<PAGE>
                                                                    Exhibit 10.3


THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR (III)
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.


                        12% MANDATORILY CONVERTIBLE NOTE
                        --------------------------------


$                                                                  March 2, 2007
 ---------------

        FOR VALUE RECEIVED, Narrowstep Inc., a Delaware corporation (the
"COMPANY"), hereby unconditionally promises to pay to the order of
________________ (the "HOLDER"), having an address at
__________________________, at such address or at such other place as may be
designated in writing by the Holder, or its assigns, the aggregate principal sum
of _____________ United States Dollars ($______________), together with interest
from the date set forth above on the unpaid principal balance of this Note
outstanding at a rate equal to twelve percent (12%) (computed on the basis of
the actual number of days elapsed in a 365-day year) per annum and continuing on
the outstanding principal until this 12% Convertible Note (the "NOTE") is
automatically converted into other securities of the Company as provided herein
or indefeasibly and irrevocably paid in full by the Company. Interest on this
Note shall accrue and shall be payable on the Stated Maturity Date (as defined
below). Subject to the other provisions of this Note, the principal of this Note
and all accrued and unpaid interest hereon shall mature and become due and
payable on March 2, 2009 (the "STATED MATURITY DATE"). Except as provided
herein, all payments of principal and interest by the Company under this Note
shall be made in United States dollars in immediately available funds to an
account specified by the Holder. In no event shall any interest charged,
collected or reserved under this Note exceed the maximum rate then permitted by
applicable law and if any such payment is paid by the Company, then such excess
sum shall be credited by the Holder as a payment of principal.

        This Note is one of a series of Notes (the "COMPANY NOTES") of like
tenor in an aggregate principal amount of up to Ten Million United States
Dollars ($10,000,000) issued by the Company pursuant to the terms of the
Purchase Agreement (as defined below).

        1.      DEFINITIONS. Capitalized terms used herein shall have the
respective meanings ascribed thereto in the Purchase Agreement unless otherwise
defined herein. Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated:

                "BOARD" shall mean the Board of Directors of Company.

                "BUSINESS DAY" means any day, other than a Saturday, Sunday or
legal holiday, on which banks in New York City are open for the general
transaction of business.

                "COMPANY" has the meaning set forth in the first paragraph
hereof.


<PAGE>


                "COMPANY NOTES" has the meaning set forth in the second
paragraph hereof.

                "COMPANY SALE" shall be deemed to have occurred if, at any time
(i) the Company merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to such
transaction own less than 50% of the aggregate voting power of the Company or
the successor entity of such transaction or (ii) the Company sells or transfers
its assets, as an entirety or substantially as an entirety, to another Person.

                "CONVERSION SECURITIES" shall mean (i) if the Mandatory
Conversion Event is the closing of a Qualified Financing, the securities issued
in the Qualified Financing and (ii) if the Mandatory Conversion Event is the
closing of a Company Sale, shares of Common Stock.

                "EVENT OF DEFAULT" has the meaning set forth in Section 6
hereof.

                "HOLDER" has the meaning set forth in the first paragraph
hereof.

                "LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any of the foregoing).

                "MAJORITY HOLDERS" has the meaning set forth in Section 8
hereof.

                "MANDATORY CONVERSION DATE" has the meaning set forth in Section
4(a) hereof.

                "MANDATORY CONVERSION EVENT" means the earlier to occur of
either (i) the closing of a Qualified Financing or (ii) a Company Sale.

                "NOTE" has the meaning set forth in the first paragraph hereof.

                "PERMITTED LIENS" means:

                (a)     restrictions on transfers of securities imposed by
applicable securities laws;

                (b)     Liens on the property of a Person existing at the time
such Person became a Subsidiary or such property was acquired from such Person;
provided, however, that any such Lien may not extend to any other property
(other than accessions to and proceeds thereof) provided, further, that any such
Lien was not created in anticipation of or in connection with the transaction or
series of transactions pursuant to which such Person became a Subsidiary or such
property was acquired from such Person;

                (c)     assignments of insurance or condemnation proceeds
provided to landlords (or their mortgagees) pursuant to the terms of any lease
and Liens or rights reserved in any lease for rent or for compliance with the
terms of such lease;

                (d)     Liens imposed by law for taxes that are not yet due or
are being contested in good faith and for which adequate reserves have been
established on the Company's books


                                        2
<PAGE>


and records in accordance with U.S. generally accepted accounting principles,
consistently applied;

                (e)     carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or that are being contested in good faith and by appropriate proceedings;

                (f)     pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;

                (g)     deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business; and

                (h)     easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere with the
ordinary conduct of business of the Company or any of its Subsidiaries.

