Note No. 1

THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE  "ACT"),  NOR  APPROVED  OR  DISAPPROVED  BY THE  SECURITIES  AND  EXCHANGE
COMMISSION ("THE COMMISSION"),  OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY
STATE.  THIS NOTE MAY NOT BE SOLD IN THE ABSENCE OF A REGISTRATION  STATEMENT OR
AN EXEMPTION FROM REGISTRATION. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

9% SUBORDINATED CONVERTIBLE PROMISSORY NOTE DUE
JANUARY 31, 1999

$_________ U.S.                                               April 18, 1997

     UNIVERSAL TRADING  TECHNOLOGIES  CORPORATION,  a Delaware  corporation (the
"Company"),   for   value   received,   promises   to  pay  to  the   order   of
_______________________________   at   ____________________________  or  at  the
offices of the Company,  the sum of  $___________  U.S. on JANUARY 31, 1999 with
interest  from the date hereof on the unpaid  principal  hereof  until  maturity
(whether as stated or by acceleration), according to the tenor hereof, at a rate
of 9% per annum (and after such  maturity or demand at a rate per annum equal to
9%) until such principal is paid in full.  Interest shall be payable annually in
arrears on JANUARY 31, 1998 and on JANUARY 31, 1999 or upon the earlier due date
of the note.  Interest  shall be  calculated  on the basis of a 360-day year for
actual days elapsed. This note is one of a series of 9% subordinated convertible
promissory notes that have been delivered to investors in a Private Placement by
the Company,  all of which notes are hereinafter referred to as the "Notes". The
Notes are direct, unsecured obligations of the Company.

     The Company for itself,  its successors and assigns,  covenants and agrees,
and each holder of the Notes, by his acceptance  hereof,  likewise covenants and
agrees,  that the payment of the principal of, premium (if any) and interest on,
the Notes is hereby  expressly  subordinated,  to the  extent  and in the manner
hereinafter  set forth,  in right of payment to the prior payment in full of all
"Senior Indebtedness," as that term is herein defined.

     In case of any  distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other  marshalling of the assets and liabilities
of the Company:

     (a) the  holders of all Senior  Indebtedness  shall  first be  entitled  to
receive payment thereof in full,  including all principal,  premium, if any, and
interest,  or provision shall be made for such payment before the holders of the
Notes receive any payment upon the principal  of,  premium,  if any, or interest
on, indebtedness evidenced by the Notes;

     (b) any  payment or  distribution  of assets of the  Company of any kind or
character,  whether in cash, property or securities, to which the holders of the
Notes would be entitled except for the subordination  provisions hereof shall be
paid and/or delivered by the liquidating trustee or agent or other person making
such payment or  distribution,  whether a trustee in  bankruptcy,  a receiver or
liquidating trustee or otherwise, directly to the holders of Senior Indebtedness
or their  representative or  representatives or to the trustee or trustees under
any  indenture  under  which  any  instruments  evidencing  any of  such  Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of amounts  remaining unpaid on account of the Senior
Indebtedness held or represented by each to the extent necessary to make payment
in full of all Senior Indebtedness  remaining unpaid, after giving effect to any
concurrent  payment or  distribution  (or provision  therefor) to the holders of
such Senior Indebtedness; and

     (c) in the  event  that  notwithstanding  the  foregoing,  any  payment  or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by the holders of the Notes before all
Senior Indebtedness is paid in full or provision is made for such payment,  such
payment or  distribution  shall be held in trust for the benefit of and promptly
paid over to the holders of such Senior Indebtedness or their  representative or
representatives  or to the trustee or trustees  under any indenture  under which
any instruments evidencing any of such Senior Indebtedness may have been issued,
as their respective  interests may appear, for application to the payment of all
Senior  Indebtedness  remaining unpaid until all such Senior  Indebtedness shall
have  been  paid in full,  after  giving  effect to any  concurrent  payment  or
distribution (or provision therefor) to the holders of such Senior Indebtedness.

