Document:

2006 Incentive Stock Plan

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2006 STOCK INCENTIVE
PLAN 

ARTICLE ONE 

GENERAL PROVISIONS 

     I.    
          PURPOSE OF THE PLAN 

        This
2006 Stock Incentive Plan is intended to promote the interests of Positron Corporation
(the “Corporation”) by providing eligible persons with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the Service of the Corporation. 

        Capitalized
terms shall have the meanings assigned to such terms in the attached Appendix. 

     II.    
          STRUCTURE OF THE PLAN 

         A.       
          The Plan shall be divided into two separate equity programs: 

	 	–	the
Discretionary Option Grant Program under which eligible persons may, at the discretion of
the Plan Administrator, be granted options to purchase shares of Common Stock and stock
appreciation rights; and  

	 	–	the
Stock Issuance Program under which eligible persons may, at the discretion of the Plan
Administrator, be issued shares of Common Stock directly, either through the immediate
purchase of such shares or as a bonus for services rendered the Corporation (or any
Parent or Subsidiary).  

         B.       
          The provisions of Articles One and Four shall apply to all equity programs under
          the Plan and shall govern the interests of all persons under the Plan. 

     III.    
          ADMINISTRATION OF THE PLAN 

         A.       
          The Plan shall be administered by the Board or an Option Committee appointed by
          the Board. Should administration of the Plan be vested in an Option Committee,
          any discretionary option grants or stock issuances to members of the Option
          Committee must be authorized and approved by a disinterested majority of the
          Board. 

         B.       
          Members of the Option Committee shall serve for such period of time as the Board
          may determine and may be removed by the Board at any time. 

         C.       
          Each Plan Administrator shall, within the scope of its administrative functions
          under the Plan, have full power and authority (subject to the provisions of the
          Plan) to establish such rules and regulations as it may deem appropriate for
          proper administration of the Discretionary Option Grant and Stock Issuance
          Programs and to make such determinations under, and issue such interpretations
          of, the provisions of such programs and any outstanding options or stock
          issuances thereunder as it may deem necessary or advisable. Decisions of the
          Plan Administrator within the scope of its administrative functions under the
          Plan shall be final and binding on all parties who have an interest in the
          Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
          any option or stock issuance thereunder. 

         D.       
          Service on the Option Committee shall constitute service as a Board member, and
          members of such committee shall accordingly be entitled to full indemnification
          and reimbursement as Board members for their service on such committee. No
          member of the Option Committee shall be liable for any act or omission made in
          good faith with respect to the Plan or any option grants or stock issuances
          under the Plan. 

     IV.    
          ELIGIBILITY 

		    A.                        The
persons eligible to participate in the Discretionary Option Grant and Stock
          Issuance Programs are as follows:  

		    (i)                        Employees,  

          		    (ii)       
               Officers, members of the Board or the board of directors of any Parent or
               Subsidiary, and 

               

          		    (iii)       
               consultants and other independent advisors who provide services to the
               Corporation (or any Parent or Subsidiary). 

               

         B.       
          Each Plan Administrator shall, within the scope of its administrative
          jurisdiction under the Plan, have full authority to determine: (i) with respect
          to the option grants or stock appreciation rights under the Discretionary Option
          Grant Program, which eligible persons are to receive grants, the time or times
          when such grants are to be made, the number of shares to be covered by each such
          grant, the time or times when each option is to become exercisable, the vesting
          schedule (if any) applicable to the option shares and the maximum term for which
          the option is to remain outstanding; and (ii) with respect to stock issuances
          under the Stock Issuance Program, which eligible persons are to receive stock
          issuances, the time or times when such issuances are to be made, the number of
          shares to be issued to each Participant, the vesting schedule (if any)
          applicable to the issued shares and the consideration for such shares. 

         C.       
          The Plan Administrator shall have the absolute discretion either to grant
          options or stock appreciation rights in accordance with the Discretionary Option
          Grant Program or to effect stock issuances or grant share right awards in
          accordance with the Stock Issuance Program. 

     V.    
          STOCK SUBJECT TO THE PLAN 

         A.       
          The stock issuable under the Plan shall be shares of authorized but unissued or
          reacquired Common Stock, including shares repurchased by the Corporation on the
          open market. The maximum number of shares of Common Stock initially reserved for
          issuance over the term of the Plan shall not exceed five million (5,000,000)
          shares. 

         B.       
          Shares of Common Stock subject to outstanding options shall be available for
          subsequent issuance under the Plan to the extent (i) those options expire or
          terminate for any reason prior to exercise in full or (ii) the options are
          canceled in accordance with the cancellation-regrant provisions of Article Two.
          Unvested shares issued under the Plan and subsequently canceled or repurchased
          by the Corporation at the original exercise or issue price paid per share,
          pursuant to the Corporation’s repurchase rights under the Plan, shall be
          added back to the number of shares of Common Stock reserved for issuance under
          the Plan and shall accordingly be available for reissuance through one or more
          subsequent option grants or direct stock issuances under the Plan. In addition,
          should the exercise price of an option under the Plan be paid with shares of
          Common Stock or should shares of Common Stock otherwise issuable under the Plan
          be withheld by the Corporation in satisfaction of the withholding taxes incurred
          in connection with the exercise of an option or the vesting of a stock issuance
          under the Plan, then the number of shares of Common Stock available for issuance
          under the Plan shall be reduced only by the net number of shares of Common Stock
          issued to the holder of such option or stock issuance, and not by the gross
          number of shares for which the option is exercised or which vest under the stock
          issuance. However, shares of Common Stock underlying one or more stock
          appreciation rights exercised under Section V of Article Two of the Plan shall
          not be available for subsequent issuance under the Plan. 

         C.       
          If any change is made to the Common Stock by reason of any stock split, stock
          dividend, recapitalization, combination of shares, exchange of shares or other
          change affecting the outstanding Common Stock as a class without the
          Corporation’s receipt of consideration, appropriate adjustments shall be
          made to: (i) the maximum number and/or class of securities issuable under the
          Plan; and (ii) the number and/or class of securities and the exercise price per
          share in effect under each outstanding option under the Plan. Such adjustments
          to the outstanding options are to be effected in a manner which shall preclude
          the enlargement or dilution of rights and benefits under such options. The
          adjustments determined by the Plan Administrator shall be final, binding and
          conclusive. 

ARTICLE TWO 

DISCRETIONARY OPTION
GRANT PROGRAM 

     I.    
          OPTION TERMS 

        Each
option shall be evidenced by one or more documents in the form approved by the Plan
Administrator; provided, however, that each such document shall comply with the terms
specified below. 

