ENVOY MEDICAL CORPORATION THIRD AMENDED AND RESTATED SECURED CONVERTIBLE PROMISSORY NOTE

3.

Rights of Investor upon Event of Default.  Upon the occurrence or existence of any Event of Default and at any time thereafter during the continuance of such Event of Default, subject to the Intercreditor Agreement, Investor may declare any or all outstanding balance of this Note to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived.  In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, subject to the Intercreditor Agreement, Investor may exercise any other right, power or remedy granted to it by the Transaction Documents or otherwise by law or in equity.

(a)

into fully paid and nonassessable shares of common stock of the Company, with the number of shares of common stock to be issued upon conversion equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on this Note on the date of conversion by One and No/l00 Dollars ($1.00) (the “Fallback Conversion Price”); provided that in the event

(b)

in the event the Company consummates an equity financing pursuant to which the Company sells shares of either common or preferred stock (the “New Stock”), into fully paid and nonassessable shares of New Stock at a price per share equal to 80% of the price per share paid by the other investors for their New Stock and on the same terms as the other investors that purchase New Stock.

(i)

shares of common stock, options, or convertible securities issued as a dividend or distribution;

(ii)

shares of common stock, options, or convertible securities issued by reason of a dividend, stock split, split-up or other distribution on shares of the Company’s common stock;

(iii)

shares of common stock, options, or convertible securities issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the board of directors of the Company; or

(iv)

shares of common stock or convertible securities actually issued upon the exercise of options, provided such issuance is pursuant to the terms of such option.

(c)

In the event the Company consummates an equity financing pursuant to which it sells a minimum of $2,500,000 of New Stock, at any time after such equity financing, the Company, in its sole discretion, may cause all or a portion of the principal and unpaid accrued interest under this Note to be converted into fully paid and nonassessable shares of common stock of the Company at either the Fallback Conversion Price or in the event such equity financing is for a price per share of New Stock less than the Fallback Conversion Price, at a price per shares equal to 80% of the price per share of such New Stock.

(a)

Stock Split, etc.  If the Company at any time divides the outstanding shares of its common stock into a greater number of shares (whether pursuant to a stock split, stock dividend or otherwise), and conversely, if the outstanding shares of common stock are combined into a smaller number of shares, the Fallback Conversion Price in effect immediately prior to such division or combination shall be proportionately adjusted to reflect the reduction or increase in the value of each such share.

(b)

Reorganization.  If any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that the Company’s shareholders are entitled to receive stock, securities, or assets with respect to or in exchange for their shares, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, Investor shall have the right to receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares of common stock immediately theretofore receivable upon the exercise of the rights represented hereby, such shares of stock, other securities, or assets as would have been issued or delivered to Investor if Investor had converted this Note pursuant to this Section 4 and had received shares of common stock prior to such reorganization, reclassification, consolidation, merger or sale.  The Company shall not affect any such consolidation, merger or sale, unless prior to the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets assumes, by written instrument executed and mailed to Investor at the last address of such holder appearing on the books of the Company, the obligation to deliver to Investor such shares of stock, securities or assets to which, in accordance with the foregoing provisions, Investor is entitled.

(c)

Other Adjustments.  If the Company takes any other action, or if any other event occurs, that does not come within the scope of the provisions of Sections (a) and (b), above, but which should result in an adjustment in the Fallback Conversion Price in order to fairly protect the conversion rights of Investor, the Company shall make an appropriate adjustment in such rights.

(d)

Adjusted Shares.  Upon each adjustment of the Fallback Conversion Price, Investor shall thereafter be entitled to receive, at the Fallback Conversion Price resulting from such adjustment, the number of shares of Company common stock obtained by multiplying the Fallback Conversion Price in effect immediately prior to such adjustment by the number of shares of common stock receivable pursuant hereto immediately prior to such adjustment and dividing the product thereof by the Fallback Conversion Price resulting from such adjustment.

(e)

Notice.  Upon any adjustment of the Fallback Conversion Price, the Company shall give written notice thereof, which notice shall state the Fallback Conversion Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of common stock receivable at such price upon conversion of this Note, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

5.

Successors and Assigns. Subject to the restrictions on transfer described below, the rights and obligations of the Company and Investor shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

6.

Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and Investor.

7.

Transfer of this Note or Securities Issuable on Conversion Hereof.  With respect to any offer, sale or other disposition of this Note or securities into which such Note may be converted, Investor will give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of Investor’s counsel, or other evidence if reasonably satisfactory to the Company, to the effect that such offer, sale or other distribution may be effected without registration or qualification (under any federal or state law then in effect).  Upon receiving such written notice and reasonably satisfactory opinion, if so requested, or other evidence, the Company, as promptly as practicable, shall notify Investor that Investor may sell or otherwise dispose of this Note or such securities, all in accordance with the terms of the notice delivered to the Company.  If a determination has been made pursuant to this Section 7 that the opinion of counsel for Investor, or other evidence, is not reasonably satisfactory to the Company, the Company shall so notify Investor promptly after such determination has been made.  This Note and any certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Securities Act.  The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.  Subject to the foregoing, transfers of this Note shall be registered upon registration books maintained for such purpose by or on behalf of the Company.  Prior to presentation of this Note for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Note shall be overdue and the Company shall not be affected by notice to the contrary.

8.

Assignment by the Company.  Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Investor.

9.

Notices.  All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing, shall be given and shall be deemed received as specified in the Note and Warrant Purchase Agreement.

10.

Waivers.  The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

11.

Governing Law.  THE VALIDITY OF THIS NOTE, TOGETHER WITH ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF).