the Other Holders elect not to
      have
      all of the outstanding principal and accrued interest hereunder prepaid) which
      the Holder or Other Holders, as the case may be have elected to have prepaid.
      The Makers shall deliver the applicable Triggering Event Prepayment Price to
      the
      Holder, within five (5) business days after the Makers’ receipt of this Note or
      the certificates related thereto, as the case may be, and, in the case of a
      prepayment pursuant to Section
      3.7(h),
      the
      Makers shall deliver the applicable Major Transaction Prepayment Price
      immediately prior to the consummation of the Major Transaction; provided
      that the
      Holder’s original Note or the Other Holders’ original Other Note, or the
      certificates related thereto, shall have been so delivered to the Makers;
provided further
      that if
      the Makers are unable to prepay all of the Notes to be prepaid, the Makers
      shall
      prepay an amount to the Holder and each Other Holder of this Note and the Other
      Notes being prepaid equal to such holder’s pro-rata
      amount
      of
      all Notes being prepaid. If the Makers shall fail to prepay all of the Notes
      submitted for prepayment (other than pursuant to a dispute as to the arithmetic
      calculation of the Prepayment Price), in addition to any remedy such holder
      of
      the Notes may have under this Note and the Purchase Agreement, the applicable
      Prepayment Price payable in respect of such Notes not prepaid shall bear
      interest at the rate of two percent (2%) per month (prorated for partial months)
      until paid in full. Until the Makers pay such unpaid applicable Prepayment
      Price
      in full to a holder of the Notes submitted for prepayment, such holder shall
      have the option (the “Void
      Optional Prepayment Option”)
      to, in
      lieu of prepayment, require the Makers to promptly return to such holder(s)
      all
      of the Notes that were submitted for prepayment by such holder(s) under this
      Section
      3.7
      and for
      which the applicable Prepayment Price has not been paid, by sending written
      notice thereof to the Makers via facsimile (the “Void
      Optional Prepayment Notice”).
      Upon
      the Makers’ receipt of such Void Optional Prepayment Notice(s) and prior to
      payment of the full applicable Prepayment Price to such holder, (i) the
      Notice(s) of Prepayment at Option of Holder Upon Triggering Event or the
      Notice(s) of Prepayment at Option of Holder Upon Major Transaction, as the
      case
      may be, shall be null and void ab
      initio
      with
      respect to those Notes submitted for prepayment and for which the applicable
      Prepayment Price has not been paid, (ii) the Makers shall immediately return
      any
      such Notes submitted to the Makers by each holder for prepayment under this
      Section
      3.7(j)
      and for
      which the applicable Prepayment Price has not been paid and (iii) the Conversion
      Price of such returned Notes shall be adjusted to the lesser of (A) the
      Conversion Price as in effect on the date on which the applicable Void Optional
      Prepayment Notice(s) is delivered to the Makers and (B) the lowest Closing
      Bid
      Price during the period beginning on the date on which the Notice(s) of
      Prepayment of Option of Holder Upon Major Transaction or the Notice(s) of
      Prepayment at Option of Holder Upon Triggering Event, as the case may be, is
      delivered to the Makers and ending on the date on which the Void Optional
      Prepayment Notice(s) is delivered to the Makers; provided
      that no
      adjustment shall be made if such adjustment would result in an increase of
      the
      Conversion Price then in effect. A holder’s delivery of a Void Optional
      Prepayment Notice and exercise of its rights following such notice shall not
      effect the Makers’ obligations to make any payments which have accrued prior to
      the date of such notice. Payments provided for in this Section
      3.7
      shall
      have priority to payments to other stockholders in connection with a Major
      Transaction. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Section
      3.8 Inability
      to Fully Convert.

     

    (a) Holder's
      Option if Maker Cannot Fully Convert.
      If,
      upon the Company’s receipt of a Conversion Notice, the Company cannot issue
      shares of Common Stock registered for resale under the Registration Statement,
      for any reason, including, without limitation, because the Company (x) does
      not
      have a sufficient number of shares of Common Stock authorized and available,
      (y)
      is otherwise prohibited by applicable law or by the rules or regulations of
      any
      stock exchange, interdealer quotation system or other self-regulatory
      organization with jurisdiction over the Company or any of its securities from
      issuing all of the Common Stock which is to be issued to the Holder pursuant
      to
      a Conversion Notice or (z) fails to have a sufficient number of shares of Common
      Stock registered for resale under the Registration Statement, then the Company
      shall issue as many shares of Common Stock, as it is able to issue in accordance
      with the Holder's Conversion Notice and, with respect to the unconverted portion
      of this Note, the Holder, solely at Holder's option, can elect to:

     

    (i) require
      the Makers to prepay that portion of this Note for which the Company is unable
      to issue Common Stock in accordance with the Holder's Conversion Notice (the
      “Mandatory
      Prepayment”)
      at a
      price per share equal to the Triggering Event Prepayment Price as of such
      Conversion Date (the “Mandatory
      Prepayment Price”);

     

    (ii) with
      respect to the Common Stock, if the Company’s inability to fully convert is
      pursuant to Section
      3.8(a)(y)
      above,
      require the Company to issue restricted shares of Common Stock, if it is
      permissible for the Company to do so, in accordance with the Holder's Conversion
      Notice;

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (iii) void
      its
      Conversion Notice and retain or have returned, as the case may be, this Note
      (or
      the portion thereof) that was to be converted pursuant to the Conversion Notice
      (provided that the Holder's voiding its Conversion Notice shall not effect
      the
      Makers’ obligations to make any payments which have accrued prior to the date of
      such notice); or

     

    (iv) exercise
      its Buy-In rights pursuant to and in accordance with the terms and provisions
      of
Section
      3.3(c)
      of this
      Note.

     

    (b) Mechanics
      of Fulfilling Holder's Election.
      Upon
      receipt of a facsimile copy of a Conversion Notice from the Holder which cannot
      be fully satisfied as described in Section
      3.8(a)
      above,
      the Company shall within two (2) Trading Days send via facsimile to the Holder
      a
      notice of the Company 's inability to fully satisfy the Conversion Notice (the
      “Inability
      to Fully Convert Notice”).
      Such
      Inability to Fully Convert Notice shall indicate (i) the reason why the Company
      is unable to fully satisfy the Holder's Conversion Notice, (ii) the amount
      of
      this Note which cannot be converted and (iii) the applicable Mandatory
      Prepayment Price. The Holder shall notify the Makers of its election pursuant
      to
Section
      3.8(a)
      above by
      delivering written notice via facsimile to the Makers (“Notice
      in Response to Inability to Convert”).

     

    (c) Payment
      of Prepayment Price.
      If the
      Holder shall elect to have its Notes prepaid pursuant to Section
      3.8(a)(i)
      above,
      the Makers shall pay the Mandatory Prepayment Price to the Holder within thirty
      (30) days of the Makers’ receipt of the Holder's Notice in Response to Inability
      to Convert, provided
      that
      prior to the Makers’ receipt of the Holder's Notice in Response to Inability to
      Convert the Company has not delivered a notice to the Holder stating, to the
      satisfaction of the Holder, that the event or condition resulting in the
      Mandatory Prepayment has been cured and all Conversion Shares issuable to the
      Holder can and will be delivered to the Holder in accordance with the terms
      of
      this Note. If the Makers shall fail to pay the applicable Mandatory Prepayment
      Price to the Holder on the date that is three (3) business days following the
      Makers’ receipt of the Holder's Notice in Response to Inability to Convert
      (other than pursuant to a dispute as to the determination of the arithmetic
      calculation of the Prepayment Price), in addition to any remedy the Holder
      may
      have under this Note and the Purchase Agreement, such unpaid amount shall bear
      interest at the rate of two percent (2%) per month (prorated for partial months)
      until paid in full. Until the full Mandatory Prepayment Price is paid in full
      to
      the Holder, the Holder may (i) void the Mandatory Prepayment with respect to
      that portion of the Note for which the full Mandatory Prepayment Price has
      not
      been paid, (ii) receive back such Note, and (iii) require that the Conversion
      Price of such returned Note be adjusted to the lesser of (A) the Conversion
      Price as in effect on the date on which the Holder voided the Mandatory
      Prepayment and (B) the lowest Closing Bid Price during the period beginning
      on
      the Conversion Date and ending on the date the Holder voided the Mandatory
      Prepayment. 

     

    (d) Pro-rata
      Conversion and Prepayment.
      In the
      event the Company receives a Conversion Notice from the Holder and the Other
      Holders on the same day and the Company can convert and prepay some, but not
      all, of this Note pursuant to this Section
      3.8,
      the
      Company shall convert and prepay from the Holder and each Other Holder electing
      to have its Other Notes converted and prepaid at such time an amount equal
      to
      the Holder or such Other Holder's pro-rata
      amount
      of all the Notes and the Other Notes being converted and prepaid at such
      time.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    Section
      3.9 No
      Rights as Stockholder. Nothing contained in this Note shall be construed as
      conferring upon the Holder, prior to the conversion of this Note, the right
      to
      vote or to receive dividends or to consent or to receive notice as a stockholder
      in respect of any meeting of stockholders for the election of directors of
      the
      Company or of any other matter, or any other rights as a stockholder of the
      Company.