         A.       
          EXERCISE PRICE. 

		    1.                        The
exercise price per share shall be fixed by the Plan Administrator. 

          		    2.       
               The exercise price shall become immediately due upon exercise of the option and
               may, subject to the provisions of Section I of Article Four and the documents
               evidencing the option, be payable in one or more of the forms specified below: 

               

          		    (i)       
               cash or check made payable to the Corporation, or 

               

          		    (ii)       
               shares of Common Stock held for the requisite period necessary to avoid a charge
               to the Corporation’s earnings for financial reporting purposes and valued
               at Fair Market Value on the Exercise Date, or 

               

          		    (iii)       
               to the extent the sale complies with all applicable laws relating to the
               regulation and sale of securities, through a special sale and remittance
               procedure pursuant to which the Optionee shall concurrently provide irrevocable
               written instructions to: (a) a Corporation-designated brokerage firm to effect
               the immediate sale of the purchased shares and remit to the Corporation, out of
               the sale proceeds available on the settlement date, sufficient funds to cover
               the aggregate exercise price payable for the purchased shares plus all
               applicable Federal, state and local income and employment taxes required to be
               withheld by the Corporation by reason of such exercise; and (b) the Corporation
               to deliver the certificates for the purchased shares directly to such brokerage
               firm in order to complete the sale, or 

               

          		    (iv)       
               subject to such additional terms and conditions as the plan administrator shall
               determine, to have the number of shares deliverable to the option holder as a
               result of the exercise reduced by a number of shares sufficient to pay the
               amount the Corporation determines to be necessary to withhold for federal,
               state, local and other taxes as a result of the exercise of the option and, as
               long as no additional accounting expenses would result to the Corporation, to
               pay the exercise price of the option. 

               

        Except
to the extent such sale and remittance procedure is utilized, payment of the exercise
price for the purchased shares must be made on the Exercise Date. 

         B.       
          EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such time or
          times, during such period and for such number of shares as shall be determined
          by the Plan Administrator and set forth in the documents evidencing the option.
          However, no option shall have a term in excess of ten (10) years measured from
          the option grant date. 

         C.       
          EFFECT OF TERMINATION OF SERVICE. 

          		    1.       
               The following provisions shall govern the exercise of any options held by the
               Optionee at the time of cessation of Service or death: 

               

          		    (i)       
               Subject to subparagraph (iv) below, any option outstanding at the time of
               the Optionee’s cessation of Service for any reason shall remain exercisable
               for such period of time thereafter as shall be determined by the Plan
               Administrator and set forth in the documents evidencing the option. 

               

          		    (ii)       
               Any option held by the Optionee at the time of death and exercisable in whole or
               in part at that time may be subsequently exercised by the personal
               representative of the Optionee’s estate or by the person or persons to whom
               the option is transferred pursuant to the Optionee’s will or in accordance
               with the laws of descent and distribution or by the Optionee’s designated
               beneficiary or beneficiaries of that option. 

               

          		    (iii)       
               Except as otherwise determined in the discretion of the Plan Administrator
               either at the time the option is granted or at any time the option remains
               outstanding, should the Optionee’s Service be terminated for Misconduct or
               should the Optionee otherwise engage in Misconduct while one or more options
               granted to the Optionee under this Article Two are outstanding, then all those
               options shall terminate immediately and cease to be outstanding. 

               

          		    (iv)       
               During the applicable post-Service exercise period, the option may not be
               exercised in the aggregate for more than the number of vested shares for which
               the option is exercisable on the date of the Optionee’s cessation of
               Service. Upon the expiration of the applicable exercise period or (if earlier)
               upon the expiration of the option term, the option shall terminate and cease to
               be outstanding for any vested shares for which the option has not been
               exercised. However, the option shall, immediately upon the Optionee’s
               cessation of Service, terminate and cease to be outstanding to the extent the
               option is not otherwise at that time exercisable for vested shares. 

               

          		    2.       
               The Plan Administrator shall have complete discretion, either at the time an
               option is granted or at any time while the option remains outstanding, to: 

               

          		    (i)       
               extend the period of time for which the option is to remain exercisable
               following the Optionee’s cessation of Service from the limited exercise
               period otherwise in effect for that option to such greater period of time as the
               Plan Administrator shall deem appropriate, but in no event beyond the expiration
               of the option term, and/or 

               

          		    (ii)       
               permit the option to be exercised, during the applicable post-Service exercise
               period, not only with respect to the number of vested shares of Common Stock for
               which such option is exercisable at the time of the Optionee’s cessation of
               Service but also with respect to one or more additional installments in which
               the Optionee would have vested had the Optionee continued in Service. 

               

         D.       
          STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights
          with respect to the shares subject to the option until such person shall have
          exercised the option, paid the exercise price and become a holder of record of
          the purchased shares. 

         E.       
          REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant
          options which are exercisable for unvested shares of Common Stock. Should the
          Optionee cease Service while holding such unvested shares, the Corporation shall
          have the right to repurchase, at the purchase price paid per share, any or all
          of those unvested shares. The terms upon which such repurchase right shall be
          exercisable (including the period and procedure for exercise and the appropriate
          vesting schedule for the purchased shares) shall be established by the Plan
          Administrator and set forth in the document evidencing such repurchase right. 

         F.       
          LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, the
          options shall be exercisable only by the Optionee and shall not be assignable or
          transferable other than by will or by the laws of descent and distribution
          following the Optionee’s death, provided however, that
          an option may be assigned in whole or in part during Optionee’s lifetime to
          one or more members of the Optionee’s Immediate Family or to a trust
          established for the exclusive benefit of Optionee or one or more members of the
          Optionee’s Immediate Family or to the Optionee’s former spouse, to the
          extent such assignment is in connection with Optionee’s estate plan or
          pursuant to a domestic relations order. The assigned portion shall be
          exercisable only by the person or persons who acquire a proprietary interest in
          the option pursuant to such assignment. The terms applicable to the assigned
          portion shall be the same as those in effect for this option immediately prior
          to such assignment and shall be set forth in such documents issued to the
          assignee as the Plan Administrator may deem appropriate. Notwithstanding the
          foregoing, the Optionee may also designate one or more persons as the
          beneficiary or beneficiaries of his or her outstanding options under this
          Article Two, and those options shall, in accordance with such designation,
          automatically be transferred to such beneficiary or beneficiaries upon the
          Optionee’s death while holding those options. Such beneficiary or
          beneficiaries shall take the transferred option subject to all the terms and
          conditions of the applicable agreement evidencing each such transferred option,
          including (without limitation) the limited time period during which the option
          may be exercised following the Optionee’s death. 

     II.    
          CANCELLATION AND REGRANT OF OPTIONS 

        The
Plan Administrator shall have the authority to effect, at any time and from time to time,
with the consent of the affected option holders, the cancellation of any or all
outstanding options under the Discretionary Option Grant Program and to grant in
substitution new options covering the same or different number of shares of Common Stock
but with an exercise price per share based on the Fair Market Value per share of Common
Stock on the new grant date. 

     III.    
          CHANGE IN CONTROL/HOSTILE TAKE-OVER 

         A.       
          No option outstanding at the time of a Change in Control shall become
          exercisable on an accelerated basis if and to the extent: (i) that option is, in
          connection with the Change in Control, assumed by the successor corporation (or
          parent thereof) or otherwise continued in full force and effect pursuant to the
          terms of the Change in Control transaction, (ii) such option is replaced with a
          cash incentive program of the successor corporation which preserves the spread
          existing at the time of the Change in Control on the shares of Common Stock for
          which the option is not otherwise at that time exercisable and provides for
          subsequent payout in accordance with the same exercise/vesting schedule
          applicable to those option shares or (iii) the acceleration of such option is
          subject to other limitations imposed by the Plan Administrator at the time of
          the option grant. However, if none of the foregoing conditions are satisfied,
          then each option outstanding at the time of the Change in Control but not
          otherwise exercisable for all the shares of Common Stock at that time subject to
          such option shall automatically accelerate so that each such option shall,
          immediately prior to the effective date of the Change in Control, become
          exercisable for all the shares of Common Stock at the time subject to such
          option and may be exercised for any or all of those shares as fully vested
          shares of Common Stock. 

