THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CERAGENIX PHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

Principal
$_______________                                                                                                                    
Issue Date: November ___, 2005

SECURED CONVERTIBLE NOTE

          FOR VALUE RECEIVED, CERAGENIX PHARMACEUTICALS, INC., a Delaware
corporation (hereinafter called "Borrower"), hereby promises to pay to
____________________________,
____________________________________________________________ (the "Holder") or
order, without demand, the sum of ________________________________________
Dollars ($_________), with unpaid accrued interest, on November ___, 2007 (the
"Maturity Date"), or sooner as described herein.

          This Note has been entered into pursuant to the terms of a
subscription agreement between the Borrower and the Holder, dated of even date
herewith (the "Subscription Agreement"), and shall be governed by the terms of
such Subscription Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to this Note:

ARTICLE I

GENERAL PROVISIONS

          1.1          Interest Rate. Subject to Section 5.6 hereof, interest
payable on this Note shall accrue at a rate per annum (the "Interest Rate")
equal to ten percent (10%) per year on the outstanding principal balance,
compounded annually. Interest on the Principal Amount shall first be payable on
the sooner of 120 days after the Issue Date, or five Business Days after the
Actual Effective Date and on the same day of the month each three months
thereafter and on the Maturity Date, whether by acceleration or otherwise.
Provided an Event of Default has not occurred and interest is paid timely, the
Borrower may pay one-half the interest payable on this Note with registered
free-trading shares of Common Stock with an attributed value per share equal to
85% of the volume weighted average price of the Common Stock as reported by
Bloomberg L.P. for the Principal Market for the five consecutive trading days
ending on the trading day preceding the date interest is due to be paid
hereunder. Interest shall compound annually. This Note may be pre-paid at any
time without penalty in accordance with the terms of Section 2.5 hereof.

          1.2          Conversion Privileges. The Conversion Privileges set
forth in Article II shall remain in full force and effect immediately from the
date hereof and until the Note is paid in full regardless of the occurrence of
an Event of Default. The Note shall be payable in full on the Maturity Date,
unless previously converted into Common Stock in accordance with Article II
hereof, provided, that if an Event of Default has occurred, the Holder may
extend the Maturity Date for up to a time period equal to the duration of the
Event of Default.

          1.3          Default Interest Rate. A default interest rate of fifteen
percent (15%) per annum shall apply to amounts owed hereunder which are not paid
on their respective due dates.

ARTICLE II

CONVERSION RIGHTS

          The Holder shall have the right to convert the outstanding principal
and interest due under this Note into Shares of the Borrower's Common Stock, no
par value per share ("Common Stock") as set forth below.

                    2.1.          Conversion into the Borrower's Common Stock.

                    (a)          Subject to the terms of this Note, the Holder
shall have the right from and after the date of the issuance of this Note and
then at any time until this Note is fully paid, to convert any outstanding and
unpaid principal portion of this Note, and accrued interest, at the election of
the Holder (the date of giving of such notice of conversion being a "Conversion
Date") into fully paid and nonassessable shares of Common Stock as such stock
exists on the date of issuance of this Note, or any shares of capital stock of
Borrower into which such Common Stock shall hereafter be changed or
reclassified, at the conversion price as defined in Section 2.1(b) hereof (the
"Conversion Price"), determined as provided herein. Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which is annexed hereto,
Borrower shall issue and deliver to the Holder within three (3) business days
from the Conversion Date (such third day being the "Delivery Date") that number
of shares of Common Stock for the portion of the Note converted in accordance
with the foregoing. At the election of the Holder, the Borrower will deliver
accrued but unpaid interest on the Note through the Conversion Date directly to
the Holder on or before the Delivery Date. The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
that portion of the principal of the Note and interest to be converted, by the
Conversion Price.

