NEITHER  THE  ISSUANCE  AND  SALE  OF  THE  SECURITIES  REPRESENTED  BY
THIS  CERTIFICATE  NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES
ARE  CONVERTIBLE  HAVE  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT
OF   1933,   AS   AMENDED,   OR   APPLICABLE   STATE   SECURITIES   LAWS.
THE
SECURITIES   MAY   NOT   BE   OFFERED   FOR   SALE,   SOLD,   TRANSFERRED   OR
ASSIGNED    (I)    IN    THE    ABSENCE    OF    (A)    AN    EFFECTIVE
REGISTRATION
STATEMENT  FOR  THE  SECURITIES  UNDER  THE  SECURITIES  ACT  OF  1933,  AS
AMENDED,  OR  (B)  AN  OPINION  OF  COUNSEL  (WHICH  COUNSEL  SHALL  BE
SELECTED  BY  THE  HOLDER),  IN  A  GENERALLY  ACCEPTABLE  FORM,  THAT
REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID  ACT  OR  (II)  UNLESS  SOLD
PURSUANT      TO      RULE      144      OR      RULE      144A      UNDER
SAID      ACT.
NOTWITHSTANDING  THE  FOREGOING,  THE  SECURITIES  MAY  BE  PLEDGED  IN
CONNECTION  WITH  A  BONA  FIDE  MARGIN  ACCOUNT  OR  OTHER  LOAN  OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.



PRINCIPAL AMOUNT: US$77,750                   ISSUE DATE: JULY 6, 2016
PURCHASE PRICE: US$77,750

                    CONVERTIBLE PROMISSORY NOTE

      FOR  VALUE  RECEIVED,  CLEAN  ENERGY  TECHNOLOGIES,  INC.,  a  Nevada
corporation   (hereinafter   called   the   "Borrower"),   hereby   promises
to   pay   to   the   order   of
AUCTUS   FUND,   LLC,   a   Delaware   limited   liability   company,   or
registered   assigns   (the
"Holder")  the  sum  of  US$77,750  together  with  any  interest  as  set
forth  herein,  on  April  6,  2017
(the "Maturity Date"), and to pay interest on the unpaid principal balance
hereof at the rate of ten
percent  (10%)  (the  "Interest  Rate")  per  annum  from  the  date  hereof
(the  "Issue  Date")  until  the
same  becomes  due  and  payable,  whether  at  maturity  or  upon  acceleration
or  by  prepayment  or
otherwise.   This  Note  may  not  be  prepaid  in  whole  or  in  part  except
as  otherwise  explicitly  set
forth  herein  with  the  written  consent  of  the  Holder  which  may  be
withheld  for  any  reason  or  for
no reason. Any amount of principal or interest on this Note which is not paid
when due shall bear
interest  at  the  rate  of  twenty-four  percent  (24%)  per  annum  from  the
due  date  thereof  until  the
same is paid (the "Default Interest").   Interest shall commence accruing on the
date that the Note
is  fully  paid  and  shall  be  computed  on  the  basis  of  a  360-day  year
and  the  actual  number  of  days
elapsed.  All payments due hereunder (to the extent not converted into common
stock, $0.001 par
value  per  share  (the  "Common  Stock")  in  accordance  with  the  terms
hereof)  shall  be  made  in
lawful  money  of  the  United  States  of  America.   All  payments  shall  be
made  at  such  address  as
the  Holder  shall  hereafter  give  to  the  Borrower  by  written  notice
made  in  accordance  with  the
provisions  of  this  Note.   Whenever  any  amount  expressed  to  be  due  by
the  terms  of  this  Note  is
due on any day which is not a business day, the same shall instead be due on the
next succeeding
day which is a business day and, in the case of any interest payment date which
is not the date on
which  this  Note  is  paid  in  full,  the  extension  of  the  due  date
thereof  shall  not  be  taken  into
account  for  purposes  of  determining  the  amount  of  interest  due  on
such  date.   As  used  in  this
Note,  the  term  "business  day"  shall  mean  any  day  other  than  a
Saturday,  Sunday  or  a  day  on
which  commercial  banks  in  the  city  of  New  York,  New  York  are
authorized  or  required  by  law


<PAGE>






or  executive  order  to  remain  closed.    Each  capitalized  term  used
herein,  and  not  otherwise
defined,  shall  have  the  meaning  ascribed  thereto  in  that  certain
Securities  Purchase  Agreement
dated   the   date   hereof,   pursuant   to   which   this   Note   was
originally   issued   (the   "Purchase
Agreement").

      This  Note  is  free  from  all  taxes,  liens,  claims  and  encumbrances
with  respect  to  the  issue
thereof and shall not be subject to preemptive rights or other similar rights of
shareholders of the
Borrower and will not impose personal liability upon the holder thereof.

      The following terms shall apply to this Note:

                      ARTICLE I.  CONVERSION RIGHTS

           1.1 Conversion  Right.   The  Holder  shall  have  the  right  from
time  to  time,  and  at
any  time  following  one  hundred  eighty  (180)  days  after  the  date  of
this  Note  and  ending  on  the
later  of  (i)  the  Maturity  Date  and  (ii)  the  date  of  payment  of  the
Default  Amount  (as  defined  in
Article  III)  pursuant  to  Section  1.6(a)  or  Article  III,  each  in
respect  of  the  remaining  outstanding
principal  amount  of  this  Note  to  convert  all  or  any  part  of  the
outstanding  and  unpaid  principal
amount  of  this  Note  into  fully  paid  and  non-assessable  shares  of
Common  Stock,  as  such
Common  Stock  exists  on  the  Issue  Date,  or  any  shares  of  capital
stock  or  other  securities  of  the
Borrower  into  which  such  Common  Stock  shall  hereafter  be  changed  or
reclassified  at  the
Conversion  Price  (as  defined  below)  determined  as  provided  herein  (a
"Conversion");  provided,
however,  that  in  no  event  shall  the  Holder  be  entitled  to  convert
any  portion  of  this  Note  in
excess of that portion of this Note upon conversion of which the sum of (1) the
number of shares
of  Common  Stock  beneficially  owned  by  the  Holder  and  its  affiliates
(other  than  shares  of
Common   Stock   which   may   be   deemed   beneficially   owned   through
the   ownership   of   the
unconverted portion of the Notes or the unexercised or unconverted portion of
any other security
of  the  Borrower  subject  to  a  limitation  on  conversion  or  exercise
analogous  to  the  limitations
contained  herein)  and  (2)  the  number  of  shares  of  Common  Stock
issuable  upon  the  conversion
of the portion of this Note with respect to which the determination of this
proviso is being made,
would  result  in  beneficial  ownership  by  the  Holder  and  its  affiliates
of  more  than  4.99%  of  the
outstanding shares of Common Stock.   For purposes of the proviso to the
immediately preceding
sentence,  beneficial  ownership  shall  be  determined  in  accordance  with
Section  13(d)  of  the
Securities  Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act"),  and
Regulations  13D-G
thereunder,   except   as   otherwise   provided   in   clause   (1)   of   such
proviso,   provided,   further,
however, that the limitations on conversion may be waived by the Holder upon, at
the election of
the  Holder,  not  less  than  61  days'  prior  notice  to  the  Borrower,  and
the  provisions  of  the
conversion   limitation   shall   continue   to   apply   until   such   61st
day   (or   such   later   date,   as
determined  by  the  Holder,  as  may  be  specified  in  such  notice  of
waiver).   The  number  of  shares
of  Common  Stock  to  be  issued  upon  each  conversion  of  this  Note  shall
be  determined  by
dividing  the  Conversion  Amount  (as  defined  below)  by  the  applicable
Conversion  Price  then  in
effect  on  the  date  specified  in  the  notice  of  conversion,  in  the
form  attached  hereto  as  Exhibit  A
(the  "Notice  of  Conversion"),  delivered  to  the  Borrower  by  the  Holder
in  accordance  with
Section 1.4 below; provided that the Notice of Conversion is submitted by
facsimile or e-mail (or
by  other  means  resulting  in,  or  reasonably  expected  to  result  in,
notice)  to  the  Borrower  before
6:00  p.m.,  New  York,  New  York  time  on  such  conversion  date  (the
"Conversion  Date").   The



                                     2





<PAGE>






term  "Conversion  Amount"  means,  with  respect  to  any  conversion  of  this
Note,  the  sum  of  (1)
the  principal  amount  of  this  Note  to  be  converted  in  such  conversion
plus  (2)  at  the  Holder's
option,  accrued  and  unpaid  interest,  if  any,  on  such  principal  amount
at  the  interest  rates
provided  in  this  Note  to  the  Conversion  Date,  provided  however,  that
the  Borrower  shall  have
the  right  to  pay  any  or  all  interest  in  cash  plus  (3)  at  the
Holder's  option,  Default  Interest,  if  any,
on  the  amounts  referred  to  in  the  immediately  preceding  clauses  (1)
and/or  (2)  plus  (4)  at  the
Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof.

           1.2 Conversion Price.

                 (a)  Calculation  of  Conversion  Price.   Subject  to  the
adjustments  described
herein,  and  provided  that  no  Event  of  Default  (as  defined  in  Article
III)  has  occurred,  the
conversion  price  (the  "Conversion  Price")  shall  equal  the  lesser  of
(i)  55%  multiplied  by  the
lowest  Trading  Price  (as  defined  below)  (representing  a  discount  rate
of  45%)  during  the
previous  twenty  (20)  Trading  Day  period  ending  on  the  latest  complete
Trading  Day  prior  to  the
date  of  this  Note  and  (ii)  the  Variable  Conversion  Price  (as  defined
herein)  (subject  to  equitable
adjustments  for  stock  splits,  stock  dividends  or  rights  offerings  by
the  Borrower  relating  to  the
Borrower's   securities   or   the   securities   of   any   subsidiary   of
the   Borrower,   combinations,
recapitalization,  reclassifications,  extraordinary  distributions  and
similar  events).   The  "Variable
Conversion   Price"   shall   mean   55%   multiplied   by   the   Market
Price   (as   defined   herein)
(representing  a  discount  rate  of  45%).    "Market  Price"  means  the
lowest  Trading  Price  (as
defined  below)  for  the  Common  Stock  during  the  twenty  (20)  Trading
Day  period  ending  on  the
latest  complete  Trading  Day  prior  to  the  Conversion  Date.    "Trading
Price"  means,  for  any
security  as  of  any  date,  the  lesser  of:  (i)  the  lowest  trade  price
on  the  Over-the-Counter  Bulletin
Board  (the  "OTCBB"),  OTCQB  or  applicable  trading  market  as  reported  by
a  reliable  reporting
service  ("Reporting  Service")  designated  by  the  Holder  or,  if  the
OTCBB  is  not  the  principal
trading  market  for  such  security,  the  trading  price  of  such  security
on  the  principal  securities
exchange  or  trading  market  where  such  security  is  listed  or  traded
or,  if  no  trading  price  of  such
security  is  available  in  any  of  the  foregoing  manners,  the  average  of
the  trading  prices  of  any
market  makers  for  such  security  that  are  listed  in  the  "pink  sheets"
by  the  OTC  Markets  Group,
Inc.,  or  (ii)  the  closing  bid  price  on  the  OTCBB,  OTCQB  or
applicable  trading  market  as
reported  by  a  Reporting  Service  designated  by  the  Holder  or,  if  the
OTCBB  is  not  the  principal
trading  market  for  such  security,  the  closing  bid  price  of  such
security  on  the  principal  securities
exchange  or  trading  market  where  such  security  is  listed  or  traded
or,  if  no  closing  bid  price  of
such  security  is  available  in  any  of  the  foregoing  manners,  the
average  of  the  closing  bid  prices
of  any  market  makers  for  such  security  that  are  listed  in  the  "pink
sheets"  by  the  OTC  Markets
Group,  Inc.   To  the  extent  the  Conversion  Price  of  the  Borrower's
Common  Stock  closes  below
the  par  value  per  share,  the  Borrower  will  take  all  steps  necessary
to  solicit  the  consent  of  the
stockholders to reduce the par value to the lowest value possible under law. The
Borrower agrees
to  honor  all  conversions  submitted  pending  this  adjustment.
Furthermore,  the  Conversion  Price
may  be  adjusted  downward  if,  within  three  (3)  business  days  of  the
transmittal  of  the  Notice  of
Conversion to the Borrower, the Common Stock has a closing bid which is 5% or
lower than that
set  forth  in  the  Notice  of  Conversion.  If  the  shares  of  the
Borrower's  Common  Stock  have  not
been  delivered  within  three  (3)  business  days  to  the  Borrower,  the
Notice  of  Conversion  may  be
rescinded.   At  any  time  after  the  Closing  Date,  if  in  the  case  that
the  Borrower's  Common  Stock
is  not  deliverable  by  DWAC  (including  if  the  Borrower's  transfer  agent
has  a  policy  prohibiting



