<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
ACT,
OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY
FOR
OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS
NOT
REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR
REGULATION S UNDER SAID ACT.
CALLABLE SECURED CONVERTIBLE NOTE
Yucaipa, California
June 16, 2008
$20,000
FOR VALUE RECEIVED, INGEN TECHNOLOGIES, INC., a Georgia
Corporation
(hereinafter called the "BORROWER"), hereby promises to pay to the
order of AJW
Partners, LLC or registered assigns (the "HOLDER") the sum of
$20,000 on June
16, 2011 (the "MATURITY DATE"), and to pay interest on the unpaid
principal
balance hereof at the rate of six percent (6%) (the "INTEREST
RATE") per annum
from June 16, 2008 (the "ISSUE DATE") until the same becomes due
and payable,
whether at maturity or upon acceleration or by prepayment or
otherwise. Any
amount of principal or interest on this Note which is not paid when
due shall
bear interest at the rate of fifteen percent (15%) per annum from
the due date
thereof until the same is paid ("DEFAULT INTEREST"). Interest shall
commence
accruing on the Issue Date, shall be computed on the basis of a
365-day year and
the actual number of days elapsed and shall be payable quarterly
provided that
no interest shall be due and payable for any month in which the
Trading Price
(as such term is defined below) is greater than $0.12 for each
Trading Day (as
such term is defined below) of the month. All payments due
hereunder (to the
extent not converted into common stock, no par value per share (the
"COMMON
STOCK") in accordance with the terms hereof) shall be made in
lawful money of
the United States of America. All payments shall be made at such
address as the
Holder shall hereafter give to the Borrower by written notice made
in accordance
with the provisions of this Note. Whenever any amount expressed to
be due by the
terms of this Note is due on any day which is not a business day,
the same shall
instead be due on the next succeeding day which is a business day
and, in the
case of any interest payment date which is not the date on which
this Note is
paid in full, the extension of the due date thereof shall not be
taken into
account for purposes of determining the amount of interest due on
such date. As
used in this Note, the term "business day" shall mean any day other
than a
Saturday, Sunday or a day on which commercial banks in the city of
New York, New
York are authorized or required by law or executive order to remain
closed. Each
<PAGE>
capitalized term used herein, and not otherwise defined, shall have
the meaning
ascribed thereto in that certain Securities Purchase Agreement,
dated June 16,
2008, pursuant to which this Note was originally issued (the
"PURCHASE
AGREEMENT").
This Note is free from all taxes, liens, claims and encumbrances
with
respect to the issue thereof and shall not be subject to preemptive
rights or
other similar rights of shareholders of the Borrower and will not
impose
personal liability upon the holder thereof. The obligations of the
Borrower
under this Note shall be secured by that certain Security Agreement
and that
certain Intellectual Property Security Agreement, each dated June
16, 2008 by
and between the Borrower and the Holder.
The following terms shall apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1 CONVERSION RIGHT. The Holder shall have the right from time
to
time, and at any time on or prior to the earlier of (i) the
Maturity Date and
(ii) the date of payment of the Default Amount (as defined in
Article III)
pursuant to Section 1.6(a) or Article HI, the Optional Prepayment
Amount (as
defined in Section 5.1 or any payments pursuant to Section 1.7,
each in respect
of the remaining outstanding principal amount of this Note to
convert all or any
part of the outstanding and unpaid principal amount of this Note
into fully paid
and non-assessable shares of Common Stock, as such Common Stock
exists on the
Issue Date, or any shares of capital stock or other securities of
the Borrower
into which such Common Stock shall hereafter be changed or
reclassified at the
conversion price (the "CONVERSION PRICE") determined as provided
herein (a
"CONVERSION"); PROVIDED, HOWEVER, that in no event shall the Holder
be entitled
to convert any portion of this Note in excess of that portion of
this Note upon
conversion of which the sum of (1) the number of shares of Common
Stock
beneficially owned by the Holder and its affiliates (other than
shares of Common
Stock which may be deemed beneficially owned through the ownership
of the
unconverted portion of the Notes or the unexercised or unconverted
portion of
any other security of the Borrower (including, without limitation,
the warrants
issued by the Borrower pursuant to the Purchase Agreement) subject
to a
