<PAGE>
                                                                     EXHIBIT 4.2

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY
ACCEPTABLE TO THE MAKER) IN THE FORM, SUBSTANCE AND SCOPE REASONABLY
SATISFACTORY TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE
SECURITIES LAWS.


                            ANALYTICAL SURVEYS, INC.
                   Senior Secured Convertible Promissory Note
                               due April 2, 2005



No. CN-02-1                                                       $20,000,000.00
Dated:  April 2, 2002


     For value received, ANALYTICAL SURVEYS, INC., a Colorado corporation (the
"Maker"), hereby promises to pay to the order of Tonga Partners, L.P. (together
with its successors, representatives, and permitted assigns, the "Holder"), in
accordance with the terms hereinafter provided, the principal amount of Two
Million Dollars ($2,000,000.00), together with interest thereon. Concurrently
with the issuance of this Note, the Company is issuing separate notes (the
"Other Notes") to separate purchasers (the "Other Holders") pursuant to the
Purchase Agreement (as defined in Section 1.1 hereof).

     All payments under or pursuant to this Note shall be made in United States
Dollars in immediately available funds to the Holder at the address of the
Holder first set forth above or at such other place as the Holder may designate
from time to time in writing to the Maker or by wire transfer of funds to the
Holder's account, instructions for which are attached hereto as Exhibit A. The
outstanding principal balance of this Note shall be due and payable on April 2,
2005 (the "Maturity Date") or at such earlier time as provided herein; provided,
however, if the Mandatory Conversion Date is extended pursuant to Section
3.5(b)(x) hereof, the Maturity Date shall be extended to the Mandatory
Conversion Date.

                                   ARTICLE I

     Section 1.1 Purchase Agreement. This Note has been executed and delivered
pursuant to the Note and Warrant Purchase Agreement, dated as of April 2, 2002
(the "Purchase Agreement"), by and between the Maker and the purchasers listed
therein. Capitalized terms


                                      -1-
<PAGE>

used and not otherwise defined herein shall have the meanings set forth for such
terms in the Purchase Agreement.

     Section 1.2 Interest. Beginning on the date hereof, the outstanding
principal balance of this Note shall bear interest at a rate per annum equal to
five percent (5%), payable upon conversion unless earlier converted or prepaid
as provided herein. Interest shall be computed on the basis of a 360-day year of
twelve (12) 30-day months and shall accrue commencing on the issuance date of
this Note (the "Issuance Date"). The interest shall be payable in shares of the
Maker's common stock, no par value per share (the "Common Stock"); provided,
that the Maker shall issue to the Holder registered and freely tradable shares
of Common Stock. The number of shares of Common Stock to be issued as payment of
accrued and unpaid interest shall be determined by dividing (a) the total amount
of accrued and unpaid interest to be converted into Common Stock by (b) the
Conversion Price (as defined in Section 3.2(a) hereof). Furthermore, upon the
occurrence of an Event of Default (as defined in Section 2.1 hereof), then to
the extent permitted by law, the Maker will pay interest to the Holder, payable
on demand, on the outstanding principal balance of the Note from the date of the
Event of Default until such Event of Default is cured at the rate of the lesser
of fifteen percent (15%) and the maximum applicable legal rate per annum.

     Section 1.3 Security Agreement. The obligations of the Maker hereunder
shall be secured by, and the Holder shall be entitled to the rights and security
granted by the Maker pursuant to, the Security Agreement dated as of the date
hereof by the Maker for the benefit of the Holder (the "Security Agreement").

     Section 1.4 Senior Note. This Note shall be senior to all other
indebtedness of the Maker.

     Section 1.5 Payment on Non-Business Days. Whenever any payment to be made
shall be due on a Saturday, Sunday or a public holiday under the laws of the
State of New York, such payment may be due on the next succeeding business day
and such next succeeding day shall be included in the calculation of the amount
of accrued interest payable on such date.

     Section 1.6 Transfer. This Note may be transferred or sold, subject to the
provisions of Section 4.8 of this Note, or pledged, hypothecated or otherwise
granted as security by the Holder.

     Section 1.7 Replacement. Upon receipt of a duly executed, notarized and
unsecured written statement from the Holder with respect to the loss, theft or
destruction of this Note (or any replacement hereof), and without requiring an
indemnity bond or other security, or, in the case of a mutilation of this Note,
upon surrender and cancellation of such Note, the Maker shall issue a new Note,
of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated
Note.


                                      -2-
<PAGE>

                                   ARTICLE II


                           EVENTS OF DEFAULT; REMEDIES

     Section 2.1 Events of Default. The occurrence of any of the following
events shall be an "Event of Default" under this Note:

     (a) the Maker shall fail to make the payment of any amount of principal
outstanding on the date such payment is due hereunder; or

     (b) the Maker shall fail to make any payment of interest in shares of
Common Stock for a period of five (5) days after the date such interest is due;
or

     (c) the failure of the Registration Statement to be declared effective by
the Securities and Exchange Commission ("SEC") on or prior to the date which is
one hundred fifty (150) days after the Filing Date (as defined in the
Registration Rights Agreement); or

     (d) the suspension from listing or the failure of the Common Stock to be
listed on The Nasdaq SmallCap Market for a period of five (5) consecutive
Trading Days; or

     (e) the Maker's notice to the Holder, including by way of public
announcement, at any time, of its inability to comply (including for any of the
reasons described in Section 3.8(a) hereof) or its intention not to comply with
proper requests for conversion of this Note into shares of Common Stock; or

     (f) the Maker shall fail to (i) timely deliver the shares of Common Stock
upon conversion of this Note or any interest accrued and unpaid, (ii) timely
file the Registration Statement (as defined in the Registration Rights
Agreement) or (iii) make the payment of any fees and/or liquidated damages under
this Note, the Purchase Agreement or the Registration Rights Agreement, which
failure in the case of items (i) and (iii) of this Section 2.1(f) is not
remedied within seven (7) business days after the incurrence thereof; or

     (g) while the Registration Statement is required to be maintained effective
pursuant to the terms of the Registration Rights Agreement, the effectiveness of
the Registration Statement lapses for any reason (including, without limitation,
the issuance of a stop order) or is unavailable to the Holder for sale of the
Registrable Securities (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, and such lapse
or unavailability continues for a period of ten (10) consecutive Trading Days,
provided that the cause of such lapse or unavailability is not due to factors
primarily within the control of Holder; or

     (h) default shall be made in the performance or observance of (i) any
material covenant, condition or agreement contained in this Note (other than as
set forth in Section 3.7(m) hereof and clause (f) of this Section 2.1) and such
default is not fully cured within ten (10) business days after the occurrence
thereof or (ii) any material covenant, condition or agreement contained in the
Purchase Agreement, the Security Agreement, the Other Notes or the


                                      -3-
<PAGE>

Registration Rights Agreement which is not covered by any other provisions of
this Section 2.1 and such default is not fully cured within ten (10) business
days after the occurrence thereof; or