                    (b)          Subject to adjustment as provided in this
Section 2.1(b) and Section 2.1(c) hereof, the Conversion Price per share shall
be $____ [the lesser of $2.05, or the average of the Volume Weighted Average
Prices of the Common Stock as reported by Bloomberg L.P. for the OTC Bulletin
board for the twenty trading days ending on the last trading day before the
Closing Date] per share of Common Stock, subject to adjustment as described
herein. From and after (i) the occurrence of an Event of Default, or (ii) the
occurrence of a Milestone Default (as defined below), the Conversion Price shall
be reduced (but not increased) to the lesser of the Conversion Price in effect
prior to the occurrence of the Milestone Default or the average of the volume
weighted average prices of the Common Stock as reported by Bloomberg L.P. for
the Principal Market for the five trading days preceding the Reporting Date (as
defined below). A Milestone Default shall occur if the Borrower does not report
as of a Reporting Date on a Form 10-Q, 10-QSB, 10-K or 10-KSB (or successor
forms, each a "Form") Revenues and EBITDA equal or greater than the amounts set
forth on Schedule A hereto, for any one or more of the periods as set forth on
Schedule A hereto. The Reporting Date shall be the last date the Form is
required to be filed after permitted extensions or, if sooner, the date the Form
is actually filed.

                    (c)           The Conversion Price and number and kind of
shares or other securities to be issued upon conversion determined pursuant to
Section 2.1(a), shall be subject to adjustment from time to time upon the
happening of certain events while this conversion right remains outstanding, as
follows:

                              A.          Merger, Sale of Assets, etc. If the
Borrower at any time shall consolidate with or merge into or sell or convey all
or substantially all its assets to any other corporation, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase such number and kind of shares or
other securities and property as would have been issuable or distributable on
account of such consolidation, merger, sale or conveyance, upon or with respect
to the securities subject to the conversion or purchase right immediately prior
to such consolidation, merger, sale or conveyance as if the Holder had converted
this Note immediately prior to such event. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.

                              B.          Reclassification, etc. If the Borrower
at any time shall, by reclassification or otherwise, change the Common Stock
into the same or a different number of securities of any class or classes that
may be issued or outstanding, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase an adjusted number of such securities and kind of securities
as would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other change as if
the Holder had converted this Note immediately prior to such event.

                              C.          Stock Splits, Combinations and
Dividends. If the shares of Common Stock are subdivided or combined into a
greater or smaller number of shares of Common Stock, or if a dividend is paid on
the Common Stock in shares of Common Stock, the Conversion Price shall be
proportionately reduced in case of subdivision of shares or stock dividend or
proportionately increased in the case of combination of shares, in each such
case by the ratio which the total number of shares of Common Stock outstanding
immediately before such event bears to the total number of shares of Common
Stock outstanding immediately after to such event..

                              D.          Share Issuance. So long as this Note
is outstanding, if the Borrower shall issue or agree to issue any shares of
Common Stock except for the Excepted Issuances for a consideration less than the
Conversion Price in effect at the time of such issue, then, and thereafter
successively upon each such issue, the Conversion Price shall be reduced to such
other lower issue price. For purposes of this adjustment, the issuance of any
security carrying the right to convert such security into shares of Common Stock
or of any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Conversion Price upon the issuance of the above-described
security and again upon the issuance of shares of Common Stock upon exercise of
such conversion or purchase rights if such issuance is at a price lower than the
then applicable Conversion Price. The reduction of the Conversion Price
described in this paragraph is in addition to other rights of the Holder
described in this Note and the Subscription Agreement.

                    (d)          Whenever the Conversion Price is adjusted
pursuant to Section 2.1(c) above, the Borrower shall promptly mail to the Holder
a notice setting forth the Conversion Price after such adjustment and setting
forth a statement of the facts requiring such adjustment.

                    (e)          During the period the conversion right exists,
Borrower will reserve from its authorized and unissued Common Stock not less
than 175% of the number of shares of Common Stock issuable upon the full
conversion of this Note. Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable. Borrower agrees
that its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the conversion of this Note.

                    2.2          Method of Conversion. This Note may be
converted by the Holder in whole or in part as described in Section 2.1(a)
hereof and the Subscription Agreement. Upon partial conversion of this Note, a
new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Borrower to the Holder for the principal
balance of this Note and interest which shall not have been converted or paid.

                    2.3          Maximum Conversion. The Holder shall not be
entitled to convert on a Conversion Date that amount of the Note in connection
with that number of shares of Common Stock which would be in excess of the sum
of (i) the number of shares of Common Stock beneficially owned by the Holder and
its affiliates on a Conversion Date, (ii) any Common Stock issuable in
connection with the unconverted portion of the Note, and (iii) the number of
shares of Common Stock issuable upon the conversion of the Note with respect to
which the determination of this provision is being made on a Conversion Date,
which would result in beneficial ownership by the Holder and its affiliates of
more than 4.99% of the outstanding shares of Common Stock of the Borrower on
such Conversion Date. For the purposes of this Section 2.3, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate conversions of only
4.99% and aggregate conversion by the Holder may exceed 4.99%. The Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section 2.3 will limit any conversion hereunder and to the extent that
the Holder determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Holder. The Holder may waive the conversion
limitation described in this Section 2.3, in whole or in part, upon and
effective after 61 days prior written notice to the Borrower. The Holder may
decide whether to convert a Note or exercise this Warrant to achieve an actual
4.99% ownership position.