                                     3





<PAGE>






or   limiting   delivery   of   shares   of   the   Borrower's   Common   Stock
specified   in   a   Notice   of
Conversion), an additional 10% discount will apply for all future conversions
under all Notes.   If
in  the  case  that  the  Borrower's  Common  Stock  is  "chilled"  for  deposit
into  the  DTC  system  and
only   eligible   for   clearing   deposit,   an   additional   15%   discount
shall   apply   for   all   future
conversions  under  all  Notes  while  the  "chill"  is  in  effect.   If  in
the  case  of  both  of  the  above,  an
additional  cumulative  25%  discount  shall  apply.   Additionally,  if  the
Company  ceases  to  be  a
reporting  company  pursuant  to  the  1934  Act  or  if  the  Note  cannot  be
converted  into  free  trading
shares  after  one  hundred  eighty-one  (181)  days  from  the  Issue  Date,
an  additional  15%  discount
will  be  attributed  to  the  Conversion  Price.   If  the  Trading  Price
cannot  be  calculated  for  such
security  on  such  date  in  the  manner  provided  above,  the  Trading  Price
shall  be  the  fair  market
value  as  mutually  determined  by  the  Borrower  and  the  holders  of  a
majority  in  interest  of  the
Notes  being  converted  for  which  the  calculation  of  the  Trading  Price
is  required  in  order  to
determine  the  Conversion  Price  of  such  Notes.   "Trading  Day"  shall
mean  any  day  on  which  the
Common  Stock  is  tradable  for  any  period  on  the  OTCBB,  OTCQB  or  on
the  principal  securities
exchange  or  other  securities  market  on  which  the  Common  Stock  is  then
being  traded.    The
Borrower  shall  be  responsible  for  the  fees  of  its  transfer  agent  and
all  DTC  fees  associated  with
any such issuance.

                 (b)  Conversion  Price  During  Major  Announcements.
Notwithstanding
anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public
announcement  that  it  intends  to  consolidate  or  merge  with  any  other
corporation  (other  than  a
merger  in  which  the  Borrower  is  the  surviving  or  continuing
corporation  and  its  capital  stock  is
unchanged)  or  sell  or  transfer  all  or  substantially  all  of  the  assets
of  the  Borrower  or  (ii)  any
person,  group  or  entity  (including  the  Borrower)  publicly  announces  a
tender  offer  to  purchase
50%  or  more  of  the  Borrower's  Common  Stock  (or  any  other  takeover
scheme)  (the  date  of  the
announcement  referred  to  in  clause  (i)  or  (ii)  is  hereinafter  referred
to  as  the   "Announcement
Date"),  then  the  Conversion  Price  shall,  effective  upon  the
Announcement  Date  and  continuing
through  the  Adjusted  Conversion  Price  Termination  Date  (as  defined
below),  be  equal  to  the
lower  of  (x)  the  Conversion  Price  which  would  have  been  applicable
for  a  Conversion  occurring
on the Announcement Date and (y) the Conversion Price that would otherwise be in
effect. From
and   after   the   Adjusted   Conversion   Price   Termination   Date,   the
Conversion   Price   shall   be
determined  as  set  forth  in  this  Section  1.2(a).   For  purposes  hereof,
"Adjusted  Conversion  Price
Termination  Date"  shall  mean,  with  respect  to  any  proposed  transaction
or  tender  offer  (or
takeover  scheme)  for  which  a  public  announcement  as  contemplated  by
this  Section  1.2(b)  has
been  made,  the  date  upon  which  the  Borrower  (in  the  case  of  clause
(i)  above)  or  the  person,
group  or  entity  (in  the  case  of  clause  (ii)  above)  consummates  or
publicly  announces  the
termination  or  abandonment  of  the  proposed  transaction  or  tender  offer
(or  takeover  scheme)
which caused this Section 1.2(b) to become operative.

                 (c)   Pro  Rata  Conversion;  Disputes.  In  the  event  of  a
dispute  as  to  the
number of shares of Common Stock issuable to the Holder in connection with a
conversion of this
Note,  the  Borrower  shall  issue  to  the  Holder  the  number  of  shares  of
Common  Stock  not  in
dispute and resolve such dispute in accordance with Section 4.13.

           1.3 Authorized   Shares.     The   Borrower   covenants   that
during   the   period   the
conversion  right  exists,  the  Borrower  will  reserve  from  its  authorized
and  unissued  Common



                                     4





<PAGE>






Stock  a  sufficient  number  of  shares,  free  from  preemptive  rights,  to
provide  for  the  issuance  of
Common Stock upon the full conversion of this Note issued pursuant to the
Purchase Agreement.
The  Borrower  is  required  at  all  times  to  have  authorized  and  reserved
seven  times  the  number  of
shares  that  is  actually  issuable  upon  full  conversion  of  the  Note
(based  on  the  Conversion  Price
of  the  Notes  in  effect  from  time  to  time)  (the  "Reserved  Amount").
The  Reserved  Amount  shall
be increased from time to time in accordance with the Borrower's obligations
pursuant to Section
3(d)  of  the  Purchase  Agreement.   The  Borrower  represents  that  upon
issuance,  such  shares  will
be duly and validly issued, fully paid and non-assessable.  In addition, if the
Borrower shall issue
any  securities  or  make  any  change  to  its  capital  structure  which
would  change  the  number  of
shares   of   Common   Stock   into   which   the   Notes   shall   be
convertible   at   the   then   current
Conversion  Price,  the  Borrower  shall  at  the  same  time  make  proper
provision  so  that  thereafter
there shall be a sufficient number of shares of Common Stock authorized and
reserved, free from
preemptive  rights,  for  conversion  of  the  outstanding  Notes.   The
Borrower  (i)  acknowledges  that
it has irrevocably instructed its transfer agent to issue certificates for the
Common Stock issuable
upon  conversion  of  this  Note,  and  (ii) agrees  that  its  issuance  of
this  Note  shall  constitute  full
authority  to  its  officers  and  agents  who  are  charged  with  the  duty
of  executing  stock  certificates
to  execute  and  issue  the  necessary  certificates  for  shares  of  Common
Stock  in  accordance  with
the  terms  and  conditions  of  this  Note.    Notwithstanding  the  foregoing,
in  no  event  shall  the
Reserved   Amount   be   lower   than   the   initial   Reserved   Amount,
regardless   of   any   prior
conversions.

           If,  at  any  time  the  Borrower  does  not  maintain  or  replenish
the  Reserved  Amount
within three (3) business days of the request of the Holder, the principal
amount of the Note shall
increase  by  Five  Thousand  and  No/100  United  States  Dollars  ($5,000)
(under  Holder's  and
Borrower's  expectation  that  any  principal  amount  increase  will  tack
back  to  the  Issue  Date)  per
occurrence.

           1.4 Method of Conversion.

                 (a)  Mechanics  of  Conversion.   Subject  to  Section  1.1,
this  Note  may  be
converted by the Holder in whole or in part at any time from time to time after
the Issue Date, by
(A) submitting  to  the  Borrower  a  Notice  of  Conversion  (by  facsimile,
e-mail  or  other  reasonable
means of communication dispatched on the Conversion Date prior to 5:00 p.m., New
York, New
York  time)  and  (B) subject  to  Section  1.4(b),  surrendering  this  Note
at  the  principal  office  of  the
Borrower.

                 (b)  Surrender  of  Note  Upon  Conversion.   Notwithstanding
anything  to  the
contrary  set  forth  herein,  upon  conversion  of  this  Note  in  accordance
with  the  terms  hereof,  the
Holder  shall  not  be  required  to  physically  surrender  this  Note  to  the
Borrower  unless  the  entire
unpaid  principal  amount  of  this  Note  is  so  converted.    The  Holder
and  the  Borrower  shall
maintain records showing the principal amount so converted and the dates of such
conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Borrower, so  as  not to
require physical surrender of this Note upon each such conversion.  In the event
of any dispute or
discrepancy, such records of the Borrower shall, prima facie, be controlling and
determinative in
the  absence  of  manifest  error.    Notwithstanding  the  foregoing,  if  any
portion  of  this  Note  is
converted  as  aforesaid,  the  Holder  may  not  transfer  this  Note  unless
the  Holder  first  physically



                                     5





<PAGE>






surrenders  this  Note  to  the  Borrower,  whereupon  the  Borrower  will
forthwith  issue  and  deliver
upon the order of the Holder a new Note of like tenor, registered as the Holder
(upon payment by
the  Holder  of  any  applicable  transfer  taxes)  may  request,  representing
in  the  aggregate  the
remaining unpaid principal amount of  this  Note.   The Holder and any assignee,
by acceptance of
this  Note,  acknowledge  and  agree  that,  by  reason  of  the  provisions  of
this  paragraph,  following
conversion  of  a  portion  of  this  Note,  the  unpaid  and  unconverted
principal  amount  of  this  Note
represented by this Note may be less than the amount stated on the face hereof.

                 (c)  Payment  of  Taxes.   The  Borrower  shall  not  be
required  to  pay  any  tax
which  may  be  payable  in  respect  of  any  transfer  involved  in  the
issue  and  delivery  of  shares  of
Common  Stock  or  other  securities  or  property  on  conversion  of  this
Note  in  a  name  other  than
that  of  the  Holder  (or  in  street  name),  and  the  Borrower  shall  not
be  required  to  issue  or  deliver
any  such  shares  or  other  securities  or  property  unless  and  until  the
person  or  persons  (other  than
the  Holder  or  the  custodian  in  whose  street  name  such  shares  are  to
be  held  for  the  Holder's
account)  requesting  the  issuance  thereof  shall  have  paid  to  the
Borrower  the  amount  of  any  such
tax or shall have established to the satisfaction of the Borrower that such tax
has been paid.

                 (d)  Delivery  of  Common  Stock  Upon  Conversion.    Upon
receipt  by  the
Borrower  from  the  Holder  of  a  facsimile  transmission  or  e-mail  (or
other  reasonable  means  of
communication)  of  a  Notice  of  Conversion  meeting  the  requirements  for
conversion  as  provided
in  this  Section  1.4,  the  Borrower  shall  issue  and  deliver  or  cause
to  be  issued  and  delivered  to  or
upon  the  order  of  the  Holder  certificates  for  the  Common  Stock
issuable  upon  such  conversion
within  three  (3)  business  days  after  such  receipt  (the  "Deadline")
(and,  solely  in  the  case  of
conversion  of  the  entire  unpaid  principal  amount  hereof,  surrender  of
this  Note)  in  accordance
with the terms hereof and the Purchase Agreement.

