[FORM OF INITIAL SENIOR CONVERTIBLE NOTE]


NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE
SECURITIES  INTO WHICH THESE  SECURITIES ARE  CONVERTIBLE  HAVE BEEN  REGISTERED
UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,  TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES
LAWS,  OR (B) AN  OPINION OF  COUNSEL,  IN A  GENERALLY  ACCEPTABLE  FORM,  THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE  STATE SECURITIES LAWS
OR  (II)  UNLESS  SOLD  PURSUANT  TO RULE  144 OR  RULE  144A  UNDER  SAID  ACT.
NOTWITHSTANDING THE FOREGOING,  THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.  ANY  TRANSFEREE OF THIS NOTE SHOULD  CAREFULLY  REVIEW THE TERMS OF
THIS NOTE,  INCLUDING  SECTIONS 3(c)(iii) AND 19(a) HEREOF. THE PRINCIPAL AMOUNT
REPRESENTED BY THIS NOTE AND THE SECURITIES  ISSUABLE UPON CONVERSION HEREOF MAY
BE LESS  THAN THE  AMOUNTS  SET FORTH ON THE FACE  HEREOF  PURSUANT  TO  SECTION
3(c)(iii) OF THIS NOTE.



                             SENIOR CONVERTIBLE NOTE


Issuance Date: March 31, 2003                      Principal: U.S. $____________

     FOR  VALUE  RECEIVED,  APHTON  CORPORATION,  a  Delaware  corporation  (the
"Company"),  hereby  promises  to pay  to the  order  of  __________________  or
registered  assigns  ("Holder")  the amount set out above as the  Principal  (as
reduced  pursuant to the terms  hereof  pursuant to  redemption,  conversion  or
otherwise, the "Principal") when due, whether upon the Maturity Date (as defined
below),  acceleration,  conversion,  redemption  or  otherwise  (in each case in
accordance  with the  terms  hereof)  and to pay  interest  ("Interest")  on any
outstanding  Principal  at the rate of 6.00%  per  annum,  subject  to  periodic
adjustment  pursuant to Section 2 (the "Interest  Rate"),  from the date set out
above as the Issuance Date (the "Issuance  Date") until the same becomes due and
payable,  whether upon an Interest Date (as defined  below),  the Maturity Date,
acceleration,  conversion,  redemption  or otherwise (in each case in accordance
with the terms hereof).  This Convertible Note (including all Convertible  Notes
issued in exchange,  transfer or replacement  hereof,  this "Note") is one of an
issue of Convertible Notes (collectively, the "Notes" and such other Convertible
Notes, the "Other Notes") issued



<PAGE>


on the Issuance Date pursuant to the Securities  Purchase  Agreement (as defined
below). Certain capitalized terms are defined in Section 29.

          (1)  MATURITY.  On the Maturity Date, the Holder shall  surrender this
Note to the Company  and the  Company  shall pay to the Holder an amount in cash
representing all outstanding Principal,  accrued and unpaid Interest and accrued
and unpaid Late Charges,  if any. The "Maturity  Date" shall be the date that is
five years after the Initial Closing Date (as defined in the Securities Purchase
Agreement) as may be extended at the option of the Holder (i) in the event that,
and for so long as, an Event of Default (as defined in Section  4(a)) shall have
occurred and be  continuing  or any event shall have  occurred and be continuing
which with the passage of time and the failure to cure would  result in an Event
of Default and (ii) through the date that is ten days after the  consummation of
a Change of Control (as  defined in Section  5(a)) in the event that a Change of
Control  is  publicly  announced  or a Change of Control  Notice (as  defined in
Section 5(a)) is delivered prior to the Maturity Date.

          (2)  INTEREST;  INTEREST  RATE.  Interest on this Note shall  commence
accruing  on the  Issuance  Date and shall be computed on the basis of a 365-day
year and  actual  days  elapsed  and shall be  payable  on the first day of each
Calendar Quarter during the period beginning on the Issuance Date and ending on,
and including,  the Maturity Date (each an "Interest  Date").  Interest shall be
payable  on each  Interest  Date in cash or, at the  option of the  Company,  in
shares of Common Stock  ("Interest  Shares")  provided  that the Interest  which
accrued  during any  period  shall be payable  in  Interest  Shares  only if the
Company delivers written notice of such election ("Interest Election Notice") to
each holder of the Notes and the Separate Tranche Notes at least 10 Trading Days
prior to the Interest Date (an "Interest Election Date"). Interest to be paid on
an Interest Date in Interest  Shares shall be paid in a number of fully paid and
nonassessable  shares  (rounded to the nearest  whole share in  accordance  with
Section 3(a)) of Common Stock equal to the quotient of (a) the Interest  payable
and (b) the Interest  Conversion  Price on the applicable  Interest Date. If any
Interest  Shares are to be paid on an Interest Date,  then the Company shall (X)
issue and deliver on the applicable  Interest Date, to such address as specified
by the Holder in writing to the Company at least one  Business  Day prior to the
applicable Interest Date, a certificate, registered in the name of the Holder or
its  designee,  for the number of Interest  Shares to which the Holder  shall be
entitled,  or (Y) provided  that the  Company's  transfer  agent (the  "Transfer
Agent") is  participating in the Depository Trust Company ("DTC") Fast Automated
Securities  Transfer  Program,  upon the  request  of the  Holder,  credit  such
aggregate number of Interest 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.  Notwithstanding the foregoing,  the Company
shall not be entitled to pay  Interest in Interest  Shares and shall be required
to pay such  Interest in cash on the  applicable  Interest Date if (x) any event
constituting  an Event of Default or an event that with the  passage of time and
assuming it were not cured would constitute an Event of Default has occurred and
is continuing on the  applicable  Interest  Election Date or the Interest  Date,
unless consented to in writing by the Holder, (y) the Registration Statement (as
defined in the Registration  Rights  Agreement)  covering the Interest Shares is
not effective and available  for the resale of the  Registrable  Securities  (as
defined  in the  Registration  Rights  Agreement)  relating  to this Note on the
Interest  Election  Date or on the  Interest  Date or (z)  the  Company  has not
obtained  the  Stockholder  Approval  (as  defined  in the  Securities  Purchase
Agreement) prior to the Interest

                                       2
<PAGE>

Election Date. Prior to the payment of Interest on an Interest Date, Interest on
this Note shall accrue at the  Interest  Rate and be payable by way of inclusion
of the Interest in the  Conversion  Amount in accordance  with Section  3(b)(i).
From and after the occurrence of an Event of Default, the Interest Rate shall be
increased to 12%. In the event that such Event of Default is subsequently cured,
the adjustment referred to in the preceding sentence shall cease to be effective
as of the date of such cure;  provided  that the Interest as  calculated at such
increased rate during the continuance of such Event of Default shall continue to
apply to the extent  relating to the days after the  occurrence of such Event of
Default through and including the date of cure of such Event of Default.

          (3) CONVERSION OF NOTES. This Note shall be convertible into shares of
the Company's common stock, par value $0.001 per share (the "Common Stock"),  on
the terms and conditions set forth in this Section 3.

               (a) Conversion Right.  Subject to the provisions of Section 3(d),
at any time or times on or after  the  date on which  the  Company  obtains  the
Stockholder Approval, the Holder shall be entitled to convert any portion of the
outstanding and unpaid  Conversion Amount (as defined below) into fully paid and
nonassessable  shares of Common Stock in  accordance  with Section  3(c), at the
Conversion Rate (as defined below).  The Company shall not issue any fraction of
a share of Common Stock upon any conversion. If the issuance would result in the
issuance of a fraction of a share of Common Stock,  the Company shall round such
fraction of a share of Common Stock up to the nearest  whole share.  The Company
shall pay any and all taxes that may be payable with respect to the issuance and
delivery of Common Stock upon conversion of any Conversion Amount.

               (b)  Conversion  Rate.  The  number of  shares  of  Common  Stock
issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall
be determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(as defined below) (the "Conversion Rate").

     (i)  "Conversion  Amount" means the sum of (A) the portion of the Principal
     to  be  converted,  redeemed  or  otherwise  with  respect  to  which  this
     determination  is being made, (B) accrued and unpaid  Interest with respect
     to such  Principal  and (C) accrued and unpaid Late Charges with respect to
     such Principal and Interest.

     (ii) "Conversion Price" means, as of any Conversion Date (as defined below)
     or other date of  determination,  and  subject to  adjustment  as  provided
     herein, $2.50.

               (c) Mechanics of Conversion.

