SERIES A SENIOR CONVERTIBLE PROMISSORY NOTE

 

 

 

 

 

                                                                    EXHIBIT 99.2

 

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE

NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR

APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE

DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN

OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO

THE MAKER THAT THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION

HEREOF MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION

FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

 

 

                           IN TOUCH MEDIA GROUP, INC.

 

                                     SERIES A

                       SENIOR CONVERTIBLE PROMISSORY NOTE

 

--------------------------------------------------------------------------------

NOTE   NUMBER..................................     2005-A-NOTE-001

 

NOTE ISSUE DATE...............................     NOVEMBER 30, 2005

 

MATURITY DATE.................................     MAY 31, 2007

 

NAME OF NOTE HOLDER...........................

 

TOTAL AMOUNT OF NOTE..........................     $1,000,000

--------------------------------------------------------------------------------

 

         For value received, In Touch Media Group, Inc., a Florida corporation

(the "Maker"), hereby promises to pay to the order of the "Holder" identified

above, (together with its successors, representatives, and permitted assigns,

the "Holder"), in accordance with the terms hereinafter provided, the principal

amount set forth above, together with interest thereon. Concurrently with the

issuance of this Note, the Maker is issuing separate senior convertible

promissory notes (the "Other Notes") to separate purchasers (the "Other

Holders") pursuant to the Purchase Agreement (as defined in Section 1.1 hereof).

 

         All payments under or pursuant to this Note shall be made in United

States Dollars in immediately available funds to the Holder at the address of

the Holder first set forth above or at such other place as the Holder may

designate from time to time in writing to the Maker or by wire transfer of funds

to the Holder's account, instructions for which are attached hereto as Exhibit

A. The outstanding principal balance of this Note shall be due and payable on

the "Maturity Date" set forth above or at such earlier time as provided herein.

 

 

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                                   ARTICLE I

 

         Section 1.1 Purchase Agreement. This Note has been executed and

delivered pursuant to the Note and Warrant Purchase Agreement dated as of

November 29, 2005 (the "Purchase Agreement") by and among the Maker and the

purchasers listed therein. Capitalized terms used and not otherwise defined

herein shall have the meanings set forth for such terms in the Purchase

Agreement.

 

         Section 1.2 Interest. Beginning on the issuance date of this Note (the

"Issuance Date"), the outstanding principal balance of this Note shall bear

interest, in arrears, at a rate per annum equal to nine percent (9%), payable

semi-annually on May 31st and November 30th of each year commencing May 31st and

November 30th, 2006 at the option of the Maker in (A) cash, or (B) in registered

shares of the Maker's common stock, par value $0.001 per share (the "Common

Stock"), in accordance with terms of Section 1.3 below. Interest shall be

computed on the basis of a 360-day year of twelve (12) 30-day months and shall

accrue commencing on the Issuance Date. Furthermore, upon the occurrence of an

Event of Default (as defined in Section 2.1 hereof), then to the extent

permitted by law, the Maker will pay interest to the Holder, payable on demand,

on the outstanding principal balance of the Note from the date of the Event of

Default until such Event of Default is cured at the rate of the lesser of

fifteen percent (15%) and the maximum applicable legal rate per annum.

 

         Section 1.3 Payment of Interest.

 

         (a) Commencing on the sixth (6th) month following the Issuance Date and

continuing thereafter every six months (a "Interest Payment Date") any accrued

but unpaid interest. The Maker may pay such Interest in cash or registered

shares of Common Stock. If the Maker elects to pay the Interest in cash such

amount shall be wired in immediately available funds on the Interest Payment

Date; provided, however, that if the Holder has delivered a Conversion Notice to

the Maker or delivers a Conversion Notice prior to the Interest Payment Date.

 

         (b) If the Maker elects to pay the Interest in registered shares of

Common Stock, the number of registered shares of Common Stock to be issued to

the Holder shall be an amount equal to the Interest accrued divided by

eighty-five percent (85%) of the average of the Closing Bid Price (as defined in

Section 1.3(c) hereof) for the five (5) Trading Days immediately preceding the

Interest Payment Date. Notwithstanding the foregoing to the contrary, the Maker

may elect to pay the Interest in registered shares of Common Stock on any

Interest Payment Date only if (A) the registration statement providing for the

resale of the shares of Common Stock issuable upon conversion of this Note (the

"Registration Statement") is effective and has been effective, without lapse or

suspension of any kind, for a period of twenty (20) consecutive calendar days,

(B) trading in the Common Stock shall not have been suspended by the Securities

and Exchange Commission or the OTC Bulletin Board (or other exchange or market

on which the Common Stock is trading), (C) the Maker is in material compliance

with the terms and conditions of this Note and the other Transaction Documents,

and (D) the issuance of shares of

 

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SERIES A SENIOR CONVERTIBLE PROMISSORY NOTE

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Common Stock on the Interest Payment Date does not violate the provisions of

Section 3.4 hereof.

 

         (c) The term "Closing Bid Price" shall mean, on any particular date (i)

the last trading price per share of the Common Stock on such date on the Pink

Sheets, OTC Bulletin Board or another registered national stock exchange on

which the Common Stock is then listed, or if there is no such price on such

date, then the last trading price on such exchange or quotation system on the

date nearest preceding such date, or (ii) if the Common Stock is not listed then

on the Pink Sheets, OTC Bulletin Board or any registered national stock

exchange, the last trading price for a share of Common Stock in the

over-the-counter market, as reported by the Pink Sheets, OTC Bulletin Board or

in the National Quotation Bureau Incorporated or similar organization or agency

succeeding to its functions of reporting prices) at the close of business on

such date, or (iii) if the Common Stock is not then reported by the Pink Sheets,

OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar

organization or agency succeeding to its functions of reporting prices), then

the average of the "Pink Sheet" quotes for the relevant conversion period, as

determined in good faith by the Holder, or (iv) if the Common Stock is not then

publicly traded the fair market value of a share of Common Stock as determined

by the Holder and reasonably acceptable to the Maker.

 

         Section 1.4 [Intentionally Omitted.]

 

         Section 1.5 Payment on Non-Business Days. Whenever any payment to be

made shall be due on a Saturday, Sunday or a public holiday under the laws of

the State of New York, such payment may be due on the next succeeding business

day and such next succeeding day shall be included in the calculation of the

amount of accrued interest payable on such date.

 

         Section 1.6 Transfer. This Note may be transferred or sold, subject to

the provisions of Section 4.8 of this Note, or pledged, hypothecated or

otherwise granted as security by the Holder.

 

         Section 1.7 Replacement. Upon receipt of a duly executed, notarized and

unsecured written statement from the Holder with respect to the loss, theft or

destruction of this Note (or any replacement hereof) and a standard indemnity,

or, in the case of a mutilation of this Note, upon surrender and cancellation of

such Note, the Maker shall issue a new Note, of like tenor and amount, in lieu

of such lost, stolen, destroyed or mutilated Note.

 

                                   ARTICLE II

 

                           EVENTS OF DEFAULT; REMEDIES

 

         Section 2.1 Events of Default. The occurrence of any of the following

events shall be an "Event of Default" under this Note:

 

         (a) the Maker shall fail to make the Interest accrued on a Interest

Payment Date and such default is not fully cured within five (5) business days

after the occurrence thereof; or

 

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SERIES A SENIOR CONVERTIBLE PROMISSORY NOTE

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         (b) the failure of the Registration Statement to be declared effective

by the Securities and Exchange Commission on or prior to the date which is one

hundred eighty (180) days after the Closing Date; or

 

         (c) the suspension from listing, without subsequent listing on any one

of, or the failure of the Common Stock to be listed on at least one of the OTC

Bulletin Board, the American Stock Exchange, the Nasdaq National Market, the

Nasdaq SmallCap Market or The New York Stock Exchange, Inc. for a period of five

(5) consecutive Trading Days; or

 

         (d) the Maker's notice to the Holder, including by way of public

announcement, at any time, of its inability to comply (including for any of the

reasons described in Section 3.8(a) hereof) or its intention not to comply with

proper requests for conversion of this Note into shares of Common Stock; or

 

         (e) the Maker shall fail to (i) timely deliver the shares of Common

Stock upon conversion of the Note or any interest accrued and unpaid, (ii) file

the Registration Statement in accordance with the terms of the Registration

Rights Agreement or (iii) make the payment of any fees and/or liquidated damages

under this Note, the Purchase Agreement or the Registration Rights Agreement,

which failure in the case of items (i) and (iii) of this Section 2.1(e) is not

remedied within three (3) business days after the incurrence thereof; or

 

         (f) while the Registration Statement is required to be maintained

effective pursuant to the terms of the Registration Rights Agreement, the

effectiveness of the Registration Statement lapses for any reason (including,

without limitation, the issuance of a stop order) or is unavailable to the

Holder for sale of the Registrable Securities (as defined in the Registration

Rights Agreement) in accordance with the terms of the Registration Rights

Agreement, and such lapse or unavailability continues for a period of thirty

(30) consecutive Trading Days, provided that the Maker has not exercised its

rights pursuant to Section 3(n) of the Registration Rights Agreement; or

 

         (g) default shall be made in the performance or observance of (i) any

material covenant, condition or agreement contained in this Note (other than as

set forth in clause (f) of this Section 2.1) and such default is not fully cured

within ten (10) business days after the Maker receives notice from the Holder of

the occurrence thereof or (ii) any material covenant, condition or agreement

contained in the Purchase Agreement, the Other Notes, the Registration Rights

Agreement or any other Transaction Document which is not covered by any other

provisions of this Section 2.1 and such default is not fully cured within three

(3) business days after the Maker receives notice from the Holder of the

occurrence thereof; or

 

         (h) any material representation or warranty made by the Maker herein or

in the Purchase Agreement, the Registration Rights Agreement, the Other Notes or

any other Transaction Document shall prove to have been false or incorrect or

breached in a material respect on the date as of which made; or

 

         (i) the Maker shall (A) default in any payment of any amount or amounts

of principal of or interest on any Indebtedness (other than the Indebtedness

hereunder) the

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SERIES A SENIOR CONVERTIBLE PROMISSORY NOTE

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aggregate principal amount of which Indebtedness is in excess of $100,000 or (B)

default in the observance or performance of any other agreement or condition

relating to any Indebtedness or contained in any instrument or agreement

evidencing, securing or relating thereto, or any other event shall occur or

condition exist, the effect of which default or other event or condition is to

cause, or to permit the holder or holders or beneficiary or beneficiaries of

such Indebtedness to cause with the giving of notice if required, such

Indebtedness to become due prior to its stated maturity; or

 

         (j) the Maker shall (i) apply for or consent to the appointment of, or

the taking of possession by, a receiver, custodian, trustee or liquidator of

itself or of all or a substantial part of its property or assets, (ii) make a

general assignment for the benefit of its creditors, (iii) commence a voluntary

case under the United States Bankruptcy Code (as now or hereafter in effect) or

under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a

petition seeking to take advantage of any bankruptcy, insolvency, moratorium,

reorganization or other similar law affecting the enforcement of creditors'

rights generally, (v) acquiesce in writing to any petition filed against it in

an involuntary case under United States Bankruptcy Code (as now or hereafter in

effect) or under the comparable laws of any jurisdiction (foreign or domestic),

(vi) issue a notice of bankruptcy or winding down of its operations or issue a

press release regarding same, or (vii) take any action under the laws of any

jurisdiction (foreign or domestic) analogous to any of the foregoing; or

 

         (k) a proceeding or case shall be commenced in respect of the Maker,

without its application or consent, in any court of competent jurisdiction,

seeking (i) the liquidation, reorganization, moratorium, dissolution, winding

up, or composition or readjustment of its debts, (ii) the appointment of a

trustee, receiver, custodian, liquidator or the like of it or of all or any

substantial part of its assets in connection with the liquidation or dissolution

of the Maker or (iii) similar relief in respect of it under any law providing

for the relief of debtors, and such proceeding or case described in clause (i),

(ii) or (iii) shall continue undismissed, or unstayed and in effect, for a

period of thirty (30) days or any order for relief shall be entered in an

involuntary case under United States Bankruptcy Code (as now or hereafter in

effect) or under the comparable laws of any jurisdiction (foreign or domestic)

against the Maker or action under the laws of any jurisdiction (foreign or

domestic) analogous to any of the foregoing shall be taken with respect to the

Maker and shall continue undismissed, or unstayed and in effect for a period of

thirty (30) days; or

 

         (l) the failure of the Maker to instruct its transfer agent to remove

any legends from shares of Common Stock eligible to be sold under Rule 144 of

the Securities Act and issue such unlegended certificates to the Holder within

five (5) business days of the Holder's request so long as the Holder has

provided reasonable assurances to the Maker that such shares of Common Stock can

be sold pursuant to Rule 144; or

 

         (m) the failure of the Maker to pay any amounts due to the Holder

herein or in the Purchase Agreement or the Registration Rights Agreement within

three (3) business days of the date such payments are due; or

 

         (n) the occurrence of an Event of Default under the Other Notes.

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SERIES A SENIOR CONVERTIBLE PROMISSORY NOTE

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         Section 2.2 Remedies Upon An Event of Default. If an Event of Default

shall have occurred and shall be continuing, the Holder of this Note may at any

time at its option, (a) declare the entire unpaid principal balance of this

Note, together with all interest accrued hereon, due and payable, and thereupon,

the same shall be accelerated and so due and payable, without presentment,

demand, protest, or notice, all of which are hereby expressly unconditionally

and irrevocably waived by the Maker; provided, however, that upon the occurrence

of an Event of Default described in (i) Sections 2.1 (j) or (k), the outstanding

principal balance and accrued interest hereunder shall be automatically due and

payable and (ii) Sections 2.1 (b)-(i), demand the prepayment of this Note

pursuant to Section 3.7 hereof, (b) demand that the principal amount of this

Note then outstanding and all accrued and unpaid interest thereon shall be

converted into shares of Common Stock at a Conversion Price per share calculated

pursuant to Section 3.1 hereof assuming that the date that the Event of Default

occurs is the Conversion Date (as defined in Section 3.1 hereof), or (c)

exercise or otherwise enforce any one or more of the Holder's rights, powers,

privileges, remedies and interests under this Note, the Purchase Agreement, the

Registration Rights Agreement or applicable law. No course of delay on the part

of the Holder shall operate as a waiver thereof or otherwise prejudice the right

of the Holder. No remedy conferred hereby shall be exclusive of any other remedy

referred to herein or now or hereafter available at law, in equity, by statute

or otherwise.

 

                                  ARTICLE III

 

                      CONVERSION; ANTIDILUTION; PREPAYMENT

 

         Section 3.1 Conversion Option.

 

          (a) At any time on or after the Issuance Date, this Note shall be

convertible (in whole or in part), at the option of the Holder (the "Conversion

Option"), into such number of fully paid and non-assessable shares of Common

Stock (the "Conversion Rate") as is determined by dividing (x) that portion of

the outstanding principal balance plus any accrued but unpaid interest under

this Note as of such date that the Holder elects to convert by (y) the

Conversion Price (as defined in Section 3.2(a) hereof) then in effect on the

date on which the Holder faxes a notice of conversion (the "Conversion Notice"),

duly executed, to the Maker at the Fax number provided in the Purchase

Agreement, Attn.: Chief Executive Officer (the "Voluntary Conversion Date"),

provided, however, that the Conversion Price shall be subject to adjustment as

described in Section 3.6 below. The Holder shall deliver this Note to the Maker

at the address designated in the Purchase Agreement at such time that this Note

is fully converted. With respect to partial conversions of this Note, the Maker

shall keep written records of the amount of this Note converted as of each

Conversion Date.

 

         (b) On the Mandatory Conversion Date (as defined below), the Maker may

cause the principal amount of this Note plus all accrued and unpaid interest to

convert into a number of fully paid and nonassessable shares of Common Stock

equal to the quotient of (i) the principal amount of this Note plus all accrued

and unpaid interest outstanding on the Mandatory Conversion Date divided by (ii)

the Conversion Price in effect on the Mandatory Conversion Date by providing

five business (5) days prior written notice of such Mandatory Conversion Date.

As used herein, a "Mandatory Conversion Date" shall be a date following the

effective

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SERIES A SENIOR CONVERTIBLE PROMISSORY NOTE

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date of the Registration Statement in which the Closing Bid Price exceeds $2.50

for a period of ten (10) consecutive Trading Days and the average daily trading

volume for such ten (10) consecutive Trading Day period exceeds 125,000 shares

of Common Stock; provided, that (A) the Registration Statement is effective and

has been effective, without lapse or suspension of any kind, for a period of

twenty (20) consecutive calendar days immediately preceding the Mandatory

Conversion Date, (B) trading in the Common Stock shall not have been suspended

by the Securities and Exchange Commission or the Pink Sheets or OTC Bulletin

Board (or other exchange or market on which the Common Stock is trading), (C)

the Maker is in material compliance with the terms and conditions of this Note

and the other Transaction Documents, (D) the issuance of shares of Common Stock

on the Mandatory Conversion Date pursuant to such mandatory conversion does not

violate the provisions of Section 3.4 hereof, and (E) the Maker is not in

possession of any material non-public information. Notwithstanding the foregoing

to the contrary, the Mandatory Conversion Date shall be extended for as long as

a Triggering Event (as defined in Section 3.7(f) hereof) shall have occurred and

be continuing. The Mandatory Conversion Date and the Voluntary Conversion Date

collectively are referred to in this Note as the "Conversion Date."

 

         Section 3.2 Conversion Price.

 

         (a) The term "Conversion Price" shall mean $0.20, subject to adjustment

under Section 3.6 hereof.

 

         (b) Notwithstanding any of the foregoing to the contrary, if during any

period (a "Black-out Period"), a Holder is unable to trade any Common Stock

issued or issuable upon conversion of this Note immediately due to the

postponement of filing or delay or suspension of effectiveness of the

Registration Statement or because the Maker has otherwise informed such Holder

that an existing prospectus cannot be used at that time in the sale or transfer

of such Common Stock (provided that such postponement, delay, suspension or fact

that the prospectus cannot be used is not due to factors solely within the

control of the Holder of this Note or due to the Maker exercising its rights

under Section 3(n) of the Registration Rights Agreement), such Holder shall have

the option but not the obligation on any Conversion Date within ten (10) Trading

Days following the expiration of the Black-out Period of using the Conversion

Price applicable on such Conversion Date or any Conversion Price selected by

such Holder that would have been applicable had such Conversion Date been at any

earlier time during the Black-out Period or within the ten (10) Trading Days

thereafter. In no event shall the Black-out Period have any effect on the

Maturity Date of this Note.

