Common use of Optional Conversion Clause in Contracts

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its option, at any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).

Optional Conversion. (ai) The Holder holders of this Convertible Note is entitled, at its optionthe Series B CCPS shall severally have the right, at any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Datefrom time to time at their sole option after their issuance, to convert this Convertible Note (or any portion of require the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (orCompany, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price written notice (the “Conversion PriceNotice”) equal ), to $3.25 (or at convert their respective Series B CCPS into Equity Shares of the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note Company. In case the conversion occurs prior to the Company accompanied by written notice to expiry of the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000Maturity Date, then the remaining Principal Amount conversion shall be completed within a period of this Convertible Note21 (twenty one) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of days from the date of the Conversion Notice. The Series B CCPS will be convertible into Equity Shares of the Company at a conversion notice delivered pursuant ratio of 1:1 (the “Conversion Factor”), without being required to Section 7.2pay any amount for such conversion. However, or (iii) pay if the Holder an amount in cash holders of Series B CCPS are unable to receive amounts equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the remaining Accretion Portion by the Market Price SHA (as of the date of the conversion notice delivered pursuant to Section 7.2. (capplicable) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value Conversion Factor of 1:1 due to pricing restrictions under applicable Law, then each Series B CCPS shall be converted at such higher conversion ratio that will permit the holders of Series B CCPS to receive the amounts that they are entitled under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9, of the Convertible Notes SHA, as applicable; in which event the term ‘Conversion Factor’ shall be reckoned accordingly. For avoidance of doubts, the holders of Series B CCPS shall not be entitled to any proceeds over and above their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA, irrespective of the Conversion Factor. (or specified portions thereofii) so surrendered. Instead The Conversion Notice shall be dated and shall set forth: (a) The number of any fractional share Series B CCPS in respect of Common Stock which the holders of the Series B CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and (b) The number of Equity Shares of the Company that would otherwise be issuable upon conversion the Series B CCPS shall convert into. (iii) Upon receipt of any Convertible Note or Convertible Notes (or specified portions thereof)the Conversion Notice, the Company shall pay effect the following: (a) Convening of a cash adjustment meeting of the Board, in which meeting the Company shall approve the following: (A) The conversion of the relevant Series B CCPS; (B) The cancellation of the share certificates representing such number of the Series B CCPS; and (C) The issuance and allotment of such number of Equity Shares of the Company that the Series B CCPS shall convert into, in each case, as are mentioned in the Conversion Notice; (b) Issuance of duly stamped share certificates to the holders of the Series B CCPS to evidence such holders of the Series B CCPS as the owners of the shares issued upon conversion of their respective Series B CCPS as are mentioned in the Conversion Notice; (c) Updating its register of members to reflect the holders of the Series B CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series B CCPS as mentioned in the Conversion Notice; (d) Filing with the jurisdictional Registrar of Companies, Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of such fractional share in an amount equal allotment of the shares to the holders of the Series B CCPS pursuant to such fraction multiplied by holders of the closing sales price Series B CCPS exercising their rights in accordance with paragraph 5.1 and shall provide the holders of one the Series B CCPS with certified true copies of PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and (e) The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5, including without limitation, convening a meeting of the Board to approve the splitting of the share of Common Stock as reported in certificates representing the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)Series B CCPS.

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its optionSubject to the provisions hereof, at any time until following the close twenty-first (21st) day after the Company has sent to its stockholders an information statement under Regulation 14C of business the Securities Exchange Act of 1934 with respect to the action by written consent of holders of a majority of the outstanding Buyer Common Stock to authorize the issuance of Buyer Common Stock issuable upon conversion of this Note, and so long as (i) the Buyer Common Stock is authorized for listing or quotation on August 18a national securities exchange, 2006, Nasdaq or in case this Convertible Note the Over-the-Counter Bulletin Board or the “pink sheets,” and (ii) all or a portion hereof is called for redemption, then in respect of the principal amount of this Convertible Note remains outstanding, either the Holder or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to may at its election convert this Convertible Note (or any portion of into the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid and non-assessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion PriceShares”) of Buyer Common Stock equal to $3.25 the aggregate outstanding principal amount due under this Note (or plus accrued interest) divided by the Conversion Price (as defined below), by notice of conversion and surrender (or, in the case of a Company-elected conversion, request for surrender) of this Note at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender principal office of this Convertible Note to the Company, or such other office or agency of the Company accompanied as it may reasonably designate by written notice to the Holder, during normal business hours on any Business Day. The “Conversion Price” shall, subject to adjustment as provided in Section 6 below, mean (x) $3.50 (the “Initial Conversion Price”) if either the Company that such or the Holder elects to convert this Convertible Note, Note prior to the first anniversary of the date of issuance and (y) if either the Company or if less than the entire Principal Amount Holder elects to convert this Note after the first anniversary of this Convertible Note is to be convertedthe date of issuance, the portion thereof to lesser of (A) the Initial Conversion Price (as it may be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) adjusted in accordance with Section 7.2. 6) and (bB) At the option volume weighted average trading price per share of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Buyer Common Stock in accordance with Section 7.1(a), for the Company may twenty (i20) pay trading days ending on the Holder an amount in cash equal second trading date prior to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2conversion. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).