                                       3
<PAGE>

     (i) Optional  Conversion.  To convert any Conversion  Amount into shares of
     Common  Stock on any date (a  "Conversion  Date"),  the  Holder  shall  (A)
     transmit by facsimile  (or otherwise  deliver),  for receipt on or prior to
     9:00 p.m., New York City Time on such date, a copy of an executed notice of
     conversion  in the form  attached  hereto  as  Exhibit  I (the  "Conversion
     Notice") to the Company and (B) if required by Section 3(c)(iii), surrender
     this  Note to a common  carrier  for  delivery  to the  Company  as soon as
     practicable  on or following such date (or an  indemnification  undertaking
     with respect to this Note in the case of its loss,  theft or  destruction).
     On or before  the first  Business  Day  following  the date of receipt of a
     Conversion  Notice,  the Company shall transmit by facsimile a confirmation
     of receipt of such Conversion  Notice to the Holder and the Transfer Agent.
     On or before the second  Business  Day  following  the date of receipt of a
     Conversion Notice (the "Share Delivery Date"),  the Company shall (X) 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 of Common Stock to which the Holder shall be entitled,  or
     (Y) provided that the Transfer Agent is participating in DTC Fast Automated
     Securities  Transfer Program,  upon the request of the Holder,  credit such
     aggregate  number of shares of Common  Stock 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. If this Note is physically
     surrendered  for  conversion  as  required  by  Section  3(c)(iii)  and the
     outstanding Principal of this Note is greater than the Principal portion of
     the Conversion  Amount being  converted,  then the Company shall as soon as
     practicable and in no event later than three 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  (in  accordance  with  Section  19(d))
     representing the outstanding Principal not converted. The person or persons
     entitled to receive the shares of Common Stock  issuable  upon a conversion
     of this Note  shall be treated  for all  purposes  as the record  holder or
     holders of such shares of Common Stock on the Conversion Date.

     (ii)  Company's  Failure to Timely  Convert.  If the Company  shall fail to
     issue a certificate  to the Holder or credit the Holder's  balance  account
     with DTC for the  number of shares of Common  Stock to which the  Holder is
     entitled upon  conversion of any  Conversion  Amount or to issue a new Note
     (in accordance with Section 19(d))  representing  the Principal  portion of
     the Conversion  Amount to which the Holder is entitled,  in each case on or
     prior to the date which is five Business Days after the Conversion Date (in
     each case, a "Conversion Failure"),  then (A) the Company shall pay damages
     to the Holder for each date of such  Conversion  Failure in an amount equal
     to 1.0% of the  product  of (I) the sum of the  number  of shares of Common
     Stock not issued to the Holder on or prior to the Share  Delivery  Date and
     to which the Holder is entitled and, in the event the Company has failed to
     deliver a new Note to the Holder on or prior to the Note Delivery Date, the
     number of shares of Common Stock issuable upon conversion of the Conversion
     Amount represented by such new Note, as of the Note Delivery Date, and (II)
     the Closing Sale Price of the Common Stock on the Share  Delivery  Date, in
     the case of the failure to deliver Common Stock, or the Note Delivery Date,
     in the case of  failure  to  deliver  a new Note and (B) the  Holder,  upon
     written notice to the Company,  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

                                       4
<PAGE>

     pursuant  to  such  Conversion  Notice;  provided  that  the  voiding  of a
     Conversion  Notice shall not affect the Company's  obligations  to make any
     payments  which have accrued  prior to the date of such notice  pursuant to
     this Section 3(c)(ii) or otherwise.

     (iii)  Book-Entry.  Notwithstanding  anything  to the  contrary  set  forth
     herein,  upon conversion of any portion of this Note in accordance with the
     terms hereof, the Holder shall not be required to physically surrender this
     Note to the Company unless (A) the full  Conversion  Amount  represented by
     this Note is being  converted  or (B) the Holder has  provided  the Company
     with prior  written  notice  (which  notice may be included in a Conversion
     Notice) requesting  physical surrender and reissue of this Note. The Holder
     and the Company shall maintain records showing the Principal,  Interest and
     Late Charges  converted and the dates of such conversions or shall use such
     other method,  reasonably satisfactory to the Holder and the Company, so as
     not to require physical surrender of this Note upon conversion.

     (iv) Pro Rata Conversion;  Disputes. In the event that the Company receives
     a Conversion  Notice from more than one holder of Notes or Separate Tranche
     Notes for the same  Conversion  Date and the Company can convert some,  but
     not all,  of such  portions  of the Notes  submitted  for  conversion,  the
     Company,  subject to Section 3(d),  shall convert from each holder of Notes
     or Separate  Tranche Notes electing to have Notes or Separate Tranche Notes
     converted  on such date a pro rata amount of such  holder's  portion of its
     Notes or Separate  Tranche  Notes  submitted  for  conversion  based on the
     principal  amount  of  Notes  and  Separate  Tranche  Notes  submitted  for
     conversion on such date by such holder relative to the aggregate  principal
     amount of all Notes and Separate  Tranche Notes submitted for conversion on
     such  date.  In the event of a dispute as to the number of shares of Common
     Stock issuable to the Holder in connection  with a conversion of this Note,
     the Company  shall issue to the Holder the number of shares of Common Stock
     not in dispute and resolve such dispute in accordance with Section 24.

               (d) Limitations on Conversions.

     (i)  Beneficial  Ownership.  The Company shall not effect any conversion of
     this Note,  and the Holder of this Note shall not have the right to convert
     any portion of this Note pursuant to Section 3(a), to the extent that after
     giving effect to such  conversion,  the Holder  (together with the Holder's
     affiliates) would  beneficially own in excess of [4.99%](1)  [19.99%](2) of
     the number of shares of Common Stock  outstanding  immediately after giving
     effect to such  conversion.  For purposes of the  foregoing  sentence,  the
     number of shares of Common Stock  beneficially  owned by the Holder and its
     affiliates shall include the number of shares of Common Stock issuable upon
     conversion  of this Note with  respect to which the  determination  of such
     sentence  is being made,  but shall  exclude the number of shares of Common
     Stock  which  would be  issuable  upon  (A)  conversion  of the  remaining,
     nonconverted  portion of this Note beneficially  owned by the Holder or any
     of its affiliates and (B) exercise or conversion of the unexercised or

--------------
1    For SF Capital.
2    For Heartland and Citigroup.

                                      5
<PAGE>

     nonconverted  portion of any other  securities  of the Company  (including,
     without  limitation,  any Other Notes,  Separate Tranche Notes or warrants)
     subject  to a  limitation  on  conversion  or  exercise  analogous  to  the
     limitation  contained herein beneficially owned by the Holder or any of its
     affiliates.  Except as set forth in the preceding sentence, for purposes of
     this  Section  3(d)(i),   beneficial   ownership  shall  be  calculated  in
     accordance  with Section 13(d) of the  Securities  Exchange Act of 1934, as
     amended. For purposes of this Section 3(d)(i), in determining the number of
     outstanding  shares of Common  Stock,  the Holder may rely on the number of
     outstanding  shares of Common Stock as reflected in (x) the Company's  most
     recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
     announcement  by the Company or (z) any other  notice by the Company or the
     Transfer  Agent  setting  forth  the  number  of  shares  of  Common  Stock
     outstanding.  For any reason at any time,  upon the written or oral request
     of the Holder, the Company shall within one Business Day confirm orally and
     in  writing  to the  Holder  the  number of shares  of  Common  Stock  then
     outstanding.  In any case, the number of outstanding shares of Common Stock
     shall be determined  after giving  effect to the  conversion or exercise of
     securities  of the  Company,  including  this  Note,  by the  Holder or its
     affiliates since the date as of which such number of outstanding  shares of
     Common Stock was reported.

     (ii)  Principal  Market  Regulation.  The Company shall not be obligated to
     issue any shares of Common Stock upon  conversion of this Note prior to the
     date on which the Company obtains the Stockholder  Approval if the issuance
     of such shares of Common Stock would exceed that number of shares of Common
     Stock  which the  Company  may issue upon  conversion  of the Notes and the
     Separate Tranche Notes without  breaching the Company's  obligations  under
     the rules or  regulations  of the Principal  Market (the  "Exchange  Cap"),
     except that such  limitation  shall not apply in the event that the Company
     obtains the  approval  of its  stockholders  as required by the  applicable
     rules of the  Principal  Market for  issuances of Common Stock in excess of
     such amount. Until such approval is obtained,  no purchaser of the Notes or
     Separate Tranche Notes pursuant to the Securities  Purchase  Agreement (the
     "Purchasers") shall be issued, upon conversion of Notes or Separate Tranche
     Notes, shares of Common Stock.

          (4)   RIGHTS UPON EVENT OF DEFAULT.