limitation on conversion or exercise analogous to the limitations
contained
herein) and (2) the number of shares of Common Stock issuable upon
the
conversion of the portion of this Note with respect to which the
determination
of this proviso is being made, would result in beneficial ownership
by the
Holder and its affiliates of more than 4.99% of the outstanding
shares of Common
Stock and PROVIDED FURTHER that the Holder shall not be entitled to
convert any
portion of this Note during any month immediately succeeding a
Determination
Date on which the Borrower exercises its prepayment option pursuant
to Section
5.2 of this Note. For purposes of the proviso to the immediately
preceding
sentence, beneficial ownership shall be determined in accordance
with Section
13(d) of the Securities Exchange Act of 1934, as amended, and
Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso. The
number of shares of Common Stock to be issued upon each conversion
of this Note
shall be determined by dividing the Conversion Amount (as defined
below) by the
applicable Conversion Price then in effect on the date specified in
the notice
of conversion, in the form attached hereto as Exhibit A (the
"NOTICE OF
CONVERSION"), delivered to the Borrower by the Holder in accordance
with Section
1.4 below; provided that the Notice of Conversion is submitted by
facsimile (or
<PAGE>
by other means resulting in, or reasonably expected to result in,
notice) to the
Borrower before 6:00 p.m., New York, New York time on such
conversion date (the
"CONVERSION DATE"). The term "CONVERSION AMOUNT" means, with
respect to any
conversion of this Note, the sum of (1) the principal amount of
this Note to be
converted in such conversion PLUS (2) accrued and unpaid interest,
if any, on
such principal amount at the interest rates provided in this Note
to the
Conversion Date, provided, however, that the Company shall have the
right to pay
any or all interest in cash PLUS (3) Default Interest, if any, on
the amounts
referred to in the immediately preceding clauses (1) and/or (2)
PLUS (4) at the
Holder's option, any amounts owed to the Holder pursuant to
Sections 1.3 and
1.4(g) hereof or pursuant to Section 2(c) of that certain
Registration Rights
Agreement, dated as of June 16, 2008, executed in connection with
the initial
issuance of this Note and the other Notes issued on the Issue Date
(the
"REGISTRATION RIGHTS AGREEMENT"). The term "DETERMINATION DATE"
means the last
business day of each month after the Issue Date.
1.2 CONVERSION PRICE.
(A) CALCULATION OF CONVERSION PRICE. The Conversion Price shall be
the
Variable Conversion Price (as defined herein) (subject, in each
case, to
equitable adjustments for stock splits, stock dividends or rights
offerings by
the Borrower relating to the Borrower's securities or the
securities of any
subsidiary of the Borrower, combinations, recapitalization,
reclassifications,
extraordinary distributions and similar events). The "VARIABLE
CONVERSION PRICE"
shall mean the Applicable Percentage (as defined herein) multiplied
by the
Market Price (as defined herein). "MARKET PRICE" means the average
of the lowest
three (3) Trading Prices (as defined below) for the Common Stock
during the
twenty (20) Trading Day period ending one Trading Day prior to the
date the
Conversion Notice is sent by the Holder to THE Borrower via
facsimile (the
"CONVERSION DATE"). "TRADING PRICE" means, for any security as of
any date, the
intraday trading price on the Over-the-Counter Bulletin Board (the
"OTCBB") as
reported by a reliable reporting service ("REPORTING SERVICE")
mutually
acceptable to Borrower and Holder and hereafter designated by
Holders of a
majority in interest of the Notes and the Borrower or, if the OTCBB
IS not the
principal trading market for such security, the intraday trading
price OF such
security on the principal securities exchange or trading market
where such
security is listed or traded or, if no intraday trading price of
such security
is available in any of the foregoing manners, the average of the
intraday
trading prices of any market makers for such security that are
listed in the
"pink sheets" by the National Quotation Bureau, Inc. If the Trading
Price cannot
be calculated for such security on such date in the manner provided
above, the
Trading Price shall be the fair market value AS mutually determined
by the
Borrower and the holders of a majority in interest of the Notes
being converted
for which the calculation of the Trading Price is required in order
to determine
the Conversion Price of such Notes. "TRADING DAY" shall mean any
day on which
the Common Stock is traded for any period on the OTCBB, or on the
principal
securities exchange or other securities market on which the Common
Stock is then
being traded. "APPLICABLE PERCENTAGE" SHALL mean 50%.