Optional Conversion. (a) The At any date after issuance, the Holder of this Convertible Note is shall be entitled, at its option, at any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (all or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as principal face amount of this Note, together with accrued interest thereon, then outstanding (“Conversion Amount”) into equity of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash Company at a valuation equal to a part price of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional $0.50 per each share of Common Stock that would otherwise be issuable upon conversion or shares of any Convertible Note or Convertible Notes (or specified portions thereof), Preferred Stock designated by the Company shall pay a cash adjustment in respect of such fractional share Parties in an amount equal equivalent to such fraction multiplied by the closing sales price a value of one $0.50 per share of Common Stock as reported on an as-converted basis (“Conversion Equity”). Such conversion shall be effectuated, by the Company recording the Conversion Equity on the books of the Company within 10 days of receipt by the Company of the Notice of Conversion. Once the Holder has received such Conversion Equity, the Holder shall surrender the Note (or portion thereof) to be converted to the Company, executed by the Holder of this Note evidencing such ▇▇▇▇▇▇’s intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. If the Company shall fail to record the Conversion Equity in the composite transactions Holder’s name within such 10 day period, the Conversion Amount shall be automatically increased by ten percent (10%), and shall be increased an additional five percent (5%) for each additional 10 day period (or portion thereof) thereafter to a maximum aggregate increase of twenty-five (25%). In the principal United States securities exchange on which event of a partial conversion of the Common Stock Note, the Company will immediately issue a replacement Note covering the unconverted portion. To the fullest extent permitted by law, the Holder shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under the Bankruptcy Code. In the event the Company is traded ora debtor under the Bankruptcy Code, if the Common Stock is not listed on a United States national Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362 in respect of the Holder’s conversion privilege. The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362 in respect of the conversion of this Note. The Company agrees, without cost or regional securities exchangeexpense to the Holder, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange to take or quotation system, on the trading day immediately preceding such day)consent to any and all action necessary to effectuate relief under 11 U.S.C. § 362.

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its option, at At any time after the Original Issue Date until the close of business on August 18this Debenture is no longer outstanding, 2006this Debenture shall be convertible, in whole or in case this Convertible Note or a portion hereof is called for redemptionpart, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock and Warrants at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in accordance with Section 7.1(a4I hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company may (i) pay unless the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the Accretion Portion by effect of lowering the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the outstanding principal amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such fraction multiplied by conversion(s). The Company may deliver an objection to any Notice of Conversion within one Business Day of delivery of such Notice of Conversion. In the closing sales price event of one share any dispute or discrepancy, the records of Common Stock as reported the Holder shall be controlling and determinative in the composite transactions for absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph and those provisions contained in Section 2(d), following conversion of a portion of this Debenture, the unpaid and unconverted principal United States securities exchange on which amount of this Debenture may be less than the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, amount stated on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)face hereof.

Optional Conversion. (a) The Upon delivery of the Conversion Notice attached hereto to the Company, the Holder of this Convertible Note is entitledhas the right, at its the Holder’s option, at any time until prior to payment in full of the close principal balance of business and accrued interest on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption DateNote, to convert this Convertible Note Note, in accordance with the provisions of this Section 4, in whole or in part (or any portion if in part, in principal amounts of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is no less than $100,000, then and in $100,000 increments), into shares of the remaining Principal Amount of this Convertible Company’s common stock, which are fully paid, nonassessable, fully registered and immediately transferable, subject only to compliance with all applicable securities laws and regulations. This Note)) at the Accreted Value of such Principal Amount, or of such portionany portion thereof, will be convertible into that number of fully paid and nonassessable shares of the Company’s common stock equal to (calculated i) the principal amount of the Note being converted divided by (ii) the Conversion Price. Provided, however, Holder will only be able to convert the Note, or any portion thereof, into shares of the Company’s common stock if Holder’s total beneficial ownership of the Company’s common stock immediately after such conversion would be less than 4.9% of the Company’s then total number of issued and outstanding shares of common stock (nothing herein shall prevent Holder from entering into an agreement to sell all or a portion of the shares into which this Note would convert as to each long as the closing on any such sale occurs simultaneously with the conversion to of the nearest 1/100 Note so that Holder’s percentage ownership of a shareCompany’s common stock never surpasses 4.9%). Notwithstanding the immediately preceding sentence, if ▇▇▇▇▇▇’s post-conversion beneficial ownership of the Company’s common stock would be five percent (5.0%) or greater, Holder may convert the Note, or any portion thereof, if (and only if) Holder has fully disclosed any and all information, has executed any documents, and has taken all other steps, required by any applicable gaming agency or regulatory authority for holders of Common Stock obtained by dividing such Accreted Value by a conversion price 5.0% or more of the Company’s common stock (the “Conversion PriceDisclosure Requirements”) equal ), and agrees to $3.25 (or at make all such information available in the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender future and to comply with any request of this Convertible Note to the Company accompanied by written notice to or any applicable gaming agency or regulatory authority or otherwise fully complies with (on a timely basis) the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part requirements of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2applicable gaming agency or regulatory authority. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).

Optional Conversion. (a) The Holder For purposes of this Convertible Note is entitledSection 4, at its optionthe "Conversion Termination Date" shall mean the earlier of the following dates: (i) April 1, 2003; or (ii) sixty (60) days following the mailing postmark date of written notice by the Company to the Holders that it intends to close under an Equity Financing. This Debenture may be converted at any time until after, but not before, April 1, 1999 (or at any time following written notice by the Company to the Holders that it intends to close of business on August 18, 2006, under an Equity Offering) and prior to the Conversion Termination Date in whole or in case this Convertible Note or a portion hereof is called for redemptionpart, then in respect of this Convertible Note or such portion hereof, until and including but (unless at the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion option of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof Holder (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)"Conversion") at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid whole shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of 's fully-paid and non-assessable New Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained as shall be determined by dividing the amount then outstanding principal balance of this Debenture plus all interest then accrued but unpaid hereunder, by $.10 (the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) "Conversion Price"). No fractional shares of the Company's New Common Stock shall be issued upon conversion nor shall cash in lieu of Convertible Notesfractional shares be paid by the Company. If more A Debenture may be converted in whole or in part by written notice from the Holder to the Company bearing a mailing postmark date not later than one Convertible Note the Conversion Termination Date sent to the Principal Office of the Company specifying the portion, if less than all, of the Debenture to be converted, accompanied by surrender of the Debenture. In the event of a partial Conversion of the Debenture by the Holder, another Debenture of like terms equal in principal amount to the unpaid balance of the Debenture partially converted shall be surrendered issued to the Holder. The shares of New Common Stock issuable upon the Conversion may not be publicly offered or sold unless the person offering or selling such security complies with the registration provisions of the Securities Act of 1933, as amended or any successor legislation thereto, any state securities law applicable to the issuance and sale of such shares and all applicable rules and regulations adopted by any of the foregoing, or unless, in the opinion of counsel who is satisfactory to Company and its counsel, such offer and sale is exempt from such registration provisions. Notwithstanding anything herein to the contrary, unless the shares issuable on Conversion are covered by a current registration statement under the Securities Act of 1933 as amended, or other applicable law at the time of any proposed Conversion, it shall be a condition of the delivery of certificates for conversion at one time by shares of the same HolderCompany's New Common Stock issuable upon the Conversion, that the Holder deliver to Company, together with this Debenture for cancellation, the number Holder's written representation in form satisfactory to the Company that the Holder is acquiring the shares without a view to engage in a distribution thereof in violation of fully paid applicable laws, rules and regulations relating to such registration. Any unregistered shares of Common Stock which issued upon Conversion shall be issuable upon conversion thereof endorsed with a legend in substantially the following form, and the Holder shall be computed on comply with the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions terms thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).:

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its option, to convert, and sell on the same day or at any subsequent time, at any time when the Company’s common stock par value US$0.001 per share (“Common Stock”) is trading at or above the Conversion Price and from time to time, until the close of business on August 18, 2006, or payment in case this Convertible Note or a portion hereof is called for redemption, then in respect full of this Convertible Note or such portion hereofDebenture, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (all or any portion part of the Principal Amount hereof which is $100,000 or an integral multiple principal amount of $1,000 in excess thereof the Debenture, plus accrued interest, into shares (orthe “Conversion Shares”) of the Common Stock, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as price per share equal to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price $0.0875 (the “Conversion Price”). No fraction of shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To convert this Debenture, the Holder hereof shall deliver written notice thereof, substantially in the form of Exhibit “A” to this Debenture, with appropriate insertions (the “Conversion Notice”), to the Company at its address as set forth herein. The date upon which the conversion shall be effective (the “Conversion Date”) equal shall be deemed to $3.25 (be the date set forth in the Conversion Notice. Upon the Holder converting any of this Debenture into Common Stock or at the current adjusted Conversion Price if an adjustment has been made Company redeeming any of this Debenture as provided herein) , the principal amount owed under this Debenture shall be reduced by surrender of this Convertible Note the principal amount so converted or redeemed. Additionally, whenever the monthly installment due pursuant to the Company accompanied by written notice to Mandatory Redemption provisions of Section 1.05 hereof is not paid within five (5) days of the Company that due date of such payment (unless such obligation has been suspended under the terms of Section 1.05), the Holder elects shall have the right to convert this Convertible Note, or if less than Debenture at an amount equal to eighty-five percent (85%) of the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option lowest daily closing bid price of the Company’s Common Stock, in lieu of converting as quoted by Bloomberg, LP, for the Accretion Portion of ten (10) trading days immediately preceding the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay Conversion Date. In no event shall the Holder an amount in cash equal be entitled to such Accretion Portion, or (ii) issue to the Holder the convert this Debenture for a number of shares of Common Stock equal to the quotient obtained by dividing the amount in excess of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the that number of shares of Common Stock equal which, upon giving effect to such conversion, would cause the quotient obtained by dividing the amount aggregate number of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time beneficially owned by the same Holder, Holder and its affiliates to exceed 4.99% of the number of fully paid outstanding shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if following such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)conversion.

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its option, at At any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to Holder may convert this Convertible Note (or any portion all of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if principal and accrued interest then outstanding under the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, Note into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the Stock. The number of shares of Common Stock issued upon conversion shall be equal to the quotient obtained Obligations divided by dividing (i) the amount of Original Conversion Price if the Accretion Portion by Holder participated in the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, initial Closing or (iiiii) pay the Subsequent Closing Price if the Holder an amount participated in cash equal to a part of such Accretion Portion and issue subsequent Closing. (b) Fifteen (15) days prior written notice (the "Company Notice") shall be delivered to the Holder of this Note at the number address last shown on the records of shares the Company for the Holder or, if no such address appears, at the place where the principal executive office of the Company is located, notifying the Holder of the terms and conditions of a Change of Control, the price per share to be paid to holders of Common Stock equal in such Change of Control and calling upon such Holder, if conversion is elected by the Holder, to surrender to the quotient obtained by dividing Company, in the amount of manner and at the remaining Accretion Portion place designated, the Note. If the Holder elects to convert this Note (or elects to have the Note repaid in full by the Market Price as Company in the case of a Change of Control), the date of Holder shall provide written notice to the conversion notice delivered pursuant to Section 7.2Company no later than five (5) days after the Company Notice is deemed given. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notesthis Note. If more than one Convertible Note shall be surrendered for Upon the conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis all of the aggregate Accreted Value principal and accrued interest outstanding under this Note, in lieu of the Convertible Notes (or specified portions thereof) so surrendered. Instead of Company issuing any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof)shares to the Holder, the Company shall pay a cash adjustment in respect to the Holder the amount of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the outstanding principal United States securities exchange on which the Common Stock is traded or, if the Common Stock and accrued interest that is not listed on a United States national or regional securities exchangeso converted. Upon full conversion of this Note, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)Company shall be forever released from all its obligations and liabilities under this Note.