               (a)  Event  of  Default.  Each  of  the  following  events  shall
constitute a "Event of Default":

     (i) the failure of the  applicable  Registration  Statement  required to be
     filed  pursuant  to  the  Registration  Rights  Agreement  to  be  declared
     effective  by the SEC on or  prior to the date  that is 90 days  after  the
     applicable  Effectiveness  Deadline (as defined in the Registration  Rights
     Agreement),  or, while the applicable Registration Statement is required to
     be maintained  effective  pursuant to the terms of the Registration  Rights
     Agreement,  the  effectiveness  of the  applicable  Registration  Statement
     lapses for any reason  (including,  without  limitation,  the issuance of a
     stop order) or is unavailable to any holder of the Notes for sale of all of
     such holder's Registrable Securities (as defined in the Registration Rights
     Agreement) in accordance with the terms of the Registration Rights

                                       6
<PAGE>

     Agreement,  and such lapse or  unavailability  continues for a period of 20
     consecutive  days or for more than an  aggregate  of 60 days in any 365-day
     period (other than days during an Allowable Grace Period (as defined in the
     Registration Rights Agreement));

     (ii) the  suspension  from  trading or  failure  of the Common  Stock to be
     listed on The NASDAQ  National  Market,  The NASDAQ  SmallCap  Market,  the
     American Stock Exchange or The New York Stock Exchange,  Inc., for a period
     of five  consecutive  days or for more than an  aggregate of 10 days in any
     365-day period;

     (iii) the Company's (A) failure to cure a Conversion Failure by delivery of
     the required  number of shares of Common Stock or a new Note (in accordance
     with Section  19(d)),  as  applicable,  within 10 days after the applicable
     Conversion Date or (B) notice, written or oral, to any holder of the Notes,
     including by way of public  announcement  or through any of its agents,  at
     any time, of its  intention not to comply with a request for  conversion of
     any Notes into shares of Common Stock that is tendered in  accordance  with
     the provisions of the Notes;

     (iv) from and after the date on which the Company  obtains the  Stockholder
     Approval, upon the Company's receipt of a Conversion Notice, the Company is
     not obligated to issue shares of Common Stock upon such  conversion  due to
     the provisions of Section 3(d)(ii);

     (v) from and after the date on which the Company  obtains  the  Stockholder
     Approval, at any time following the tenth consecutive Business Day that the
     Holder's  Authorized  Share Allocation is less than the number of shares of
     Common Stock that the Holder would be entitled to receive upon a conversion
     of  the  full  Conversion  Amount  of  this  Note  (without  regard  to any
     limitations on conversion set forth in Section 3(d) or otherwise);

     (vi) the  Company's  failure to pay to the Holder any amount of  Principal,
     Interest,  Late Charges or other amounts when and as due under this Note or
     any other  Transaction  Document  (as  defined in the  Securities  Purchase
     Agreement)  or  any  other  agreement,   document,   certificate  or  other
     instrument  delivered  in  connection  with the  transactions  contemplated
     hereby and thereby to which the Holder is a party, except, in the case of a
     failure to pay  Interest  and Late  Charges  when and as due, in which case
     only if such  failure  continues  for a period of at least  three  Business
     Days;

     (vii) any default under, redemption of or acceleration prior to maturity of
     any  Indebtedness  (as defined in Section 3(r) of the  Securities  Purchase
     Agreement) of the Company or any of its Subsidiaries (as defined in Section
     3(a) of the Securities Purchase Agreement);

     (viii) the  Company or any of its  Subsidiaries,  pursuant to or within the
     meaning of Title 11, U.S. Code, or any similar Federal or state law for the
     relief  of  debtors  (collectively,  "Bankruptcy  Law"),  (A)  commences  a
     voluntary case, (B) consents to the entry of an order for relief against it
     in an  involuntary  case,  (C) consents to the  appointment  of a

                                       7
<PAGE>

     receiver,   trustee,   assignee,   liquidator   or  similar   official   (a
     "Custodian"),  (D)  makes  a  general  assignment  for the  benefit  of its
     creditors or (E) admits in writing  that it is generally  unable to pay its
     debts as they become due;

     (ix) a court of competent  jurisdiction enters an order or decree under any
     Bankruptcy  Law that (A) is for relief  against  the  Company or any of its
     Subsidiaries  in an  involuntary  case,  (B)  appoints a  Custodian  of the
     Company or any of its  Subsidiaries  or (C) orders the  liquidation  of the
     Company or any of its Subsidiaries;

     (x) a final  judgment or judgments for the payment of money  aggregating in
     excess  of  $1,000,000  are  rendered  against  the  Company  or any of its
     Subsidiaries  and which  judgments are not,  within 60 days after the entry
     thereof, bonded, discharged or stayed pending appeal, or are not discharged
     within 60 days after the expiration of such stay; provided,  however,  that
     any judgment  which is covered by  insurance or an indemnity  from a credit
     worthy party shall not be included in calculating the $1,000,000 amount set
     forth above so long as the Company provides the Holder a written  statement
     from such insurer or indemnity  provider (which written  statement shall be
     reasonably  satisfactory to the Holder) to the effect that such judgment is
     covered by  insurance  or an  indemnity  and the Company  will  receive the
     proceeds of such  insurance or indemnity  within 30 days of the issuance of
     such judgment;

     (xi) the Company breaches any representation,  warranty,  covenant or other
     term or condition of any of the Transaction Documents, including this Note,
     or any other agreement, document, certificate or other instrument delivered
     in  connection  with the  transactions  contemplated  thereby and hereby to
     which the Holder is a party,  except, in the case of a breach of a covenant
     which is curable,  only if such breach  continues  for a period of at least
     ten consecutive Business Days;

     (xii) any  breach or failure in any  respect to comply  with  Section 15 of
     this Note; or

     (xiii) any Event of Default (as defined in the Other Notes or the  Separate
     Tranche  Notes) occurs with respect to any Other Notes or Separate  Tranche
     Notes.


               (b) Redemption  Right.  Promptly after the occurrence of an Event
of  Default  with  respect to this Note or any Other  Note,  the  Company  shall
deliver written notice thereof via facsimile and overnight courier (an "Event of
Default  Notice") to the Holder.  At any time after the earlier of the  Holder's
receipt of an Event of Default Notice and the Holder  becoming aware of an Event
of  Default,  the Holder may require the Company to redeem all or any portion of
this Note by delivering written notice thereof (the "Event of Default Redemption
Notice") to the Company, which Event of Default Redemption Notice shall indicate
the portion of this Note the Holder is electing to redeem.  Each portion of this
Note subject to redemption by the Company pursuant to this Section 4(b) shall be
redeemed by the Company at a price equal to 110% of the Conversion  Amount to be
redeemed (the "Event of Default Redemption Price"). Redemptions required by this
Section 4(b) shall be made in accordance with the provisions of Section 12.

                                       8
<PAGE>

          (5)   RIGHTS UPON CHANGE OF CONTROL.

               (a)  Change  of  Control.  Each  of the  following  events  shall
constitute a "Change of Control":

     (i) the  consolidation,  merger or other business  combination  (including,
     without limitation,  a reorganization or  recapitalization)  of the Company
     with or into  another  Person  (other than (A) a  consolidation,  merger or
     other business combination (including,  without limitation,  reorganization
     or  recapitalization)  in  which  holders  of the  Company's  voting  power
     immediately  prior to the  transaction  continue  after the  transaction to
     hold,  directly or indirectly,  the voting power of the surviving entity or
     entities  necessary  to elect 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; or

     (iii) a  purchase,  tender or  exchange  offer made to and  accepted by the
     holders of more than the 50% of the outstanding shares of Common Stock.

               (b)  Assumption.  Prior  to the  consummation  of any  Change  of
Control, the Company will secure from any Person purchasing the Company's assets
or Common Stock or any successor  resulting from such Change of Control (in each
case,  an  "Acquiring  Entity")  a  written  agreement  (in form  and  substance
satisfactory  to the holders of Notes  representing  at least  two-thirds of the
aggregate  principal  amount of the Notes then  outstanding)  to deliver to each
holder of Notes in exchange for such Notes,  a security of the Acquiring  Entity
evidenced by a written instrument substantially similar in form and substance to
the Notes, including, without limitation, having a principal amount and interest
rate equal to the principal  amounts and the interest rates of the Notes held by
such holder,  and  satisfactory  to the holders of Notes  representing  at least
two-thirds of the principal amount of the Notes then outstanding.

               (c)  Redemption  Right.  No sooner than 15 days nor later than 10
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 to the Holder (a "Change of
Control  Notice").  At any time during the period  beginning  after the Holder's
receipt of a Change of Control Notice and ending on the date of the consummation
of such Change of Control  (or,  in the event a Change of Control  Notice is not
delivered at least 10 days prior to a Change of Control, at any time on or after
the date which is 10 days prior to a Change of Control  and ending 10 days after
the consummation of such Change of Control),  the Holder may require the Company
to redeem all or any portion of this Note by delivering  written  notice thereof
("Change of Control Redemption Notice") to the Company,  which Change of Control
Redemption Notice shall indicate the Conversion Amount the Holder is electing to
redeem. The portion of this Note subject to redemption  pursuant to this Section
5(c) shall be redeemed by the Company at a price equal to 110% of the Conversion
Amount being redeemed (the "Change of Control  Redemption  Price").  Redemptions
required by this

                                       9
<PAGE>

Section 5(c) shall be made in accordance  with the  provisions of Section 12 and
shall have  priority to payments to  stockholders  of the Company in  connection
with a Change of Control.

          (6)  RIGHTS  UPON ISSUANCE  OF  PURCHASE  RIGHTS  AND OTHER  CORPORATE
EVENTS.

               (a) Purchase  Rights.  If at any time after the Initial  Issuance
Date the Company grants, issues or sells any Options,  Convertible Securities or
rights to purchase stock, warrants, securities or other property pro rata to the
record  holders of any class of Common Stock (the "Purchase  Rights"),  then the
Holder will be entitled to acquire,  upon the terms  applicable to such Purchase
Rights,  the aggregate  Purchase  Rights which the Holder could have acquired if
the  Holder  had held the  number  of shares of  Common  Stock  acquirable  upon
complete conversion of this Note (without taking into account any limitations or
restrictions on the  convertibility of this Note) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such  record is taken,  the date as of which  the  record  holders  of
Common Stock are to be determined for the grant,  issue or sale of such Purchase
Rights.

               (b) Other  Corporate  Events.  Prior to the  consummation  of any
recapitalization,  reorganization,  consolidation,  spin-off,  merger  or  other
business  combination (other than a Change of Control) pursuant to which holders
of Common Stock are entitled to receive  securities or other assets with respect
to or in exchange for Common Stock (a "Corporate Event"), the Company shall make
appropriate  provision to insure that the Holder will  thereafter have the right
to receive  upon a  conversion  of this Note,  (i) in  addition to the shares of
Common Stock receivable upon such conversion, such securities or other assets to
which the Holder would have been  entitled with respect to such shares of Common
Stock  had  such  shares  of  Common  Stock  been  held by the  Holder  upon the
consummation  of such  Corporate  Event or (ii) in lieu of the  shares of Common
Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of Common Stock in connection  with the  consummation of
such  Corporate  Event in such amounts as the Holder would have been entitled to
receive had this Note initially been issued with conversion  rights for the form
of such  consideration  (as opposed to shares of Common  Stock) at a  conversion
rate for such  consideration  commensurate  with the Conversion Rate.  Provision
made  pursuant  to the  preceding  sentence  shall  be in a form  and  substance
satisfactory  to the holders of Notes  representing  at least  two-thirds of the
aggregate principal amount of the Notes then outstanding.

                                       10
<PAGE>

          (7)  RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

               (a) Adjustment of Conversion Price upon Issuance of Common Stock.
If and  whenever on or prior to the  thirty-six  (36) month  anniversary  of the
Initial  Issuance Date, the Company issues or sells,  or in accordance with this
Section  7(a) is  deemed  to have  issued or sold,  any  shares of Common  Stock
(including  the  issuance or sale of shares of Common  Stock owned or held by or
for the account of the Company,  but excluding  shares of Common Stock deemed to
have  been  issued  or sold by the  Company  in  connection  with  any  Excluded
Security) for a consideration  per share (the "New Securities  Issuance  Price")
less than a price (the  "Applicable  Price")  equal to the  Conversion  Price in
effect  immediately  prior to such  issue or sale (the  foregoing,  a  "Dilutive
Issuance"), then immediately after such issue or sale, the Conversion Price then
in effect  shall be reduced to an amount  equal to the New  Securities  Issuance
Price;  provided,  however,  that if any such Dilutive Issuance occurs after the
twelve  (12) month  anniversary  of the Initial  Issuance  Date and prior to the
thirty-six  (36)  month  anniversary  of the  Initial  Issuance  Date,  then the
Conversion  Price shall not be adjusted  pursuant to this  Section  7(a) below a
price  equal to 80% of the  Applicable  Price.  If and  whenever on or after the
thirty-six (36) month  anniversary of the Initial Issuance Date and prior to the
Maturity Date, the Company issues or sells,  or in accordance  with this Section
7(a) is deemed to have issued or sold,  any shares of Common Stock in a Dilutive
Issuance,  then immediately  after such issue or sale, the Conversion Price then
in  effect  shall  be  reduced  to an  amount  equal to the  product  of (x) the
Conversion Price in effect  immediately  prior to such issue or sale and (y) the
quotient  of (1) the sum of (I) the  product  of the  Applicable  Price  and the
number of shares of Common Stock Deemed  Outstanding  immediately  prior to such
issue or sale and (II) the  consideration,  if any, received by the Company upon
such issue or sale,  divided  by (2) the  product  of (I) the  Applicable  Price
multiplied  by (II) the  number of shares of  Common  Stock  Deemed  Outstanding
immediately  after such issue or sale. For purposes of determining  the adjusted
Conversion Price under this Section 7(a), the following shall be applicable:

     (i) Issuance of Options. If at any time after the Initial Issuance Date the
     Company in any manner  grants or sells any Options and the lowest price per
     share for which one share of Common Stock is issuable  upon the exercise of
     any  such  Option  or  upon  conversion  or  exchange  or  exercise  of any
     Convertible  Securities  issuable upon exercise of such Option is less than
     the Applicable Price, then such share of Common Stock shall be deemed to be
     outstanding  and to have been issued and sold by the Company at the time of
     the granting or sale of such Option for such price per share.  For purposes
     of this Section 7(a)(i), the "lowest price per share for which one share of
     Common  Stock is  issuable  upon the  exercise  of any such  Option or upon
     conversion or exchange or exercise of any Convertible  Securities  issuable
     upon  exercise  of such  Option"  shall be  equal to the sum of the  lowest
     amounts of  consideration  (if any)  received or  receivable by the Company
     with respect to any one share of Common Stock upon  granting or sale of the
     Option,  upon  exercise  of the Option and upon  conversion  or exchange or
     exercise of any Convertible Security issuable upon exercise of such Option.
     No further adjustment of the Conversion Price shall be made upon the actual
     issuance of such Common Stock or of such  Convertible  Securities  upon the
     exercise of such  Options or upon the actual  issuance of such Common Stock
     upon conversion or exchange or exercise of such Convertible Securities.

                                       11
<PAGE>

     (ii) Issuance of Convertible  Securities.  If at any time after the Initial
     Issuance  Date the  Company in any manner  issues or sells any  Convertible
     Securities  and the  lowest  price  per share for which one share of Common
     Stock is issuable upon such  conversion or exchange or exercise  thereof is
     less than the  Applicable  Price,  then such share of Common Stock shall be
     deemed to be outstanding and to have been issued and sold by the Company at
     the time of the issuance of sale of such  Convertible  Securities  for such
     price per share. For the purposes of this Section 7(a)(ii),  the "price per
     share for which one share of Common Stock is issuable upon such  conversion
     or 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 any  one  share  of  Common  Stock  upon  the  issuance  or  sale of the
     Convertible  Security  and upon the  conversion  or exchange or exercise of
     such Convertible  Security.  No further  adjustment of the Conversion Price
     shall be made upon the actual issuance of such Common Stock upon conversion
     or exchange or exercise  of such  Convertible  Securities,  and if any such
     issue or sale of such  Convertible  Securities is made upon exercise of any
     Options for which  adjustment of the Conversion Price had been or are to be
     made  pursuant  to  other  provisions  of this  Section  7(a),  no  further
     adjustment of the Conversion Price shall be made by reason of such issue or
     sale.

     (iii) Change in Option Price or Rate of  Conversion.  If the purchase price
     provided for in any Options  issued after the Initial  Issuance  Date,  the
     additional  consideration,  if any,  payable  upon the  issue,  conversion,
     exchange or exercise of any Convertible Securities issued after the Initial
     Issuance  Date,  or the  rate  at  which  any  Convertible  Securities  are
     convertible into or exchangeable or exercisable for Common Stock changes at
     any time, the  Conversion  Price in effect at the time of such change shall
     be adjusted to the Conversion Price which would have been in effect at such
     time had such Options or Convertible  Securities  provided for such changed
     purchase price, additional consideration or changed conversion rate, as the
     case may be, at the time initially granted, issued or sold. For purposes of
     this Section 7(a)(iii),  if the terms of any Option or Convertible Security
     that was  outstanding  as of the Initial  Issuance  Date 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 Conversion Price then in effect.

     (iv) Calculation of Consideration Received. In case any Option is issued in
     connection  with  the  issue or sale of other  securities  of the  Company,
     together  comprising  one  integrated  transaction  in  which  no  specific
     consideration  is  allocated to such  Options by the parties  thereto,  the
     Options will be deemed to have been issued for a consideration  of $.01. If
     any Common Stock,  Options or Convertible  Securities are issued or sold or
     deemed to have been  issued or sold for cash,  the  consideration  received
     therefor  will be  deemed  to be the net  amount  received  by the  Company
     therefor. If any Common Stock, Options or Convertible Securities are issued
     or  sold  for  a   consideration   other  than  cash,  the  amount  of  the
     consideration  other than cash  received  by the  Company  will be the fair

                                       12
<PAGE>

     value of such  consideration,  except where such consideration  consists of
     securities,  in which  case the  amount of  consideration  received  by the
     Company  will be the Closing Sale Price of such  securities  on the date of
     receipt. If any Common Stock, Options or Convertible  Securities are issued
     to the owners of the non-surviving  entity in connection with any merger in
     which the  Company is the  surviving  entity,  the amount of  consideration
     therefor  will be deemed to be the fair  value of such  portion  of the net
     assets and business of the non-surviving  entity as is attributable to such
     Common Stock,  Options or Convertible  Securities,  as the case may be. The
     fair  value of any  consideration  other  than cash or  securities  will be
     determined  jointly by the Company and the holders of Notes representing at
     least two-thirds of the principal amounts of the Notes then outstanding. If
     such  parties  are  unable to reach  agreement  within  ten days  after the
     occurrence of an event  requiring  valuation (the "Valuation  Event"),  the
     fair value of such  consideration  will be determined  within five Business
     Days after the tenth day following the Valuation  Event by an  independent,
     reputable  appraiser  jointly  selected  by the  Company and the holders of
     Notes  representing  at least  two-thirds of the  principal  amounts of the
     Notes then outstanding. The determination of such appraiser shall be deemed
     binding upon all parties absent manifest error and the fees and expenses of
     such appraiser shall be borne by the Company.

