SENIOR SECURED CONVERTIBLE GRID NOTE DUE OCTOBER 1, 2010

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE"ACT") OR APPLICABLE STATE SECURITIES LAWS. SUCH 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 REASONABLY SATISFACTORY TO COUNSEL TO THE BORROWER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

Original Issue Date: ________________
Initial Conversion Price (subject to adjustment herein): $0.10

SENIOR SECURED CONVERTIBLE GRID NOTE
DUE OCTOBER 1, 2010

FOR VALUE RECEIVED, ICP Solar Technologies, Inc. , a Nevada corporation (hereinafter called the "Borrower" or “Company” ), hereby promises to pay to the order of ________________________________or its registered assigns (the "Holder" ) the sum of up to ________________________________, or so much thereof as shall constitute the Principal Amount (as defined below), calculated as described below, based upon the amount advanced (each an “Advance”) by the Holder to the Company hereunder and not repaid by October 1, 2010 (the "Maturity Date" ), or such earlier date as this Grid Note is required or permitted to be repaid as provided hereunder, in accordance with the provisions hereof. This Grid Note (including all Grid Notes issued in exchange, transfer or replacement hereof, this "Grid Note" ) is one of an issue of Grid Notes issued pursuant to the Line of Credit Agreement (as defined in Section 1 below) on the Closing Date (collectively, the "Grid Notes" and such other Grid Notes, the "Other Grid Notes" ).

Except as otherwise expressly provided herein, including but not limited to Section 7(c) below, this Grid Note may not be prepaid by the Borrower. All payments due hereunder (to the extent not converted into Common Stock, par value $0.00001 per share, of the Borrower (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 the address of the Holder as set forth in the Line of Credit Agreement (as defined in Section 1 below) or at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Grid Note. Whenever any amount expressed to be due by the terms of this Grid Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day.

This Note evidences loans made by Holder to Borrower from time to time, subject to, and as provided in the Line of Credit Agreement. The unpaid principal balance of this Note at any time shall be the difference of (i) the total amount advanced by Holder to Borrower, divided by 0.9009 (the “Original Issuance Discount”), less (ii) the sum of (a) the total amount of principal payments made hereon by Borrower and (b) the total amounts of this Grid Note that have been converted into Common Stock (such difference is defined as the “Principal Amount” ). The date and amount of each Advance and each payment on account of principal thereof may be endorsed by Holder on the grid attached to and made a part of this Note, and when so endorsed shall represent evidence thereof binding upon Borrower in the absence of manifest error. Any failure by Holder to so endorse shall in no way mitigate or discharge the obligation of Borrower to repay any loans actually made. Borrower may prepay this Note in whole or in part at any time with all accrued interest to the date of prepayment.

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Advances hereunder may be made, at the option of the Holder, subject to the limitations as to time and amount set forth in the Line of Credit Agreement. Any such Advance so made shall be conclusively presumed to have been made to or for the benefit of Borrower, and Borrower shall be liable in respect thereof when any such Advance is made in accordance with any such request or direction, or when deposited to any account of Borrower. Upon each Advance, Borrower shall deliver to Holder a certificate signed by its CEO and CFO representing to Holder that (i) all of the representations and warranties of Borrower set forth in this Note and in the Line of Credit Agreement are true and correct as of the date of such request as if made on and as of such date and (ii) on such date Borrower is not in breach of any of its covenants to Holder set forth in this Note, the Line of Credit Agreement, the Security Agreement or in any other document or instrument of Borrower to Holder and no Event of Default has occurred.

Except as expressly otherwise provided herein with respect to prepayments, all payments on this Note shall be applied to the payment of accrued interest and accrued reimbursement obligations with respect to Holder’s attorneys’ fees and expenses before being applied to the payment of principal. In the event that any other Required Cash Payment is due at any time that Holder receives a payment from Borrower on account of this Note or any such other Obligations, Holder may apply such payment to amounts due under this Note or any such other Required Cash Payments in such manner as Holder, in its discretion, elects, regardless of any instructions from Borrower to the contrary. The obligations of Borrower to Holder evidenced by this Note are secured by that certain Security Agreement (as defined in the Line of Credit Agreement) dated as of the date hereof.