         B.       
          All of the Corporation’s outstanding repurchase rights under the
          Discretionary Option Grant Program shall also terminate automatically, and the
          shares of Common Stock subject to those terminated rights shall immediately vest
          in full, in the event of any Change in Control, except to the extent: (i) those
          repurchase rights are assigned to the successor corporation (or parent thereof)
          or otherwise continued in full force and effect pursuant to the terms of the
          Change in Control transaction or (ii) such accelerated vesting is precluded by
          other limitations imposed by the Plan Administrator at the time the repurchase
          right is issued. 

         C.       
          Immediately following the consummation of the Change in Control, all outstanding
          options shall terminate and cease to be outstanding, except to the extent
          assumed by the successor corporation (or parent thereof) or otherwise expressly
          continued in full force and effect pursuant to the terms of the Change in
          Control transaction. 

         D.       
          Each option which is assumed in connection with a Change in Control or otherwise
          continued in effect shall be appropriately adjusted, immediately after such
          Change in Control, to apply to the number and class of securities which would
          have been issuable to the Optionee in consummation of such Change in Control had
          the option been exercised immediately prior to such Change in Control.
          Appropriate adjustments to reflect such Change in Control shall also be made to:
          (i) the exercise price payable per share under each outstanding option, provided
          the aggregate exercise price payable for such securities shall remain the same;
          (ii) the maximum number and/or class of securities available for issuance over
          the remaining term of the Plan; and (iii) the maximum number and/or class of
          securities for which any one person may be granted options, direct stock
          issuances and share right awards under the Plan per calendar year. To the extent
          the actual holders of the Corporation’s outstanding Common Stock receive
          cash consideration for their Common Stock in consummation of the Change in
          Control transaction, the successor corporation may, in connection with the
          assumption of the outstanding options under the Discretionary Option Grant
          Program, substitute one or more shares of its own common stock with a fair
          market value equivalent to the cash consideration paid per share of Common Stock
          in such Change in Control transaction. 

         E.       
          The Plan Administrator shall have the discretionary authority to structure one
          or more outstanding options under the Discretionary Option Grant Program so that
          those options shall, immediately prior to the effective date of a Change in
          Control, become exercisable for all the shares of Common Stock at that time
          subject to such options on an accelerated basis and may be exercised for any or
          all of such shares as fully vested shares of Common Stock, whether or not those
          options are to be assumed or otherwise continued in full force and effect or
          replaced with a cash incentive program pursuant to the express terms of the
          Change in Control transaction. In addition, the Plan Administrator shall have
          the discretionary authority to structure one or more of the Corporation’s
          repurchase rights under the Discretionary Option Grant Program so that those
          rights shall immediately terminate at the time of such Change in Control and
          shall not be assignable to the successor corporation (or parent thereof), and
          the shares subject to those terminated rights shall accordingly vest in full at
          the time of such Change in Control. 

         F.       
          The Plan Administrator shall have full power and authority to structure one or
          more outstanding options under the Discretionary Option Grant Program so that
          those options shall vest and become exercisable for all the shares of Common
          Stock at that time subject to such options on an accelerated basis in the event
          the Optionee’s Service is subsequently terminated by reason of an
          Involuntary Termination within a designated period (not to exceed eighteen (18)
          months) following the effective date of any Change in Control in which those
          options do not otherwise accelerate. Any options so accelerated shall remain
          exercisable for fully vested shares of Common Stock until the expiration or
          sooner termination of the option term. In addition, the Plan Administrator may
          structure one or more of the Corporation’s repurchase rights under the
          Discretionary Option Grant Program so that those rights shall immediately
          terminate with respect to any shares of Common Stock held by the Optionee at the
          time of his or her Involuntary Termination, and the shares subject to those
          terminated repurchase rights shall accordingly vest in full at that time. 

         G.       
          The Plan Administrator shall have the discretionary authority to structure one
          or more outstanding options under the Discretionary Option Grant Program so that
          those options shall, immediately prior to the effective date of a Hostile
          Take-Over, vest and become exercisable for all the shares of Common Stock at
          that time subject to such options on an accelerated basis and may be exercised
          for any or all of such shares as fully vested shares of Common Stock. In
          addition, the Plan Administrator shall have the discretionary authority to
          structure one or more of the Corporation’s repurchase rights under the
          Discretionary Option Grant Program so that those rights shall terminate
          automatically upon the consummation of such Hostile Take-Over, and the shares
          subject to those terminated rights shall thereupon immediately vest in full.
          Alternatively, the Plan Administrator may condition the automatic acceleration
          of one or more outstanding options under the Discretionary Option Grant Program
          and the termination of one or more of the Corporation’s outstanding
          repurchase rights under such program upon the Involuntary Termination of the
          Optionee’s Service within a designated period (not to exceed eighteen (18)
          months) following the effective date of such Hostile Take-Over. Each option so
          accelerated shall remain exercisable for fully vested shares of Common Stock
          until the expiration or sooner termination of the option term. 

         H.       
          The grant of options under the Discretionary Option Grant Program shall in no
          way affect the right of the Corporation to adjust, reclassify, reorganize or
          otherwise change its capital or business structure or to merge, consolidate,
          dissolve, liquidate or sell or transfer all or any part of its business or
          assets. 

     V.    
          STOCK APPRECIATION RIGHTS 

        The
Plan Administrator may, subject to such conditions as it may determine, grant to selected
Optionees stock appreciation rights which will allow the holders of those rights to elect
between the exercise of the underlying option for shares of Common Stock and the surrender
of that option in exchange for a distribution from the Corporation in an amount equal to
the excess of: (A) the Option Surrender Value of the number of shares for which the option
is surrendered; over (B) the aggregate exercise price payable for such shares. The
distribution may be made in shares of Common Stock valued at Fair Market Value on the
option surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate. 

ARTICLE THREE 

STOCK ISSUANCE PROGRAM 

     I.    
          STOCK ISSUANCES 

        Shares
of Common Stock may be issued under the Stock Issuance Program through direct and
immediate issuances without any intervening option grants. Each such stock issuance shall
be evidenced by a Stock Issuance Agreement which complies with the terms specified below.
Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals. 

     II.    
          STOCK ISSUANCE TERMS 

         A.       
          PURCHASE PRICE. 

          		    1.       
               The purchase price per share shall be fixed by the Plan Administrator. 

               

          		    2.       
               Subject to the provisions of Section I of Article Four, shares of Common Stock
               may be issued under the Stock Issuance Program for any of the following items of
               consideration which the Plan Administrator may deem appropriate in each
               individual instance: 

               

          		    (i)       
               cash or check made payable to the Corporation, or 

               

          		    (ii)       
               services rendered or to be rendered to the Corporation (or any Parent or
               Subsidiary). 