(B) CONVERSION PRICE DURING MAJOR ANNOUNCEMENTS.
Notwithstanding
anything contained in Section 1.2(a) to the contrary, in the event
the Borrower
(i) makes a public announcement that it intends to consolidate or
merge with any
other corporation (other than a merger in which the Borrower is the
surviving or
continuing corporation AND its capital stock is unchanged) or sell
or transfer
ALL or substantially all of the assets of the Borrower or (ii) any
person, group
or entity (including the Borrower) publicly announces a tender
offer to purchase
<PAGE>
50% or more of the Borrower's Common Stock (or any other takeover
scheme) (the
date of the announcement referred to in clause (i) or (ii) is
hereinafter
referred to as the "ANNOUNCEMENT DATE"), then the Conversion Price
shall,
effective upon the Announcement Date and continuing through the
Adjusted
Conversion Price Termination Date (as defined below), be equal to
the lower of
(x) the Conversion Price which would have been applicable for a
Conversion
occurring on the Announcement Date and (y) the Conversion Price
that would
otherwise be in effect. From and after the Adjusted Conversion
Price Termination
Date, the Conversion Price shall be determined as set forth in this
Section
1.2(a). For purposes hereof, "ADJUSTED CONVERSION PRICE TERMINATION
DATE" shall
mean, with respect to any proposed transaction or tender offer (or
takeover
scheme) for which a public announcement as contemplated by this
Section 1.2(b)
has been made, the date upon which the Borrower (in the case of
clause (i)
above) or the person, group or entity (in the case of clause (ii)
above)
consummates or publicly announces the termination or abandonment of
the proposed
transaction or tender offer (or takeover scheme) which caused this
Section
1.2(b) to become operative.
1.3 AUTHORIZED SHARES. The Borrower covenants that upon the
increase in
the number of authorized shares of the Company's Common Stock to
500,000,000
shares within thirty (30) days from the date hereof and during the
period the
conversion right exists thereafter, the Borrower will reserve from
its
authorized and unissued Common Stock a sufficient number of shares,
free from
preemptive rights, to provide for the issuance of Common Stock upon
the full
conversion of this Note and the other Notes issued pursuant to the
Purchase
Agreement. The Borrower is required at all times to have authorized
and reserved
two times the number of shares that is actually issuable upon full
conversion of
the Notes (based on the Conversion Price of the Notes or the
Exercise Price of
the Warrants in effect FROM TIME TO time) (the "RESERVED AMOUNT").
The Reserved
Amount shall be increased from time to time in accordance with the
Borrower's
obligations pursuant to Section 4(h) of the Purchase Agreement. The
Borrower
represents that upon issuance, such shares will be duly and validly
issued,
fully paid and non- assessable. In addition, if the Borrower shall
issue any
securities or make any change to its capital structure which would
change the
number of shares of Common Stock into which the Notes shall be
convertible at
the then current Conversion Price, the Borrower shall at the same
time make
proper provision so that thereafter there shall be a sufficient
number of shares
of Common Stock authorized and reserved, free from preemptive
rights, for
conversion of the outstanding Notes. The Borrower (i) acknowledges
that it has
irrevocably instructed its transfer agent to issue certificates for
the Common
Stock issuable upon conversion of this Note, and (ii) agrees that
its issuance
of this Note shall constitute full authority to its officers and
agents who are
charged with the duty of executing stock certificates to execute
and issue the
necessary certificates for shares of Common Stock in accordance
with the terms
and conditions of this NOTE.