This Grid Note is subject to the following additional provisions:

Section 1. Certain Definitions . Capitalized terms used and not otherwise defined herein that are defined in that certain Line of Credit Agreement, of date even herewith, pursuant to which the Grid Note was originally issued (the "Line of Credit Agreement" or the “Purchase Agreement” ), shall have the meanings given such terms in the Line of Credit Agreement. For the purposes hereof, the following terms shall have the following meanings:

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“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated hereunder.

“1934 Act” means the Securities Exchange Act of 1934, as amended.

“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof; (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within sixty (60) days after commencement; (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) calendar days after such appointment; (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors; (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

The "Black-Scholes" value of a warrant or other Option shall be determined by use of the Black Scholes Option Pricing Model reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the Warrant or other Option as of such date of request and (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg.

“Bloomberg” shall mean Bloomberg L.P.

"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.

“Closing Date” means the Trading Day when (i) all of the Holder’s Transaction Documents have been executed and delivered by the applicable parties thereto, (ii) all conditions precedent to (a) each Holder’s obligations to pay the Subscription Amount and (b) the Company’s obligations to deliver the Grid Notes, and (iii) Holder shall have delivered the purchase price for the Grid Note to the Company in accordance with the Line of Credit Agreement.

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"Closing Bid Price," as of any date, means the last bid price of the Common Stock on the Principal Market as reported by Bloomberg or, if the Principal Market is not the principal trading market for such security, the last bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if no last bid price of such security is available on the Principal Market for such security or in any of the foregoing manners, the average of the bid prices of any market makers for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date in the manner provided above, the Closing Bid Price shall be the fair market value as mutually determined by the Company and the Holder.

"Closing Price," as of any date, means the last sale price of the Common Stock on the Principal Market as reported by Bloomberg or, if the Principal Market is not the principal trading market for such security, the last sale price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if no last sale price of such security is available on a securities exchange or trading market where such security is listed or traded as reported by Bloomberg or in any of the foregoing manners, the average of the bid prices of any market makers for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Price cannot be calculated for such security on such date in the manner provided above, the Closing Price shall be the fair market value as mutually determined by the Company and the Holder.

“Commission” means the Securities and Exchange Commission.

“Common Stock Equivalents” shall have the meaning ascribed to it in the Line of Credit Agreement.

"Conversion Amount" shall have the meaning set forth in Section 3(a)(iv) below.

"Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

"Grid Notes" shall be deemed to refer to this Grid Note, as originally executed, or if later amended or supplemented, then as so amended or supplemented, all other convertible notes issued pursuant to the Line of Credit Agreement and all convertible debentures issued in replacement hereof or thereof or otherwise with respect hereto or thereto.

“Default Conversion Sum” shall have the meaning set forth in Section 11(a) below.

"Eligible Market" shall have the meaning ascribed to it in the Line of Credit Agreement by and between the Company and the Holder.

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“Event of Default” shall have the meaning set forth in Section 10.

“Event of Failure” shall mean the occurrence of any event(s) which trigger the accrual of Liquidated Damages.

  “Holders” shall mean the Holder, and the holders of Other Grid Notes issued pursuant to the Line of Credit Agreement.

"Indebtedness" shall have the meaning ascribed to it in the Line of Credit Agreement.

“Issuable Shares” shall heave the meaning set forth in Section 3(a)(iii) below.

“Late Payment Fees” shall have the meaning set forth in Section 13 below.

“Late Share Delivery Liquidated Damages” shall have the meaning set forth in Section 3(d)(iv) below.

“Legend Removal Failure Liquidated Damages” shall have the meaning ascribed to it in the Line of Credit Agreement.