                    2.4.          Mandatory Conversion. Provided an Event of
Default (or an event that with the passage of time or the giving of notice could
become an Event of Default) has not occurred, whether or not such Event of
Default has been cured, then commencing after the Actual Effective Date, the
Borrower will have the option by written notice to the Holder ("Notice of
Mandatory Conversion") of compelling the Holder to convert the outstanding and
unpaid Principal Amount, and accrued interest, of this Note into Common Stock at
the Conversion Price then in affect ("Mandatory Conversion"). The Notice of
Mandatory Conversion must be given, if at all, within ten (10) days following
any consecutive twenty (20) day trading period ("Lookback Period") during which
the closing bid price for the Borrower's Common Stock as reported by Bloomberg,
LP for the Principal Market is more than 200% of the Conversion Price each day
during the Lookback Period. The date the Notice of Mandatory Conversion is given
is the "Mandatory Conversion Date." The Notice of Mandatory Conversion shall
specify the aggregate principal amount of the Note which is subject to Mandatory
Conversion. Mandatory Conversion Notices must be given proportionately to all
Holders of Notes who hold Notes similar in terms and tenure as this Note. A
Notice of Mandatory Conversion may not be given unless the Registration
Statement has been effective for the unrestricted public resale of the
Registrable Securities each day during the Lookback Period and for the three
trading days thereafter. Notices of Mandatory Conversion may not be given in
connection with the aggregate amount of Common Stock that would exceed 20% of
the amount of Common Stock traded on the Principal Market during the Lookback
Period as reported by Bloomberg L.P. The amount of Note principal included in a
Mandatory Conversion Notice shall be further reduced to an amount that would not
cause the Holder to exceed the limitation described in Section 2.3 of this Note.
A further Mandatory Conversion Notice may not be given until twenty (20) trading
days have elapsed from the preceding Mandatory Conversion Date. Each Mandatory
Conversion Date shall be a deemed Conversion Date and the Borrower will be
required to deliver the Common Stock issuable pursuant to a Mandatory Conversion
Notice in the same manner and time period as described in Section 2.1 above.

                    2.5.          Optional Redemption of Principal Amount. From
and after the Actual Effective Date (as defined in the Subscription Agreement)
and provided an Event of Default (or an event that with the passage of time or
the giving of notice could become an Event of Default) has not occurred, whether
or not such Event of Default has been cured, unless waived by the Holders, the
Borrower will have the option of prepaying the outstanding and unpaid Principal
amount, and accrued interest, of this Note ("Optional Redemption"), in whole or
in part, by paying to the Holder a sum of money equal to one hundred and twenty
percent (120%) of the principal amount to be redeemed, together with accrued but
unpaid interest thereon and any and all other sums due, accrued or payable to
the Holder arising under this Note or any Transaction Document through the
Redemption Payment Date as defined below (the "Redemption Amount"). Borrower's
election to exercise its right to prepay must be by notice in writing ("Notice
of Redemption"). The Notice of Redemption shall specify the date for such
Optional Redemption (the "Redemption Payment Date"), which date shall be thirty
(30) days after the date of the Notice of Redemption (the "Redemption Period").
A Notice of Redemption shall not be effective with respect to any portion of the
Principal Amount for which the Holder has a pending election to convert; for
conversions initiated or made by the Holder during the Redemption Period; nor
for principal and interest amounts, the conversion of which would exceed the
limits set forth in Section 2.3 of this Note. On the Redemption Payment Date,
the Redemption Amount, less any portion of the Redemption Amount against which
the Holder had exercised its conversion rights shall be paid in good funds to
the Holder. In the event the Borrower fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then at the election of the Holder
(i) such Notice of Redemption will be null and void, (ii) Borrower will not have
the right to deliver another Notice of Redemption, and (iii) Borrower's failure
may be deemed by Holder to be non-curable Event of Default. A Redemption Notice
may be given only at a time when the Registration Statement is effective.