     Upon the  payment in full of all Senior  Indebtedness,  the  holders of the
Notes shall be subrogated to the rights of the holders of Senior Indebtedness to
receive  payments or  distributions  of assets of the Company  applicable to the
Senior Indebtedness until the unpaid principal of, premium, if any, and interest
on the Notes shall be paid in full. No such payments or distributions applicable
to the Senior  Indebtedness  shall, as between the Company,  its creditors other
than the holders of Senior Indebtedness, and the holders of the Notes, be deemed
to be a payment by the Company to or on account of the Notes. The  subordination
provisions  of the Notes are  intended  solely for the purpose of  defining  the
relative  rights of the holder of the Notes,  on the one hand, and the holder of
the Senior Indebtedness, on the other hand.

     Nothing  contained  herein is intended to or shall  impair,  as between the
Company,  its creditors other than the holders of Senior  Indebtedness,  and the
holder of the Notes, the obligation of the Company,  which is unconditional  and
absolute,  to pay to the holder of the Notes the principal of (and  premium,  if
any) and interest on the Notes as and when the same shall become due and payable
in accordance with its terms, or to affect the relative rights of the holders of
the Notes and  creditors  of the  Company  other than the  holders of the Senior
Indebtedness,  nor shall anything  herein or therein  prevent the holders of the
Notes from  exercising all remedies  otherwise  permitted by applicable law upon
default under the Notes,  subject to the rights, if any, under the subordination
provisions  of the Notes of the  holders  of Senior  Indebtedness  in respect of
cash,  property or securities  of the Company  received upon the exercise of any
such remedy.

     Upon any payment or  distribution  of assets of the Company  referred to in
the  subordination  provisions  of the Notes,  the holders of the Notes shall be
entitled  to rely  upon  any  order or  decree  made by any  court of  competent
jurisdiction   in  which  such   dissolution,   winding   up,   liquidation   or
reorganization  proceedings are pending or upon a certificate of the liquidating
trustee or agent or other person making any  distribution  to the holders of the
Notes for the purpose of  ascertaining  the persons  entitled to  participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company,  the amount  thereof or payable  thereon,  the amount or amounts
paid or  distributed  thereon  and all other facts  pertinent  thereto or to the
subordination provisions of the Notes.

     No payments on account of  principal,  premium,  if any, or interest on the
Notes,  shall be made unless  full  payment of amounts  then due for  principal,
premium, if any, sinking funds and interest on Senior Indebtedness has been made
or duly  provided  for in money or  money's  worth.  No  payments  on account of
principal,  premium,  if any, or interest on the Notes, shall be made if: (i) at
the time of such payment or immediately after giving effect thereto, there shall
exist  under any Senior  Indebtedness  or any  agreement  pursuant  to which any
Senior Indebtedness is issued, any default or any condition, event or act, which
with notice or lapse of time, or both, would  constitute a default,  or (ii) the
Company  shall  have  received  from any  holder of Senior  Indebtedness  or the
representative  of a  holder  of  Senior  Indebtedness  written  notice  of  the
existence of any default or any condition,  event or act, which,  with notice or
lapse of time, or both, would constitute a default,  or which would preclude the
making of any payment by the Company with respect to the principal,  premium, if
any, or interest  on the Notes;  in any such case unless and until such  default
shall have been cured or waived or shall have ceased to exist.

     Nothing  contained  in the  subordination  provisions  of the Notes,  shall
affect the  obligation  of the  Company to make,  or prevent  the  Company  from
making,  at  any  time  except  during  the  pendency  of any  such  insolvency,
bankruptcy,  dissolution, winding up, liquidation or reorganization proceedings,
and except during the  continuance of any default  specified in the  immediately
preceding paragraph (not cured or waived), payments at any time of principal of,
and premium or interest on, the Notes.