Optional Conversion. (a1) On or after the First Optional Conversion Date, upon election by a holder, and in accordance with this Section 4.03, any Notes issued hereunder will be convertible into Common Shares at the Non-IPO Conversion Price (an "Optional Conversion"). (2) Such right of conversion shall extend only to the maximum number of whole Common Shares into which the aggregate principal amount of the Note or Notes surrendered for conversion at any one time by the holder thereof may be converted. Fractional interests in Common Shares shall not be issued. (3) The Holder holder of a Note desiring to convert such Note in whole or in part into Common Shares shall surrender such Note to the Trustee at its principal offices in the City of Calgary, Alberta together with the conversion notice attached hereto as Schedule 2 or any other written notice in a form satisfactory to the Trustee, in either case duly executed by the Noteholder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Note in accordance with the provisions of this Convertible Article 4 (each such time of exercise, an "Optional Conversion Time"). Thereupon such Noteholder or, subject to payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Company as at the Date of Conversion (or such later date as is specified in Section 4.03(9)) as the holder of the number of Common Shares into which such Note is entitledconvertible in accordance with the provisions of this Article 4 and, at within ten (10) Business Days after the Optional Conversion Time, the Company shall deliver to such Noteholder or, subject as aforesaid, his nominee(s) or assignee(s), a certificate or certificates for such Common Shares or deposit such Common Shares through the Depository's non-certificated system or through the Direct Registration System and make or cause to be made any payment of interest to which such holder is entitled in accordance with Section 4.04(12) hereof. (4) A Beneficial Owner may exercise the right evidenced by a Note to receive Common Shares by causing a Participant to deliver to the Depository on behalf of the Beneficial Owner, a notice of such Beneficial Owner's intention to convert the Notes in a manner acceptable to the Depository. Forthwith upon receipt by the Depository of such notice, the Depository shall deliver to the Trustee a Transaction Instruction confirming its optionintention to convert Notes in a manner acceptable to the Trustee, at any time until including by electronic means. (5) A notice in form acceptable to the close Participant from such Beneficial Owner should be provided to the Participant sufficiently in advance so as to permit the Participant to deliver notice to the Depository and for the Depository in turn to deliver notice to the Trustee prior to the Maturity Date. The Depository will initiate the exercise by way of business on August 18the Transaction Instruction and the Trustee will execute the exercise by issuing to the Depository through the non-certificated inventory system the Common Shares to which the exercising Noteholder is entitled pursuant to the conversion. (6) By causing a Participant to deliver notice to the Depository, 2006a Noteholder shall be deemed to have irrevocably surrendered his or her Notes so exercised and appointed such Participant to act as his or her exclusive settlement agent with respect to the conversion and the receipt of Common Shares in connection with the obligations arising from such conversion. (7) Any notice which the Depository determines to be incomplete, not in proper form, or not duly executed shall for all purposes be void and of no effect and the exercise to which it relates shall be considered for all purposes not to have been exercised thereby. A failure by a Participant to exercise or to give effect to the settlement thereof in accordance with the Noteholder's instructions will not give rise to any obligations or liability on the part of the Company or Trustee to the Participant or the Noteholder. (8) Any Transaction Instruction referred to in this Section 4.03 shall be signed by the registered Noteholder, or its executors or administrators or other legal representatives or an attorney of the registered Noteholder, duly appointed by an instrument in writing satisfactory to the Trustee but such exercise form need not be executed by the Depository. (9) For the purposes of this Article 4, a Note shall be deemed to be surrendered for conversion on the date on which it is so surrendered when the register of the Trustee is open and in accordance with the provisions of this Article 4 or, in the case this Convertible of Note or a portion hereof is called for redemption, then held through the Depository which the Trustee received notice of and all necessary documentation in respect of this Convertible the exercise of the conversion rights and, in the case of a Note so surrendered by post or such portion hereofother means of transmission, until and including but (unless on the Company defaults date on which it is received by the Trustee at its offices specified in making Section 4.03(3); provided that if a Note is surrendered for conversion on a day on which the payment due upon redemption) not afterregister of Common Shares is closed, the close person or persons entitled to receive Common Shares shall become the holder or holders of business record of such Common Shares as at the date on which such registers are next reopened (in each case, called the Redemption Date"Date of Conversion"). (10) Any part, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 being U.S.$1,000 or an integral multiple thereof, of $1,000 a Note in a denomination in excess thereof (or, if the Principal Amount on the of U.S.$1,000 may be converted as provided in this Article 4 and all references in this Indenture to conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value Notes shall be deemed to include conversion of such Principal Amountparts. (11) The holder of any Note of which only a part is converted shall, or upon the exercise of his right of conversion, surrender such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) Trustee in accordance with Section 7.24.03(3), and the Trustee shall cancel the same and shall without charge forthwith authenticate and deliver to the holder a new Note or Notes in an aggregate principal amount equal to the unconverted part of the principal amount of the Note so surrendered or, with respect to a Note held through the Depository, registration and surrender of interests in the Notes will be made only through the Depository's non-certificated system. (b12) At Notwithstanding any other provision of this Indenture, if an Optional Conversion Time occurs after a Record Date for the option payment of interest and before the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to corresponding Interest Payment Date then no interest shall be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue paid to the converting Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)Interest Payment Date.