“Liquidated Damages” means any liquidated damages due hereunder, or under the other Transaction Documents, including but not limited to the Late Share Delivery Liquidated Damages, the Legend Removal Failure Liquidated Damages, and the Late Payment Fees.

"Market Price," as of any date, means the Volume Weighted Average Price (as defined herein) of the Common Stock during the five (5) consecutive Trading Day period immediately preceding the date in question.

“Major Transaction Redemption Premium” shall mean 125%.

“Mandatory Redemption Premium” shall mean 125%.

“Ongoing Share Reservation Requirement” shall have the meaning ascribed to it in the Line of Credit Agreement.

"Options" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

“Original Issue Date” shall mean the date of the first issuance of any Grid Note regardless of the number of transfers of any particular Grid Note.

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"Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

“Permitted Indebtedness” means (a) Indebtedness evidenced by the Grid Notes or issuances to the Holders as contemplated by the Transaction Documents; (b) the Indebtedness existing on the Original Issue Date as set forth on Schedule 3(cc) attached to the Line of Credit Agreement, provided that the principal amount thereof is not increased or the terms thereof are not otherwise amended or modified after the Closing Date; (c) Indebtedness to trade creditors incurred in the ordinary course of business and (d) indebtedness that (i) is expressly junior and subordinated to the Grid Notes pursuant to a written subordination agreement with the Buyers that is acceptable to each Buyer in its sole and absolute discretion, and (ii) matures at a date later than the Maturity Date, (iii) has no prepayments or amortization payments prior to the maturity of the Grid Notes, and (iv) has a rate of interest no greater than the interest rate of the Grid Notes. For purposes of clarification, it is expressly agreed and understood that the classification of Indebtedness as “Permitted Indebtedness” does not cause such Indebtedness to be exempted from the Subsequent Issuance Adjustments (as defined in Section 6 below), the prohibition against the issuance of Variable Equity Securities (as defined in Section 4(d)(ii) of the Line of Credit Agreement), the Buyer’s Rights of Participation (as defined in Section 4(d)(iii) of the Line of Credit Agreement) or from any other provisions of the Transaction Documents, except that Permitted Indebtedness does constitute an exception to the Indebtedness Negative Covenant specified in Section 9(d) hereof.

“Permitted Liens” shall have the meaning ascribed to it in the Line of Credit Agreement.

"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

“Principal Market” shall have the meaning ascribed to it in the Line of Credit Agreement by and between the Company and the Holder.

“Redemption” shall mean any redemption of the Grid Note hereunder, including but not limited to a Redemption Upon Major Transaction, a Mandatory Redemption, a Capital Raising Redemption and an Automatic Redemption.

“Redemption Amount” shall mean any amount that is payable to the Holder pursuant to a Redemption.

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“Redemption Date” shall mean the date of any Redemption of the Grid Note hereunder.

“Required Cash Payment” shall have the meaning set forth in Section 10(a) below.

“Required Holders” shall mean Holders holding greater than seventy five percent (75%) of the then outstanding principal amount of Grid Notes.

“Shares” shall mean the shares of Common Stock issuable upon Conversion of the Grid Notes.

“Subscription Amount” shall mean, as to each Buyer, the amount to be paid for the Grid Note purchased pursuant to the Line of Credit Agreement as specified in Section 10 of the Line of Credit Agreement, in United States Dollars and in immediately available funds.

“Subsidiaries” shall have the meaning ascribed to it in the Line of Credit Agreement.

"Trading Day" shall mean any day on which the Common Sock is traded for any period on the Principal Market, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

“Transaction Documents” shall have the meaning ascribed to it in the Securities Purchase Agreement.

“Variable Equity Securities” shall have the meaning ascribed to it in the Line of Credit Agreement.

