UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

	Filed by the Registrant   x
	Filed by a Party other than the Registrant   o
	Check the appropriate box:

	xo   Preliminary Proxy Statement
	o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	ox   Definitive Proxy Statement
	o   Definitive Additional Materials
	o   Soliciting Material Pursuant to §240.14a-12

      Payment of Filing Fee (Check the appropriate box):

	x   No fee required.
	o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	1) Title of each class of securities to which transaction applies:

	2) Aggregate number of securities to which transaction applies:

	3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

	4) Proposed maximum aggregate value of transaction:

	5) Total fee paid:

	o   Fee paid previously with preliminary materials.

	o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	1) Amount Previously Paid:

	2) Form, Schedule or Registration Statement No.:

	3) Filing Party:

	4) Date Filed:

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Form 10-K, as the case may be (a“Periodic Report”), during the Additional Note Issuance Period, the Company may, in its sole discretion, deliver (by facsimile) a written notice to each Buyer electing to sell Additional Notes and Additional Warrants to the Buyers (an“Additional Sale Election Notice”). The Additional Sale Election Notice shall set forth the aggregate principal amount of Additional Notes to be sold to the Buyers (the“Additional Note Issuance Amount”) on an Additional Closing Date (as defined in Section 1(d)), which shall not be less than $3,000,000; provided, however, that (A) the sum of the Additional Note Issuance Amount and the original aggregate principal amount of all other Additional Notes issued and sold by the Company to the Buyers during the 365-day period immediately preceding such Additional Closing Date shall not exceed $15,000,000 in the aggregate, (B) the sum of the Additional Note Issuance Amount and the aggregate principal amount of all other Additional Notes issued and sold by the Company at any time pursuant to this Agreement shall not exceed $45,000,000 in the aggregate, (C) the sum of the Additional Note Issuance Amount and the aggregate principal amount and accrued and unpaid interest of all other Notes outstanding as of each of the date of the Additional Sale Election Notice and the Additional Closing Date shall not exceed the Free Cash Flow Amount (as defined in the Notes), determined as of the end of the quarterly or annual period covered by the most recently filed, or required to be filed, Periodic Report, and (D) unless Shareholder Approval (as defined in Section 4(k)) has been obtained, the Additional Note Issuance Amount shall not exceed an amount that would require, pursuant to this Section 1(b), Buyers to buy Additional Warrants to acquire a number of shares of Common Stock that, when multiplied by 1.2 and added to the number of shares of Common Stock that have been issued upon exercise of any Warrants (as defined in this Section 1(b)) or conversion of, or as interest on, any Notes prior to the date of such Additional Sale Election Notice and added to 120% of the shares issuable as of the date of such Additional Sale Election Notice upon exercise of all Warrants then outstanding, would exceed the Exchange Cap (as defined in the Notes) (the limitations on the Additional Note Issuance Amount set forth in the immediately preceding clauses (A), (B), (C) and (D) being collectively referred to as the“Additional Note Issuance Amount Limitations”), and if the Additional Note Issuance Amount cannot be at least $3,000,000 as a result of the Additional Note Issuance Amount Limitations, the Company may not deliver an Additional Sale Election Notice and may not issue or sell any Additional Notes on such Additional Closing Date. The Additional Sale Election Notice shall also set forth (i) each Buyer’s principal amount of Additional Notes to be purchased (determined as provided in the next sentence), and (ii) the Additional Closing Date for the purchase and sale of Additional Notes and Additional Warrants pursuant to such Additional Sale Election Notice (determined as provided in section 1(d) below). In the event that the Company delivers an Additional Sale Election Notice in accordance with the foregoing, subject to the conditions set forth in this Section 1(b) and Sections 1(d), 6(b) and 7(b) below, the Company shall issue and sell to each Buyer, and each Buyer severally agrees to buy from the Company, on the applicable Additional Closing Date (an“Additional Closing”), (I) Additional Notes in a principal amount equal to the product of the Additional Note Issuance Amount, multiplied by such Buyer’s allocation percentage (as set forth opposite such Buyer’s name in the fourth column on theSchedule of Buyers (such Buyer’s“Allocation Percentage”), and (II) warrants, substantially in the form attached asExhibit C, to acquire that number of shares of Common Stock equal to the quotient (rounded to the nearest whole number, with 0.5 rounded up) of (a) 28% of the product of the Additional Note Issuance Amount, multiplied by such Buyer’s Allocation Percentage, divided by (b) the Warrant Exercise Price (as defined in the Additional 115% Warrants (as defined below)) as of the applicable Additional Closing Date (the“Additional 115% Warrants”), and (III) warrants, substantially in the form attached asExhibit C, to acquire that number of shares of Common Stock equal to the quotient (rounded to the nearest whole number, with 0.5 rounded up) of (x) 27% of the product of the Additional Note Issuance Amount, multiplied by such Buyer’s Allocation Percentage, divided by (y) the Warrant Exercise Price (as defined in the Additional 140% Warrants (as defined below)) as of the applicable Additional Closing Date (the“Additional 140% Warrants”; the Additional 115% Warrants and the Additional 140% Warrants, together with any warrants or other securities issued in exchange or substitution therefor or replacement thereof, and as any of the same may be amended, restated, modified or supplemented and in effect from time to time, the“Additional Warrants” and, collectively with the Initial Warrants, the“Warrants”; the shares of Common Stock issuable upon exercise of the Additional Warrants being referred to as the

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	“Additional Warrant Shares” and, collectively with the Initial Warrant Shares, being referred to as the“Warrant Shares”). The purchase price (the“Additional Purchase Price” and, together with the Initial Purchase Price, each the“Purchase Price”) of the Additional Notes and the related Additional Warrants at the applicable Additional Closing shall be equal to $1.00 for each $1.00 of principal amount of the Additional Notes purchased.“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.
	c. The Initial Closing Date. The date and time of the Initial Closing (the“Initial Closing Date”) shall be 10:00 a.m., New York City time, on the first Business Day following the date of this Agreement, subject to the satisfaction (or waiver) of all of the conditions to the Initial Closing set forth in Sections 6(a) and 7(a) (or such later or earlier date as is mutually agreed to by the Company and the Buyers). The Initial Closing shall occur on the Initial Closing Date at the offices of Katten Muchin Zavis Rosenman, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693 or at such other time, date and place as the Company and the Buyers may collectively designate in writing.
	d. Additional Closing Dates. The date and time of any Additional Closing (an“Additional Closing Date” and, together with the Initial Closing Date, each a“Closing Date”) shall be 10:00 a.m., New York City time, on the tenth (10th) Business Day following receipt by each Buyer of an Additional Sale Election Notice, subject to the satisfaction (or waiver) of the conditions to the Additional Closing set forth in Sections 1(b), 6(b) and 7(b) and the conditions set forth in this Section 1(d) or the waiver thereof in writing by such Buyer (or such later date as is mutually agreed to by the Company and the Buyers). Notwithstanding the foregoing, the Company shall not be entitled to deliver an Additional Sale Election Notice unless each of the following conditions is satisfied (or waived in writing by the applicable Buyer) as of and through the date on which the Company delivers to each Buyer the applicable Additional Sale Election Notice (the“Additional Sale Election Notice Date”), and no Buyer shall be required to purchase the Additional Notes unless each of the following conditions and the conditions set forth in Sections 1(b) and 7(b) are satisfied (or waived in writing by the applicable Buyer) as of and through the applicable Additional Closing Date (the“Additional Sale Election Notice Conditions”): (i) during the period beginning on the date of this Agreement and ending on and including the applicable Additional Closing Date, there shall not have occurred either (x) the public announcement of a pending, proposed or intended Change of Control (as defined in the Notes) which has not been abandoned or terminated and publicly announced as such or (y) a Triggering Event or an Event of Default (each as defined in the Notes); (ii) during the sixty (60) day period ending on and including such Additional Closing Date, there shall not have occurred an event that with the passage of time or the giving of notice would constitute a Triggering Event or an Event of Default; (iii) at all times during the period beginning on the date of this Agreement and ending on such Additional Closing Date, the Common Stock is listed on the Principal Market (as defined in Section 3(s)) and the Common Stock shall not have been suspended from trading nor shall delisting or suspension by the Principal Market have been threatened either (A) in writing by such exchange or market or (B) by falling below the minimum listing maintenance requirements of the Principal Market; (iv) during the period beginning on the Initial Closing Date and ending on and including such Additional Closing Date, the Company shall have delivered Conversion Shares and Warrant Shares upon conversion or exercise, as the case may be, of the Notes and the Warrants on a timely basis as set forth in Section 2(d)(ii) of the Notes or Section 2(a) of the Warrants; (v) as of the Additional Sale Election Notice Date, Notes remain outstanding; (vi) there is not outstanding any Indebtedness (as defined in the Notes) of the Company or any of the Subsidiaries (as defined in Section 3(a)) that the Company or any Subsidiary is prohibited from issuing, assuming or incurring under Section 4(n) or would be prohibited from issuing, assuming or incurring under Section 4(n) if the Additional Notes proposed to be issued on the Additional Closing Date were outstanding at the time of such issuance, assumption or incurrence; (vii) no Permitted Subordinated Indebtedness (as defined in Section 4(n)) that is outstanding on the applicable Additional Closing Date matures or otherwise requires or permits redemption or repayment on or prior to the Maturity Date (as defined in the Notes) of the Additional Notes proposed to be issued on the applicable Additional Closing Date; (viii) no capital stock of the Company or any Subsidiary is redeemable on or prior to the Maturity Date of the Additional Notes proposed to be issued on the applicable Additional Closing Date; and

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	(ix) the Company shall have publicly disclosed (either on a Form 10-K, 10-Q or 8-K) its After-tax PV10 (as defined in the Notes) as of a date during the last forty-five (45) days of the fiscal quarter immediately preceding the Additional Closing. Any Additional Closing shall occur on the applicable Additional Closing Date at the offices of Katten Muchin Zavis Rosenman, 525 West Monroe Street, Chicago, Illinois 60661-3693 or at such other time, date and place as the Company and the Buyers may collectively designate in writing.
	e. Form of Payment. On each of the Closing Dates, (i) each Buyer shall pay the applicable Purchase Price to the Company for the Notes and the Warrants to be issued and sold to such Buyer on such Closing Date, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions, less any amount withheld pursuant to Section 4(h), and (ii) the Company shall deliver to each Buyer, Notes (in the principal amounts as such Buyer shall request) (the“Note Certificates”) representing such principal amount of the Notes that such Buyer is purchasing hereunder at such Closing, along with warrants representing the Warrants that such Buyer is purchasing hereunder at such Closing, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

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	delivered on behalf of such Buyer and are valid and binding agreements of such Buyer enforceable against such Buyer in accordance with their respective terms. The Security Agreement, the Account Control Agreements and each of the other agreements entered into and other documents executed by such Buyer in connection with the transactions contemplated hereby and thereby as of the Initial Closing or any Additional Closing will have been duly and validly authorized, executed and delivered on behalf of such Buyer as of the Initial Closing or such Additional Closing, as applicable, and will be valid and binding agreements of such Buyer enforceable against such Buyer in accordance with their respective terms.
	i. Residency. Such Buyer is a resident of that jurisdiction specified below its address on theSchedule of Buyers.
	j. No Other Agreements. As of the Initial Closing Date, such Buyer has not, directly or indirectly, made any agreements with the Company relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents (as defined in Section 3(b)).

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	assets, incurring any Indebtedness or other liabilities or obligations, or otherwise), such Subsidiary shall for all purposes of this Agreement and the other Transaction Documents be treated as if it had just been formed as an Active Subsidiary. Each of the Company’s Inactive Subsidiaries is designated as such onSchedule 3(a).
	b. Authorization; Enforcement; Validity. Each of the Company and the applicable Subsidiaries has the requisite corporate power and authority to enter into and perform its obligations under each of this Agreement, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5), the Notes, the Warrants, the Security Agreement, the Account Control Agreements, the Guaranty, the Mortgages, the Pledge Agreement and each of the other agreements to which it is a party or by which it is bound and which is entered into by the parties hereto in connection with the transactions contemplated hereby and thereby (collectively, the“Transaction Documents”), and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and, to the extent applicable, its Subsidiaries and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby, including the issuance of up to $45,000,000 in principal amount of the Notes and the related Warrants and the reservation for issuance and the issuance of the Conversion Shares and Warrant Shares issuable upon conversion or exercise thereof, have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its shareholders, except as contemplated by Section 4(k) and except for authorization by the Company’s Board of Directors for the issuance of in excess of $45,000,000 in principal amount of the Notes and the related Warrants contemplated by this Agreement. This Agreement and the other Transaction Documents dated of even date herewith have been duly executed and delivered by the Company and, to the extent applicable, its Subsidiaries and constitute the valid and binding obligations of each of the Company and its Active Subsidiaries that is a party thereto, enforceable against such parties in accordance with their terms. As of each of the Closings, the Transaction Documents dated after the date of this Agreement and on or prior to the date of such Closing shall have been duly executed and delivered by such parties and shall constitute the valid and binding obligations of each of the Company and its Subsidiaries that is a party thereto, enforceable against such parties in accordance with their terms.
	c. Capitalization. As of the date of this Agreement, the authorized capital stock of the Company consists of (i) 300,000,000 shares of Common Stock, of which as of the date of this Agreement 10,663,097 shares are issued and outstanding, 1,361,131 shares are reserved for issuance pursuant to the Company’s stock option, restricted stock and stock purchase plans and 4,115,344 shares are issuable and reserved for issuance pursuant to securities (other than the Notes and the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000 shares of preferred stock, no par value, of which as of the date of this Agreement, none is issued or outstanding. All of such outstanding or issuable shares have been, or upon issuance will be, validly issued and are, or upon issuance will be, fully paid and nonassessable. Except as disclosed inSchedule 3(c), (A) no shares of the capital stock of the Company or any of its Subsidiaries are subject to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company or any of its Subsidiaries; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable for, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable for, any shares of capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing

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	anti-dilution or similar provisions that will or may be triggered by the issuance of the Securities; and (F) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. The Company has furnished to each Buyer true and correct copies of the Company’s Articles of Incorporation, as amended and as in effect on the date this representation is made (the“Articles of Incorporation”), and the Company’s Bylaws, as amended and as in effect on the date this representation is made (the“Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for, Common Stock, and the material rights of the holders thereof in respect thereto.
	d. Issuance of Securities. The Notes are duly authorized and, upon issuance in accordance with the terms hereof, shall be (i) free from all taxes and Liens with respect to the issuance thereof and (ii) entitled to the rights set forth in the Notes. At least 2,000,000 shares of Common Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 4(f) below) have been duly authorized and reserved for issuance upon exercise of the Initial Warrants and in connection with any Additional Closing, the Company will have reserved at least 110% of the number of Warrant Shares issuable upon exercise of any Additional Warrants then issued. Upon conversion or exercise in accordance with the Notes or the Warrants, as the case may be, the Conversion Shares and the Warrant Shares will be validly issued, fully paid and nonassessable and free from all taxes and Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming the accuracy of the representations and warranties of the Buyers set forth in Section 2(a), 2(b), 2(d), 2(i) and 2(j), the issuance by the Company of the Securities is exempt from registration under the 1933 Act and applicable state securities laws.
	e. No Conflicts. The execution and delivery of the Transaction Documents by the Company and, if applicable, its Subsidiaries, the performance by such parties of their obligations thereunder and the consummation by such parties of the transactions contemplated thereby (including the reservation for issuance and issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation or the Bylaws or the organizational documents of any Subsidiary; (ii) conflict with, or constitute a breach or default (or an event which, with the giving of notice or lapse of time or both, constitutes or would constitute a breach or default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or other remedy with respect to, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party; (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market (as defined in Section 3(s)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor any of its Active Subsidiaries is in violation of any term of its articles of incorporation (or other organizational charter) or is in material violation of any term of its bylaws (or partnership or operating agreement), as applicable. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under (or with the giving of notice or lapse of time or both would be in violation of or default under) any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except where such violation or default could not reasonably be expected to have a Material Adverse Effect or to result in the acceleration of any Indebtedness or other obligation. The business of the Company and its Active Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, ordinance or regulation of any governmental entity except as could not reasonably be expected to have a Material Adverse Effect. Except for the filing of a proxy statement with the SEC as would be required if the Company seeks shareholder approval pursuant to the rules of the NASDAQ National Market for the issuance of an aggregate number of Warrant Shares and Conversion Shares greater than 19.99% of the number of shares of Common Stock outstanding immediately prior to the Initial Closing Date, the filings and listings contemplated by the Registration Rights Agreement or described in Section 4(b) and Section 4(g), and the filing of instruments to perfect security interests, none of the Company and its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance with

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	the terms hereof or thereof. All consents, authorizations, orders, filings and registrations that the Company or any of its Subsidiaries is required to obtain as described in the preceding sentence have been obtained or effected on or prior to the date of this Agreement. To the Knowledge (as defined below) of the Company, there are no facts or circumstances that might give rise to any of the foregoing. The Company and its Active Subsidiaries are in material compliance with applicable provision of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder (collectively,“Sarbanes-Oxley”). The“Knowledge” of the Company means, unless otherwise specified, the actual knowledge of any “officer” (as such term is defined in Rule 16a-1 under the 1934 Act) of the Company or of the principal financial officer of any Active Subsidiary.
	f. SEC Documents; Financial Statements. Since December 31, 2002, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date this representation is made (including all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein) being hereinafter referred to as the“SEC Documents”). A complete and accurate list of the SEC Documents is set forth onSchedule 3(f). The Company has made available to the Buyers or their respective representatives true and complete copies of the SEC Documents. Each of the SEC Documents was filed with the SEC within the time frames prescribed by the SEC for the filing of such SEC Documents (including any extensions of such time frames permitted by Rule 12b-25 under the 1934 Act) such that each filing was timely filed (or deemed timely filed pursuant to Rule 12b-25 under the 1934 Act) with the SEC. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents. None of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the consolidated financial statements of the Company and its Subsidiaries included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such consolidated financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company and its Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). None of the Company and its Subsidiaries, or any of their respective officers, directors or Affiliates (as defined in Section 4(j)) or, to the Company’s Knowledge, any shareholder of the Company has made any other filing with the SEC, issued any press release or made any other public statement or communication on behalf of the Company or any of its Subsidiaries or otherwise relating to the Company or any of its subsidiaries that contains any untrue statement of a material fact or omits any statement of material fact necessary in order to make the statements therein, in the light of the circumstances under which they are or were made, not misleading or has provided any other information to the Buyers, including information referred to in Section 2(d), that, considered in the aggregate, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are or were made, not misleading. None of the Company, its Subsidiaries and their respective officers, directors, employees or agents has provided the Buyers with any material, nonpublic information. The Company is not required to file and will not be required to file any agreement, note, lease, mortgage, deed or other instrument entered into prior to the date this representation is made and in effect on the date this representatio n is made and to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound that has not been previously filed as an exhibit (including by way of incorporation by reference) to its reports filed or made with the SEC under the 1934 Act. The accounting firm that has expressed its opinion with respect to the consolidated financial statements included in the

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	Company’s most recently filed annual report on Form 10-K (the“Audit Opinion”) is independent of the Company pursuant to the standards set forth in Rule 2-01 of Regulation S-X promulgated by the SEC, and such firm was otherwise qualified to render the Audit Opinion under applicable law and the rules and regulations of the SEC. There is no transaction, arrangement or other relationship between the Company and an unconsolidated or other off-balance-sheet entity that is required to be disclosed by the Company in its reports pursuant to the 1934 Act that has not been so disclosed in the SEC Documents.
	g. Absence of Certain Changes. Except as disclosed in any SEC Documents which were filed with the SEC at least five (5) days prior to the date of this Agreement, since December 31, 2003, there has been no Material Adverse Effect. Neither the Company nor any of its Active Subsidiaries has taken any steps, and neither the Company nor any of its Active Subsidiaries currently expects to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company have any Knowledge or reason to believe that the creditors of the Company or any of its Active Subsidiaries intend to initiate involuntary bankruptcy proceedings or any Knowledge of any fact that would reasonably lead a creditor to do so. Neither the Company nor any of its Active Subsidiaries is as of the date this representation is made, nor after giving effect to the transactions contemplated hereby, will be Insolvent (as defined below). For purposes of this Section 3(g),“Insolvent” means (i) the present fair saleable value of the Company’s assets is less than the amount required to pay the Company’s total indebtedness, contingent or otherwise, (ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur, prior to the second anniversary of the date this representation is made, or believes that it will incur, prior to the second anniversary of the date this representation is made, debts that would be beyond its ability to pay as such debts mature or (iv) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. Except as disclosed inSchedule 3(g), since December 31, 2003, the Company has not declared or paid any dividends or sold any assets outside of the ordinary course of business, individually or in the aggregate, in excess of $100,000. Except as disclosed inSchedule 3(g), since December 31, 2003, the Company has not had any capital expenditures outside the ordinary course of its business or individually in excess of $1,000,000.
	h. Absence of Litigation. Except as set forth onSchedule 3(h) (i) there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened against or affecting the Company, the Common Stock or any of the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors in their capacities as such, other than any proceeding, inquiry or investigation arising in the ordinary course related to permits, approvals or licenses related to the Company’s oil and gas exploration and production operations, (ii) during the past three (3) years there has been no material action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened against or affecting the Company, the Common Stock or any of the Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors in their capacities as such, other than any proceeding, inquiry or investigation arising in the ordinary course related to permits, approvals or licenses related to the Company’s oil and gas exploration and production operations and (iii) to the Knowledge of the Company, none of the directors or officers of the Company has been involved in securities-related litigation during the past five years. None of the matters described inSchedule 3(h), regardless of their outcome, could reasonably be expected to have a Material Adverse Effect.
	i. Acknowledgment Regarding Buyer’s Purchase of Notes and Warrants. The Company acknowledges and agrees that each of the Buyers is acting solely in the capacity of an arm’s length purchaser with respect to the Company in connection with the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that each Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by any of the Buyers or any of their respective representatives or agents in connection with the Transaction Documents

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	and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.
	j. No Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth onSchedule 3(j), and except for the issuance of the Notes and Warrants contemplated by this Agreement, no material event, liability, development or circumstance has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, credit worthiness, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed at least five (5) days prior to the date that this representation is made.
	k. No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Securities.
	l. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable shareholder approval provisions of the Principal Market or any other authority, nor will the Company or any of its Subsidiaries take any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings for purposes of the 1933 Act or any applicable shareholder provision of the Principal Market or any other authority.
	m. Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Notes and the Warrant Shares issuable upon exercise of the Warrants will increase in certain circumstances. The Company further acknowledges that any obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and the Notes and its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
	n. Employee Relations. Neither the Company nor any of its Subsidiaries is involved in any labor union dispute nor, to the Knowledge of the Company is any such dispute threatened. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement. Except as set forth in Schedule 3(n), no executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such executive officer intends to leave the Company or otherwise terminate such officer’s employment with the Company. No executive officer, to the Knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not result, either individually or in the aggregate, in a Material Adverse Effect.
	o. Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights necessary to conduct their respective businesses as now

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	conducted. None of the Company’s and its Subsidiaries’ trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights have expired or terminated, or are expected to expire or terminate within two years from the date this representation is made. The Company has no Knowledge of any infringement by the Company or any of its Subsidiaries of trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, trade secrets or other intellectual property rights of others, or of any development of similar or identical trade secrets or technical information by others. There is no claim, action or proceeding being made or brought against, or to the Company’s Knowledge, being threatened against, the Company or any of its Subsidiaries regarding its trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses or trade secrets, or infringement of other intellectual property rights. The Company does not have any Knowledge of any facts or circumstances that could reasonably be expected to give rise to any of the foregoing. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.
	p. Environmental Laws. Except as set forth inSchedule 3(p), and except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its Subsidiaries (I) are in compliance with any and all Environmental Laws (as defined below), (II) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as presently conducted and (III) are in compliance with all terms and conditions of any such permit, license or approval. The term“Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
	q. Title. Except as set forth inSchedule 3(bb), neither the Company nor any of its Subsidiaries has any interest in real property or any oil, gas or other mineral drilling, exploration or development rights. The Company and its Subsidiaries have good and valid title to all personal property owned by them that is material to the business of the Company and its Subsidiaries, in each case free and clear of all Liens except such as are described inSchedule 3(q). The Company and its Subsidiaries have good, marketable and indefeasible title in fee simple to all real property owned (rather than leased) by them (the“Owned Real Property”) as set forth onSchedule 3(q), in each case free and clear of all Liens, other than Permitted Liens, except such as are described inSchedule 3(q).
	r. Insurance. The Company and each of its Active Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Active Subsidiaries are engaged. Neither the Company nor any such Active Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Active Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
	s. Regulatory Permits. Except as set forth onSchedule 3(s) or as could not, individually or in the aggregate, reasonably be expected to have any of (i) a Material Adverse Effect, (ii) a Services Business Material Adverse Effect, (iii) a Property Material Adverse Effect, or (iv) a material adverse effect on the production, extraction, transportation or sale of oil, gas, minerals or other Hydrocarbons (as defined in the Mortgages) from any portion of the Real Property (as defined in Section 3(bb)) that is producing oil, gas, minerals and/or other Hydrocarbons at the time this representation is made, the Company and

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	its Active Subsidiaries possess all certificates, authorizations, approvals, licenses and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses as conducted at the time this representation is made(“Permits”), and neither the Company nor any such Active Subsidiary has received any notice of proceedings relating to the revocation or modification of any such Permit. Without limiting the foregoing, except as set forth onSchedule 3(s), the Company and its Active Subsidiaries possess all Permits necessary to produce, extract, transport and sell the oil, gas and other minerals in that portion of Real Property that is producing oil, gas, minerals and/or other Hydrocarbons at the time this representation is made. Except as set forth inSchedule 3(s) or as could not reasonably be expected to have a Material Adverse Effect or a Property Material Adverse Effect, the Company and its Active Subsidiaries have no reason to believe that they will not be able to obtain necessary Permits as and when necessary to enable the Company to produce, extract, transport and sell the oil, gas, minerals and other Hydrocarbons in the Real Property. The Company is not in violation of any of the rules, regulations or requirements of The NASDAQ National Market (the“Principal Market”; provided however, that, if after the date of this Agreement the Common Stock is listed on the New York Stock Exchange or both the NASDAQ National Market or the New York Stock Exchange, the“Principal Market” shall mean the New York Stock Exchange or both the NASDAQ National Market and the New York Stock Exchange, as applicable) and has no knowledge of any facts or circumstances which would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. Since December 31, 2002, (i) the Company’s Common Stock has been listed on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. As used in this Agreement,“Services Business Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, financial condition, credit worthiness or prospects of the Services Business, and“Property Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, financial condition, credit worthiness or prospects of the Company and its Active Subsidiaries, taken as a whole, with respect to any of the geographical areas described under the heading “major properties”(or otherwise described) in Item 2 (or a comparable section) of the Company’s annual report on Form 10-K most recently filed by the Company prior to the date this representation is made, or any such geographical area that will be required to be described in the next annual report on Form 10-K to be filed by the Company after the date this representation is made.
	t. Internal Accounting Controls; Disclosure Controls and Procedures. The Company and each of its Active Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liability is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences. The Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the 1934 Act; such controls and procedures are effective to ensure that the information required to be disclosed by the Company in the reports that it files with or submits to the SEC is recorded, processed, summarized and reported accurately within the time periods specified in the SEC’s rules and forms.
	u. Tax Status. The Company and each of its Active Subsidiaries (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Active Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes), (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and for which the Company has made appropriate reserves on its books, and

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	(iii) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations (referred to in clause (i) above) apply. There are no unpaid taxes in any material amount claimed in writing to be due by the taxing authority of any jurisdiction, and to the Company’s Knowledge, there is no basis for any such claim.
	v. Transactions With Affiliates. Except as set forth inSchedule 3(v) or for transactions in which the sole obligation of the Company or any of its Subsidiaries is the payment of cash in a maximum amount of $5,000 individually (for any single transaction) and $15,000 in the aggregate in any calendar year, no Related Party (as defined in Section 4(j)) of the Company or any of its Subsidiaries, nor any of their respective affiliates, is presently, or has been within the past two years, a party to any transaction, contract, agreement, instrument, commitment, understanding or other arrangement or relationship with the Company or any of its Subsidiaries (other than for services as an employee, officer and/or director), whether for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments or consideration to or from any such Related Party. Except as set forth inSchedule 3(v), no Related Party of the Company or any of its Subsidiaries, or any of their respective affiliates, has any direct or indirect ownership interest in any Person (other than ownership of less than 2% of the outstanding common stock of a publicly traded corporation) in which the Company or any of its Subsidiaries has any direct or indirect ownership interest or with which the Company or any of its Subsidiaries competes or has a business relationship.
	w. Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination or other similar anti-takeover provision under the Articles of Incorporation or the laws of Colorado that is or could become applicable to the Buyers as a result of the transactions contemplated by this Agreement, including the Company’s issuance of the Securities and the Buyers’ ownership of the Securities.
	x. Rights Agreement. The Company has not adopted a shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.
	y. Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor to the Company’s Knowledge, any director, officer, agent, employee or other person acting on behalf of the Company or any of its Active Subsidiaries has, in the course of its actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
	z. No Other Agreements. As of the Initial Closing Date, the Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents.
	aa. Outstanding Indebtedness; Liens. Payments of principal and other payments due under the Notes will, upon issuance in connection with the Closings, rank senior to all other Indebtedness (as defined in the Notes) of the Company or any of its Subsidiaries (other than, at the Initial Closing, with respect to the repayment of the Indebtedness required to be repaid by Section 4(u), and provided, however, that such payments will be no less thanpari passuwith Indebtedness permitted under clauses (a)(IV), (a)(V), (a)(VI) (a)(VII), (a)(VIII) and (A)(IX) of Section 4(n)) and, by virtue of their secured position, to all trade account payables of the Company or any of its Subsidiaries. Except as set forth onSchedule 3(aa), (I) neither the Company nor any of its Subsidiaries has any outstanding Indebtedness or trade account payables, (II) there are no Liens on any of the assets of the Company and its Subsidiaries, and (III) there are no financing statements securing obligations of any amounts filed against the Company or any of its Subsidiaries or any of their respective assets.