Optional Conversion. To convert any Conversion Amount into shares of Company Common Stock on any date (a) The Holder of this Convertible Note is entitled, at its option, at any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after“Conversion Date”), the close of business on the Redemption Date, to convert this Convertible Note Holder shall (A) transmit by facsimile (or any portion otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated form attached hereto as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price Exhibit I (the “Conversion PriceNotice”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied and (B) if required by written notice Section 2(e)(iii), surrender this Note to a common carrier for delivery to the Company that as soon as practicable on or following such Holder elects date (or an indemnification undertaking with respect to convert this Convertible NoteNote in the case of its loss, theft or if less than destruction). On or before the entire Principal Amount second (2nd) Business Day following the date of this Convertible Note is to be convertedreceipt of a Conversion Notice, the portion thereof Company shall transmit by facsimile a confirmation of receipt of such Conversion Notice to be converted, which shall be $100,000 the Holder and the Transfer Agent (as defined below). On or integral multiple before the third (3rd) Business Day following the date of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount receipt of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(aConversion Notice (the “Share Delivery Date”), the Company may (i) pay shall issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder an amount in cash equal to such Accretion Portionor its designee, or (ii) issue to the Holder for the number of shares of Company Common Stock equal to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required by Section 2(e)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note (the “Note Delivery Date”) and at its own expense, 1 The Initial Fixed Conversion Price may be adjusted at any time on or after October 27, 2006 pursuant to section 7(b). issue and deliver to the quotient obtained by dividing holder a new Note (in accordance with Section 17(d)) representing the amount of outstanding Principal not converted. The Person or Persons entitled to receive the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Company Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued issuable upon a conversion of Convertible Notes. If more than one Convertible this Note shall be surrendered treated for conversion at one time by all purposes as the same Holder, the number record holder or holders of fully paid such shares of Company Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of Conversion Date to the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied extent permitted by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)applicable law.

Optional Conversion. (a) The Holder of this Convertible Note is entitledmay, at its option, option at any time until and from time to time (and in lieu of the close Holder accepting repayment of business principal and accrued interest so converted), convert any or all of the outstanding principal of and accrued and unpaid interest under this Note into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a conversion price per share equal to $0.35 (subject to adjustment in the event of a stock split, combination, reclassification or like event with respect to the Common Stock), but only if and to the extent the Company is not at such time prevented from issuing such shares by the terms of any agreement to which the Company is a party on August September 18, 20062007, or in case this Convertible Note or a portion hereof is called for redemption, then in respect and at the time of any attempted conversion of this Convertible Note or (a “Conflicting Agreement”). The Holder may exercise such portion hereofconversion right by giving written notice to the Company, until which notice shall set forth the amount of outstanding principal and including but (unless interest to be converted and shall be accompanied by this Note. No fractional shares will be issued upon conversion of this Note. In lieu of any fractional share to which Lender would otherwise be entitled, the Company defaults in making will pay the payment due upon redemption) not aftercash value of that fractional share to the Holder, as provided herein. Upon the conversion of any principal and interest pursuant to this Note, the close Company will continue to be bound by and subject to all of business on the Redemption Date, its obligations and liabilities pursuant to convert this Convertible Note (or with respect to any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount principal and interest of this Convertible Note)) at Note remaining outstanding after such conversion. Within 10 business days after receipt of an exercise notice and this Note from the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a)Holder, the Company may will (iA) pay in the event the Company is not then prevented from issuing new shares to the Holder an amount in cash equal to such Accretion Portionby any Conflicting Agreement, or (ii) issue to the Holder (i) a replacement note in an amount equal to the remaining outstanding principal of the Note, if any, which replacement note shall be otherwise identical in form and substance to this Note, and (ii) a certificate or certificates for the number of shares of Common Stock equal to which the Holder is entitled (bearing such legends as may be required by applicable state and federal securities laws in the opinion of legal counsel of the Company), together with a check payable to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of Holder for any cash amounts payable for any fractional share resulting from the conversion notice delivered pursuant to Section 7.2of this Note, or (iiiB) pay in the Holder an amount in cash equal to a part of such Accretion Portion and issue event the Company is prevented from issuing new shares to the Holder by a Conflicting Agreement, so notify the number of shares of Common Stock equal to Holder in a writing accompanied by this Note, whereupon the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion exercise notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)deemed null and void.”

Optional Conversion. (a) The Holder of this Convertible Note is entitledInvestor may, at its option, at discretion any time until prior to the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Maturity Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, in whole or of such portionin part, plus any accrued, unpaid interest due under this Note (together, the “Converted Amount”) into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by of the Company at a conversion price (of $0.14, such that upon conversion of the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be convertedConverted Amount, the portion thereof to be converted, which Investor shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder receive the number of shares of Common Stock equal to the quotient obtained by dividing of (i) the amount Converted Amount, divided by, (ii) $0.14. Before the Investor shall be entitled to convert this Note, in whole or in part, into shares of Common Stock hereunder, the Investor shall surrender this Note, duly endorsed, at the office of the Accretion Portion Company (or a notice to the effect that the original Note has been lost, stolen or destroyed and an agreement acceptable to the Company whereby the holder agrees to indemnify the Company from any loss incurred by it in connection with this Note), and shall give written notice to the Market Price as Company at its principal corporate office, of the date of election to convert the conversion notice delivered same pursuant to Section 7.2this section, or (iii) pay and shall state the Holder an amount Converted Amount and the name in cash equal which the certificate for shares of Common Stock are to a part of be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such Accretion Portion and issue office to the Holder Investor (i) a certificate for the number of shares of Common Stock equal to which the Investor shall be entitled upon conversion of the Converted Amount (bearing such legends as are required by the Note Purchase Agreement and applicable state and federal securities laws in the opinion of counsel to the quotient obtained by dividing Company), (ii) a new note, bearing the same terms as this Note, for the amount of the remaining Accretion Portion by remainder of the Market Price as Principal Amount not elected to be converted (if any) (the “Remainder Amount”), and (iii) any other securities and property to which the Investor is entitled upon such conversion under the terms of this Note. The conversion shall be deemed to have been made immediately prior to the close of business on the date of the conversion notice delivered pursuant surrender of this Note, and the Person entitled to Section 7.2. (c) No fractional receive the shares of Common Stock upon such conversion shall be issued upon conversion treated for all purposes as the record holder of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid such shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect as of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)date.

