Common use of Conversion Price Adjustment Clause in Contracts

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so

Conversion Price Adjustment. The Conversion Price of the Debentures this Debenture on any Conversion Date (the "Conversion Price") shall be equal to $1.194.50, subject to adjustment as provided for in subsection (i) through (ixx) below. (i) If the Company, at any time while any Debentures are this Debenture is outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction fraction, of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are this Debenture is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holdersthe Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares soso offered would purchase at such Per Share Market Value. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. However, upon the expiration of any such right, option or warrant to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of the Common Stock actually purchased upon the exercise of such rights, options or warrants actually exercised. (iii) If the Company or any subsidiary thereof, as applicable with respect to Common Stock Equivalents (as defined below), at any time while this Debenture is outstanding shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ("Common Stock Equivalents"), to any Person (and not to the Holder) entitling such Person to acquire shares of Common Stock at a price per share less than the Conversion Price (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights issued in connection with such issuance, be entitled to receive shares of Common Stock at a price less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price), then, the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such shares of Common Stock or such Common Stock Equivalents plus the number of shares of Common Stock which the offering price for such shares of Common Stock or Common Stock Equivalents would purchase at the Conversion Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of shares of Common Stock so issued or issuable, provided that for purposes hereof, all shares of Common Stock that are issuable upon conversion exercise or exchange of Common Stock Equivalents shall be deemed outstanding immediately after the issuance of such Common Stock Equivalents. Such adjustment shall be made whenever such shares of Common Stock or Common Stock Equivalents are issued. However, upon the expiration of any Common Stock Equivalents the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such Common Stock Equivalents shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such Common Stock Equivalents) had the adjustment of the Conversion Price made upon the issuance of such Common Stock Equivalents been made on the basis of offering for subscription or purchase only that number of shares of Common Stock actually purchased upon the exercise of such Common Stock Equivalents actually exercised. The foregoing shall not apply to any (i) issuances of securities as consideration in a merger, consolidation or acquisition of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or as consideration for the acquisition of a business, product or license by the Company, (ii) the issuance of securities upon the exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (iii) the grant of options or warrants, or the issuance of additional securities, under any duly authorized Company stock option, restricted stock plan or stock purchase plan for the benefit of the Company's employees. (iv) If the Company, at any time while this Debenture is outstanding, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price at which this Debenture shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction, of which the denominator shall be the Per Share Market Value determined as of the record date mentioned above, and of which the numerator shall be such Per Share Market Value on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Company's Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. (v) In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at its option, (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture only, into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Debenture shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Company into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture could have been converted immediately prior to such reclassification or share exchange would have been entitled or (B) require the Company to prepay the aggregate of the outstanding principal amount of this Debenture, plus all interest and other amounts due and payable thereon, at a price determined in accordance with Section 3(b). The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges. (vi) All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. No adjustments in the Conversion Price shall be required if such adjustment is less than $0.01, provided, however, that any adjustments which by reason of this Section are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (vii) Whenever the Conversion Price is adjusted pursuant hereto, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. (viii) If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) In case the Company shall pay or make a stock dividend or otherwise make a other distribution to all or distributions on shares substantially all holders of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares class of capital stock of the CompanyCompany payable in Common Stock, then the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be multiplied reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before at the close of business on the date fixed for such event determination and of which the denominator shall be the (i) such number of shares plus (ii) the total number of Common Stock outstanding after shares constituting such event. Any adjustment made pursuant dividend or other distribution, such reduction to this Section shall become effective immediately after the record opening of business on the day following the date fixed for such determination. (For the determination purposes of stockholders entitled determining adjustments to receive such dividend or distribution and shall become effective immediately after the effective date Conversion Price as set forth herein, shares of Common Stock held in the case treasury of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, and distributions or issuances in respect thereof shall be disregarded.) (b) In case the Company shall issue rights, options rights or warrants to all or substantially all holders of its Common Stock (and entitling them, for a period of not to Holders) entitling them more than 45 days, to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Current Market Value at Price on the record date mentioned belowfixed for the determination of stockholders entitled to receive such rights or warrants, then the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be multiplied reduced by multiplying such Conversion Price by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and fraction of which the numerator shall be (i) the number of shares of the Common Stock (excluding treasury shares, if any) outstanding at the close of business on the date of issuance of fixed for such rights or warrants determination plus (ii) the number of shares of Common Stock which the aggregate of the offering price of the total number of shares soof Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be (i) the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus (ii) the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such termination. In case any rights or warrants referred to in this paragraph in respect of which an adjustment shall have been made shall expire unexercised, the Conversion Price shall be readjusted at the time of such expiration to the Conversion Price that would then be in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants.

