Common use of Conversion of Note Clause in Contracts

Conversion of Note. At the option of Lender, the outstanding principal balance of this Note and all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole number.

Conversion of Note. At the option of Lender, the outstanding principal balance of this Note and all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Prior Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to Lender (as similarly adjusted for the Prior Intercreditor Lenders: ): (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) upon full conversion of this Note and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 1 attached to the Amendment and Conversion Agreement hereto and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 13 of the Amendment Agreement dated as of the date hereof between Borrower and Conversion Lender (the "Agreement"); (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 11 of this the Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor the Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower ▇▇▇▇▇▇▇▇ (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender ▇▇▇▇▇▇ shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splits, stock dividends, recapitalizations or similar events after August 19December 15, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender ▇▇▇▇▇▇ and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole number.

Conversion of Note. At the option of Lender, the (a) The entire outstanding principal balance of this Note and all accrued interest, fees Balance hereunder shall be repaid in cash or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and cash equivalents on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by referenceDeemed Repayment Date; provided, however, that if the following terms Lender provides written notice to the Borrower on or prior to the Deemed Maturity Date indicating the Lender’s election to have all or any portion of the outstanding Balance hereunder converted as of the Deemed Maturity Date into Ordinary Shares, then only that portion of the outstanding Balance that the Lender has not elected to be converted into Ordinary Shares at the Primary Conversion Price shall be adjusted repaid in cash or cash equivalents on the Deemed Repayment Date, and the remainder shall be converted as applied of the Deemed Maturity Date into Ordinary Shares at the Primary Conversion Price; provided, further, if the Lender provides no notice to the Intercreditor Lenders: (i) Borrower, or provides written notice to the subscription amount shall be Borrower on or prior to the amount being Deemed Maturity Date indicating the Lender’s election to have less than all of the Balance converted by an Intercreditor Lender in into Ordinary Shares on the particular conversion involved Deemed Maturity Date, and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions Borrower effects a Liquidity Event (as defined in the Amendment and Purchase Agreement), or enters into a definitive agreement to effect a Liquidity Event, on or prior to the Deemed Repayment Date, the Borrower shall provide at least thirty-five (35) days prior written notice to the Lender of such Liquidity Event (the “Liquidity Event Notice”), in which case the Lender may, within thirty (30) days after receipt by the Lender of the Liquidity Event Notice, provide written notice to the Borrower of its election, effective at such closing of such Liquidity Event, to have such portion of the Balance automatically converted into Ordinary Shares at the Primary Conversion AgreementPrice; provided that, if such Liquidity Event is not consummated within six (6) and (B) months after the Deemed Repayment Date, such portion of the Balance shall be exercisable by an Intercreditor Lender, due and payable in whole cash or in part, at any time cash equivalents on the six-month anniversary of the Deemed Repayment Date. (b) Except for the right to receive repayment under the Note or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to obtain certificates representing the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as Ordinary Shares set forth in Section 1.5(a)(iii4(c) below and rights related to a Liquidity Event in Section 4(a) above, all rights with respect to this Note shall terminate upon the effective conversion of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment entire Balance of this Note by Borrower (and the occurrence of the Deemed Repayment Date, whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under not this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B Note has been surrendered to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splitsBorrower for cancellation. (c) Subject to Section 4(b) above, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon promptly as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial any conversion of this Note, (i) this Note may be surrendered by the Borrower at its expense will issue and deliver to the Lender and replaced a certificate or certificates evidencing the number of Ordinary Shares issued to the Lender in connection with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole number▇.

Conversion of Note. Purchasers shall have the right to convert each of their Notes as follows: (a) At any time a Purchaser may (i) convert all or, subject to the limitations hereinafter set forth, a portion of the outstanding principal into shares of Common Stock of the Company at a price per share equal to US$1.37 per share, as such price may be adjusted pursuant to Section 11.7(d) and 11.7(e) (“Conversion Price”); or (ii), until the first anniversary of the Closing Date, as adjusted pursuant to Section 12.12 (the “Tethys Option Period”), at the option of Lenderthe Note holders convert all, or subject to limitations hereinafter set forth, a portion of the outstanding principal balance into Tethys Common Stock at the Tethys Conversion Price per share, as such price may be adjusted pursuant to Section 11.7(f); provided, however, in the event that holders of this the Notes elect to convert their Notes into Tethys Common Stock, if Note holders are prevented from exercising their conversion rights hereunder due to the collateral constraints imposed by the security agreements securing the Company’s Senior Secured Notes, then such Tethys Option Period shall be extended to a date which is 30 days after Note holders have received notice that such constraints have expired, have been waived or eliminated or that they are otherwise no longer applicable. The Company shall promptly notify Note holders of the existence of, and expiration, waiver or elimination, or inapplicability of any such constraints. Any such conversions of a portion of the Notes shall be in minimum aggregate amounts of $100,000, or multiples thereof. (b) To elect any conversion, a Purchaser shall provide to the Company written notice of said election. The parties shall thereafter proceed with diligence to close said conversion not more than 30 days following the Company’s receipt of the election notice. The effective date of any conversion shall be the date on which the election notice is delivered to the Company notwithstanding that closing may be delayed beyond 30 days after a Purchaser’s election notice is delivered to the Company. Any Purchaser electing to convert its Notes shall realize all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead economic and equitable benefits of conversion as provided belowfrom and after said effective date. (c) Upon the closing of a conversion, may be converted, in whole or in part, into units (the "Units") consisting Company shall authorize and issue to such Purchaser a certificate representing the applicable number of shares of Series B Cumulative Convertible Preferred Common Stock or Tethys Common Stock issuable upon such conversion in accordance with this Section 11.7. (d) So long as any Notes or Warrants are outstanding, in the "Series B Stock"event the Company issues equity securities after the date of this Agreement (other than pursuant to the granting of stock options pursuant to employee stock option plans approved by the Company’s stockholders; or the exercise or conversion of outstanding warrants, stock options or convertible securities, including without limitation the conversion of the Senior Secured Notes) with a price of less than US$1.37 per share, as adjusted, such price per share determined net of all discounts, fees, costs and expenses incurred in connection with such issuance, then the Conversion Price in Section 11.7(a)(i) and warrants the exercise price of the Warrants shall be automatically reset to purchase the lowest net effective price per share, without any further action of the Purchasers. Notwithstanding the foregoing, in no event shall the number of shares of Common Stock (issuable to the "Warrants"Purchasers pursuant to this Section 11.7(d) cause the Purchasers to own in excess of Borrower, 19.9% of the outstanding Common Stock of the Company as at the same price and on date of this Agreement unless the same other terms and conditions Company has obtained the prior approval of its stockholders as required by Section 713 of the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by referenceAMEX Company Guide; provided, however, that the following terms Company shall be adjusted as applied use its commercially reasonable efforts to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of diligently seek to obtain such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise approval of its conversion right, in whole or in part. stockholders. (e) In the event Lender fails to make such election the number of outstanding shares of Common Stock are changed into a different number or class of shares by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event reason of any stock splitssplit, stock dividendsdividend, recapitalizations reverse stock split, reclassification, recapitalization, combination, merger, consolidation or any similar events after August 19, 2004 but prior to the date of conversiontransaction, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued Conversion Price in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole number.Section

Conversion of Note. At (a) Subject to the option of Lenderprovisions for adjustment hereinafter set forth, the outstanding principal balance of this Note and all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lenderconvertible, in whole or in part, at any time after the Additional Interest Trigger Date, at the option of the Lender (a "Conversion"), up to the outstanding principal amount of the Note plus accrued but unpaid interest thereon held by Lender at the time of such conversion into that number of fully paid and nonassessable shares of UTC Common Stock equal to (x) the quotient obtained by dividing (A) the principal amount of the Note plus accrued but unpaid interest thereon to be converted by (B) the Conversion Price (as hereinafter defined) minus (y) any additional interest paid on overdue principal that has been paid or before May 31is owing in UTC Common Stock; subject to the proviso contained in this Section 10.01(a). The conversion price (the "Conversion Price") shall be the average closing price of UTC Common Stock as reported on NASDAQ-NSM (or, 2005if NASDAQ-NSM is not available, a similar generally accepted reporting service in the United States of America or, if such service is not available, a price determined in good faith by the Board of Directors of the Borrower) for a period of fourteen (14) Business Days consisting of (x) the seven (7) Business Days prior to the notice of conversion, (y) the Business Day of the issuance of the Conversion Notice by the Lender and (z) the six (6) Business Days following the issuance of the Conversion Notice (but in no event shall the Conversion Price be higher than $8.39 or lower than $6.87, provided, however, that the foregoing amounts shall be appropriately adjusted to give effect to adjustments to the Conversion Price, from time to time, pursuant to Section 10.01(f)) and shall be subject to further adjustments from time to time pursuant to Section 10.01. The transfer and delivery of the UTC Common shares to the Lender shall take place three (3) Business Days following the last day used to calculate the Conversion Price (such earlier date, the "Pricing Date" and such later date, the "Conversion Date"); provided, however, that (x) no fractional shares shall be issued upon the conversion of the Note, (y) all shares of UTC Common Stock (including fractions thereof) issuable upon conversion of the Note by the Lender shall be aggregated for purposes of determining whether conversion would result in the issuance of any fractional share and (z) if, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of UTC Common Stock, Borrower shall, in lieu of issuing any fractional share, pay Lender a sum in cash equal to the Conversion Price of such fraction on the date of conversion. (b) A Conversion may be effected by the Lender upon the surrender to Borrower at the principal office of the Borrower of the Note accompanied by a written notice stating that the Lender elects to convert all or a specified amount of its Note in accordance with the provisions of this Section 10 and specifying the name or names in which Lender wishes the certificate or certificates for shares of UTC Common Stock to be issued (the "Conversion Notice"). (c) In case the Conversion Notice shall specify a name or names other than that of the Lender, such Conversion Notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of UTC Common Stock in such name or names. Other than such taxes, Borrower will pay any and all taxes (other than taxes based on income) that may be payable in respect of any issuance or delivery of shares of UTC Common Stock upon a Conversion. On the Conversion Date and upon, if applicable, payment of all transfer taxes (or the demonstration to the reasonable satisfaction of Borrower that such taxes have been paid), Borrower shall deliver or cause to be delivered (1) in increments as set forth in Schedule 3 attached certificate(s) representing the number of validly issued, fully paid and nonassessable full shares of UTC Common Stock to which the Amendment and Conversion Agreement holder of the Note being converted shall be entitled and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) if less than all of the Securities Purchase Agreement, but with the principal amount of the option exercisable under Note evidenced by the circumstances described surrendered Note is being converted, in Section 1.5(a)(iii) being exchange for the Note surrendered, a new Note, of like tenor, in a principal amount equal to fifty percent (50%) the full principal amount of the unexercised portion of Note surrendered less the original option; principal amount being converted. (iiid) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and A Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed been made at the close of business on the Pricing Date and delivered by them. Upon any tender of payment of this Note by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead surrender of conversion the certificate or exercise of its conversion right, in whole or in part. In certificates representing the event Lender fails Note to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided converted so that the payment tendered is rights of the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached holder thereof as Exhibit B to the Amendment Note being converted shall cease except for the right to receive shares of UTC Common Stock in accordance herewith, and Conversion Agreement or other appropriate form. In the event Person entitled to receive the shares of any stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender UTC Common Stock shall be treated for all purposes as having become the record holder of such shares of UTC Common Stock at such time. (e) Borrower shall at all times reserve, and keep available for issuance upon a Conversion, such number of its authorized but unissued shares of UTC Common Stock as will from time to time be sufficient to permit a Conversion of all of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in outstanding principal balance of the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, and shall take all action required to increase the authorized number of shares of UTC Common Stock if necessary to permit the Conversion of all of the outstanding principal balance of the Note. (f) The Conversion Price will be subject to adjustment from time to time as follows: (i) this Note may be surrendered In case Borrower shall at any time or from time to time after the Closing Date (A) pay a dividend, or make a distribution, on the outstanding shares of UTC Common Stock in shares of UTC Common Stock, (B) subdivide the outstanding shares of UTC Common Stock, (C) combine the outstanding shares of UTC Common Stock into a smaller number of shares or (D) issue by Lender and replaced with a new Note reclassification of like tenor the shares of UTC (i) shall become effective (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the remaining balance determination of holders of shares of UTC Common Stock entitled to receive such dividend or distribution, or (y) in the Note surrendered case of such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. No adjustment shall be made pursuant to this clause (i) in connection with any transaction to which Section 10(g) applies. (ii) Lender may retain In case Borrower shall issue shares of UTC Common Stock (or rights, warrants or other securities convertible into or exchangeable for shares of UTC Common Stock) after the Closing Date, other than (A) pursuant to obligations existing on the date hereof, including, without limitation, obligations under agreements with existing lenders, outstanding options, rights, warrants or other securities convertible into or exchangeable for shares of UTC Common Stock, or pursuant to any existing employee benefit plan, (B) pursuant to any joint venture or other strategic alliance, with the prior written consent of Lender, (C) issuances covered by Section 10.01(f)(i), and (D) issuances pursuant to a registration statement under the Securities Act, for consideration in an amount per share of UTC Common Stock (or having an exercise, conversion or exchange price per share) less than an amount equal to 25% below the Current Market Price, then (i) the number of shares of UTC Common Stock for which the Note is