     

    ARTICLE
      IV

     

    MISCELLANEOUS

     

    Section
      4.1 Notices.
      Any notice, demand, request, waiver or other communication required or permitted
      to be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery, telecopy or facsimile at the address or number designated in the
      Purchase Agreement (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 Makers will give written notice to the Holder at least ten (10) days prior
      to the date on which the Company takes a record (x) with respect to any dividend
      or distribution upon the Common Stock, (y) with respect to any pro rata
      subscription offer to holders of Common Stock or (z) for determining rights
      to
      vote with respect to any Organic Change, dissolution, liquidation or winding-up
      but in no event shall such notice be provided to the Holder prior to such
      information being made known to the public. The Makers will also give written
      notice to the Holder at least ten (10) days prior to the date on which any
      Organic Change, dissolution, liquidation or winding-up will take place but
      in no
      event shall such notice be provided to the Holder prior to such information
      being made known to the public. The Makers shall promptly notify the Holder
      of
      any notices sent or received, or any actions taken with respect to the Other
      Notes.

     

    Section
      4.2 Governing
      Law; Consent to Jurisdiction. The
      parties acknowledge and agree that any claim, controversy, dispute or action
      relating in any way to this agreement or the subject matter of this agreement
      shall be governed solely by the laws of the State of Delaware, without regard
      to
      any conflict of laws doctrines. The parties irrevocably consent to being served
      with legal process issued from the state and federal courts located in New
      York
      and irrevocably consent to the exclusive personal jurisdiction of the federal
      and state courts situated in the State of New York. The parties irrevocably
      waive any objections to the personal jurisdiction of these courts. Said courts
      shall have sole and exclusive jurisdiction over any and all claims,
      controversies, disputes and actions which in any way relate to this agreement
      or
      the subject matter of this agreement. The parties also irrevocably waive any
      objections that these courts constitute an oppressive, unfair, or inconvenient
      forum and agree not to seek to change venue on these grounds or any other
      grounds. Nothing
      in this Section
      4.2
      shall
      affect or limit any right to serve process in any other manner permitted by
      law.
      

     

    Section
      4.3 Headings.
      Article and section headings in this Note are included herein for purposes
      of
      convenience of reference only and shall not constitute a part of this Note
      for
      any other purpose.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Section
      4.4 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, at law or in equity (including, without
      limitation, a decree of specific performance and/or other injunctive relief),
      no
      remedy contained herein shall be deemed a waiver of compliance with the
      provisions giving rise to such remedy and nothing herein shall limit a Holder's
      right to pursue actual damages for any failure by the Makers to comply with
      the
      terms of this Note. Amounts set forth or provided for herein with respect to
      payments, conversion and the like (and the computation thereof) shall be the
      amounts to be received by the Holder hereof and shall not, except as expressly
      provided herein, be subject to any other obligation of the Makers (or the
      performance thereof). Each of the Makers acknowledges that a breach by it of
      its
      obligations hereunder will cause irreparable and material harm to the Holder
      and
      that the remedy at law for any such breach may be inadequate. Therefore each
      Maker agrees that, in the event of any such breach or threatened breach, the
      Holder shall be entitled, in addition to all other available rights and
      remedies, at law or in equity, to seek and obtain such equitable relief,
      including but not limited to an injunction restraining any such breach or
      threatened breach, without the necessity of showing economic loss and without
      any bond or other security being required. 

     

    Section
      4.5 Enforcement
      Expenses. The Makers agree to pay all costs and expenses of the Holder
      incurred as a result of enforcement of this Note, including, without limitation,
      reasonable attorneys' fees and expenses.

     

    Section
      4.6 Binding
      Effect. The obligations of the Makers and the Holder set forth herein shall
      be binding upon the successors and assigns of each such party, whether or not
      such successors or assigns are permitted by the terms hereof.

     

    Section
      4.7 Amendments.
      This Note may not be modified or amended in any manner except in writing
      executed by the Makers and the Holder.