                 (e)  Obligation  of  Borrower  to  Deliver  Common  Stock.
Upon  receipt  by
the Borrower of a Notice of Conversion, the Holder shall be deemed to be the
holder of record of
the  Common  Stock  issuable  upon  such  conversion,  the  outstanding
principal  amount  and  the
amount  of  accrued  and  unpaid  interest  on  this  Note  shall  be  reduced
to  reflect  such  conversion,
and,  unless  the  Borrower  defaults  on  its  obligations  under  this
Article  I,  all  rights  with  respect  to
the  portion  of  this  Note  being  so  converted  shall  forthwith  terminate
except  the  right  to  receive
the   Common   Stock   or   other   securities,   cash   or   other   assets,
as   herein   provided,   on   such
conversion.    If  the  Holder  shall  have  given  a  Notice  of  Conversion
as  provided  herein,  the
Borrower's  obligation  to  issue  and  deliver  the  certificates  for  Common
Stock  shall  be  absolute
and  unconditional,  irrespective  of  the  absence  of  any  action  by  the
Holder  to  enforce  the  same,
any  waiver  or  consent  with  respect  to  any  provision  thereof,  the
recovery  of  any  judgment
against  any  person  or  any  action  to  enforce  the  same,  any  failure  or
delay  in  the  enforcement  of
any  other  obligation  of  the  Borrower  to  the  holder  of  record,  or  any
setoff,  counterclaim,
recoupment,  limitation  or  termination,  or  any  breach  or  alleged  breach
by  the  Holder  of  any
obligation  to  the  Borrower,  and  irrespective  of  any  other  circumstance
which  might  otherwise
limit  such  obligation  of  the  Borrower  to  the  Holder  in  connection
with  such  conversion.   The
Conversion  Date  specified  in  the  Notice  of  Conversion  shall  be  the
Conversion  Date  so  long  as
the  Notice  of  Conversion  is  received  by  the  Borrower  before  5:00
p.m.,  New  York,  New  York
time, on such date.




                                     6






<PAGE>






                 (f)  Delivery   of   Common   Stock   by   Electronic
Transfer.     In   lieu   of
delivering   physical   certificates   representing   the   Common   Stock
issuable   upon   conversion,
provided   the   Borrower   is   participating   in   the   Depository   Trust
Company   ("DTC")   Fast
Automated   Securities   Transfer   ("FAST")   program,   upon   request   of
the   Holder   and   its
compliance  with  the  provisions  contained  in  Section  1.1  and  in  this
Section  1.4,  the  Borrower
shall  use  its  commercially  reasonable  best  efforts  to  cause  its
transfer  agent  to  electronically
transmit  the  Common  Stock  issuable  upon  conversion  to  the  Holder  by
crediting  the  account  of
Holder's  Prime  Broker  with  DTC  through  its  Deposit  Withdrawal  At
Custodian  ("DWAC")
system.

                 (g)   DTC  Eligibility  &  Sub-Penny.  If  the  Borrower  fails
to  maintain  its
status  as  "DTC  Eligible"  for  any  reason,  or,  if  the  Conversion  Price
is  less  than  $0.01,  the
principal  amount  of  the  Note  shall  increase  by  Fifteen  Thousand  and
No/100  United  States
Dollars   ($15,000)   (under   Holder's   and   Borrower's   expectation   that
any   principal   amount
increase  will  tack  back  to  the  Issue  Date).   In  addition,  the
Variable  Conversion  Price  shall  be
redefined  to  mean  forty  percent  (40%)  multiplied  by  the  Market  Price,
subject  to  adjustment  as
provided in this Note.

                 (h)  Failure   to   Deliver   Common   Stock   Prior   to
Delivery   Deadline.
Without  in  any  way  limiting  the  Holder's  right  to  pursue  other
remedies,  including  actual
damages  and/or  equitable  relief,  the  parties  agree  that  if  delivery  of
the  Common  Stock  issuable
upon  conversion  of  this  Note  is  not  delivered  by  the  Deadline  (other
than  a  failure  due  to  the
circumstances  described  in  Section  1.3  above,  which  failure  shall  be
governed  by  such  Section)
the  Borrower  shall  pay  to  the  Holder  $2,000  per  day  in  cash,  for
each  day  beyond  the  Deadline
that  the  Borrower  fails  to  deliver  such  Common  Stock  until  the
Borrower  issues  and  delivers  a
certificate  to  the  Holder  or  credit  the  Holder's  balance  account  with
OTC  for  the  number  of
shares  of  Common  Stock  to  which  the  Holder  is  entitled  upon  such
Holder's  conversion  of  any
Conversion Amount (under Holder's and Borrower's expectation that any damages
will tack back
to  the  Issue  Date)..   Such  cash  amount  shall  be  paid  to  Holder  by
the  fifth  day  of  the  month
following  the  month  in  which  it  has  accrued  or,  at  the  option  of
the  Holder  (by  written  notice  to
the Borrower by the first day of the month following the month in which it has
accrued), shall be
added  to  the  principal  amount  of  this  Note,  in  which  event  interest
shall  accrue  thereon  in
accordance  with  the  terms  of  this  Note  and  such  additional  principal
amount  shall  be  convertible
into  Common  Stock  in  accordance  with  the  terms  of  this  Note.   The
Borrower  agrees  that  the
right  to  convert  is  a  valuable  right  to  the  Holder.   The  damages
resulting  from  a  failure,  attempt
to  frustrate,  interference  with  such  conversion  right  are  difficult  if
not  impossible  to  qualify.
Accordingly  the  parties  acknowledge  that  the  liquidated  damages
provision  contained  in  this
Section 1.4(h) are justified.

                 (i)   Rescindment  of  a  Notice  of  Conversion.   If  (i)
the  Borrower  fails
to  respond  to  Holder  within  one  (1)  business  day  from  the  Conversion
Date  confirming  the
details  of  Notice  of  Conversion,  (ii)  the  Borrower  fails  to  provide
any  of  the  shares  of  the
Borrower's Common Stock requested in the Notice of Conversion within three (3)
business days
from  the  date  of  receipt  of  the  Note  of  Conversion,  (iii)  the  Holder
is  unable  to  procure  a  legal
opinion  required  to  have  the  shares  of  the  Borrower's  Common  Stock
issued  unrestricted  and/or
deposited  to  sell  for  any  reason  related  to  the  Borrower's  standing,
(iv)  the  Holder  is  unable  to



                                     7





<PAGE>






deposit  the  shares  of  the  Borrower's  Common  Stock  requested  in  the
Notice  of  Conversion  for
any  reason  related  to  the  Borrower's  standing,  (v)  at  any  time  after
a  missed  Deadline,  at  the
Holder's  sole  discretion,  or  (vi)  if  OTC  Markets  changes  the
Borrower's  designation  to  `Limited
Information'  (Yield),  `No  Information'  (Stop  Sign),  `Caveat  Emptor'
(Skull  &  Crossbones),
`OTC',  `Other  OTC'  or  `Grey  Market'  (Exclamation  Mark  Sign)  or  other
trading  restriction  on
the  day  of  or  any  day  after  the  Conversion  Date,  the  Holder
maintains  the  option  and  sole
discretion to rescind the Notice of Conversion ("Rescindment") with a "Notice of
Rescindment."

           1.5 Concerning   the   Shares.      The   shares   of   Common
Stock   issuable   upon
conversion of this Note may not be sold or transferred unless   (i) such shares
are sold pursuant to
an  effective  registration  statement  under  the  Act  or  (ii)  the  Borrower
or  its  transfer  agent  shall
have  been  furnished  with  an  opinion  of   counsel  (which  opinion  shall
be  in  form,  substance  and
scope  customary  for  opinions  of  counsel  in  comparable  transactions)  to
the  effect  that  the  shares
to  be  sold  or  transferred  may  be  sold  or  transferred  pursuant  to  an
exemption  from  such
registration  or  (iii) such  shares  are  sold  or  transferred  pursuant  to
Rule  144  under  the  Act  (or  a
successor  rule)  ("Rule  144")  or  (iv)  such  shares  are  transferred  to
an  "affiliate"  (as  defined  in
Rule 144)  of  the Borrower  who  agrees  to  sell or  otherwise transfer  the
shares  only  in  accordance
with  this  Section  1.5  and  who  is  an  Accredited  Investor  (as  defined
in  the  Purchase  Agreement).
Except  as  otherwise  provided  in  the  Purchase  Agreement  (and  subject  to
the  removal  provisions
set forth below), until such time as the shares of Common Stock issuable upon
conversion of this
Note  have  been  registered  under  the  Act  or  otherwise  may  be  sold
pursuant  to  Rule  144  without
any  restriction  as  to  the  number  of  securities  as  of  a  particular
date  that  can  then  be  immediately
sold, each certificate for shares of Common Stock issuable upon conversion of
this Note that has
not  been  so  included  in  an  effective  registration  statement  or  that
has  not  been  sold  pursuant  to
an effective registration statement or an exemption that permits removal of the
legend, shall bear
a legend substantially in the following form, as appropriate:


      "NEITHER      THE      ISSUANCE      AND      SALE      OF      THE
SECURITIES
      REPRESENTED   BY   THIS   CERTIFICATE   NOR   THE   SECURITIES   INTO
      WHICH      THESE      SECURITIES      ARE      EXERCISABLE      HAVE
BEEN
      REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED,  OR
      APPLICABLE  STATE  SECURITIES  LAWS.   THE  SECURITIES  MAY  NOT  BE
      OFFERED   FOR   SALE,   SOLD,   TRANSFERRED   OR   ASSIGNED   (I)   IN
THE
      ABSENCE  OF  (A)  AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR  THE
      SECURITIES  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED,  OR  (B)
      AN  OPINION  OF  COUNSEL  (WHICH  COUNSEL  SHALL  BE  SELECTED  BY
      THE     HOLDER),     IN     A     GENERALLY     ACCEPTABLE     FORM,
THAT
      REGISTRATION   IS   NOT   REQUIRED   UNDER   SAID   ACT   OR   (II)
UNLESS
      SOLD   PURSUANT   TO   RULE   144   OR   RULE   144A   UNDER   SAID   ACT.
      NOTWITHSTANDING    THE    FOREGOING,    THE    SECURITIES    MAY    BE
      PLEDGED  IN  CONNECTION  WITH  A  BONA  FIDE  MARGIN  ACCOUNT  OR
      OTHER    LOAN    OR    FINANCING    ARRANGEMENT    SECURED    BY    THE
      SECURITIES."

           The  legend  set  forth  above  shall  be  removed  and  the
Borrower  shall  issue  to  the
Holder  a  new  certificate  therefore  free  of  any  transfer  legend  if  (i)
the  Borrower  or  its  transfer
agent  shall  have  received  an  opinion  of  counsel,  in  form,  substance
and  scope  customary  for
opinions of counsel in comparable transactions, to the effect that a public sale
or transfer of such


                                     8




<PAGE>






Common   Stock   may   be   made   without   registration   under   the   Act,
which   opinion   shall   be
reasonably  accepted  by  the  Borrower  so  that  the  sale  or  transfer  is
effected  or  (ii)  in  the  case  of
the  Common  Stock  issuable  upon  conversion  of  this  Note,  such  security
is  registered  for  sale  by
the Holder under an effective registration statement filed under the Act or
otherwise may be sold
pursuant  to  Rule  144  without  any  restriction  as  to  the  number  of
securities  as  of  a  particular  date
that  can  then  be  immediately  sold.  In  the  event  that  the  Borrower
does  not  accept  the  opinion  of
counsel provided by the Buyer with respect to the transfer of Securities
pursuant to an exemption
from  registration,  such  as  Rule  144  or  Regulation  S,  at  the  Deadline,
it  will  be  considered  an
Event of Default pursuant to Section 3.2 of the Note.