Conversion Price Adjustment. The Conversion Price of conversion price shall be adjusted from time to time as follows: - If we should, after the Debentures on any Conversion Date issue date (the "Conversion Price"1) shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable our common stock in shares of Common Stock (other than PIK dividend preferred our common stock), (b2) subdivide or split our outstanding shares of Common Stock common stock into a larger greater number of shares, (c3) combine (including by way of reverse our outstanding common stock split) outstanding shares of Common Stock into a smaller number of shares, shares or (d4) issue by reclassification of shares of the Common Stock any shares of capital stock by reclassification of our common stock, the Company, then conversion price in effect immediately prior thereto will be adjusted so that the Conversion Price shall holder of any share of preferred stock thereafter surrendered for conversion will be multiplied by a fraction of which the numerator shall be entitled to receive the number of shares of Common Stock (excluding treasury shares, if any) outstanding before common stock which such holder would have owned or have been entitled to receive after the occurrence of any of the events described above had such share been surrendered for conversion immediately prior to the occurrence of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this paragraph will become effective immediately after the close of business on the record date for determination of stockholders entitled to receive such dividend or distribution in the case of a dividend or distribution, except as provided elsewhere in the certificate of designation, and shall become effective immediately after the close of business on the effective date in the case of a subdivision, split, combination or reclassification. Any shares of common stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding shares of common stock below. - If we should issue after the issue date rights or warrants to all holders of common stock entitling them (for a period expiring within 45 days after the date) to subscribe for or purchase common stock at a price per share less than the current market price per share of common stock at the record date for the determination of stockholders entitled to receive such rights or warrants, then the conversion price in effect immediately prior thereto will be adjusted to equal the price determined by multiplying (1) the conversion price in effect immediately prior to the date of issuance of such rights or warrants by (2) a fraction, the numerator of which will 102 113 be the denominator shall be sum of (a) the number of shares of Common Stock common stock outstanding on the date of issuance of such rights or warrants (without giving effect to any such issuance) and (b) the number of shares which the aggregate proceeds from the exercise of such rights or warrants for common stock would purchase at such current market price, and the denominator of which will be the sum of (1) the number of shares of common stock outstanding on the date of issuance of such rights or warrants (without giving effect to any such issuance) and (2) the number of additional shares of common stock that are subject to such rights or warrants. Such adjustment will be made successively whenever any such rights or warrants are issued, and will become effective immediately after such eventrecord date. Any In determining whether any rights or warrants entitle the holders of common stock to subscribe for or purchase shares of common stock at less than such current market price, there shall be taken into account the fair market value of any consideration received by us upon issuance and upon exercise of such rights or warrants. - If we should pay a dividend or make a distribution to all holders of our common stock after the issue date of any shares of its capital stock or its subsidiaries (other than in common stock) or evidences of indebtedness or assets (excluding cash dividends payable solely in cash that may from time to time be fixed by our board of directors, or dividends or distributions in connection with liquidation, dissolution or winding up) or rights or warrants to subscribe for or purchase any of its securities or those of its subsidiaries (excluding those referred to above), then in each such case, the conversion price will be adjusted so that it shall equal the price determined by multiplying (A) the conversion price in effect on the record date mentioned below by (B) a fraction, the numerator of which shall be the current market price per share of the common stock on the record date mentioned below less the then fair market value as of such record date of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of common stock, and the denominator of which will be the current market price per share of the common stock on such record date; provided, however, that in the event the then fair market value of the portion of securities so distributed applicable to one share of common stock is equal to or greater than the current market price per share of common stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of shares of preferred stock shall have the right to receive the amount and kind of securities such holder would have received had such holder converted each such share of preferred stock immediately prior to the record date for the distribution of the securities. Such adjustment made pursuant to this Section shall become effective immediately immediately, except as provided elsewhere in the certificate of designation, after the record date for the determination of stockholders entitled to receive such distribution. - Notwithstanding anything in the second and third bullet points above, if rights or warrants, the distribution of which results an adjustment under either of such subparagraphs shall by their terms provide for an increase or increases with the passage of time or otherwise in the price payable to us upon the exercise thereof, the conversion price upon any such increase becoming effective shall forthwith be readjusted (but to no greater extent than originally adjusted by reason of such issuance or sale) to reflect the same. Upon the expiration or termination of such rights or warrants, if any such rights or warrants shall not have been exercised, then the conversion price shall forthwith be readjusted and thereafter be the rate which 103 114 it would have been had an adjustment been made on the basis that (1) the only rights or warrants so issued or sold were those so exercised and they were issued or sold for the consideration actually received by us upon such exercise plus the consideration, if any, actually received by us for the granting of all such options, rights or warrants whether or not exercised and (2) we issued and sold a number of shares of common stock equal to those actually issued upon exercise of such rights, and such shares were issued and sold for a consideration equal to the aggregate exercise price in effect under the exercise rights actually exercised at the respective dates of their exercise. For purposes of the second and third bullets above, the aggregate consideration received by us in connection with the issuance of shares of common stock or of rights or warrants shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such securities plus the minimum aggregate amount, if any, payable upon the exercise of such rights or warrants into shares of common stock. - If we should, by dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Companyotherwise, at any time while any Debentures are outstanding, shall issue rights, options or warrants distribute to all holders of Common Stock our common stock cash, excluding distributions specified in the certificate of designation, in an aggregate amount that, together with (1) the aggregate amount of any other distributions to all holders of the common stock made exclusively in cash within the 12 months preceding the date fixed for the determination of stockholders entitled to such distribution and not in respect of which no conversion price adjustment pursuant to Holdersthe third bullet point above or this bullet point has been made previously and (2) entitling them the aggregate of any cash plus the fair market value as of such date of determination of consideration payable in respect of any tender or exchange offer by us or a subsidiary for all or any portion of the common stock consummated within 12 months preceding such date of determination and in respect of which no conversion price adjustment pursuant to subscribe for or purchase shares the sixth bullet point below has been made previously, exceeds the greater of Common Stock at a (a) 1% of the product of the current market price per share less than the Per Share Market Value at the record of common stock on such date mentioned below, then the Conversion Price shall be of determination multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) common stock outstanding on such date or (b) 5% of our net income reported for the 12 month period ending with the fiscal quarter next preceding such payment, then in each such case the conversion price shall be reduced so that it shall equal the price obtained by multiplying the conversion price in effect immediately prior to the close of business on such date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and determination by a fraction of which the numerator shall be the current market price per share of common stock on such date less the amount of cash to be distributed at such time applicable to one share of common stock and the denominator shall be such current market price, such reduction to become effective immediately prior to the opening of business on the day after such date; provided, however, that in the event the portion of the cash so distributed applicable to one share of common stock is equal to or greater than the current market price per share of common stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of shares of preferred stock shall have the right to receive the amount of cash such holder would have received had such holder converted each such share of preferred stock immediately prior to the record date for such distribution. - If a tender or exchange offer made by us or any subsidiary for all or any portion of the common stock shall be consummated and such tender or exchange offer shall involve an aggregate consideration having a fair market value as of the last time 104 115 that tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that, together with (1) the aggregate of the cash plus the fair market value as of the expiration time of the other consideration paid in respect of any other tender or exchange offer by us or a subsidiary for all or any portion of the common stock consummated within the 12 months preceding the expiration time and in respect of which no conversion price adjustment pursuant to this bullet has been made previously and (2) the aggregate amount of any distributions to all holders of the common stock made exclusively in cash within the 12 months preceding the expiration time and in respect of which no conversion price adjustment pursuant to the third and fifth bullets above has been made