The "Volume Weighted Average Price" or “VWAP” for any security as of any date means the volume weighted average sale price on the Principal Market, as reported by, or as calculated based upon data reported by, Bloomberg or an equivalent, reliable reporting service mutually acceptable to and hereafter designated by holders of a majority in interest of the Grid Notes and the Company or, if no volume weighted average sale price is reported for such security, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the closing trade prices of any market makers for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If the Volume Weighted Average Price is to be determined over a period of more than one Trading Day, then “ Volume Weighted Average Price” for the period shall mean the volume weighted average of the daily Volume Weighted Average Prices, determined as set forth above, for each Business Day during the period. If the volume weighted average price cannot be calculated for such security on such date in the manner provided above, the volume weighted average price shall be the fair market value as mutually determined by the Company and the holders of a majority in interest of the Grid Notes being converted for which the calculation of the volume weighted average price is required in order to determine the Conversion Price of such Grid Notes.

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Section 2. Interest . This Grid Note shall be issued with the Original Issue Discount, but shall not accrue any interest on the Principal Amount after issuance, except for Late Payment Fees or interest payable hereunder following a default.

Furthermore, upon the occurrence of an Event of Default (as defined in Section 10 hereof) which, if curable, has remained uncured for ten (10) Trading Days, the Company will pay interest to the Holder, payable on demand, on the outstanding principal balance of the Grid Note from the date of the Event of Default until such Event of Default is cured at the rate of the lesser of eighteen percent (18%) and the maximum applicable legal rate per annum.

Section 3. Conversion .

(a) Conversion Right.

(i) Conversion Timing and Amount . Subject to the limitations on Conversion contained herein, the record Holder of this Grid Note shall have the right (a “Conversion Right” ) from time to time, and at any time on or after the Original Issue Date hereof to convert any of all of the Grid Notes (plus any accrued and unpaid Liquidated Damages and other Required Cash Payments) into fully paid and non-assessable shares of Common Stock, or any shares of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as defined in Section 3(b) below, subject to adjustment as provided herein) determined as provided herein (a "Conversion" ). The Conversion Rights set forth in this Section 3 shall remain in full force and effect immediately from the Original Issue Date until the Grid Note is paid in full regardless of the occurrence of an Event of Default.

(ii) Limitation On Conversion . Notwithstanding the above, in no event shall the Holder be entitled to convert any portion of this Grid Note in excess of that portion of this Grid Note upon Conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and any applicable affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Grid Note or the unexercised or unconverted portion of any other security of the Company subject to a limitation on Conversion or exercise analogous to the limitations contained herein)(the “Beneficially Owned Shares” ) and (2) the number of shares of Common Stock issuable upon the Conversion of the portion of the Grid 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% (the “Maximum Percentage” ) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Grid Note held by the Holder (the “Beneficial Ownership Limitation” ). For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso in the immediately preceding sentence, and PROVIDED THAT the Beneficial Ownership Limitation shall be conclusively satisfied if the applicable Notice of Conversion includes a signed representation by the Holder, if requested by the Company, that the issuance of the shares in such Notice of Conversion will not violate the Beneficial Ownership Limitation, and the Company shall not be entitled to require additional documentation of such satisfaction.

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The parties agree that, in the event that the Company receives any tender offer or any offer to enter into a merger with another entity whereby the Company shall not be the surviving entity (an “Offer” ), or in the event that Default Shares are being issued to the Holder pursuant to Section 11 hereof, then the Maximum Percentage shall be automatically increased immediately after such Offer to read “9.99%” each place that “4.99%” occurs in the first paragraph of this Section 3(a)(ii) above. Notwithstanding the above, Holder shall retain the option to either exercise or not exercise its option(s) to acquire Common Stock pursuant to the terms hereof after an Offer. The Beneficial Ownership Limitation provisions of this Section 3(a)(ii) may be waived by such Holder, at the election of such Holder, upon not less than sixty-one (61) days’ prior notice to the Company, to change the Maximum Percentage to any other percentage not less than 4.99% and not in excess of 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Grid Note held by the Holder and the provisions of this Section 3(a)(ii) shall continue to apply. Any such increase or decrease to the Maximum Percentage will apply only to the Holder and not to any other holder of Grid Notes. Upon such a change by a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation may not be further waived by such Holder, provided that, if an Event of Default occurs, thereafter the Beneficial Ownership Limitation provisions of this Section 3(a)(ii) may be waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior notice to the Company, to change the Maximum Percentage to any other percentage not less than 4.99% (and not limited to 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Grid Note held by the Holder and the provisions of this Section 3(a)(ii) shall continue to apply. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(a)(ii) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