                "PERSON" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.

                "PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as
of March 2, 2007, and as that agreement may be amended from time to time, by and
among the Company and the Investors.

                "QUALIFIED FINANCING" means a private placement by the Company
of its equity or equity inked securities to one or more accredited investors (at
least one or more of which are not Affiliates of the Company) pursuant to which
the Company receives gross proceeds of at least $3 million.

                "QUALIFIED FINANCING DOCUMENTS" means the definitive
documentation entered into by the Company and the investors in connection with
the Qualified Financing, including, without limitation, customary registration
rights provisions.

                "STATED MATURITY DATE" has the meaning set forth in the first
paragraph hereof.

                "SUBSIDIARY" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.

                                      -3-

<PAGE>


        2.      PURCHASE AGREEMENT. This Note is one of the several 12%
Mandatorily Convertible Notes of the Company issued pursuant to the Purchase
Agreement. This Note is subject to the terms and conditions of, and entitled to
the benefit of, the provisions of the Purchase Agreement. This Note is
transferable and assignable to any Person to whom such transfer is permissible
under the Purchase Agreement and applicable law. The Company agrees to issue
from time to time a replacement Note in the form hereof to facilitate such
transfers and assignments. In addition, after delivery of an indemnity in form
and substance reasonably satisfactory to the Company, the Company also agrees to
promptly issue a replacement Note if this Note is lost, stolen, mutilated or
destroyed.

        3.      NO RIGHT OF PREPAYMENT OR REDEMPTION. This Note shall not be
prepayable or redeemable by the Company prior to the Stated Maturity Date.

        4.      AUTOMATIC CONVERSION.

                (a)     Neither this Note nor any portion of this Note shall be
convertible at any time unless and until a Mandatory Conversion Event shall have
occurred. Upon the occurrence of a Mandatory Conversion Event, all of the
principal amount of this Note and any accrued and unpaid interest due hereon
shall automatically and without any action on the part of the Holder convert on
a dollar-for-dollar basis, less a discount of 10%, into Conversion Securities.
If the Mandatory Conversion Event is the closing of a Company Sale, for purposes
of applying the discount, the Common Stock shall be valued at the per share
consideration paid for shares of Common Stock in the Company Sale. So, for
example, if the per share price for the Common Stock to be paid in the event of
a Company Sale is $2.00, the Note would convert into shares of Common Stock at a
conversion price of $1.80. The date on which the Mandatory Conversion Event
occurs is hereinafter referred to as the "Mandatory Conversion Date." The
Company shall notify the Holder at least five Business Days prior to the
expected Mandatory Conversion Date. The Holder shall keep such notice
confidential and shall not effect any transaction in securities of the Company
from and after receipt of the Company's notice and until such transactions are
again permitted pursuant to the Qualified Financing Documents.

                (b)     No later than the Business Day immediately prior to the
Mandatory Conversion Date, the Holder of this Note shall deliver to the Company
(i) this Note (or, in lieu thereof, an appropriate lost security affidavit in
the event this Note shall have been lost or destroyed, together with a customary
indemnity agreement) to the Company at its principal office (or such other
office or agency of the Company as the Company may designate by notice in
writing to the Holder), together with a statement of the name or names (with
address) in which the certificate or certificates for the Conversion Securities
issuable upon such conversion shall be issued and (ii) to the extent applicable,
executed counterparts of the Qualified Financing Documents executed by the
investors in the Qualified Financing. Promptly following the Mandatory
Conversion Date and the surrender of this Note (or, in lieu thereof, delivery of
an appropriate lost security affidavit in the event this Note shall have been
lost or destroyed, together with a customary indemnity agreement) and such
counterparts as aforesaid, the Company shall issue and deliver, or cause to be
issued and delivered, to the Holder, registered in such name or names as the
Holder may direct in writing, certificates representing the Conversion
Securities into which this Note has been converted. The conversion shall be
deemed to have been effected, as of the close of business on the Mandatory
Conversion Date, and at such time,

                                      -4-

<PAGE>


the rights of the Holder shall cease with respect to this Note, and the Person
or Persons in whose name or names any Conversion Securities shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of such Conversion Securities.

                (c)     No fractional interest in any Conversion Security shall
be issued upon any conversion of this Note. If any fractional interest would,
except for the provisions of the first sentence of this Section 4(c), be
delivered upon such conversion, such fractional interest shall be rounded down
to nearest whole number or amount, as applicable.

        5.      COVENANTS.

                (a)     So long as any amount due under this Note is outstanding
and until the earlier of (i) the indefeasible payment in full of all amounts
payable by the Company hereunder and (ii) the conversion of this Note:

                (i)     The Company shall and shall cause each of its
Subsidiaries to (A) carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducting, (B) do all things necessary to remain duly organized, validly
existing, and in good standing as a domestic corporation under the laws of its
state of incorporation and (C) maintain all requisite authority to conduct its
business in those jurisdictions in which its business is conducted.