IF, at any time a Holder of this Note submits a Notice of
Conversion,
and the Borrower does not have sufficient authorized but unissued
shares of
Common Stock available to effect such conversion in accordance with
the
provisions of this Article I (a "CONVERSION DEFAULT"), subject to
Section 4.8,
the Borrower shall issue to the Holder all of the SHARES of Common
Stock which
are then available to effect such conversion. The portion of this
Note which the
Holder included in its Conversion Notice and which exceeds the
amount which is
then convertible into available shares of Common Stock (the "EXCESS
AMOUNT")
<PAGE>
shall, notwithstanding anything to the contrary contained herein,
not
be convertible into Common Stock in accordance with the terms
hereof until (and
at the Holder's option at any time after) the date additional
shares of Common
Stock are authorized by the Borrower to permit such conversion, at
which time
the Conversion Price in respect thereof shall be the lesser of (i)
the
Conversion Price on the Conversion Default Date (as defined below)
and (ii) the
Conversion Price on the Conversion Date thereafter elected by the
Holder in
respect thereof. In addition, the Borrower shall pay to the Holder
payments
("CONVERSION DEFAULT PAYMENTS") for a Conversion Default in the
amount of (x)
the SUM OF (1) the then outstanding principal amount of this Note
PLUS (2)
accrued and unpaid interest on the unpaid principal amount of this
Note through
the Authorization Date (as defined below) PLUS (3) Default
Interest, if any, on
the amounts referred to in clauses (1) and/or (2), MULTIPLIED BY
(y) .24,
MULTIPLIED BY (z) (N/365), where N = the number of days from the
day the holder
submits a Notice of Conversion giving rise to a Conversion Default
(the
"CONVERSION DEFAULT DATE") to the date (the "AUTHORIZATION DATE")
that the
Borrower authorizes a sufficient number of shares of Common Stock
to effect
conversion of the full outstanding principal balance of this Note.
The Borrower
shall use its best efforts to authorize a sufficient number of
shares of Common
Stock as soon as practicable following the earlier of (i) such time
that the
Holder notifies the Borrower or that the Borrower otherwise becomes
aware that
there are or likely will be insufficient authorized and unissued
shares to allow
full conversion thereof and (ii) a Conversion Default. The Borrower
shall send
notice to the Holder of the authorization of additional shares of
Common Stock,
the Authorization Date and the amount of Holder's accrued
Conversion Default
Payments. The accrued Conversion Default Payments for each calendar
month shall
be paid in cash or shall be convertible into Common Stock (at such
time as there
are sufficient authorized shares of Common Stock) at the applicable
Conversion
Price, at the Borrower's option, as follows:
(a) In the event Holder elects to take such payment in cash,
cash
payment shall be made to Holder by the fifth (5th) day of the month
following
the month in which it has accrued; and
(b) In the event Holder elects to take such payment in Common
Stock,
the Holder may convert such payment amount into Common Stock at the
Conversion
Price (as in effect at the time of conversion) at any time after
the fifth day
of the month following the month in which it has accrued in
accordance with the
terms of this Article I (so long as there is then a sufficient
number of
authorized shares of Common Stock).
The Holder's election shall be made in writing to the Borrower at
any
time prior to 6:00 p.m., New York, New York time, on the third day
of the month
following the month in which Conversion Default payments have
accrued. If no
election is made, the Holder shall be deemed to have elected to
receive cash.
Nothing herein shall limit the Holder's right to pursue actual
damages (to the
extent in excess of the Conversion Default Payments) for the
Borrower's failure
to maintain a sufficient number of authorized shares of Common
Stock, and each
holder shall have the right to pursue all remedies available at law
or in equity
(including degree of specific performance and/or injunctive
relief).
<PAGE>
1.4 METHOD OF CONVERSION.
(A) MECHANICS OF CONVERSION. Subject to Section 1.1, this Note may
be
converted by the Holder in whole or in part at any time from time
to time after
the Issue Date, by (A) submitting to the Borrower a Notice of
Conversion (BY
facsimile or other reasonable means of communication dispatched on
the
Conversion Date prior to 6:00 p.m., New York, New York time) and
(B) subject to
Section 1.4(B), surrendering this Note at the principal office of
the Borrower.
(B) SURRENDER OF NOTE UPON CONVERSION. Notwithstanding anything to
the
contrary set forth herein, upon conversion of this Note in
accordance with the
terms hereof, the Holder shall not be required to physically
surrender this Note
to the Borrower unless the entire unpaid principal amount of this
Note is so
converted. The Holder and the Borrower shall maintain records
showing the
principal amount so converted and the dates of such conversions or
shall use
such other method, reasonably satisfactory to the Holder and the
Borrower, so as
not to require physical surrender of this Note upon each such
conversion. In the
event of any dispute or discrepancy, such records of the Borrower
shall be
controlling and determinative in the absence of manifest error.
