Exhibit 10.1

THE SECURITIES  EVIDENCED  HEREBY HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES
ACT OF 1933,  AS AMENDED  (THE "1933  ACT"),  AND MAY NOT BE SOLD,  TRANSFERRED,
ASSIGNED OR  HYPOTHECATED  UNLESS THERE IS AN EFFECTIVE  REGISTRATION  STATEMENT
UNDER THE 1933 ACT COVERING SUCH  SECURITIES OR THE COMPANY  RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER OF THESE  SECURITIES,  REASONABLY  SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT.



                          BESTNET COMMUNICATIONS CORP.

                              A NEVADA CORPORATION

                   SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

February 25, 2003

FOR VALUE RECEIVED,  BESTNET  COMMUNICATIONS  CORP., a Nevada  corporation  (the
"Company"),  hereby promises to pay to ___________________ or registered assigns
(hereinafter referred to as the "Holder"), the principal sum of $75,000.

This Senior Secured Convertible  Promissory Note (the "Note") is being issued as
one of a two notes of like  tenor  that are being  issued by the  Company  on or
about  the  date  hereof  to  __________________  and   ________________________
respectively  (collectively,  the "Bridge  Notes").  No payment,  including  any
prepayment, may be made on this Note unless payments are made pari passu on each
of the outstanding  Bridge Notes.  All payments shall be made in lawful money of
the United States of America at the address of the Holder  listed  below,  or at
such  other  place as the  Holder  may  designate  in  writing.  Unless  earlier
converted  pursuant to Section 2 hereof,  the principal  hereof shall be due and
payable  on the  earlier  to occur of (i)  March 27,  2003,  or (ii) an Event of
Default (as defined below). Interest shall accrue on the principal sum at a rate
of 10% per annum,  compounded annually.  Prepayment of principal,  together with
accrued interest,  may be made without penalty, and without the Holder's consent
but upon ten (10)  days  prior  written  notice  to the  Holder,  provided  that
prepayment may only be made on this Note if at the same time  prepayment is made
on all  Bridge  Notes,  with  payment  on each  Bridge  Note  made  pro  rata in
proportion to the original  principal amount of such Bridge Note relative to the
aggregate principal amount of all Bridge Notes. The repayment obligations of the
Company  under the Bridge  Notes are secured by all of the assets of the Company
pursuant to a Security Agreement dated February 25, 2003.
<PAGE>
1.   INITIAL  ISSUANCE  OF  COMMON  STOCK.  Upon  execution  of this Note and as
     compensation  for the issuance of this Note, the Company shall issue to the
     Holder  25,000   shares  of  its  common  voting  stock,   fully  paid  and
     non-assessable ("Shares").

2.   EXTENSION OF THE NOTE AND FURTHER ISSUANCE OF COMMON STOCK. The Company may
     extend the due date of the Bridge Notes by up to thirty (30) days,  upon 10
     days prior  written  notice to the Holder and  issuance and delivery to the
     Holder of 3,750 additional Shares.

3.   LIMITATION ON SOURCE OF  REPAYMENT.  This Note may not be repaid out of the
     proceeds  of the sale of equity in the Company at a price that is less than
     the equivalent of $0.10 per common share as constituted on the date of this
     Note.

4.   DEFAULT.  If any of the  following  events  (hereafter  called  "Events  of
     Default") shall occur:

     (a)  If the  Company  shall  default  in the  payment of any  principal  or
          accrued interest due under this Note on the date the same shall become
          due and payable,  whether at maturity or by acceleration or otherwise;
          or

     (b)  If the  Company  shall make a general  assignment  for the  benefit of
          creditors; or

     (c)  If the Company shall file a voluntary petition in bankruptcy, or shall
          be insolvent or  adjudicated  bankrupt,  or shall file any petition or
          answer   seeking   any   reorganization,   arrangement,   composition,
          readjustment,  liquidation,  dissolution  or similar  relief under the
          present  or any  future  federal  bankruptcy  act or other  applicable
          federal, state or other statute, law or regulation,  or shall file any
          answer  admitting the material  allegation of a petition filed against
          the  Company  in such  proceeding,  or  shall  seek or  consent  to or
          acquiesce in the appointment of any trustee, receiver or liquidator of
          the Company of all or any  substantial  part of the  properties of the
          Company,  or  the  Company  shall  commence  the  winding  up  or  the
          dissolution or liquidation of the Company; or