ARTICLE III

EVENT OF DEFAULT

          The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest (to the extent accrued) then remaining unpaid hereon and all other
amounts payable hereunder immediately due and payable, upon demand, without
presentment, or grace period, all of which hereby are expressly waived, except
as set forth below:

                    3.1          Failure to Pay Principal or Interest. The
Borrower fails to pay any installment of principal, interest or other sum due
under this Note when due and such failure continues for a period of ten (10)
business days after the due date.

                    3.2          Breach of Covenant. The Borrower breaches any
material covenant or other term or condition of the Subscription Agreement or
this Note in any material respect and such breach, if subject to cure, continues
for a period of ten (10) business days after written notice to the Borrower from
the Holder.

                    3.3          Breach of Representations and Warranties. Any
material representation or warranty of the Borrower made herein, in the
Subscription Agreement, or in any agreement, statement or certificate given in
writing pursuant hereto or in connection therewith shall be false or misleading
in any material respect as of the date made and the Closing Date.

                    3.4          Receiver or Trustee. The Borrower shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be appointed
without the consent of the Borrower and is not dismissed within forty-five (45)
days of appointment.

                    3.5          Judgments. Any money judgment, writ or similar
final process shall be entered or filed against Borrower or any of its property
or other assets for more than $75,000, and shall remain unvacated, unbonded or
unstayed for a period of forty-five (45) days.

                    3.6          Bankruptcy. Bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings or relief under
any bankruptcy law or any law, or the issuance of any notice in relation to such
event, for the relief of debtors shall be instituted by or against the Borrower
and if instituted against Borrower are not dismissed within forty-five (45) days
of initiation.

                    3.7          Delisting. Delisting of the Common Stock from
any Principal Market without relisting on another Principal Market within five
days of such delisting; failure to comply with the requirements for continued
listing on any Principal Market for a period of fifteen consecutive trading
days; or notification from any Principal Market that the Borrower is not in
compliance with the conditions for such continued listing on such Principal
Market and Borrower's failure to be in compliance within five days of such
notice.

                    3.8          Non-Payment. A payment default by the Borrower
under any one or more obligations in an aggregate monetary amount in excess of
$100,000 for more than twenty days after the due date, unless the Borrower is
contesting the validity of such obligation in good faith.

                    3.9          Stop Trade. An SEC or judicial stop trade order
or Principal Market trading suspension that lasts for five or more consecutive
trading days.

                    3.10          Failure to Deliver Common Stock or Replacement
Note. Borrower's failure to timely deliver Common Stock to the Holder pursuant
to and in the form required by this Note and Sections 7 and 11 of the
Subscription Agreement, or, if required, a replacement Note.

                    3.11          Non-Registration Event. The occurrence of a
Non-Registration Event as described in Section 11.4 of the Subscription
Agreement.

                    3.12          Reservation Default. Failure by the Borrower
to have reserved for issuance upon conversion of the Note the amount of Common
stock as set forth in this Note and the Subscription Agreement.

                    3.13          Cross Default. A default by the Borrower of a
material term, covenant, warranty or undertaking of any other agreement to which
the Borrower and Holder are parties, or the occurrence of a material event of
default under any such other agreement which is not cured after any required
notice and/or cure period.

                    3.14          Filing Default. Failure by the Company to
timely file Forms with the Commission after applicable permitted extensions and,
if the Borrower is not required to file Forms, then failure to file Forms on a
voluntary basis by the date the Forms would be required to have been filed.