 

         Section 3.3 Mechanics of Conversion. Not later than three (3) Trading

Days after any Conversion Date, the Maker or its designated transfer agent, as

applicable, shall issue and deliver to the Depository Trust Company ("DTC")

account on the Holder's behalf via the Deposit Withdrawal Agent Commission

System ("DWAC") as specified in the Conversion Notice, registered in the name of

the Holder or its designee, for the number of shares of Common Stock to which

the Holder shall be entitled. In the alternative, not later than three (3)

Trading Days after any Conversion Date, the Maker shall deliver to the

applicable Holder by express courier a certificate or certificates which shall

be free of restrictive legends and trading restrictions (other than those

required by Section 5.1 of the Purchase Agreement) representing

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the number of shares of Common Stock being acquired upon the conversion of this

Note (the "Delivery Date"). Notwithstanding the foregoing to the contrary, the

Maker or its transfer agent shall only be obligated to issue and deliver the

shares to the DTC on the Holder's behalf via DWAC (or certificates free of

restrictive legends) if such conversion is in connection with a sale and the

Holder has complied with the applicable prospectus delivery requirements (as

evidenced by documentation furnished to and reasonably satisfactory to the

Maker). If in the case of any Conversion Notice such certificate or certificates

are not delivered to or as directed by the applicable Holder by the Delivery

Date, the Holder shall be entitled by written notice to the Maker at any time on

or before its receipt of such certificate or certificates thereafter, to rescind

such conversion, in which event the Maker shall immediately return this Note

tendered for conversion, whereupon the Maker and the Holder shall each be

restored to their respective positions immediately prior to the delivery of such

notice of revocation, except that any amounts described in Sections 3.3(b) and

(c) shall be payable through the date notice of rescission is given to the

Maker.

 

         Section 3.4 Ownership Cap and Certain Conversion Restrictions.

 

         (a) Notwithstanding anything to the contrary set forth in Section 3 of

this Note, at no time may the Holder convert all or a portion of this Note if

the number of shares of Common Stock to be issued pursuant to such conversion

would exceed, when aggregated with all other shares of Common Stock owned by the

Holder at such time, the number of shares of Common Stock which would result in

the Holder beneficially owning (as determined in accordance with Section 13(d)

of the Exchange Act and the rules thereunder) more than 4.9% of all of the

Common Stock outstanding at such time; provided, however, that upon the Holder

providing the Maker with sixty-one (61) days notice (pursuant to Section 4.1

hereof) (the "Waiver Notice") that the Holder would like to waive this Section

3.4(a) with regard to any or all shares of Common Stock issuable upon conversion

of this Note, this Section 3.4(a) will be of no force or effect with regard to

all or a portion of the Note referenced in the Waiver Notice.

 

         (b) Notwithstanding anything to the contrary set forth in Section 3 of

this Note, at no time may the Holder convert all or a portion of this Note if

the number of shares of Common Stock to be issued pursuant to such conversion,

when aggregated with all other shares of Common Stock owned by the Holder at

such time, would result in the Holder beneficially owning (as determined in

accordance with Section 13(d) of the Exchange Act and the rules thereunder) in

excess of 9.9% of the then issued and outstanding shares of Common Stock

outstanding at such time; provided, however, that upon the Holder providing the

Maker with a Waiver Notice that the Holder would like to waive Section 3.4(b) of

this Note with regard to any or all shares of Common Stock issuable upon

conversion of this Note, this Section 3.4(b) shall be of no force or effect with

regard to all or a portion of the Note referenced in the Waiver Notice.

 

         Section 3.5 Intentionally Omitted.

 

         Section 3.6 Adjustment of Conversion Price.

 

         (a) The Conversion Price shall be subject to adjustment from time to

time as follows:

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                  (i) Adjustments for Stock Splits and Combinations. If the

         Maker shall at any time or from time to time after the Issuance Date,

         effect a stock split of the outstanding Common Stock, the applicable

         Conversion Price in effect immediately prior to the stock split shall

         be proportionately decreased. If the Maker shall at any time or from

          time to time after the Issuance Date, combine the outstanding shares of

         Common Stock, the applicable Conversion Price in effect immediately

         prior to the combination shall be proportionately increased. Any

         adjustments under this Section 3.6(a)(i) shall be effective at the

         close of business on the date the stock split or combination occurs.