     The term "Senior Indebtedness" shall mean the principal of, and premium (if
any) on, and interest on all indebtedness of the Company (other than the Notes),
whether  outstanding  on the date of the Notes or  hereafter  created  for money
borrowed by the Company or other monetary  obligations  of the Company  (whether
the same be evidenced by debentures or notes (other than the Notes) or evidenced
by a letter of credit,  loan  agreement or an  indenture or similar  instrument)
from,  owing to, or guaranteed to, banks,  trust companies,  leasing  companies,
insurance  companies or other institutional  lenders and any renewal,  extension
refunding, amendment or modifications of any such Senior Indebtedness, including
without limitation of the foregoing, purchase money mortgages, mortgages made or
given or  guaranteed  by the Company as mortgagor or  guarantor,  and assumed or
guaranteed  mortgages,  upon property,  but excluding any  indebtedness to trade
creditors or suppliers on open account for work,  labor,  services and materials
and excluding any indebtedness which by the terms of the instrument  creating or
evidencing  the same is stated to be not  superior  in right of  payment  to the
Notes.  During the  continuation  of any default in the payment of  principal or
interest on any Senior Indebtedness,  no payment of principal or interest may be
made by the Company on the Notes.  The Notes contain no limitation on the amount
of additional  Senior  Indebtedness or other  indebtedness that may be issued or
incurred.  However, the Company will not in the future until the Notes have been
repaid in full incur  indebtedness that is senior to the Notes other than Senior
Indebtedness;  provided,  however,  that nothing shall prohibit the Company from
incurring secured indebtedness.

     The  transferability  of the Notes is  restricted  under  federal and state
securities laws.

     NO SALE,  OFFER TO SELL OR  TRANSFER  OF THE NOTES  SHALL BE MADE  UNLESS A
REGISTRATION  STATEMENT  UNDER THE FEDERAL  SECURITIES  ACT OF 1933, AS AMENDED,
WITH  RESPECT  TO SUCH  SECURITIES  IS THEN IN EFFECT OR AN  EXEMPTION  FROM THE
REGISTRATION  REQUIREMENT  OF  SUCH  ACT IS  THEN  IN  FACT  APPLICABLE  TO SUCH
TRANSFER.

THE NOTES ARE CONVERTIBLE INTO OTHER SECURITIES OF THE COMPANY.

<PAGE>
                                    ARTICLE I

                               CONVERSION OF NOTES

     1.1  Commencing  eighteen  months from April 18, 1997, the principal of the
Notes is convertible at a price of $1.00 per share.  In the event that the Notes
become due and payable  prior to October 18, 1998, as provided in 4.1 of Article
IV,  then the  Company  will  notify the  holders of the Notes of their right to
convert the Notes at least  thirty  days prior to the due date of the Notes.  In
the event that the Notes are converted,  the holder shall be entitled to receive
accrued but unpaid interest through the conversion date of the Notes.

     For the purpose of this  Article,  the term  "Common  Stock" shall mean the
capital stock of the Company of the class  authorized  and  designated as Common
Stock at the date hereof or as such stock may, by change or reclassification, be
constituted from time to time.

     1.2.  The Company  shall not be required  to issue  fractions  of shares of
Common  Stock  upon  conversions  of the  Notes.  If more than one Note shall be
surrendered for conversion at one time by the same holder,  the number of shares
of Common  Stock  which  shall be  issuable  upon  conversion  thereof  shall be
computed  on the  basis  of the  aggregate  principal  amount  of the  Notes  so
surrendered.  If any  fractional  interest  in a share  of  Common  Stock  would
otherwise be deliverable  upon the conversion of any Note or Notes,  the Company
shall make adjustment therefor by rounding to the nearest whole share.

     1.3 The issue of Common Stock certificates on conversions of Notes shall be
made without charge to the holder for such certificates or any tax in respect of
the issue thereof.  The Company shall not,  however,  be required to pay any tax
which may be  payable  in  respect  of any  transfer  involved  in the issue and
delivery  of any  certificate  in any name  other than that of the holder of the
Notes being converted, and the Company shall not be required to issue or deliver
any such  shares  unless and until the person or  persons  requesting  the issue
thereof  shall  have paid to the  Company  the  amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

     The  Company  shall at all  times  reserve  and keep  available  out of its
authorized  but unissued  stock for the purpose of effecting  conversions of the
Notes such number of its duly  authorized  shares of Common  Stock as shall from
time to time be  sufficient  to  effect  such  exercises  and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect such  exercises at the exercise  price then in effect the Company will
take such corporate  action as may, in the opinion of its counsel,  be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.