convertible shall be adjusted to equal the product obtained by multiplying the number of shares of UTC Common Stock for which the Note is convertible immediately prior to such issue or sale by a fraction (A) the numerator of which shall be the number of shares of UTC Common Stock outstanding immediately after such issue or sale, and (B) the denominator of which shall be the number of shares of UTC Common Stock outstanding immediately prior to such issue or sale plus the number of shares which the aggregate offering price of the total number of such additional shares of UTC Common Stock would purchase at the then Current Market Price; and (ii) the Conversion Price as to the number of shares for which this Note is convertible prior to such adjustment shall be adjusted by multiplying such Conversion Price by a fraction (x) the numerator of which shall be the number of shares for which this Note is convertible immediately prior to such issue or sale, and (y) the denominator of which shall be the number of shares of UTC Common Stock purchasable immediately after such issue or sale. (iii) An adjustment made pursuant to Section 10.01(f)(ii) above shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively immediately after the close of business on such date. No adjustment shall be made pursuant to Section 10.01(f)(ii) in respect of any issuance of shares of UTC Common Stock on or prior to the Closing Date. For purposes of Section 10.01(f)(ii), the aggregate consideration received by Borrower in connection with the issuance of shares of UTC Common Stock or of rights, warrants or other securities exchangeable or convertible into shares of UTC Common Stock shall be deemed to be equal to the sum of the aggregate offering price of all such UTC Common Stock and such rights, warrants, or other exchangeable or convertible securities plus the aggregate amount, if any, receivable upon exchange or conversion of any such exchangeable or convertible securities into shares of UTC Common Stock. (iv) In case Borrower shall at any time or from time to time after the Closing Date declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of stock or other securities or property or rights or warrants to subscribe for securities of Borrower or any of its Subsidiaries by way of dividend or spinoff), on its UTC Common Stock, other than dividends or distributions of shares of UTC Common Stock which are referred to in clause (i) above and cash dividends paid out of retained earnings, then the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (A) the applicable Conversion Price on the day immediately prior to the record date fixed for the determination of stockholders entitled to receive such dividend or distribution by (B) a fraction, the numerator of which shall be the Current Market Price per share of UTC Common Stock on the day immediately prior to such record date less the amount of such dividend or distribution per share of UTC Common Stock, and the parties may keep separate records denominator of which shall be such Current Market Price per share of UTC Common Stock on the outstanding balance day immediately prior to such record date. No adjustment shall be made pursuant to this Section 10.01(f)(iv) in connection with any transaction to which Section 10.01(g) applies. (v) For purposes of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share resultsSection 10.01(f), the number of shares of UTC Common Stock at any time outstanding shall not include any shares of UTC Common Stock then owned or held by or for the account of Borrower or any of its Subsidiaries. (vi) If Borrower shall take a record of the holders of its UTC Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to stockholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the number of shares of UTC Common Stock issuable upon exercise of the right of conversion granted by this Section 10.01(f) or in the Conversion Price then in effect shall be required by reason of the taking of such record. (vii) Anything in this Section 10.01(f) to the contrary notwithstanding, Borrower shall not be required to give effect to any adjustment in the Conversion Price unless and until the net effect of one or more adjustments (each of which shall be carried forward), determined as above provided, shall have resulted in a change of the Conversion Price by at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to change the Conversion Price by at least one percent, such change in Conversion Price shall thereupon be given effect. (viii) If any option or warrant expires or is canceled without having been exercised, then, for the purposes of the adjustments set forth above, such option or warrant shall have been deemed not to have been issued and the Conversion Price shall be adjusted accordingly. No holder of UTC Common Stock which was previously issued upon conversion of the Note shall have any obligation to redeem or cancel any such shares of UTC Common Stock as a result of the operation of this Section 10.01(f)(viii). (g) In case of any reorganization of capital, reclassification of capital stock (other than a reclassification of capital subject to Section 10.01(f)(i)), consolidation or merger with or into another corporation, or sale, transfer or disposition of all or substantially all the property, assets or business of Borrower to another corporation (any one or more of such events being an "Organic Change"), the Note then outstanding, shall thereafter be convertible into, in lieu of the UTC Common Stock issuable upon such Conversion prior to consummation of such Organic Change, the kind and amount of shares of stock and other securities and property receivable (including cash) upon the consummation of such Organic Change by a holder of that number of shares of UTC Common Stock into which the Note was convertible immediately prior to such Organic Change (including, on a pro rata basis, the cash, securities or property received by holders of UTC Common Stock in any tender or exchange offer that is a step in such Organic Change). In case securities or property other than UTC Common Stock shall be rounded upwards issuable or downwards deliverable upon conversion as aforesaid, then all references in this Section 10.01(g) shall be deemed to apply, so far as appropriate and nearly as may be, to such other securities or property. (h) In case at any time or from time to time Borrower shall pay any stock dividend or make any other non-cash distribution to the nearest whole numberholders of its UTC Common Stock, or shall offer for subscription pro rata to the holders of its UTC Common Stock any additional shares of stock of any class or any other right, or there shall be any capital reorganization or reclassification of the UTC Common Stock of Borrower or consolidation or merger of Borrower with or into another corporation, or any sale or conveyance to another corporation of the property of Borrower as an entirety or substantially as an entirety, or there shall be a voluntary or involuntary dissolution, liquidation or winding up of Borrower, then, in any one or more of said cases, Borrower shall give at least 20 days' prior written notice to the registered holder of the Note at the address of each as shown on the books of Borrower as of the date on which (i) the books of Borrower shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such non-bankruptcy reorganization, reclassification, consolidation, merger, sale or conveyance, dissolution, liquidation or winding up shall take place, as the case may be, provided that in the case of any Organic Change to which Section 10.01(g) applies Borrower shall give at least 20 days' prior written notice as aforesaid. Such notice shall also specify the date as of which the holders of the UTC Common Stock of record shall participate in such dividend, distribution or subscription rights or shall be entitled to exchange their UTC Common Stock for securities or other property deliverable upon such non-bankruptcy reorganization, reclassification, consolidation, merger, sale or conveyance or participate in such dissolution, liquidation or winding up, as the case may be. Failure to give such notice shall not invalidate any action so taken. (i) Upon any adjustment of the Conversion Price then in effect and any increase or decrease in the number of shares of UTC Common Stock issuable upon the operation of the conversion set forth in this Section 10.01, then, and in each such case, Borrower shall promptly deliver to the holder of the Note, a certificate signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of Borrower setting forth in reasonable detail the event requiring the adjustment a