Notwithstanding
the foregoing, if any portion of this Note is converted as
aforesaid, the Holder
may not transfer this Note unless the Holder first physically
surrenders this
Note to the Borrower, whereupon the Borrower will forthwith issue
and deliver
upon the order of the Holder a new Note of like tenor, registered
as the Holder
(upon payment by the Holder of any applicable transfer taxes) may
request,
representing in the aggregate the remaining UNPAID principal amount
of this
Note. The Holder and any assignee, by acceptance of this Note,
acknowledge and
agree that, by reason of the provisions of this paragraph,
following conversion
of a portion of this Note, the unpaid and unconverted principal
amount of this
Note represented by this Note may be less than the amount stated on
the face
hereof.
(C) PAYMENT OF TAXES. The Borrower SHALL not be required to pay any
tax
which may be payable in respect of any transfer involved in the
issue and
delivery of shares of Common Stock or other securities or property
on conversion
of this Note in a name other THAN that of the Holder (or in street
name), and
the Borrower shall not be required to issue or deliver any such
shares or other
securities or property unless and until the person or persons
(other than the
Holder or the custodian in whose street name such shares are to be
held for the
Holder's account) requesting the issuance thereof SHALL have paid
to the
Borrower the amount of any such tax or shall have established to
the
satisfaction of the Borrower THAT such tax has been paid.
(D) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon receipt by
the
Borrower from the Holder of a facsimile transmission (or other
reasonable means
of communication) of a Notice of Conversion meeting the
requirements for
conversion as provided in this Section 1.4, the Borrower shall
issue and deliver
or cause to be issued and delivered to or upon the order of the
Holder
certificates for the Common Stock issuable UPON such conversion
within three (3)
business days after such receipt (and, solely in the case of
conversion of the
entire unpaid principal amount hereof, surrender of this Note)
(such third
business day being hereinafter referred to as the "DEADLINE") in
accordance with
the terms hereof and the Purchase Agreement (including, without
limitation, in
accordance with the requirements of Section 2(g) of the Purchase
Agreement that
<PAGE>
certificates for shares of Common Stock issued on or after the
effective date of
the Registration Statement upon conversion of this Note shall not
bear any
restrictive legend).
(E) OBLIGATION OF BORROWER TO DELIVER COMMON STOCK. Upon receipt by
the
Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder
of record of the Common Stock issuable upon such conversion, the
outstanding
principal amount and the amount of accrued and unpaid interest on
this Note
shall be reduced to reflect such conversion, and, unless the
Borrower defaults
on its obligations under this Article I, all rights with respect to
the portion
of this Note being so converted shall forthwith terminate except
the right to
receive the Common Stock or other securities, cash or other assets,
as herein
provided, on such conversion. If the Holder shall have given a
Notice of
Conversion as provided herein, the Borrower's obligation to issue
and deliver
the certificates for Common Stock shall be absolute and
unconditional,
irrespective of the absence of any action by the Holder to enforce
the same, any
waiver or consent with respect to any provision thereof, the
recovery of any
judgment against any person or any action to enforce the same, any
failure or
delay in the enforcement of any other obligation of the Borrower to
the holder
of record, or any setoff, counterclaim, recoupment, limitation or
termination,
or any breach or alleged breach by the Holder of any obligation to
the Borrower,
and irrespective of any other circumstance which might otherwise
limit such
obligation of the Borrower to the Holder in connection with such
conversion. The
Conversion Date specified in the Notice of Conversion shall be the
Conversion
Date so long as the Notice of Conversion is received by the
Borrower before 6:00
p.m., New York, New York time, on such date.
(F) DELIVERY OF COMMON STOCK BY ELECTRONIC TRANSFER. In lieu of
delivering physical certificates representing the Common Stock
issuable upon
conversion, provided the Borrower's transfer agent is participating
in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer
("FAST")
program, upon request of the Holder and its compliance with the
provisions
contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its
best efforts to cause its transfer agent to electronically transmit
the Common
Stock issuable upon conversion to the Holder by crediting the
account of
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission
("DWAC") system.