           1.6 Effect of Certain Events.

                 (a)  Effect  of  Merger,  Consolidation,  Etc.   At  the
option  of  the  Holder,  the
sale,  conveyance  or  disposition  of  all  or  substantially  all  of  the
assets  of  the  Borrower,  the
effectuation by the Borrower of a transaction or series of related transactions
in which more than
50%  of  the  voting  power  of  the  Borrower  is  disposed  of,  or  the
consolidation,  merger  or  other
business  combination  of  the  Borrower  with  or  into  any  other  Person
(as  defined  below)  or
Persons  when  the  Borrower  is  not  the  survivor  shall  either:  (i)  be
deemed  to  be  an  Event  of
Default  (as  defined  in  Article  III)  pursuant  to  which  the  Borrower
shall  be  required  to  pay  to  the
Holder  upon  the  consummation  of  and  as  a  condition  to  such
transaction  an  amount  equal  to  the
Default  Amount  (as  defined  in  Article  III)  or  (ii)  be  treated
pursuant  to  Section  1.6(b)  hereof.
"Person"   shall   mean   any   individual,   corporation,   limited   liability
company,   partnership,
association, trust or other entity or organization.

                 (b)  Adjustment  Due  to  Merger,  Consolidation,  Etc.   If,
at  any  time  when
this  Note  is  issued  and  outstanding  and  prior  to  conversion  of  all
of  the  Notes,  there  shall  be  any
merger,   consolidation,   exchange   of   shares,   recapitalization,
reorganization,   or   other   similar
event,  as  a  result  of  which  shares  of  Common  Stock  of  the  Borrower
shall  be  changed  into  the
same  or  a  different  number  of  shares  of  another  class  or  classes  of
stock  or  securities  of  the
Borrower  or  another  entity,  or  in  case  of  any  sale  or  conveyance  of
all  or  substantially  all  of  the
assets  of  the  Borrower  other  than  in  connection  with  a  plan  of
complete  liquidation  of  the
Borrower,  then  the  Holder  of  this  Note  shall  thereafter  have  the
right  to  receive  upon  conversion
of this Note, upon the basis and upon the terms and conditions specified herein
and in lieu of the
shares   of   Common   Stock   immediately   theretofore   issuable   upon
conversion,   such   stock,
securities  or  assets  which  the  Holder  would  have  been  entitled  to
receive  in  such  transaction  had
this  Note  been  converted  in  full  immediately  prior  to  such  transaction
(without  regard  to  any
limitations  on  conversion  set  forth  herein),  and  in  any  such  case
appropriate  provisions  shall  be
made  with  respect  to  the  rights  and  interests  of  the  Holder  of  this
Note  to  the  end  that  the
provisions  hereof  (including,  without  limitation,  provisions  for
adjustment  of  the  Conversion
Price  and  of  the  number  of  shares  issuable  upon  conversion  of  the
Note)  shall  thereafter  be
applicable,  as  nearly  as  may  be  practicable  in  relation  to  any
securities  or  assets  thereafter
deliverable  upon  the  conversion  hereof.   The  Borrower  shall  not  affect
any  transaction  described
in  this  Section  1.6(b)  unless  (a)  it  first  gives,  to  the  extent
practicable,  thirty  (30)  days  prior
written  notice  (but  in  any  event  at  least  fifteen  (15)  days  prior
written  notice)  of  the  record  date
of  the  special  meeting  of  shareholders  to  approve,  or  if  there  is  no
such  record  date,  the
consummation    of,    such    merger,    consolidation,    exchange    of
shares,    recapitalization,



                                     9





<PAGE>






reorganization  or  other  similar  event  or  sale  of  assets  (during  which
time  the  Holder  shall  be
entitled  to  convert  this  Note)  and  (b)  the  resulting  successor  or
acquiring  entity  (if  not  the
Borrower)  assumes  by  written  instrument  the  obligations  of  this  Section
1.6(b).    The  above
provisions  shall  similarly  apply  to  successive  consolidations,  mergers,
sales,  transfers  or  share
exchanges.

                 (c)  Adjustment Due to Distribution.  If the Borrower shall
declare or make
any  distribution  of  its  assets  (or  rights  to  acquire  its  assets)  to
holders  of  Common  Stock  as  a
dividend,  stock  repurchase,  by  way  of  return  of  capital  or  otherwise
(including  any  dividend  or
distribution  to  the  Borrower's  shareholders  in  cash  or  shares  (or
rights  to  acquire  shares)  of
capital  stock  of  a  subsidiary  (i.e.,  a  spin-off))  (a  "Distribution"),
then  the  Holder  of  this  Note
shall  be  entitled,  upon  any  conversion  of  this  Note  after  the  date
of  record  for  determining
shareholders entitled to such Distribution, to receive the amount of such assets
which would have
been  payable  to  the  Holder  with  respect  to  the  shares  of  Common
Stock  issuable  upon  such
conversion  had  such  Holder  been  the  holder  of  such  shares  of  Common
Stock  on  the  record  date
for the determination of shareholders entitled to such Distribution.

                 (d)  Adjustment  Due  to  Dilutive  Issuance.   If,  at  any
time  when  any  Notes
are issued and outstanding, the Borrower issues or sells, or in accordance with
this Section 1.6(d)
hereof  is  deemed  to  have  issued  or  sold,  except  for  shares  of  Common
Stock  issued  directly  to
vendors  or  suppliers  of  the  Borrower  in  satisfaction  of  amounts  owed
to  such  vendors  or
suppliers  (provided,  however,  that  such  vendors  or  suppliers  shall  not
have  an  arrangement  to
transfer,  sell  or  assign  such  shares  of  Common  Stock  prior  to  the
issuance  of  such  shares),  any
shares  of  Common  Stock  for  no  consideration  or  for  a  consideration
per  share  (before  deduction
of  reasonable  expenses  or  commissions  or  underwriting  discounts  or
allowances  in  connection
therewith)  less  than  the  Conversion  Price  in  effect  on  the  date  of
such  issuance  (or  deemed
issuance)  of  such  shares  of  Common  Stock  (a  "Dilutive  Issuance"),  then
immediately  upon  the
Dilutive  Issuance,  the  Conversion  Price  will  be  reduced  to  the  amount
of  the  consideration  per
share received by the Borrower in such Dilutive Issuance.

                 The  Borrower  shall  be  deemed  to  have  issued  or  sold
shares  of  Common
Stock  if  the  Borrower  in  any  manner  issues  or  grants  any  warrants,
rights  or  options  (not
including employee stock option plans), whether or not immediately exercisable,
to subscribe for
or  to  purchase  Common  Stock  or  other  securities  convertible  into  or
exchangeable  for  Common
Stock  ("Convertible  Securities")  (such  warrants,  rights  and  options  to
purchase  Common  Stock
or  Convertible  Securities  are  hereinafter  referred  to  as  "Options")  and
the  price  per  share  for
which  Common  Stock  is  issuable  upon  the  exercise  of  such  Options  is
less  than  the  Conversion
Price  then  in  effect,  then  the  Conversion  Price  shall  be  equal  to
such  price  per  share.    For
purposes  of  the  preceding  sentence,  the  "price  per  share  for  which
Common  Stock  is  issuable
upon  the  exercise  of  such  Options"  is  determined  by  dividing  (i)  the
total  amount,  if  any,
received  or  receivable  by  the  Borrower  as  consideration  for  the
issuance  or  granting  of  all  such
Options,  plus  the  minimum  aggregate  amount  of  additional  consideration,
if  any,  payable  to  the
Borrower  upon  the  exercise  of  all  such  Options,  plus,  in  the  case  of
Convertible  Securities
issuable   upon   the   exercise   of   such   Options,   the   minimum
aggregate   amount   of   additional
consideration  payable  upon  the  conversion  or  exchange  thereof  at  the
time  such  Convertible
Securities  first  become  convertible  or  exchangeable,  by  (ii)  the
maximum  total  number  of  shares



                                    10





<PAGE>






of  Common  Stock  issuable  upon  the  exercise  of  all  such  Options
(assuming  full  conversion  of
Convertible  Securities,  if  applicable).    No  further  adjustment  to  the
Conversion  Price  will  be
made upon the actual issuance of such Common Stock upon the exercise of such
Options or upon
the conversion or exchange of Convertible Securities issuable upon exercise of
such Options.

                 Additionally,  the  Borrower  shall  be  deemed  to  have
issued  or  sold  shares
of  Common  Stock  if  the  Borrower  in  any  manner  issues  or  sells  any
Convertible  Securities,
whether  or  not  immediately  convertible  (other  than  where  the  same  are
issuable  upon  the
exercise  of  Options),  and  the  price  per  share  for  which  Common  Stock
is  issuable  upon  such
conversion  or  exchange  is  less  than  the  Conversion  Price  then  in
effect,  then  the  Conversion
Price  shall  be  equal  to  such  price  per  share.    For  the  purposes  of
the  preceding  sentence,  the
"price  per  share  for  which  Common  Stock  is  issuable  upon  such
conversion  or  exchange"  is
determined  by  dividing  (i)  the  total  amount,  if  any,  received  or
receivable  by  the  Borrower  as
consideration  for  the  issuance  or  sale  of  all  such  Convertible
Securities,  plus  the  minimum
aggregate   amount   of   additional   consideration,   if   any,   payable   to
the   Borrower   upon   the
conversion  or  exchange  thereof  at  the  time  such  Convertible  Securities
first  become  convertible
or  exchangeable,  by  (ii)  the  maximum  total  number  of  shares  of  Common
Stock  issuable  upon
the  conversion  or  exchange  of  all  such  Convertible  Securities.    No
further  adjustment  to  the
Conversion Price will be made upon the actual issuance of such Common Stock upon
conversion
or exchange of such Convertible Securities.

                 (e)  Purchase  Rights.    If,  at  any  time  when  any  Notes
are  issued  and
outstanding,  the  Borrower  issues  any  convertible  securities  or  rights
to  purchase  stock,  warrants,
securities  or  other  property  (the  "Purchase  Rights")  pro  rata  to  the
record  holders  of  any  class  of
Common   Stock,   then   the   Holder   of   this   Note   will   be   entitled
to   acquire,   upon   the   terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
Holder could have
acquired  if  such  Holder  had  held  the  number  of  shares  of  Common
Stock  acquirable  upon
complete  conversion  of  this  Note  (without  regard  to  any  limitations  on
conversion  contained
herein)  immediately  before  the  date  on  which  a  record  is  taken  for
the  grant,  issuance  or  sale  of
such  Purchase  Rights  or,  if  no  such  record  is  taken,  the  date  as  of
which  the  record  holders  of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.

                 (f)  Notice  of  Adjustments.    Upon  the  occurrence  of
each  adjustment  or
readjustment  of  the  Conversion  Price  as  a  result  of  the  events
described  in  this  Section  1.6,  the
Borrower,  at  its  expense,  shall  promptly  compute  such  adjustment  or
readjustment  and  prepare
and furnish to the Holder a certificate setting forth such adjustment or
readjustment and  showing
in  detail  the  facts  upon  which  such  adjustment  or  readjustment  is
based.   The  Borrower  shall,
upon  the  written  request  at  any  time  of  the  Holder,  furnish  to  such
Holder  a  like  certificate
setting  forth  (i)  such  adjustment  or  readjustment,  (ii)  the  Conversion
Price  at  the  time  in  effect
and  (iii)  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 conversion of the Note.