Conversion of Note. At Pursuant to the option of Lender, the outstanding principal balance of this Note and all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided belowDecember 31, may be converted, in whole or in part, into units 1999 (the "UnitsCut-Off Date") consisting and (i) from and after the execution and delivery of shares of Series B Cumulative Convertible Preferred Stock a firm commitment underwriting/purchase agreement with the Underwriter (the "Series B StockSigning Date") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and conditioned on the same other terms subsequent closing of the IPO in the case of a public offering, and conditions as (ii) from and after the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing execution and delivery of an agreement for the sale of all or substantially all of the business of the Group or equity interests of the Group (the a "Series B FinancingPrivate Sale"), as set forth and conditioned on the subsequent closing of the Private Sale in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as case of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower (whether by prepayment before maturity or payment at or after maturity)sale, Lender shall have ten the right to convert the principal balance of the Note into membership interests of Borrower or capital stock in the case of Reorganized Borrower (the "Shares") in an amount equal to a minimum of 10% and a maximum of 30% of the total capitalization of Borrower on a fully diluted basis (except for dilution resulting from the adoption of a stock option plan not to exceed 10% of Borrower's total capitalization) business days thereafter calculated prior to elect either acceptance the dilution resulting from the issuance of such payment instead of conversion or exercise of its conversion rightshares to the public in the IPO, all calculated in whole or in partaccordance with the formula described below. In other words, Lender's equity interest shall be diluted along with the event Lender fails other Members of Borrower by the sale of stock to make such election the public and by such datethe Borrower's membership interests reserved for issuance pursuant to the stock option plan. If the valuation ascribed to the Reorganized Borrower for the IPO and on which the price per share to the public is calculated or the sale price to be paid by the buyer for the Group in a Private Sale (the "Valuation") is $50,000,000, Lender shall be deemed entitled to have elected acceptance convert the Note into 10% of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise Borrower's membership interests or capital stock in the form attached as Exhibit B to the Amendment and Conversion Agreement case of Reorganized Borrower. The percentage of Borrower's membership interests or other appropriate form. In the event of any capital stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name case of and delivered to Lender Reorganized Borrower into which the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered converted shall increase thereafter by 1% for each $2,500,000 in Valuation up to a maximum of 30% of Borrower's membership interests or capital stock in the case of Reorganized Borrower at a Vauation of $100,000,000 or more. Lender as soon as practicable shall have the right by written notice to Borrower to surrender its conversion rights by accelerating the Cut-Off Date to any month-end date from, after any such surrenderand including December 31, 1998. No fractional shares If Borrower has an active Registration Statement on file with the Securities and Exchange Commission on the Cut-Off Date, the Cut-Off Date shall be issued upon such conversion. If upon such conversion automatically extended for a fractional share resultsperiod of time expiring one hundred eighty (180) days after the Registration Statement is declared effective or the Registration Statement is withdrawn by Borrower, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole numberwhichever is earlier.

Conversion of Note. Purchasers shall have the right to convert each of their Notes as follows: (a) At any time a Purchaser may convert all or, subject to the option limitations hereinafter set forth, a portion of Lender, the outstanding principal balance (an “Optional Conversion”) into shares of this Note and all accrued interestCommon Stock of the Company at a price per share equal to US$1 per share, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, such price may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock"adjusted pursuant to Section 11.7(e) and warrants to purchase Common Stock 11.7(f) (“Conversion Price”), except that Persistency may not convert any portion of the "Warrants") of Borrower, at the same price and outstanding principal on the same other terms and conditions as Notes purchased by Persistency pursuant to this Agreement until at least six (6) months from the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing")Closing Date, as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which unless there is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 a Mandatory Exercise of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (Warrants, as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor LenderWarrant, in whole or in part, at which case any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) all of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement outstanding Notes held by Persistency shall not apply to an Intercreditor Lender automatically and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be simultaneously become immediately convertible at the option of Lenderthe Purchaser on receipt of the Mandatory Exercise Notice, as defined in the Warrant. Any such Optional Conversions of a portion of the Notes shall be in minimum aggregate amounts of $100,000, or multiples thereof. (b) Provided that the holders of the Senior Secured Notes have converted all their Senior Secured Notes into shares of Common Stock, the Company may, at its sole discretionoption, require the conversion of all the outstanding Notes (a “Mandatory Conversion”) into shares of fully paid, non-assessable Common Stock. Lender The Company may exercise this option only if for five (5) consecutive trading days, including the last trading day of such conversion right by providing period, the Current Market Price (as defined below) of the Common Stock equals or exceeds $1.50 (or its equivalent in NOK), such price to Borrower written notice of exercise be subject to adjustments in the form attached same manner and for the same events as Exhibit B the Conversion Price in pursuant to the Amendment Section 11.7(e) and Conversion Agreement or other appropriate form11.7(f). In order to exercise the event of any stock splitsMandatory Conversion, stock dividends, recapitalizations or similar events after August 19, 2004 but the Company must notify the Purchasers prior to the opening of business on the second trading day after any period in which the last of the conditions in the preceding sentences have been met (a “Mandatory Conversion Notice”). Any Mandatory Conversion Notice shall be automatically deemed a notice for acceleration of the Warrants, which shall automatically become immediately exercisable on receipt of such notice. The notice shall specify the Mandatory Conversion Date and provide the current Conversion Price and Current Market Price of the Common Stock, in each case as of the close of business on the trading day next preceding the date of conversionthe notice, then and the number and kind Mandatory Conversion shall occur at such current Conversion Price set forth in such notice in the manner provided in this Section 11.7. Effective as of securities issuable upon conversion the close of business on the Mandatory Conversion Date, the Notes shall be appropriately adjusted. Such conversion deemed fully paid and shall no longer be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause deemed to be issued and outstanding, and the Warrants shall be fully exercisable. The Company shall deliver to the Purchasers certificates representing the shares of Common Stock which the Purchasers are entitled to receive as a result of the Mandatory Conversion and shall pay to the Purchasers in cash all interest accrued under the Notes to the Mandatory Conversion Date, as promptly as possible and in any event no later than five (5) Business Days after the Mandatory Conversion Date. The Mandatory Conversion Date will be the second business day after which the Company has issued the notice announcing its intention to exercise its Mandatory Conversion Right. The term “Current Market Price” of the Common Stock for any day means the reported per share closing bid price, regular way, on such day, as reported on the AMEX, or, if the Common Stock is not listed or admitted to trading on the AMEX on such day, on The Oslo Stock Exchange (“OSE”), if the Common Stock is not listed on such securities exchanges, or the Nasdaq NMS or, if the Common Stock is not quoted or admitted to trading on such quotations system, on the principal quotation system in which the Common Stock may be listed or admitted to trading or quoted or, if not listed or admitted to trading or quoted on any securities exchange or quotation system, the average of the closing bid and asked prices of the Common Stock in the name over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or similar generally accepted reporting service, or, if not so available in such manner, as furnished by any AMEX member firm selected from time to time by the Board of and delivered to Lender Directors of the securities to Company for that purpose or, if not so available in such manner, as otherwise determined in good faith by the Board of Directors of the Company, which Lender determination shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole numberconclusive.