 

                  (ii) Adjustments for Certain Dividends and Distributions. If

         the Maker shall at any time or from time to time after the Issuance

         Date, make or issue or set a record date for the determination of

         holders of Common Stock entitled to receive a dividend or other

         distribution payable in shares of Common Stock, then, and in each

          event, the applicable Conversion Price in effect immediately prior to

         such event shall be decreased as of the time of such issuance or, in

         the event such record date shall have been fixed, as of the close of

         business on such record date, by multiplying, the applicable Conversion

         Price then in effect by a fraction:

 

                           (1) the numerator of which shall be the total number

                  of shares of Common Stock issued and outstanding immediately

                  prior to the time of such issuance or the close of business on

                  such record date; and

 

                           (2) the denominator of which shall be the total

                  number of shares of Common Stock issued and outstanding

                  immediately prior to the time of such issuance or the close of

                  business on such record date plus the number of shares of

                  Common Stock issuable in payment of such dividend or

                   distribution.

 

                  (iii) Adjustment for Other Dividends and Distributions. If the

         Maker shall at any time or from time to time after the Issuance Date,

         make or issue or set a record date for the determination of holders of

         Common Stock entitled to receive a dividend or other distribution

         payable in other than shares of Common Stock, then, and in each event,

         an appropriate revision to the applicable Conversion Price shall be

         made and provision shall be made (by adjustments of the Conversion

         Price or otherwise) so that the holders of this Note shall receive upon

         conversions thereof, in addition to the number of shares of Common

         Stock receivable thereon, the number of securities of the Maker which

         they would have received had this Note been converted into Common Stock

         on the date of such event and had thereafter, during the period from

         the date of such event to and including the Conversion Date, retained

         such securities (together with any distributions payable thereon during

         such period), giving application to all adjustments called for during

         such period under this Section 3.6(a)(iii) with respect to the rights

         of the holders of this Note and the Other Notes; provided, however,

         that if such record date shall have been fixed and such dividend is not

         fully paid or if such distribution is not fully made on the date fixed

         therefor, the Conversion Price shall be adjusted pursuant to this

         paragraph as of the time of actual payment of such dividends or

         distributions.

 

                  (iv) Adjustments for Reclassification, Exchange or

         Substitution. If the Common Stock issuable upon conversion of this Note

         at any time or from time to time after the Issuance Date shall be

         changed to the same or different number of shares of any class or

         classes

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         of stock, whether by reclassification, exchange, substitution or

         otherwise (other than by way of a stock split or combination of shares

          or stock dividends provided for in Sections 3.6(a)(i), (ii) and (iii),

         or a reorganization, merger, consolidation, or sale of assets provided

         for in Section 3.6(a)(v)), then, and in each event, an appropriate

         revision to the Conversion Price shall be made and provisions shall be

         made (by adjustments of the Conversion Price or otherwise) so that the

         Holder shall have the right thereafter to convert this Note into the

         kind and amount of shares of stock and other securities receivable upon

         reclassification, exchange, substitution or other change, by holders of

         the number of shares of Common Stock into which such Note might have

         been converted immediately prior to such reclassification, exchange,

         substitution or other change, all subject to further adjustment as

         provided herein.

 

                  (v) Adjustments for Reorganization, Merger, Consolidation or

         Sales of Assets. If at any time or from time to time after the Issuance

         Date there shall be a capital reorganization of the Maker (other than

         by way of a stock split or combination of shares or stock dividends or

         distributions provided for in Section 3.6(a)(i), (ii) and (iii), or a

         reclassification, exchange or substitution of shares provided for in

         Section 3.6(a)(iv)), or a merger or consolidation of the Maker with or

         into another corporation where the holders of outstanding voting

         securities prior to such merger or consolidation do no