           1.7 Trading  Market  Limitations.  Unless  permitted  by  the
applicable  rules  and
regulations  of  the  principal  securities  market  on  which  the  Common
Stock  is  then  listed  or
traded,  in  no  event  shall  the  Borrower  issue  upon  conversion  of  or
otherwise  pursuant  to  this
Note  and  the  other  Notes  issued  pursuant  to  the  Purchase  Agreement
more  than  the  maximum



                                    11





<PAGE>






number  of  shares  of  Common  Stock  that  the  Borrower  can  issue  pursuant
to  any  rule  of  the
principal  United  States  securities  market  on  which  the  Common  Stock  is
then  traded  (the
"Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on
the Closing
Date  (as  defined  in  the  Purchase  Agreement),  subject  to  equitable
adjustment  from  time  to  time
for stock splits, stock dividends, combinations, capital reorganizations and
similar events relating
to  the  Common  Stock  occurring  after  the  date  hereof.   Once  the
Maximum  Share  Amount  has
been  issued,  if  the  Borrower  fails  to  eliminate  any  prohibitions  under
applicable  law  or  the  rules
or  regulations  of  any  stock  exchange,  interdealer  quotation  system  or
other  self-regulatory
organization with jurisdiction over the Borrower or any of its securities on the
Borrower's ability
to  issue  shares  of  Common  Stock  in  excess  of  the  Maximum  Share
Amount,  in  lieu  of  any
further  right  to  convert  this  Note,  this  will  be  considered  an  Event
of  Default  under  Section  3.2
of the Note.

           1.8 Status  as  Shareholder.    Upon  submission  of  a  Notice  of
Conversion  by  a
Holder,  (i)  the  shares  covered  thereby  (other  than  the  shares,  if
any,  which  cannot  be  issued
because  their  issuance  would  exceed  such  Holder's  allocated  portion  of
the  Reserved  Amount  or
Maximum  Share  Amount)  shall  be  deemed  converted  into  shares  of  Common
Stock  and  (ii)  the
Holder's  rights  as  a  Holder  of  such  converted  portion  of  this  Note
shall  cease  and  terminate,
excepting  only  the  right  to  receive  certificates  for  such  shares  of
Common  Stock  and  to  any
remedies  provided  herein  or  otherwise  available  at  law  or  in  equity
to  such  Holder  because  of  a
failure  by  the  Borrower  to  comply  with  the  terms   of  this  Note.
Notwithstanding  the  foregoing,
if  a  Holder  has  not  received  certificates  for  all  shares  of  Common
Stock  prior  to  the  tenth  (10th)
business  day  after  the  expiration  of  the  Deadline  with  respect  to  a
conversion  of  any  portion  of
this  Note  for  any  reason,  then  (unless  the  Holder  otherwise  elects  to
retain  its  status  as  a  holder
of Common Stock by so notifying the Borrower) the Holder shall regain the rights
of a Holder of
this  Note  with  respect  to  such  unconverted  portions  of  this  Note  and
the  Borrower  shall,  as  soon
as   practicable,   return   such   unconverted   Note   to   the   Holder   or,
if   the   Note   has   not   been
surrendered, adjust its records to reflect that such portion of this Note has
not been converted.  In
all  cases,  the  Holder  shall  retain  all  of  its  rights  and  remedies
(including,  without  limitation,  (i)
the  right  to  receive  Conversion  Default  Payments  pursuant  to  Section
1.3  to  the  extent  required
thereby  for  such  Conversion  Default  and  any  subsequent  Conversion
Default  and  (ii)  the  right  to
have the Conversion Price with respect to subsequent conversions determined in
accordance with
Section 1.3) for the Borrower's failure to convert this Note.

           1.9 Prepayment.   Notwithstanding anything to the contrary contained
in this Note,
the  Borrower  may  prepay  the  amounts  outstanding  hereunder  pursuant  to
the  following  terms
and conditions:

                 (a)  At  any  time  during  the  period  beginning  on  the
Issue  Date  and  ending
on the date which is ninety (90) days following the Issue Date, the Borrower
shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the
Holder of the Note
to  prepay  the  outstanding  Note  (principal  and  accrued  interest),  in
full  by  making  a  payment  to
the  Holder  of  an  amount  in  cash  equal  to  125%,  multiplied  by  the
sum  of:  (w)  the  then
outstanding  principal  amount  of  this  Note  plus  (x) accrued  and  unpaid
interest  on  the  unpaid
principal amount of this Note plus (y) Default Interest, if any.




                                    12






<PAGE>






                 (b)  At  any  time  during  the  period  beginning  the  day
which  is  ninety  one
(91)  days  following  the  Issue  Date  and  ending  on  the  date  which  is
one  hundred  eighty  (180)
days  following  the  Issue  Date,  the  Borrower  shall  have  the  right,
exercisable  on  not  less  than
three  (3)  Trading  Days  prior  written  notice  to  the  Holder  of  the
Note  to  prepay  the  outstanding
Note  (principal  and  accrued  interest),  in  full  by  making  a  payment  to
the  Holder  of  an  amount  in
cash  equal  to  135%,  multiplied  by  the  sum  of:  (w)  the  then
outstanding  principal  amount  of  this
Note  plus  (x) accrued  and  unpaid  interest  on  the  unpaid  principal
amount  of  this  Note  plus  (y)
Default Interest, if any.

                 (c)  After  the  expiration  of  one  hundred  eighty  (180)
days  following  the
date of the Note, the Borrower shall have no right of prepayment.

Any notice of prepayment hereunder (an "Optional Prepayment Notice") shall be
delivered to the
Holder  of  the  Note  at  its  registered  addresses  and  shall  state:  (1)
that  the  Borrower  is  exercising
its  right  to  prepay  the  Note,  and  (2)  the  date  of  prepayment  which
shall  be  not  more  than  three
(3)  Trading  Days  from  the  date  of  the  Optional  Prepayment  Notice.
On  the  date  fixed  for
prepayment   (the   "Optional   Prepayment   Date"),   the   Borrower   shall
make   payment   of   the
applicable  prepayment  amount  to  or  upon  the  order  of  the  Holder  as
specified  by  the  Holder  in
writing  to  the  Borrower  at  least  one  (1)  business  day  prior  to  the
Optional  Prepayment  Date.   If
the Borrower delivers an Optional Prepayment Notice and fails to pay the
applicable prepayment
amount  due  to  the  Holder  of  the  Note  within  two  (2)  business  days
following  the  Optional
Prepayment  Date,  the  Borrower  shall  forever  forfeit  its  right  to
prepay  the  Note  pursuant  to  this
Section 1.9.

                      ARTICLE II.  CERTAIN COVENANTS

           2.1 Distributions  on  Capital  Stock.    So  long  as  the  Borrower
shall  have  any
obligation  under  this  Note,  the  Borrower  shall  not  without  the
Holder's  written  consent  (a)  pay,
declare  or  set  apart  for  such  payment,  any  dividend  or  other
distribution  (whether  in  cash,
property or other securities) on shares of capital stock other than dividends on
shares of Common
Stock  solely  in  the  form  of  additional  shares  of  Common  Stock  or  (b)
directly  or  indirectly  or
through  any  subsidiary  make  any  other  payment  or  distribution  in
respect  of  its  capital  stock
except for distributions pursuant to any shareholders' rights plan which is
approved by a majority
of the Borrower's disinterested directors.

           2.2 Restriction  on  Stock  Repurchases.   So  long  as  the
Borrower  shall  have  any
obligation  under  this  Note,  the  Borrower  shall  not  without  the
Holder's  written  consent  redeem,
repurchase  or  otherwise  acquire  (whether  for  cash  or  in  exchange  for
property  or  other  securities
or otherwise) in any one transaction or series of related transactions any
shares of capital stock of
the Borrower or any warrants, rights or options to purchase or acquire any such
shares.

           2.3 Borrowings.    So  long  as  the  Borrower  shall  have  any
obligation  under  this
Note,   the   Borrower   shall   not,   without   the   Holder's   written
consent,   create,   incur,   assume
guarantee,   endorse,   contingently   agree   to   purchase   or   otherwise
become   liable   upon   the
obligation   of   any   person,   firm,   partnership,   joint   venture   or
corporation,   except   by   the
endorsement of negotiable instruments for deposit or collection, or suffer to
exist any liability for
borrowed  money,  except  (a)  borrowings  in  existence  or  committed  on  the
date  hereof  and  of


                                    13




<PAGE>






which  the  Borrower  has  informed  Holder  in  writing  prior  to  the  date
hereof,  (b)  indebtedness  to
trade  creditors  financial  institutions  or  other  lenders  incurred  in  the
ordinary  course  of  business
or (c) borrowings, the proceeds of which shall be used to repay this Note.

           2.4 Sale  of  Assets.   So  long  as  the  Borrower  shall  have  any
obligation  under  this
Note,  the  Borrower  shall  not,  without  the  Holder's  written  consent,
sell,  lease  or  otherwise
dispose  of  any  significant  portion  of  its  assets  outside  the  ordinary
course  of  business.    Any
consent  to  the  disposition  of  any  assets  may  be  conditioned  on  a
specified  use  of  the  proceeds  of
disposition.

           2.5 Advances  and  Loans.    So  long  as  the  Borrower  shall  have
any  obligation
under  this  Note,  the  Borrower  shall  not,  without  the  Holder's  written
consent,  lend  money,  give
credit  or  make  advances  to  any  person,  firm,  joint  venture  or
corporation,  including,  without
limitation,  officers,  directors,  employees,  subsidiaries  and  affiliates
of  the  Borrower,  except
loans,  credits  or  advances  (a)  in  existence  or  committed  on  the  date
hereof  and  which  the
Borrower  has  informed  Holder  in  writing  prior  to  the  date  hereof,  (b)
made  in  the  ordinary
course of business or (c) not in excess of $100,000.

           2.6 Section  3(a)(9)  or  3(a)(10)  Transaction.  So  long  as  this
Note  is  outstanding,
the  Borrower  shall  not  enter  into  any  transaction  or  arrangement
structured  in  accordance  with,
based  upon,  or  related  or  pursuant  to,  in  whole  or  in  part,  either
Section  3(a)(9)  of  the  Securities
Act  (a  "3(a)(9)  Transaction")  or  Section  3(a)(l0)  of  the  Securities
Act  (a  "3(a)(l0)  Transaction").
In  the  event  that  the  Borrower  does  enter  into,  or  makes  any
issuance  of  Common  Stock  related
to  a  3(a)(9)  Transaction  or  a  3(a)(l0)  Transaction  while  this  note  is
outstanding,  a  liquidated
damages  charge  of  25%  of  the  outstanding  principal  balance  of  this
Note,  but  not  less  than
Fifteen  Thousand  Dollars  $15,000,  will  be  assessed  and  will  become
immediately  due  and
payable to the Holder at its election in the form of cash payment or addition to
the balance of this
Note.

           2.7 Preservation  of  Existence,  etc.  The  Borrower  shall
maintain  and  preserve,  and
cause  each  of  its  Subsidiaries  to  maintain  and  preserve,  its
existence,  rights  and  privileges,  and
become  or  remain,  and  cause  each  of  its  Subsidiaries  (other  than
dormant  Subsidiaries  that  have
no  or  minimum  assets)  to  become  or  remain,  duly  qualified  and  in
good  standing  in  each
jurisdiction  in  which  the  character  of  the  properties  owned  or  leased
by  it  or  in  which  the
transaction of its business makes such qualification necessary.