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(iii) Maximum Exercise of Rights . In the event the Holder notifies the Company that the exercise of the rights described in this Section 3 or the issuance of Interim Conversion Shares (as defined in Section 6(d) hereof), Payment Shares (as defined in the Line of Credit Agreement) or other shares of Common Stock issuable to the Holder under the terms of the Transaction Documents (collectively, “Issuable Shares” ) would result in the issuance of an amount of Common Stock that would exceed the maximum amount that may be issued to a Holder calculated in the manner described in Section 3(a)(ii) of this Agreement, then the issuance of such additional shares of Common Stock to such Holder will be deferred in whole or in part until such time as such Holder is able to beneficially own such Common Stock without exceeding the maximum amount calculated in the manner described in Section 3(a)(ii) of this Agreement. The determination of when such Common Stock may be issued without violating the Beneficial Ownership Limitations shall be made by each Holder as to only such Holder.

(iv) Calculation of Conversion Amount . The number of shares of Common Stock to be issued upon each Conversion of this Grid Note shall be determined by dividing the Conversion Amount (as defined herein) by the applicable Conversion Price. The term "Conversion Amount" means, with respect to any Conversion of the Grid Note, the sum of (1) the Principal Amount of the Grid Note to be converted in such Conversion, PLUS (2) at the Holder's option, any Liquidated Damages and other Required Cash Payment owed to the Holder.

(b) Conversion Price . The "Conversion Price" shall initially equal ten cents ( $0.10 ) (the "Initial Conversion Price" ) (subject to adjustments pursuant to the terms of this Grid Note and subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company's securities or the securities of any Subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).

(c) Reservation of Shares .

(i) Increase and Maintenance of Authorized and Reserved Amount . The Company represents that the aggregate number of its authorized shares of Common Stock is at least 100,000,000 shares and covenants that it will initially reserve (the “Initial Share Reservation” ) from its authorized and unissued Common Stock a number of shares of Common Stock equal to at least 150% of the initial principal amount of this Grid Note, divided by the Conversion Price in effect on the Original Issue Date of this Grid Note, free from preemptive rights, to provide for the issuance of Common Stock upon the Conversion of this Grid Note.

Company further covenants that, beginning on the Original Issue Date hereof, and continuing until all of the Grid Notes have been converted, redeemed or otherwise satisfied in accordance with their terms, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares (the “ Required Grid Note Reserve Amount ”), free from preemptive rights, equal to 150% of the number of shares as shall from time to time be necessary to provide for the issuance of Common Stock upon the full Conversion of all of the Grid Notes (without regard to any limitations on conversions). The Company shall authorize and reserve such additional amounts (together with the Required Grid Note Reserve Amount, collectively referred to as the “Required Reserve Amount” ) of shares from time to time as necessary to comply with the Company's obligations to meet the Ongoing Share Reservation Requirements (as defined in the Line of Credit Agreement) pursuant to Section 4(e) of the Line of Credit Agreement. The Company represents that upon issuance, such Shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Company 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 Grid Note shall be convertible at the then applicable Conversion Price, or if the Conversion Price shall be adjusted, the Company 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 portion of this Grid Note.