               

         B.       
          VESTING PROVISIONS. 

          		    1.       
               Shares of Common Stock issued under the Stock Issuance Program may, in the
               discretion of the Plan Administrator, be fully and immediately vested upon
               issuance or may vest in one or more installments over the Participant’s
               period of Service or upon attainment of specified performance objectives. The
               elements of the vesting schedule applicable to any unvested shares of Common
               Stock issued under the Stock Issuance Program shall be determined by the Plan
               Administrator and incorporated into the Stock Issuance Agreement. Shares of
               Common Stock may also be issued under the Stock Issuance Program pursuant to
               share right awards which entitle the recipients to receive those shares upon the
               attainment of designated performance goals. Upon the attainment of such
               performance goals, fully vested shares of Common Stock shall be issued upon
               satisfaction of those share right awards. 

               

          		    2.       
               Any new, substituted or additional securities or other property (including money
               paid other than as a regular cash dividend) which the Participant may have the
               right to receive with respect to the Participant’s unvested shares of
               Common Stock by reason of any stock dividend, stock split, recapitalization,
               combination of shares, exchange of shares or other change affecting the
               outstanding Common Stock as a class without the Corporation’s receipt of
               consideration shall be issued subject to: (i) the same vesting requirements
               applicable to the Participant’s unvested shares of Common Stock; and (ii)
               such escrow arrangements as the Plan Administrator shall deem appropriate. 

               

          		    3.       
               The Participant shall have full stockholder rights with respect to any shares of
               Common Stock issued to the Participant under the Stock Issuance Program, whether
               or not the Participant’s interest in those shares is vested. Accordingly,
               the Participant shall have the right to vote such shares and to receive any
               regular cash dividends paid on such shares. 

               

          		    4.       
               Should the Participant cease to remain in Service while holding one or more
               unvested shares of Common Stock issued under the Stock Issuance Program or
               should the performance objectives not be attained with respect to one or more
               such unvested shares of Common Stock, then those shares shall be immediately
               surrendered to the Corporation for cancellation, and the Participant shall have
               no further stockholder rights with respect to those shares. To the extent the
               surrendered shares were previously issued to the Participant for consideration
               paid in cash or cash equivalent (including the Participant’s purchase-money
               indebtedness but not including services rendered by the Participant), the
               Corporation shall repay to the Participant the cash consideration paid for the
               surrendered shares and shall cancel the unpaid principal balance of any
               outstanding purchase-money note of the Participant attributable to the
               surrendered shares. 

               

          		    5.       
               The Plan Administrator may in its discretion waive the surrender and
               cancellation of one or more unvested shares of Common Stock which would
               otherwise occur upon the cessation of the Participant’s Service or the
               non-attainment of the performance objectives applicable to those shares. Such
               waiver shall result in the immediate vesting of the Participant’s interest
               in the shares as to which the waiver applies. Such waiver may be effected at any
               time, whether before or after the Participant’s cessation of Service or the
               attainment or non-attainment of the applicable performance objectives. 

               

          		    6.       
               Outstanding share right awards under the Stock Issuance Program shall
               automatically terminate, and no shares of Common Stock shall actually be issued
               in satisfaction of those awards, if the performance goals or Service
               requirements established for such awards are not attained. The Plan
               Administrator, however, shall have the discretionary authority to issue shares
               of Common Stock under one or more outstanding share right awards as to which the
               designated performance goals or Service requirements have not been attained. 

               

     III.    
          CHANGE IN CONTROL/HOSTILE TAKE-OVER 

         A.       
          All of the Corporation’s outstanding repurchase rights under the Stock
          Issuance Program shall terminate automatically, and all the shares of Common
          Stock subject to those terminated rights shall immediately vest in full, in the
          event of any Change in Control, except to the extent (i) those repurchase rights
          are assigned to the successor corporation (or parent thereof) or otherwise
          continued in full force and effect pursuant to the express terms of the Change
          in Control transaction or (ii) such accelerated vesting is precluded by other
          limitations imposed in the Stock Issuance Agreement. 

         B.       
          The Plan Administrator shall have the discretionary authority to structure one
          or more of the Corporation’s repurchase rights under the Stock Issuance
          Program so that those rights shall automatically terminate in whole or in part
          upon the occurrence of a Change in Control and shall not be assignable to the
          successor corporation (or parent thereof), and the shares of Common Stock
          subject to those terminated rights shall immediately vest in full at the time of
          such Change in Control. 

         C.       
          The Plan Administrator shall also have the discretionary authority to structure
          one or more of the Corporation’s repurchase rights under the Stock Issuance
          Program so that those rights shall automatically terminate in whole or in part,
          and the shares of Common Stock subject to those terminated rights shall
          immediately vest in full, upon the Involuntary Termination of the
          Participant’s Service within a designated period (not to exceed eighteen
          (18) months) following the effective date of any Change in Control in which
          those repurchase rights do not otherwise terminate. 

         D.       
          The Plan Administrator shall also have the discretionary authority to structure
          one or more of the Corporation’s repurchase rights under the Stock Issuance
          Program so that those rights shall automatically terminate in whole or in part
          upon the occurrence of a Hostile Take-Over, and the shares of Common Stock
          subject to those terminated rights shall immediately vest in full at the time of
          such Hostile Take-Over. 

ARTICLE FOUR 

MISCELLANEOUS 

     I.    
          FINANCING 

        The
Plan Administrator may permit any Optionee or Participant to pay the option exercise price
under the Discretionary Option Grant Program or the purchase price of shares issued under
the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note
payable in one or more installments. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the Optionee or
Participant exceed the sum of (i) the aggregate option exercise price or purchase price
payable for the purchased shares plus (ii) any Federal, state and local income and
employment tax liability incurred by the Optionee or the Participant in connection with
the option exercise or share purchase. 

     II.    
          SHARE ESCROW/LEGENDS 

        Unvested
shares issued under the Plan may, in the Plan Administrator’s discretion, be held in
escrow by the Corporation until the Participant’s interest in such shares vests or
may be issued directly to the Participant with restrictive legends on the certificates
evidencing those unvested shares. 

     III.    
          TAX WITHHOLDING 

         A.       
          The Corporation’s obligation to deliver shares of Common Stock upon the
          exercise of options or the issuance or vesting of such shares under the Plan
          shall be subject to the satisfaction of all applicable Federal, state and local
          income and employment tax withholding requirements. 

         B.       
          The Plan Administrator may, in its discretion, provide any or all holders of
          options or unvested shares of Common Stock under the Plan with the right to use
          shares of Common Stock in satisfaction of all or part of the Taxes incurred by
          such holders in connection with the exercise of their options or the vesting of
          their shares. Such right may be provided to any such holder in either or both of
          the following formats: 

         1.       
          Stock Withholding: The election to have the Corporation withhold, from the
          shares of Common Stock otherwise issuable upon the exercise of such option or
          the vesting of such shares, a portion of those shares with an aggregate Fair
          Market Value equal to the amount of the Taxes (not to exceed one hundred percent
          (100%) of such Taxes) to be satisfied in such manner as designated by the holder
          in writing; or 

         2.       
          Stock Delivery: The election to deliver to the Corporation, at the time the
          option is exercised or the shares vest, one or more shares of Common Stock
          previously acquired by such holder (other than in connection with the option
          exercise or share vesting triggering the Taxes) with an aggregate Fair Market
          Value equal to the amount of the Taxes (not to exceed one hundred percent (100%)
          of such Taxes) to be satisfied in such manner as designated by the holder in
          writing. 

