THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES, OR
DELIVERY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES THAT SUCH REGISTRATION IS NOT REQUIRED.

                                TECHNOPRISES LTD.

                     5% SECURED CONVERTIBLE PROMISSORY NOTE

U.S. $50,000                                                       JULY 23, 2004

      THIS PROMISSORY NOTE (this "Note") is made as of this 23rd day of July,
2004, by Technoprises Ltd., a corporation incorporated under the laws of the
State of Israel ("Maker"), in favor of DCOFI Master LDC or its assigns
("Payee").

                                    RECITALS

      WHEREAS, Maker requires the financing provided pursuant to this Note and
certain other similar notes issued concurrently herewith for an aggregate
collective principal amount of $50,000 (collectively, the "Notes"), for working
capital and general corporate purposes, including investor and public relations
funding.

      WHEREAS, Maker also has agreed to issue Payee a warrant (the "Warrant") in
connection with the issuance of this Note (the Warrant and Note referred to
collectively hereinafter as the "Transaction Securities"). The shares of
ordinary stock, NIS .5 par value per share, of Maker ("Common Stock") underlying
the Warrant are referred to hereinafter as the "Warrant Shares."

      WHEREAS, in order to secure the payment obligation of the Maker hereunder,
the Maker and the Payee simultaneously herewith are executing and delivering a
Security Agreement with respect to assets and properties of the Maker located in
the United States and an Israeli Debenture Agreement with respect to assets and
properties of the Maker located in Israel, each dated as of the date hereof
(collectively, the "Security Agreements").


                                       1
<PAGE>

                                 NOTE AGREEMENT

      NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained, and for and in consideration of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Maker and Payee hereby covenant and agree as set forth below.

      FOR VALUED RECEIVED, Maker hereby promises to pay to the order of Payee,
the principal sum of FIFTY THOUSAND DOLLARS ($50,000), or such lesser amount as
may from time to time be otherwise owing from Maker to Payee under this Note,
together with interest on the principal amount from time to time outstanding
hereunder accrued from the date hereof at the rate and in the manner set forth
below. All payments of principal or interest or both shall be paid as set forth
below, and each such payment shall be made in lawful money of the United States
of America.

      This Note is subject to the following terms and conditions:

      1. PAYMENTS OF PRINCIPAL AND INTEREST.

            (a) Repayment. Unless otherwise repaid or converted as provided
herein, the entire unpaid principal balance of this Note, together with all
accrued but unpaid interest thereon, shall be due and payable in full on June
30, 2005 (the "Maturity Date"). Payee's conversion rights shall be extinguished
upon payment in full of all principal and accrued interest and all other amounts
due hereunder on or after the Maturity Date. Interest shall accrue and be
payable in arrears on an Interest Payment Date (as defined in Section 2 below)
or any payment hereof.

            (b) Late Fee Upon Failure To Repay. If Maker fails to repay this
Note on or prior to the Maturity Date or such earlier date resulting from the
acceleration of the date upon which the principal amount of this Note shall be
payable in accordance with the terms of this Note (due to an Event of Default or
otherwise), the interest rate on the outstanding principle amount, accrued and
unpaid interest and all other amounts due hereunder shall increase to a rate of
18% per annum until all amounts owing on this Note are repaid in full,
commencing on the earlier of: (a) the Maturity Date or (b) the date upon which
the repayment of this Note is accelerated pursuant to the terms hereof.

            (c) Optional Prepayment. After December 30, 2004, Maker shall be
entitled, at its option upon thirty days prior written notice, to repay a
portion or all of the outstanding principal amount together with interest, late
fees, penalties and all other amounts due thereunder; provided, however any
principal amount of this Note that is repaid prior to maturity shall be repaid
at a early redemption premium equal to 120% of the principal amount proposed to
be repaid (such early redemption premium shall be in addition to and not in lieu
of any interest, late fees, penalties or other amounts due hereunder); provided,
further however, that Payee shall have the right but not the obligation during
such thirty (30) day notice period to convert the entire outstanding principal
balance of this Note, together with all accrued but unpaid interest due
hereunder into shares of capital stock of the Maker pursuant to the terms of
Section 3 hereof.

            (d) Manner of Payment. Maker shall make payment in accordance with
the terms of this Note no later than 5:30 p.m. (New York City time) on the date
when due, in immediately available funds. Each payment of principal and of
interest shall be paid by Maker without setoff or counterclaim to Payee at
Payee's address set forth in Section 15, or to such other location or accounts
within the United States as Payee may specify in writing to Maker from time to
time, in immediately available funds.