     (v) Record  Date.  If the  Company  takes a record of the holders of Common
     Stock for the purpose of entitling  them (A) to receive a dividend or other
     distribution payable in Common Stock, Options or in Convertible  Securities
     or (B) 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.

     (vi) Aventis  Debentures.  If the Company  causes the  conversion of all or
     part of the  Aventis  Debentures  (as  defined in the  Securities  Purchase
     Agreement) (each, an "Aventis  Conversion") at a conversion price per share
     of Common Stock the ("Aventis  Conversion Price") that is less than a price
     equal to the Conversion Price in effect  immediately  prior to such Aventis
     Conversion,  then immediately after such Aventis Conversion, the Conversion
     Price then in effect  shall be reduced  to an amount  equal to the  Aventis
     Conversion Price.

                                       13
<PAGE>

               (b)   Adjustment  of  Conversion   Price  upon   Subdivision   or
Combination of Common Stock. If the Company at any time subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding  shares  of  Common  Stock  into a greater  number  of  shares,  the
Conversion  Price  in  effect  immediately  prior  to such  subdivision  will be
proportionately  reduced.  If the Company at any time combines (by  combination,
reverse stock split or otherwise) one or more classes of its outstanding  shares
of Common Stock into a smaller number of shares,  the Conversion Price in effect
immediately prior to such combination will be proportionately increased.

               (c) Other Events. If any event occurs of the type contemplated by
the  provisions  of  this  Section  7 but  not  expressly  provided  for by such
provisions  (including,  without limitation,  the granting of stock appreciation
rights,  phantom  stock rights or other rights with equity  features),  then the
Company's  Board  of  Directors  will  make  an  appropriate  adjustment  in the
Conversion  Price so as to protect  the  rights of the  Holder  under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 7.

          (8) HOLDER RIGHT OF OPTIONAL REDEMPTION.  At any time and from time to
time  after  March 31,  2006,  the  Holder  shall  have the  right,  in its sole
discretion,  to require that the Company  redeem all or any portion of this Note
(a "Holder Optional Redemption") by delivering written notice thereof (a "Holder
Optional  Redemption  Notice") to the Company,  which Holder Optional Redemption
Notice shall  indicate the  Conversion  Amount the Holder is electing to redeem.
The portion of this Note subject to redemption  pursuant to this Section 8 shall
be  redeemed  by the Company at a price  equal to the  Conversion  Amount  being
redeemed (the "Holder Optional Redemption Price").  Redemptions required by this
Section 8 shall be made in accordance with the provisions of Section 12.

          (9) COMPANY'S RIGHT OF OPTIONAL  REDEMPTION.  (a) Optional Redemption.
At any time from and after March 31, 2006, if the Conditions to Company Optional
Redemption  (as set forth in Section 9(c)) are satisfied or waived in writing by
the Holder, the Company shall have the right to require the Holder to submit for
redemption  all or any such portion of the Principal of this Note  designated in
the Company Optional Redemption Notice for an amount in cash equal to Conversion
Amount of the Principal of this Note being  redeemed  pursuant to this Section 9
(the "Company Optional Redemption Price" and, together with the Event of Default
Redemption Price, the Holder Optional Redemption Price and the Change of Control
Redemption Price, the "Redemption Price"). The Company may exercise its right to
require  redemption  under this  Section  9(a) by  delivering  on the  twentieth
Trading Date prior to the date on which the Company Optional  Redemption will be
effected  (the  "Company  Optional  Redemption  Date";  with the twenty  Company
Trading Day period between  delivery of the Company Optional  Redemption  Notice
(as defined below) and the Company Optional Redemption Date being referred to as
the "Company Optional Redemption  Measuring Period") a written notice thereof by
facsimile and overnight courier to all, but not less than all, of the holders of
Notes (the "Company Optional Redemption Notice" and,  collectively with an Event
of Default Redemption  Notice, a Holder Optional  Redemption Notice and a Change
of Control Redemption Notice,  "Redemption  Notices" and,  individually,  each a
"Redemption Notice").  The date all of the holders shall have received a Company
Optional

                                       14
<PAGE>

Redemption  Notice is referred to as the  "Company  Optional  Redemption  Notice
Date". The Company Optional Redemption Notice shall be irrevocable.

               (b) Pro Rata  Redemption  Requirement.  If the Company  elects to
cause a redemption of all or any portion of the  Conversion  Amount of this Note
pursuant to Section 9(a),  then it must  simultaneously  take the similar action
with respect to the Other Notes.  If the Company  elects to cause the redemption
of this Note  pursuant to Section  9(a) (or similar  provisions  under the Other
Notes) with respect to less than all of the Conversion Amounts of the Notes then
outstanding,  then the Company shall redeem a Conversion Amount from each of the
holders of the Notes equal to the product of (I) the aggregate Conversion Amount
of Notes which the Company  has elected to redeem  pursuant to Section  9(a) (or
similar  provisions under the Other Notes),  multiplied by (II) a fraction,  the
numerator  of which is the sum of the  aggregate  principal  amount of the Notes
initially  purchased  by such  holder on the  applicable  Issuance  Date and the
denominator of which is the sum of the aggregate  principal  amount of the Notes
purchased by all holders on the  applicable  Issuance  Date (such  fraction with
respect to each holder is referred to as its "Redemption Allocation Percentage",
and such  amount  with  respect to each  holder is  referred to as its "Pro Rata
Redemption  Amount").  In the event that the  initial  holder of any Notes shall
sell or otherwise  transfer any of such holder's Notes,  the transferee shall be
allocated a pro rata portion of such holder's Redemption Allocation  Percentage.
The Company Optional  Redemption Notice shall state (A) the Trading Day selected
for the Company  Optional  Redemption  in accordance  with Section  9(a),  which
Trading  Day shall be at least 20  Business  Days but not more than 60  Business
Days  following  the  Company  Optional  Redemption  Notice  Date (the  "Company
Optional  Redemption  Date"),  (B) the aggregate  Conversion Amount of the Notes
which the  Company  has  elected to redeem  from all of the holders of the Notes
pursuant to this Section 9 (and analogous provisions under the Other Notes), (C)
each holder's Pro Rata Redemption  Amount of the Conversion  Amount of the Notes
the  Company has elected to redeem  pursuant  to this  Section 9 (and  analogous
provisions under the Other Notes) and (D) the Company Optional  Redemption Price
to be paid to such  Holder  as of the  Company  Optional  Redemption  Date.  All
Conversion  Amounts  converted  by the  Holder  after  delivery  of the  Company
Optional  Redemption Notice Date shall reduce the Conversion Amount of this Note
required to be redeemed on the Company  Optional  Redemption  Date.  Redemptions
required by this Section 9 shall be made in  accordance  with the  provisions of
Section  12.  Notwithstanding  anything to the  contrary in this  Section 9, but
subject to Section 3(d), until the Company  Optional  Redemption Price (together
with any  interest  thereon)  is paid in full,  the Pro Rata  Redemption  Amount
(together with any interest  thereon) may be converted,  in whole or in part, by
the Holder into Common Stock pursuant to Section 3.

               (c) Conditions to Company  Optional  Redemption.  For purposes of
this Section 9, "Conditions to Company Optional  Redemption" means the following
conditions:  (i) on each day during the period beginning on the date of delivery
of the Company Optional Redemption Notice to each holder of the Notes and ending
on and including the date immediately  preceding the Company Optional Redemption
Date, no Grace Period (as defined in the Registration Rights Agreement) shall be
in effect and either (x) the Registration  Statement or Registration  Statements
required  pursuant to the  Registration  Rights Agreement shall be effective and
available for the sale for all of the Registrable  Securities in accordance with
the terms of the Registration Rights Agreement or (y) all shares of Common Stock
issuable upon

                                       15
<PAGE>

conversion and redemption of the Notes and the Separate Tranche Notes and shares
of Common Stock issuable upon exercise of the Warrants and the Separate  Tranche
Warrants shall be eligible for sale without restriction  pursuant to Rule 144(k)
and any  applicable  state  securities  laws,  (ii) the  Company  shall  have no
knowledge of any fact that would cause (x) the Registration  Statements required
pursuant to the Registration  Rights Agreement not to be effective and available
for the sale of at least all of the  Registrable  Securities in accordance  with
the terms of the Registration Rights Agreement or (y) any shares of Common Stock
issuable upon  conversion  or  redemption of the Notes and the Separate  Tranche
Notes and shares of Common Stock  issuable upon exercise of the Warrants and the
Separate  Tranche  Warrants  not to be  eligible  for sale  without  restriction
pursuant to Rule 144(k) and any applicable  state securities laws; (iii) on each
day during the period  beginning on the date of delivery of the Company Optional
Redemption  Notice to each holder of the Notes and ending on and  including  the
date  immediately  preceding the Company  Optional  Redemption  Date, the Common
Stock is designated for quotation on the Principal Market,  the NYSE or the AMEX
and shall not have been  suspended  from trading on such  exchange or market nor
shall  delisting or  suspension  by such  exchange or market been  threatened or
pending either (A) in writing by such exchange or market or (B) by falling below
the minimum listing  maintenance  requirements of such exchange or market;  (iv)
during the  period  beginning  on the  Initial  Issuance  Date and ending on and
including the date immediately  preceding the Company Optional  Redemption Date,
the Company shall have  delivered  shares of Common Stock upon any conversion of
Conversion  Amounts on a timely  basis as set forth in  Section  3(c)(i) of this
Note (and analogous  provisions  under the Other Notes) and the Separate Tranche
Notes and delivered shares of Common Stock upon exercise of any Warrants and the
Separate  Tranche Warrants on a timely basis as set forth in Section 1(a) of the
Warrants and the  Separate  Tranche  Warrants;  (v) the Company has obtained the
Stockholder  Approval  prior to the date of  delivery  of the  Company  Optional
Redemption Notice; (vi) during the period beginning on the Initial Issuance Date
and ending on and including the Company  Optional  Redemption  Date, there shall
not have occurred either (x) the public  announcement of a pending,  proposed or
intended  Change  of  Control  which  has  not  been  abandoned,  terminated  or
consummated or (y) an Event of Default;  and (vii) the Company  otherwise  shall
have  been in  material  compliance  with and shall  not have  breached,  in any
material respect, any provision, covenant,  representation or warranty of any of
the Transaction Documents.

          (10)  NONCIRCUMVENTION.  The Company hereby  covenants and agrees that
the Company  will not, by  amendment  of its  Certificate  of  Incorporation  or
through  any  reorganization,   transfer  of  assets,   consolidation,   merger,
dissolution,  issue or sale of securities,  or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this Note,
and will at all times in good faith carry out all of the provisions of this Note
and take all action as may be  required  to protect  the rights of the Holder of
this Note.

          (11) RESERVATION OF AUTHORIZED SHARES.

               (a) Reservation.  The Company shall reserve out of its authorized
and unissued  Common Stock a number of shares of Common Stock in accordance with
Section 3(c) of the Securities Purchase  Agreement.  At no time shall the number
of shares of Common Stock so reserved be less than the number of shares required
to be reserved by Section 3(c) of the

                                       16
<PAGE>

Securities Purchase Agreement (without regard to any limitations on conversions)
(the "Required Reserve Amount"). Following the date on which the Company obtains
the Stockholder Approval,  the initial number of shares of Common Stock reserved
for  conversions  of the  Notes  and each  increase  in the  number of shares so
reserved shall be allocated pro rata among the holders of the Notes based on the
principal  amount of the Notes held by each holder at the time of Issuance  Date
or  increase  in the  number  of  reserved  shares,  as  the  case  may be  (the
"Authorized  Share  Allocation").  In the  event  that a  holder  shall  sell or
otherwise  transfer  any of  such  holder's  Notes,  each  transferee  shall  be
allocated a pro rata portion of such holder's  Authorized Share Allocation.  Any
shares of Common Stock reserved and allocated to any Person which ceases to hold
any Notes shall be allocated to the remaining  holders of Notes,  pro rata based
on the principal amount of the Notes then held by such holders.

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

          (12) HOLDER'S REDEMPTIONS.

               (a) Mechanics. In the event that the Holder has sent a Redemption
Notice to the Company pursuant to Section 4(b), Section 5(c) or Section 8 or the
Company  has  delivered  a Company  Optional  Redemption  Notice  to the  Holder
pursuant  to  Section  9, the  Holder  shall  promptly  submit  this Note to the
Company.  The Company shall deliver the applicable  Event of Default  Redemption
Price to the Holder within five Business Days after the Company's receipt of the
Holder's  Event of  Default  Redemption  Notice;  provided  that the  Holder has
delivered  this Note to the  Company.  If the Holder has  submitted  a Change of
Control  Redemption  Notice in accordance  with Section 5(c),  the Company shall
deliver  the  applicable  Change  of  Control  Redemption  Price  to the  Holder
concurrently  with the  consummation of such Change of Control if such notice is
received  prior to the  consummation  of such  Change of Control and within five
Business Days after the Company's receipt of such notice otherwise.  The Company
shall deliver the  applicable  Holder  Optional  Redemption  Price to the Holder
within five  Business Days after the  Company's  receipt of the Holder  Optional
Redemption  Notice;  provided  that the  Holder has  delivered  this Note to the
Company.  The Company shall deliver the applicable  Company Optional  Redemption
Price to the Holder on the Company

                                       17
<PAGE>

Optional  Redemption  Date;  provided that the Holder has delivered this Note to
the  Company.  In the event of a redemption  of less than all of the  Conversion
Amount of this Note, the Company shall promptly cause to be issued and delivered
to the Holder a new Note (in  accordance  with Section 19(d))  representing  the
outstanding Principal which has not been redeemed. In the event that the Company
does not pay the Redemption Price to the Holder within the time period required,
at any time thereafter and until the Company pays such unpaid  Redemption  Price
in full, the Holder shall have the option to, in lieu of redemption, require the
Company  to  promptly  return  to the  Holder  all or any  portion  of this Note
representing  the  Conversion  Amount that was submitted for  redemption and for
which the applicable  Redemption  Price (together with any Late Charges thereon)
has not been paid. Upon the Company's receipt of such notice, (x) the Redemption
Notice shall be null and void with respect to such  Conversion  Amount,  (y) the
Company shall  immediately  return this Note, or issue a new Note (in accordance
with Section 19(d)) to the Holder  representing  such Conversion  Amount and (z)
the  Conversion  Price of this Note or such new Notes  shall be  adjusted to the
lesser  of (A) the  Conversion  Price as in  effect  on the  date on  which  the
Redemption  Notice is voided and (B) the  lowest  Closing  Bid Price  during the
period  beginning on and  including the date on which the  Redemption  Notice is
delivered  to the  Company  and  ending on and  including  the date on which the
Redemption  Notice  is  voided.  The  Holder's  delivery  of a notice  voiding a
Redemption  Notice and  exercise of its rights  following  such notice shall not
affect the Company's obligations to make any payments of Late Charges which have
accrued prior to the date of such notice with respect to the  Conversion  Amount
subject to such notice.

               (b)  Redemption by Other Holders.  Upon the Company's  receipt of
notice from any of the holders of the Other Notes or the Separate  Tranche Notes
for redemption or repayment as a result of an event or occurrence  substantially
similar to the events or occurrences  described in Section 4(b), Section 5(c) or
Section 8 or the  delivery  to the  holders of the Other  Notes or the  Separate
Tranche Notes of a Company Optional Redemption Notice or similar notice based on
events  or  occurrences  substantially  similar  to the  events  or  occurrences
described in Section 9 (each an "Other  Redemption  Notice"),  the Company shall
immediately  forward to the Holder by  facsimile a copy of such  notice.  If the
Company receives or delivers, as the case may be, a Redemption Notice and one or
more Other Redemption  Notices during the seven Business Day period beginning on
and  including  the date which is three  Business  Days  prior to the  Company's
receipt of the  Holder's  Redemption  Notice or the  Company's  delivery  of the
Company  Optional  Redemption  Notice,  as the case may be,  and  ending  on and
including the date which is three  Business Days after the Company's  receipt of
the Holder's Redemption Notice or the Company's delivery of the Company Optional
Redemption  Notice,  as the case may be, and the Company is unable to redeem all
principal,  interest and other amounts  designated in such Redemption Notice and
such Other Redemption Notices received or delivered,  as the case may be, during
such seven Business Day period,  then the Company shall redeem a pro rata amount
from each holder of the Notes  (including  the Holder) and the Separate  Tranche
Notes based on the principal  amount of the Notes and the Separate Tranche Notes
submitted  for  redemption  pursuant  to such  Redemption  Notice and such Other
Redemption Notices received or delivered,  as the case may be, during such seven
Business Day period.

          (13)  RESTRICTION ON REDEMPTION AND CASH  DIVIDENDS.  Until all of the
Notes have been  converted,  redeemed or otherwise  satisfied in accordance with
their

                                       18
<PAGE>

terms,  the Company shall not,  directly or  indirectly,  redeem,  repurchase or
declare or pay any cash dividend or  distribution  on, its capital stock without
the prior express written consent of the holders of Notes  representing at least
two-thirds  of the  aggregate  principal  amount of the Notes then  outstanding.
Notwithstanding  anything to the contrary  contained  in this Note,  the Company
shall at all times have the right to redeem the Aventis Debentures in accordance
with their terms as such terms exist on the Initial Issuance Date.

          (14)  VOTING  RIGHTS.  The Holder  shall have no voting  rights as the
holder of this Note, except as required by law, including but not limited to the
Delaware General Corporation Law, and as expressly provided in this Note.

          (15) RANK; ADDITIONAL INDEBTEDNESS.