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	portions thereof. Except as set forth onSchedule 3(bb), to the Knowledge of the Company, there are no pending or threatened requests, applications or proceedings to alter or restrict any zoning or other use restrictions applicable to the Real Property that would interfere with the conduct of the Company’s or any of its Subsidiaries’ business as conducted at the time this representation is made. Except as set forth onSchedule 3(bb), there are no restrictions applicable to the Real Property that would interfere with the Company’s or any of its Subsidiary’s making an assignment or granting of a leasehold or other mortgage to the Buyers as contemplated by the Security Documents (as defined in the Notes), including any requirement under any Real Property Leases requiring the consent of, or notice to, any lessor of any such Real Property. None of the Real Property of the Company and its Subsidiaries located in the State of Kansas is currently producing any Hydrocarbons, and none of such Real Property has any material value as of the date hereof.
	cc. Joint Value Enhancement Agreement. The Joint Value Enhancement Agreement, dated December 3, 2003, among Infinity Oil & Gas of Wyoming, Inc.(“IOGW”), Schlumberger Technology Corporation and Red Oak Capital Management LP (the“JVEA”) has been terminated and will be of no further force or effect as of and after February 6, 2005;provided, however, that (i) the obligation to make Deferred Payments (as such term is defined in the JVEA) under Article 5 of the JVEA in respect of each Bundle (as such term is defined in the JVEA) shall continue for the full period provided by Article 5.2 of the JVEA for that Bundle, and (ii) the confidentiality provisions of Article 10 of the JVEA shall continue for a period of eighteen (18) months following the termination of the JVEA.

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	of a date within ten (10) days of the Initial Closing Date, by the Secretary of State of the State of Colorado, and (C) the Bylaws, each as in effect at the Initial Closing.
	(x) The Company shall have made all filings under all applicable federal and state securities laws necessary to consummate the issuance of the Securities pursuant to this Agreement in compliance with such laws.
	(xi) The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding as of a date within five (5) days of the Initial Closing Date.
	(xii) The Company and its Subsidiaries shall have delivered to such Buyer evidence, satisfactory to such Buyer, of the repayment of all borrowings (including all principal thereof and interest and fees thereon) under the LaSalle Facility and the U.S. Bank Facility, and undertakings and authorizations in a form acceptable to such Buyer concerning all UCC-3 termination statements and other notices, certificates, instruments, documents and other papers, filings and actions necessary or desirable to terminate and release all security interests of LaSalle and U.S. Bank in the Collateral.
	(xiii) The Company and its Subsidiaries shall have delivered and pledged to such Buyer any and all Instruments, Negotiable Documents, Chattel Paper (each of the foregoing terms, as defined in the Security Agreement) and certificated securities (accompanied by stock powers executed in blank), duly endorsed and/or accompanied by such instruments of assignment and transfer executed by the Company and its Subsidiaries, in such form and substance as such Buyer may request.
	(xiv) The Company and its Subsidiaries shall have given, executed, delivered, filed and/or recorded any financing statements, notices, instruments, documents, agreements and other papers that may be necessary or desirable (in the reasonable judgment of such Buyer) to create, preserve, perfect or validate the security interest granted to such Buyer pursuant to the Security Agreement and to enable such Buyer to exercise and enforce its rights with respect to such security interest.
	(xv) The Company shall not have made any public announcement regarding the transactions contemplated by the Agreement prior to the Initial Closing.
	(xvi) The Company and its Subsidiaries shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

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	performed, satisfied or complied with by the Company at or prior to such Additional Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of such Additional Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer, including an update as of such Additional Closing Date of the representations and related schedule contained in Section 3(c) above and an update of Schedules 3(a), 3(f), 3(g), 3(h), 3(n), 3(q), 3(s), 3(v), 3(aa) and 3(bb) hereto.
	(iv) Such Buyer shall have received (A) the opinion of Davis Graham & Stubbs, LLP (or such other law firm as is reasonably acceptable to the Buyers being obligated to purchase at least two-thirds2/3 of the aggregate principal amount of the Additional Notes on such Additional Closing Date), dated as of such Additional Closing Date, which opinion will address, among other things, laws of the State of Colorado applicable to the transactions contemplated hereby, in form, scope and substance reasonably satisfactory to such Buyer and in substantially the form ofExhibit K attached hereto and (B) the opinions of Davis Graham & Stubbs, LLP, Kluin & Bolt, LLC, and Tate, Gowan and Wilson (or such other law firms as are reasonably acceptable to the Buyers being obligated to purchase at least two-thirds2/3 of the aggregate principal amount of the Additional Notes on such Additional Closing Date), each dated as of such Additional Closing Date, which opinions will collectively address, among other things, certain laws of the States of Kansas, Wyoming and Texas (and any other states in which the Company has properties or assets as of such Additional Closing Date) applicable to the security interests provided pursuant to the Security Agreement, in form, scope and substance reasonably satisfactory to such Buyer and in substantially the form ofExhibit L attached hereto.
	(v) The Company shall have executed and delivered to such Buyer the Note Certificates and the Additional Warrants (in such denominations as such Buyer shall request) for the Additional Notes and Additional Warrants being purchased by such Buyer at such Additional Closing.
	(vi) The Board of Directors of the Company shall have adopted, and not rescinded or otherwise amended or modified resolutions consistent with Section 3(b) above and in a form reasonably acceptable to such Buyer with respect to the issuance at such Additional Closing Date of the Additional Notes and Additional Warrants being purchased by the Buyers at such Additional Closing Date.
	(vii) As of such Additional Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of the Warrants, at least the number of shares of Common Stock equal to 100% of the sum of (A) the aggregate number of shares issuable as of such Additional Closing Date upon exercise of all Warrants outstanding immediately prior thereto, and (B) the aggregate number of shares that may be acquired as of such Additional Closing Date upon exercise of all Additional Warrants issued and sold to all of the Buyers thereat.
	(viii) The Irrevocable Transfer Agent Instructions shall remain in effect as of such Additional Closing Date and the Company shall have caused the Transfer Agent to deliver a letter to the Buyers to that effect.
	(ix) The Company shall have delivered to such Buyer a certificate evidencing the incorporation and good standing of the Company and each Subsidiary in such entity’s state or other jurisdiction of incorporation or organization issued by the Secretary of State (or other applicable authority) of such state of incorporation or organization as of a date within ten (10) days of such Additional Closing Date.
	(x) The Company shall have delivered to such Buyer a secretary’s certificate, dated as of such Additional Closing Date, certifying as to (A) the Resolutions, (B) the Articles of Incorporation, certified as of a date within ten (10) days of such Additional Closing Date, by the Secretary of State of the State of Colorado and (C) the Bylaws, each as in effect at such Additional Closing.
	(xi) The Company shall have made all filings under all applicable federal and state securities laws necessary to consummate the issuance of the Securities pursuant to this Agreement in compliance with such laws.

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	Telephone: 720-932-7800
	Facsimile: 720-932-5409
	Attention: Senior Vice President

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	principal amount of the Notes purchased by all holders on the Initial Closing Date and such Additional Closing Dates.
	(v) “Applicable Interest Rate” initially shall mean the per annum interest rate equal to the sum of (a) the 3-Month LIBOR Rate in effect on the Issuance Date, and (b) six and three-quarter percent (6.75%); provided, however, that on the first Business Day of each calendar quarter commencing after the Issuance Date (each, an“Interest Reset Date”), such rate shall be adjusted to the per annum interest rate equal to the sum of (a) the 3-Month LIBOR Rate in effect on such date, and (b) six and three-quarter percent (6.75%). Each Applicable Interest Rate will be applicable as of and after the Interest Reset Date to which it relates to, but not including, the next succeeding Interest Reset Date.
	(vi) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the city of New York are authorized or required by law to remain closed.
	(vii) “Common Stock” means (A) the Company’s common stock, $0.0001 par value per share, and (B) any capital stock resulting from a reclassification of such common stock.
	(viii) “Company Alternative Redemption Rate” means at any time during a 12-month period beginning on and including a date set forth below, the rate, expressed as a percentage, set forth opposite such date below:

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	requesting the holders of such Series of Notes to extend the Fixed Maturity Date by twelve (12) months and (B) within ten (10) Business Days of receipt of the notice described in clause (A) (such 10-Business-Day Period, the“Response Period”), agreed in writing to extend the Maturity Date of all the Notes of such Series by twelve (12) months, (provided that, for the avoidance of doubt, if the Company does not receive such written agreement within the Response Period from the requisite holders of the Notes of such Series, such requested extension shall be deemed denied and the Fixed Maturity Date shall not be extended).
	(xxv) “Maturity Date Triggering Event” means any principal amount of the 7% Notes is outstanding on the Business Day immediately preceding the scheduled maturity date of the 7% Notes, unless the Free Cash Flow Amount as of the end of the quarterly or annual period covered by the quarterly report on Form 10-Q or annual report on Form 10-K most recently filed, or required to be filed, by the Company with the SEC exceeds 150% of the Aggregate Notes Balance as of the Business Day immediately preceding the scheduled maturity of the 7% Notes.
	(xxvi) “Other Notes” means all of the senior secured notes, other than this Note, that have been issued by the Company pursuant to the Securities Purchase Agreement and all notes issued in exchange therefor or replacement thereof.
	(xxvii) “Permitted Lien” means (a) Liens created by the Security Documents; (b) Liens existing on the date of this Agreement not otherwise described in any other clause of this definition and set forth onSchedule 3(bb); (c) Liens for taxes or other governmental charges not at the time due and payable so long as the Company and its Subsidiaries maintain adequate reserves in accordance with United States generally accepted accounting principles(“GAAP”) in respect of such taxes and charges; (d) Liens arising in the ordinary course of business in favor of carriers, warehousemen, mechanics and materialmen, or other similar Liens imposed by law, which remain payable without penalty or which are being contested in good faith by appropriate proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto, and in each case for which adequate reserves in accordance with GAAP are being maintained; (e) Liens arising in the ordinary course of business in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or Liens consisting of cash collateral securing the Company’s or any of its Active Subsidiaries’ performance of surety bonds, bids, performance bonds and similar obligations (exclusive of obligations for the payment of borrowed money) permitted pursuant to clause (a)(IV) of Section 12 and, in each case, for which the Company maintains adequate reserves; (f) attachments, appeal bonds (and cash collateral securing such bonds), judgments and other similar Liens, for sums not exceeding $500,000 in the aggregate for Company and its Subsidiaries, arising in connection with court proceedings, provided that the execution or other enforcement of such Liens is effectively stayed; (g) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens arising in the ordinary course of business and not materially detracting from the value of the property subject thereto and not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary; (h) Liens in favor of U.S. Bank and LaSalle in respect of the Duke LC Account and the Returned Items Account (each as defined in the Security Agreement) to the extent such accounts are maintained and permitted to exist in accordance with the terms of the Security Agreement; (i) Liens consisting of cash collateral securing the Company’s and its Active Subsidiaries’ reimbursement obligations under letters of credit permitted by clauses (a)(VI) and (a)(VII) of Section 12, provided that the aggregate amount of cash collateral securing such Indebtedness does not exceed the undrawn face amount of all such letters of credit outstanding at any one time; (j) Liens securing Indebtedness listed on Schedule 4(u) of the Securities Purchase Agreement for up to thirty (30) days following the Initial Closing Date; (k) Liens on equipment subject to Capital Lease Obligations permitted to be incurred pursuant to clause (a)(V) of Section 12, to the extent such Liens secure such Capital Lease Obligations; and (l) Liens in favor of Schlumberger Technology Corporation and Red Oak Capital Management LP (collectively, the“Service Par-

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	ties”), granted pursuant to the Joint Value Enhancement Agreement, dated December 3, 2003, among Infinity Oil & Gas of Wyoming, Inc.(“IOGW”) and the Service Parties (as in effect on the date hereof, the“JVEA”), on the three (3) Project Wells (as such term is defined in the JVEA) described on Exhibit C to Schedule VIII of the Security Agreement, to the extent such Liens secure the obligations of IOGW to the Service Parties under the JVEA.
	(xxviii) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof or any other legal entity.
	(xxix) “Principal” means the outstanding principal amount of this Note as of any date of determination.
	(xxx) “Priority Notes Balance” means, as of the date of any determination, the aggregate outstanding principal amount of all the Notes that have a Fixed Maturity Date that is later than the Fixed Maturity Date of this Note, together with all accrued but unpaid interest thereon.
	(xxxi) “Principal Market” means, with respect to the Common Stock or any other security, the NASDAQ National Market or if the Common Stock or such other security, as the case may be, is not traded on the NASDAQ National Market, then the principal securities exchange or trading market for the Common Stock or such other security.
	(xxxii) “Registrable Securities” for purposes of this Note means Shares issued or issuable upon conversion of this Note, and any shares of capital stock issued or issuable with respect to such Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on conversions of this Note.
	(xxxiii) “Registration Rights Agreement” means that certain registration rights agreement, dated as of January 13, 2005, among the Company and the initial holders of the Notes relating to the filing of registration statements covering, among other things, the resale of Registrable Securities, as such agreement may be amended from time to time as provided in such agreement.
	(xxxiv) “Registration Statement” means a registration statement or registration statements filed under the 1933 Act pursuant to the Registration Rights Agreement covering the resale of Registrable Securities.
	(xxxv) “SEC” means the United States Securities and Exchange Commission, or any successor thereto.
	(xxxvi) “Security Agreement” means that certain security agreement among the Company, its Active Subsidiaries and the initial holders of the Notes relating to the granting by the Company and the Subsidiaries of a first-priority security interest in all the assets of the Company and its Active Subsidiaries, as such agreement may be amended from time to time as provided in such agreement.
	(xxxvii) “Security Documents” means any agreement, document or instrument executed concurrently herewith or at any time hereafter pursuant to which the Company, its Active Subsidiaries or any other Person either (i) guarantees payment or performance of all or any portion of the obligations hereunder or under any other instruments delivered in connection with the transactions contemplated hereby and by the Securities Purchase Agreement, and/or (ii) provides, as security for all or any portion of such obligations, a Lien on any of its assets in favor of the Holder, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.
	(xxxviii) “Series Allocation Percentage” means, with respect to each holder of Notes of the same Series as this Note, a fraction of which the numerator is the aggregate principal amount of Notes of such Series initially purchased by such holder on the Issuance Date and of which the denominator is the aggregate principal amount of Notes of such Series purchased by all holders on the Issuance Date.