     1.4. The  conversion  rate of the Notes as defined in 1.1 shall be adjusted
from time to time as follows:  in the event that the Company shall,  at any time
prior to the  conversion of the Notes:  (i) declare or pay to the holders of the
Common  Stock a dividend  payable in any kind of shares of stock of the Company;
or (ii) change or divide or otherwise  reclassify its Common Stock into the same
or a different number of shares with or without par value, or into shares of any
class or classes;  or (iii)  consolidate or merge with, or transfer its property
as an entirety or  substantially  as an entirety to, any other  corporation;  or
(iv) make any  distribution  of its assets to  holders of its Common  Stock as a
liquidation  or partial  liquidation  dividend  or by way of return of  capital;
then,  upon the  subsequent  conversion of the Notes,  each holder thereof shall
receive for the  conversion  price,  in addition to or in  substitution  for the
shares  of  Common  Stock to which it would  otherwise  be  entitled  upon  such
exercise,  such  additional  shares  of stock or scrip of the  Company,  or such
reclassified shares of stock of the Company, or such shares of the securities or
property of the Company resulting from such consolidation or merger or transfer,
or such assets of the Company,  which it would have been entitled to receive had
it converted the Notes prior to the happening of any of the foregoing events.


                                   ARTICLE II

                                  VOTING RIGHTS

     2.1 The  holders  of the  Notes  shall  not be  entitled  to  notice of any
stockholders'  meetings  or  possess  any  right to vote  upon the  election  of
directors or upon any other matter.


                                   ARTICLE III

                                     DEFAULT

     3.1 Except as expressly provided herein, the Company waives protest, demand
for payment and notice of default for non-payment.

     3.2. The holders of not less than 50% by amount of the Notes may consent to
change any terms  covering  the Notes  except  those terms  relating to interest
rate,  payment dates,  conversion and maturity date which may be changed only by
unanimous consent of the Note holders.

     The holders of not less than fifty (50%) percent of the principal amount of
the  Notes by notice in  writing  sent by  registered  mail to the  Company  may
declare the  principal  amount of all the Notes to be forthwith due and payable,
and upon any such declaration the same shall become immediately due and payable,
in the following events:

     (a) If default shall be made in the payment of any  installment of interest
on any of the Notes when and as the same shall become due and payable, as herein
provided,  after  allowance  for a grace  period of  fifteen  (15) days and such
default  shall  continue for a period of an  additional  fifteen (15) days after
written notice is received by the Company from the Note holders; or

     (b) If default  shall be made in the payment of the principal of any of the
Notes when and as the same shall become due and payable; or

     (c) If the Company shall institute proceedings for voluntary bankruptcy, or
shall apply for or consent to the appointment of a receiver for itself or any of
its property,  or shall make an assignment for the benefit of its creditors,  or
shall go into voluntary  liquidation or be dissolved,  or shall admit in writing
its  inability to pay its debts  generally as they  mature,  or shall  institute
proceedings  for  reorganization,   readjustment,  arrangement,  composition  or
similar  relief under any  bankruptcy,  insolvency or other  applicable  law, or
shall file an answer in any such proceedings  against it joining in seeking such
relief or not objecting thereto; or

     (d)  If an  order,  judgment  or  decree  shall  have  been  made  for  the
appointment  of a  receiver  of the  Company  or of a  substantial  part  of its
property,  or  approving  a  petition  seeking   reorganization,   readjustment,
arrangement, composition or similar relief for the Company under any bankruptcy,
insolvency or other  applicable  law, or adjudging the Company to be bankrupt or
insolvent,  and such order,  judgment or decree  shall remain in force for sixty
(60) days without any stay thereof; or

     (e) If one or more judgments, decrees or orders for the payment of money in
excess of $100,000 U.S. in the aggregate  shall be rendered  against the Company
and/or its subsidiaries,  and such judgments,  decrees, or orders shall continue
unsatisfied  and in effect for a period of 30  consecutive  days  without  being
vacated, discharged, satisfied or stayed or bonded pending appeal.


                                   ARTICLE IV

                                   REDEMPTION

     4.1 The Notes may not be redeemed by the Company  prior to January 31, 1999
except as provided in 4.2 of Article IV.

     4.2 Upon the  completion  by the Company of a private  placement  or public
offering  wherein the Company  receives gross  proceeds of at least  $10,000,000
U.S. in any one  transaction,  the Company will promptly  notify its noteholders
that it will  redeem  the Notes at 100% of the face  amount  of the  Notes  plus
accrued and unpaid interest.  Such notice will provide for the redemption of the
Notes six months after the completion of such offering.