Optional Conversion. At any time while this Bond is outstanding, at the option of the Investor in such Investor’s sole discretion, this Bond may be converted, in whole or in part, into Common Stock (aor preferred stock of the Company with the terms and conditions set forth in Annex A; provided; however, that if the Investor desires to convert to preferred stock, it shall request that the Company obtain Stockholder Approval and the Company will use commercially reasonable efforts to do so) The Holder (such stock issued upon conversion of this Convertible Note is entitledBond, at its option, at any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion PriceStock”) equal to $3.25 (or at ). To exercise its conversion right, the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by Investor shall deliver a written notice to the Company that such Holder elects to convert this Convertible NoteCompany, or if less than specifying the entire Principal Amount principal amount of this Convertible Note is Bond as well as the accrued and unpaid Default Interest, if any, to be converted, together with the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note original Bond to be converted into shares of Common Stock (or a notice to the effect that the original Bond has been lost, stolen or destroyed and an agreement acceptable to the Company whereby the Investor agrees to indemnify the Company from any loss incurred by it in accordance connection with Section 7.1(athis Bond). If this Bond is surrendered for partial conversion, the Company may (i) pay shall execute and deliver to the Holder Investor a new Bond in an aggregate principal amount in cash equal to such Accretion Portionthe unconverted portion of the surrendered Bond, or (ii) without payment of any service charge borne by the Investor. The Company shall, as soon as practicable thereafter, issue and deliver to the Holder Investor a certificate or certificates (or a notice of issuance of uncertificated shares, if applicable) for the number of shares to which the Investor shall be entitled upon such conversion. Any conversion of Common Stock equal this Bond pursuant to this Section 5(c) shall be deemed to have been made on the date when the Investor’s notice referred to the quotient obtained previous provisions and the original Bond to be converted (or a notice to the effect that the original Bond has been lost, stolen or destroyed and an agreement acceptable to the Company whereby the Investor agrees to indemnify the Company from any loss incurred by dividing it in connection with this Bond) are delivered to the amount of Company and on and after such date the Accretion Portion by Persons entitled to receive the Market Price shares issuable upon such conversion shall be treated for all purposes as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part record holder of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2shares. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its option, at At any time until after June 9, 2012 and prior to the close Maturity Date (as defined in the respective Secured Promissory Notes), up to Fifty Percent (50%) of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not afteroutstanding principal amount, the close of business on Exit Fee (as defined in the Redemption DatePromissory Notes), to convert this Convertible Note and all accrued interest under the Promissory Notes (or any portion of collectively, the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)“Conversion Amount”) shall be convertible at the Accreted Value option of such Principal AmountInvestor. Upon a conversion, or of such portion, into the Investor shall receive that number of fully paid shares (calculated as to each conversion to of the nearest 1/100 of a share) of Company’s Common Stock obtained as is determined by dividing such Accreted Value the Conversion Amount by a conversion price 0.75 (the “Conversion Price”) equal to $3.25 ). The Conversion Price reflects the reverse stock split set forth in the Merger Agreement, but, in the event that any subsequent stock split or similar event takes place (or in the event that the Promissory Notes are converted prior to the consummation of the reverse stock split contemplated by the Merger Agreement), appropriate adjustment will be made to the Conversion Price. No fractional shares shall be issued upon conversion; in lieu of the Company issuing any fractional shares to Investor upon the conversion, the Investor shall receive one whole share of Common Stock for any fractional interest. Before Investor shall be entitled to convert this Note into shares of Common Stock under this section, it shall surrender the applicable Promissory Note(s), duly endorsed, at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender office of this Convertible Note to the Company accompanied by and shall give written notice to the Company that such Holder elects at its principal corporate office, of the election to convert the same pursuant to this Convertible NoteSection, or if less than and shall state therein the entire Principal Conversion Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into and the name or names in which the certificate or certificates for shares of Common Stock in accordance with Section 7.1(aare to be issued (the “Notice of Conversion”), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue . Subject to the Holder additional restrictions above, Investor may not tender a Notice of Conversion more than one time every thirty (30) days. The Company or the Company’s transfer agent shall, within five (5) business days after receive of a Notice of Conversion, issue and deliver at such office to Investor a certificate or certificates for the number of shares of Common Stock equal to which Investor shall be entitled upon conversion (bearing such legends as are required by applicable state and federal securities laws in the opinion of counsel to the quotient obtained by dividing Company), together with a replacement Note (if any principal amount, Exit Fee or accrued interest is not converted). The conversion shall be deemed to have been made immediately prior to the amount close of the Accretion Portion by the Market Price as of business on the date of receipt of the conversion notice delivered pursuant Notice of Conversion, and the Person or Persons entitled to Section 7.2, or (iii) pay receive the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to upon such conversion shall be treated for all purposes as the quotient obtained by dividing the amount record Investor or Investors of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional such shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect as of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)date.

Optional Conversion. (a) The Holder of principal amound outstanding under this Convertible Note is entitled, at its optionnote shall be convertible, at any time until after the close date of business issuance and up to 5:00 p.m. California time on August 18the Maturity Date, 2006, or in case this Convertible Note or a portion hereof is called for redemption, into fully paid and non-assessable shares of Common Shares of the Company at the Conversion Price (as hereafter defined) then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained effect. The Holder shall effect conversions by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note delivering to the Company accompanied by written notice a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice of Conversion”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (a “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company that such Holder elects to convert this Convertible Note, or if less than unless the entire Principal Amount principal amount of this Convertible Note is to be Debenture has been so converted, . Conversions hereunder shall have the portion thereof to be converted, which shall be $100,000 or integral multiple effect of $1,000 in excess thereof (or, if lowering the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount outstanding principal amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such fraction multiplied by conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the closing sales price event of one share any dispute or discrepancy, the records of Common Stock as reported the Holder shall be controlling and determinative in the composite transactions for absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal United States securities exchange on which amount of this Debenture may be less than the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, amount stated on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such dayface hereof. b).

Optional Conversion. (a) The Holder of this Convertible Note is entitled, at its option, at any time until the close of business on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “''Conversion Price”") equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).