                (ii)    The Company shall promptly notify the Holder of the
occurrence of any Event of Default or any event which, with the giving of
notice, the lapse of time or both would constitute an Event of Default, which
notice shall include a written statement as to such occurrence, specifying the
nature thereof and the action (if any) which is proposed to be taken with
respect thereto.

                (iii)   The Company shall and shall cause each Subsidiary to pay
when due all taxes, assessments and governmental charges and levies upon it or
its income, profits or property, except those that are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside.

                (iv)    The Company shall and shall cause each Subsidiary to use
commercially reasonable efforts to do all things necessary to maintain,
preserve, protect and keep its properties in good repair, working order and
condition and use commercially reasonable efforts to make all necessary and
proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted.

                (b)     So long as any amount due under this Note is outstanding
and until the earlier of (i) the indefeasible payment in full of all amounts
payable by the Company hereunder and (ii) the conversion of this Note, without
the prior written consent of the Majority Holders (for purposes of this Section
5(b), any Company Notes held by any employee, director or officer of the Company
or any Subsidiary shall not be deemed to be outstanding):

                                      -5-

<PAGE>


                (i)     The Company shall not and shall cause each Subsidiary
not to create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired other than Permitted Liens.
The Company shall not, and shall cause each Subsidiary not to, be bound by any
agreement which limits the ability of the Company or any Subsidiary to grant
Liens.

                (ii)    The Company shall not, and shall cause each of its
Subsidiaries not to, directly or indirectly, declare or pay any dividends on
account of any shares of any class or series of its capital stock now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums for
such purpose, or redeem, retire, defease, purchase or otherwise acquire any
shares of any class of its capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration or apply or set apart
any sum, or make any other distribution (by reduction of capital or otherwise)
in respect of any such shares or pay any interest, premium if any, or principal
of any Indebtedness or redeem, retire, defease, repurchase or otherwise acquire
any Indebtedness (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
payment in respect thereof or agree to do any of the foregoing (each of the
foregoing is herein called a "RESTRICTED PAYMENT"); provided, that (i) the
Company may make payments of interest, premium if any, and principal of the
Notes in accordance with the terms hereof, (ii) provided that no Event of
Default or event which, with the giving of notice, the lapse of time or both
would constitute an Event of Default has occurred and is continuing, the Company
and its Subsidiaries may make regularly scheduled payments of interest and
principal of any Permitted Indebtedness, (iv) any Subsidiary directly or
indirectly wholly owned by the Company may pay dividends on its capital stock
and (v) the Company may repurchase capital stock from a former employee in
connection with the termination or other departure of such employee, strictly in
accordance with the terms of any agreement entered into with such employee,
provided that (A) such repurchase is approved by a majority of the Board, (B)
payments permitted under this clause (v) shall not exceed Five Hundred Thousand
United States Dollars ($500,000) in the aggregate, and (C) no such payment may
be made if an Event of Default or an event which, with the giving of notice, the
lapse of time or both would constitute an Event of Default has occurred and is
continuing or would result from such payment.

        6.      EVENT OF DEFAULT. The occurrence of any of following events
shall constitute an "EVENT OF DEFAULT" hereunder:

                (a)     the failure of the Company to make any payment of
principal on this Note when due, whether at maturity, upon acceleration or
otherwise;

                (b)     the failure of the Company to make any payment of
interest on this Note when due, whether at maturity, upon acceleration or
otherwise, and such failure continues for more than thirty (30) days;

                                      -6-

<PAGE>


                (c)     the Company and/or its Subsidiaries fail to make a
required payment or payments on Indebtedness of Five Hundred Thousand United
States Dollars ($500,000) or more in aggregate principal amount and such failure
continues for more than ten (10) days;

                (d)     there shall have occurred an acceleration of the stated
maturity of any Indebtedness of the Company or its Subsidiaries of Five Hundred
Thousand United States Dollars ($500,000) or more in aggregate principal amount
(which acceleration is not rescinded, annulled or otherwise cured within ten
(10) days of receipt by the Company or a Subsidiary of notice of such
acceleration);

                (e)     the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as they
become due; or an order, judgment or decree is entered adjudicating the Company
as bankrupt or insolvent; or any order for relief with respect to the Company is
entered under title 11 of the United States Code or any other bankruptcy or
insolvency law; or the Company petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Company or of
any substantial part of the assets of the Company, or commences any proceeding
relating to it under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction; or any
such petition or application is filed, or any such proceeding is commenced,
against the Company and either (i) the Company by any act indicates its approval
thereof, consents thereto or acquiescence therein or (ii) such petition
application or proceeding is not dismissed within sixty (60) days;