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

                      ARTICLE III.  EVENTS OF DEFAULT




                                    14






<PAGE>






           If any of the following events of default (each, an "Event of
Default") shall occur:

           3.1 Failure  to  Pay  Principal  or  Interest.   The  Borrower  fails
to  pay  the  principal
hereof  or  interest  thereon  when  due  on  this  Note,  whether  at
maturity,  upon  acceleration  or
otherwise.

           3.2 Conversion  and  the  Shares.   The  Borrower  fails  to  issue
shares  of  Common
Stock  to  the  Holder  (or  announces  or  threatens  in  writing  that  it
will  not  honor  its  obligation  to
do  so)  upon  exercise by  the  Holder  of  the conversion  rights  of  the
Holder  in  accordance with  the
terms  of  this  Note,  fails  to  transfer  or  cause  its  transfer  agent  to
transfer  (issue)  (electronically  or
in  certificated  form)  any  certificate  for  shares  of  Common  Stock
issued  to  the  Holder  upon
conversion  of  or  otherwise  pursuant  to  this  Note  as  and  when  required
by  this  Note,  the
Borrower  directs  its  transfer  agent  not  to  transfer  or  delays,
impairs,  and/or  hinders  its  transfer
agent  in  transferring  (or  issuing)  (electronically  or  in  certificated
form)  any  certificate  for  shares
of  Common  Stock  to  be  issued  to  the  Holder  upon  conversion  of  or
otherwise  pursuant  to  this
Note  as  and  when  required  by  this  Note,  or  fails  to  remove  (or
directs  its  transfer  agent  not  to
remove  or  impairs,  delays,  and/or  hinders  its  transfer  agent  from
removing)  any  restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate for any
shares  of  Common  Stock  issued  to  the  Holder  upon  conversion  of  or
otherwise  pursuant  to  this
Note as and when required by this Note (or makes any written announcement,
statement or threat
that  it  does  not  intend  to  honor  the  obligations  described  in  this
paragraph)  and  any  such  failure
shall  continue  uncured  (or  any  written  announcement,  statement  or
threat  not  to  honor  its
obligations  shall  not  be  rescinded  in  writing)  for  three  (3)  business
days  after  the  Holder  shall
have  delivered  a  Notice  of  Conversion.   It  is  an  obligation  of  the
Borrower  to  remain  current  in
its  obligations  to  its  transfer  agent.  It  shall  be  an  event  of
default  of  this  Note,  if  a  conversion  of
this  Note  is  delayed,  hindered  or  frustrated  due  to  a  balance  owed
by  the  Borrower  to  its  transfer
agent.  If  at  the  option  of  the  Holder,  the  Holder  advances  any  funds
to  the  Borrower's  transfer
agent in order to process a conversion, such advanced funds shall be paid by the
Borrower to the
Holder within forty eight (48) hours of a demand from the Holder.

           3.3 Failure   to   Deliver   Transaction   Expense   Amount.     The
Borrower   fails   to
deliver  the  Transaction  Expense  Amount  (as  defined  in  the  Purchase
Agreement)  to  the  Holder
within three (3) business days of the date such amount is due.

           3.4 Breach  of  Covenants.   The  Borrower  breaches  any  material
covenant  or  other
material  term  or  condition  contained  in  this  Note  and  any  collateral
documents  including  but  not
limited  to  the  Purchase  Agreement  and  such  breach  continues  for  a
period  of  ten  (10)  days  after
written notice thereof to the Borrower from the Holder.

           3.5 Breach  of  Representations  and  Warranties.   Any
representation  or  warranty  of
the Borrower made herein or in any agreement, statement or certificate given in
writing pursuant
hereto  or  in  connection  herewith  (including,  without  limitation,  the
Purchase  Agreement),  shall
be  false  or  misleading  in  any  material  respect  when  made  and  the
breach  of  which  has  (or  with
the passage of time will have) a material adverse effect on the rights of the
Holder with respect to
this Note or the Purchase Agreement.




                                    15






<PAGE>






           3.6 Receiver  or  Trustee.   The  Borrower  or  any  subsidiary  of
the  Borrower  shall
make  an  assignment  for  the  benefit  of  creditors  or  commence
proceedings  for  its  dissolution,  or
apply  for  or  consent  to  the  appointment  of  a  receiver  or  trustee  for
it  or  for  a  substantial  part  of
its  property  or  business,  or  such  a  receiver  or  trustee  shall
otherwise  be  appointed  for  the
Borrower  or  for  a  substantial  part  of  its  property  or  business
without  its  consent  and  shall  not  be
discharged within sixty (60) days after such appointment.

           3.7 Judgments.   Any  money  judgment,  writ  or  similar  process
shall  be  entered  or
filed against the Borrower or any subsidiary of the Borrower or any of its
property or other assets
for more than $50,000, and shall remain unvacated, unbonded or unstayed for a
period of twenty
(20)  days  unless  otherwise  consented  to  by  the  Holder,  which  consent
will  not  be  unreasonably
withheld.

           3.8 Bankruptcy.  Bankruptcy,    insolvency,    reorganization    or
liquidation
proceedings  or  other  proceedings,  voluntary  or  involuntary,  for  relief
under  any  bankruptcy  law
or  any  law  for  the  relief  of  debtors  shall  be  instituted  by  or
against  the  Borrower  or  any
subsidiary  of  the  Borrower,  or  the  Borrower  admits  in  writing  its
inability  to  pay  its  debts
generally as  they mature, or have filed against it an involuntary petition for
bankruptcy relief, all
under  federal  or  state  laws  as  applicable  or  the  Borrower  admits  in
writing  its  inability  to  pay  its
debts  generally  as  they  mature,  or  have  filed  against  it  an
involuntary  petition  for  bankruptcy
relief, all under international, federal or state laws as applicable.

           3.9 Delisting of Common Stock.  The Borrower shall fail to maintain
the listing of
the  Common  Stock  on  at  least  one  of  the  OTCBB,  a  tier  of  the  OTC
Markets  Group  Inc.  or  an
equivalent  replacement  exchange,  the  Nasdaq  National  Market,  the  Nasdaq
Small  Cap  Market,
the New York Stock Exchange, or the NYSE MKT.

           3.10     Failure  to  Comply  with  the  Exchange  Act.    The
Borrower  shall  fail  to
comply  with  the  reporting  requirements  of  the  Exchange  Act;  and/or  the
Borrower  shall  cease  to
be subject to the reporting requirements of the Exchange Act.

           3.11     Liquidation.     Any  dissolution,  liquidation,  or
winding  up  of  Borrower  or
any substantial portion of its business.

           3.12     Cessation  of  Operations.    Any  cessation  of  operations
by  Borrower  or
Borrower  admits  it  is  otherwise  generally  unable  to  pay  its  debts  as
such  debts  become  due,
provided, however, that any disclosure of the Borrower's ability to continue as
a "going concern"
shall not be an admission that the Borrower cannot pay its debts as they become
due.

           3.13     Maintenance  of  Assets.   The  failure  by  Borrower  to
maintain  any  material
intellectual property rights, personal, real property or other assets which are
necessary to conduct
its business (whether now or in the future).

           3.14     Financial Statement Restatement.The   restatement   of   any
financial
statements filed by the Borrower with the SEC for any date or period from two
years prior to the
Issue  Date  of  this  Note  and  until  this  Note  is  no  longer
outstanding,  if  the  result  of  such



                                    16





<PAGE>






restatement  would,  by  comparison  to  the  unrestated  financial  statement,
have  constituted  a
material  adverse  effect  on  the  rights  of  the  Holder  with  respect  to
this  Note  or  the  Purchase
Agreement.

           3.15     Reverse Splits.  The  Borrower  effectuates  a  reverse
split  of  its  Common
Stock without twenty (20) days prior written notice to the Holder.

           3.16     Replacement of Transfer Agent. In the event that the
Borrower proposes to
replace  its  transfer  agent,  the  Borrower  fails  to  provide,  prior  to
the  effective  date  of  such
replacement,  a  fully  executed  Irrevocable  Transfer  Agent  Instructions  in
a  form  as  initially
delivered  pursuant  to  the  Purchase  Agreement  (including  but  not  limited
to  the  provision  to
irrevocably  reserve  shares  of  Common  Stock  in  the  Reserved  Amount)
signed  by  the  successor
transfer agent to Borrower and the Borrower.

           3.17     Cessation  of  Trading.   Any  cessation  of  trading  of
the  Common  Stock  on
at  least  one  of  the  OTCBB,  a  tier  of  the  OTC  Markets  Group  Inc.  or
an  equivalent  replacement
exchange,  the  Nasdaq  National  Market,  the  Nasdaq  Small  Cap  Market,  the
New  York  Stock
Exchange,  or  the  NYSE  MKT,  and  such  cessation  of  trading  shall
continue  for  a  period  of  five
consecutive (5) Trading Days.

           3.18     Cross-Default.   Notwithstanding  anything  to  the
contrary  contained  in  this
Note  or  the  other  related  or  companion  documents,  a  breach  or  default
by  the  Borrower  of  any
covenant  or  other  term  or  condition  contained  in  any  of  the  Other
Agreements,  after  the  passage
of all applicable notice and cure or grace periods, shall, at the option of the
Holder, be considered
a  default  under  this  Note  and  the  Other  Agreements,  in  which  event
the  Holder  shall  be  entitled
(but  in  no  event  required)  to  apply  all  rights  and  remedies  of  the
Holder  under  the  terms  of  this
Note   and   the   Other   Agreements   by   reason   of   a   default   under
said   Other   Agreement   or
hereunder.   "Other  Agreements"  means,  collectively,  all  agreements  and
instruments  between,
among  or  by:  (1)  the  Borrower,  and,  or  for  the  benefit  of,  (2) the
Holder  and  any  affiliate  of  the
Holder,  including,  without  limitation,  promissory  notes;  provided,
however,  the  term  "Other
Agreements"  shall  not  include  the  agreements  and  instruments  defined  as
the  Documents.   Each
of the loan transactions will be cross-defaulted with each other loan
transaction and with all other
existing and future debt of Borrower to the Holder.

           3.19     Bid  Price.   The  Borrower  shall  lose  the  "bid" price
for  its  Common  Stock
($0.0001  on  the  "Ask"  with  zero  market  makers  on  the  "Bid"  per  Level
2)  and/or  a  market
(including  the  OTCBB,  any  tier  of  the  OTC  Markets  Group  Inc.   or  an
equivalent  replacement
exchange).

           3.20     OTC   Markets   Designation.      OTC   Markets   changes
the   Borrower's
designation   to   `No   Information'   (Stop   Sign),   `Limited   Information'
(Yield   Sign),   `Caveat
Emptor'  (Skull  and  Crossbones),  or  `OTC',  `Other  OTC'  or  `Grey  Market'
(Exclamation  Mark
Sign).

Upon the occurrence and during the continuation of any Event of Default
specified in Section 3.1
(solely  with  respect  to  failure  to  pay  the  principal  hereof  or
interest  thereon  when  due  at  the
Maturity  Date),  the  Note  shall  become  immediately  due  and  payable  and
the  Borrower  shall  pay


                                    17




<PAGE>






to  the  Holder,  in  full  satisfaction  of  its  obligations  hereunder,  an
amount  equal  to  the  Default
Sum (as defined herein).  UPON THE OCCURRENCE AND DURING THE CONTINUATION
OF   ANY   EVENT   OF   DEFAULT   SPECIFIED   IN   SECTION   3.2,   THE   NOTE
SHALL
BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO
THE   HOLDER,   IN   FULL   SATISFACTION   OF   ITS   OBLIGATIONS   HEREUNDER,
AN
AMOUNT  EQUAL  TO:  (Y)  THE  DEFAULT  SUM  (AS  DEFINED  HEREIN);  MULTIPLIED
BY  (Z)  TWO  (2).  Upon  the  occurrence  and  during  the  continuation  of
any  Event  of  Default
specified  in  Sections  3.1  (solely  with  respect  to  failure  to  pay  the
principal  hereof  or  interest
thereon  when  due  on  this  Note  upon  acceleration),  3.3,  3.4,  3.6,  3.8,
3.9,  3.11,  3.12,  3.13,  3.14,
3.15,  3.16.  3.17,  3.18,  3.19  and/or  3.20  exercisable  through  the
delivery  of  written  notice  to  the
Borrower  by  such  Holders  (the  "Default  Notice"),  and  upon  the
occurrence  of  an  Event  of
Default  specified  the  remaining  sections  of  Article  III  (other  than
failure  to  pay  the  principal
hereof  or  interest  thereon  at  the  Maturity  Date  specified  in  Section
3,1  hereof),  the  Note  shall
become   immediately   due   and   payable   and   the   Borrower   shall   pay
to   the   Holder,   in   full
satisfaction  of  its  obligations  hereunder,  an  amount  equal  to  (i)  130%
times  the  sum  of  (w)  the
then outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid
principal  amount  of  this  Note  to  the  date  of  payment  (the  "Mandatory
Prepayment  Date")  plus
(y)  Default  Interest,  if  any,  on  the  amounts  referred  to  in  clauses
(w)  and/or  (x)  plus  (z)  any
amounts  owed  to  the  Holder  pursuant  to  Sections  1.3  and  1.4(g)  hereof
(the  then  outstanding
principal  amount  of  this  Note  to  the  date  of  payment  plus  the
amounts  referred  to  in  clauses  (x),
(y)  and  (z)  shall  collectively  be  known  as  the  "Default  Sum")  or
(ii)  at  the  option  of  the  Holder,
the  "parity  value"  of  the  Default  Sum  to  be  prepaid,  where  parity
value  means  (a)  the  highest
number  of  shares  of  Common  Stock  issuable  upon  conversion  of  or
otherwise  pursuant  to  such
Default  Sum  in  accordance  with  Article  I,  treating  the  Trading  Day
immediately  preceding  the
Mandatory  Prepayment  Date  as  the  "Conversion  Date"  for  purposes  of
determining  the  lowest
applicable Conversion Price, unless the Default Event arises as a result of a
breach in respect of a
specific  Conversion  Date  in  which  case  such  Conversion  Date  shall  be
the  Conversion  Date),
multiplied  by  (b)  the  highest  Trading  Price  for  the  Common  Stock
during  the  period  beginning
on the date of first occurrence of the Event of Default and ending one day prior
to the Mandatory
Prepayment   Date   (the   "Default   Amount")   and   all   other   amounts
payable   hereunder   shall
immediately  become  due  and  payable,  all  without  demand,  presentment  or
notice,  all  of  which
hereby  are  expressly  waived,  together  with  all  costs,  including,
without  limitation,  legal  fees  and
expenses,  of  collection,  and  the  Holder  shall  be  entitled  to  exercise
all  other  rights  and  remedies
available  at  law  or  in  equity.   Further,  if  a  breach  of  Sections
3.9,  3.10  and/or  3.19  occurs  or  is
continuing after the six (6) month anniversary of this Note, then the principal
amount of the Note
shall  increase  by  Fifteen  Thousand  and  No/100  United  States  Dollars
($15,000)  (under  Holder's
and  Borrower's  expectation  that  any  principal  amount  increase  will  tack
back  to  the  Issue  Date)
and  the  Holder  shall  be  entitled  to  use  the  lowest  Trading  Price
during  the  delinquency  period  as
a  base  price  for  the  conversion  with  the  Variable  Conversion  Price
shall  be  redefined  to  mean
forty  percent  (40%)  multiplied  by  the  Market  Price,  subject  to
adjustment  as  provided  in  this
Note.  For  example,  if  the  lowest  Trading  Price  during  the  delinquency
period  is  $0.01  per  share
and  the  conversion  discount  is  50%,  then  the  Holder  may  elect  to
convert  future  conversions  at
$0.005  per  share.   If  this  Note  is  not  paid  at  Maturity  Date,  then
the  outstanding  principal  due
under this Note shall increase by Fifteen Thousand and No/100 United States
Dollars ($15,000).






                                    18








<PAGE>






If  the  Borrower  fails  to  pay  the  Default  Amount  within  five  (5)
business  days  of  written  notice
that  such  amount  is  due  and  payable,  then  the  Holder  shall  have  the
right  at  any  time,  so  long  as
the Borrower remains in default (and so long and to the extent that there are
sufficient authorized
shares), to require the Borrower, upon written notice, to immediately issue, in
lieu of  the Default
Amount,  the  number  of  shares  of  Common  Stock  of  the  Borrower  equal
to  the  Default  Amount
divided   by   the   Conversion   Price   then   in   effect.     This
requirement   by   the   Borrower   shall
automatically apply upon the occurrence of an Event of Default without the need
for any party to
give any notice or take any other action.

If  the  Holder  shall  commence  an  action  or  proceeding  to  enforce  any
provisions  of  this  Note,
including, without limitation, engaging an attorney, then if the Holder prevails
in such action, the
Holder  shall  be  reimbursed  by  the  Borrower  for  its  attorneys'  fees
and  other  costs  and  expenses
incurred in the investigation, preparation and prosecution of such action or
proceeding.

                       ARTICLE IV.  MISCELLANEOUS

           4.1 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
privileges.    All  rights  and
remedies  existing  hereunder  are  cumulative  to,  and  not  exclusive  of,
any  rights  or  remedies
otherwise available.

           4.2 Notices.     All   notices,   demands,   requests,   consents,
approvals,   and   other
communications   required   or   permitted   hereunder   shall   be   in
writing   and,   unless   otherwise
specified  herein,  shall  be  (i)  personally  served,  (ii)  deposited  in
the  mail,  registered  or  certified,
return  receipt  requested,  postage  prepaid,  (iii)  delivered  by  reputable
air  courier  service  with
charges  prepaid,  or  (iv)  transmitted  by  hand  delivery,  telegram,  or
facsimile,  addressed  as  set
forth  below  or  to  such  other  address  as  such  party  shall  have
specified  most  recently  by  written
notice.   Any  notice  or  other  communication  required  or  permitted  to  be
given  hereunder  shall  be
deemed  effective  (a)  upon  hand  delivery  or  delivery  by  facsimile,  with
accurate  confirmation
generated  by  the  transmitting  facsimile  machine,  at  the  address  or
number  designated  below  (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  addresses  for
such communications shall be:

         If to the Borrower, to:

           Clean Energy Technologies, Inc.
           2990 Redhill Avenue
           Costa Mesa, CA 92626
           Attn:  John Bennett, CFO
           E-mail:  jbennett@cetyinc.com



                                    19





<PAGE>







         With a copy to (which copy shall not constitute notice):

           Law Office of Andrew Coldicutt
           1220 Rosecrans Street, PMB 258
           San Diego, CA 92106
           Attn:  Andrew Coldicutt, Esq.
           E-mail: andrew@coldicuttlaw.com

         If to the Holder:

           Auctus Fund, LLC
           101 Arch Street, 20th Floor
           Boston, MA 02110
           Attn: Lou Posner
           Facsimile: (617) 532-6420

         With a copy to (which copy shall not constitute notice):

           Lucosky Brookman LLP
           101 Wood Avenue South, 5th Floor
           Woodbridge, NJ 08830
           Attn: Joseph M. Lucosky, Esq.
           Facsimile: (732) 395-4401

           4.3 Amendments.   This  Note  and  any  provision  hereof  may  only
be  amended  by
an  instrument  in  writing  signed  by  the  Borrower  and  the  Holder.    The
term  "Note"  and  all
reference  thereto,  as  used  throughout  this  instrument,  shall  mean  this
instrument  (and  the  other
Notes  issued  pursuant  to  the  Purchase  Agreement)  as  originally
executed,  or  if  later  amended  or
supplemented, then as so amended or supplemented.

           4.4 Assignability.     This   Note   shall   be   binding   upon
the   Borrower   and   its
successors  and  assigns,  and  shall  inure  to  be  the  benefit  of  the
Holder  and  its  successors  and
assigns.   Each transferee of this Note must be an "accredited investor" (as
defined in Rule 501(a)
of  the  1933  Act).    Notwithstanding  anything  in  this  Note  to  the
contrary,  this  Note  may  be
pledged   as   collateral   in   connection   with   a   bona   fide   margin
account   or   other   lending
arrangement.   The  Holder  and  any  assignee,  by  acceptance  of  this  Note,
acknowledge  and  agree
that following conversion of a portion of this Note, the unpaid and unconverted
principal amount
of this Note represented by this Note may be less than the amount stated on the
face hereof.

           4.5 Cost  of  Collection.    If  default  is  made  in  the  payment
of  this  Note,  the
Borrower   shall   pay   the   Holder   hereof   reasonable   costs   of
collection,   including   reasonable
attorneys' fees.

           4.6 Governing  Law.  This  Note  shall  be  governed  by  and
construed  in  accordance
with the laws of the State of Nevada without regard to principles of conflicts
of laws.  Any action



                                    20





<PAGE>






brought  by  either  party  against  the  other  concerning  the  transactions
contemplated  by  this  Note
shall  be  brought  only  in  the  state  courts  of  Massachusetts  or  in  the
federal  courts  located  in  the
Commonwealth  of  Massachusetts.     The  parties  to  this  Note  hereby
irrevocably  waive  any
objection  to  jurisdiction  and  venue  of  any  action  instituted  hereunder
and  shall  not  assert  any
defense  based  on  lack  of  jurisdiction  or  venue  or  based  upon  forum
non  conveniens.    THE
BORROWER  HEREBY  IRREVOCABLY  WAIVES  ANY  RIGHT  IT  MAY  HAVE  TO,
AND  AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE  ADJUDICATION  OF
ANY  DISPUTE  HEREUNDER  OR  IN  CONNECTION  WITH  OR  ARISING  OUT  OF
THIS  NOTE  OR  ANY  TRANSACTION  CONTEMPLATED  HEREBY.    The  prevailing
party  shall  be  entitled  to  recover  from  the  other  party  its
reasonable  attorney's  fees  and  costs.   In
the event that any provision of this Note or any other agreement delivered in
connection herewith
is  invalid  or  unenforceable  under  any  applicable  statute  or  rule  of
law,  then  such  provision  shall
be  deemed  inoperative  to  the  extent  that  it  may  conflict  therewith
and  shall  be  deemed  modified
to  conform  with  such  statute  or  rule  of  law.   Any  such  provision
which  may  prove  invalid  or
unenforceable  under  any  law  shall  not  affect  the  validity  or
enforceability  of  any  other  provision
of  any  agreement.      Each  party  hereby  irrevocably  waives  personal
service  of  process  and
consents  to  process  being  served  in  any  suit,  action  or  proceeding  in
connection  with  this
Agreement  or  any  other  Transaction  Document  by  mailing  a  copy  thereof
via  registered  or
certified  mail  or  overnight  delivery  (with  evidence  of  delivery)  to
such  party  at  the  address  in
effect  for  notices  to  it  under  this  Agreement  and  agrees  that  such
service  shall  constitute  good
and sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to
limit in any way any right to serve process in any other manner permitted by
law.