     (i) any material representation or warranty made by the Maker herein or in
the Purchase Agreement, the Security Agreement or the Registration Rights
Agreement shall prove to have been false or incorrect or breached in a material
respect on the date as of which made; or

     (j) the Maker shall issue any debt securities which are not subordinate to
this Note and the Other Notes other than on such terms as are acceptable to the
Holders of a majority of the outstanding principal amount of this Note and the
Other Notes purchased under the Purchase Agreement; provided, however, that the
provisions of this Section 2.1(j) shall be of no force or effect if the Maker
consummates a subsequent financing with a third party in an aggregate amount of
$4,000,000 or greater; or

     (k) the consummation of any of the following transactions: (i) the
consolidation, merger or other business combination of the Maker with or into a
person or entity (other than (A) pursuant to a migratory merger effected solely
for the purpose of changing the jurisdiction of incorporation of the Maker or
(B) a consolidation, merger or other business combination in which holders of
the Maker'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), except if in the case of a consolidation, merger or other business
combination of the Maker, the Maker shall have given the Holder not less than
fifteen (15) business days prior written notice thereof (the "Transaction
Notice") and shall have furnished the Holder with such information regarding the
consolidation, merger or other business combination (including, without
limitation, the counterparties thereto) as the Holder may reasonably request in
order for the Holder to determine if it will exercise its conversion rights
hereunder prior to the consummation of such consolidation, merger or other
business combination; (ii) the sale or transfer of all or substantially all of
the Maker's assets; or (iii) the consummation of a purchase, tender or exchange
offer made to the holders of more than 30% of the outstanding shares of Common
Stock; or

     (l) the Maker shall (i) default in any payment of any amount or amounts of
principal of or interest on any Indebtedness (other than the Indebtedness
hereunder) the aggregate principal amount of which Indebtedness is in excess of
$25,000 or (ii) default in the observance or performance of any other material
agreement or condition relating to any Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders or beneficiary or
beneficiaries of such Indebtedness to cause with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity; or

     (m) the Maker shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect) or under
the comparable laws of any jurisdiction (foreign or domestic), (iv) file a
petition


                                      -4-
<PAGE>

seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors'
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
or (vi) take any action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing; or

     (n) a proceeding or case shall be commenced in respect of the Maker,
without its application or consent, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, moratorium, dissolution, winding
up, or composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets in connection with the liquidation or dissolution
of the Maker or (iii) similar relief in respect of it under any law providing
for the relief of debtors, and such proceeding or case described in clause (i),
(ii) or (iii) shall continue undismissed, or unstayed and in effect, for a
period of seventy-five (75) days or any order for relief shall be entered in an
involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic)
against the Maker or action under the laws of any jurisdiction (foreign or
domestic) analogous to any of the foregoing shall be taken with respect to the
Maker and shall continue undismissed, or unstayed and in effect for a period of
seventy-five (75) days; or

     (o) or the occurrence of an Event of Default under the Other Notes.

     Section 2.2 Remedies Upon An Event of Default. If an Event of Default shall
have occurred and shall be continuing, the Holder of this Note may at any time
at its option (a) declare the entire unpaid principal balance of this Note,
together with all interest accrued hereon, due and payable, and thereupon, the
same shall be accelerated and so due and payable, without presentment, demand,
protest, or notice, all of which are hereby expressly unconditionally and
irrevocably waived by the Maker; provided, however, that upon the occurrence of
an Event of Default described in (i) Sections 2.1 (m), (n) or (o), the
outstanding principal balance and accrued interest hereunder shall be
automatically due and payable and (ii) Sections 2.1 (c)-(l), demand the
prepayment of this Note pursuant to Section 3.7 hereof, (b) demand that the
principal amount of this Note then outstanding and all accrued and unpaid
interest thereon shall be converted into shares of Common Stock at a Conversion
Price per share calculated pursuant to Section 3.1 hereof assuming that the date
that the Event of Default occurs is the Conversion Date (as defined in Section
3.2(a) hereof), or (c) exercise or otherwise enforce any one or more of the
Holder's rights, powers, privileges, remedies and interests under this Note, the
Purchase Agreement, the Security Agreement, the Registration Rights Agreement or
applicable law. No course of delay on the part of the Holder shall operate as a
waiver thereof or otherwise prejudice the right of the Holder. No remedy
conferred hereby shall be exclusive of any other remedy referred to herein or
now or hereafter available at law, in equity, by statute or otherwise.


                                      -5-
<PAGE>

                                  ARTICLE III

                      CONVERSION; ANTIDILUTION; PREPAYMENT

     Section 3.1 Conversion Option. At any time on or after the Issuance Date,
this Note shall be convertible (in whole or in part), at the option of the
Holder (the "Conversion Option"), into such number of fully paid and
non-assessable shares of Common Stock (the "Conversion Rate") as is determined
by dividing (x) that portion of the outstanding principal balance under this
Note as of such date that the Holder elects to convert by (y) the Conversion
Price (as hereinafter defined) then in effect on the date on which the Holder
faxes a notice of conversion (the "Conversion Notice"), duly executed, to the
Maker (facsimile number (317) 532-3433, Attn.: Chief Financial Officer) (the
"Voluntary Conversion Date"), provided, however, that the Conversion Price shall
be subject to adjustment as described in Section 3.6 below.

     Section 3.2 Conversion Price.

     (a) Subject to the provisions of subsection (b) below, the term "Conversion
Price" shall mean an amount equal to the lesser of (i) the Closing Price (as
defined below) and (ii) ninety percent (90%) of the average of the Per Share
Market Value of the Common Stock for the three (3) Trading Days having the
lowest Per Share Market Value during the twenty (20) Trading Days immediately
prior to the Voluntary Conversion Date or the Mandatory Conversion Date (as
defined in Section 3.5 hereof), as applicable, except that if during any period
(a "Black-out Period"), a Holder is unable to trade any Common Stock issued or
issuable upon conversion of the Notes immediately due to the postponement of
filing or delay or suspension of effectiveness of a registration statement or
because the Maker has otherwise informed such Holder that an existing prospectus
cannot be used at that time in the sale or transfer of such Common Stock, such
Holder shall have the option but not the obligation on any Voluntary Conversion
Date or Mandatory Conversion Date, as the case may be, within ten (10) Trading
Days following the expiration of the Black-out Period of using the Conversion
Price applicable on such Conversion Date or any Conversion Price selected by
such Holder that would have been applicable had such Conversion Date been at any
earlier time during the Black-out Period or within the ten (10) Trading Days
thereafter.