previously, exceeds the greater of (a) 1% of the product of the current market price per share of common stock on such date of determination multiplied by the number of shares of the Common Stock (excluding treasury shares, if any) common stock outstanding on such date or (b) 5% of our net income reported for the date 12 month period ending with the fiscal quarter next preceding such payment, then in each such case the conversion price shall be reduced so that it shall equal the price obtained by multiplying the conversion price in effect immediately prior the expiration time by a fraction of issuance which the numerator shall be (x) the product of such rights or warrants plus the current market price per share of common stock immediately prior to the expiration time multiplied by the number of shares which of common stock outstanding (including any tendered or exchanged shares) at the expiration time minus (y) the fair market value of the aggregate offering consideration payable to stockholders upon consummation of such tender or exchange offer and the denominator shall be the product of (A) such current market price multiplied by (B) such number of outstanding shares at the expiration time minus the number of shares accepted for payment in such tender or exchange offer, such reduction to become effective immediately prior to the opening of business on the day following the expiration time; provided, however, that if the number of shares accepted for payment or the aggregate consideration payable therefor have not been finally determined by such opening of business, the adjustment required by this bullet shall, pending such final determination, be made based upon the preliminarily announced results of such tender or exchange offer, and, after such final determination shall have been made, the adjustment required by this bullet will be made based upon the number of shares accepted for payment and the aggregate consideration payable therefore as so finally determined. - No adjustment in the conversion price will be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this bullet are not required to be made shall be carried forward and taken into account in any subsequent adjustment; and provided, however, that any adjustment shall be required and shall be made in accordance with the provisions of the certificate of designations (other than this bullet)not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of common stock. All calculations under this section shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest 1/100th of a share (with .005 of a share being rounded upward), as the case may be. Notwithstanding anything in this paragraph to the contrary, we will be entitled, to the extent permitted by law, to make such reductions in the conversion price, in addition to those required by this paragraph, as we, in our discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets or any other transaction which could 105 116 be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended, hereafter made by us to its stockholders shall not be taxable for such stockholders. If (1) we shall declare a dividend (or any other distribution) on its common stock that would cause an adjustment to the conversion price of the total number preferred stock pursuant to the terms of any of the certificate of designations; (2) we shall authorize the granting to the holders of its common stock of rights or warrants to subscribe for or purchase any shares of any class or any other rights or warrants; (3) there shall be any reclassification or change of its common stock (except as set forth specifically in the certificate of designations); (4) there shall be a voluntary or involuntary dissolution, liquidation or winding up of PracticeWorks; or (5) we or any subsidiary shall commence a tender offer or exchange offer for all or a portion of its common stock, then we shall cause to be filed with our transfer agent and shall cause to be mailed to the holders of shares soof the preferred stock, as promptly as possible, but at least 30 days prior to the applicable date hereinafter specified, a notice stating (a) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of our common stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (b) the date on which such reclassification, change, dissolution, liquidation or winding up is expected to become effective or occur or the expiration date of any such tender offer or exchange offer, and the date as of which it is expected that holders of our common stock of record shall be entitled to exchange their shares of common stock for securities or other property deliverable upon such reclassification, dissolution, liquidation or winding up.

Conversion Price Adjustment. The Conversion Price of In the Debentures on event that the Company issues or sells any Conversion Date (Common Stock or securities which are convertible into or exchangeable for its Common Stock or any convertible securities, or any warrants or other rights to subscribe for or to purchase or any options for the "Conversion Price") shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares purchase of its Common Stock or any such convertible securities (other equity or equity equivalent securities payable in than issuance of the Warrants and shares of Common Stock pursuant to the exercise thereof, shares or options issued or which may be issued pursuant to the Company's employee or director option plans or shares issued upon exercise of options, warrants or rights outstanding on the Closing Date and listed in the Exchange Act Reports but including, without limitation, any such issuance in a Paragraph 4 Transaction or other Acquisition) at an effective purchase price (or for consideration in a Paragraph 4 Transaction, Acquisition or other transaction) per Common Share which is less than PIK dividend preferred stock)the Conversion Date Market Price then in effect or the then Market Price For Common Shares, in each such case each of the X percentages under the definition Conversion Date Market Price in effect under the Debentures immediately prior to such issue or sale shall be reduced effective concurrently with such issue or sale to percentages determined by multiplying each such percentage then in effect by a fraction, (bx) subdivide outstanding the numerator of which shall be the sum of (1) the number of shares of Common Stock into a larger outstanding immediately prior to such issue, including, without duplication, those deemed to have been issued under any provision of the Debentures plus (2) the number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shareswhich the aggregate consideration received by the Company for such additional shares would purchase at such Market Price For Common Shares or Conversion Date Market Price, or (d) issue by reclassification of shares of as the Common Stock any shares of capital stock of the Companycase may be, then in effect; and (y) the Conversion Price shall be multiplied by a fraction denominator of which the numerator shall be the number of shares of Common Stock (excluding treasury sharesof the Company outstanding immediately after such issue or sale including, if any) outstanding before without duplication those deemed to have been issued under any provision of the Debentures. For purposes of the foregoing , the amount of consideration received by the Company for any such event and of which the denominator issuance or sale, other than Cash, shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If fair market value thereof as determined by the Company's Board of Directors , at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares option of the Common Stock (excluding treasury shares, if any) outstanding on the date Holder of issuance of such rights Debentures evidencing 50% or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares more of the Common Stock (excluding treasury sharesprincipal indebtedness then evidenced thereby, if any) outstanding on by an investment banker or other appraiser selected by such Holders and reasonably acceptable to the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares soCompany.

Conversion Price Adjustment. The Conversion Price (and the number of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other issuance upon conversion hereunder) shall be subject to full ratchet adjustment from time to time as hereinafter provided. Upon each adjustment of the Conversion Price, the Holder hereof shall thereafter be entitled to purchase than PIK dividend preferred stock), (b) subdivide outstanding number of shares of Common Stock of the Borrower obtained by multiplying the Conversion Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable pursuant to conversion immediately prior to such adjustment and dividing the product thereof by the Conversion Price resulting from such adjustment. If the Borrower subdivides (by any share dividend, share split, recapitalization or otherwise) one or more classes of its Equity Interests into a larger greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Borrower combines (c) combine (including by way of combination, reverse stock splitsplit or otherwise) outstanding shares one or more classes of Common Stock its Equity Interests into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. If the Borrower (i) sells or issues any Common Stock for a price at or below the Conversion Price per share of Common Stock, or (dii) issue by reclassification distributes to the holders of shares its outstanding Common Stock, with or without consideration, any cash, securities, or other property (including, without limitation, the distribution of assets of the Common Stock any shares Borrower, cash dividends and other distributions, the granting of capital stock appreciation rights, phantom stock rights or other rights with equity features, and the non-cash issuance of equity securities of the CompanyBorrower), then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares adjusted to such lower price per share of Common Stock (excluding treasury sharesStock; provided, if any) outstanding before that no such event and of which adjustment will increase the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made Conversion Price as otherwise determined pursuant to this Section clause (c). Notwithstanding the foregoing, (i) the Conversion Price shall become effective immediately after not be adjusted in connection with the record date for the determination issuance or exercise of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, warrants or options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares Equity Interests pursuant to existing employee option grants to employees at an exercise price of not less than $3.57 per share of Common Stock at a price per share less than after the Per Share Market Value at the record date mentioned below, then the Conversion Price hereof and (ii) no such adjustment shall be multiplied by a fractionrequired if the Borrower makes an identical distribution to the Holder of this Note as if this Note, of which the denominator shall be the number of shares of the immediately prior to such distribution, had hypothetically converted this Note into Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares soterms contained herein.”