     (d)  If, within sixty (60) days after the commencement of an action against
          the Company  (and  service of process in  connection  therewith on the
          Company)   seeking   any   bankruptcy,   insolvency,   reorganization,
          liquidation, dissolution or similar relief under any present or future
          statute,  law or regulation,  such action shall not have been resolved
          in  favor of the  Company  or all  orders  or  proceedings  thereunder
          affecting the operations or the business of the Company stayed,  or if
          the  stay of any such  order or  proceeding  shall  thereafter  be set
          aside, or if, within sixty (60) days after the appointment without the
          consent or  acquiescence  of the Company of any  trustee,  receiver or
          liquidator  of the  Company or of all or any  substantial  part of the
          properties  of the  Company,  such  appointment  shall  not have  been
          vacated; or

     (e)  In the event the Company (i) redeems,  purchases or otherwise acquires
          for  value,  any share or shares of its equity  securities  other than
          shares issued to officers, directors, employees and consultants of the
          Company  pursuant to agreements  obligating  the Company to repurchase
          such  shares upon  termination  of  employment  with or service to the
          Company,  (ii)  declares or pays any dividends on or declares or makes
          any other  distribution  (other than a dividend  payable on the common
          stock  solely  in shares of  common  stock) on  account  of any of its
          equity securities or sets apart any sum for any such purpose, or (iii)
          repays any of the Bridge  Notes  other than a  repayment  concurrently
          made on all Bridge  Notes,  with  payment on each Bridge Note made pro
          rata  in  proportion  to the  principal  amount  of such  Bridge  Note
          relative to the aggregate principal amount of all Bridge Notes;

                                       2
<PAGE>
then,  and in each and every such case,  the  Holders of either of these  Bridge
Notes may, by written notice to the Company, declare all amounts under this Note
and all other Bridge Notes to be forthwith due and payable  (except that, in the
case of an Event of Default under either  Section 4(b),  Section 4(c) or Section
4(d), this Note shall become  immediately due and payable without notice, and in
the case of a default  under  Section 4(a) and 4(f)(iii) the Holder of this Note
may by written  notice  declare all amounts  under this Note due and payable and
the balance shall become so due and payable,  without  presentation,  protest or
further demand or notice of any kind, all of which are hereby expressly  waived.
The Company shall give promptly a written notice to the Holder of the occurrence
or the  approval by the Company or its Board of  Directors of any and all of the
foregoing  events.  Upon any such  Event of  Default,  this Note shall no longer
accrue  interest,  provided,  however,  the  Company  shall pay,  as  additional
consideration,  3,750 additional Shares for each month during which such default
continues.  If such issuance  shall result in an illegal rate of interest,  then
the number of Shares  shall be reduced to such number that the fair market value
thereof  shall not exceed the maximum legal rate of interest.  Furthermore,  the
compensation  of the Company's  officers will be reduced by twenty percent (20%)
if the Bridge  Notes are not paid in full within  sixty (60) days of the day the
Company first issues any Bridge Note.

5.   Conversion.

     (a)  GRANT OF RIGHT.  Subject  to the terms of  Section  5(d)  hereof,  any
          Holder of this Note has the right, at the Holder's option, at any time
          prior to  payment  in full of the  principal  balance  of and  accrued
          interest  under  this Note  including  without  limitation  during the
          thirty (30) day period mentioned above, to convert, in accordance with
          the  provisions  of this Section 5, (i) the  principal  amount of this
          Note, in whole but not in part, and at the Holder's  option,  and (ii)
          the  unpaid  interest  under  the  Note  accrued  to the  date of such
          conversion  in (i),  above,  into fully  paid  Units of the  Company's
          securities,  each unit consisting of three (3) shares of the Company's
          Common Stock, $.001 par value, one (1) share of the Company's Series A
          Preferred  Stock and a  three-year  warrant to purchase an  additional
          share of Common  Stock at an  exercise  price of $0.30 per share  (the
          "Units"),  all as more fully set forth in the Company  final  offering
          materials  for an offering of Units based upon the "Term  Sheet" dated
          January 29,  2003,  a copy of which is attached  hereto as Schedule 5.
          The  number  of  Units  which  this  Note  may be  converted  shall be
          determined  by dividing  the  aggregate  principal  amount of the Note
          and/or accrued unpaid interest under the Note by the conversion  price
          in effect at the time of such conversion.