     (b) The term "Closing Price" shall mean an amount equal to the lesser of
(i) $.40 if the Reverse Stock Split is not effected prior to the Closing Date or
$2.00 if the Reverse Stock Split is effected prior to the Closing Date and (ii)
ninety percent (90%) of the average Per Share Market Value of the Common Stock
for the ninety (90) Trading Days immediately prior to the Closing Date. The term
"Per Share Market Value" means on any particular date (a) the closing bid price
of the Common Stock on such date on The Nasdaq SmallCap Market or other
registered national stock exchange on which the Common Stock is then listed or
if there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on The Nasdaq SmallCap Market or any
registered national stock exchange, then the lowest intra-day price for a share
of Common Stock, as reported by Bloomberg L.P. or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the intra-day price for a share of Common Stock is not then
reported, then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the Holder, or


                                      -6-
<PAGE>

(d) if the Common Stock is not then publicly traded the fair market value of a
share of Common Stock as determined by an Independent Appraiser (as defined in
Section 4.13 hereof) selected in good faith by the Holders of a majority in
interest of the Notes; provided, however, that the Maker, after receipt of the
determination by such Independent Appraiser, shall have the right to select an
additional Independent Appraiser, in which case, the fair market value shall be
equal to the average of the determinations by each such Independent Appraiser;
and provided, further that all determinations of the Per Share Market Value
shall be appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The determination of fair market value
by an Independent Appraiser shall be based upon the fair market value of the
Issuer determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value, and shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

     (c) Upon the conversion of the final portion of this Note and the Other
Notes (the "Final Conversion"), if the total number of Conversion Shares
previously issued to the Holder and the holders of the Other Notes plus the
number of Conversion Shares issued in connection with the Final Conversion is
less than thirty-eight percent (38%) of the number of shares of Common Stock
outstanding on a fully diluted basis as of the date of the Final Conversion, the
Company shall issue additional shares of Common Stock to the Holder and the
holders of the Other Notes on a pro rata basis so that the Holder and the
holders of the Other Notes own in the aggregate at least thirty-eight percent
(38%) of the number of shares of Common Stock outstanding on a fully diluted
basis as of the date of the Final Conversion.

     Section 3.3 Mechanics of Conversion.

     (a) Not later than three (3) Trading Days after any Conversion Date, the
Maker will deliver to the applicable Holder by express courier (A) a certificate
or certificates which shall be free of restrictive legends and trading
restrictions (other than those required by Section 5.1 of the Purchase
Agreement) representing the number of shares of Common Stock being acquired upon
the conversion of this Note and (B) one or more new promissory notes
representing the amount of this Note not converted. If in the case of any
Conversion Notice such certificate or certificates are not delivered to or as
directed by the applicable Holder by the third Trading Day after the Conversion
Date (the "Delivery Date"), the Holder shall be entitled by written notice to
the Maker at any time on or before its receipt of such certificate or
certificates thereafter, to rescind such conversion, in which event the Maker
shall immediately return this Note tendered for conversion, whereupon the Maker
and the Holder shall each be restored to their respective positions immediately
prior to the delivery of such notice of revocation, except that any amounts
described in Sections 3.3(b) and (c) shall be payable through the date notice of
rescission is given to the Maker.

     (b) The Maker understands that a delay in the delivery of the shares of
Common Stock upon conversion of this Note and failure to deliver one or more new
promissory notes representing the unconverted principal amount of this Note
beyond the Delivery Date could result in economic loss to the Holder. If the
Maker fails to deliver to the Holder such certificate


                                      -7-
<PAGE>

or certificates pursuant to this Section hereunder by the Delivery Date, the
Maker shall pay to such Holder, in cash, an amount per Trading Day for each
Trading Day until such certificates are delivered, together with interest on
such amount at a rate of 10% per annum, accruing until such amount and any
accrued interest thereon is paid in full, equal to the greater of (A) (i) 1% of
the aggregate principal amount of the Notes requested to be converted for the
first five (5) Trading Days after the Delivery Date and (ii) 2% of the aggregate
principal amount of the Notes requested to be converted for each Trading Day
thereafter and (B) $2,000 per day (which amount shall be paid as liquidated
damages and not as a penalty). Nothing herein shall limit a Holder's right to
pursue actual damages for the Maker's failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein (including, without limitation, damages relating to any purchase of
shares of Common Stock by such Holder to make delivery on a sale effected in
anticipation of receiving certificates representing shares of Common Stock upon
conversion, such damages to be in an amount equal to (A) the aggregate amount
paid by such Holder for the shares of Common Stock so purchased minus (B) the
aggregate amount of net proceeds, if any, received by such Holder from the sale
of the shares of Common Stock issued by the Maker pursuant to such conversion),
and such Holder shall have the right to pursue all remedies available to it at
law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief). Notwithstanding anything to the contrary
contained herein, the Holder shall be entitled to withdraw a Conversion Notice,
and upon such withdrawal the Maker shall only be obligated to pay the liquidated
damages accrued in accordance with this Section 3.3(b) through the date the
Conversion Notice is withdrawn.

     (c) In addition to any other rights available to the Holder, if the Maker
fails to deliver to the Holder such certificate or certificates pursuant to
Section 3.3(a) by the Delivery Date and if after the Delivery Date the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Holder of the Conversion Shares which
the Holder anticipated receiving upon such conversion, provided that the sale
occurs prior to the time of receipt of the certificate or certificates (a
"Buy-In"), then the Maker shall pay in cash to the Holder (in addition to any
remedies available to or elected by the Holder) the amount by which (A) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the aggregate principal amount
of this Note for which such conversion was not timely honored, together with
interest thereon at a rate of the lesser of 15% and the maximum applicable legal
rate per annum, accruing until such amount and any accrued interest thereon is
paid in full (which amount shall be paid as liquidated damages and not as a
penalty). For example, if the Holder purchases shares of Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
conversion of $10,000 aggregate principal amount of this Note, the Maker shall
be required to pay the Holder $1,000, plus interest. The Holder shall provide
the Maker written notice indicating the amounts payable to the Holder in respect
of the Buy-In.

     Section 3.4 Intentionally Omitted.

     Section 3.5 Mandatory Conversion.

     (a) On the Mandatory Conversion Date (as defined below), this Note shall,
automatically and without any action on the part of the holder hereof, convert
into a number of fully paid and nonassessable shares of Common Stock equal to
the quotient of (i) the principal


                                      -8-
<PAGE>

amount of this Note outstanding on the Mandatory Conversion Date divided by (ii)
the Conversion Price in effect on the Mandatory Conversion Date.

     (b) As used herein, the "Mandatory Conversion Date" shall be the date which
is three (3) years from the date of issuance of this Note, provided, that the
Mandatory Conversion Date shall be extended for the following periods: (x) for
as long as (A) the conversion of this Note would violate Section 3.4 hereof but
shall not be extended for more than a total of ninety (90) days, (B) a
Triggering Event (as defined in Section 3.7(f) hereof) shall have occurred and
be continuing or (C) any event shall have occurred and be continuing which with
the passage of time and the failure to cure would result in a Triggering Event,
(y) for those number of days that the Registration Statement (as defined in the
Registration Rights Agreement) was not in effect during the Effectiveness Period
(as defined in the Registration Rights Agreement) and (z) one day for each day
in any Blackout Period (as defined in Section 3.2(a) hereof). The Mandatory
Conversion Date and the Voluntary Conversion Date collectively are referred to
in this Note as the "Conversion Date."

     (c) On the Mandatory Conversion Date, the outstanding principal balance of
this Note plus all accrued and unpaid interest shall be converted automatically
without any further action by the holder of this Note and whether or not this
Note is surrendered to the Company or its transfer agent; provided, however,
that the Company shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon conversion of this Note unless this Note is
either delivered to the Company or the holder notifies the Company this Note has
been lost, stolen, or destroyed, and executes an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection
therewith. Upon the occurrence of the automatic conversion of this Note pursuant
to this Section 3.5, the holder of this Note shall surrender this Note for which
the Mandatory Conversion Date has occurred to the Company and the Company shall
deliver the shares of Common Stock issuable upon such conversion (in the same
manner set forth in Section 3.3 hereof) to the holder within three (3) Trading
Days of the holder's delivery of this Note.

     Section 3.6 Adjustment of Conversion Price.

     (a) The Conversion Price shall be subject to adjustment from time to time
as follows:

          (i) Adjustments for Stock Splits and Combinations. If the Maker shall
at any time or from time to time after the Issuance Date, effect a stock split
of the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Maker shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section 3.6(a)(i) shall be effective at the close of
business on the date the stock split or combination occurs.

          (ii) Adjustments for Certain Dividends and Distributions. If the Maker
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock,
then, and in each event, the applicable Conversion Price in


                                      -9-
<PAGE>

effect immediately prior to such event shall be decreased as of the time of such
issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying, as applicable, the
applicable Conversion Price then in effect by a fraction:

               (1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and

               (2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.

          (iii) Adjustment for Other Dividends and Distributions. If the Maker
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the applicable
Conversion Price shall be made and provision shall be made (by adjustments of
the Conversion Price or otherwise) so that the holders of this Note shall
receive upon conversions thereof, in addition to the number of shares of Common
Stock receivable thereon, the number of securities of the Maker which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 3.6(a)(iii) with
respect to the rights of the holders of this Note and the Other Notes.

          (iv) Adjustments for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon conversion of this Note at any time or from time
to time after the Issuance Date shall be changed to the same or different number
of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 3.6(a)(i),
(ii) and (iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 3.6(a)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall be made and provisions shall be made (by
adjustments of the Conversion Price or otherwise) so that the holder of this
Note shall have the right thereafter to convert this Note into the kind and
amount of shares of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of shares of
Common Stock into which such Note might have been converted immediately prior to
such reclassification, exchange, substitution or other change, all subject to
further adjustment as provided herein.

          (v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Maker (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section 3.6(a)(i), (ii) and (iii), or a reclassification, exchange or
substitution of shares provided for in Section 3.6(a)(iv)), or a merger or
consolidation of the Maker with or into another corporation, or the sale of all
or substantially all


                                      -10-
<PAGE>

of the Maker's properties or assets to any other person (an "Organic Change"),
then as a part of such Organic Change an appropriate revision to the Conversion
Price shall be made and provision shall be made (by adjustments of the
Conversion Price or otherwise) so that the holder of this Note shall have the
right thereafter to convert such Note into the kind and amount of shares of
stock and other securities or property of the Maker or any successor corporation
resulting from Organic Change. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Section 3.6(a)(v) with respect
to the rights of the holder of this Note after the Organic Change to the end
that the provisions of this Section 3.6(a)(v) (including any adjustment in the
applicable Conversion Price then in effect and the number of shares of stock or
other securities deliverable upon conversion of this Note and the Other Notes)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.

          (vi) Adjustments for Issuance of Additional Shares of Common Stock.

               (1) In the event the Maker, shall, at any time, from time to
time, issue or sell any shares of Additional Shares of Common Stock (including
Treasury Shares) for a consideration per share less than the Conversion Price or
Closing Price then in effect for the Note immediately prior to the time of such
issue or sale, then, forthwith upon such issue or sale, the Conversion Price or
the Closing Price, as the case may be, then in effect for the Notes shall be
reduced to a price equal to the consideration per share paid for such Common
Stock and the number of shares of Common Stock for which this Note is
convertible shall be increased by the product of the number of shares of Common
Stock for which this Note is convertible immediately prior to such issuance or
sale multiplied by the Dilution Percentage. "Dilution Percentage" shall mean the
percentage by which the Conversion Price then in effect is reduced pursuant to
this Section 3.6(a)(vi).

               (2) The provisions under this subsection 3.6(a)(vi) shall not
apply under any of the circumstances for which an adjustment is provided in
subsections (i), (ii), (iii), (iv) or (v) of this Section 3.6(a). No adjustment
of the applicable Conversion Price or Closing Price shall be made under this
subsection (a)(vi) upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to any Common Stock Equivalent (as defined below) if
upon the issuance of such Common Stock Equivalent (x) any adjustment shall have
been made pursuant to subsection (vii) of this Section 3.6(a) or (y) no
adjustment was required pursuant to subsection (vii) of this Section 3.6(a). No
adjustment of the applicable Conversion Price shall be made under this
subsection (vi) in an amount less than $.01 per share, but any such lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment, if any, which together with any adjustments
so carried forward shall amount to $.01 per share or more; provided that upon
any adjustment of the applicable Conversion Price as a result of any dividend or
distribution payable in Common Stock or Convertible Securities (as defined
below) or the reclassification, subdivision or combination of Common Stock into
a greater or smaller number of shares, the foregoing figure of $.01 per share
(or such figure as last adjusted) shall be adjusted (to the nearest one-half
cent) in proportion to the adjustment in the applicable Conversion Price.

          (vii) Issuance of Common Stock Equivalents. If the Maker, at any time
after the Issuance Date, shall issue any securities convertible into or
exchangeable for, directly or indirectly, Common Stock ("Convertible
Securities"), other than this Note, or any rights or


                                      -11-
<PAGE>

warrants or options to purchase any such Common Stock or Convertible Securities,
shall be issued or sold (collectively, the "Common Stock Equivalents") and the
price per share for which Additional Shares of Common Stock may be issuable
thereafter pursuant to such Common Stock Equivalent shall be less than the
applicable Conversion Price then in effect, or if, after any such issuance of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the applicable Conversion Price in effect at
the time of such amendment, then the applicable Conversion Price upon each such
issuance or amendment shall be adjusted as provided in the first sentence of
subsection (vi) of this Section 3.6(a) on the basis that (1) the maximum number
of Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents shall be deemed to have been issued (whether or not such Common
Stock Equivalents are actually then exercisable, convertible or exchangeable in
whole or in part) as of the earlier of (A) the date on which the Maker shall
enter into a firm contract for the issuance of such Common Stock Equivalent, or
(B) the date of actual issuance of such Common Stock Equivalent, and (2) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received or receivable by
the Maker for the issuance of such Additional Shares of Common Stock pursuant to
such Common Stock Equivalent. No adjustment of the applicable Conversion Price
shall be made under this subsection (vii) upon the issuance of any Convertible
Security which is issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any adjustment shall previously
have been made to the exercise price of such warrants then in effect upon the
issuance of such warrants or other rights pursuant to this subsection (vii). If
no adjustment is required under this subsection (vii) upon issuance of any
Common Stock Equivalent or once an adjustment is made under this subsection
(vii) based upon the Per Share Market Value in effect on the date of such
adjustment, no further adjustment shall be made under this subsection (vii)
based solely upon a change in the Per Share Market Value after such date.

          (viii) Consideration for Stock. In case any shares of Common Stock or
any Common Stock Equivalents shall be issued or sold:

               (1) in connection with any merger or consolidation in which the
Maker is the surviving corporation (other than any consolidation or merger in
which the previously outstanding shares of Common Stock of the Maker shall be
changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Maker, of such portion of the assets and business of the nonsurviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or

               (2) in the event of any consolidation or merger of the Maker in
which the Maker is not the surviving corporation or in which the previously
outstanding shares of Common Stock of the Maker shall be changed into or
exchanged for the stock or other securities of another corporation, or in the
event of any sale of all or substantially all of the assets of the Maker for
stock or other securities of any corporation, the Maker shall be deemed to have
issued a number of shares of its Common Stock for stock or securities or other
property of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated, and for a consideration equal to
the fair market value on the date of such transaction


                                      -12-
<PAGE>

of all such stock or securities or other property of the other corporation. If
any such calculation results in adjustment of the applicable Conversion Price,
or the number of shares of Common Stock issuable upon conversion of the Notes,
the determination of the applicable Conversion Price or the number of shares of
Common Stock issuable upon conversion of the Notes immediately prior to such
merger, consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon conversion of
the Notes.

     (b) Record Date. In case the Maker shall take record of the holders of its
Common Stock for the purpose of entitling them to subscribe for or purchase
Common Stock or Convertible Securities, then the date of the issue or sale of
the shares of Common Stock shall be deemed to be such record date.

     (c) Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Maker shall not be required to make any adjustment of the
number of shares of Common Stock issuable upon conversion of the Notes upon the
grant after the Issuance Date of, or the exercise after the Issuance Date of,
(i) shares of Common Stock issuable upon exercise of the Warrants; (ii) shares
of Common Stock issuable upon conversion of this Note and the Other Notes; (iii)
shares of Common Stock to be issued to strategic partners and/or in connection
with a strategic merger or acquisition; (iv) shares of Common Stock or the
issuance of options to purchase shares of Common Stock to employees, officers,
directors, consultants and vendors in accordance with the Issuer's existing
employee stock ownership plans; (v) the issuance of Securities pursuant to the
conversion or exercise of convertible or exercisable securities issued or
outstanding prior to the date hereof; and (vi) the issuance of securities in
exchange for assets.

     (d) No Impairment. The Maker shall not, by amendment of its Articles 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 to be
observed or performed hereunder by the Maker, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 3.6 and
in the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the Holder against impairment. In the event a
Holder shall elect to convert any Notes as provided herein, the Maker cannot
refuse conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever,
unless, an injunction from a court, or notice, restraining and or adjoining
conversion of all or of said Notes shall have issued and the Maker posts a
surety bond for the benefit of such Holder in an amount equal to 130% of the
amount of the Notes the Holder has elected to convert, which bond shall remain
in effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Holder in the event it obtains
judgment.

     (e) Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of this Note pursuant to this Section 3.6, the Maker at
its expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Holder a certificate setting forth such
adjustment and readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. The Maker shall, upon written request of
the Holder, at any time, furnish or cause to be furnished to such holder a like
certificate setting


                                      -13-
<PAGE>

forth such adjustments and readjustments, the applicable Conversion Price in
effect at the time, and the number of shares of Common Stock and the amount, if
any, of other securities or property which at the time would be received upon
the conversion of this Note. Notwithstanding the foregoing, the Maker shall not
be obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent (1%) of such adjusted amount.

     (f) Issue Taxes. The Maker shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of this Note
pursuant thereto; provided, however, that the Maker shall not be obligated to
pay any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.

     (g) Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of this Note. In lieu of any fractional shares to which the
Holder would otherwise be entitled, the Maker shall pay cash equal to the
product of such fraction multiplied by the average of the Per Share Market
Values of the Common Stock for the five (5) consecutive Trading Days immediately
preceding the Conversion Date.

     (h) Reservation of Common Stock. The Maker shall at all times when this
Note shall be outstanding, reserve and keep available out of its authorized but
unissued Common Stock, 10,000,000 shares of Common Stock to effect the
conversion of this Note and all interest accrued thereon; provided that the
number of shares of Common Stock so reserved shall at no time be less than 125%
of the number of shares of Common Stock for which this Note and all interest
accrued thereon are at any time convertible. The Maker shall, from time to time
in accordance with the Colorado General Corporation Law, as amended, increase
the authorized number of shares of Common Stock if at any time the unissued
number of authorized shares shall not be sufficient to satisfy the Maker's
obligations under this Section 3.6(h).

     (i) Regulatory Compliance. If any shares of Common Stock to be reserved for
the purpose of conversion of this Note or any interest accrued thereon require
registration or listing with or approval of any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon
conversion, the Maker shall, at its sole cost and expense, in good faith and as
expeditiously as possible, endeavor to secure such registration, listing or
approval, as the case may be.

     Section 3.7 Prepayment.

     (a) Prepayment Upon an Event of Default. Notwithstanding anything to the
contrary contained herein, upon the occurrence of an Event of Default described
in Sections 2.1(c)-(k) hereof, the Holder shall have the right, at such Holder's
option, to require the Maker to prepay all or a portion of this Note at a price
equal to the Triggering Event Prepayment Price (as defined in Section 3.7(c)
below) applicable at the time of such request. Nothing in this Section 3.7(a)
shall limit the Holder's rights under Section 2.2 hereof.

     (b) Prepayment Option Upon Major Transaction. In addition to all other
rights of the holder of this Note contained herein, simultaneous with the
occurrence of a Major


                                      -14-
<PAGE>

Transaction (as defined below), the holder of this Note
shall have the right, at such holder's option, to require the Maker to prepay
all or a portion of such holder's Notes at a price equal to the greater of (i)
130% of the aggregate principal amount of the Notes and (ii) the product of (A)
the Conversion Rate and (B) the Per Share Market Value of the Common Stock on
the Trading Day immediately preceding such Major Transaction ("Major Transaction
Prepayment Price").

     (c) Prepayment Option Upon Triggering Event. In addition to all other
rights of the holder of this Note contained herein, after a Triggering Event (as
defined below), the holder of this Note shall have the right, at such holder's
option, to require the Maker to prepay all or a portion of such holder's Notes
at a price equal to the greater of (i) 130% of the aggregate principal amount of
this Note and (ii) the product of (A) the Conversion Rate at such time and (B)
the Per Share Market Value of the Common Stock calculated as of the date
immediately preceding such Triggering Event on which the exchange or market on
which the Common Stock is traded is open ("Triggering Event Prepayment Price").

     (d) Intentionally Omitted.