Conversion Price Adjustment. (i) The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.19, also be subject to adjustment from time to time as provided for in subsection (i) through (ix) below.follows: (iA) If the CompanyCorporation shall, at any time while or from time to time after the Original Issuance Date, issue any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (bExcluded Stock) subdivide outstanding shares without consideration or for a consideration per share less than the Adjusted Market Price in effect immediately prior to the issuance of such Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the CompanyStock, then the Conversion Price in effect immediately prior to each such issuance shall forthwith be lowered (but never increased) to a price equal to the sum of (x) the Conversion Premium plus (y) the quotient obtained by dividing: (1) an amount equal to the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such issuance, multiplied by the Market Price in effect immediately prior to such issuance, and (y) the consideration received by the Corporation upon such issuance; by (2) the total number of shares of Common Stock outstanding (including any shares of Common Stock deemed to have been issued pursuant to subdivision (3) of clause (B) below) immediately after the issuance of such Common Stock. (B) For the purposes of any adjustment of the Conversion Price pursuant to clause (A) above, the following provisions shall be multiplied by applicable: (1) In the case of the issuance of Common Stock for cash in a fraction of which public offering or private placement, the numerator consideration shall be deemed to be the amount of cash paid therefor prior to deducting therefrom any usual and customary discounts, commissions or placement fees paid by the Corporation to any underwriter or placement agent in connection with the issuance and sale thereof. (2) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the Fair Value thereof. (3) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, Securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable Securities: (a) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (1) and (2) above), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby; (b) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable Securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable Securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such Securities, options, or rights were issued and for a consideration equal to the consideration received by the Corporation for any such Securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such Securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subdivisions (1) and (2) above); (c) on any change in the number of shares or exercise price of Common Stock deliverable upon exercise of any such options or rights or conversions of or exchange for such Securities, the Conversion Price shall forthwith be readjusted to such Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights or Securities not converted prior to such change or options or rights related to such Securities not converted prior to such change been made upon the basis of such change; and (d) on the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable Securities, the Conversion Price shall forthwith be readjusted to such Conversion Price as would have obtained had the adjustment made upon the issuance of such options, rights, Securities or options or rights related to such Securities been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options or rights, upon the conversion or exchange of such Securities, or upon the exercise of the options or rights related to such Securities and subsequent conversion or exchange thereof. (excluding treasury sharesii) If, if any) outstanding before such event and of which at any time after the denominator shall be Original Issuance Date, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, subdivision or split-up (or if no record date is set, the date such stock dividend, subdivision or stock split is consummated), the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of Series B Preferred Stock shall be increased in proportion to such increase in outstanding shares. (iii) If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then, following the record date for such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Series B Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (iv) In the event of any capital reorganization of the Corporation, any reclassification of the stock of the Corporation (other than a change in par value or from no par value to par value or from par value to no par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or any consolidation or merger of the Corporation, each share of Series B Preferred Stock shall after such eventreorganization, reclassification, consolidation, or merger be convertible into the kind and number of shares of stock or other Securities or property of the Corporation or of the corporation resulting from such consolidation or surviving such merger to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon conversion of such share of Series B Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation or merger. Any adjustment made pursuant The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations or mergers. (v) If any event occurs of the type contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Corporation's Board of Directors shall make an appropriate reduction in the Conversion Price so as to protect the rights of the holders of the Series B Preferred Stock. (vi) All calculations under this paragraph shall be made to the nearest one hundredth (1/100) of a cent. (vii) In any case in which the provisions of this Section 6(c) shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer until the occurrence of such event (i) issuing to the holder of any share of Series B Preferred Stock converted after such record date and before the occurrence of such event the shares of capital stock issuable upon such conversion by reason of the adjustment required by such event in addition to the shares of capital stock issuable upon such conversion before giving effect to such adjustments, and (ii) paying to such holder any amount in cash in lieu of a fractional share of capital stock pursuant to paragraph (iii) above; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such additional shares and such cash. (viii) Whenever the Conversion Price shall be adjusted as provided in this paragraph (c), the Corporation shall make available for inspection during regular business hours, at its principal executive offices or at such other place as may be designated by the Corporation, a statement, signed by its chief executive officer, showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. The Corporation shall also cause a copy of such statement to be sent by first class certified mail, return receipt requested and postage prepaid, to each holder of Series B Preferred Stock at such holder's address appearing on the Corporation's records. Where appropriate, such copy may be given in advance and may be included as part of any notice required to be mailed under the provisions of paragraph (x) below. (ix) If the Corporation shall propose to take any action of the types described in clauses (ii), (iii) or (iv) of this paragraph (c) above, the Corporation shall give notice to each holder of shares of Series B Preferred Stock, in the manner set forth in paragraph (viii) above, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Price and the number, kind or class of shares or other Securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon conversion of shares of Series B Preferred Stock. In the case of any action which would require the fixing of a record date, such notice shall be given at least 10 days prior to the date so fixed, and in case of all other action, such notice shall be given at least 10 days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action. (x) In the event that the Requisite Preferred Holders consent in writing to limit, or waive in its entirety, any anti-dilution adjustment to which the holders of the Series B Preferred Stock would otherwise be entitled hereunder, the Corporation shall not be required to make any adjustment whatsoever with respect to any Series B Preferred Stock in excess of such limit or at all, as the terms of such consent may dictate. (xi) The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 6 