ARTICLE IV

SECURITY INTEREST

          4.          Security Interest/Waiver of Automatic Stay. This Note is
secured by a security interest granted to the Collateral Agent for the benefit
of the Holder pursuant to a Security Agreement, as delivered by Borrower to
Holder. The Borrower acknowledges and agrees that should a proceeding under any
bankruptcy or insolvency law be commenced by or against the Borrower, or if any
of the Collateral (as defined in the Security Agreement) should become the
subject of any bankruptcy or insolvency proceeding, then the Holder should be
entitled to, among other relief to which the Holder may be entitled under the
Transaction Documents and any other agreement to which the Borrower and Holder
are parties (collectively, "Loan Documents") and/or applicable law, an order
from the court granting immediate relief from the automatic stay pursuant to 11
U.S.C. Section 362 to permit the Holder to exercise all of its rights and
remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11
U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO
ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Borrower hereby consents to any motion for relief from stay
that may be filed by the Holder in any bankruptcy or insolvency proceeding
initiated by or against the Borrower and, further, agrees not to file any
opposition to any motion for relief from stay filed by the Holder. The Borrower
represents, acknowledges and agrees that this provision is a specific and
material aspect of the Loan Documents, and that the Holder would not agree to
the terms of the Loan Documents if this waiver were not a part of this Note. The
Borrower further represents, acknowledges and agrees that this waiver is
knowingly, intelligently and voluntarily made, that neither the Holder nor any
person acting on behalf of the Holder has made any representations to induce
this waiver, that the Borrower has been represented (or has had the opportunity
to he represented) in the signing of this Note and the Loan Documents and in the
making of this waiver by independent legal counsel selected by the Borrower and
that the Borrower has discussed this waiver with counsel.

ARTICLE V

MISCELLANEOUS

                    5.1          Failure or Indulgence Not Waiver. No failure or
delay on the part of Holder hereof 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. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

                    5.2          Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i)
personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: (i) if to the
Borrower to: Ceragenix Pharmaceuticals, Inc., 1444 Wazee Street, Suite 210,
Denver, CO 80202, Attn: Steven S. Porter, CEO, telecopier: (303) 534-1860, with
a copy by telecopier only to: Cliff Neuman, Esq., Clifford L. Neuman, P.C.,
Temple-Bowron House, 1507 Pine Street, Boulder, CO 80302, telecopier: (303)
449-1045, and (ii) if to the Holder, to the name, address and telecopy number
set forth on the front page of this Note, with a copy by telecopier only to
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
telecopier number: (212) 697-3575.

                    5.3          Amendment Provision. The term "Note" and all
reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented.

                    5.4          Assignability. The obligations of Borrower
under this Note are not assignable without the consent of the Holder. This Note
shall be binding upon the Borrower and its successors and assigns, and shall
inure to the benefit of the Holder and the permitted assigns of the Note.

                    5.5          Governing Law. This Note shall be governed by
and construed in accordance with the laws of the State of New York. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the civil or state
courts of New York or in the federal courts located in the State and county of
New York. Each of the Borrower, Holder and any signator hereto in his personal
capacity hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs.

                    5.6          Maximum Payments. Nothing contained herein
shall be deemed to establish or require the payment of a rate of interest or
other charges in excess of the maximum permitted by applicable law. In the event
that the rate of interest required to be paid or other charges hereunder exceed
the maximum permitted by such law, any payments in excess of such maximum shall
be credited against amounts owed by the Borrower to the Holder and thus refunded
to the Borrower.

                    5.7          Shareholder Status. The Holder shall not have
rights as a shareholder of the Borrower with respect to unconverted portions of
this Note. However, the Holder will have all the rights of a shareholder of the
Borrower with respect to the shares of Common Stock to be received by Holder
after delivery by the Holder of a Conversion Notice to the Borrower.

[THIS SPACE INTENTIONALLY LEFT BLANK]

          IN WITNESS WHEREOF

, Borrower has caused this Note to be signed in its name by an authorized
officer as of the ____ day of November, 2005.

 

CERAGENIX PHARMACEUTICALS, INC.

             

By:________________________________

 

Name:

 

Title:

WITNESS:

______________________________________

NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

          The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Note issued by Ceragenix
Pharmaceuticals, Inc. on November ___, 2005 into Shares of Common Stock of
Ceragenix Pharmaceuticals, Inc. (the "Borrower") according to the conditions set
forth in such Note, as of the date written below.

Date of
Conversion:____________________________________________________________________

Conversion
Price:______________________________________________________________________

Shares To Be
Delivered:_________________________________________________________________

Signature:____________________________________________________________________________

Print
Name:__________________________________________________________________________

Address:_____________________________________________________________________________

  
          _____________________________________________________________________________

SCHEDULE A

MILESTONES

Report Due for Period

3rd Quarter, 2006

4th Quarter, 2006

Year Ended 12/31/06

1st Quarter, 2007

2nd Quarter, 2007

3rd Quarter, 2007

4th Quarter, 2007

Year Ended 12/31/07

Revenue

836

2,187

3,778

6,215

7,177

8,640

10,103

32,135

EBITDA

(3,605)

(3,684)

(14,429)

(3,034)

(1,225)

(308)

704

(3,863)