     (b)  NOTICE OF  CONVERSION.  Before the Holder shall be entitled to convert
          this Note into shares of Common Stock, he shall surrender this Note at
          the  office of the  Company  and shall  give  written  notice by mail,
          postage prepaid,  to the Company at its principal corporate office, of
          the election to convert the same, if the Holder is electing to convert
          pursuant to Section  5(a),  and shall  state  therein on the Notice of
          Conversion  annexed  to this Note the entire  principal  amount of the
          Note to be  converted  and the  unpaid  interest  and  accrued on such
          principal amount that is also to be converted.

     (c)  SATISFACTION   WITH   REQUIREMENTS   OF   SECURITIES   ACT  OF   1933.
          Notwithstanding  anything to the contrary  contained herein,  each and
          every  conversion  of this  Note,  is  contingent  upon the  Company's
          satisfaction  that the issuance of Units upon the conversion is exempt

                                       3
<PAGE>
          from the  requirements of the Securities Act of 1933, as amended,  and
          all applicable state securities laws. The Holder agrees to execute any
          and  all  documents  deemed  necessary  by the  Company  to  effect  a
          conversion of this Note.

     (d)  MECHANICS  AND EFFECT OF  CONVERSION.  No  fractional  Units  shall be
          issued upon  conversion of this Note.  In lieu of the Company  issuing
          any  fractional  Units to the Holder upon the conversion of this Note,
          the  Company  shall pay to the Holder,  when it is due,  the amount of
          outstanding principal that is not so converted. Upon the conversion of
          this Note pursuant to Section 5(a) above,  the Holder shall  surrender
          this Note, duly endorsed,  at the principal office of the Company.  At
          its expense,  the Company shall,  as soon as  practicable  thereafter,
          issue  and  deliver  to  such  Holder  at  such  principal   office  a
          certificate  or  certificates   for  the  number  of  shares  of  such
          Securities to which the Holder shall be entitled upon such  conversion
          (bearing  such legends as are required by the Purchase  Agreement  and
          applicable state and federal securities laws in the opinion of counsel
          to the Company),  together with any other  securities  and property to
          which the Holder is entitled upon such  conversion  under the terms of
          this  Note,  including  a check  payable  to the  Holder  for any cash
          amounts  payable for unpaid and accrued  interest  and for  fractional
          shares as described above. In the event of any conversion of this Note
          pursuant to Section  5(a) above,  such  conversion  shall be deemed to
          have been made  immediately  prior to the  closing of the  issuance of
          such Units and on and after such date the Holder of this Note entitled
          to receive the shares of such Securities issuable upon such conversion
          shall be treated for all purposes as the record holder of such shares.
          Upon  conversion of this Note,  the Company shall be forever  released
          from all its obligations and liabilities  under this Note, except that
          the Company  shall be obligated to pay the Holder within ten (10) days
          after the date of such  conversion  any cash  amounts  resulting  from
          fractional  shares as  described  above,  and any unpaid  and  accrued
          interest (not  converted  under the Note) to and including the date of
          such conversion, and no more.

6.   DIVIDENDS. In the event that the Company shall make any distribution of its
     assets  upon or with  respect  to its Common  Stock,  as a  liquidating  or
     partial  liquidating  dividend,  or other than as a dividend payable out of
     earnings or any surplus  legally  available for dividends under the laws of
     the state of  incorporation  of the  Company,  each Holder of any Note then
     outstanding  shall,  upon the  exercise  of his right to convert  after the
     record  date for such  distribution  or, in the  absence of a record  date,
     after the date of such  distribution,  receive,  in  addition to the shares
     subscribed  for,  the  amount  of such  assets  (or,  at the  option of the
     Company,  a sum equal to the value thereof at the time of  distribution  as
     determined  by the Board of  Directors  in good faith which would have been
     distributed  to such  Holder  if he had  exercised  his  right  to  convert
     immediately  prior to the  record  date for such  distribution  or,  in the
     absence  of  a  record  date,   immediately  prior  to  the  date  of  such
     distribution.

                                       4
<PAGE>
7.   REPRESENTATIONS  AND  WARRANTIES OF HOLDER.  Holder hereby  represents  and
     warrants that:

     a.   AUTHORIZATION.  Holder has full power and authority to enter into this
          Note,  and  this  Note  constitutes  the  valid  and  legally  binding
          obligations of Holder, enforceable in accordance with its terms;

     b.   PURCHASE ENTIRELY FOR OWN ACCOUNT.  This Note, the Units issuable upon
          execution  hereof,  the securities  stock issuable upon  conversion of
          this  Note or upon  conversion  of any  instrument  issuable  upon the
          conversion thereof  (collectively,  the "Securities") will be acquired
          for  investment  for Holder's own account,  not as a nominee or agent,
          and not with a view to the resale or distribution of any part thereof;
          and  Holder  has  no  present  intention  of  selling,   granting  any
          participation in or otherwise  distributing the same.  Holder does not
          have any  contract,  undertaking,  agreement or  arrangement  with any
          person  to  sell,  transfer  or  grant  participation  in  any  of the
          Securities to such person or to any third person; and

     c.   INVESTMENT  EXPERIENCE.   Holder  is  an  investor  in  securities  of
          companies in the  development  stage and  acknowledges  that Holder is
          able to fend for himself and bear the economic risk of its investment,
          including  the  complete  loss  thereof,  and has such  knowledge  and
          experience in financial or business  matters that Holder is capable of
          evaluating the merits and risks of the  investment in the  Securities.
          Holder  has not  been  organized  for the  purpose  of  acquiring  the
          Securities.

     d.   ACCREDITED  INVESTOR.   Holder  understands  the  definition  of,  and
          represents that Holder is, an "accredited investor" as defined in Rule
          501 of  Regulation  D, as presently in effect,  promulgated  under the
          Securities Act of 1933, as amended (the "1933 Act").

     e.   RESTRICTED  SECURITIES.  Holder  understands  that the Securities that
          Holder is purchasing  are  characterized  as  "restricted  securities"
          under the federal securities laws, inasmuch as they are being acquired
          from the Company in a transaction not involving a public offering, and
          that under such laws and applicable regulations such securities may be
          resold without registration under the 1933 Act only in certain limited
          circumstances.  In this connection,  Holder is familiar with Rule 144,
          as presently in effect, and understands the resale limitations imposed
          thereby and by the 1933 Act.

8.   DISCLOSURE OF  INFORMATION.  The Company has  heretofore  delivered to each
     Holder a copy of its most recent  Annual  Report on Form 10-K as filed with
     the  Securities and Exchange  Commission  and of every Report  subsequently
     filed with said agency.  The Company  represents  and warrants  that it has
     also  delivered a writing  containing a description of every fact necessary
     to make the disclosures in said Reports current and not misleading.  Holder
     therefore  believes  that Holder has  received all the  information  Holder
     considers  necessary or  appropriate  for deciding  whether to purchase the
     Securities.  Holder has had an  opportunity  to ask  questions  and receive
     answers from the Company regarding the terms and conditions of the offering
     and sale of the Securities.

9.   FURTHER  LIMITATIONS  ON  DISPOSITION.  Without  in any  way  limiting  the
     representations  set forth  above,  Holder  further  agrees not to make any
     disposition of all or any portion of the  Securities  (other than the valid
     exercise or conversion  thereof in accordance with their respective  terms)
     unless  and  until:  (a) there is then in effect a  registration  statement
     under the 1933 Act covering such proposed disposition, and such disposition
     is made in accordance with such registration  statement;  or (b) (i) Holder

                                       5
<PAGE>
     has notified the Company of the proposed  disposition and has furnished the
     Company with a detailed  statement  of the  circumstances  surrounding  the
     proposed  disposition,  and (ii) if requested  by the  Company,  Holder has
     furnished the Company with an opinion of counsel,  reasonably  satisfactory
     to the Company, that such disposition will not require registration of such
     Securities  under the 1933 Act or registration or  qualification  under any
     applicable state securities law.

     Notwithstanding  the  foregoing,  no  investment  representation  letter or
     opinion of counsel shall be required for any transfer of Securities  (i) in
     compliance with Rule 144 or Rule 144A of the 1933 Act or (ii) by gift, will
     or  intestate  succession  by  Holder  to  his  or  her  spouse  or  lineal
     descendants  or ancestors or any trust for any of the  foregoing;  provided
     that, in each of the foregoing cases,  the transferee  agrees in writing to
     be  subject to the terms of this Note.  In  addition,  if the holder of any
     Securities  delivers to the Company an unqualified  opinion of counsel that
     no subsequent transfer of such Securities shall require  registration under
     the 1933 Act, the Company shall, upon such contemplated transfer,  promptly
     deliver new documents/certificates for such Securities that do not bear the
     legend set forth in Section 10 hereof.

10.  LEGENDS.  It is understood that the certificates  evidencing the Securities
     may bear one or more of the following legends:

     (a)  The following legend under the 1933 Act:

          "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECUTITIES ACT OF
          1933, AS AMENDED.  THEY MAY NOT BE SOLD,  OFFERED FOR SALE, PLEDGED OR
          HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
          RESPECT  TO THE  SECURITIES  UNDER  SUCH ACT OR AN  OPINION OF COUNSEL
          SATISFACTORY  TO THE COMPANY THAT SUCH  REGISTRATION IS NOT REQUIRED",
          or

     (b)  Any legend required by state securities laws.

          The Company agrees to remove promptly,  upon the request of the holder
          of  Securities  issued upon  conversion  of this Note,  the legend set
          forth in Section 7(a) hereof from the  documents/certificates for such
          Securities  upon full  compliance  with this  Note,  Rules 144 and 145
          under the 1933 Act and any  other  applicable  provisions  of the 1933
          Act.

11.  ASSIGNMENT.  This Note  applies to,  inures to the benefit of and binds the
     successors  and assigns of the parties  hereto.  Any  transfer of this Note
     will  be  effected  only by  surrender  of this  Note  to the  Company  and
     reissuance  of a new note to  transferee.  The  Holder  and any  subsequent
     holder(s) of this Note receive this Note subject to the foregoing items and
     conditions, and agree to comply with the foregoing terms and conditions for
     the benefit of the Company and any other holders.

12.  NOTICES. Any notice,  request or other communication  required or permitted
     hereunder  shall be in writing  and shall be deemed to have been duly given
     (i) when  received,  if  personally  delivered,  faxed,  sent by nationally
     recognized courier or U.S. Mail  return-receipt  requested,  or (ii) on the
     third  business day after deposit in the U.S.  Mail, if sent by first-class
     mail,  in any such case to the address of the Holder set forth below and to
     the Company at Bestnet  Communications Corp. 5075 Cascade Road SE, Suite A,
     Grand Rapids,  Michigan 49546,  Attention:  Robert A. Blanchard President &
     CEO.  Any party hereto may by notice so given change its address for future
     notice hereunder.

13.  NO STOCKHOLDER RIGHTS. Nothing contained in this Note shall be construed as
     conferring  upon the  Holder  or any other  person  the right to vote or to
     consent or to receive  notice as a  stockholder  in respect of  meetings of
     stockholders  for the  election  of  directors  of the Company or any other
     matters or any rights  whatsoever as a stockholder  of the Company;  and no

                                       6
<PAGE>
     dividends  shall be  payable  or  accrued  in  respect  of this Note or the
     capital stock obtainable hereunder until, and only to the extent that, this
     Note shall have been converted.

14.  NOTE  REGISTER.  This  Note is  transferable  only  upon  the  books of the
     Company,  which  it shall  cause to be  maintained  for such  purpose.  The
     Company  may treat  the  registered  holder  of this Note as he,  she or it
     appears on the Company's books at any time as the Holder for all purposes.

15.  LOSS. Etc. OF NOTE. Upon receipt of evidence satisfactory to the Company of
     the loss,  theft,  destruction or mutilation of this Note, and of indemnity
     reasonably  satisfactory  to the  Company  if this Note is lost,  stolen or
     destroyed, and upon surrender and cancellation of this Note if this Note is
     mutilated,  the Company  shall execute and deliver to the Holder a new Note
     of like date, tenor and denomination.

16.  AMENDMENT,  WAIVER.  ETC.  The terms of this Note may be  amended or waived
     only upon the written  agreement  of the Company and the Holder;  provided,
     however,  that the terms of this Note and all of the other Bridge Notes may
     be amended or waived  upon the  written  agreement  of the  Company and the
     Holders of both Bridge  Notes,  as long as such  amendment or waiver is the
     same for all Bridge Notes.