and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the holders of Preferred Stock against impairment. (xii) The computations of all amounts under this Section 6 shall be made assuming all other anti-dilution or similar adjustments to be made to the terms of all other securities resulting from the transaction causing an adjustment pursuant to this Section 6 have previously been made so as to maintain the relative economic interest of the Preferred Stock vis a vis all other securities issued by the Corporation. (xiii) The Corporation shall take or cause to be taken such steps as shall be necessary to ensure that the par value per share of Common Stock is at all time less than or equal to the Conversion Price. (xiv) In the event the Corporation grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Preferred Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate number or amount of such stock, warrants, securities or other property which such Holder could have acquired if such Holder had held the Common Stock acquirable upon complete conversion of this Series B Preferred Stock immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of the grant, issue or sale of such Purchase Rights. (xv) In the event the Corporation shall, at any time or from time to time after the date hereof, distribute pro rata to the record holders of Common Stock cash, evidences of its indebtedness, other Securities or other properties or assets, or any options, warrants or other rights to subscribe for or purchase any of the foregoing, then (unless the holder of the share of Series B Preferred Stock shares in such distribution on a ratable basis based upon the shares of Common Stock issuable upon conversion of such share) the Conversion Price shall be decreased to a price determined by multiplying the Conversion Price then in effect by a fraction, the numerator of which shall be the Market Price less the sum of (X) the cash portion, if any, of such distribution per share of Common Stock deemed outstanding (exclusive of any treasury shares) on the record date for such distribution plus (Y) the Fair Value of such distribution consisting of evidences of indebtedness, other Securities, properties, assets, options, warrants or subscription or purchase rights, per share of Common Stock deemed outstanding (exclusive of any treasury shares) on the record date for such distribution of that portion, if any, and the denominator of which shall be such Market Price of Common Stock. The adjustments required by this paragraph (xv) shall be made whenever any such distribution occurs retroactive to the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classificationdistribution. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.194.80, subject to adjustment as provided for in subsection (i) through (ixx) belowbelow and in Section 5 hereof. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares soso offered would purchase at such Per Share Market Value. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. However, upon the expiration of any such right, option or warrant to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of the Common Stock actually purchased upon the exercise of such rights, options or warrants actually exercised. (iii) If the Company or any subsidiary thereof, as applicable with respect to Common Stock Equivalents (as defined below), at any time while Debentures are outstanding shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ("Common Stock Equivalents"), entitling any Person to acquire shares of Common Stock at a price per share less than the Conversion Price (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights issued in connection with such issuance, be entitled to receive shares of Common Stock at a price less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price), then, the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such shares of Common Stock or such Common Stock Equivalents plus the number of shares of Common Stock which the offering price for such shares of Common Stock or Common Stock Equivalents would purchase at the Conversion Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of shares of Common Stock so issued or issuable, provided, that for purposes hereof, all shares of Common Stock that are issuable upon conversion exercise or exchange of Common Stock Equivalents shall be deemed outstanding immediately after the issuance of such Common Stock Equivalents. Such adjustment shall be made whenever such shares of Common Stock or Common Stock Equivalents are issued. However, upon the expiration of any Common Stock Equivalents the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such Common Stock Equivalents shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such Common Stock Equivalents) had the adjustment of the Conversion Price made upon the issuance of such Common Stock Equivalents been made on the basis of offering for subscription or purchase only that number of shares of Common Stock actually purchased upon the exercise of such

Conversion Price Adjustment. The initial Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") as stated above shall equal $1.19, be subject to adjustment from time to time and such Conversion Price as provided for in subsection (i) through (ix) belowadjusted shall likewise be subject to further adjustment, all as hereinafter set forth. (ia) If and whenever the Company issues or sells any additional securities for consideration equivalent to a per share price of Common Stock (the “Base Price”) less than the Conversion Price in effect immediately prior to such issuance or sale, then immediately upon such issuance or sale the Conversion Price shall be reduced to a new Conversion Price equal to the Base Price; provided, however, that this Section 2(a) shall not be applicable to the issuance of securities to pursuant to the Securities Purchase Agreement. (b) If the CompanyBorrower, at any time while any Debentures are this Note is outstanding, (ai) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock)Stock, (bii) subdivide outstanding shares of Common Stock into a larger number of shares, (ciii) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (div) issue by reclassification of shares of the Common Stock any shares of capital stock of the CompanyBorrower, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding after such event. Any adjustment made pursuant to this Section paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classificationreclassification. (iic) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then Whenever the Conversion Price shall be multiplied by adjusted as provided in this Section 2, the Company shall reasonably promptly provide notice of such adjustment to the Lender together with a fractionwritten statement from an authorized officer of the Company, of which showing in reasonable detail the denominator facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. Notwithstanding the foregoing, no adjustment in the Conversion Price shall be required unless such adjustment would require a change of at least 1% in such Conversion Price; provided, however, that any adjustments which by reason of this Section are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (d) In case of any consolidation or merger of the Borrower with or into another entity or the conveyance of all or substantially all of the assets of the Borrower to another entity (collectively, an “Organic Change”), this Note shall thereafter be convertible (to the extent such conversion is permitted hereunder) into the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date or other securities or property to which a holder of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on of the date Borrower deliverable upon conversion of issuance this Note would have been entitled had this Note been converted immediately prior to such Organic Change and held until after the closing of such rights or warrants plus Organic Change; and, in any such case, appropriate adjustment shall be made in the number of shares which the aggregate offering price application of the total number provisions herein set forth with respect to the rights and interest thereafter of Lender or any subsequent holder of this Note, to the end that the provisions set forth herein shall be thereafter applicable, as nearly as reasonably may be, in relation to any shares soof Common Stock or other property thereafter deliverable upon the conversion of this Note.