                (f)     a final, non-appealable judgment which, in the aggregate
with other outstanding final judgments against the Company and its Subsidiaries,
exceeds Five Hundred Thousand United States Dollars ($500,000) shall be rendered
against the Company or a Subsidiary and within sixty (60) days after entry
thereof, such judgment is not discharged or execution thereof stayed pending
appeal, or within sixty (60) days after the expiration of such stay, such
judgment is not discharged; provided, however, that a judgment that provides for
the payment of royalties subsequent to the date of the judgment shall be deemed
to be discharged so long as the Company or the Subsidiary affected thereby is in
compliance with the terms of such judgment;

                (g)     the Company is in breach of the requirements of Section
5(b) hereof; or

                (h)     if any representation or statement of fact made in any
Transaction Document by the Company proves to have been false in any material
respect when made or furnished.

                Upon the occurrence of any such Event of Default all unpaid
principal and accrued interest under this Note shall become immediately due and
payable (A) upon election of the Holder, with respect to (a) through (d) and (f)
through (h), and (B) automatically, with respect to (e). Upon the occurrence of
any Event of Default, the Holder may, in addition to declaring all amounts due
hereunder to be immediately due and payable, pursue any available remedy,
whether at law or in equity. If an Event of Default occurs, the Company shall
pay to the

                                      -7-

<PAGE>


Holder the reasonable attorneys' fees and disbursements and all other reasonable
out-of-pocket costs incurred by the Holder in order to collect amounts due and
owing under this Note or otherwise to enforce the Holder's rights and remedies
hereunder and under the other Transaction Documents.

        7.      NO WAIVER. To the extent permitted by applicable law, no delay
or omission on the part of the Holder in exercising any right under this Note
shall operate as a waiver of such right or of any other right of the Holder, nor
shall any delay, omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion.

        8.      AMENDMENTS IN WRITING. Any term of this Note may be amended or
waived upon the written consent of the Company and the holders of Company Notes
representing at least 50% of the principal amount of Company Notes then
outstanding (the "MAJORITY HOLDERS"); PROVIDED, that (x) any such amendment or
waiver must apply to all outstanding Company Notes; and (y) without the consent
of the Holder hereof, no amendment or waiver shall (i) change the Stated
Maturity Date of this Note, (ii) reduce the principal amount of this Note or the
interest rate due hereon or (iii) change the place of payment of this Note. No
such waiver or consent on any one instance shall be construed to be a continuing
waiver or a waiver in any other instance unless it expressly so provides.

        9.      WAIVERS. The Company hereby forever waives presentment, demand,
presentment for payment, protest, notice of protest, notice of dishonor of this
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.

        10.     WAIVER OF JURY TRIAL. THE COMPANY, AND BY ACCEPTING THIS NOTE
THE HOLDER, EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS NOTE OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THE
COMPANY AND THE HOLDER EACH HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.


                                      -8-


<PAGE>


        11.     GOVERNING LAW; CONSENT TO JURISDICTION. This Note shall be
governed by and construed under the law of the State of New York, without giving
effect to the conflicts of law principles thereof. The Company and, by accepting
this Note, the Holder, each irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this Note
and the transactions contemplated hereby. Service of process in connection with
any such suit, action or proceeding may be served on each party hereto anywhere
in the world by the same methods as are specified for the giving of notices
under this Note. The Company and, by accepting this Note, the Holder, each
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Company and,
by accepting this Note, the Holder, each irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

        12.     COSTS. If action is instituted to collect on this Note, the
Company promises to pay all reasonable costs and expenses, including reasonable
attorney's fees, incurred in connection with such action.

        13.     NOTICES. All notices hereunder shall be given in writing and
shall be deemed delivered when received by the other party hereto at the address
set forth in the Purchase Agreement or at such other address as may be specified
by such party from time to time in accordance with the Purchase Agreement.

        14.     SUCCESSORS AND ASSIGNS. This Note shall be binding upon the
successors or assigns of the Company and shall inure to the benefit of the
successors and assigns of the Holder.


                  [Remainder of Page Intentionally Left Blank]


                                      -9-


<PAGE>



        IN WITNESS WHEREOF, the Company has caused this 12% Mandatorily
Convertible Note to be signed in its name, effective as of the date first above
written.

                                            NARROWSTEP INC.



                                            By:
                                                --------------------------------
                                                Name:  Lisa VanPatten
                                                Title: Chief Financial Officer



                                      -10-