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	resolved pursuant to Section 2(d)(iii) below with the term “Weighted Average Price” being substituted for the term “Conversion Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during any period during which the Weighted Average Price is being determined.

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	via facsimile within two (2) Business Day of receipt or deemed receipt of the Holder’s Conversion Notice or other date of determination. If the Holder and the Company are unable to agree upon the determination of the Conversion Price or arithmetic calculation of the Conversion Rate within one (1) Business Day of such disputed determination or arithmetic calculation being transmitted to the Holder, then the Company shall promptly (and in any event within two (2) Business Days) submit via facsimile (A) the disputed determination of the Conversion Price to an independent, reputable investment banking firm agreed to by the Company and the holders of the Notes representing at least two-thirds (2/3) of the aggregate principal amounts of the Notes then outstanding as to which such determination is being made, or (B) the disputed arithmetic calculation of the Conversion Rate to the Company’s independent, outside accountant, as the case may be. The Company shall direct the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than two (2) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
	(iv) Record Holder. The person or persons entitled to receive the Shares issuable upon a conversion of this Note shall be treated for all purposes as the legal and record holder or holders of such Shares on the Conversion Date.
	(v) Company’s Failure to Timely Convert.

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	entitled but has not received upon a conversion exceeds (B) the net proceeds received by the Holder from the sale of the Shares to which the Holder is entitled but has not received upon such conversion. If the Company fails to pay the additional damages set forth in this Section 2(d)(v)(A) within five (5) Business Days of the date incurred, then the Holder entitled to such payments shall have the right at any time, so long as the Company continues to fail to make such payments, to require the Company, upon written notice, to immediately issue, in lieu of such cash damages, the number of Shares equal to the quotient of (X) the aggregate amount of the damages payments described herein divided by (Y) the Conversion Price in effect on such Conversion Date as specified by the Holder in the Conversion Notice.
	(B)     Void Conversion Notice; Adjustment to Conversion Price. If for any reason the Holder has not received all of the Shares prior to the tenth (10th) Business Day after the Share Delivery Date with respect to a conversion of this Note, other than due to the limitation contained in Section 5(b) or to the pendency of a dispute being resolved in accordance with Section 2(d)(iii) (a“Conversion Failure”), then the Holder, upon written notice to the Company (a“Void Conversion Notice”), may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to the Holder’s Conversion Notice; provided that the voiding of the Holder’s Conversion Notice shall not affect the Company’s obligations to make any payments that have accrued prior to the date of such notice pursuant to Section 2(d)(v)(A) or otherwise.
	(C) Redemption. In the event of a Conversion Failure, the Holder, upon written notice to the Company, may require that the Company redeem, in accordance with Section 3, all of the Principal, including the Principal previously submitted for conversion and with respect to which the Company has not delivered shares of Common Stock; provided that the Holder shall not be entitled to require redemption of any Principal pursuant to this clause (C) solely as a result of a Conversion Failure caused by any Principal being the subject of a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(d)(iii), provided the Shares are delivered to the Holder within two (2) Business Days of the resolution of such bona fide dispute.

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Principal to which the Holder is entitled shall be controlling and determinative in the absence of demonstrable error. Notwithstanding the foregoing, if this Note is converted or redeemed as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder may request, representing in the aggregate the remaining Principal represented by this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion or redemption of any portion of this Note, the Principal of this Note may be less than the principal amount stated on the face hereof.

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Notice(s) of Redemption Upon Change of Control from any holder of the Other Notes, the Company shall promptly, but in no event later than one (1) Business Day following such receipt, notify the Holder by facsimile of the Company’s receipt of such Notice(s) of Redemption Upon Change of Control. The Company shall deliver the Change of Control Redemption Price simultaneously with the consummation of the Change of Control; provided that, if required by Section 2(d)(viii), this Note shall have been so delivered to the Company. The Company shall not enter into any binding agreement or other arrangement with respect to a Change of Control unless the Company provides that the payments provided for in this Section 4(b) shall have priority to payments to stockholders in connection with such Change of Control and the Company complies with such provision. For purposes of this Section 4(b),“Change of Control” means (i) the consolidation, merger or other business combination of the Company with or into another Person (other than (A) a consolidation, merger or other business combination in which holders of the Company’s voting power immediately prior to the transaction continue after the transaction to hold, directly or indirectly, a majority of the combined voting power of the surviving entity or entities entitled to vote generally for the election of a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company), (ii) the sale or transfer of all or substantially all of the Company’s assets (including, for the avoidance of doubt, the sale of all or substantially all of the assets of the Company’s Subsidiaries in the aggregate) or (iii) the consummation of a purchase, tender or exchange offer made to and accepted by the holders of more than the 50% of the outstanding Shares.

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	Company, including the Notes and the Warrants, by the Holder and its affiliates since the date as of which such number of outstanding Shares was reported. For purposes of determining the maximum number of Shares that the Company may issue to the Holder pursuant to Section 5(b) upon conversion of this Note on a particular Conversion Date, Holder’s delivery of a Conversion Notice with respect to such conversion shall constitute a representation (on which the Company may rely without investigation) by the Holder that, upon the issuance of the Shares to be issued to it on such Conversion Date, the shares of Common Stock beneficially owned by the Holder and its affiliates shall not exceed 4.99% of the total outstanding Shares immediately after giving effect to such conversion, as determined in accordance with this Section 5(b).
	(c) Limitation on Number of Shares Issuable Hereunder. The Company shall not be obligated to issue any Shares upon conversion of this Note if the issuance of such Shares would exceed that number of Shares which the Company may issue upon conversion of the Notes and upon exercise of the Warrants (the“Exchange Cap”) without breaching the Company’s obligations under the rules or regulations of the Principal Market, except that such limitation shall not apply in the event that the Company (a) obtains Shareholder Approval or (b) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holders representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding. Until Shareholder Approval or such written opinion is obtained, no purchaser of Notes pursuant to the Securities Purchase Agreement (the“Purchasers”) shall be issued, upon conversion of, or as interest on, this Note, a number of Shares greater than the product of (i) the difference of (x) the Exchange Cap, minus (y) the sum of (A) the aggregate number of Shares that have been issued upon exercise of any Warrants or upon conversion of any Notes prior to the date of such determination and (B) 120% of the Shares issuable as of the date of such determination upon exercise of all Warrants then outstanding, multiplied by (ii) such Purchaser’s Allocation Percentage (the“Cap Allocation Amount”). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser’s Notes, the transferee shall be allocated a pro rata portion of such Purchaser’s Cap Allocation Amount. In the event that any holder of Notes shall convert all of such holder’s Notes and exercise all of such holder’s Warrants into a number of Shares in an amount which, in the aggregate, is less than such holder’s Cap Allocation Amount, then the difference between such holder’s Cap Allocation Amount and the number of Shares actually issued to such holder upon conversion of such holder’s Notes and exercise of such holder’s Warrants shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Notes and Warrants on a pro rata basis in proportion to the aggregate number of Shares issuable upon conversion of the Notes and exercise of the Warrants then held by each such Holder.

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	time or the giving of notice and without being cured would constitute a Triggering Event or an Event of Default; and (ii) on each day during the period beginning 90 days prior to the Company Alternative

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	Redemption Notice Date and ending on and including the applicable Company Alternative Redemption Date, the Company and its Subsidiaries otherwise shall have been in compliance with in all material respects and shall not have breached or been in breach in any material respect of any provision or covenant of the Securities Purchase Agreement or any of the other Transaction Documents.
	(d) Remedies. In the event that the Company does not pay the Company Alternative Redemption Price in full for the Holder’s Pro Rata Redemption Amount on the Company Alternative Redemption Date and the Conditions to Company Alternative Redemption were satisfied, or to the extent not satisfied, were waived by the Holder, then in addition to any remedy the Holder may have under this Note and the Securities Purchase Agreement (including indemnification pursuant to Section 8 thereof or at law or in equity), the Company Alternative Redemption Price payable in respect of such unredeemed Pro Rata Redemption Amount shall bear interest at the rate of the lesser of 1.5% per month (prorated for partial months) and the highest lawful maximum interest rate.

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	Company Alternative Conversion Date”), (x) the aggregate principal amount (or Interest in the case of an Interest Conversion Election) of the Series of Notes that the Company has elected to convert from all

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	the holders of Notes of such Series pursuant to this Section 8 (or other similar provisions in such Other Notes), and (y) each holder’s Pro Rata Conversion Amount.
	(b) Mechanics of Company Alternative Conversion. If the Company has exercised its right to Company Alternative Conversion in accordance with Section 8(a) and Section 6 or 13, as applicable, and the conditions of this Section 8 are satisfied (or waived in writing by the Holder) on the Company Alternative Conversion Notice Date and at each time the Holder delivers a Conversion Notice or is deemed to have delivered a Conversion Notice with respect to any portion of the Pro Rata Conversion Amount (a“Company Alternative Conversion Date”) (including the Conditions to Company Alternative Conversion as set forth in Section 8(c)), then, subject to Sections 5 and 8(d), the Holder shall convert the Pro Rata Conversion Amount, together with any Interest Amount with respect to the allocable portion of principal represented by such Pro Rata Conversion Amount accruing through and including the applicable Conversion Date, in whole or in part and at such time or times as the Holder, in its sole discretion determines, during the Company Alternative Conversion Period; provided, however, that the Holder shall not be permitted to convert during the Company Alternative Conversion Period, any portion of the Conversion Amount that exceeds the product of (i) the Holder’s Series Allocation Percentage and (ii) twenty percent (20%) of the sum of the daily dollar trading volume (as reported by Bloomberg) of the Common Stock on its Principal Market on each of the Trading Days during the Company Alternative Conversion Period (such limitation, the“Volume Conversion Restriction Amount”). In the event any Pro Rata Conversion Amount has not been converted by the Holder prior to the Final Company Alternative Conversion Date, then, subject to the limitations set forth in Sections 5 and 8(e), the remaining Pro Rata Conversion Amount shall be converted as of the Final Company Alternative Conversion Date, as if the Holder had delivered a Conversion Notice pursuant to Section 2 with respect to such Pro Rata Conversion Amount on the Final Company Alternative Conversion Date but without the Holder being required to actually deliver such Conversion Notice, provided that the Conditions to Company Alternative Conversion are satisfied (or waived in writing by the Holder) on the Final Company Alternative Conversion Date. In the event that the Conditions to Company Alternative Conversion are not satisfied on the Final Company Alternative Conversion Date (and, for the avoidance of doubt, on each day during the Company Alternative Conversion Period), then the Company Alternative Conversion shall be null and void with respect to all or any part designated by the Holder of the unconverted Pro Rata Conversion Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii), unless such Pro Rata Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance Amount or an Excluded Amount, in which the case Company shall be deemed to have given a Company Alternative Redemption Notice with respect to such unconverted Pro Rata Conversion Amount (and, for purposes of Section 7(a), shall be entitled to give such Company Alternative Redemption Notice), and such amount shall be redeemed or paid by the Company within five (5) Business Days in accordance with Section 7. Notwithstanding the foregoing, at any time during a Company Alternative Conversion Period that does not relate to an Interest Conversion or a Mandatory Compliance Conversion, the Company may give written notice to the Holder of termination of such Company Alternative Conversion Period, provided that the Company gives the same notice to all holders of Notes of this Series, and in such case, such Company Alternative Conversion Period shall terminate at the end of the first Business Day following the Holder’s receipt of such notice of termination, the Company Alternative Conversion shall be null and void with respect to any part of the Pro Rata Conversion Amount that has not been converted as of such termination of the Company Alternative Conversion Period (by delivering a Conversion Notice on or prior to the first Business Day following the Holder’s receipt of such notice of termination), and the Holder shall be entitled to all the rights of a holder of the Note with respect to such amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding

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	on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii). Notwithstanding anything contained herein to the contrary, no notice

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	delivered by the Company to any Holder regarding a Condition to Company Alternative Conversion shall contain any material non-public information.
	(c) Conditions to Company Alternative Conversion.“Conditions to Company Alternative Conversion” means the following conditions: (i) except in the case of an Interest Conversion or Mandatory Compliance Conversion, the aggregate principal amount of the Notes of any Series selected for conversion by the Company as reflected in the Company Alternative Conversion Notice is at least $500,000 (or, if less, the aggregate principal amount of the Notes of such Series then outstanding); (ii) none of the Expected Trading Days during the Company Alternative Conversion Period to which the Company Alternative Conversion Notice relates shall be Expected Trading Days in any Company Alternative Conversion Period as to which another Company Alternative Conversion Notice has been given pursuant to this Note or any Other Notes; (iii) the aggregate Conversion Amount of the Notes selected for conversion by the Company as reflected in the Company Alternative Conversion Notice shall not exceed fifteen percent (15%) of the product of (I) the arithmetic average of the daily dollar trading volume (as reported by Bloomberg) of the Common Stock on its Principal Market over the twenty (20) consecutive Trading Days ending on and including the date that is immediately preceding the Company Alternative Conversion Notice Date multiplied by (II) the number of Expected Trading Days during the Company Alternative Conversion Period to which the Company Alternative Conversion Notice relates; (iv) the Company shall not have delivered the Company Alternative Conversion Notice during any other Company Alternative Conversion Period nor, except in the case of a Company Alternative Conversion being effected for purposes of a Mandatory Compliance Conversion under Section 13, within twenty (20) Trading Days after the previous Final Company Alternative Conversion Date; (v) during the period beginning on and including the Issuance Date and ending on and including the Company Alternative Conversion Date, there shall not have occurred either (x) the public announcement of a pending, proposed or intended Change of Control that has not been abandoned, terminated or consummated and publicly disclosed as such at least ten (10) Trading Days prior to the Company Alternative Conversion Date or (y) a Triggering Event or an Event of Default (as defined in Section 11); (v) during the period beginning on the Issuance Date and ending on and including the Company Alternative Conversion Date, the Company shall have delivered Shares upon conversion of the Notes and upon exercise of the Warrants on a timely basis as set forth in Section 2(d)(ii) of the Notes and Section 2(a) of the Warrants, respectively; (vi) on each day during the period beginning on and including the date that is forty-five (45) days prior to the Company Alternative Conversion Notice Date and ending on and including the applicable Company Alternative Conversion Date, the Common Stock is listed on the NASDAQ National Market or the New York Stock Exchange and the Common Stock has not been suspended from trading on the NASDAQ National Market or the New York Stock Exchange nor shall delisting or suspension by the NASDAQ National Market or the New York Stock Exchange have been threatened either (A) in writing by the NASDAQ National Market or the New York Stock Exchange or (B) by falling below the minimum listing maintenance requirements of the NASDAQ National Market or the New York Stock Exchange; (vii) on each day during the period beginning on and including the date that is ten (10) days prior to the Company Alternative Conversion Notice Date and ending on and including the Company Alternative Conversion Date, a Registration Statement shall be effective and available for the sale of not less 150% of the Registrable Securities issuable upon conversion as of the Company Alternative Conversion Notice Date of the aggregate Conversion Amount selected for conversion by the Company as reflected in the Company Alternative Conversion Notice, in accordance with the Registration Rights Agreement, and there shall not have been any Grace Period applicable to such Registration Statement (as defined in the Registration Rights Agreement); (viii) on each day during the period beginning ninety (90) days prior to the Company Alternative Conversion Notice Date, the Company and its Subsidiaries otherwise shall have been in compliance with in all respects and shall not have breached or been in breach of any provision or covenant of the Notes or any other Transaction Documents; and (ix) the Company shall have obtained all requisite approvals of its stockholders for the issuance of the Shares to the holders of the Notes.