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) In case the Company shall pay or make a stock dividend or otherwise make a other distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares class of capital stock of the CompanyCompany payable in Common Stock, then the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be multiplied reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before at the close of business on the date fixed for such event determination and of which the denominator shall be the sum of such number of shares and the total number of Common Stock outstanding after shares constituting such event. Any adjustment made pursuant dividend or other distribution, such reduction to this Section shall become effective immediately after the record opening of business on the day following the date fixed for such determination. (For the determination purposes of stockholders entitled determining adjustments to receive such dividend or distribution and shall become effective immediately after the effective date Conversion Price as set forth herein, shares of Common Stock held in the case treasury of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, and distributions or issuances in respect thereof shall be disregarded.) (b) In case the Company shall issue rights, options rights or warrants to all or substantially all holders of its Common Stock entitling them, for a period of not more than forty-five (and not to Holders45) entitling them days, to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Current Market Value at Price on the record date mentioned belowfixed for the determination of stockholders entitled to receive such rights or warrants, then the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be multiplied reduced by multiplying such Conversion Price by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and fraction of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding at the close of business on the date of issuance of fixed for such rights or warrants determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares soof Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such termination. In case any rights or warrants referred to in this paragraph in respect of which an adjustment shall have been made shall expire unexercised, the Conversion Price shall be readjusted at the time of such expiration to the Conversion Price that would then be in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants.

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.19, subject to adjustment as provided for in subsection (i) through (ix) below. (i) If the Company, at any time while any Debentures are outstanding, (a) In case the Company shall pay or make a stock dividend or otherwise make a other distribution to all or distributions on shares substantially all holders of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares class of capital stock of the CompanyCompany payable in Common Stock, then the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be multiplied reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before at the close of business on the date fixed for such event determination and of which the denominator shall be the (i) such number of shares plus (ii) the total number of Common Stock outstanding after shares constituting such event. Any adjustment made pursuant dividend or other distribution, such reduction to this Section shall become effective immediately after the record opening of business on the day following the date fixed for such determination. (For the determination purposes of stockholders entitled determining adjustments to receive such dividend or distribution and shall become effective immediately after the effective date Conversion Price as set forth herein, shares of Common Stock held in the case treasury of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, and distributions or issuances in respect thereof shall be disregarded.) (b) In case the Company shall issue rights, options rights or warrants to all or substantially all holders of its Common Stock (and entitling them, for a period of not to Holders) entitling them more than 45 days, to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Current Market Value at Price on the record date mentioned belowfixed for the determination of stockholders entitled to receive such rights or warrants, then the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be multiplied reduced by multiplying such Conversion Price by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and fraction of which the numerator shall be (i) the number of shares of the Common Stock (excluding treasury shares, if any) outstanding at the close of business on the date of issuance of fixed for such rights or warrants determination plus (ii) the number of shares of Common Stock which the aggregate of the offering price of the total number of shares soof Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be (i) the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus (ii) the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such termination. In case any rights or warrants referred to in this paragraph in respect of which an adjustment shall have been made shall expire unexercised, the Conversion Price shall be readjusted at the time of such expiration to the Conversion Price that would then be in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (d) In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock evidences of indebtedness, shares of capital stock of any class or series, other securities, cash or assets (other than Common Stock referred to in Section 4.04(a), rights or warrants referred to in Section 4.04(b) or a dividend or distribution payable exclusively in cash), the Conversion Price in effect immediately prior to the close of business on the date fixed for the payment of such distribution shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be (i) the Current Market Price on the date fixed for such payment minus (ii) the then Fair Market Value of the portion of such evidences of indebtedness, shares of capital stock, other securities, cash and assets distributed per share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for such payment. In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of Common Stock shares of any capital stock of, or other equity interest in, any subsidiary or other business unit of the Company (a “Spin Off”) and, immediately after such distribution, such capital stock or other equity interest is registered under the Exchange Act and listed and publicly traded on a national securities exchange registered under Section 6 of the Exchange Act, then the Conversion Price in effect immediately prior to the close of business on the date fixed for such distribution shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be (i) the Current Market Price on the date fixed for such distribution minus (ii) the average of the Closing Prices of the amount of such capital stock or other equity interests distributed per share of Common Stock on such exchange during the first ten days of such public trading immediately following and including the effective date of the Spin Off and the denominator shall be the Current Market Price on the date fixed for such distribution. (e) In case the Company shall, by dividend or otherwise, make a distribution to all or substantially all holders of its Common Stock payable exclusively in cash, the Conversion Price in effect immediately prior to the close of business on the date fixed for such payment shall be adjusted by multiplying such Conversion Price by a fraction of which the numerator shall be (i) the Current Market Price on the date fixed for such payment minus (ii) the amount in cash per share of Common Stock paid in such distribution and the denominator shall be the Current Market Price on the date fixed for such payment, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for such payment. In the event that the amount in cash per share of Common Stock paid in such distribution is greater than or equal to the Current Market Price on the date fixed for such payment, each Holder of Notes shall receive, for each $1,000 principal amount of Notes, without conversion and at the same time and upon the same terms as holders of Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate on the Business Day immediately preceding the date fixed for such payment for such cash dividend or distribution. (f) In case the Company or any subsidiary of the Company shall consummate a tender or exchange offer for all or any portion of the Common Stock, the Conversion Price in effect immediately prior to the close of business on the date of expiration of such tender or exchange offer shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be (i) the Current Market Price on such date of expiration minus the (ii) Per Share Premium Amount paid in such tender or exchange offer and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day following such date of expiration. (g) In case the Company shall, by dividend or otherwise, make a distribution referred to in Section 4.04(d) or 4.04(e), any Holder converting its Notes (or any portion of the outstanding principal amount of its Notes (together with any accrued and unpaid interest thereon)) subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Conversion Price adjustment in respect of such distribution shall, in lieu of a conversion adjustment, be entitled to receive, for each share of Common Stock received in respect of the conversion of such Notes (or portion of the outstanding principal amount of such Notes (together with any accrued and unpaid interest thereon) being converted), the portion of the evidences of indebtedness, shares of capital stock, other securities, cash and assets so distributed applicable to one share of Common Stock; provided, however that, at the election of the Company (whose election shall be evidenced by a resolution of the Board of Directors) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holder any portion or all of such evidences of indebtedness, shares of capital stock, other securities, cash and assets to which such holder is entitled as set forth above, (i) pay such Holder an amount in Cash equal to the Fair Market Value thereof or (ii) distribute to such Holder a due xxxx therefor, provided that such due xxxx (A) meets any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded and (B) requires payment or delivery of such evidences of indebtedness, shares of capital stock, other securities, cash or assets no later than the date of payment thereof to holders of shares of Common Stock receiving such distribution. (h) The Company may not engage in any transaction if, as a result thereof, the Conversion Price would be reduced to below the par value per share of the Common Stock. (i) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least one tenth of one percent (0.1%) in the Conversion Price; provided, however that any adjustments which by reason of this Section