     IV.    
          EFFECTIVE DATE AND TERM OF THE PLAN 

         A.       
          The Plan shall become effective immediately upon the Plan Effective Date.
          Options may be granted under the Discretionary Option Grant at any time on or
          after the Plan Effective Date. 

         B.       
          The Plan shall terminate upon the EARLIEST of (i) the tenth anniversary of the
          Plan Effective Date, (ii) the date on which all shares available for issuance
          under the Plan shall have been issued as fully-vested shares or (iii) the
          termination of all outstanding options in connection with a Change in Control.
          Upon such plan termination, all outstanding option grants and unvested stock
          issuances shall thereafter continue to have force and effect in accordance with
          the provisions of the documents evidencing such grants or issuances. 

     V.    
          AMENDMENT OF THE PLAN 

         A.       
          The Board shall have complete and exclusive power and authority to amend or
          modify the Plan in any or all respects. However, no such amendment or
          modification shall adversely affect the rights and obligations with respect to
          stock options or unvested stock issuances at the time outstanding under the Plan
          unless the Optionee or the Participant consents to such amendment or
          modification. In addition, certain amendments may require stockholder approval
          pursuant to applicable laws or regulations. 

         B.       
          Options to purchase shares of Common Stock may be granted under the
          Discretionary Option Grant Program and shares of Common Stock may be issued
          under the Stock Issuance Program that are in each instance in excess of the
          number of shares then available for issuance under the Plan, provided any excess
          shares actually issued under those programs shall be held in escrow until there
          is obtained any required approval of an amendment sufficiently increasing the
          number of shares of Common Stock available for issuance under the Plan. If such
          approval is not obtained within twelve (12) months after the date the first such
          excess issuances are made, then (i) any unexercised options granted on the basis
          of such excess shares shall terminate and cease to be outstanding and (ii) the
          Corporation shall promptly refund to the Optionees and the Participants the
          exercise or purchase price paid for any excess shares issued under the Plan and
          held in escrow, together with interest (at the applicable Short Term Federal
          Rate) for the period the shares were held in escrow, and such shares shall
          thereupon be automatically canceled and cease to be outstanding. 

     VI.    
          USE OF PROCEEDS 

        Any
cash proceeds received by the Corporation from the sale of shares of Common Stock under
the Plan shall be used for general corporate purposes. 

     VII.    
          REGULATORY APPROVALS 

         A.       
          The implementation of the Plan, the granting of any stock option under the Plan
          and the issuance of any shares of Common Stock (i) upon the exercise of any
          granted option or (ii) under the Stock Issuance Program shall be subject to the
          Corporation’s procurement of all approvals and permits required by
          regulatory authorities having jurisdiction over the Plan, the stock options
          granted under it and the shares of Common Stock issued pursuant to it. 

         B.       
          No shares of Common Stock or other assets shall be issued or delivered under the
          Plan unless and until there shall have been compliance with all applicable
          requirements of Federal and state securities laws, including the filing and
          effectiveness of the Form S-8 registration statement for the shares of Common
          Stock issuable under the Plan, and all applicable listing requirements of the
          stock exchange or automated quotation system, as applicable, on which Common
          Stock is then quoted for trading. 

     VIII.    
          NO EMPLOYMENT/SERVICE RIGHTS 

        Nothing
in the Plan shall confer upon the Optionee or the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such
person) or of the Optionee or the Participant, which rights are hereby expressly reserved
by each, to terminate such person’s Service at any time for any reason, with or
without cause. 

[REMAINDER OF THIS
PAGE INTENTIONALLY LEFT BLANK] 

APPENDIX 

        The
following definitions shall be in effect under the Plan: 

         A.       
          BOARD shall mean the Corporation’s Board of Directors. 

         B.       
          CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation
          effected through any of the following transactions: 

               (i)       
          a stockholder-approved merger or consolidation in which securities possessing
          more than fifty percent (50%) of the total combined voting power of the
          Corporation’s outstanding securities are transferred to a person or persons
          different from the persons holding those securities immediately prior to such
          transaction; or 

               (ii)       
          a sale, transfer or other disposition of all or substantially all of the
          Corporation’s assets; or 

               (iii)       
          the acquisition, directly or indirectly by any person or related group of
          persons (other than the Corporation or a person that directly or indirectly
          controls, is controlled by, or is under common control with, the Corporation),
          of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
          securities possessing more than fifty percent (50%) of the total combined voting
          power of the Corporation’s outstanding securities pursuant to a tender or
          exchange offer made directly to the Corporation’s stockholders which the
          Board recommends such stockholders accept; 

        provided,
however, the Plan Administrator shall have the discretionary authority to determine that a
transaction or series of transactions does not constitute a Change in Control. Such
determination by the Plan Administrator shall govern notwithstanding the fact that the
determination is contrary to paragraphs (i) through (iii) set forth above. 

         C.       
          CODE shall mean the Internal Revenue Code of 1986, as amended. 

         D.       
          COMMON STOCK shall mean the Corporation’s common stock. 

         E.       
          CORPORATION shall mean Positron Corporation, a Texas corporation, and its
          successors. 

         F.       
          DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option grant
          program in effect under the Plan. 

         G.       
          EMPLOYEE shall mean an “employee” of the Corporation (or any Parent or
          Subsidiary), within the meaning of Section 3401(c) of the Code and the
          regulations thereunder. 

         H.       
          EXERCISE DATE shall mean the date on which the Corporation shall have received
          written notice of the option exercise. 

         I.       
          FAIR MARKET VALUE per share of Common Stock on any relevant date shall be
          determined by the Plan Administrator in its sole, reasonable discretion. In
          determining the fair market value, the Plan Administrator may consider the
          following items: 

               (i)       
          the closing selling price per share of common stock on the date of grant. 

        This
closing selling price shall be determined as follows: 

     	a. 	       

           If the Common Stock is at the time listed on the Nasdaq Stock Market, then the
          closing selling price per share of Common Stock on the date in question shall be
          used, as such price is reported by the National Association of Securities
          Dealers on the Nasdaq Stock Market and published in The Wall Street
          Journal. If there is no closing selling price for the Common Stock on the
          date in question, then the closing selling price on the last preceding date for
          which such quotation exists shall be used; 

          

     	b. 	       

           If the Common Stock is at the time listed on any stock exchange, then the
          closing selling price per share of Common Stock on the date in question on the
          stock exchange determined by the Plan Administrator to be the primary market for
          the Common Stock shall be used, as such price is officially quoted in the
          composite tape of transactions on such exchange and published in The Wall
          Street Journal. If there is no closing selling price for the Common Stock on
          the date in question, then the closing selling price on the last preceding date
          for which such quotation exists shall be used; or 

          

     	c. 	       