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	adjustment for stock splits, stock dividends, stock combinations and other similar events after the date of the Securities Purchase Agreement) or such higher price (which shall not exceed 85% of the lesser of (i) the arithmetic average of the Weighted Average Price of the Common Stock on each of the five (5) Trading Days immediately preceding the Company Alternative Conversion Notice Date and (ii) the Weighted Average Price on the Trading Day immediately preceding the Company Alternative Conversion Notice Date) as provided by the Company in the applicable Company Alternative Conversion Notice (the“Company Alternative Conversion Trigger Price”), then any Company Alternative Conversion pursuant to Section 8(b) shall automatically terminate with respect to any Pro Rata Conversion Amount that is not subject to a Conversion Notice delivered to the Company on or prior to the Company Alternative Conversion Floor Trigger Date (as defined below), in accordance with this Section 8(d). The Company Alternative Conversion Trigger Price shall be subject to adjustment for any stock dividend, stock split, stock combination or other similar transaction. The first Trading Day, if any, during the applicable Company Alternative Conversion Period on which the Weighted Average Price of the Common Stock is less than the Company Alternative Conversion Trigger Price shall constitute a“Company Alternative Conversion Floor Trigger Date” with respect to such Company Alternative Conversion Period. On the first day immediately following the Company Alternative Conversion Floor Trigger Date the Company Alternative Conversion shall be null and void with respect any portion of the Pro Rata Conversion Amount that the Holder has not converted on or prior to the Company Alternative Conversion Floor Trigger Date (by delivering a Conversion Notice on or prior to the Company Alternative Conversion Floor Trigger Date), and the holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii), unless such Pro Rata Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance Amount or an Excluded Amount, in which case the Company shall be deemed to have given a Company Alternative Redemption Notice with respect to such unconverted Pro Rata Conversion Amount (and, for purposes of Section 7(a) shall be entitled to give such Company Alternative Conversion Notice), and such amount shall be redeemed or paid by the Company within two (2) Business Days of the Company Alternative Conversion Floor Trigger Date in accordance with Section 7.
	(e) Company Alternative Conversion Period Volume Limitations. Notwithstanding anything contained in this Section 8 to the contrary, on the applicable Final Company Alternative Conversion Date, (i) the Holder shall not be required (but shall be permitted subject to clause (ii) of this Section 8(e)) to convert (and shall not be deemed, solely as a result of Section 8(b), to have converted) any portion of the Pro Rata Conversion Amount on the applicable Final Company Alternative Conversion Date in excess of the difference between (A) the product of (I) the Holder’s Series Allocation Percentage and (II) ten percent (10%) of the sum of the daily dollar trading volume (as reported by Bloomberg) of the Common Stock on its Principal Market on each of the Trading Days during the Company Alternative Conversion Period, minus (B) any Pro Rata Conversion Amount converted by the Holder during the Company Alternative Conversion Period and (ii) the Holder shall neither be required nor permitted to convert (and shall not be deemed, solely as a result of Section 8(b) to have converted) any portion of the Pro Rata Conversion Amount on the applicable Final Company Alternative Conversion Date in excess of the difference between (A) the applicable Volume Conversion Restriction Amount, minus (B) any Pro Rata Conversion Amount converted by the Holder during the Company Alternative Conversion Period. Following the Final Company Alternative Conversion Date, the Company Alternative Conversion shall be null and void with respect to the unconverted Pro Rata Conversion Amount, and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Pro Rata Conversion Amount, and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii), unless such

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	Pro Rata Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance Amount or an Excluded Amount, in which case the Company shall be deemed to have given a Company Alternative

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	Redemption Notice with respect to such unconverted Pro Rata Conversion Amount (and, for purposes of Section 7(a), shall be entitled to give such Company Alternative Redemption Notice), and such amount shall be redeemed or paid by the Company within five (5) Business Days in accordance with Section 7.

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	that (1) is for relief against the Company in an involuntary case; (2) appoints a Custodian (as defined below) of the Company or any Subsidiary for all or substantially all of its property; or (3) orders the

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	liquidation of the Company or any Subsidiary; (vii) the Company fails to file, or is determined to have failed to file, in a timely manner any report required to be filed with the SEC pursuant to the 1934 Act, provided that any filing made within the time period permitted by Rule 12b-25 under the 1934 Act and pursuant to a timely filed Form 12b-25 shall, for purposes of this clause (vii), be deemed to be timely filed; (viii) the Company or any of its Subsidiaries breaches any representation, warranty, covenant or other term or condition of the Security Documents that adversely affects the security interest of the Holder (or any agent or representative thereof on their behalf) in any material portion of the Collateral (as defined in the Security Agreement) or the perfection or priority thereof; or (ix) one or more judgments, non-interlocutory orders or decrees shall be entered by a U.S. state or federal or a foreign court or administrative agency of competent jurisdiction against any the Company or any of its Subsidiaries involving in the aggregate a liability (to the extent not covered by independent third-party insurance) as to any single or related series of transactions, incidents or conditions, of $300,000 or more, and the same shall remain unsatisfied, unvacated, unbonded or unstayed pending appeal for a period of thirty (30) days after the entry thereof. The term“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. The term“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Within five (5) Business Days after the occurrence of any Event of Default set forth in clause (iv), (v), (vi), (viii) or (ix) above, the Company shall deliver written notice thereof to the Holder.
	(b) Remedies. If an Event of Default occurs and is continuing, the Holder of this Note may declare all of this Note, including all amounts due hereunder (the“Acceleration Amount”), to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (v) and (vi) of Section 11(a), this Note shall immediately become due and payable without further action or notice. In addition to any remedy the Holder may have under this Note and the Securities Purchase Agreement, such unpaid amount shall bear interest at the rate of the lesser of 1.5% per month (prorated for partial months) or the highest lawful maximum interest rate until paid in full. Nothing in this Section 11 shall limit any other rights the Holder may have under this Note, the Security Documents or the Securities Purchase Agreement, including Sections 2 and 3 of this Note.
	(c) Void Acceleration. In the event that the Company does not pay the Acceleration Amount within five (5) Business Days of this Note becoming due under Section 11(b), at any time thereafter and until the Company pays such unpaid Acceleration Amount in full, the Holder shall have the option to, in lieu of redemption, require the Company to promptly return this Note (to the extent this Note has been previously delivered to the Company), in whole or any portion thereof, to the Holder, by sending written notice thereof to the Company via facsimile (the“Void Acceleration Notice”). Upon the Company’s receipt of such Void Acceleration Notice, (i) the acceleration pursuant to Section 11(b) shall be null and void with respect to the portion of this Note subject to such Void Acceleration Notice, and (ii) the Company shall promptly return the portion of this Note (to the extent this Note has been previously delivered to the Company) subject to such Void Acceleration Notice.

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	provided the Company is in compliance with Sections 7 and 8 in connection therewith (such amount in this clause (B) being referred to as the“Excluded Amount”).
	(xxiii) “Maturity Date” means the earliest to occur of (A) the Fixed Maturity Date, (B) the date of a Maturity Date Triggering Event, (C) such date as all amounts due under this Note have been fully paid.
	(xxiv) “Maturity Date Extension” means the holders of Notes representing at least two-thirds (2/3) of the aggregate principal amount of the then outstanding Notes that are of the same Series as this Note, have (A) received a notice from the Company no earlier than sixty (60) days, and no later than thirty (30) days prior to[INSERT the date that is 30 months after the Issuance Date](which notice the Company may deliver on only one occasion with respect to such Series of Notes), requesting the holders of such Series of Notes to extend the Fixed Maturity Date by twelve (12) months and (B) within ten (10) Business Days of receipt of the notice described in clause (A) (such 10-Business-Day Period, the“Response Period”), agreed in writing to extend the Maturity Date of all the Notes of such Series by twelve (12) months, (provided that, for the avoidance of doubt, if the Company does not receive such written agreement within the Response Period from the requisite holders of the Notes of such Series, such requested extension shall be deemed denied and the Fixed Maturity Date shall not be extended).
	(xxv) “Maturity Date Triggering Event” means any principal amount of the 7% Notes is outstanding on the Business Day immediately preceding the scheduled maturity date of the 7% Notes, unless the Free Cash Flow Amount as of the end of the quarterly or annual period covered by the quarterly report on Form 10-Q or annual report on Form 10-K most recently filed, or required to be filed, by the Company with the SEC exceeds 150% of the Aggregate Notes Balance as of the Business Day immediately preceding the scheduled maturity of the 7% Notes.
	(xxvi) “Other Notes” means all of the senior secured notes, other than this Note, that have been issued by the Company pursuant to the Securities Purchase Agreement and all notes issued in exchange therefor or replacement thereof.
	(xxvii) “Permitted Lien” means (a) Liens created by the Security Documents; (b) Liens existing on the date of this Agreement not otherwise described in any other clause of this definition and set forth onSchedule 3(bb); (c) Liens for taxes or other governmental charges not at the time due and payable so long as the Company and its Subsidiaries maintain adequate reserves in accordance with United States generally accepted accounting principles(“GAAP”) in respect of such taxes and charges; (d) Liens arising in the ordinary course of business in favor of carriers, warehousemen, mechanics and materialmen, or other similar Liens imposed by law, which remain payable without penalty or which are being contested in good faith by appropriate proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto, and in each case for which adequate reserves in accordance with GAAP are being maintained; (e) Liens arising in the ordinary course of business in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or Liens consisting of cash collateral securing the Company’s or any of its Active Subsidiaries’ performance of surety bonds, bids, performance bonds and similar obligations (exclusive of obligations for the payment of borrowed money) permitted pursuant to clause (a)(IV) of Section 12 and, in each case, for which the Company maintains adequate reserves; (f) attachments, appeal bonds (and cash collateral securing such bonds), judgments and other similar Liens, for sums not exceeding $500,000 in the aggregate for Company and its Subsidiaries, arising in connection with court proceedings, provided that the execution or other enforcement of such Liens is effectively stayed; (g) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens arising in the ordinary course of business and not materially detracting from

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	the value of the property subject thereto and not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary; (h) Liens in favor of U.S. Bank and LaSalle in respect of the Duke LC Account and the Returned Items Account (each as defined in the Security Agreement) to the extent such accounts are maintained and permitted to exist in accordance with the terms of the Security Agreement; (i) Liens consisting of cash collateral securing the Company’s and its Active Subsidiaries’ reimbursement obligations under letters of credit permitted by clauses (a)(VI) and (a)(VII) of Section 12, provided that the aggregate amount of cash collateral securing such Indebtedness does not exceed the undrawn face amount of all such letters of credit outstanding at any one time; (j) Liens securing Indebtedness listed on Schedule 4(u) of the Securities Purchase Agreement for up to thirty (30) days following the Initial Closing Date; (k) Liens on equipment subject to Capital Lease Obligations permitted to be incurred pursuant to clause (a)(V) of Section 12, to the extent such Liens secure such Capital Lease Obligations; and (l) Liens in favor of Schlumberger Technology Corporation and Red Oak Capital Management LP (collectively, the“Service Parties”), granted pursuant to the Joint Value Enhancement Agreement, dated December 3, 2003, among Infinity Oil & Gas of Wyoming, Inc.(“IOGW”) and the Service Parties (as in effect on the date hereof, the“JVEA”), on the three (3) Project Wells (as such term is defined in the JVEA) described on Exhibit C to Schedule VIII of the Security Agreement, to the extent such Liens secure the obligations of IOGW to the Service Parties under the JVEA.
	(xxviii) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof or any other legal entity.
	(xxix) “Principal” means the outstanding principal amount of this Note as of any date of determination.
	(xxx) “Priority Notes Balance” means, as of the date of any determination, the aggregate outstanding principal amount of all the Notes that have a Fixed Maturity Date that is later than the Fixed Maturity Date of this Note, together with all accrued but unpaid interest thereon.
	(xxxi) “Principal Market” means, with respect to the Common Stock or any other security, the NASDAQ National Market or if the Common Stock or such other security, as the case may be, is not traded on the NASDAQ National Market, then the principal securities exchange or trading market for the Common Stock or such other security.
	(xxxii) “Registrable Securities” for purposes of this Note means Shares issued or issuable upon conversion of this Note, and any shares of capital stock issued or issuable with respect to such Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on conversions of this Note.
	(xxxiii) “Registration Rights Agreement” means that certain registration rights agreement, dated as of January 13, 2005, among the Company and the initial holders of the Notes relating to the filing of registration statements covering, among other things, the resale of Registrable Securities, as such agreement may be amended from time to time as provided in such agreement.
	(xxxiv) “Registration Statement” means a registration statement or registration statements filed under the 1933 Act pursuant to the Registration Rights Agreement covering the resale of Registrable Securities.
	(xxxv) “SEC” means the United States Securities and Exchange Commission, or any successor thereto.
	(xxxvi) “Security Agreement” means that certain security agreement among the Company, its Active Subsidiaries and the initial holders of the Notes relating to the granting by the

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	Company and the Subsidiaries of a first-priority security interest in all the assets of the Company and its Active Subsidiaries, as such agreement may be amended from time to time as provided in such agreement.
	(xxxvii) “Security Documents” means any agreement, document or instrument executed concurrently herewith or at any time hereafter pursuant to which the Company, its Active Subsidiaries or any other Person either (i) guarantees payment or performance of all or any portion of the obligations hereunder or under any other instruments delivered in connection with the transactions contemplated hereby and by the Securities Purchase Agreement, and/or (ii) provides, as security for all or any portion of such obligations, a Lien on any of its assets in favor of the Holder, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.
	(xxxviii) “Series Allocation Percentage” means, with respect to each holder of Notes of the same Series as this Note, a fraction of which the numerator is the aggregate principal amount of Notes of such Series initially purchased by such holder on the Issuance Date and of which the denominator is the aggregate principal amount of Notes of such Series purchased by all holders on the Issuance Date.
	(xxxix) “Services Business Free Cash Flow” means, as of the date of any determination, the result of (A) the consolidated net operating income before interest, taxes, depreciation and amortization of the oil field services segment of the operations of the Company and its Subsidiaries (as such segment is described in the Company’s annual report on Form 10-K for the year ended December 31, 2003), excluding net operating income derived from the Company and its affiliates, for the 12-month period ended on such date of determination, plus (B) the aggregate amount of interest, service charges and fees paid by the Company in connection with the LaSalle Facility and the mortgage Indebtedness of Consolidated Oil Well Services, Inc. listed on Schedule 4(u) to the Securities Purchase Agreement prior to December 31, 2004 but during the 12-month period ended on such date of determination, minus (C) all capital expenditures not funded solely out of the proceeds of Permitted Subordinate Debt or issuances of non-redeemable capital stock of the Company, interest and income taxes, in each case, of such segment for such 12-month period, all as determined in accordance with GAAP applied on a consistent basis and disclosed in the Company’s most recently filed quarterly report on Form 10-Q and/or annual report on Form 10-K, as applicable.
	(xxxx) “Services Business Revenue” means, as of the date of any determination, the consolidated revenue from the oil field services segment of the operations of the Company and its Subsidiaries (as such segment is described in the Company’s annual report on Form 10-K for the year ended December 31, 2003) excluding net revenue derived from the Company and its affiliates, for the 12-month period ended on such date of determination, determined in accordance with GAAP applied on a consistent basis and disclosed in the Company’s most recently filed quarterly report on Form 10-Q and/or annual report on Form 10-K, as applicable.
	(xli)“Shares” means shares of Common Stock.
	(xlii)“Trading Day” means any day on which the Common Stock is traded on its Principal Market; provided that “Trading Day” shall not include any day on which the Principal Market is open for trading for less than 4.5 hours.
	(xliii)“Warrants” means the warrants issued to the holders of the Notes pursuant to the Securities Purchase Agreement, and all warrants issued in exchange or substitution therefor or replacement thereof pursuant to the terms of such warrants or the Securities Purchase Agreement.
	(xliv)“Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on its Principal Market during the period beginning at 9:30 a.m. New York City time (or such other time as its Principal Market publicly announces is

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the official open of trading) and ending at 4:00 p.m. New York City time (or such other time as its Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price” functions, or if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m. New York City time (or such other time as such over-the-counter market publicly announces is the official open of trading), and ending at 4:00 p.m. New York City time (or such other time as such over-the-counter market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by the National Quotation Bureau, Inc. If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of Notes representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding as to which such determination is being made. If the Company and the holders of the Notes representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding as to which such determination is being made are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(d)(iii) below with the term “Weighted Average Price” being substituted for the term “Conversion Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during any period during which the Weighted Average Price is being determined.

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	receipt of such Conversion Notice to the Holder and the Company’s designated transfer agent (the“Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein and (II) on or before the second (2nd) Business Day following the date of receipt or deemed receipt by the Company of such Conversion Notice (the“Share Delivery Date”) (A) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program and provided that the Holder is eligible to receive Shares through DTC, credit such aggregate number of Shares to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (B) if the foregoing shall not apply, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of Shares to which the Holder shall be entitled. If this Note is submitted for conversion, as may be required by Section 2(d)(viii), and the Principal represented by this Note is greater than the Principal 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, issue and deliver to the Holder a new Note representing the Principal not converted.
	(iii) Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price or the arithmetic calculation of the Conversion Rate, the Company shall instruct the Transfer Agent to issue to the Holder the Shares representing the number of Shares that is not disputed and shall transmit an explanation of the disputed determinations or arithmetic calculations to the Holder via facsimile within two (2) Business Day of receipt or deemed receipt of the Holder’s Conversion Notice or other date of determination. If the Holder and the Company are unable to agree upon the determination of the Conversion Price or arithmetic calculation of the Conversion Rate within one (1) Business Day of such disputed determination or arithmetic calculation being transmitted to the Holder, then the Company shall promptly (and in any event within two (2) Business Days) submit via facsimile (A) the disputed determination of the Conversion Price to an independent, reputable investment banking firm agreed to by the Company and the holders of the Notes representing at least two-thirds (2/3) of the aggregate principal amounts of the Notes then outstanding as to which such determination is being made, or (B) the disputed arithmetic calculation of the Conversion Rate to the Company’s independent, outside accountant, as the case may be. The Company shall direct the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than two (2) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
	(iv) Record Holder. The person or persons entitled to receive the Shares issuable upon a conversion of this Note shall be treated for all purposes as the legal and record holder or holders of such Shares on the Conversion Date.
	(v) Company’s Failure to Timely Convert.

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	each day after the Share Delivery Date such conversion is not timely effected and/or each day after the Note Delivery Date such Note is not delivered in an amount equal to 0.5% of the sum of (a) the product of (I) the number of Shares not issued to the Holder or its designee on or prior to the Share Delivery Date and to which the Holder is entitled and (II) the Weighted Average Price of the Common Stock on the Share Delivery Date (such product is referred to herein as the“Share Product Amount”), and (b) in the event the Company has failed to deliver a Note to the Holder on or prior to the Note Delivery Date, the product of (y) the number of Shares issuable upon conversion of the Principal represented by the Note as of the Note Delivery Date and (z) the Weighted Average Price of the Common Stock on the Note Delivery Date; provided that in no event shall cash damages accrue pursuant to this Section 2(d)(v)(A) with respect to the Share Product Amount during the period, if any, in which the Conversion Price or the arithmetic calculation of the Conversion Rate is subject to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(d)(iii), provided that the Shares are delivered to the Holder within two (2) Business Days of the resolution of such bona fide dispute. Alternatively, subject to Section 2(d)(iii), at the election of the Holder made in the Holder’s sole discretion, the Company shall pay to the Holder, in lieu of the additional damages referred to in the preceding sentence (but in addition to all other available remedies that the Holder may pursue hereunder and under the Securities Purchase Agreement (including indemnification pursuant to Section 8 thereof or at law or in equity)), 110% of the amount by which (A) the Holder’s total purchase price (including brokerage commissions, if any) for the Shares purchased to make delivery in satisfaction of a sale by the Holder of the Shares to which the Holder is entitled but has not received upon a conversion exceeds (B) the net proceeds received by the Holder from the sale of the Shares to which the Holder is entitled but has not received upon such conversion. If the Company fails to pay the additional damages set forth in this Section 2(d)(v)(A) within five (5) Business Days of the date incurred, then the Holder entitled to such payments shall have the right at any time, so long as the Company continues to fail to make such payments, to require the Company, upon written notice, to immediately issue, in lieu of such cash damages, the number of Shares equal to the quotient of (X) the aggregate amount of the damages payments described herein divided by (Y) the Conversion Price in effect on such Conversion Date as specified by the Holder in the Conversion Notice.
	(B) Void Conversion Notice; Adjustment to Conversion Price. If for any reason the Holder has not received all of the Shares prior to the tenth (10th) Business Day after the Share Delivery Date with respect to a conversion of this Note, other than due to the limitation contained in Section 5(b) or to the pendency of a dispute being resolved in accordance with Section 2(d)(iii) (a“Conversion Failure”), then the Holder, upon written notice to the Company (a“Void Conversion Notice”), may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to the Holder’s Conversion Notice; provided that the voiding of the Holder’s Conversion Notice shall not affect the Company’s obligations to make any payments that have accrued prior to the date of such notice pursuant to Section 2(d)(v)(A) or otherwise.
	(C) Redemption. In the event of a Conversion Failure, the Holder, upon written notice to the Company, may require that the Company redeem, in accordance with Section 3, all of the Principal, including the Principal previously submitted for conversion and with respect to which the Company has not delivered shares of Common Stock; provided that the Holder shall not be entitled to require redemption of any Principal pursuant to this clause (C) solely as a result of a Conversion Failure caused by any Principal being the subject of a bona fide dispute that is subject to and being resolved

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	pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(d)(iii), provided the Shares are delivered to the Holder within two (2) Business Days of the resolution of such bona fide dispute.

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	Registration Rights Agreement to be declared effective by the SEC on or prior to the date that is 45 days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);
	(ii) while a Note Registration Statement filed pursuant to Section 2(a)(iii), Section 2(a)(iv) or Section 2(e)(iii) of the Registration Rights Agreement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of such Note Registration Statement lapses for any reason (including the issuance of a stop order) or is unavailable to the Holder for sale of Note Registrable Securities (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period (other than days during an Allowable Grace Period (as defined in the Registration Rights Agreement));
	(iii) the suspension from trading or failure of the Common Stock to be listed on the NASDAQ National Market or the New York Stock Exchange for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period;
	(iv) the Company’s or the Transfer Agent’s notice to any holder of the Notes, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Notes into Shares that is tendered in accordance with the provisions of the Notes (excluding, however, a notice that relates solely to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 2(d)(iii), provided neither such dispute nor such notice is publicly disclosed);
	(v) a Conversion Failure (as defined in Section 2(d)(v)(B));
	(vi) upon the Company’s receipt or deemed receipt of a Conversion Notice, the Company not being obligated to issue Shares upon such conversion due to the provisions of Section 5(c).
	(vii) the Company or any of its Subsidiaries breaches any representation, warranty, covenant or other term or condition of the Securities Purchase Agreement, the Registration Rights Agreement, the Warrants, this Note, the Security Documents or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby and hereby, except to the extent that such breach would not have a Material Adverse Effect (as defined in Section 3(a) of the Securities Purchase Agreement) and except, in the case of a breach of a covenant or other term that is curable, only if such breach continues for a period of at least ten (10) days after any “officer” (as such term is defined in Rule 16a-1 under the 1934 Act) of the Company, or the principal financial officer of any of the Company’s Active Subsidiaries, knew or reasonably should have known of such breach; or
	(viii) the Company does not comply with the provisions of Section 6, 7, 12 or 13 hereof or Section 4(l), 4(n), 4(o), 4(p), 4(q), 4(r), 4(s), 4(t) or 4(v) or the last sentence of Section 4(w) of the Securities Purchase Agreement.

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	it and (ii) the applicable Redemption Price, as calculated pursuant to Section 3(a) above; provided that a Notice of Redemption at Option of Holder may only be sent during the period beginning on and including the date of the Triggering Event and ending on and including the date which is twenty (20) Business Days after the date on which the Holder receives a Notice of Triggering Event from the Company with respect to such Triggering Event.
	(d) Payment of Redemption Price. Upon the Company’s receipt of a Notice(s) of Redemption at Option of the Holder from any holder of the Other Notes, the Company shall promptly notify the Holder by facsimile of the Company’s receipt of such notice(s). Each holder that has sent such a notice shall, if required pursuant to Section 2(d)(viii), promptly submit to the Company such holder’s Note that such holder has elected to have redeemed. The Company shall deliver the applicable Redemption Price to the Holder within five (5) Business Days after the Company’s receipt of a Notice of Redemption at Option of Holder, provided that the Holder’s Note shall have been so delivered to the Company. If the Company is unable to redeem all of the Notes submitted for redemption, the Company shall (i) redeem a pro rata amount from each holder of the Notes based on the principal amount of the Notes submitted for redemption by such holder relative to the aggregate principal amount of the Notes submitted for redemption by all holders of the Notes, and (ii) in addition to any remedy the Holder may have under this Note, the Securities Purchase Agreement and the Security Documents, pay to the Holder interest at the rate of the lesser of 1.5% per month (prorated for partial months) or the highest lawful maximum interest rate in respect of the unredeemed Principal until paid in full.
	(e) Void Redemption. In the event that the Company does not pay the Redemption Price within the time period set forth in Section 3(d), at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option (the“Void Optional Redemption Option”) to, in lieu of redemption, require the Company to promptly return to the Holder any or all of the Notes or any portion thereof representing the Principal that was submitted for redemption by the Holder under this Section 3 and for which the Redemption Price (together with any interest thereon) has not been paid, by sending written notice thereof to the Company via facsimile (the“Void Optional Redemption Notice”). Upon the Company’s receipt of such Void Optional Redemption Notice, (i) the Notice of Redemption at Option of Holder shall be null and void with respect to the Principal subject to the Void Optional Redemption Notice, and (ii) the Company shall immediately return to the Holder any Note subject to the Void Optional Redemption Notice.
	(f) Disputes; Miscellaneous. In the event of a bona fide dispute as to the determination of the arithmetic calculation of the Redemption Price, such dispute shall be resolved pursuant to Section 2(d)(iii) above, with the term “Redemption Price” being substituted for the term “Conversion Rate.” A holder’s delivery of a Void Optional Redemption Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments that have accrued prior to the date of such notice. In the event of a redemption pursuant to this Section 3 of less than all of the Principal, the Company shall promptly cause to be issued and delivered to the Holder a Note representing the remaining Principal that has not been redeemed, if necessary.

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	Person purchasing such assets or the successor resulting from such Organic Change (in each case, the“Acquiring Entity”) a written agreement, in form and substance satisfactory to the holders representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding, to deliver to the Holder in exchange for this Note, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Note and satisfactory to the holders representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding. Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the holders representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding) to ensure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the Shares immediately theretofore acquirable and receivable upon the conversion of this Note (without regard to any limitations or restrictions on conversion) such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of Shares that would have been acquirable and receivable upon the conversion of this Note as of the date of such Organic Change (without taking into account any limitations or restrictions on the conversion of this Note).
	(b) Optional Redemption Upon Change of Control. In addition to the rights of the Holder under Section 4(a), upon a Change of Control (as defined below) of the Company the Holder shall have the right, at the Holder’s option, to require the Company to redeem all or a portion of the Principal at a price equal to 105% (or 115% in the case of an event satisfying the definition of Change of Control pursuant to subsection (iii) below) of the Principal plus the Interest Amount with respect to such Principal (the“Change of Control Redemption Price”). No sooner than thirty (30) nor later than twenty (20) Business Days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile and overnight courier (a“Notice of Change of Control”) to the Holder. At any time during the period beginning after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least twenty (20) Business Days prior to a Change of Control, at any time on or after the date which is twenty (20) Business Days prior to a Change of Control) and ending on the date of such Change of Control, the Holder may require the Company to redeem all or a portion of the Principal by delivering written notice thereof via facsimile and overnight courier (a“Notice of Redemption Upon Change of Control”) to the Company, which Notice of Redemption Upon Change of Control shall be irrevocable (provided that the Company complies with its obligations under this Section 4(b)) and shall indicate (i) the Principal that the Holder is submitting for redemption, and (ii) the applicable Change of Control Redemption Price, as calculated pursuant to this Section 4(b). Upon the Company’s receipt of a Notice(s) of Redemption Upon Change of Control from any holder of the Other Notes, the Company shall promptly, but in no event later than one (1) Business Day following such receipt, notify the Holder by facsimile of the Company’s receipt of such Notice(s) of Redemption Upon Change of Control. The Company shall deliver the Change of Control Redemption Price simultaneously with the consummation of the Change of Control; provided that, if required by Section 2(d)(viii), this Note shall have been so delivered to the Company. The Company shall not enter into any binding agreement or other arrangement with respect to a Change of Control unless the Company provides that the payments provided for in this Section 4(b) shall have priority to payments to stockholders in connection with such Change of Control and the Company complies with such provision. For purposes of this Section 4(b),“Change of Control” means (i) the consolidation, merger or other business combination of the Company with or into another Person (other than (A) a consolidation, merger or other business combination in which holders of the Company’s voting power immediately prior to the transaction continue after the transaction to hold, directly or indirectly, a majority of the combined voting power of the surviving entity or entities entitled to vote generally for the election of a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company), (ii) the sale or transfer of all or

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	substantially all of the Company’s assets (including, for the avoidance of doubt, the sale of all or substantially all of the assets of the Company’s Subsidiaries in the aggregate) or (iii) the consummation of a purchase, tender or exchange offer made to and accepted by the holders of more than the 50% of the outstanding Shares.