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(ii) Insufficient Authorized Shares . If at any time while any of the Grid Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Grid Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an " Authorized Share Failure "), then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Grid Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

The Company shall use its best efforts to authorize and reserve a sufficient number of shares of Common Stock as soon as practicable following the earlier of (i) such time that the Holder notifies the Company or that the Company otherwise becomes aware that there are or likely will be insufficient authorized, reserved and unissued shares to allow full Conversion of the outstanding amount of the Grid Note. The Company shall send notice to the Holder of the authorization of additional shares of Common Stock, the date of such authorization and the amount of the Holder's accrued Liquidated Damages.

(iii) Allocations of Reserve Amount . The initial number of shares of Common Stock authorized and reserved for conversions of the Grid Notes and each increase in the number of shares so reserved (collectively, the “Actual Reserved Amount” ) shall be allocated pro rata among the Holders (the " Reserved Share Allocation ") of the Grid Notes based on the aggregate number of Shares into which each Holder’s outstanding Grid Note would be convertible (collectively, the “Fully Diluted Holdings” ) as a percentage of the aggregate Fully Diluted Holdings of all of the Holders. In the event a holder shall sell or otherwise transfer such Holder’s Debenture, each transferee shall immediately be allocated a pro rata portion of such transferor’s Reserved Share Allocation. Any portion of the Reserved Share Allocation which remains allocated to any Person or entity which does not hold any Grid Notes shall be allocated to the remaining holders of Grid Notes, pro rata based on the Holder’s Fully Diluted Holdings at the time of such allocation.

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(d) Method of Conversion.

(i) Mechanics of Conversion . Subject to Section 3(a) and the other provisions of this Grid Note, this Grid Note may be converted into Common Stock by the Holder in whole or in part at any time and from time to time after the Original Issue Date, by (A) submitting to the Company a duly executed notice of Conversion in the form attached hereto as Exhibit A (" Notice of Conversion" ) by facsimile dispatched prior to Midnight, New York City time (the " Conversion Notice Deadline" ) on the date specified therein as the Conversion Date (as defined herein) (or by other means resulting in written notice to the Company on the date specified therein as the Conversion Date) to the office of the Company; which notice shall specify the principal amount of this Grid Note to be converted (plus the dollar amount of any Liquidated Damages, and other Required Cash Payments that the Holder elects to convert into Common Stock), the applicable Conversion Price, and the number of shares of Common Stock issuable upon such Conversion; and (B) subject to Section 3(d)(vii), surrendering the Grid Note at the principal office of the Company.

(ii) Conversion Date . The "Conversion Date" shall be the date specified in the Notice of Conversion, provided that the Notice of Conversion is submitted by facsimile (or by other means resulting in, or reasonably expected to result in, written notice) to the Company or its transfer agent ( “Transfer Agent” ) before Midnight, New York City time, on the date so specified, otherwise the Conversion Date shall be the date that the Notice of Conversion (or a facsimile thereof) is first received by the Company or its Transfer Agent. The Person or Persons entitled to receive the shares of Common Stock issuable upon Conversion shall be treated for all purposes as the record holder or holders of such securities as of the Conversion Date.

(iii) Delivery of Common Stock Upon Conversion . Upon submission of a Notice of Conversion, the Company shall, by no later than the third (3rd) Business Day after the Conversion Date (the "Conversion Shares Delivery Deadline" ), issue and deliver (or cause its Transfer Agent so to issue and deliver) in accordance with the terms hereof and the Line of Credit Agreement to or upon the order of the Holder that number of shares of Common Stock ( “Conversion Shares” ) for the principal amount of this Grid Note (plus the dollar amount of any Liquidated Damages, and other Required Cash Payments that the Holder elects to convert into Common Stock) converted as shall be determined in accordance herewith. Upon the Conversion of this Grid Note, the Company shall, at its own cost and expense, take all necessary action, including obtaining and delivering an opinion of counsel to assure that the Company's Transfer Agent shall issue stock certificates in the name of Holder (or its nominee) or such other Persons as designated by Holder and in such denominations to be specified at Conversion representing the number of shares of Common Stock issuable upon such Conversion. The Company warrants that no instructions other than these instructions have been or will be given to the Transfer Agent of the Common Stock and that the Shares will be free-trading, and freely transferable, and will not contain a legend restricting the resale or transferability of the Shares provided the Shares are eligible for immediate resale, without volume limitations, pursuant to Rule 144 or another exemption from registration.