     (e) "Major Transaction." A "Major Transaction" shall be deemed to have
occurred at such time as any of the following events:

          (i) the consolidation, merger or other business combination of the
Maker with or into another Person (as defined in Section 4.13 hereof) (other
than (A) pursuant to a migratory merger effected solely for the purpose of
changing the jurisdiction of incorporation of the Maker or (B) a consolidation,
merger or other business combination in which holders of the Maker'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).

          (ii) the sale or transfer of all or substantially all of the Maker's
assets; or

          (iii) consummation of a purchase, tender or exchange offer made to the
holders of more than 30% of the outstanding shares of Common Stock.

     (f) "Triggering Event." A "Triggering Event" shall be deemed to have
occurred at such time as any of the following events:

          (i) the failure of the Registration Statement to be declared effective
by the SEC on or prior to the date which is one hundred fifty (150) days after
the Closing Date;

          (ii) while the Registration Statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of the Registration Statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the
holder of this Note for sale of the Registrable Securities (as defined in the
Registration Rights Agreement) in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period of ten
(10) consecutive


                                      -15-
<PAGE>

Trading Days, provided that the cause of such lapse or unavailability is due to
factors within the control of the Maker and not due to factors solely within the
control of the holder of this Note;

          (iii) the suspension from trading or the failure of the Common Stock
to be traded on The Nasdaq SmallCap Market for a period of five (5) consecutive
days, provided, that such suspension from listing or failure to be listed is due
to factors within the control of the Maker, including, but not limited to,
failure to timely file all reports required to be filed with the SEC or to meet
the net tangible assets requirements for listing, if any;

          (iv) the Maker's notice to any holder of the Notes, including by way
of public announcement, at any time, of its inability to comply (including for
any of the reasons described in Section 3.8) or its intention not to comply with
proper requests for conversion of any of the Notes into shares of Common Stock;

          (v) the Maker's failure to comply with a Conversion Notice tendered
within ten (10) business days after the receipt by the Maker of the Conversion
Notice and the original Note; or

          (vi) any material representation, warranty or covenant made by the
Maker herein or in the Purchase Agreement, the Security Agreement or the
Registration Rights Agreement shall prove to have been false or incorrect or
breached in a material respect on the date as of which made.

     (g) Intentionally Omitted.

     (h) Mechanics of Prepayment at Option of Holder Upon Major Transaction. No
sooner than fifteen (15) days nor later than ten (10) days prior to the
consummation of a Major Transaction, but not prior to the public announcement of
such Major Transaction, the Maker shall deliver written notice thereof via
facsimile and overnight courier ("Notice of Major Transaction") to the holder of
this Note and holders of the Other Notes. At any time after receipt of a Notice
of Major Transaction (or, in the event a Notice of Major Transaction is not
delivered at least ten (10) days prior to a Major Transaction, at any time
within ten (10) days prior to a Major Transaction), any holder of the Notes then
outstanding may require the Maker to prepay, effective immediately prior to the
consummation of such Major Transaction, all of the holder's Notes then
outstanding by delivering written notice thereof via facsimile and overnight
courier ("Notice of Prepayment at Option of Holder Upon Major Transaction") to
the Maker, which Notice of Prepayment at Option of Holder Upon Major Transaction
shall indicate (i) the number of Notes that such holder is electing to prepay
and (ii) the applicable Major Transaction Prepayment Price, as calculated
pursuant to Section 3.7(b) above.

     (i) Mechanics of Prepayment at Option of Holder Upon Triggering Event.
Within one (1) day after the occurrence of a Triggering Event, the Maker shall
deliver written notice thereof via facsimile and overnight courier ("Notice of
Triggering Event") to each holder of the Notes. At any time after the earlier of
a holder's receipt of a Notice of Triggering Event and such holder becoming
aware of a Triggering Event, any holder of this Note and the Other Notes then
outstanding may require the Maker to prepay all of the Notes on a pro rata basis
by delivering written notice thereof via facsimile and overnight courier
("Notice of Prepayment at


                                      -16-
<PAGE>

Option of Holder Upon Triggering Event") to the Maker, which Notice of
Prepayment at Option of Holder Upon Triggering Event shall indicate (i) the
number of Notes that such holder is electing to prepay and (ii) the applicable
Triggering Event Prepayment Price, as calculated pursuant to Section 3.7(c)
above.

     (j) Intentionally Omitted.

     (k) Payment of Prepayment Price. Upon the Maker's receipt of a Notice(s) of
Prepayment at Option of Holder Upon Triggering Event or a Notice(s) of
Prepayment at Option of Holder Upon Major Transaction from any holder of the
Notes, the Maker shall immediately notify each holder of the Notes by facsimile
of the Maker's receipt of such Notice(s) of Prepayment at Option of Holder Upon
Triggering Event or Notice(s) of Prepayment at Option of Holder Upon Major
Transaction and each holder which has sent such a notice shall promptly submit
to the Maker such holder's certificates representing the Notes which such holder
has elected to have prepaid. The Maker shall deliver the applicable Triggering
Event Prepayment Price, in the case of a prepayment pursuant to Section 3.7(i),
to such holder within five (5) business days after the Maker's receipt of a
Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case
of a prepayment pursuant to Section 3.7(k), the Maker shall deliver the
applicable Major Transaction Prepayment Price immediately prior to the
consummation of the Major Transaction; provided that a holder's original Note
shall have been so delivered to the Maker; provided further that if the Maker is
unable to prepay all of the Notes to be prepaid, the Maker shall prepay an
amount from each holder of the Notes being prepaid equal to such holder's
pro-rata amount (based on the number of Notes held by such holder relative to
the number of Notes outstanding) of all Notes being prepaid. If the Maker shall
fail to prepay all of the Notes submitted for prepayment (other than pursuant to
a dispute as to the arithmetic calculation of the Prepayment Price), in addition
to any remedy such holder of the Notes may have under this Note, the Security
Agreement and the Purchase Agreement, the applicable Prepayment Price payable in
respect of such Notes not prepaid shall bear interest at the rate of 2.0% per
month (prorated for partial months) until paid in full. Until the Maker pays
such unpaid applicable Prepayment Price in full to a holder of the Notes
submitted for prepayment, such holder shall have the option (the "Void Optional
Prepayment Option") to, in lieu of prepayment, require the Maker to promptly
return to such holder(s) all of the Notes that were submitted for prepayment by
such holder(s) under this Section 3.7 and for which the applicable Prepayment
Price has not been paid, by sending written notice thereof to the Maker via
facsimile (the "Void Optional Prepayment Notice"). Upon the Maker's receipt of
such Void Optional Prepayment Notice(s) and prior to payment of the full
applicable Prepayment Price to such holder, (i) the Notice(s) of Prepayment at
Option of Holder Upon Triggering Event or the Notice(s) of Prepayment at Option
of Holder Upon Major Transaction, as the case may be, shall be null and void
with respect to those Notes submitted for prepayment and for which the
applicable Prepayment Price has not been paid, (ii) the Maker shall immediately
return any Notes submitted to the Maker by each holder for prepayment under this
Section 3.7(h) and for which the applicable Prepayment Price has not been paid
and (iii) the Conversion Price of such returned Notes shall be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the Void
Optional Prepayment Notice(s) is delivered to the Maker and (B) the lowest Per
Share Market Value during the period beginning on the date on which the
Notice(s) of Prepayment of Option of Holder Upon Major Transaction or the
Notice(s) of Prepayment at Option of Holder Upon Triggering Event, as the case
may be, is delivered to the Maker and