Conversion of Note. At into Common Stock; Redemption by the option of Lender, the outstanding principal balance Company. --------------------------------------------------------------- (a) The Holder of this Note and all accrued interestis entitled, fees or other amounts payable under this Noteat its option, at any time prior commencing the earlier of (i) the date on which the Registration Statement (as defined in the Securities Purchase Agreement) is declared effective by the SEC; or (ii) the date which is ninety (90) days after the date first written at the top of this Note, to acceptance by Lender convert all or a portion of payment thereof instead the original principal face amount of this Note into shares of common stock in the Company, $.0001 par value per share (defined hereinafter as the "Common Stock"), at a conversion as provided below, may be converted, in whole or in part, into units price (the "UnitsConversion Price") consisting for each share of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock equal to one hundred five percent (the "Warrants"105%) of Borrowerthe average of the closing bid prices for the Common Stock for the three (3) trading days immediately preceding the Conversion Date (as hereinafter defined), at the same price and as reported on the same National Association of Securities Dealers OTC Bulletin Board Market (or on such other terms and conditions national securities exchange or market as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Common Stock financing may trade at such time). Such conversion shall be achieved by submitting to the Company the fully completed form of conversion notice attached hereto as Exhibit I (the a "Series B FinancingNotice of Conversion"), executed by the Holder of this Note evidencing such Holder's intention to convert this Note or the specified portion (as set forth herein provided) hereof. A Notice of Conversion may be submitted via facsimile to the Company at the telecopier number for the Company provided in the Securities Purchase Agreement (or at such other number as requested in advance of such conversion in writing by the "Securities Purchase Agreement"Company), and if so submitted the original Notice of Conversion shall be delivered to the Company within three (3) business days. The Company and the Holder shall each keep records with respect to the portion of this Note then being converted and all portions previously converted; upon receipt by the Holder of the requisite Conversion Shares, the outstanding principal amount of the Note shall be reduced by the amount specified in the Notice of Conversion resulting in such Conversion Shares. The Company may from time to time, but is not required to, instruct the Holder and the Holder shall surrender this Note along with the initial investors in Notice of Conversion for the Series B Financing which is attached purposes of making a notation thereon as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) principal being equal to fifty percent (50%) converted, or of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of canceling this Note by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with issuing a new Note in the same form with the principal amount of like tenor for such Note reduced by the remaining balance of the Note surrendered amount converted. Such new or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new notated Note shall be delivered to Lender as soon as practicable the Holder within three (3) business days after any such surrenderHolder's surrender to the Company. No fractional shares shall or scrip representing fractions of shares will be issued upon such on conversion. If upon such conversion a fractional share results, but the number of shares to be issued upon conversion issuable shall be rounded upwards or downwards to the nearest whole numbershare. Accrued interest on the converted portion of the Note shall be payable upon conversion thereof, in cash or Common Stock at the Conversion Price, at the Company's option. The date on which a notice of conversion is given (the "Conversion Date") shall be deemed to be either the date on which the Company receives from the Holder an original Notice of Conversion duly executed, or, if earlier, the date set forth in such Notice of Conversion if the original Notice of Conversion is received by the Company within three (3) business days thereafter. In all cases, the Company shall deliver the Conversion Shares to the Holder within three (3) business days after the Conversion Date with respect to such Conversion Shares being delivered, and at the address specified in the Notice of Conversion. The Company acknowledges that the Securities Purchase Agreement requires that the Company pay liquidated damages for late or non-delivery of Conversion Shares. Subject to the provisions of Paragraph 4(b) hereof, at the Maturity Date, the remaining portion of this Note which remains unconverted, if any, plus accrued interest shall be automatically converted into shares of Common Stock as of the Maturity Date, as if the Holder had converted the remaining portion of this Note according to the provisions of this Section 4, with the Conversion Date being equivalent in such event to the Maturity Date, as if the Holder had provided the Company with a Notice of Conversion with respect to the outstanding principal amount of this Note on the Maturity Date. Other than a conversion made on the Maturity Date in accordance with this paragraph, conversions of this Note must be effected in increments of at least Ten Thousand U.S. Dollars ($10,000) of principal amount of this Note (or such lesser outstanding principal amount of this Note). (b) Notwithstanding anything herein to the contrary, the Company shall have the right (but not the obligation) to redeem all or any portion of this Note, provided the Company is not then in violation of any of its obligations under this Note or under the Securities Purchase Agreement or any addenda thereto, under the following conditions. At any time prior to delivery of any Notice of Conversion (in this Section 4(b), a "Notice") to the Company by the Holder in accordance with the terms of this Note, the Company may give to the Holder notice (a "Redemption Notice") that it intends to pay the Holder the Cash Redemption Amount (as hereinafter defined) with respect to all or such portion of the Note referred to in the Redemption Notice. The "Cash Redemption Amount" shall be equal to one hundred percent (100%) of the face amount of the portion of the Note to be redeemed pursuant to the Redemption Notice, and shall be paid to the Holder according to the Holder's written instructions to the Company within three (3) business days after delivery of the Redemption Notice with respect to such Note or portion thereof to be redeemed. If the Company does not redeem within the time limits herein specified and according to the terms of this Section 4(b), then unless waived by the Holder, the Redemption Notice shall be null and void, and the Holder may convert all or such portion of this Note as the Holder in its discretion determines.