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outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holders representing at least two-thirds (2/3) of the aggregate principal amount of the Notes then outstanding. Until Shareholder Approval or such written opinion is obtained, no purchaser of Notes pursuant to the Securities Purchase Agreement (the“Purchasers”) shall be issued, upon conversion of, or as interest on, this Note, a number of Shares greater than the product of (i) the difference of (x) the Exchange Cap, minus (y) the sum of (A) the aggregate number of Shares that have been issued upon exercise of any Warrants or upon conversion of any Notes prior to the date of such determination and (B) 120% of the Shares issuable as of the date of such determination upon exercise of all Warrants then outstanding, multiplied by (ii) such Purchaser’s Allocation Percentage (the“Cap Allocation Amount”). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser’s Notes, the transferee shall be allocated a pro rata portion of such Purchaser’s Cap Allocation Amount. In the event that any holder of Notes shall convert all of such holder’s Notes and exercise all of such holder’s Warrants into a number of Shares in an amount which, in the aggregate, is less than such holder’s Cap Allocation Amount, then the difference between such holder’s Cap Allocation Amount and the number of Shares actually issued to such holder upon conversion of such holder’s Notes and exercise of such holder’s Warrants shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Notes and Warrants on a pro rata basis in proportion to the aggregate number of Shares issuable upon conversion of the Notes and exercise of the Warrants then held by each such Holder.

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	Company Alternative Redemption Notice is referred to as the“Company Alternative Redemption Notice Date.” A Company Alternative Redemption Notice shall be irrevocable by the Company. If the Company elects a Company Alternative Redemption pursuant to this Section 7(a), then it must simultaneously take the same action with respect to all of the Other Notes of the same Series as this Note. If the Company elects a Company Alternative Redemption (and similar action under Other Notes of the same Series) with respect to less than all of the aggregate principal amount of Notes of such Series then outstanding, then the Company shall elect to redeem a principal amount (together with the related Interest Amount) from each of the holders of Notes of such Series equal to the product of (I) the aggregate principal amount of the Notes of such Series that the Company has elected to redeem pursuant to this Section 7 (or the similar provisions of such Other Notes), multiplied by (II) the Holder’s Series Allocation Percentage (such amount with respect to each holder of the Notes is referred to as its“Pro Rata Redemption Amount” and with respect to the Holder is referred to as the Pro Rata Redemption Amount). In the event that the initial holder of any Notes of such Series shall sell or otherwise transfer any of such holder’s Notes, the transferee shall be allocated a pro rata portion of such holder’s Series Allocation Percentage. The Company Alternative Redemption Notice shall state (i) the date selected by the Company for the Company Alternative Redemption Date in accordance with this Section 7(a), (ii) the aggregate principal amount of Notes of such Series that the Company has elected to redeem from all of the holders of Notes of such Series pursuant to this Section 7 and (iii) each holder’s Pro Rata Redemption Amount of the principal amount of Notes of such Series the Company has elected to redeem pursuant to this Section 7(a).
	(b) Mechanics of Company Alternative Redemption. If the Company has exercised its right to Company Alternative Redemption in accordance with Section 7(a) and the conditions of this Section 7 are satisfied on the Company Alternative Redemption Date (including the Conditions to Company Alternative Redemption as set forth in Section 7(c)) (or waived in writing by the Holder), then the Holder’s Pro Rata Redemption Amount, if any, that remains outstanding on the Company Alternative Redemption Date shall be redeemed by the Company on such Company Alternative Redemption Date by the payment by the Company to the Holder on such Company Alternative Redemption Date, by wire transfer of immediately available funds, of an amount equal to the Company Alternative Redemption Price for the Holder’s Pro Rata Redemption Amount. Notwithstanding anything contained herein to the contrary, no notice delivered by the Company to any Holder regarding a Condition to Company Alternative Redemption shall contain any material non-public information.
	(c) Conditions to Company Alternative Redemption. For purposes of this Section 7,“Conditions to Company Alternative Redemption” means the following conditions: (i) during the period beginning on and including the Issuance Date and ending on and including the applicable Company Alternative Redemption Date, there shall not have occurred either (x) the public announcement of a pending, proposed or intended Change of Control that has not been abandoned, terminated or consummated and publicly disclosed as such at least ten (10) Trading Days prior to the Company Alternative Redemption Notice Date or (y) a Triggering Event or an Event of Default, or an event that with the passage of time or the giving of notice and without being cured would constitute a Triggering Event or an Event of Default; and (ii) on each day during the period beginning 90 days prior to the Company Alternative Redemption Notice Date and ending on and including the applicable Company Alternative Redemption Date, the Company and its Subsidiaries otherwise shall have been in compliance with in all material respects and shall not have breached or been in breach in any material respect of any provision or covenant of the Securities Purchase Agreement or any of the other Transaction Documents.
	(d) Remedies. In the event that the Company does not pay the Company Alternative Redemption Price in full for the Holder’s Pro Rata Redemption Amount on the Company Alternative Redemption Date and the Conditions to Company Alternative Redemption were satisfied, or to the extent not satisfied, were waived by the Holder, then in addition to any remedy

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the Holder may have under this Note and the Securities Purchase Agreement (including indemnification pursuant to Section 8 thereof or at law or in equity), the Company Alternative Redemption Price payable in respect of such unredeemed Pro Rata Redemption Amount shall bear interest at the rate of the lesser of 1.5% per month (prorated for partial months) and the highest lawful maximum interest rate.

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the Company Alternative Conversion Notice Date and at each time the Holder delivers a Conversion Notice or is deemed to have delivered a Conversion Notice with respect to any portion of the Pro Rata Conversion Amount (a“Company Alternative Conversion Date”) (including the Conditions to Company Alternative Conversion as set forth in Section 8(c)), then, subject to Sections 5 and 8(d), the Holder shall convert the Pro Rata Conversion Amount, together with any Interest Amount with respect to the allocable portion of principal represented by such Pro Rata Conversion Amount accruing through and including the applicable Conversion Date, in whole or in part and at such time or times as the Holder, in its sole discretion determines, during the Company Alternative Conversion Period; provided, however, that the Holder shall not be permitted to convert during the Company Alternative Conversion Period, any portion of the Conversion Amount that exceeds the product of (i) the Holder’s Series Allocation Percentage and (ii) twenty percent (20%) of the sum of the daily dollar trading volume (as reported by Bloomberg) of the Common Stock on its Principal Market on each of the Trading Days during the Company Alternative Conversion Period (such limitation, the“Volume Conversion Restriction Amount”). In the event any Pro Rata Conversion Amount has not been converted by the Holder prior to the Final Company Alternative Conversion Date, then, subject to the limitations set forth in Sections 5 and 8(e), the remaining Pro Rata Conversion Amount shall be converted as of the Final Company Alternative Conversion Date, as if the Holder had delivered a Conversion Notice pursuant to Section 2 with respect to such Pro Rata Conversion Amount on the Final Company Alternative Conversion Date but without the Holder being required to actually deliver such Conversion Notice, provided that the Conditions to Company Alternative Conversion are satisfied (or waived in writing by the Holder) on the Final Company Alternative Conversion Date. In the event that the Conditions to Company Alternative Conversion are not satisfied on the Final Company Alternative Conversion Date (and, for the avoidance of doubt, on each day during the Company Alternative Conversion Period), then the Company Alternative Conversion shall be null and void with respect to all or any part designated by the Holder of the unconverted Pro Rata Conversion Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii), unless such Pro Rata Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance Amount or an Excluded Amount, in which the case Company shall be deemed to have given a Company Alternative Redemption Notice with respect to such unconverted Pro Rata Conversion Amount (and, for purposes of Section 7(a), shall be entitled to give such Company Alternative Redemption Notice), and such amount shall be redeemed or paid by the Company within five (5) Business Days in accordance with Section 7. Notwithstanding the foregoing, at any time during a Company Alternative Conversion Period that does not relate to an Interest Conversion or a Mandatory Compliance Conversion, the Company may give written notice to the Holder of termination of such Company Alternative Conversion Period, provided that the Company gives the same notice to all holders of Notes of this Series, and in such case, such Company Alternative Conversion Period shall terminate at the end of the first Business Day following the Holder’s receipt of such notice of termination, the Company Alternative Conversion shall be null and void with respect to any part of the Pro Rata Conversion Amount that has not been converted as of such termination of the Company Alternative Conversion Period (by delivering a Conversion Notice on or prior to the first Business Day following the Holder’s receipt of such notice of termination), and the Holder shall be entitled to all the rights of a holder of the Note with respect to such amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii). Notwithstanding anything contained herein to the contrary, no notice delivered by the Company to any Holder regarding a Condition to Company Alternative Conversion shall contain any material non-public information.

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	adjustment for stock splits, stock dividends, stock combinations and other similar events after the date of the Securities Purchase Agreement) or such higher price (which shall not exceed 85% of the lesser of (i) the arithmetic average of the Weighted Average Price of the Common Stock on each of the five (5) Trading Days immediately preceding the Company Alternative Conversion Notice Date and (ii) the Weighted Average Price on the Trading Day immediately preceding the Company Alternative Conversion Notice Date) as provided by the Company in the applicable Company Alternative Conversion Notice (the“Company Alternative Conversion Trigger Price”), then any Company Alternative Conversion pursuant to Section 8(b) shall automatically terminate with respect to any Pro Rata Conversion Amount that is not subject to a Conversion Notice delivered to the Company on or prior to the Company Alternative Conversion Floor Trigger Date (as defined below), in accordance with this Section 8(d). The Company Alternative Conversion Trigger Price shall be subject to adjustment for any stock dividend, stock split, stock combination or other similar transaction. The first Trading Day, if any, during the applicable Company Alternative Conversion Period on which the Weighted Average Price of the Common Stock is less than the Company Alternative Conversion Trigger Price shall constitute a“Company Alternative Conversion Floor Trigger Date” with respect to such Company Alternative Conversion Period. On the first day immediately following the Company Alternative Conversion Floor Trigger Date the Company Alternative Conversion shall be null and void with respect any portion of the Pro Rata Conversion Amount that the Holder has not converted on or prior to the Company Alternative Conversion Floor Trigger Date (by delivering a Conversion Notice on or prior to the Company Alternative Conversion Floor Trigger Date), and the holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii), unless such Pro Rata Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance Amount or an Excluded Amount, in which case the Company shall be deemed to have given a Company Alternative Redemption Notice with respect to such unconverted Pro Rata Conversion Amount (and, for purposes of Section 7(a) shall be entitled to give such Company Alternative Conversion Notice), and such amount shall be redeemed or paid by the Company within two (2) Business Days of the Company Alternative Conversion Floor Trigger Date in accordance with Section 7.
	(e) Company Alternative Conversion Period Volume Limitations. Notwithstanding anything contained in this Section 8 to the contrary, on the applicable Final Company Alternative Conversion Date, (i) the Holder shall not be required (but shall be permitted subject to clause (ii) of this Section 8(e)) to convert (and shall not be deemed, solely as a result of Section 8(b), to have converted) any portion of the Pro Rata Conversion Amount on the applicable Final Company Alternative Conversion Date in excess of the difference between (A) the product of (I) the Holder’s Series Allocation Percentage and (II) ten percent (10%) of the sum of the daily dollar trading volume (as reported by Bloomberg) of the Common Stock on its Principal Market on each of the Trading Days during the Company Alternative Conversion Period, minus (B) any Pro Rata Conversion Amount converted by the Holder during the Company Alternative Conversion Period and (ii) the Holder shall neither be required nor permitted to convert (and shall not be deemed, solely as a result of Section 8(b) to have converted) any portion of the Pro Rata Conversion Amount on the applicable Final Company Alternative Conversion Date in excess of the difference between (A) the applicable Volume Conversion Restriction Amount, minus (B) any Pro Rata Conversion Amount converted by the Holder during the Company Alternative Conversion Period. Following the Final Company Alternative Conversion Date, the Company Alternative Conversion shall be null and void with respect to the unconverted Pro Rata Conversion Amount, and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Pro Rata Conversion Amount, and, accordingly, shall be subject to all the other provisions of this Note, including that if such amount remains outstanding on the Maturity Date, then the Company shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii), unless such Pro Rata

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Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance Amount or an Excluded Amount, in which case the Company shall be deemed to have given a Company Alternative Redemption Notice with respect to such unconverted Pro Rata Conversion Amount (and, for purposes of Section 7(a), shall be entitled to give such Company Alternative Redemption Notice), and such amount shall be redeemed or paid by the Company within five (5) Business Days in accordance with Section 7.

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	assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; (vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (1) is for relief against the Company in an involuntary case; (2) appoints a Custodian (as defined below) of the Company or any Subsidiary for all or substantially all of its property; or (3) orders the liquidation of the Company or any Subsidiary; (vii) the Company fails to file, or is determined to have failed to file, in a timely manner any report required to be filed with the SEC pursuant to the 1934 Act, provided that any filing made within the time period permitted by Rule 12b-25 under the 1934 Act and pursuant to a timely filed Form 12b-25 shall, for purposes of this clause (vii), be deemed to be timely filed; (viii) the Company or any of its Subsidiaries breaches any representation, warranty, covenant or other term or condition of the Security Documents that adversely affects the security interest of the Holder (or any agent or representative thereof on their behalf) in any material portion of the Collateral (as defined in the Security Agreement) or the perfection or priority thereof; or (ix) one or more judgments, non-interlocutory orders or decrees shall be entered by a U.S. state or federal or a foreign court or administrative agency of competent jurisdiction against any the Company or any of its Subsidiaries involving in the aggregate a liability (to the extent not covered by independent third-party insurance) as to any single or related series of transactions, incidents or conditions, of $300,000 or more, and the same shall remain unsatisfied, unvacated, unbonded or unstayed pending appeal for a period of thirty (30) days after the entry thereof. The term“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. The term“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Within five (5) Business Days after the occurrence of any Event of Default set forth in clause (iv), (v), (vi), (viii) or (ix) above, the Company shall deliver written notice thereof to the Holder.
	(b) Remedies. If an Event of Default occurs and is continuing, the Holder of this Note may declare all of this Note, including all amounts due hereunder (the“Acceleration Amount”), to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (v) and (vi) of Section 11(a), this Note shall immediately become due and payable without further action or notice. In addition to any remedy the Holder may have under this Note and the Securities Purchase Agreement, such unpaid amount shall bear interest at the rate of the lesser of 1.5% per month (prorated for partial months) or the highest lawful maximum interest rate until paid in full. Nothing in this Section 11 shall limit any other rights the Holder may have under this Note, the Security Documents or the Securities Purchase Agreement, including Sections 2 and 3 of this Note.
	(c) Void Acceleration. In the event that the Company does not pay the Acceleration Amount within five (5) Business Days of this Note becoming due under Section 11(b), at any time thereafter and until the Company pays such unpaid Acceleration Amount in full, the Holder shall have the option to, in lieu of redemption, require the Company to promptly return this Note (to the extent this Note has been previously delivered to the Company), in whole or any portion thereof, to the Holder, by sending written notice thereof to the Company via facsimile (the“Void Acceleration Notice”). Upon the Company’s receipt of such Void Acceleration Notice, (i) the acceleration pursuant to Section 11(b) shall be null and void with respect to the portion of this Note subject to such Void Acceleration Notice, and (ii) the Company shall promptly return the portion of this Note (to the extent this Note has been previously delivered to the Company) subject to such Void Acceleration Notice.