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") shall equal $1.190.25, subject to adjustment as provided for in subsection (i) through (ixviii) below. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value Conversion Price in effect at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at the Conversion Price. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. However, upon the expiration of any such right, option or warrant to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of the Common Stock actually purchased upon the exercise of such rights, options or warrants actually exercised. (iii) If the Company, at any time while Debentures are outstanding, shall distribute to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price at which Debentures shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Per Share Market Value determined as of the record date mentioned above, and of which the numerator shall be such Per Share Market Value on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. (iv) In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holders shall have the right thereafter to, at their option, (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture only, into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holders of the Debentures shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Company into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture could have been converted immediately prior to such reclassification or share exchange would have been entitled. (v) All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. No adjustments in the Conversion Price shall be required if such adjustment is less than $0.01, provided, however, that any adjustments which by reason of this Section are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (vi) Whenever the Conversion Price is adjusted pursuant hereto, the Company shall promptly mail to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. (vii) If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Debentures, and shall cause to be mailed to the Holders at their last addresses as they shall appear upon the stock books of the Company, at least twenty calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Holders are entitled to convert Debentures during the twenty-day period commencing the date of such notice to the effective date of the event triggering such notice. (viii) In case of any (1) merger or consolidation of the Company with or into another Person, or (2) sale by the Company of more than one-half of the assets of the Company (based upon then fair market value) in one or a series of related transactions, a Holder shall have the right to (A) require prepayment of the outstanding principal and accrued but unpaid interest of this Debenture, or (B) convert its aggregate principal amount of Debentures then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of Debentures could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the event that the Holder shall have elected under clause (A) above and the Company shall not have failed to pay the amounts due by the second Business Day prior to the closing of such transaction, or shall have indicated its intention to do so, then in the case of a merger or consolidation at the closing thereof, (x) require the surviving entity to issue shares of convertible preferred stock or convertible debentures with such aggregate stated value or in such face amount, as the case may be, equal to the aggregate principal amount of Debentures then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which newly issued shares of preferred stock or debentures shall have terms identical (including with respect to conversion) to the terms of this Debenture (except, in the case of preferred stock, as may be required to reflect the differences between equity and debt) and shall be entitled to all of the rights and privileges of a Holder of Debentures set forth herein and the agreements pursuant to which the Debentures were issued (including, without limitation, as such rights relate to the acquisition, transferability, registration and listing of such shares of stock other securities issuable upon conversion thereof), and (y) simultaneously with the issuance of such convertible preferred stock or convertible debentures, shall have the right to convert such instrument only into shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger or consolidation. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holders the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the Date(the "Conversion Price") shall equal $1.194.80, subject to adjustment as provided for in subsection (i) through (ixx) belowbelow and in Section 5 hereof. (i) If the Company, at any time while any Debentures are outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK dividend preferred stock), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares soso offered would purchase at such Per Share Market Value. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. However, upon the expiration of any such 12 right, option or warrant to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of the Common Stock actually purchased upon the exercise of such rights, options or warrants actually exercised. (iii) If the Company or any subsidiary thereof, as applicable with respect to Common Stock Equivalents (as defined below), at any time while Debentures are outstanding shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ("Common Stock Equivalents"), entitling any Person to acquire shares of Common Stock at a price per share less than the Conversion Price (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights issued in connection with such issuance, be entitled to receive shares of Common Stock at a price less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price), then, the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such shares of Common Stock or such Common Stock Equivalents plus the number of shares of Common Stock which the offering price for such shares of Common Stock or Common Stock Equivalents would purchase at the Conversion Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of shares of Common Stock so issued or issuable, provided, that for purposes hereof, all shares of Common Stock that are issuable upon conversion exercise or exchange of Common Stock Equivalents shall be deemed outstanding immediately after the issuance of such Common Stock Equivalents. Such adjustment shall be made whenever such shares of Common Stock or Common Stock Equivalents are issued. However, upon the expiration of any Common Stock Equivalents the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such Common Stock Equivalents shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section after the issuance of such Common Stock Equivalents) had the adjustment of the Conversion Price made upon the issuance of such Common Stock Equivalents been made on the basis of offering for subscription or purchase only that number of shares of Common Stock actually purchased upon the exercise of such

Conversion Price Adjustment. The Conversion Price of the Debentures on any Conversion Date (the "Conversion Price") each Note shall equal $1.19, subject be adjusted from time to adjustment time as provided for in subsection (i) through (ix) below.follows: (i) If the Company, at any time while any Debentures are outstanding, Company shall after the Closing Date of such Note (aA) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable capital stock in shares of Common Stock (other than PIK dividend preferred stock)Stock, (bB) subdivide its outstanding shares of Common Stock into a larger greater number of shares, (cC) combine (including by way of reverse stock split) its outstanding shares of Common Stock into a smaller number of shares, shares or (dD) issue by reclassification of shares of the Common Stock any shares of capital stock by reclassification of the Companyits outstanding Common Stock, then the Conversion Price shall be multiplied by a fraction in effect at the opening of which business on the numerator shall be day following the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date fixed for the determination of stockholders entitled to receive such dividend or distribution and or at the opening of business on the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall become effective be adjusted so that the Purchaser of any Note thereafter converted shall be entitled to receive the number of shares of Common Stock that such Purchaser would have owned or have been entitled to receive after the happening of any of the events described above had such Note been converted immediately after prior to the record date in the case of a dividend or a distribution or the effective date in the case of a subdivision, combination or re-classificationreclassification. (ii) If the Company, at any time while