Conversion of Note. At 1.1 The holder of this Note shall have the option right, at such holder's option, to convert, subject to the terms, conditions and provisions of Lenderthis Article I, the outstanding principal balance of this Note and all accrued interestor any portion thereof into Voting Units at the price of $____ per Voting Unit, fees or other amounts payable under this Noteor, in the event an adjustment of such price has occurred pursuant to the provisions of Section 1.3, then at the price as last adjusted (referred to herein as the "Conversion Price"), at any time prior to acceptance by Lender after both of payment thereof instead the following have occurred: (i) ________ __, 199_ and (ii) such time as DEVELOPER has completed not less than 80% of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as Development Schedule set forth in the Securities Purchase Agreement Development Agreement, and up to the later of (y) the "Securities Purchase Agreement"date on which the DEVELOPER has properly repaid the outstanding principal balance of the Loan and all accrued interest thereon in full or (x) with the initial investors first day of the ______ Retail Period in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by referenceCompany's fiscal year ____; provided, however, that nothing herein shall impair, restrict or prohibit the following terms exercise of remedies, including exercise of the conversion right, under Section 8.2 of the Loan Agreement upon the occurrence of a Default. In the event the outstanding principal balance of this Note is to be converted, the holder shall be adjusted as applied surrender this Note to the Intercreditor Lenders: (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, DEVELOPER at any time on during usual business hours together with written notice (hereinafter referred to as "Conversion Notice") that the holder elects to convert this Note into Voting Units in accordance with the provisions of this Article I, and specifying the name or before May 31names in which the certificate or certificates, 2005if any, (1) evidencing the Voting Units issuable upon such conversion shall be registered, together with the addresses of the persons so named. In the event this Note is to be converted in increments as set forth in Schedule 3 attached part only, the DEVELOPER shall, upon surrender of this Note, execute and deliver to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) holder thereof, at the expense of the Securities Purchase AgreementDEVELOPER, but a new Note in principal amount equal to the unconverted portion of this Note. In no event shall accrued interest be convertible into Voting Units. 1.2 As promptly as practicable after the surrender, as herein provided, of this Note for conversion and the receipt of the Conversion Notice relating thereto, the DEVELOPER shall deliver to or upon the written order of the holder of this Note a certificate or certificates, or other evidence of ownership if Voting Units are uncertificated, representing the number of Voting Units of the DEVELOPER into which this Note may be converted in accordance with the amount provisions of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised this Article I and a new Note for any unconverted portion of the original option; (iii) Section 4.5 of principal amount hereof. Subject to the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 following provisions of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversionSection 1.2, Borrower and Lender such conversion shall be deemed to have entered into a Securities Purchase Agreement (been made immediately before the close of business on the date that this Note shall have been surrendered for conversion together with such adjusted terms) for such conversionthe Conversion Notice, as if executed and delivered by them. Upon any tender so that the rights of payment the holder of this Note by Borrower (whether by prepayment before maturity as a Noteholder shall cease at such time and the person or payment at or after maturity), Lender shall have ten (10) business days thereafter persons entitled to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In receive the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable Voting Units upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender this Note shall be treated for all purposes as having become the record holder or holders of such Voting Units at such time, and such conversion shall be at the Conversion Price in effect at such time. If the last day for the exercise of the securities conversion right shall not be a business day, then such conversion right may be exercised on the next succeeding business day. (a) In case of any reclassification or change of outstanding Units, or in case of any consolidation or merger of the DEVELOPER with or into any partnership, corporation, or other entity (other than a merger in which the DEVELOPER is the surviving corporation and which does not result in any reclassification or change of outstanding Units, other than a change in number of Units issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note) or in case of any sale or conveyance to any partnership, corporation, or other entity of the property of the DEVELOPER as an entirety or substantially as an entirety, then the holder of this Note shall have the right thereafter to convert this Note into the kind and amount of units and other securities and property receivable upon such reclassification, change, consolidation, merger, sale, or conveyance by a holder of the number of Voting Units of the DEVELOPER issuable upon conversion of this Note immediately prior to such reclassification, change, consolidation, merger, sale, or conveyance, subject to adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for herein. (b) The Conversion Price shall be adjusted in the event the DEVELOPER shall at any time (i) this Note may be surrendered by Lender and replaced with make a new Note subdivision of like tenor for the remaining balance of the Note surrendered or combine Units outstanding or (ii) Lender may retain make a distribution in cash, in kind, or in securities of any kind (including, but not limited to, any Unit split, other than cash distributions permitted pursuant to the provisions of Section 6.4 of the Loan Agreement ("Permitted Distributions")). In the event the DEVELOPER makes a subdivision of Units or makes a distribution in cash, in kind, or in securities of any kind (other than Permitted Distributions), the Conversion Price in effect immediately prior to such action shall be appropriately decreased, and in the event the DEVELOPER shall at any time combine Units outstanding, the Conversion Price in effect immediately prior to such combination shall be appropriately increased. An adjustment made pursuant to this Section 1.3(b) shall, in the event of a subdivision or combination, become effective retroactively immediately after the effective date thereof, and shall, in the event of a distribution, become effective retroactively immediately after the record date for the determination of members entitled thereto. Whenever the Conversion Price is adjusted, pursuant to this Section 1.3(b), the DEVELOPER shall promptly cause a notice to be given to such holder of this Note and which will state the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after adjusted Conversion Price. (c) The DEVELOPER covenants that if any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares Units to be issued upon conversion of this Note require registration with or approval of any governmental authority under any federal or state law before such Units may be issued upon conversion, the DEVELOPER will, at its expense and as expeditiously as possible, cause such Units to be duly registered or approved, as the case may be. (d) Any issuance of certificates, or other evidence of ownership if Voting Units are uncertificated, for Voting Units upon the conversion of this Note shall be rounded upwards or downwards made without charge to the nearest whole number.converting Noteholder for any tax in respect of the issuance of such certificates or other evidence of ownership, and such certificates or other evidence of ownership shall be issued in the respective names of, or in such names as may be directed by, the holder of this Note;