           If the Common Stock is regularly quoted by a recognized securities dealer but
          selling prices are not reported, the mean between the high bid and low asked
          prices for the Common Stock on the date of determination shall be used, as
          published in The Wall Street  Journal or such other source as the Plan
          Administrator deems reliable. 

          

               (ii)       
          the average trading volume of the Common Stock and the trading volume on the
          date of the grant; 

          (iii)        the
closing selling price per share of Common Stock on recent dates;  

          (iv)        the
spread between the “bid” and “ask” prices on the date of
               grant and on recent dates;  

          (v)        the
price of the Corporation’s securities in recently closed private
               offerings;  

          (vi)        appropriate
volume discounts based on the number of shares subject to the option
               grant; and  

          (vii)        any
other information the plan administrator determines is applicable in
               determining the fair market value.  

         J.       
          HOSTILE TAKE-OVER shall mean: 

               (i)       
          the acquisition, directly or indirectly, by any person or related group of
          persons (other than the Corporation or a person that directly or indirectly
          controls, is controlled by, or is under common control with, the Corporation) of
          beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
          securities possessing more than fifty percent (50%) of the total combined voting
          power of the Corporation’s outstanding securities pursuant to a tender or
          exchange offer made directly to the Corporation’s stockholders which the
          Board does not recommend such stockholders to accept; or 

               (ii)       
          a change in the composition of the Board over a period of thirty-six (36)
          consecutive months or less such that a majority of the Board members ceases, by
          reason of one or more contested elections for Board membership, to be comprised
          of individuals who either: (a) have been Board members continuously since the
          beginning of such period; or (b) have been elected or nominated for election as
          Board members during such period by at least a majority of the Board members
          described in clause (a) who were still in office at the time the Board approved
          such election or nomination. 

         K.       
          IMMEDIATE FAMILY shall mean any child, stepchild, grandchild, parent,
          stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
          son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
          adoptive relationships. 

         L.       
          INVOLUNTARY TERMINATION shall mean the termination of the Service of any
          individual which occurs by reason of: 

               (i)       
          such individual’s involuntary dismissal or discharge by the Corporation for
          reasons other than Misconduct, or 

               (ii)       
          such individual’s voluntary resignation following (A) a change in his or
          her position with the Corporation which materially reduces his or her level of
          responsibility or the level of management to which Optionee reports, (B) a
          reduction in his or her level of compensation (including base salary, fringe
          benefits and participation in any corporate-performance based bonus or incentive
          programs) by more than fifteen percent (15%) or (C) a relocation of such
          individual’s place of employment by more than fifty (50) miles, provided
          and only if such change, reduction or relocation is effected by the Corporation
          without the individual’s consent. 

         M.       
          MISCONDUCT shall mean the commission of any act of fraud, embezzlement or
          dishonesty by the Optionee or Participant, any unauthorized use or disclosure by
          such person of confidential information or trade secrets of the Corporation (or
          any Parent or Subsidiary), or any other intentional misconduct by such person
          adversely affecting the business or affairs of the Corporation (or any Parent or
          Subsidiary) in a material manner. The foregoing definition shall not be deemed
          to be inclusive of all the acts or omissions which the Corporation (or any
          Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
          any Optionee, Participant or other person in the Service of the Corporation (or
          any Parent or Subsidiary). 

         N.       
          1934 ACT shall mean the Securities Exchange Act of 1934, as amended. 

         O.       
          OFFICER shall mean any person serving as the president, chief executive officer,
          chief financial officer, chief operating officer, treasurer, secretary or in any
          other managerial or administrative capacity for the Corporation or a Parent or
          Subsidiary of the Corporation, as determined in the Administrator’s
          discretion. 

         P.       
          OPTION COMMITTEE shall mean the committee of two (2) or more non-employee Board
          members appointed by the Board to administer the Discretionary Option Grant and
          Stock Issuance Programs. 

         Q.       
          OPTIONEE shall mean any person to whom an option is granted under the
          Discretionary Option Grant Program. 

         R.       
          OPTION SURRENDER VALUE shall mean the Fair Market Value per share of Common
          Stock on the date the option is surrendered to the Corporation or, in the event
          of a Hostile Take-Over, effected through a tender offer, the highest reported
          price per share of Common Stock paid by the tender offer or in effecting such
          Hostile Take-Over, if greater. 

         S.       
          PARENT shall mean any corporation (other than the Corporation) in an unbroken
          chain of corporations ending with the Corporation, provided each corporation in
          the unbroken chain (other than the Corporation) owns, at the time of the
          determination, stock possessing fifty percent (50%) or more of the total
          combined voting power of all classes of stock in one of the other corporations
          in such chain. 

         T.       
          PARTICIPANT shall mean any person who is issued shares of Common Stock under the
          Stock Issuance Program. 

         U.       
          PLAN shall mean the Corporation’s 2006 Stock Incentive Plan, as set forth
          in this document. 

         V.       
          PLAN ADMINISTRATOR shall mean the particular entity, whether the Option
          Committee or the Board, which is authorized to administer the Discretionary
          Option Grant and Stock Issuance Programs with respect to one or more classes of
          eligible persons, to the extent such entity is carrying out its administrative
          functions under those programs with respect to the persons under its
          jurisdiction. 

         W.       
          PLAN EFFECTIVE DATE shall mean the date on which the Plan was adopted by the
          Board. 

         X.       
          SECTION 16 INSIDER shall mean an officer or director of the Corporation subject
          to the short-swing profit liabilities of Section 16 of the 1934 Act. 

         AA.       
          SERVICE shall mean the performance of services for the Corporation (or any
          Parent or Subsidiary) by a person in the capacity of an Employee, Officer,
          member of the board of directors or a consultant or independent advisor, except
          to the extent otherwise specifically provided in the documents evidencing the
          option grant or stock issuance. 

         BB.       
          SHORT TERM FEDERAL RATE shall mean the federal short-term rate in effect under
          Section 1274(d) of the Code for the period the shares were held in escrow. 

         CC.       
          STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
          Corporation and the Participant at the time of issuance of shares of Common
          Stock under the Stock Issuance Program. 

         DD.       
          STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect under the
          Plan. 

         EE.       
          SUBSIDIARY shall mean any corporation (other than the Corporation) in an
          unbroken chain of corporations beginning with the Corporation, provided each
          corporation (other than the last corporation) in the unbroken chain owns, at the
          time of the determination, stock possessing fifty percent (50%) or more of the
          total combined voting power of all classes of stock in one of the other
          corporations in such chain. 

         FF.       
          TAXES shall mean the Federal, state and local income and employment tax
          liabilities incurred by the holder of options or unvested shares of Common Stock
          in connection with the exercise of those options or the vesting of those shares. 

         GG.       
          10% STOCKHOLDER shall mean the owner of stock (as determined under Code Section
          424(d)) possessing more than ten percent (10%) of the total combined voting
          power of all classes of stock of the Corporation (or any Parent or Subsidiary).EXHIBIT 4.9

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO XSTREAM BEVERAGE NETWORK, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                          SECURED CONVERTIBLE TERM NOTE
                          -----------------------------

                  FOR VALUE RECEIVED, each of XSTREAM BEVERAGE NETWORK, INC., a
Nevada corporation (the "PARENT"), and the other companies listed on Exhibit A
attached hereto (such other companies together with the Parent, each a "COMPANY"
and collectively, the "COMPANIES"), jointly and severally, promises to pay to
LAURUS MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT,
Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands,
Fax: 345-949-8080 (the "HOLDER") or its registered assigns or successors in
interest, sum of Two Million Dollars ($2,000,000), together with any accrued and
unpaid interest hereon, on March 31, 2009 (the "MATURITY DATE") if not sooner
paid.