any Debentures are outstanding, Company shall issue rightsafter the Closing Date of such Note any Common Stock (except Common Stock issuable upon conversion of the Notes) for a consideration per share of less than the Conversion Price in effect immediately prior to the issuance of such Common Stock, the Conversion Price shall immediately be adjusted to equal the price determined by multiplying the Conversion Price by a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the date immediately preceding such issuance and (B) the number of shares that could be purchased at the Conversion Price from the aggregate proceeds to the Company of such issuance, and the denominator of which shall be the number of shares of Common Stock outstanding immediately following such issuance. In determining whether any Common Stock was issued by the Company at less than the Conversion Price then in effect, there shall be taken into account any consideration received by the Company upon issuance, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors. (iii) If the Company shall issue after the Closing Date of such Note rights or options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe exercisable for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at Conversion Price in effect on the record date mentioned belowthat is the issue date for such rights, options or warrants, then the Conversion Price shall be multiplied adjusted (effective on the first business day following the issue date) to equal the price determined by multiplying the Conversion Price in effect on such issue date by a fraction, the numerator of which the denominator shall be the sum of (A) the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the close of business on such issue date and (B) the number of shares that could be purchased at the Conversion Price from the aggregate proceeds to the Company from the issuance of such rights rights, options or warrants plus the aggregate proceeds to be received by the Company upon the exercise of such rights, options or warrants for Common Stock, and the denominator of which shall be the sum of (AA) the number of shares of Common Stock outstanding on the close of business on the issue date and (BB) the number of additional shares of Common Stock offered for subscription or purchasepurchase pursuant to such rights, and of which the numerator shall be the number of shares of options or warrants. In determining whether any rights, options or warrants entitle Purchaser s thereof to subscribe for or purchase the Common Stock (excluding treasury sharesat less than the Conversion Price then in effect, there shall be taken into account any consideration received by the Company upon issuance, and any consideration expected to be received upon exercise of such rights, options or warrants, the value of such consideration, if anyother than cash, to be determined in good faith by the Board of Directors. (iv) outstanding on Notwithstanding any other provision of this subsection 2.5, the date Conversion Price shall NOT be adjusted to reflect the issuance by the Company to employees, officers, directors, or consultants of issuance the Company (either directly or pursuant to a stock option plan or restricted stock plan approved by the shareholders and directors of such the Company) of up to an aggregate of twenty percent (20%) of the Company's shares of Common Stock or of rights or warrants plus the number options exercisable for up to an aggregate of shares which the aggregate offering price twenty percent (20%) of the total number Company's shares of shares soCommon Stock, adjusted to reflect subsequent stock splits, stock dividends, combinations, reverse stock splits, or reclassifications. (v) If the Company intends to enter into any consolidation with or merger of the Company with or into another corporation or other entity, or in the case of any sale, lease or conveyance to another corporation of the assets of the Company as an entirety or substantially as an entirety, then the Company shall give each Purchaser not less than thirty (30) days prior written notice of the closing date for such transaction, and each Purchaser shall have the right to convert its Note into Common Stock of the Company pursuant to the terms of this Agreement.

Conversion Price Adjustment. The Conversion Price and the number of Common Shares issuable upon conversion of the Debentures on any Conversion Date (the "Conversion Price") Loan shall equal $1.19, be subject to adjustment from time to time as provided for in subsection hereinafter provided: (ia) through (ix) below.If and whenever at any time after the date hereof the Corporation: (i) If issues Common Shares, or securities exchangeable for or convertible into Common Shares, to all or substantially all of the Company, at any time while any Debentures are outstanding, (a) shall pay holders of Common Shares as a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (other than PIK a dividend preferred stockpaid in the ordinary course); (ii) makes a distribution on its outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares (other than a dividend paid in the ordinary course); (iii) subdivides, (b) subdivide re-divides or changes its outstanding shares Common Shares into a greater number of Common Stock into a larger number of sharesShares; or (iv) reduces, (c) combine (including by way of reverse stock split) combines, or consolidates its outstanding shares of Common Stock Shares into a smaller number of sharesCommon Shares; (any of such events in clauses (i), or (dii), (iii) issue by reclassification of shares of the Common Stock any shares of capital stock of the Companyand (iv) being called a “Share Reorganization”), then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become adjusted effective immediately after the record date or the effective date, as the case may be, at which the holders of Common Shares are determined for the determination purpose of stockholders entitled the Share Reorganization, by multiplying the Conversion Price in effect immediately prior to receive such dividend effective date or distribution record date by a fraction, the numerator of which shall be the “Total Shares” on such effective date or record date before giving effect to such Share Reorganization and the denominator of which shall become be the Total Shares on such effective date or record date immediately after the effective date giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would have been outstanding had all such securities been exchanged for or converted into Common Shares on such effective date or record date). To the extent that any adjustment in the Conversion Price occurs pursuant to this subsection as a result of a subdivisiondistribution or stock dividend of securities convertible into or exchangeable for Common Shares, combination or re-classification. (ii) If the Company, at any time while any Debentures are outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Per Share Market Value at the record date mentioned below, then the Conversion Price shall be multiplied by a fraction, readjusted immediately after the expiration of any relevant exchange or conversion right to the Conversion Price which the denominator shall would then be in effect based upon the number of shares Common Shares actually issued and remaining issuable after such expiration, and shall be further readjusted in such manner upon expiration of any such further right. (b) If and whenever at any time after the date hereof there is a reclassification of the Common Stock Shares at any time outstanding or a change of the Common Shares into other shares or into other securities, or any other capital reorganization (excluding treasury other than a Share Reorganization), or a consolidation, amalgamation or merger of the Borrower with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification of the outstanding shares or a change of shares into other shares), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being called a “Capital Reorganization”, the Lender shall be entitled to receive, and shall accept for the same aggregate consideration, in lieu of the number of Common Shares to which the Lender was previously entitled upon such conversion, the aggregate number of shares, if anyother securities or other property which the Lender would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Lender had been the registered holder of the number of Common Shares to which it was previously entitled upon conversion. The Borrower shall take all steps necessary to ensure that, following a Capital Reorganization, the aggregate number of shares, other securities or other property to which the Lender would be entitled on conversion shall be deliverable in the event of such conversion. Any such adjustment shall be made by and set forth in an amendment to this Agreement approved by the directors and which shall for all purposes be conclusively deemed to be an appropriate adjustment. (c) outstanding on If and whenever at any time after the date hereof the Corporation shall issue Common Shares or securities convertible or exchangeable for Common Shares in an arm’s length financing transaction (and excluding, for greater certainty, Common Shares or other securities issued pursuant to any incentive stock option plan of the Corporation or any securities or rights thereto existing as at the date of issuance of this Agreement) for consideration (or conversion price or exercise price, as applicable) per Common Share less than the Conversion Price, the Conversion Price shall be adjusted immediately thereafter so that the Conversion Price shall equal such rights or warrants plus offering price and the number of additional shares Common Shares issuable to the Lender upon conversion of Common Stock offered for subscription or purchase, and principal of which the numerator Loan shall be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares soproportionately increased.