Conversion of Note. At (a) Notwithstanding anything to the option of Lendercontrary, the outstanding principal balance of this Note and all accrued interestexpress or implied, fees or other amounts payable under contained in this Note, if at any time prior to acceptance by Lender the Maturity Date, the Maker shall consummate a Public Offering, all or any portion of payment thereof instead the Principal Amount of conversion as provided belowthis Note and accrued Interest hereon, , at the election of the Holder and upon written notice to the Maker (a “Conversion Notice”), may be converted, in whole or in part, converted into units (the "Units") consisting that number of shares of Series B Cumulative Convertible Preferred Common Stock of the Maker (the "Series B Stock"“Conversion Shares”) as shall be determined by dividing (i) the Principal Amount of this Note being converted and warrants accrued Interest on such Principal Amount, by (ii) a conversion price equal to purchase eighty-five (85%) percent of the initial offering price per share of the Maker’s Common Stock (offered to the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing")public in connection with a Public Offering, as set forth in the final prospectus forming part of the registration declared effective by the Securities Purchase Agreement and Exchange Commission (the "Securities Purchase Agreement"“Conversion Price”). (b) with In the initial investors in event that the Series B Financing which is attached Holder shall elect to convert all or any part of this Note into Common Stock as Exhibit A a result of consummation of a Public Offering prior to the Amendment and Conversion Agreement dated Maturity Date, as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectivelyaforesaid, the "Intercreditor Lenders")Maker shall, not later than ten (10) Business Days following the terms and conditions date of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to the Intercreditor Lenders: a Conversion Notice (i) issue and deliver to the subscription amount shall be Holder of this Note a stock certificate evidencing the amount being converted by an Intercreditor Lender in the particular conversion involved applicable number of Conversion Shares, and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 if only a portion of the Securities Purchase Agreement (A) this Note shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lenderhave been converted into Common Stock, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached pay to the Amendment Holder in cash by wire transfer of immediately available funds the difference between the initial Principal Amount of this Note and Conversion Agreement accrued Interest hereon, and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised that portion of the original optionthis Note which has been converted into Conversion Shares; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of at which time this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender Note shall be deemed to have entered into a Securities Purchase Agreement be cancelled and without any further force or effect. (with such adjusted termsc) for such conversion, as if executed and delivered by them. Upon any tender of payment The Maker shall notify the Holder of this Note at its office of the contemplated effective date of the Public Offering by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender a date which shall have be not later than ten (10) business days thereafter prior to elect either acceptance such effective date (such notice, the “Public Offering Notice”), and shall provide the Holder with a copy of such payment instead of conversion or exercise of its conversion rightthe final registration statement and prospectus; provided, in whole or in part. In that for so long as the event Lender fails to make such election by such date, Lender Holder shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached serve as Exhibit B securities counsel to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splitsMaker, stock dividends, recapitalizations or similar events after August 19, 2004 but such prior to the date of conversion, then the number and kind of securities issuable upon conversion notice shall not be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole numberrequired.

Conversion of Note. At the option of Lender, the (a) The entire outstanding principal balance of this Note and all accrued interest, fees Balance hereunder shall be repaid in cash or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and cash equivalents on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Intercreditor Lenders"), the terms and conditions of which are incorporated herein by referenceDeemed Repayment Date; provided, however, that if the following terms Lender provides written notice to the Borrower on or prior to the Deemed Maturity Date indicating the Lender’s election to have all or any portion of the outstanding Balance hereunder converted as of the Deemed Maturity Date into Ordinary Shares, then only that portion of the outstanding Balance that the Lender has not elected to be converted into Ordinary Shares at the Primary Conversion Price shall be adjusted repaid in cash or cash equivalents on the Deemed Repayment Date, and the remainder shall be converted as applied of the Deemed Maturity Date into Ordinary Shares at the Primary Conversion Price; provided, further, if the Lender provides no notice to the Intercreditor Lenders: (i) Borrower, or provides written notice to the subscription amount shall be Borrower on or prior to the amount being Deemed Maturity Date indicating the Lender’s election to have less than all of the Balance converted by an Intercreditor Lender in into Ordinary Shares on the particular conversion involved Deemed Maturity Date, and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions Borrower effects a Liquidity Event (as defined in the Amendment and Purchase Agreement), or enters into a definitive agreement to effect a Liquidity Event, on or prior to the Deemed Repayment Date, the Borrower shall provide at least thirty-five (35) days prior written notice to the Lender of such Liquidity Event (the “Liquidity Event Notice”), in which case the Lender may, within thirty (30) days after receipt by the Lender of the Liquidity Event Notice, provide written notice to the Borrower of its election, effective at such closing of such Liquidity Event, to have such portion of the Balance automatically converted into Ordinary Shares at the Primary Conversion AgreementPrice; provided that, if such Liquidity Event is not consummated within six (6) and (B) months after the Deemed Repayment Date, such portion of the Balance shall be exercisable by an Intercreditor Lender, due and payable in whole cash or in part, at any time cash equivalents on the six-month anniversary of the Deemed Repayment Date. (b) Except for the right to receive repayment under the Note or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to obtain certificates representing the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as Ordinary Shares set forth in Section 1.5(a)(iii4(c) below and rights related to a Liquidity Event in Section 4(a) above, all rights with respect to this Note shall terminate upon the effective conversion of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment entire Balance of this Note by Borrower (and the occurrence of the Deemed Repayment Date, whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under not this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B Note has been surrendered to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splitsBorrower for cancellation. (c) Subject to Section 4(b) above, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon promptly as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial any conversion of this Note, (i) this Note may be surrendered by the Borrower at its expense will issue and deliver to the Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered certificate or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, certificates evidencing the number of shares to be Ordinary Shares issued upon conversion shall be rounded upwards or downwards to the nearest whole numberLender in connection with such conversion.