Optional Conversion. (a) The Holder outstanding principal and all accrued and unpaid interest of this Convertible Note is entitled, at its option, Debenture shall be convertible at any time until after the close Maturity Date(subject to the provisions of business on August 18the paragraph below), 2006at the option of the Holder, into shares of the Company's Common Stock, par value $.001 per share (the "Common Stock") at the Conversion Ratio, at the option of the Holder, in whole or in case part at any time after the Original Issue Date. Any conversion under this Convertible Note or Section 3(a) shall be of a portion hereof is called for redemption, then in respect minimum principal amount of this Convertible Note US$100,000. The Holder shall effect conversions by surrendering the Debenture (or such portion hereof) to be converted to the Company, until together with the form of conversion notice attached hereto (the "Conversion Notice") in the manner set forth in Section 3(h). Each Conversion Notice shall specify the principal amount of this Debenture to be converted and including but the date on which such conversion is to be effected (unless the "Conversion Date"). Subject to Section 3(b), each Conversion Notice, once given, shall be irrevocable. If the Holder is converting less than all of the principal amount represented by the Debenture tendered by the Holder with the Conversion Notice, the Company defaults in making shall promptly deliver to the payment due upon redemption) Holder a new Debenture for such principal amount as has not afterbeen converted. Notwithstanding the foregoing, the close of business on conversion shall not occur at any time within a period which is less than 65 days from the Redemption Date, to convert this Convertible Note (or any portion date of the Principal Amount hereof which is $100,000 or an integral multiple Conversion Notice, by way of $1,000 in excess thereof (orexample only, if the Principal Amount Holder gives a Conversion Notice on the conversion date is less than $100,000April 8, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note to the Company accompanied by written notice to the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted2000, the portion thereof to Debenture will not be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2convertible until 65 days thereafter. (b) At Not later than ten (10) Days after the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a)Conversion Date, the Company may will deliver to the Holder (i) pay a certificate or certificates containing the Holder an amount in cash equal to such Accretion Portionrestrictive legends and trading restrictions required by law, or (ii) issue to the Holder if any, representing the number of shares of Common Stock being acquired upon the conversion of the Debenture and (ii) a Debenture in principal amount equal to the quotient obtained by dividing the principal amount of the Accretion Portion Debenture not converted; provided, however that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of the Debenture, until the Debenture is either delivered for conversion to the Company or any transfer Holder for the Debenture or Common Stock, or the Holder notifies the Company that such Debenture has been lost, stolen or destroyed. If such certificate or certificates are not delivered by the Market Price as date required under this Section 3(b), the Holder shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return the Debenture tendered for conversion. (i) The conversion price ("Conversion Price") for this Debenture in effect on any Conversion Date shall be lower of $5.00 per share or an amount which is equal to 80% of the date average of the conversion notice delivered closing prices of the Company's Common Stock on the Nasdaq market on the last five trading days prior to April 7, 2000, subject to adjustment as otherwise contemplated by this Section 3(c). (ii) In case of any consolidation or merger of the Company with or into another person, the sale or transfer of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then the Holder shall have the right thereafter to convert the Debenture only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such consolidation, merger, sale, transfer or share exchange, and the Holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which the Debenture could have been converted immediately prior to such consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the Holder the right to receive the securities or property set forth in this Section 7.23(c) upon any conversion following such consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges. (iii) The Conversion Price shall be subject to adjustment as follows: (A) In case the Company shall (i) pay a dividend in shares of its capital stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iiiiv) pay issue by reclassification of its shares of Common Stock any shares of the Company, the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder an amount in cash equal of this Debenture thereafter surrendered for conversion shall be entitled to a part of such Accretion Portion and issue to the Holder receive the number of shares of Common Stock equal which he would have owned or have been entitled to receive after the happening of any of the events described above, had this Debenture been converted immediately prior to the quotient obtained by dividing the amount happening of such event. Such adjustment shall be made whenever any of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered events listed above shall occur. An adjustment made pursuant to Section 7.2this subdivision (A) shall become effective retroactively immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. (cB) No fractional shares of Common Stock If, at any time while this Debenture is outstanding, the Company takes any voluntary action or any event occurs as to which the foregoing subdivision (A) is not strictly applicable, but the failure to make an adjustment in the Conversion Price hereunder would not fairly protect the rights, without dilution, represented by this Debenture, then the Conversion Price in effect immediately prior thereto shall be issued upon conversion adjusted so that the Holder of Convertible Notes. If more than one Convertible Note this Debenture shall be surrendered for conversion at one time by the same Holder, entitled to receive the number of fully paid shares of Common Stock which he would have owned or been entitled to receive after the happening of any such action or event, had this Debenture been converted immediately prior to the happening of any such action or event. (d) The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Debenture as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder of this Debenture, such number of shares of Common Stock as shall be issuable upon the conversion thereof shall be computed on the basis of the aggregate Accreted Value principal amount of the Convertible Notes (or specified portions thereof) so surrenderedthis Debenture. Instead of any fractional share The Company covenants that all shares of Common Stock that would otherwise shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and nonassessable. (e) Upon a conversion of any Convertible Note or Convertible Notes (or specified portions thereof), hereunder the Company shall pay not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted, make a cash adjustment payment in respect of any final fraction of a share based on the Conversion Price at such fractional share in an amount equal to such fraction multiplied by the closing sales price time. (f) The issuance of one share certificates for shares of Common Stock as reported on conversion of the Debenture shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the composite transactions for issuance and delivery of any such certificate upon conversion in a name other than that of the principal United States securities exchange on which Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. (g) This Debenture, when fully converted into Common Stock is traded oras provided for herein and where all accrued but unpaid interest has been paid, if shall be canceled. (h) Each Conversion Notice shall be given by facsimile and by an internationally recognized overnight courier, carriage prepaid, addressed to the Common Stock is not listed on a United States national Chief Financial Officer of the Company at 5805 Sepulveda Blvd., 4th Floor, Van Nuys, California 91444, Facsimi▇▇: (▇▇▇) ▇▇▇-▇▇▇▇. Any such notice shall be deemed given and effective ▇▇▇▇ ▇▇▇ ▇▇▇▇▇est to occur of (i) receipt of such facsimile at the facsimile telephone number specified in this Section 3(h), (ii) two days after or regional securities exchange, as reported (iii) upon actual receipt by the National Association party to whom such notice is required to be given, subject in each case to actual receipt of Securities Dealers Automated Quotation System, on the day original of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)notice.