                                      -17-
<PAGE>

ending on the date on which the Void Optional Prepayment Notice(s) is delivered
to the Maker; provided that no adjustment shall be made if such adjustment would
result in an increase of the Conversion Price then in effect. A holder's
delivery of a Void Optional Prepayment Notice and exercise of its rights
following such notice shall not effect the Maker's obligations to make any
payments which have accrued prior to the date of such notice. Payments provided
for in this Section 3.7 shall have priority to payments to other stockholders in
connection with a Major Transaction.

     (l) Holder Prepayment Option. At the sole option of the Holder, the Holder
may grant the Maker the option to prepay all or any portion of the outstanding
principal amount of this Note together with all accrued and unpaid interest
thereon within ten (10) days of the Holder granting the option to the Maker. If
the Maker elects to exercise the prepayment option, the Maker shall upon five
(5) days prior written notice to the Holder (the "Maker's Prepayment Notice")
prepay all or a portion of the outstanding Notes equal to 130% of the aggregate
outstanding principal amount of this Note plus any accrued but unpaid interest
(the "Maker's Prepayment Price"); provided, however, that if a holder has
delivered a Conversion Notice to the Maker or delivers a Conversion Notice after
receipt of the Maker's Prepayment Notice, the Notes designated to be converted
may not be prepaid by the Maker; provided further that if during the period
between delivery of the Maker's Prepayment Notice and the Maker's Prepayment
Date (as defined below), a holder shall become entitled to deliver a Notice of
Prepayment at Option of Holder Upon Major Transaction or Notice of Prepayment at
Option of Holder upon Triggering Event, then the such rights of the holders
shall take precedence over the previously delivered Maker Prepayment Notice. The
Maker's Prepayment Notice shall state the date of prepayment which date shall be
the sixth (6th) day after the Maker has delivered the Maker's Prepayment Notice
(the "Maker's Prepayment Date"), the Maker's Prepayment Price and the amount of
Notes to be prepaid by the Maker. The Maker shall deliver the Maker's Prepayment
Price to the Holder within five (5) business days after the Maker has delivered
the Maker's Prepayment Notice, provided, that if the holder(s) delivers a
Conversion Notice before the Maker's Prepayment Date, then the portion of the
Maker's Prepayment Price which would be paid to prepay the Notes covered by such
Conversion Notice shall be returned to the Maker upon delivery of the Common
Stock issuable in connection with such Conversion Notice to the holder(s). On
the Maker's Prepayment Date, the Maker shall pay the Maker's Prepayment Price,
subject to any adjustment pursuant to the immediately preceding sentence, to the
holder(s) on a pro rata basis, provided, however, that upon receipt by Maker of
the certificates representing the Notes to be prepaid pursuant to this Section
3.7(l), the Maker shall, on the next business day following the date of receipt
by the Maker of the original Note, pay the Maker's Prepayment Price to the
holder(s) on a pro rata basis. If the Maker fails to pay the Maker's Prepayment
Price by the sixth (6th) business day after the Maker has delivered the Maker's
Prepayment Notice, the prepayment will be declared null and void and the Maker
shall lose its right to serve a Maker's Prepayment Notice pursuant to this
Section 3.7(l) in the future.

     Section 3.8 Inability to Fully Convert.

     (a) Holder's Option if Maker Cannot Fully Convert. If, upon the Maker's
receipt of a Conversion Notice or on the Mandatory Conversion Date, the Maker
cannot issue shares of Common Stock registered for resale under the Registration
Statement for any reason, including, without limitation, because the Maker (w)
does not have a sufficient number of shares


                                      -18-
<PAGE>

of Common Stock authorized and available, (x) is otherwise prohibited by
applicable law or by the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Maker or any of its securities from issuing all of the Common Stock which is
to be issued to the Holder pursuant to a Conversion Notice or (y) fails to have
a sufficient number of shares of Common Stock registered for resale under the
Registration Statement, then the Maker shall issue as many shares of Common
Stock as it is able to issue in accordance with the Holder's Conversion Notice
and, with respect to the unconverted portion of this Note, the Holder, solely at
Holder's option, can elect to:

          (i) require the Maker to prepay that portion of this Note for which
the Maker is unable to issue Common Stock in accordance with the Holder's
Conversion Notice (the "Mandatory Prepayment") at a price per share equal to the
Prepayment Price as of such Conversion Date (the "Mandatory Prepayment Price");

          (ii) if the Maker's inability to fully convert is pursuant to Section
3.8(a)(y) above, require the Maker to issue restricted shares of Common Stock
equal to one hundred twenty percent (120%) of the number of shares of Common
Stock the Maker is unable to deliver in accordance with such holder's Conversion
Notice;

          (iii) void its Conversion Notice and retain or have returned, as the
case may be, this Note that was to be converted pursuant to the Conversion
Notice (provided that the Holder's voiding its Conversion Notice shall not
effect the Maker's obligations to make any payments which have accrued prior to
the date of such notice).

     (b) Mechanics of Fulfilling Holder's Election. The Maker shall immediately
send via facsimile to the Holder, upon receipt of a facsimile copy of a
Conversion Notice from the Holder which cannot be fully satisfied as described
in Section 3.8(a) above, a notice of the Maker's inability to fully satisfy the
Conversion Notice (the "Inability to Fully Convert Notice"). Such Inability to
Fully Convert Notice shall indicate (i) the reason why the Maker is unable to
fully satisfy such holder's Conversion Notice, (ii) the amount of this Note
which cannot be converted and (iii) the applicable Mandatory Prepayment Price.
The Holder shall notify the Maker of its election pursuant to Section 3.8(a)
above by delivering written notice via facsimile to the Maker ("Notice in
Response to Inability to Convert").