Conversion of Note. At the option of Lender, the outstanding principal balance of this Note and all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is attached as Exhibit A to the Amendment and Conversion Agreement dated as of August 19, 2004 (the "Amendment and Conversion Agreement") among Borrower and the Lenders named therein (collectively, the "Prior Intercreditor Lenders"), the terms and conditions of which are incorporated herein by reference; provided, however, that the following terms shall be adjusted as applied to Lender (as similarly adjusted for the Prior Intercreditor Lenders: ): (i) the subscription amount shall be the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) upon full conversion of this Note and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 1 attached to the Amendment and Conversion Agreement hereto and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 13 of the Amendment Agreement dated as of the date hereof between Borrower and Conversion Lender (the "Agreement"); (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 11 of this the Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor the Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower ▇▇▇▇▇▇▇▇ (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender ▇▇▇▇▇▇ shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 the date hereof but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender ▇▇▇▇▇▇ and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole number.

Conversion of Note. At Notwithstanding anything contained herein to the option of Lendercontrary, seven (7) Business Days before the Maturity Date, the outstanding principal balance Holder may, through the delivery of this Note and all accrued interest, fees or other amounts payable under this Note, at any time prior to acceptance by Lender of payment thereof instead of conversion as provided below, may be converted, in whole or in part, into units (the "Units") consisting of shares of Series B Cumulative Convertible Preferred Stock (the "Series B Stock") and warrants to purchase Common Stock (the "Warrants") of Borrower, at the same price and on the same other terms and conditions as the $5,000,000 minimum/$15,000,000 maximum Series B Cumulative Convertible Preferred Stock financing (the "Series B Financing"), as set forth a notice in the Securities Purchase Agreement (the "Securities Purchase Agreement") with the initial investors in the Series B Financing which is form attached hereto as Exhibit A (the “Conversion Notice”) to the Amendment Company, elect to, in lieu of receiving repayment of the Note in cash, convert the aggregate amount of the outstanding accrued, but unpaid, interest and Conversion Agreement dated as principal balance due through the Maturity Date under the Note into validly issued, fully paid and non-assessable shares of August 19, 2004 common stock of the Company (the "Amendment and “Common Stock”) at a conversion price of $0.40. The Company shall issue the Common Stock to the Holder (the “Common Stock Issuance”) pursuant to the Conversion Agreement"Notice within three (3) among Borrower and Business Days after the Lenders named therein Maturity Date; provided, however, if the Common Stock Issuance requires the approval of the stockholders of the Company (collectively, the "Intercreditor Lenders"“Stockholders’ Approval”), the terms Company shall cause a meeting of the stockholders (the “Stockholder Meeting”), to be held within six (6) months from receiving the Conversion Notice, soliciting each stockholder’s affirmative vote for approval of the Common Stock Issuance, and conditions to issue the Common Stock to the Holder pursuant to the Conversion Notice within three (3) Business Days after receiving the Stockholders’ Approval. Upon completion of which are incorporated herein by referencethe Common Stock Issuance, all obligations under this Note will have been performed and discharged in full. In the event the Stockholders’ Approval is required, interest shall continue to accrue until the completion of the Common Stock Issuance. If, despite the Company’s reasonable best efforts, the Stockholders’ Approval, if required, is not obtained within six (6) months after the delivery of the Conversion Notice, the Company shall cause an additional Stockholder Meeting to be held semi-annually thereafter until such Stockholders’ Approval is obtained; provided, however, that the following terms Holder may revoke the Conversion Notice if the Stockholders’ Approval has not been obtained two (2) years after the delivery of the Conversion Notice, in which case the Company shall be adjusted as applied to immediately pay the Intercreditor Lenders: (i) Holder the subscription amount shall be principal balance due under the amount being converted by an Intercreditor Lender in the particular conversion involved and the subscription date shall be Note plus interest accrued through the date of such conversion; (ii) the option to purchase additional Units contained in Section 1.5 full payment of the Securities Purchase Agreement (A) shall be in an amount up to fifty percent (50%) of the total number of Units issuable to an Intercreditor Lender in the Initial Conversions and Additional Conversions (as defined in the Amendment and Conversion Agreement) and (B) shall be exercisable by an Intercreditor Lender, in whole or in part, at any time on or before May 31, 2005, (1) in increments as set forth in Schedule 3 attached to the Amendment and Conversion Agreement and (2) subject to earlier termination upon notice as set forth in Section 1.5(a)(iii) of the Securities Purchase Agreement, but with the amount of the option exercisable under the circumstances described in Section 1.5(a)(iii) being equal to fifty percent (50%) of the unexercised portion of the original option; (iii) Section 4.5 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 24 of the Amendment and Conversion Agreement; (iv) Section 8.1 of the Securities Purchase Agreement shall not apply to an Intercreditor Lender and instead shall be replaced by Section 20 of this Agreement; and (v) the Registration Rights Agreement referred to in the Securities Purchase Agreement shall not apply to an Intercreditor Lender and shall be replaced by the Registration Rights Agreement referred to in the Amendment and Conversion Agreement. Upon any conversion, Borrower and Lender shall be deemed to have entered into a Securities Purchase Agreement (with such adjusted terms) for such conversion, as if executed and delivered by them. Upon any tender of payment of this Note by Borrower (whether by prepayment before maturity or payment at or after maturity), Lender shall have ten (10) business days thereafter to elect either acceptance of such payment instead of conversion or exercise of its conversion right, in whole or in part. In the event Lender fails to make such election by such date, Lender shall be deemed to have elected acceptance of payment instead of conversion, provided that the payment tendered is the full amount owing under this Note. Any exercise of such conversion right shall be at the option of Lender, in its sole discretion. Lender may exercise such conversion right by providing to Borrower written notice of exercise in the form attached as Exhibit B to the Amendment and Conversion Agreement or other appropriate form. In the event of any stock splits, stock dividends, recapitalizations or similar events after August 19, 2004 but prior to the date of conversion, then the number and kind of securities issuable upon conversion shall be appropriately adjusted. Such conversion shall be effective immediately upon giving such notice and as of such date Lender shall be treated for all purposes as the holder of the securities issuable upon conversion. As soon as practicable after such conversion, Borrower, at its expense, shall cause to be issued in the name of and delivered to Lender the securities to which Lender shall be entitled upon such conversion. Upon a partial conversion of this Note, (i) this Note may be surrendered by Lender and replaced with a new Note of like tenor for the remaining balance of the Note surrendered or (ii) Lender may retain this Note and the parties may keep separate records of the outstanding balance of this Note. A new Note shall be delivered to Lender as soon as practicable after any such surrender. No fractional shares shall be issued upon such conversion. If upon such conversion a fractional share results, the number of shares to be issued upon conversion shall be rounded upwards or downwards to the nearest whole number.