                  Capitalized terms used herein without definition shall have
the meanings ascribed to such terms in that certain Security and Purchase
Agreement dated as of the date hereof by and between the Companies and the
Holder (as amended, modified and/or supplemented from time to time, the
"SECURITY AGREEMENT").

                  The following terms shall apply to this Secured Convertible
Term Note (this "NOTE"):

                                   ARTICLE I
                         CONTRACT RATE AND AMORTIZATION

         1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest payable
on the outstanding principal amount of this Note (the "PRINCIPAL AMOUNT") shall
accrue at a rate per annum equal to the "prime rate" published in The Wall
Street Journal from time to time (the "PRIME RATE"), plus one percent (1%) (the
"CONTRACT RATE"). The Contract Rate shall be increased or decreased as the case
may be for each increase or decrease in the Prime Rate in an amount equal to
such increase or decrease in the Prime Rate; each change to be effective as of
the day of the change in the Prime Rate. The Contract Rate shall not at any time
be less than nine percent (9%). Interest shall (i) be calculated on the basis of
a 360 day year, and (ii) accrue and be payable on the Maturity Date, whether by
acceleration, conversion or otherwise. The Contract Rate shall be calculated in
accordance with the terms of this Section 1.1, subject to adjustment as set
forth in this Note.

<PAGE>
                                   ARTICLE II
                            CONVERSION AND REDEMPTION

         2.1 Fixed Conversion Price. For purposes of this Note, subject to
Section 3.6 hereof, the initial "FIXED CONVERSION PRICE" means $0.45.

         2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, none of any Company's obligations to the Holder may be converted into
common stock of the Parent ("COMMON STOCK") unless either (i) an effective
current Registration Statement (as defined in the Registration Rights Agreement)
covering the shares of Common Stock to be issued in connection with satisfaction
of such obligations exists or (ii) an exemption from registration for resale of
all of the Common Stock issued and issuable is available pursuant to Rule 144 of
the Securities Act.

         2.3 Optional Redemption in Cash. The Companies may prepay this Note
("OPTIONAL REDEMPTION") by paying to the Holder a sum of money equal to one
hundred percent (100%) of the Principal Amount outstanding at such time together
with accrued but unpaid interest thereon and any and all other sums due, accrued
or payable to the Holder arising under this Note, the Security Agreement or any
other Ancillary Agreement (the "REDEMPTION AMOUNT") outstanding on the
Redemption Payment Date (as defined below). The Companies shall deliver to the
Holder a written notice of redemption (the "NOTICE OF REDEMPTION") specifying
the date for such Optional Redemption (the "REDEMPTION PAYMENT DATE"), which
date shall be ten (10) business days after the date of the Notice of Redemption
(the "REDEMPTION PERIOD"). A Notice of Redemption shall not be effective with
respect to any portion of this Note for which the Holder has previously
delivered a Notice of Conversion (as hereinafter defined) or for conversions
elected to be made by the Holder pursuant to Section 3.3 during the Redemption
Period. The Redemption Amount shall be determined as if the Holder's conversion
elections had been completed immediately prior to the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid
in good funds to the Holder. In the event the Companies fail to pay the
Redemption Amount on the Redemption Payment Date as set forth herein, then such
Redemption Notice will be null and void.

                                  ARTICLE III
                           HOLDER'S CONVERSION RIGHTS

         3.1 Optional Conversion. Subject to the terms set forth in this Article
III, the Holder shall have the right, but not the obligation, to convert all or
any portion of the issued and outstanding Principal Amount and/or accrued
interest and fees due and payable into fully paid and nonassessable shares of
Common Stock at the Fixed Conversion Price. The shares of Common Stock to be
issued upon such conversion are herein referred to as, the "CONVERSION SHARES."

         3.2 Conversion Limitation. Notwithstanding anything herein to the
contrary, in no event shall the Holder be entitled to convert any portion of
this Note in excess of that portion of this Note upon exercise of which the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and
its Affiliates (other than shares of Common Stock which may be deemed

                                       2
<PAGE>

beneficially owned through the ownership of the unconverted portion of this Note
or the unexercised or unconverted portion of any other security of the Holder
subject to a limitation on conversion analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Note with respect to which the determination
of this proviso is being made, would result in beneficial ownership by the
Holder and its Affiliates of any amount greater than 4.99% of the then
outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Holder and its Affiliates beneficially own more than 4.99% of
the then outstanding shares of Common Stock). As used herein, the term
"AFFILIATE" means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the Securities Act. For purposes of the proviso to the second preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso. The
limitations set forth herein (x) may be waived by the Holder upon provision of
no less than sixty-one (61) days prior notice to the Parent and (y) shall
automatically become null and void (i) following notice to the Companies upon
the occurrence and during the continuance of an Event of Default (as defined in
the Security and Purchase Agreement dated as of the date hereof among the
Holder, the Parent and various subsidiaries of the Parent (as amended, modified,
restated and/or supplemented from time to time, the "SECURITY AGREEMENT")), or
(ii) upon receipt by the Holder of a Notice of Redemption.

         3.3 Mechanics of Holder's Conversion. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion in
substantially the form of Exhibit B hereto (appropriate completed) ("NOTICE OF
CONVERSION") to the Parent and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
fees that are being converted. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the
appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Parent
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Parent in accordance with
the provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE").
Pursuant to the terms of the Notice of Conversion, the Parent will issue
instructions to the transfer agent accompanied by an opinion of counsel within
one (1) business day of the date of the delivery to the Parent of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Parent of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Parent of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Parent written instructions to the
contrary.

         3.4 Late Payments. The Companies understand that a delay in the
delivery of the Conversion Shares in the form required pursuant to this Article

                                       3
<PAGE>

beyond the Delivery Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, in addition to all other rights and
remedies which the Holder may have under this Note, applicable law or otherwise,
the Companies jointly and severally agree to pay late payments to the Holder for
any late issuance of Conversion Shares in the form required pursuant to this
Article II upon conversion of this Note, in the amount equal to $500 per
business day after the Delivery Date. The Companies shall make any payments
incurred under this Section in immediately available funds upon demand.

         3.5 Conversion Mechanics. The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing that
portion of the principal and interest and fees to be converted, if any, by the
then applicable Fixed Conversion Price.

         3.6 Adjustment Provisions. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to this Note shall be subject to adjustment from time to time upon the
occurrence of certain events during the period that this conversion right
remains outstanding, as follows:

             (a) Reclassification. If the Parent at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock (i) immediately prior to or (ii) immediately after,
such reclassification or other change at the sole election of the Holder.