     (c) Payment of Prepayment Price. If the Holder shall elect to have its
shares prepaid pursuant to Section 3.8(a)(i) above, the Maker shall pay the
Mandatory Prepayment Price in cash to the Holder within five (5) days of the
Maker's receipt of the Holder's Notice in Response to Inability to Convert,
provided that prior to the Maker's receipt of the Holder's Notice in Response to
Inability to Convert the Maker has not delivered a notice to the Holder stating,
to the satisfaction of the Holder, that the event or condition resulting in the
Mandatory Prepayment has been cured and all Conversion Shares issuable to the
Holder can and will be delivered to the Holder in accordance with the terms of
this Note. If the Maker shall fail to pay the applicable Mandatory Prepayment
Price to the Holder on a timely basis as described in this Section 3.8(c) (other
than pursuant to a dispute as to the determination of the arithmetic calculation
of the Prepayment Price), in addition to any remedy the Holder may have under
this Note and the Purchase Agreement, such unpaid amount shall bear interest at
the rate of 2.0% per month (prorated for partial months) until paid in full.
Until the full Mandatory Prepayment Price is paid


                                      -19-
<PAGE>

in full to the Holder, the Holder may (i) void the Mandatory Prepayment with
respect to that portion of the Note for which the full Mandatory Prepayment
Price has not been paid, (ii) receive back such Note, and (iii) require that the
Conversion Price of such returned Note be adjusted to the lesser of (A) the
Conversion Price as in effect on the date on which the Holder voided the
Mandatory Prepayment and (B) the lowest Per Share Market Value during the period
beginning on the Conversion Date and ending on the date the Holder voided the
Mandatory Prepayment.

     Section 3.9 No Rights as Shareholder. Nothing contained in this Note shall
be construed as conferring upon the Holder, prior to the conversion of this
Note, the right to vote or to receive dividends or to consent or to receive
notice as a shareholder in respect of any meeting of shareholders for the
election of directors of the Maker or of any other matter, or any other rights
as a shareholder of the Maker.

                                   ARTICLE IV

                                  MISCELLANEOUS

     Section 4.1 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated in the
Purchase Agreement (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The Maker will give written notice to the Holder at least ten (10) days prior to
the date on which the Maker closes its books or takes a record (x) with respect
to any dividend or distribution upon the Common Stock, (y) with respect to any
pro rata subscription offer to holders of Common Stock or (z) for determining
rights to vote with respect to any Organic Change, dissolution, liquidation or
winding-up and in no event shall such notice be provided to such holder prior to
such information being made known to the public. The Maker will also give
written notice to the Holder at least ten (10) days prior to the date on which
any Organic Change, dissolution, liquidation or winding-up will take place and
in no event shall such notice be provided to the Holder prior to such
information being made known to the public. The Maker shall promptly notify the
Holder of this Note of any notices sent or received, or any actions taken with
respect to the Other Notes.

     Section 4.2 Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions. This Note shall not be interpreted or
construed with any presumption against the party causing this Note to be
drafted.

     Section 4.3 Headings. Article and section headings in this Note are
included herein for purposes of convenience of reference only and shall not
constitute a part of this Note for any other purpose.


                                      -20-
<PAGE>

     Section 4.4 Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder's right to pursue actual damages for any failure by the
Maker 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 thereof and shall
not, except as expressly provided herein, be subject to any other obligation of
the Maker (or the performance thereof). The Maker acknowledges that a breach by
it of its obligations hereunder will cause irreparable and material harm to the
Holder and that the remedy at law for any such breach may be inadequate.
Therefore the Maker agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available rights
and remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.

     Section 4.5 Enforcement Expenses. The Maker agrees to pay all costs and
expenses of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.

     Section 4.6 Binding Effect. The obligations of the Maker and the Holder set
forth herein shall be binding upon the successors and assigns of each such
party, whether or not such successors or assigns are permitted by the terms
hereof.

     Section 4.7 Amendments. This Note may not be modified or amended in any
manner except in writing executed by the Maker and the Holder.

     Section 4.8 Compliance with Securities Laws. The Holder of this Note
acknowledges that this Note is being acquired solely for the Holder's own
account and not as a nominee for any other party, and for investment, and that
the Holder shall not offer, sell or otherwise dispose of this Note. This Note
and any Note issued in substitution or replacement therefore shall be stamped or
imprinted with a legend in substantially the following form:

     " THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
     SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE
     MAKER OF AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY
     ACCEPTABLE TO THE MAKER) IN THE FORM, SUBSTANCE AND SCOPE REASONABLY
     SATISFACTORY TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED,
     HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION
     UNDER THE ACT AND SUCH STATE SECURITIES LAWS."


                                      -21-
<PAGE>

     Section 4.9 Consent to Jurisdiction. Each of the Maker and the Holder (i)
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court sitting in the Southern District of New York and the courts of
the State of New York located in New York county for the purposes of any suit,
action or proceeding arising out of or relating to this Note and (ii) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Each of the Maker and the
Holder consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under the Purchase Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 4.9 shall affect or limit any right to serve process in any other manner
permitted by law.

     Section 4.10 Parties in Interest. This Note shall be binding upon, inure to
the benefit of and be enforceable by the Maker, the Holder and their respective
successors and permitted assigns.

     Section 4.11 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.

     Section 4.12 Maker Waivers. Except as otherwise specifically provided
herein, the Maker and all others that may become liable for all or any part of
the obligations evidenced by this Note, hereby waive presentment, demand, notice
of nonpayment, protest and all other demands' and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and do hereby
consent to any number of renewals of extensions of the time or payment hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon, all without affecting the liability
of the other persons, firms or Maker liable for the payment of this Note, AND DO
HEREBY WAIVE TRIAL BY JURY.

     (a) No delay or omission on the part of the Holder in exercising its rights
under this Note, or course of conduct relating hereto, shall operate as a waiver
of such rights or any other right of the Holder, nor shall any waiver by the
Holder of any such right or rights on any one occasion be deemed a waiver of the
same right or rights on any future occasion.

     Section 4.13 Definitions. For the purposes hereof, the following terms
shall have the following meanings:

     "Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Issuer) that is regularly engaged in the business of
appraising the Capital Stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of any Warrant.


                                      -22-
<PAGE>

     "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

     "Trading Day" " means (a) a day on which the Common Stock is traded on The
Nasdaq SmallCap Market or other registered national stock exchange on which the
Common Stock has been listed, or (b) if the Common Stock is not listed on The
Nasdaq SmallCap Market or any registered national stock exchange, a day or which
the Common Stock is traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (c) if the Common Stock is not quoted on the OTC Bulletin
Board, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided,
however, that in the event that the Common Stock is not listed or quoted as set
forth in (a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of New York are authorized or required by law
or other government action to close.


                                                ANALYTICAL SURVEYS, INC.



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


                                      -23-
<PAGE>

                                    EXHIBIT A

                               WIRE INSTRUCTIONS.



Payee:
      ----------------------------------------------------------

Bank:
     -----------------------------------------------------------

Address:
        --------------------------------------------------------

        --------------------------------------------------------

Bank No.:
         -------------------------------------------------------

Account No.:
            ----------------------------------------------------

Account Name:
             ---------------------------------------------------


                                      -24-
<PAGE>
                                     FORM OF

                              NOTICE OF CONVERSION

     (To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount of the above Note No. ___ into shares of Common Stock of
ANALYTICAL SURVEYS, INC. (the "Maker") according to the conditions hereof, as of
the date written below.

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

Applicable Conversion Price
                            ----------------------------------------------------

Signature
         -----------------------------------------------------------------------
         [Name]

Address:
        ------------------------------------------------------------------------

        ------------------------------------------------------------------------


                                      -25-