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in writing to be subordinate to the Notes on terms and conditions acceptable to the Buyers, including with regard to interest payments and repayment of principal, (B) which does not mature or otherwise require or permit redemption or repayment prior to or on the Maturity Date of any Notes then outstanding; and (C) which is not secured by any assets of the Company or any of its Subsidiaries, (III) Indebtedness solely between the Company and/or one of its domestic Active Subsidiaries, on the one hand, and the Company and/or one of its domestic Active Subsidiaries, on the other, provided that in each case a majority of the equity of any such domestic Active Subsidiary is directly or indirectly owned by the Company, such domestic Active Subsidiary is controlled by the Company and such domestic Active Subsidiary is a party to the Guaranty Agreement and the Security Agreement, (IV) surety bonds, bids, performance bond, and similar obligations (exclusive of obligations for the payment of borrowed money) obtained by the Company and its Subsidiaries in the ordinary course of business for the purpose of satisfying federal, state and/or local legal requirements for owning and operating their oil and gas properties or operating the Services Business, (V) Capital Lease Obligations incurred in connection with acquiring equipment for the Company’s oil and gas exploration and production business in amounts not exceeding individually, the fair market value of the equipment subject to such Capital Lease Obligations and in an aggregate outstanding amount not exceeding 7.5% of After-tax PV10 at any one time, (VI) reimbursement obligations in respect of letters of credit issued by one or more financial institutions for the account of the Company or any of its Active Subsidiaries in connection with the Company’s establishment and maintenance of a Hedged position with respect to, at any time, a maximum of2/3 of the Company’s estimate of its oil and gas production for the succeeding 12 calendar months on a rolling 12-calendar month basis, (VII) reimbursement obligations in respect of letters of credit issued for the account of the Company or any of its Active Subsidiaries for the purpose of securing performance obligations of the Company or its Active Subsidiaries incurred in the ordinary course of business (and not issued in connection with the Company’s establishment and maintenance of a Hedged position) so long as the aggregate face amount of all such letters of credit do not exceed $1,000,000 at any one time, (VIII) Indebtedness under that certain unsecured promissory note, dated January 27, 2003, in the name of Dobber Aviation, L.L.C., in a principal amount not exceeding $2,500,000 (less any payments of principal thereon or other reductions to principal made from time to time with respect thereto), and (IX) that certain unsecured obligation of the Company to Premium Assignment Corporation existing as of the date of this Agreement in an amount not to exceed $159,623.86 (less any payments of such obligation or other reductions to such obligation made from time to time with respect thereto); (b) issue, incur, assume, or extend the term of any Indebtedness in a principal amount in excess of $2,000,000 where the proceeds of such Indebtedness are to be used to develop, or in connection with the development of, assets located outside the United States in which the holders of the Notes do not have a valid, perfected first priority security interest; (c) issue any capital stock of the Company or any Subsidiary redeemable prior to the Maturity Date; (d) directly or indirectly, create, assume or suffer to exist any Lien, other than a Permitted Lien, on any asset now owned or hereafter acquired by the Company or any of its Subsidiaries; or (e) except as required or expressly permitted by Section 4(d), 4(q), 4(r) or 4(u) of the Securities Purchase Agreement, redeem, or otherwise repay in cash any principal of, any Indebtedness (other than Indebtedness under the Notes). For purposes of this Note: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than unsecured account trade payables that are (i) entered into or incurred in the ordinary course of the Company’s and its Subsidiaries’ business, (ii) on terms that require full payment within 90 days, (iii) not unpaid in excess of 90 days beyond invoice due date or are being contested in good faith and as to which such reserve as is required by GAAP has been made and (iv) not exceeding at any one time an aggregate among the Company and its Subsidiaries of $5,000,000 in the oil and gas production segment of the Company’s business (as such segment is described in the Company’s annual report on Form 10-K for the year ended December 31, 2003) or $1,000,000 in all other segments of the Company’s business, collectively, (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures, redeemable capital stock or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional

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	sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all Capital Lease Obligations, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, Lien, pledge, change, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person that owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Capital Lease Obligation” means, as to any Person, any obligation that is required to be classified and accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof, determined in accordance with GAAP; and (z) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
	(13) Free Cash Flow Amount and Mandatory Compliance Conversion or Redemption. On the first Business Day following each date that the Company files or is required to file an annual report on Form 10-K or a quarterly report on Form 10-Q (which in each case shall disclose the Free Cash Flow Amount as of the end of the period covered by such report and details of the calculation thereof, and the components thereof), the Company shall deliver to the Holder a certificate executed by its principal financial officer (an“Officer’s Certificate”) certifying as to whether or not as of the end of the period covered by such report, there is a Free Cash Flow Test Failure and the related calculations with respect thereto. Notwithstanding anything contained herein to the contrary, no Officer’s Certificate delivered by the Company to any Holder regarding a Free Cash Flow Test Failure shall contain any material non-public information. Upon each occurrence of a Free Cash Flow Test Failure, the Company shall provide the Holder, by the third (3rd) Business Day following the delivery of the Officer’s Certificate either (i) if permitted by the provisions of Section 8, a Company Alternative Conversion Notice for a Company Alternative Conversion of Principal of this Note equal to the applicable Mandatory Compliance Amount, and any Interest Amount related thereto, in accordance with, and subject to the conditions and requirements of, Section 8 (a“Mandatory Compliance Conversion”), (ii) a Company Alternative Redemption Notice for a Company Alternative Redemption of the Principal of this Note equal to the applicable Mandatory Compliance Amount, and any Interest Amount related thereto, in accordance with Section 7 (a“Mandatory Compliance Redemption”) or (iii) a combination of the immediately preceding clauses (i) and (ii); provided that all of the outstanding applicable Mandatory Compliance Amount, and any Interest Amount related thereto, must be converted or redeemed by the Company, subject to the provisions of Section 7 and/or 8, as applicable; provided further that the Company may elect more than one of the Mandatory Compliance Conversion and the Mandatory Compliance Redemption, if each such election is with respect to at least 20% of the Mandatory Compliance Amount and if such election is the same for all Notes of the same Series. If the Company has not satisfied the conditions required to make a Mandatory Compliance Conversion election with respect to one or more Series of Notes, subject to satisfaction of the conditions of Section 8, the Company may still make a Mandatory Compliance Conversion election with respect to those Series of Notes for which it can satisfy the conditions for delivery of a Mandatory Compliance Conversion election. Upon delivery of a Company Alternative Redemption Notice or Company Alternative Conversion Notice pursuant to the preceding sentence, the Company is required to comply with the provisions of Sections 7 and 8, respectively. If a Company Alternative Conversion Notice does not cover the entire applicable Mandatory Compliance Amount or no Company Alternative Conversion Notice is given with respect to an applicable Mandatory Compliance Amount, the Company will be deemed to have elected a Mandatory Compliance Redemp-

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	tion hereunder with respect to the remaining Mandatory Compliance Amount not covered by a Company Alternative Conversion Notice (and, for purposes of Section 7(a), shall be entitled to elect such Mandatory Compliance Redemption).
	(14) Participation; Restrictions. While this Note is outstanding, the Company shall not, and shall not permit any of its Subsidiaries to: (i) declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; provided however, that any Subsidiary may declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any of its capital stock that is held solely by the Company or by a domestic Active Subsidiary, provided that a majority of the equity of such domestic Active Subsidiary is directly or indirectly owned by the Company, such domestic Active Subsidiary is controlled by the Company and such domestic Active Subsidiary is a party to the Guaranty Agreement and the Security Agreement, (ii) purchase, redeem or otherwise acquire, directly or indirectly, any shares of its capital stock or the capital stock of any of its Subsidiaries, direct or indirect, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof and set forth onSchedule 3(c) of the Securities Purchase Agreement, or (iii) grant, issue or sell any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of its capital stock. While this Note is outstanding, the Company and its Subsidiaries shall not enter into any agreement which would limit or restrict the Company’s or any of its Subsidiaries’ ability to perform under, or take any other voluntary action to avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it under, this Note, the Securities Purchase Agreement, the Registration Rights Agreement, the Warrants and the Security Documents.
	(15) Notices.

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	the Company shall not be obligated to re-issue a Note if the Holder contemporaneously requests the Company to convert this Note in its entirety into Shares as permitted hereunder.
	(18) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy, and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
	(19) Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general provision contained herein. This Note shall be deemed to be jointly drafted by the Company and all Purchasers and shall not be construed against any person as the drafter hereof.
	(20) Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
	(21) Notice. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement.
	(22) Transfer of this Note. The Holder may assign or transfer some or all of its rights hereunder, subject to compliance with the 1933 Act and the provisions of Section 2(f) of the Securities Purchase Agreement without the consent of the Company, provided that any transfer of this Note to a Person that is not an affiliate of the Holder of this Note of less than all of the Principal represented hereby, shall be in Principal amount of not less than $2,000,000.
	(23) Payment of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; or (b) an attorney is retained to represent the Holder in any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action, including reasonable attorneys’ fees and disbursements.
	(24) Cancellation. After all principal and other amounts at any time owed under this Note have been paid in full or converted into Shares in accordance with the terms hereof, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
	(25) Note Exchangeable for Different Denominations. Subject to Section 2(d)(viii), in the event of a conversion or redemption pursuant to this Note of less than all of the Principal, the Company shall promptly cause to be issued and delivered to the Holder, upon tender by the Holder of this Note, a new Note of like tenor representing the remaining Principal that has not been so converted or redeemed. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes containing the same terms and conditions and representing in the aggregate the Principal, and each such new Note will represent such portion of such Principal as is designated by the

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	Holder at the time of such surrender. The date the Company issued this Note shall be the “Issuance Date” hereof regardless of the number of times a new Note shall be issued.
	(26) Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, the Security Documents and the Securities Purchase Agreement.
	(27) Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other country or jurisdiction) that would cause the application of the laws of any jurisdiction or country other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
	(28) Effect of Redemption or Conversion; No Prepayment. Upon payment of the Redemption Price, the Change of Control Redemption Price, the Company Alternative Redemption Price or the amount provided for in Section 2(d)(vii), each in accordance with the terms hereof with respect to any portion of the Principal of this Note, or delivery of Shares upon conversion of any portion of the Principal in accordance with the terms hereof, such portion of the Principal of this Note shall be deemed paid in full and shall no longer be deemed outstanding for any purpose. Except as specifically set forth in this Note, including Section 2, the Company does not have any right, option, or obligation, to pay any portion of the Principal at any time prior to the Maturity Date.
	(29) Payment Set Aside. To the extent that the Company makes a payment or payments to the Holder hereunder or the Holder enforces or exercises its rights hereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, by a trustee, receiver or any other person under any law (including any bankruptcy law, U.S. state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
	(30) Interpretative Matters. Unless the context otherwise requires, (a) all references to Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained in or attached to this Note, (b) each accounting term not otherwise defined in this Note has the meaning assigned to it in accordance with GAAP, (c) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (d) the use of the word “including” in this Note shall be by way of example rather than limitation. If a stock split, stock dividend, stock combination or other similar event occurs during any period over which an average price is being determined, then an appropriate adjustment will be made to such average to reflect such event.

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	Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 8(b)(ii), the “lowest price per share for which one share of Common Stock is issuable upon such conversion, exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of any such Convertible Security and upon conversion, exchange or exercise of such Convertible Security. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion, exchange or exercise of such Convertible Security, and if any such issue or sale of such Convertible Security is made upon exercise of any Option for which adjustment of the Warrant Exercise Price had been or are to be made pursuant to other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issue or sale.
	(iii) Change in Option Price or Rate of Conversion. If the purchase, exchange or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Options or Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Warrant Exercise Price in effect at the time of such change shall be adjusted to the Warrant Exercise Price that would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase, exchange or exercise price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold and the number of shares of Common Stock acquirable hereunder shall be correspondingly readjusted. For purposes of this Section 8(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Warrant Exercise Price then in effect.

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	this Warrant. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the“Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the holder of this Warrant. The determination of such appraiser shall be final and binding upon all parties absent demonstrable error, and the fees and expenses of such appraiser shall be borne by the Company.
	(ii) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.
	(iii) Black-Scholes Value. The“Black-Scholes Value” of any Options shall mean the sum of the amounts resulting from applying theBlack-Scholespricing model to each such Option, which calculation is made with the following inputs: (i) the “option striking price” being equal to the lowest exercise price possible under the terms of such Option on the date of the issuance of such Option (the“Valuation Date”), (ii) the “interest rate” being equal to the interest rate on one-year United States Treasury Bills issued most recently prior to the Valuation Date, (iii) the “time until option expiration” being the time from the Valuation Date until the expiration date of such Option, (iv) the “current stock price” being equal to the Weighted Average Price of the Common Stock on the Valuation Date, (v) the “volatility” being the 100-day historical volatility of the Common Stock as of the Valuation Date (as reported by the Bloomberg “HVT” screen), and (vi) the “dividend rate” being equal to zero. Within three (3) Business Days after the Company Valuation Date, each of the Company and the holder of this Warrant shall deliver to the other a written calculation of its determination of the Black-Scholes value of the Options. If the holder and the Company are unable to agree upon the calculation of the Black-Scholes Value of the Options within five (5) Business Days of the Valuation Date, then the Company shall submit via facsimile the disputed calculation to an investment banking firm (jointly selected by the Company and the holder of this Warrant) within seven (7) Business Days of the Valuation Date. The Company shall direct such investment banking firm to perform the calculations and notify the Company and the holder of the results no later than ten (10) Business Days after the Valuation Date. Such investment banking firm’s calculation of the Black-Scholes Value of the Options shall be deemed conclusive absent demonstrable error. The Company shall bear the fees and expenses of such investment banking firm for providing such calculation.

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