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(iv) Delivery Failure; Partial Liquidated Damages; Revocation of Conversion . If the Company fails for any reason to deliver to the Holder a certificate or certificates representing the Conversion Shares pursuant to Section 3(d)(iii) by the fifth (5th) Trading Day after the Conversion Date, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such fifth (5th) Trading Day until such certificates are delivered (the “ Late Share Delivery Liquidated Damages ”). Nothing herein shall limit a Holder’s right to pursue actual damages or damages for an Event of Default pursuant to the terms hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

In addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Conversion Shares by the Conversion Shares Delivery Deadline, or fails to effect delivery of Default Shares by the Default Share Delivery Deadline (as defined in Section 11 hereof) (each, a “Delivery Failure” ), the Holder, at its option, will be entitled to revoke all or part of the relevant Notice of Conversion (a “Conversion Revocation” ) or rescind all or part of a Default Conversion Notice (as defined in Section 11) (a “Default Conversion Revocation” ) or rescind all or part of a Major Transaction Conversion Notice (as defined in Section 4) (a “Major Transaction Conversion Revocation” ) or rescind all or part of the notice of Redemption, including but not limited to a notice of Mandatory Redemption (a “Redemption Revocation” ), as applicable, by delivery of a notice to such effect to the Company whereupon the Holder shall regain the rights of a Holder of this Grid Note with respect to such unconverted portions of this Grid Note and the Company and the Holder shall each be restored to their respective positions immediately prior to the delivery of such notice, except that the liquidated damages described herein shall be payable through the date notice of revocation or rescission is given to the Company.

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(v) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion, or Upon Submission for Legend Removal . In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates (without legends, if the Unrestricted Conditions have been met) by the Conversion Shares Deliver Deadline pursuant to Section 3(d)(iii), or if at any time the Holder submits shares of Common Stock for legend removal when the Unrestricted Conditions have been met, and the Company fails to deliver or cause to be delivered to such Holder a certificate representing such shares that is free from all restrictive and other legends by the applicable Legend Removal Date, and if after such Conversion Shares Deliver Deadline or Legend Removal Date, as applicable, the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Conversion Shares Deliver Deadline or Legend Removal Date, as applicable (each, a “Buy-In” ), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock so purchased multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, if applicable, either reinstate (or if necessary, reissue) the portion of the Grid Note for which such conversion was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 3(d)(iii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of the Grid Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the Grid Note as required pursuant to the terms hereof.

(vi) Surrender of Grid Note Upon Conversion; Book-Entry . Notwithstanding anything to the contrary set forth herein, upon Conversion of this Grid Note in accordance with the terms hereof, the Holder shall not be required to physically surrender the Grid Note to the Company unless all of this Grid Note is converted, in which case such Holder shall deliver the Grid Note being converted to the Company promptly following the Conversion Date at issue. The Holder and the Company shall maintain records showing the amount of this Grid Note that is so converted and the dates of such Conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Grid Note upon each such Conversion. In the event of any dispute or discrepancy, such records of the Company shall be controlling and determinative in the absence of manifest error.

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(vii) No Fractional Shares . If any Conversion of this Grid Note would result in a fractional share of Common Stock or the right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon Conversion of this Grid Note shall be the next higher number of shares.

(xiii) Lost or Stolen Grid Notes . Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of a Grid Note, and (in the case of loss, theft or destruction) of indemnity reasonably satisfactory to the Company, and upon surrender and cancellation of the Grid Note, if mutilated, the Company shall execute and deliver a new Grid Note of like tenor and date.

(e) Legends.