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

         3.7 Reservation of Shares. During the period the conversion right
exists, the Parent will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of Conversion Shares
upon the full conversion of this Note. The Parent represents that upon issuance,
the Conversion Shares will be duly and validly issued, fully paid and
non-assessable. The Parent agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for the Conversion Shares upon the conversion
of this Note.

         3.8 Registration Rights. The Holder has been granted registration
rights with respect to the Conversion Shares as set forth in the Registration
Rights Agreement.

                                       4
<PAGE>

         3.9 Issuance of New Note. Upon any partial conversion of this Note, a
new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Companies to the Holder for the
principal balance of this Note and interest which shall not have been converted
or paid. Subject to the provisions of Article IV of this Note, the Companies
shall not pay any costs, fees or any other consideration to the Holder for the
production and issuance of a new Note.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

         4.1 Events of Default. The occurrence of an Event of Default under the
Security Agreement shall constitute an event of default ("EVENT OF DEFAULT")
hereunder.

         4.2 Default Interest. Following the occurrence and during the
continuance of an Event of Default, the Companies shall, jointly and severally,
pay additional interest on the outstanding principal balance of this Note in an
amount equal to two percent (2%) per month, and all outstanding Obligations,
including unpaid interest, shall continue to accrue interest at such additional
interest rate from the date of such Event of Default until the date such Event
of Default is cured or waived.

         4.3 Default Payment. Following the occurrence and during the
continuance of an Event of Default, the Holder, at its option, may elect, in
addition to all rights and remedies of the Holder under the Security Agreement
and the Ancillary Agreements and all obligations of each Company under the
Security Agreement and the Ancillary Agreements, to require the Companies,
jointly and severally, to make a Default Payment ("DEFAULT PAYMENT"). The
Default Payment shall be one hundred thirty percent (130%) of the outstanding
principal amount of the Note, plus accrued but unpaid interest, all other fees
then remaining unpaid, and all other amounts payable hereunder. The Default
Payment shall be applied first to any fees due and payable to the Holder
pursuant to the Notes and/or the Ancillary Agreements, then to accrued and
unpaid interest due on the Notes, the Security Agreement and then to the
outstanding principal balance of the Notes. The Default Payment shall be due and
payable immediately on the date that the Holder has exercised its rights
pursuant to this Section 4.3.

                                   ARTICLE V
                                  MISCELLANEOUS

         5.1 Conversion Privileges. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof until the date this Note is indefeasibly paid in full and irrevocably
terminated.

         5.2 Cumulative Remedies. The remedies under this Note shall be
cumulative.

         5.3 Failure or Indulgence Not Waiver. No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

                                       5
<PAGE>

         5.4 Notices. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Companies at the address provided in the Security Agreement executed in
connection herewith, and to the Holder at the address provided in the Security
Agreement for such Holder, with a copy to John E. Tucker, Esq., 825 Third
Avenue, 14th Floor, New York, New York 10022, facsimile number (212) 541-4434,
or at such other address as the Companies or the Holder may designate by ten
days advance written notice to the other parties hereto. A Notice of Conversion
shall be deemed given when made to the Parent pursuant to the terms hereof, the
Security Agreement and/or any other Ancillary Agreement.

         5.5 Amendment Provision. The term "Note" and all references thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.

         5.6 Assignability. This Note shall be binding upon the Companies and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Security Agreement. No Company may assign any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.

         5.7 Cost of Collection. In case of any Event of Default under this
Note, the Companies jointly and severally agree to pay to the Holder reasonable
costs of collection, including reasonable attorneys' fees.

         5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.

             (a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

             (b) EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS
NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF
THE OTHER ANCILLARY AGREEMENTS PROVIDED, THAT EACH COMPANY ACKNOWLEDGES THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE
COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN
THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT

                                       6
<PAGE>

OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE
OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH COMPANY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANIES
AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF EACH COMPANY'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID

             (c) EACH COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH COMPANY HERETO WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE
HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE
SECURITY AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED
HERETO OR THERETO.

         5.9 Severability. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note.

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

         5.11 Security Interest. The Holder has been granted a security interest
(i) in certain assets of the Companies as more fully described in the Security

                                       7
<PAGE>

Agreement, (ii) pursuant to the Stock Pledge Agreement dated as of the date
hereof and (iii) certain other security and pledge agreements, if any.

         5.12 Construction, etc. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other. For the avoidance of doubt the Companies and the Holder
understand and agree that this Note is being issued by the Companies together
with that certain Secured Non-Convertible Term Note referred to in the Security
Agreement and that certain Secured Revolving Note referred to in the Security
Agreement as part of the same financing transaction.

         5.13 Registered Obligation. This Note is intended to be a registered
obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)
and each Company (or its agent) shall register this Note (and thereafter shall
maintain such registration) as to both principal and any stated interest.
Notwithstanding any document, instrument or agreement relating to this Note to
the contrary, transfer of this Note (or the right to any payments of principal
or stated interest thereunder) may only be effected by (i) surrender of this
Note and either the reissuance by the Companies of this Note to the new holder
or the issuance by the Companies of a new instrument to the new holder, or (ii)
transfer through a book entry system maintained by the Companies (or their
agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

       [Balance of page intentionally left blank; signature page follows]

                                       8
<PAGE>

                  IN WITNESS WHEREOF, the each Company has caused this Secured
Convertible Term Note to be signed in its name effective as of this 31st day of
March, 2006.

                                           XSTREAM BEVERAGE NETWORKS, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                           TOTAL BEVERAGE NETWORK, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                           BEVERGE NETWORK OF CONNECTICUT, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                       9
<PAGE>

                                           BEVERAGE NETWORK OF
                                           MASSACHUSETTS, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                           BEVERAGE NETWORK OF HAWAII, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                           XSTREAM BRANDS, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                           BEVERAGE NETWORK OF MARYLAND, INC.

                                           By:__________________________________
                                                Name:
                                                Title:

WITNESS:

__________________________________

                                       10
<PAGE>

                                    EXHIBIT A
                                    ---------

                                 OTHER COMPANIES
                                 ---------------

               Total Beverage Network, Inc., a Florida corporation
          Beverage Network of Connecticut, Inc., a Florida corporation
         Beverage Network of Massachusetts, Inc., a Florida corporation
             Beverage Network of Hawaii, Inc., a Florida corporation
                   Xstream Brands, Inc., a Florida corporation
            Beverage Network of Maryland, Inc., a Florida corporation

<PAGE>

                                    EXHIBIT B
                                    ---------

                              NOTICE OF CONVERSION
                              --------------------

        (To be executed by the Holder in order to convert all or part of
              the Secured Convertible Term Note into Common Stock)

Xstream Beverage Network, Inc.
[Insert Address]

         The undersigned hereby converts $_________ of the principal due on
[specify applicable Repayment Date] under the Secured Convertible Term Note
dated as of _________, 200__ (the "NOTE") issued by Xstream Beverage Network,
Inc. (the "PARENT") by delivery of shares of Common Stock of the Parent
("SHARES") on and subject to the conditions set forth in the Note.

1.       Date of Conversion       _______________________

2.       Shares To Be Delivered:  _______________________

                                           LAURUS MASTER FUND, LTD.

                                           By:_______________________________
                                           Name:_____________________________
                                           Title:____________________________

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