               (a) Rank.  Payments of Principal and Interest and other  payments
due under this Note (a) shall rank pari passu with all Other  Notes and with the
Aventis Debentures and (b) shall be senior to all other Indebtedness (as defined
in Section 3(r) of the  Securities  Purchase  Agreement)  of the Company and its
Subsidiaries (as defined in the Securities Purchase Agreement).

               (b)  Incurrence  of  Indebtedness.   So  long  as  this  Note  is
outstanding,  without the prior express  written consent of the holders of Notes
representing  not less than two-thirds of the aggregate  principal amount of the
then outstanding  Notes, the Company shall not, and the Company shall not permit
any of its Subsidiaries to, directly or indirectly,  incur or guarantee,  assume
or suffer to exist any  Indebtedness on or before March 31, 2006, other than the
Indebtedness   evidenced  by  this  Note  and  the  Other  Notes  and  Permitted
Indebtedness (as defined in the Securities Purchase Agreement).

               (c)  Restricted  Payments.  So long as this Note is  outstanding,
without the prior express written  consent of the holders of Notes  representing
not  less  than  two-thirds  of the  aggregate  principal  amount  of  the  then
outstanding  Notes,  the Company shall not, and the Company shall not permit any
of its  Subsidiaries  to,  directly or indirectly,  allow or suffer to exist any
mortgage,  lien, pledge, charge,  security interest or other encumbrance upon or
in any property or assets (including  accounts and contract rights) owned by the
Company  or any of its  Subsidiaries  on or before  March 31,  2006 prior to its
scheduled payment dates or maturity date.

          (16)  PARTICIPATION.  The Holder, as the holder of this Note, shall be
entitled to such dividends paid and distributions  made to the holders of Common
Stock to the same  extent as if the Holder had  converted  this Note into Common
Stock (without regard to any limitations on conversion  herein or elsewhere) and
had held such shares of Common Stock on the record date for such  dividends  and
distributions.  Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock.

          (17) VOTE TO ISSUE,  OR CHANGE THE TERMS OF,  NOTES.  The  affirmative
vote at a meeting duly called for such purpose or the written  consent without a
meeting,  of the holders of Notes  representing  not less than two-thirds of the
aggregate  principal amount of the then outstanding Notes, shall be required for
any change or amendment to this Note or the Other Notes.

                                       19
<PAGE>

          (18) TRANSFER. This Note may be offered, sold, assigned or transferred
by the Holder without the consent of the Company, subject only to the provisions
of Section 2(f) of the Securities Purchase Agreement and the other provisions of
this Note.

          (19) REISSUANCE OF THIS NOTE.

               (a) Transfer. If this Note is to be transferred, the Holder shall
surrender this Note to the Company,  whereupon the Company will forthwith  issue
and deliver upon the order of the Holder a new Note (in accordance  with Section
19(d)),  registered  as the Holder may  request,  representing  the  outstanding
Principal  being  transferred  by the  Holder  and,  if  less  then  the  entire
outstanding  Principal  is being  transferred,  a new Note (in  accordance  with
Section 19(d)) to the Holder  representing  the outstanding  Principal not being
transferred.   The  Holder  and  any  assignee,  by  acceptance  of  this  Note,
acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) and
this Section  19(a),  following  conversion or redemption of any portion of this
Note, the  outstanding  Principal  represented by this Note may be less than the
Principal stated on the face of this Note.

               (b) Lost,  Stolen or Mutilated  Note. Upon receipt by the Company
of  evidence  reasonably  satisfactory  to  the  Company  of  the  loss,  theft,
destruction  or  mutilation  of this Note,  and,  in the case of loss,  theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation,  upon surrender and  cancellation
of this Note, the Company shall execute and deliver to the Holder a new Note (in
accordance with Section 19(d)) representing the outstanding Principal.

               (c) Note Exchangeable for Different  Denominations.  This Note is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company,  for a new Note or Notes (in  accordance  with Section 19(d) and in
principal  amounts  of at least  $100,000)  representing  in the  aggregate  the
outstanding  Principal of this Note,  and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

               (d)  Issuance of New Notes.  Whenever  the Company is required to
issue a new Note pursuant to the terms of this Note,  such new Note (i) shall be
of like tenor with this Note, (ii) shall represent,  as indicated on the face of
such new Note, the Principal remaining outstanding (or in the case of a new Note
being  issued  pursuant  to  Section  19(a)  or  Section  19(c),  the  Principal
designated by the Holder which,  when added to the principal  represented by the
other new Notes issued in  connection  with such  issuance,  does not exceed the
Principal  remaining  outstanding  under  this  Note  immediately  prior to such
issuance of new Notes),  (iii) shall have an issuance  date, as indicated on the
face of such new Note which is the same as the Issuance Date of this Note,  (iv)
shall have the same rights and conditions as this Note, and (v) shall  represent
accrued  Interest and Late Charges on the  Principal  and Interest of this Note,
from the Issuance Date.

                                       20
<PAGE>

          (20)  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,  the  Securities
Purchase Agreement,  the Warrants and the Registration Rights Agreement,  at law
or in equity (including a decree of specific performance and/or other injunctive
relief),  and nothing herein shall limit the Holder's right to pursue actual and
consequential damages for any failure by the Company to comply with the terms of
this Note.  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 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.

          (21) 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 the Holder otherwise takes
action to collect  amounts due under this Note or to enforce the  provisions  of
this Note or (b) there occurs 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 or in connection with
such bankruptcy,  reorganization,  receivership or other proceeding,  including,
but not limited to, attorneys fees and disbursements.

          (22) CONSTRUCTION;  HEADINGS.  This Note shall be deemed to be jointly
drafted by the Company and all the Purchasers and shall not be construed against
any person as the drafter hereof.  The headings of this Note are for convenience
of reference and shall not form part of, or affect the  interpretation  of, this
Note.

          (23) 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.

          (24)  DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as  to  the
determination  of the  Redemption  Price or the  arithmetic  calculation  of the
Conversion Rate or the Redemption  Price,  the Company shall submit the disputed
determinations or arithmetic  calculations via facsimile within one Business Day
of receipt of the  Conversion  Notice or  Redemption  Notice giving rise to such
dispute,  as the case may be, to the  Holder.  If the Holder and the Company are
unable to agree upon such  determination  or calculation of the Conversion  Rate
within one Business Day of such disputed determination or arithmetic calculation
being submitted to the Holder,  then the Company shall,  within one Business Day
submit via facsimile (a) the disputed  determination of the Closing Bid Price or
the Closing Sale Price to an independent,  reputable investment bank selected by
the  Company  and  approved  by  the  Holder  or  (b)  the  disputed

                                       21
<PAGE>

arithmetic  calculation  of the Conversion  Rate or the Redemption  Price to the
Company's  independent,  outside  accountant.  The  Company,  at  the  Company's
expense, shall cause 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 five 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, and all costs, fees and expenses of
such determinations and calculations shall be borne by the Company.

          (25) NOTICES; PAYMENTS.

               (a) Notices.  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.  The Company  shall
provide the Holder with prompt  written  notice of all actions taken pursuant to
this Note,  including in reasonable  detail a description of such action and the
reason therefore.  Without limiting the generality of the foregoing, the Company
will give  written  notice to the Holder  (i)  within 2  Business  Days upon any
adjustment of the  Conversion  Price,  setting forth in reasonable  detail,  and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to the date on which the  Company  closes  its books or takes a record  (A) with
respect to any dividend or distribution  upon the Common Stock, (B) with respect
to any pro  rata  subscription  offer  to  holders  of  Common  Stock or (C) for
determining rights to vote with respect to any Change of Control, dissolution or
liquidation,  provided in each case that such information shall be made known to
the public prior to or in  conjunction  with such notice being  provided to such
holder.  Notwithstanding the foregoing,  Section 4(i) of the Securities Purchase
Agreement shall apply to all notices given pursuant to this Note.

               (b)  Payments.  Whenever any payment of cash is to be made by the
Company  to any Person  pursuant  to this Note,  such  payment  shall be made in
lawful money of the United  States of America by a check drawn on the account of
the  Company  and sent via  overnight  courier  service  to such  Person at such
address as previously  provided to the Company in writing (which address, in the
case of each of the Purchasers (as defined in Section 3(d)(ii)), shall initially
be as set forth on the Schedule of Buyers  attached to the  Securities  Purchase
Agreement);  provided that the Holder may elect to receive a payment of cash via
wire transfer of immediately available funds by providing the Company with prior
written  notice  setting  out  such  request  and  the  Holder's  wire  transfer
instructions.  Whenever any amount expressed to be due by the terms of this Note
is due on any day which is not a Business  Day, the same shall instead be due on
the next succeeding day which is a Business Day and, in the case of any Interest
Date which is not the date on which this Note is paid in full,  the extension of
the due date thereof shall not be taken into account for purposes of determining
the amount of Interest due on such date.  Any amount of  Interest,  Principal or
other amount due under the  Transaction  Documents (as defined in the Securities
Purchase  Agreement)  which is not paid when due shall  result in a late  charge
being incurred and payable by the Company in an amount equal to interest on such
amount at the rate of 12% per annum from the date such  amount was due until the
same is paid in full ("Late Charge").