17.  HEADING: REFERENCES. All headings used herein are used for convenience only
     and shall not be used to  construe or  interpret  this Note.  Except  where
     otherwise  indicated,  all references  herein to Sections refer to Sections
     hereof.

18.  SEVERABILITY.  If one or  more  provisions  of  this  Note  are  held to be
     unenforceable  under  applicable law, such provision shall be excluded from
     this Note and the  balance  of this Note  shall be  interpreted  as if such
     provision were so excluded and shall be enforceable in accordance  with its
     terms.

19.  MISCELLANEOUS.  This Note shall be governed by and  construed in accordance
     with  the  laws  of  the  State  of  Arizona.  The  Company  hereby  waives
     presentment,  demand,  notice of nonpayment,  protest and all other demands
     and notices in connection  with the delivery,  acceptance,  performance  or
     enforcement of this Note. If an action is brought for collection under this
     Note, the Company will pay all costs of collection actually incurred by the
     Holder,  including, but not limited to, the reasonable attorneys' fees of a
     single counsel for all holders of Bridge Notes as selected by such holders.

                                       7
<PAGE>
IN WITNESS WHEREOF,  the undersigned have caused this Senior Secured Convertible
Promissory Note to be executed by the undersigned as of the date first set forth
above.


BESTNET COMMUNICATIONS CORP.,
a Nevada corporation



-------------------------------------
Robert Blanchard, President


ATTEST:
       ------------------------------
                (Secretary)

The undersigned  Holder of this Note understands and acknowledges the provisions
of this Note,  including  Sections 7, 8, 9, 10 and 11, and agrees to be bound by
the provisions herein.


------------------------------------
(Signature of Holder)

------------------------------------
Address

------------------------------------
City, State and Zip Code

The  undersigned   officers  of  the  Company  understand  and  acknowledge  the
provisions in Section 4 of this Note regarding the reduction in compensation and
hereby agree to be bound by all provisions of this Note.


------------------------------------
Robert Blanchard, President


------------------------------------
Paul Jachim, Chief Financial Officer

                                       8
<PAGE>
                                   SCHEDULE I

                       BESTNET COMMUNICATIONS CORPORATION
                                JANUARY 29, 2003


INVESTMENT SUMMARY:

BestNet  Communications  Corp. (the "Company") is offering for sale to qualified
investors  4,500,000  units at a per unit cost of $.30 (the "Units").  Each Unit
consists of the following securities:

     *    3 shares of BestNet Common Stock;

     *    1 share of BestNet Series A Preferred Stock convertible to 2 shares of
          Common Stock at a cost of $.10 per share; and

     *    1 three-year warrant to purchase an additional share of BestNet Common
          Stock at a per share exercise price of $.30.

REGISTRATION RIGHTS/TRADABILITY:

Qualified  investors  will be granted  registration  rights with  respect to the
Units and the securities underlying the Units on the following terms:

     *    Upon  completion of the private  placement,  the Company agrees to use
          its best  efforts  to  register  the  Units as well as the  underlying
          common shares and the Series A Preferred Shares.

     *    The 3 common  shares  included in the Units have been  authorized  and
          reserved  for  issuance.  The 3 common  shares will be included in the
          registration statement filed by the Company.

     *    Similarly,  the  common  shares  underlying  the  Preferred  Stock and
          warrants will be included in the  registration  statement filed by the
          Company  and will be  tradable  following  the  effectiveness  of that
          registration statement and approval by the Company's shareholders of a
          proposal to increase the  authorized  capital  stock of the Company to
          accommodate  the conversion of the Preferred Stock and the exercise of
          the Warrants.  The Company  expects to file promptly a proxy statement
          relating to such  shareholder  proposal within a reasonable  period of
          time following the sale of the Units.

     *    The Company will have the authority to determine the opportune time to
          permit the  securities  underlying  the Units to trade  apart from the
          Units (i.e.,  the trading of the Preferred Stock, the Warrants and the
          Common Stock underlying the Preferred Stock and the Warrants).

TIMING:

The Units are being offered to qualified  investors for the period commencing on
the date hereof and ending on February 28, 2003,  unless extended by the Company
in its discretion by not more than 30 days.