     

    Section
      4.8 Compliance
      with Securities Laws. The Holder of this Note acknowledges that this Note is
      being acquired solely for the Holder's own account and not as a nominee for
      any
      other party, and for investment, and that the Holder shall not offer, sell
      or
      otherwise dispose of this Note. This Note and any Note issued in substitution
      or
      replacement therefor shall be stamped or imprinted with a legend in
      substantially the following form:

     

    “THIS
      NOTE
      AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
      OR
      APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE
      ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF A WRITTEN OPINION
      OF
      COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY
      THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE MAY
      BE
      SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION
      FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    Section
      4.9 Accredited
      Investor Status. In no event may the Holder convert this Note in whole or in
      part unless the Holder is an “accredited investor” as defined in Regulation D
      under the Act.

     

    Section
      4.10 Parties
      in Interest. This Note shall be binding upon, inure to the benefit of and be
      enforceable by the Makers, the Holder and their respective successors and
      permitted assigns.

     

    Section
      4.11 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, nor shall any waiver by the Holder of any such right
      or rights on any one occasion be deemed a waiver of the same right or rights
      on
      any future occasion.

     

    Section
      4.12 Makers’
      Waivers. 

     

    (a)
       Except
      as
      otherwise specifically provided herein, the Makers and all others that may
      become liable for all or any part of the obligations evidenced by this Note,
      hereby waive presentment, demand, notice of nonpayment, protest and all other
      demands' and notices in connection with the delivery, acceptance, performance
      and enforcement of this Note, and do hereby consent to any number of renewals
      of
      extensions of the time or payment hereof and agree that any such renewals or
      extensions may be made without notice to any such persons and without affecting
      their liability herein and do further consent to the release of any person
      liable hereon, all without affecting the liability of the other persons, firms
      or Makers liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY
      JURY.

     

    (b) THE
      MAKERS ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
      COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
      WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY
      WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

     

    Section
      4.13 Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

    

    “Convertible
      Securities”
means
      any convertible securities, warrants, options or other rights to subscribe
      for
      or to purchase or exchange for, shares of Common Stock or Common Stock
      Equivalents.

    

    “Options”
shall
      mean any rights, warrants or options to subscribe for or purchase Common Stock
      or Convertible Securities of the Company.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    “Person”
means
      an individual or a corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or political subdivision thereof) or
      other entity of any kind.

     

    “Trading
      Day”
means
      (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or
      (b)
      if the Common Stock is not traded on the OTC Bulletin Board, a day on which
      the
      Common Stock is quoted in the over-the-counter market as reported by the
      National Quotation Bureau Incorporated (or any similar organization or agency
      succeeding its functions of reporting prices); provided,
      however,
      that in
      the event that the Common Stock is not listed or quoted as set forth in (a)
      or
      (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any
      day which shall be a legal holiday or a day on which banking institutions in
      the
      State of New York are authorized or required by law or other government action
      to close.

    

    [remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	JUMA
              TECHNOLOGY CORP.
	 
 	 
 	 
 
	
            	By:  	/s/
              David Giangano
	 	
              
Name:
              David Giangano
	 	Title:   Chief
              Executive Officer

      	 	 	 
	 	AGN
              NETWORKS, INC.
	 
 	 
 	 
 
	
            	By:  	/s/
              David Giangano
	 	
              
Name:
              David Giangano
	 	Title:   Chief
              Executive Officer

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    WIRE
      INSTRUCTIONS

     

    Payee:
      ________________________________________________________

     

    Bank:
      ________________________________________________________

     

    Address:
      _____________________________________________________

     

     _____________________________________________________

     

    Bank
      No.:
      _____________________________________________________

     

    Account
      No.: __________________________________________________

     

    Account
      Name: _________________________________________________

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    FORM
      OF

     

    NOTICE
      OF
      OPTIONAL CONVERSION INTO SHARES OF COMMON STOCK

     

    (To
      be
      Executed by the Registered Holder in order to Convert the Note into Shares
      of
      Common Stock)

     

    The
      undersigned hereby irrevocably elects to convert $ ________________ of the
      principal amount of the above Note No. ___ into shares of Common Stock of JUMA
      TECHNOLOGY CORP. (the “Company”)
      according to the conditions hereof, as of the date written below.