           4.7 Certain Amounts.  Whenever pursuant to this Note the Borrower is
required to
pay  an  amount  in  excess  of  the  outstanding  principal  amount  (or  the
portion  thereof  required  to
be  paid  at  that  time)  plus  accrued  and  unpaid  interest  plus  Default
Interest  on  such  interest,  the
Borrower  and  the  Holder  agree  that  the  actual  damages  to  the  Holder
from  the  receipt  of  cash
payment  on  this  Note  may  be  difficult  to  determine  and  the  amount  to
be  so  paid  by  the
Borrower  represents  stipulated  damages  and  not  a  penalty  and  is
intended  to  compensate  the
Holder  in  part  for  loss  of  the  opportunity  to  convert  this  Note  and
to  earn  a  return  from  the  sale
of  shares  of  Common  Stock  acquired  upon  conversion  of  this  Note  at  a
price  in  excess  of  the
price  paid  for  such  shares  pursuant  to  this  Note.   The  Borrower  and
the  Holder  hereby  agree  that
such  amount  of  stipulated  damages  is  not  plainly  disproportionate  to
the  possible  loss  to  the
Holder  from  the  receipt  of  a  cash  payment  without  the  opportunity  to
convert  this  Note  into
shares of Common Stock.

           4.8 Purchase  Agreement.   By  its  acceptance  of  this  Note,  each
party  agrees  to  be
bound by the applicable terms of the Purchase Agreement.

           4.9 Notice  of  Corporate  Events.   Except  as  otherwise  provided
below,  the  Holder
of this Note shall have no rights as a Holder of Common Stock unless and only to
the extent that
it  converts  this  Note  into  Common  Stock.  The  Borrower  shall  provide
the  Holder  with  prior
notification  of  any  meeting  of  the  Borrower's  shareholders  (and  copies
of  proxy  materials  and
other  information  sent  to  shareholders).   In  the  event  of  any  taking
by  the  Borrower  of  a  record
of  its  shareholders  for  the  purpose  of  determining  shareholders  who
are  entitled  to  receive
payment  of  any  dividend  or  other  distribution,  any  right  to  subscribe
for,  purchase  or  otherwise



                                    21





<PAGE>






acquire (including by way of merger, consolidation, reclassification or
recapitalization) any share
of any class or any other securities or property, or to receive any other right,
or for the purpose of
determining  shareholders  who  are  entitled  to  vote  in  connection  with
any  proposed  sale,  lease  or
conveyance  of  all  or  substantially  all  of  the  assets  of  the  Borrower
or  any  proposed  liquidation,
dissolution  or  winding  up  of  the  Borrower,  the  Borrower  shall  mail  a
notice  to  the  Holder,  at
least  twenty  (20)  days  prior  to  the  record  date  specified  therein  (or
thirty  (30)  days  prior  to  the
consummation  of  the  transaction  or  event,  whichever  is  earlier),  of
the  date  on  which  any  such
record  is  to  be  taken  for  the  purpose  of  such  dividend,  distribution,
right  or  other  event,  and  a
brief  statement  regarding  the  amount  and  character  of  such  dividend,
distribution,  right  or  other
event to the extent known at such time.   The Borrower shall make a public
announcement of any
event   requiring   notification   to   the   Holder   hereunder   substantially
simultaneously   with   the
notification  to  the  Holder  in  accordance  with  the  terms  of  this
Section  4.9  including,  but  not
limited to, name changes, recapitalizations, etc. as soon as possible under law.

           4.10     Usury.  If  it  shall  be  found  that  any  interest  or
other  amount  deemed
interest due hereunder violates the applicable law governing usury, the
applicable provision shall
automatically  be  revised  to  equal  the  maximum  rate  of  interest  or
other  amount  deemed  interest
permitted  under  applicable  law.  The  Borrower  covenants  (to  the  extent
that  it  may  lawfully  do
so)  that  it  will  not  seek  to  claim  or  take  advantage  of  any  law
that  would  prohibit  or  forgive  the
Borrower from paying all or a portion of the principal or interest on this Note.

           4.11     Remedies.     The   Borrower   acknowledges   that   a
breach   by   it   of   its
obligations  hereunder  will  cause  irreparable  harm  to  the  Holder,  by
vitiating  the  intent  and
purpose  of  the  transaction  contemplated  hereby.   Accordingly,  the
Borrower  acknowledges  that
the remedy at law for a breach of its obligations under this Note will be
inadequate and agrees, in
the event of a breach or threatened breach by the Borrower of the provisions of
this Note, that the
Holder  shall  be  entitled,  in  addition  to  all  other  available  remedies
at  law  or  in  equity,  and  in
addition  to  the  penalties  assessable  herein,  to  an  injunction  or
injunctions  restraining,  preventing
or  curing  any  breach  of  this  Note  and  to  enforce  specifically  the
terms  and  provisions  thereof,
without  the  necessity  of  showing  economic  loss  and  without  any  bond
or  other  security  being
required.   No provision of this Note shall alter or impair the obligation of
the Borrower, which is
absolute  and  unconditional,  to  pay  the  principal  of,  and  interest  on,
this  Note  at  the  time,  place,
and rate, and in the form, herein prescribed.

           4.12     Severability.    In  the  event  that  any  provision  of
this  Note  is  invalid  or
unenforceable  under  any  applicable  statute  or  rule  of  law,  then  such
provision  shall  be  deemed
inoperative  to  the  extent  that  it  may  conflict  therewith  and  shall  be
deemed  modified  to  conform
with such statute or rule of law.  Any provision hereof which may prove invalid
or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.

           4.13     Dispute  Resolution.  In  the  case  of  a  dispute  as  to
the  determination  of  the
Conversion  Price,  Conversion  Amount,  any  prepayment  amount  or  Default
Amount,  Default
Sum, Closing or Maturity Date, the closing bid price, or fair market value (as
the case may be) or
the arithmetic calculation of the Conversion Price or the applicable prepayment
amount(s) (as the
case  may  be),  the  Borrower  or  the  Holder  shall  submit  the  disputed
determinations  or  arithmetic
calculations  via  facsimile  (i)  within  two  (2)  Business  Days  after
receipt  of  the  applicable  notice



                                    22





<PAGE>






giving  rise  to  such  dispute  to  the  Borrower  or  the  Holder  or  (ii)
if  no  notice  gave  rise  to  such
dispute,  at  any  time  after  the  Holder  learned  of  the  circumstances
giving  rise  to  such  dispute.  If
the  Holder  and  the  Borrower  are  unable  to  agree  upon  such
determination  or  calculation  within
two  (2)  Business  Days  of  such  disputed  determination  or  arithmetic
calculation  (as  the  case  may
be)  being  submitted  to  the  Borrower  or  the  Holder,  then  the  Borrower
shall,  within  two  (2)
Business  Days,  submit  via  facsimile  (a)  the  disputed  determination  of
the  Conversion  Price,  the
closing  bid  price,  the  or  fair  market  value  (as  the  case  may  be)  to
an  independent,  reputable
investment  bank  selected  by  the  Borrower  and  approved  by  the  Holder
or  (b)  the  disputed
arithmetic  calculation  of  the  Conversion  Price,  Conversion  Amount,  any
prepayment  amount  or
Default  Amount,  Default  Sum  to  an  independent,  outside  accountant
selected  by  the  Holder  that
is reasonably acceptable to the Borrower. The Borrower shall cause at its
expense the investment
bank or the accountant to perform the determinations or calculations and notify
the Borrower and
the  Holder  of  the  results  no  later  than  ten  (10)  Business  Days  from
the  time  it  receives  such
disputed  determinations  or  calculations.  Such  investment  bank's  or
accountant's  determination
or calculation shall be binding upon all parties absent demonstrable error.

           4.14     Terms of Future Financings.  So long as this Note is
outstanding, upon any
issuance  by  the  Borrower  or  any  of  its  subsidiaries  of  any  security
with  any  term  more  favorable
to  the  holder  of  such  security  or  with  a  term  in  favor  of  the
holder  of  such  security  that  was  not
similarly  provided  to  the  Holder  in  this  Note,  then  the  Borrower
shall  notify  the  Holder  of  such
additional  or  more  favorable  term  and  such  term,  at  Holder's  option,
shall  become  a  part  of  the
transaction  documents  with  the  Holder.   The  types  of  terms  contained
in  another  security  that
may  be  more  favorable  to  the  holder  of  such  security  include,  but
are  not  limited  to,  terms
addressing  conversion  discounts,  prepayment  rate,  conversion  lookback
periods,  interest  rates,
original   issue   discounts,   stock   sale   price,   private   placement
price   per   share,   and   warrant
coverage.

           4.15     Piggyback  Registration  Rights.   The  Borrower  shall
include  on  the  next
registration statement the Borrower files with SEC (or on the subsequent
registration statement if
such  registration  statement  is  withdrawn)  all  shares  issuable  upon
conversion  of  this  Note.
Failure  to  do  so  will  result  in  liquidated  damages  of  25%  of  the
outstanding  principal  balance  of
this  Note,  but  not  less  than  Fifteen  Thousand  and  No/100  United
States  Dollars  ($15,000),  being
immediately due and payable to the Holder at its election in the form of cash
payment or addition
to the balance of this Note.




                            [signature page follows]













                                    23















<PAGE>







      IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by its
duly authorized officer as of the date first above written.

                                        CLEAN    ENERGY    TECHNOLOGIES,
                                        INC.











                                        By:



                                        Name: Meddy Sahebi
                                        Title: Executive Chairman



































                                    24





































<PAGE>





                                EXHIBIT A
                          NOTICE OF CONVERSION

           The  undersigned  hereby  elects  to  convert
$_________________principal  amount
of  the  Note  (defined  below)  together  with  $________________  of  accrued
and  unpaid  interest
thereto,  totaling  $_____________  into  that  number  of  shares  of  Common
Stock  to  be  issued
pursuant  to  the  conversion  of  the  Note  ("Common  Stock")  as  set  forth
below,  of  Clean  Energy
Technologies,  Inc.,  a  Nevada  corporation  (the  "Borrower"),  according  to
the  conditions  of  the
convertible  note  of  the  Borrower  dated  as  of  July  6,  2016  (the
"Note"),  as  of  the  date  written
below.  No fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.

Box Checked as to applicable instructions:

      [ ]  The  Borrower  shall  electronically  transmit  the  Common  Stock
issuable  pursuant
           to this Notice of Conversion to the account of the undersigned or its
nominee with
           DTC through its Deposit Withdrawal At Custodian system ("DWAC
Transfer").

           Name of DTC Prime Broker:
           Account Number:

      [  ] The   undersigned   hereby   requests   that   the   Borrower   issue
a   certificate   or
           certificates  for  the  number  of  shares  of  Common  Stock  set
forth  below  (which
           numbers  are  based  on  the  Holder's  calculation  attached
hereto)  in  the  name(s)
           specified immediately below or, if additional space is necessary, on
an attachment
           hereto:

           Name: [NAME]
           Address: [ADDRESS]

           Date of Conversion:                      _____________
           Applicable Conversion Price:            $____________
           Number of Shares of Common Stock to be Issued
             Pursuant to Conversion of the Notes:  ______________
           Amount of Principal Balance Due remaining
             Under the Note after this conversion: ______________
           Accrued and unpaid interest remaining:  ______________

           [HOLDER]



           By:_____________________________
           Name:  [NAME]
           Title:    [TITLE]
           Date:  [DATE]




4818-3048-2483, v.  1-2690-2064, v.  1-0454, v.  1