                                       22
<PAGE>

          (26)  CANCELLATION.  After all Principal,  accrued  Interest and other
amounts  at any time owed on this Note has been  paid in full,  this Note  shall
automatically  be deemed  canceled,  shall be  surrendered  to the  Company  for
cancellation and shall not be reissued.

          (27) 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 and the Securities Purchase Agreement.

          (28)  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
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.

          (29) CERTAIN  DEFINITIONS.  For purposes of this Note,  the  following
terms shall have the following meanings:

               (a) "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.

               (b) "Calendar Quarter" means, each of the period beginning on and
including  January 1 and ending on and including March 31, the period  beginning
on and  including  April 1 and  ending  on and  including  June 30,  the  period
beginning on and including July 1 and ending on and including  September 30, and
the period  beginning  on and  including  October 1 and ending on and  including
December 31.

               (c) "Closing Bid Price" and "Closing Sale Price"  means,  for any
security  as of any date,  the last  closing  bid price and last  closing  trade
price,  respectively,  for such  security  on the Nasdaq  National  Market  (the
"Principal  Market") as reported by Bloomberg  Financial Markets  ("Bloomberg"),
or, if the  Principal  Market  begins to operate on an extended  hours basis and
does not designate the closing bid price or the closing trade price, as the case
may be,  then the last bid  price or last  trade  price,  respectively,  of such
security prior to 4:00:00 p.m.,  Eastern Time, as reported by Bloomberg,  or, if
the Principal Market is not the principal  securities exchange or trading market
for such security, the last closing bid price or last trade price, respectively,
of such security on the principal  securities  exchange or trading  market where
such security is listed or traded as reported by Bloomberg,  or if the foregoing
do not apply, the last closing bid price or last trade price,  respectively,  of
such security in the  over-the-counter  market on the electronic  bulletin board
for such security as reported by Bloomberg,  or, if no closing bid price or last
trade price,  respectively,  is reported  for such  security by  Bloomberg,  the
average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the "pink sheets" by Pink Sheets LLC (formerly,
the National  Quotation  Bureau,  Inc.). If the Closing Bid Price or the Closing
Sale Price cannot be  calculated  for a security on a particular  date on any of
the  foregoing  bases,  the Closing Bid Price or the Closing

                                       23
<PAGE>

Sale Price,  as the case may be, of such security on such date shall be the fair
market  value as mutually  determined  by the  Company  and the  Holder.  If the
Company  and the Holder are unable to agree upon the fair  market  value of such
security,  then such dispute shall be resolved  pursuant to Section 24. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.

               (d) "Common Stock Deemed  Outstanding"  means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be  outstanding  pursuant to Sections
7(a)(i) and 7(a)(ii)  hereof  regardless  of whether the Options or  Convertible
Securities  are actually  exercisable  at such time, but excluding any shares of
Common Stock owned or held by or for the account of the Company or issuable upon
conversion of the Notes or exercise of the Warrants.

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

               (f) "Excluded Securities" means any shares of Common Stock issued
or issuable  Company (i) in connection with any employee  benefit plan which has
been  approved by the Board of Directors  of the Company,  pursuant to which the
Company's  securities  may be issued to any  employee,  officer or director  for
services  provided  to  the  Company  (an  "Approved  Stock  Plan"),  (ii)  upon
conversion of the Notes or upon  exercise of the  Warrants,  (iii) in connection
with the payment of any Interest Shares on the Notes,  (iv) in connection with a
strategic  partnership  or  joint  venture  in  which  there  is  a  significant
commercial  relationship  with the Company  and in which the primary  purpose of
which is not to raise  capital  in an amount not to  exceed,  in the  aggregate,
gross  proceeds to the Company of  $20,000,000  or an  aggregate  of  10,000,000
shares  of  Common  Stock  and  (v)  pursuant  to a bona  fide  firm  commitment
underwritten  public  offering with a nationally  recognized  underwriter  which
generates gross proceeds in excess of $45,000,000  (other than an "at-the-market
offering" as defined in Rule  415(a)(4)  under the 1933 Act and "equity  lines")
and (vi) upon  conversion  of any Options or  Convertible  Securities  which are
outstanding  under any stock  option plan of the Company on the day  immediately
preceding the Initial Issuance Date,  provided that the terms of such Options or
Convertible  Securities  are not  amended,  modified  or changed on or after the
Initial Issuance Date.

               (g) "Initial Issuance Date" means March __, 2003.

               (h)  "Interest  Conversion  Price"  means,  with  respect  to any
Interest  Date,  that price which  shall be  computed  as 95% of the  arithmetic
average of the  Weighted  Average  Price of the Common Stock on each of the five
consecutive  Trading Days  immediately  preceding  such Interest  Date. All such
determinations to be appropriately adjusted for any stock split, stock dividend,
stock combination or other similar transaction during such period.

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

                                       24
<PAGE>

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

               (k)   "Registration   Rights   Agreement"   means  that   certain
registration rights agreement between the Company and the initial holders of the
Notes issued on the Initial  Issuance Date relating to the  registration  of the
resale of the shares of Common Stock issuable upon conversion of the Notes.

               (l)  "SEC"  means  the  United  States  Securities  and  Exchange
Commission.

               (m) "Securities Purchase Agreement" means that certain securities
purchase  agreement  between the  Company  and the initial  holders of the Notes
pursuant to which the Company issued the Notes.

               (n) "Separate  Tranche Notes" means the  convertible  notes which
may have been  issued  or may be  issued  pursuant  to the  Securities  Purchase
Agreement at one or more separate closings following the Issuance Date.

               (o) "Separate Tranche Warrants" means the warrants which may have
been issued or may be issued  pursuant to the Securities  Purchase  Agreement at
one or more separate closings following the Issuance Date.

               (p)  "Trading  Day"  means any day on which the  Common  Stock is
traded on the Principal Market, or, if the Principal Market is not the principal
trading market for the Common Stock, then on the principal  securities  exchange
or  securities  market on which the Common Stock is then traded;  provided  that
"Trading  Day" shall not include any day on which the Common  Stock is scheduled
to trade on such  exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended  from trading during the final hour of trading on such
exchange or market (or if such  exchange or market does not designate in advance
the closing  time of trading on such  exchange  or market,  then during the hour
ending at 4:00 p.m., New York City Time).

               (q)  "Warrants"  has the  meaning  ascribed  to such  term in the
Securities Purchase Agreement, and shall include all warrants issued in exchange
therefore or replacement thereof.

               (r) "Weighted  Average  Price" means,  for any security as of any
date,  the  dollar  volume-weighted  average  price  for  such  security  on the
Principal Market during

                                       25
<PAGE>

the period  beginning at 9:30 a.m. New York City Time (or such other time as the
Principal 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 the  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 the Principal 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 the  Principal
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 Pink  Sheets LLC  (formerly,  the
National  Quotation  Bureau,  Inc.).  If the  Weighted  Average  Price cannot be
calculated  for a security on a particular  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  Holder.  If the
Company  and the Holder are unable to agree upon the fair  market  value of such
security,  then such dispute shall be resolved  pursuant to Section 24. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.


                            [Signature Page Follows]

                                       26
<PAGE>

IN WITNESS  WHEREOF,  the Company has caused this Note to be duly executed as of
the Issuance Date set out above.

                                APHTON CORPORATION



                                By:
                                   -------------------------
                                   Name:
                                   Title:



                                       27
<PAGE>


                                                                       EXHIBIT I

                               APHTON CORPORATION
                                CONVERSION NOTICE

Reference is made to the Convertible Note (the "Note") issued to the undersigned
by Aphton  Corporation (the  "Company").  In accordance with and pursuant to the
Note, the undersigned hereby elects to convert the Conversion Amount (as defined
in the Note) of the Note indicated below into shares of Common Stock,  par value
$0.001 per share (the "Common  Stock"),  of the Company as of the date specified
below.

         Date of Conversion:
                            ----------------------------------------------------

         Aggregate Conversion Amount to be converted:
                                                     ---------------------------


Please confirm the following information:

         Conversion Price:
                          ------------------------------------------------------

         Number of shares of Common Stock to be issued:
                                                       -------------------------

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

         Issue to:
                  --------------------------------------------------------------
                  --------------------------------------------------------------
                  --------------------------------------------------------------

         Facsimile Number:
                          ------------------------------------------------------

         Authorization:
                       ---------------------------------------------------------

                  By:
                     -----------------------------------------------------------
                                                Title:
                                                      --------------------------

Dated:
      --------------------------------------------------------------------------

         Account Number:
                        --------------------------------------------------------
         (if electronic book entry transfer)

         Transaction Code Number:
                                 -----------------------------------------------
         (if electronic book entry transfer)

<PAGE>

                                 ACKNOWLEDGMENT


     The Company hereby  acknowledges  this Conversion Notice and hereby directs
U.S. Stock Transfer Corporation to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions, dated March 31,
2003,  from the Company and  acknowledged  and agreed to by U.S.  Stock Transfer
Corporation.

                                        APHTON CORPORATION



                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:





                                       29