                                    ARTICLE V

                               REGISTRATION RIGHTS

     5.1 The Confidential  Private Placement  Memorandum dated December 26, 1996
contains  the  following  registration  rights  that  have been  granted  by the
Company.

                  "The  Company,  at its sole cost,  may be required to register
                  with the SEC the shares  underlying the Convertible Notes sold
                  in this offering,  on one occasion only,  commencing 12 months
                  after the initial  closing of this  offering and expiring four
                  years  thereafter,  at the  request of the holders of at least
                  25%  of  the  Convertible  Notes  or the  shares  issued  upon
                  conversion  of the  Convertible  Notes  sold in the  Offering.
                  Also,  commencing  12 months after the initial  closing of the
                  offering and expiring  four years  thereafter,  the holders of
                  the Convertible  Notes or the shares issued upon conversion of
                  the  Convertible  Notes  sold will have the right to notice of
                  any filing of a registration  statement by the Company and the
                  right to have their shares  underlying the  Convertible  Notes
                  included in any such  registration  statement at the sole cost
                  of the  Company.  However,  in the event the Company  makes an
                  initial public offering of securities, the underwriter of such
                  offering may request the right to defer the public sale of the
                  shares of Common Stock underlying the Convertible  Notes for a
                  period of at least six  months  following  the  closing of the
                  Company's  initial public  offering if necessary to effectuate
                  the Company's  initial public offering.  The Company will have
                  the right to grant the  underwriter's  request if it is deemed
                  necessary to effectuate the Company's initial public offering.
                  The Notes themselves will have no registration rights."


                                   ARTICLE VI

                                  MISCELLANEOUS

     6.1 Time for payment  extended by law shall be included in  computation  of
interest.

     6.2 The Notes shall be governed by and construed in accordance with laws of
the State of New York.

     6.3 No  recourse  shall be had for the  payment  of the  principal  of,  or
interest on, the Notes,  or for any claim based hereon,  or otherwise in respect
hereof,  against  any  incorporator,  or  against  any past,  present  or future
stockholder,  officer or director,  as such,  of the Company or of any successor
corporation,  whether by virtue of any constitution,  statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance  hereof and as part of the  consideration for the issue
hereof, expressly waived and released.

     6.4 UTTC is prohibited  from declaring any cash dividends  prior to payment
in full of the Notes.

     6.5  Notwithstanding  anything contained herein to the contrary,  the Notes
may not be  disposed of except in  compliance  with all  applicable  federal and
state securities laws. In this respect, before selling or otherwise disposing of
the Notes,  the holder shall give five business days prior written notice to the
Company of his  intention to do so. The notice by the holder  shall  specify the
Notes  proposed to be sold or otherwise  disposed of and describe in  reasonable
detail  the  amount  of the  proposed  sale or other  disposition  and  shall be
accompanied by an opinion (in form and substance reasonably  satisfactory to the
Company's  counsel) of the holder's  securities counsel addressed to the Company
as to whether the proposed sale or other disposition may be effected without the
filing of a Registration  Statement under the Securities Act of 1933, as amended
(the "Act"), covering the Notes proposed to be sold or otherwise disposed of. If
in the  opinion  of  such  counsel,  and of  counsel  for the  Company,  no such
registration  action is necessary,  the holder, may sell or otherwise dispose of
such Notes in the manner  described  by him in the notice  given to the Company.
(Copies  of any  documents  which  the  holder  or his  counsel  files  with the
Securities and Exchange Commission  regarding the sale or other disposition will
immediately  be  provided  by him or his  counsel  to the  Company.)  If, in the
opinion of counsel for the Company  registration  of such Notes under the Act is
necessary,  no such sale or other  disposition may be effected by him other than
as contemplated by a Registration Statement filed under the Act which has become
effective under such Act.

     The  holder  of the  Notes  may not sell or  otherwise  transfer  the Notes
purchased  hereunder  without  the  transferee  agreeing  to  be  bound  by  the
provisions  of the  Subscription  Agreement  pursuant to which the holder of the
Notes is bound. A copy of such  Subscription  Agreement may be obtained from the
Company at its principal executive offices.

                                           UNIVERSAL TRADING TECHNOLOGIES
                                             CORPORATION


                                             By:________________________________
                                                Robert A. Eprile, President