     

    Date
      of
      Conversion
      _________________________________________________________

     

    Applicable
      Conversion Price __________________________________________________

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the Date of Conversion: _________________________

     

    Signature___________________________________________________________________

     

    [Name]

     

    Address:___________________________________________________________________

     

    _______________________________________________________________________

     

    
      
        
        

      

      
        27SENIOR
      SECURED PROMISSORY NOTE

    

    
      	
              $600,000.00

            	
              November
                14, 2007

            

    

     

    FOR
      VALUE
      RECEIVED,
      JUMA
      TECHNOLOGY, CORP., a
      Delaware Company (“Borrower”), hereby covenants and promises to pay to the order
      of
      VISION
      OPPORTUNITY MASTER FUND, LTD,
      a
      corporation organized under the laws of the Cayman Islands (“Lender”) in lawful
      money of the United States of America and in immediately available funds, the
      principal sum of Six Hundred Thousand ($600,000.00) (the “Loan”) together with
      accrued and unpaid interest thereon, each due and payable on the dates and
      in
      the manner set forth below.

    

    1. Principal
      Repayment.
      The
      outstanding principal amount of the Loan shall be due and payable upon the
      earlier to occur of (i) Sixty (60) days from the date hereof, or (ii) the
      closing of the next financing from Borrower, and the transactions contemplated
      thereby. (the “Principal Repayment Date”).

    

    2. Interest
      Rate.
      Borrower
      further promises to pay interest on the outstanding principal amount hereof
      from
      the date hereof until payment in full, which interest shall accrue at a rate
      of
      ten percent (10%) per annum.

     

    3. Interest
      Payment.
      Interest
      shall be shall be calculated on the basis of a 365 day year for the actual
      number of days elapsed. 

    

    4. Place
      of Payment.
      All
      amounts payable hereunder shall be payable to Lender at 20 W. 55th
      Street,
      New York, NY 10019 unless another place of payment shall be specified in writing
      by Lender.

    

    5. Application
      of Payments.
      Except
      as otherwise provided herein, payment on this Note shall be applied first to
      accrued interest, and thereafter to the outstanding principal balance
      hereof.

    

    6. Prepayment.
      Borrower
      may pay the entire outstanding balance of principal and all accrued and unpaid
      interest thereon at any time before the Principal Payment Date (a “Prepayment”)
      without penalty. 

     

    7. Waiver
      by Borrower.
      Borrower waives presentment and demand for payment, notice of dishonor, protest
      and notice of protest of this Note. The right to plead any and all statutes
      of
      limitations as a defense to any demands hereunder is hereby waived to the full
      extent permitted by law.

    

    8. Collections.
      Should
      the indebtedness represented by this Note or any part thereof be collected
      at
      law or in equity, or in bankruptcy, receivership or any other court proceedings
      (whether at the trial or appellate level), or should this Note be placed in
      the
      hands of attorneys for collection upon default, Borrower agrees to pay, in
      addition to the principal, premium and interest due and payable hereon, all
      costs of collection or attempting to collect this Note, including reasonable
      attorneys fees and expenses.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    9. Amendment.
      This
      Note may not be amended orally, but only by an agreement in writing, signed
      by
      the party against whom enforcement of any waiver, change, modification or
      discharge is sought.

    

    10. Late
      Charge.
      Borrower
      recognizes and agrees that any default of any the payment due hereunder will
      result in loss and additional expenses to Lender in servicing the indebtedness
      evidenced hereby, handling such delinquent payments and meeting Lender's other
      financial obligations, the extent of which loss and additional expenses is
      extremely difficult and impractical to ascertain. Borrower therefore agrees
      that
      in the event that any payment hereunder is not paid on the date it becomes
      due,
      for any reason other than an error for which an independent banking institution
      or wire service is determined to be wholly responsible, then in addition to
      all
      other rights set forth herein, or in the Security Agreement, Lender shall have
      the right to collect a late charge equal to four percent (4%) of the delinquent
      payment. The right to collect such late charge shall be in addition to all
      other
      rights granted to Lender hereunder.

    

    11. Default.
      At the
      option of Lender, without prior notice, and regardless of any prior forbearance,
      all sums remaining unpaid under this Note shall become immediately due and
      payable upon the occurrence of a default by Borrower under this Note, or the
      Security Agreement. The failure of Borrower to pay any amount due under the
      terms of this Note when the same becomes due and payable, if such failure
      remains unremedied within five (5) calendar days following receipt by Borrower
      of written notice from Lender of such failure to pay, shall constitute a default
      by Borrower under this Note. Furthermore, any default under the Security
      Agreement, which remains uncured within the timelines specified therein shall
      also be considered a default by Borrower under this Note.

    

    12. Time.
      Time is
      strictly of the essence in this Note. 

    

    13. No
      Waiver by Lender.
      No delay
      or omission on the part of Lender in exercising any right under this Note,
      or
      under any other agreement or instrument securing this Note shall operate as
      a
      waiver of such right on any future occasion, or of any other rights under this
      Note or any agreement or instrument securing this Note. 