(G) FAILURE TO DELIVER COMMON STOCK PRIOR TO DEADLINE. Without in
any
way limiting the Holder's right to pursue other remedies, including
actual
damages and/or equitable relief, the parties agree that if delivery
of the
Common Stock issuable upon conversion of this Note is more than
three (3)
business days after the Deadline (other than a failure due to the
circumstances
described in Section 1.3 above, which failure shall be governed by
such Section)
the Borrower shall pay to the Holder $1,000 per day in cash, for
each day beyond
the Deadline that the Borrower fails to deliver such Common Stock.
Such cash
amount shall be paid to Holder by the fifth day of the month
following the month
in which it has accrued or, at the option of the Holder (by written
notice to
the Borrower by the first day of the month following the month in
which it has
accrued), shall be added to the principal amount of this Note, in
which event
interest shall accrue thereon in accordance with the terms of this
Note and such
additional principal amount shall be convertible into Common Stock
in accordance
with the terms of this Note.
<PAGE>
1.5 CONCERNING, THE SHARES. The shares of Common Stock issuable
upon
conversion of this Note may not be sold or transferred unless (i)
such shares
are sold pursuant to an effective registration statement under the
Act or (ii)
the Borrower or its transfer agent shall have been furnished with
an opinion of
counsel (which opinion shall be in form, substance and scope
customary for
opinions of counsel in comparable transactions) to the effect that
the shares to
be sold or transferred may be sold or transferred pursuant to an
exemption from
such registration or (iii) such shares are sold or transferred
pursuant to Rule
144 under the Act (or a successor rule) ("RULE 144") or (iv) such
shares are
transferred to an "affiliate" (as defined in Rule 144) of the
Borrower who
agrees to sell or otherwise transfer the shares only in accordance
with this
Section 1.5 and who is an Accredited Investor (as defined in the
Purchase
Agreement). Except as otherwise provided in the Purchase Agreement
(and subject
to the removal provisions set forth below), until such time as the
shares of
Common Stock issuable upon conversion of this Note have been
registered under
the Act as contemplated by the Registration Rights Agreement or
otherwise may be
sold pursuant to Rule 144 without any restriction as to the number
of securities
as of a particular date that can then be immediately sold, each
certificate for
shares of Common Stock issuable upon conversion of this Note that
has not been
so included in an effective registration statement or that has not
been sold
pursuant to an effective registration statement or an exemption
that permits
removal of the legend, shall bear a legend substantially in the
following form,
as appropriate:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN
OPINION
OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS
OF
COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT
REQUIRED
UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S
UNDER
SAID ACT."
The legend set forth above shall be removed and the Borrower
shall
issue to the Holder a new certificate therefor free of any transfer
legend if
(i) the Borrower or its transfer agent shall have received an
opinion of
counsel, in form, substance and scope customary for opinions of
counsel in
comparable transactions, to the effect that a public sale or
transfer of such
Common Stock may be made without registration under the Act and the
shares are
so sold or transferred, (ii) such Holder provides the Borrower or
its transfer
agent with reasonable assurances that the Common Stock issuable
upon conversion
of this Note (to the extent such securities are deemed to have been
acquired on
the same date) can be sold pursuant to Rule 144 or (iii) in the
case of the
Common Stock issuable upon conversion of this Note, such security
is registered
for sale by the Holder under an effective registration statement
filed under the
Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to
the number of securities as of a particular date that can then be
immediately
sold. Nothing in this Note shall (i) limit the Borrower's
obligation under the
Registration Rights Agreement or (ii) affect in any way the
Holder's obligations
to comply with applicable prospectus delivery requirements upon the
resale of
the securities referred to herein.
<PAGE>
1.6 EFFECT OF CERTAIN EVENTS.
(A) EFFECT OF MERGER, CONSOLIDATION, ETC. At the option of the
Holder,
the sale, conveyance or disposition of all or substantially all of
the assets of
the Borrower, the effectuation by the Borrower of a transaction or
series of
related transactions in