(i) Restrictive Legends . The Holder understands that the Grid Notes and, until such time as Conversion Shares and any other Issued Common Shares (as defined in the Line of Credit Agreement) 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, the Conversion Shares and any other Issued Common Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. 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 REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT."

(ii) Removal of Legends . The Company will issue and deliver the Conversion Shares without restrictive legends (including the legend set forth above in this Section 3(e)), and will remove, or cause its Transfer Agent to remove at the Company’s expense, any restrictive legends on any Conversion Shares that contain restrictive legends (including the legend set forth above in this Section 3(e)), in each case when and as required under Section 6(a) of the Line of Credit Agreement. The Holder agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.

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(f) DTC Delivery. In lieu of delivering physical certificates representing the unlegended shares of Common Stock (the “Unlegended Shares” ), provided the Company’s Transfer Agent is participating in the Depository Trust Company ( "DTC" ) Fast Automated Securities Transfer ( "FAST" ) program, upon request of the Holder, so long as the certificates therefor are not required to bear a legend and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Company shall cause its Transfer Agent to electronically transmit the Unlegended Shares to the Holder by crediting the account of the Holder's prime broker with DTC through its Deposit Withdrawal Agent Commission ( "DWAC" ) system. The time periods for delivery and penalties described herein shall likewise apply to the electronic transmittals described herein.

(g) Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the portion of the Grid Note covered thereby (other than the portion, if any, pursuant to the Conversion of which shares cannot be issued because their issuance would exceed such Holder's allocated portion of the Required Reserve Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder of such converted portion of this Grid Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any Liquidated Damages or other remedies provided herein or in the Transaction Documents or otherwise available at law or in equity to such Holder because of a failure by the Company to comply with the terms of this Grid Note, including but not limited to the remedies provided in Section 3(d)(iv), Section 3(d)(vi), Section 11 and Section 14 hereof. Notwithstanding the foregoing, if a Holder initiates a Conversion Revocation, a Default Conversion Revocation or a Redemption Revocation pursuant to Section 3(d)(iv) hereof, the Holder shall regain the rights of a Holder of this Grid Note with respect to such unconverted portion of this Grid Note as specified in Section 3(d)(iv) and the Company shall, as soon as practicable, return such unconverted portion of this Grid Note to the Holder or, if the Grid Note has not been surrendered, adjust its records to reflect that such portion of the Grid Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, the right to receive Liquidated Damages to the extent required hereby for such Event of Failure and any subsequent Event of Failure and the right to receive the Default Amount pursuant to Section 11 to the extent required thereby) for the Company's failure to convert this Grid Note.

(h) Pro Rata Conversion. In the event that the Company receives a Conversion Notice from more than one holder of Grid Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Grid Notes submitted for conversion, the Company shall convert from each holder of Grid Notes electing to have Grid Notes converted on such date a pro rata amount of such holder's portion of its Grid Notes submitted for conversion based on the principal amount of Grid Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Grid Notes submitted for conversion on such date.

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Section 4. Rights Upon Major Transaction or Change of Entity Transaction .

(a) Definitions. For purposes hereof,

“Change of Entity Transaction” means (i) a consolidation, merger, exchange of shares, recapitalization, reorganization, business combination or other similar event, in one or a series of transactions (A) following which the holders of Common Stock immediately preceding such consolidation, merger, change of shares, recapitalization, reorganization, business combination or event either (1) no longer hold a majority of the shares of Common Stock of the Company or (2) no longer have the ability to elect a majority of the board of directors of the Company or (B) as a result of which shares of Common Stock shall be changed into (or the shares of Common Stock become entitled to receive) the same or a different number of shares of the same or another class or classes of stock or securities of the Company or another entity.

“Sufficient Trading Characteristics” shall mean that the average daily dollar trading volume of the common stock of such entity on its primary exchange or market is equal to or in excess of $100,000 for the 90th through the 31st day prior to the public announcement of the transaction in respect of which this definition shall be applied.

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