    

    14. Cumulative
      Rights.
      All
      rights and remedies of Lender provided for in this Note are cumulative and
      shall
      be in addition to all other rights and remedies provided in the Security
      Agreement or by law or in equity. 

    

    15. Notices.
      Except
      as otherwise provided herein, any notice or other communication herein required
      or permitted to be given shall be in writing and may be delivered in person,
      with receipt acknowledged, or sent by facsimile or by United States mail,
      registered or certified, return receipt requested, postage prepaid and addressed
      as follows:

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    

      
        	 	
                If
                  to Lender:

              	
                Vision
                  Opportunity Master Fund, Ltd.

              
	 	 	
                20
                  W. 55th
                  Street

              

      

    

    
      
        	 	 	
                New
                  York, NY 10019

              
	 	 	
                Attn:
                  Adam Benowitz, Portfolio Manager

              
	 	 	 
	 	
                If
                  to the Issuer:

              	
                Juma
                  Technology, Corp.

              
	 	 	
                154
                  Toledo Street

              
	 	 	
                Farmingdale,
                  New York 11735

              
	 	 	
                Attention:
                  Chief Executive Officer

              
	 	 	
                Tel.
                  No.: (631) 300-1000

              
	 	 	
                Fax
                  No.: (631) 270-1105 

              
	 	 	 
	 	
                With
                  copies to:

              	
                Gersten
                  Savage LLP

              
	 	 	
                600
                  Lexington Avenue, 9th
                  Floor

              
	 	 	
                New
                  York, New York 10022

              
	 	 	
                Attention:
                  Jay Kaplowitz, Esq.

              
	 	 	
                Tel.
                  No.: (212) 752-9700

              
	 	 	
                Fax
                  No.: (212) 980-5192

              

      

       

    

    Any
      party
      may change its address or facsimile number by giving the other party prior
      notice of the change in accordance with the provisions of this Section
      16.

    

    16. Governing
      Law; Venue.
      This
      Note shall be governed by, and construed and enforced in accordance with, the
      laws of the State of New York, excluding conflict of laws principles that would
      cause the application of laws of any other jurisdiction. The parties agree
      that
      any suit, action or proceeding arising out of or relating to this Note, or
      the
      interpretation, performance, or breach of this Note, shall be instituted in
      the
      Supreme Court for the County of Manhattan, State of New York, and each party
      irrevocably submits to the jurisdiction of said court, and waives all objections
      to jurisdiction or venue that it may have under the laws of the State of New
      York or otherwise in any suit, action or proceeding, except that Lender reserves
      the right to institute such supplemental local actions in other venues as may
      be
      necessary to preserve or collect the collateral identified in the Security
      Agreement, or to enforce Lender's rights therein.

    

    17. Successors
      and Assigns.
      The
      provisions of this Note shall inure to the benefit of and be binding on any
      successor to Borrower and shall extend to any holder hereof.

    

    18. Security
      Agreement/Subordination.
      This
      Note is secured by a Security Agreement of even date herewith (the “Security
      Agreement”) executed by Borrower and Lender creating a security interest in
      certain personality, intangibles and receivables of Borrower identified therein,
      which Security Agreement specifies various defaults upon the happening of which
      all sums on this Note may, at Lender’s option, be declared immediately due and
      payable. Notwithstanding the foregoing, Lender’s security interest in the
      above-referenced collateral is hereby expressly subordinated, to the extent
      and
      in the manner hereinafter set forth, to the Senior Indebtedness.

    

    18.1 “Senior
      Indebtedness”
      shall
      mean, unless expressly subordinated to or made on a parity with the amounts
      due
      under this Note, the principal of, unpaid interest on and amounts reimbursable,
      fees, expenses, costs of enforcement and other amounts due in connection with
      indebtedness of Borrower (including indebtedness of Borrower as a co-borrower)
      to banks of commercial finance, ScanSource Inc., or other lending institutions
      regularly engaged in the business of lending money, which indebtedness is
      outstanding as of the date first written above.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, Borrower has executed and delivered this Note on the day and
      year first above written.

    

    
      	 	
              Juma
                Technology, Corp.

            
	 	
              a
                Delaware corporation

            
	 	 
	 	 
	 	
              By:
                /s/
                David Giangano

            
	 	
              Name:
                David Giangano

            
	 	
              Its:
                Chief Executive Officer

            

    

     

    
      
         

      

      
        4

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