Optional Conversion. (a) The Upon delivery of the Conversion Notice attached hereto to the Company, the Holder of this Convertible Note is entitledhas the right, at its the Holder’s option, at any time until prior to payment in full of the close principal balance of business and accrued interest on August 18, 2006, or in case this Convertible Note or a portion hereof is called for redemption, then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption DateNote, to convert this Convertible Note Note, in accordance with the provisions of this Section 4, in whole or in part (or any portion if in part, in principal amounts of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is no less than $100,000, then and in $100,000 increments), into shares of the remaining Principal Amount of this Convertible Company’s common stock, which are fully paid, nonassessable, fully registered and immediately transferable, subject only to compliance with all applicable securities laws and regulations. This Note)) at the Accreted Value of such Principal Amount, or of such portionany portion thereof, will be convertible into that number of fully paid and nonassessable shares of the Company’s common stock equal to (calculated i) the principal amount of the Note being converted, together with all accrued but unpaid interest thereon, divided by (ii) the Conversion Price. Provided, however, Holder will only be able to convert the Note, or any portion thereof, into shares of the Company’s common stock if Holder’s total beneficial ownership of the Company’s common stock immediately after such conversion would be less than 4.9% of the Company’s then total number of issued and outstanding shares of common stock (nothing herein shall prevent Holder from entering into an agreement to sell all or a portion of the shares into which this Note would convert as to each long as the closing on any such sale occurs simultaneously with the conversion to of the nearest 1/100 Note so that Holder’s percentage ownership of a shareCompany’s common stock never surpasses 4.9%). Notwithstanding the immediately preceding sentence, if ▇▇▇▇▇▇’s post-conversion beneficial ownership of the Company’s common stock would be five percent (5.0%) or greater, Holder may convert the Note, or any portion thereof, if (and only if) Holder has fully disclosed any and all information, has executed any documents, and has taken all other steps, required by any applicable gaming agency or regulatory authority for holders of Common Stock obtained by dividing such Accreted Value by a conversion price 5.0% or more of the Company’s common stock (the “Conversion PriceDisclosure Requirements”) equal ), and agrees to $3.25 (or at make all such information available in the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender future and to comply with any request of this Convertible Note to the Company accompanied by written notice to or any applicable gaming agency or regulatory authority or otherwise fully complies with (on a timely basis) the Company that such Holder elects to convert this Convertible Note, or if less than the entire Principal Amount of this Convertible Note is to be converted, the portion thereof to be converted, which shall be $100,000 or integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part requirements of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2applicable gaming agency or regulatory authority. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share in an amount equal to such fraction multiplied by the closing sales price of one share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day).

Optional Conversion. (a) The Holder of principal amound outstanding under this Convertible Note is entitled, at its optionnote shall be convertible, at any time until after the close date of business issuance and up to 5:00 p.m. California time on August 18the Maturity Date, 2006, or in case this Convertible Note or a portion hereof is called for redemption, into fully paid and non-assessable shares of Common Shares of the Company at the Conversion Price (as hereafter defined) then in respect of this Convertible Note or such portion hereof, until and including but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the Redemption Date, to convert this Convertible Note (or any portion of the Principal Amount hereof which is $100,000 or an integral multiple of $1,000 in excess thereof (or, if the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount of this Convertible Note)) at the Accreted Value of such Principal Amount, or of such portion, into that number of fully paid shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock obtained effect. The Holder shall effect conversions by dividing such Accreted Value by a conversion price (the “Conversion Price”) equal to $3.25 (or at the current adjusted Conversion Price if an adjustment has been made as provided herein) by surrender of this Convertible Note delivering to the Company accompanied by written notice a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice of Conversion”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (a “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company that such Holder elects to convert this Convertible Note, or if less than unless the entire Principal Amount principal amount of this Convertible Note is to be Debenture has been so converted, . Conversions hereunder shall have the portion thereof to be converted, which shall be $100,000 or integral multiple effect of $1,000 in excess thereof (or, if lowering the Principal Amount on the conversion date is less than $100,000, then the remaining Principal Amount outstanding principal amount of this Convertible Note) in accordance with Section 7.2. (b) At the option of the Company, in lieu of converting the Accretion Portion of the Principal Amount of a Convertible Note to be converted into shares of Common Stock in accordance with Section 7.1(a), the Company may (i) pay the Holder an amount in cash equal to such Accretion Portion, or (ii) issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2, or (iii) pay the Holder an amount in cash equal to a part of such Accretion Portion and issue to the Holder the number of shares of Common Stock equal to the quotient obtained by dividing the amount of the remaining Accretion Portion by the Market Price as of the date of the conversion notice delivered pursuant to Section 7.2. (c) No fractional shares of Common Stock shall be issued upon conversion of Convertible Notes. If more than one Convertible Note shall be surrendered for conversion at one time by the same Holder, the number of fully paid shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate Accreted Value of the Convertible Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Convertible Note or Convertible Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fractional share Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such fraction multiplied by conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the closing sales price event of one share any dispute or discrepancy, the records of Common Stock as reported the Holder shall be controlling and determinative in the composite transactions for absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal United States securities exchange on which amount of this Debenture may be less than the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System, amount stated on the day of conversion (or, if such day is not a trading day on such exchange or quotation system, on the trading day immediately preceding such day)face hereof.