                                       2
<PAGE>

            (e) Cancellation. After all amounts owed on this Note have been paid
in full and/or all amounts due under this Note has been converted in full into
Common Stock as provided in Section 3, this Note will be surrendered to Maker
for cancellation and will not be reissued; provided however, the: (i)
representations and warranties contained herein and (ii) the covenants contained
in Section 6(c) hereof shall survive such repayment or conversion until the
Warrant is exercised in full or expires.

      2. INTEREST RATE.

            (a) This Note will bear interest at the rate of five percent (5%)
per year, compounded monthly from the date hereof to and including the date of
payment or conversion of this Note. Interest on this Note shall be calculated on
the basis of actual days elapsed and a 360-day year of twelve 30-day months.

            (b) Interest on this Note shall be due and payable quarterly in
arrears on September 30, 2004, December 30, 2004, March 30, 2005 and June 30,
2005 (the "Interest Payment Dates"), except that if such date is not a Business
Day then the Interest Payment Date shall be the next day that is a Business Day.
Such interest shall, at the option of Maker, either be paid in cash or in shares
of Common Stock (in accordance with Section 3). Any accrued interest that is not
otherwise paid in cash or in shares of Common Stock on the applicable Interest
Payment Date (whether due to Maker's inability to pay such interest in cash or
in shares of Common Stock) shall automatically, and without any action on the
part of Maker, accrue and compound and be added to the outstanding principal and
interest due under the Note on such Interest Payment Date.

      3. CONVERSION INTO EQUITY OF MAKER.

            (a) Conversion. The holder of this Note shall have the right at its
sole election: (i) at any time (including without limitation during the notice
periods set forth in Section 1(c) and Section 4 hereof) to convert all, or a
portion, of the principal amount of this Note plus accrued interest thereon,
late fees and other amounts due hereunder or (ii) on an Interest Payment Date,
to convert all accrued interest, in each case into shares of Common Stock at the
price of $.10 per share of Common Stock (subject to proportional adjustments for
stock splits, stock dividends and the like) (the "Conversion Price"). Upon such
conversion, Payee shall receive the same rights as all other holders of Common
Stock in Maker and shall be treated for all purposes as the record holder of the
shares of Common Stock issued upon such conversion (the "Shares").

            (b) Mechanics and Effect of Conversion. Upon the conversion of the
principal amount as provided herein, in lieu of any fractional shares of Common
Stock to which Payee would otherwise be entitled, Maker shall pay cash equal to
such fraction multiplied by the last reported sale price of a share of Common
Stock on the Trading Market on which the Common Stock is then listed or quoted
for trading on the Trading Day prior to the date of conversion (or, if the
Common Stock is not then listed or quoted for trading on any Trading Market, the
fair market value of a share of Common Stock as determined by Maker in good
faith). Upon conversion of this Note in full pursuant to this Section 3, Payee
shall surrender this Note, duly endorsed, at the principal offices of Maker or
any transfer agent for Maker. Payee shall also execute and deliver any ancillary
agreements as may be required or reasonably requested to effect the conversion
of this Note. Maker shall pay any and all issue and other taxes that may be
payable in respect of any issue or delivery of Shares pursuant to this Section
3. As used in this Section 3(b), the term "Trading Market" means the following
markets or exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the OTC Bulletin Board, the American Stock Exchange,
the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market, and the term "Trading Day" means (i) a day on which the Common Stock is
traded on a Trading Market, or (ii) if the Common Stock is not quoted on a
Trading Market, a day on which the Common Stock is quoted in the over the
counter market as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding to its functions of reporting price);
provided, that in the event that the Common Stock is not listed or quoted as set
forth in clauses (i) and (ii) hereof, then Trading Day shall mean a business
day.


                                       3
<PAGE>

            (c) Reservation of Shares. Maker shall at all times reserve and keep
available out of its authorized equity securities, solely for the purposes of
issuance upon the conversion of this Note as herein provided, such number of
Shares as shall then be issuable upon the full conversion of this Note. Maker
covenants that it shall cause all Shares which shall be so issued to be duly and
validly issued and fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof, and, without limiting the
generality of the foregoing, Maker covenants that it will from time to time take
all such action as may be required to assure that the par value per share of the
equity securities will at all times be equal to or less than the conversion
price. Maker will take all such action as may be necessary to assure that all
such Shares may be so issued without violation of any applicable law or
regulation.

            (d) Rights Prior to Conversion. Payee shall have no equity interest
in Maker or any voting, dividend, liquidation or dissolution rights with respect
to any equity securities of Maker solely by reason of this Note. Furthermore,
prior to the conversion, as set forth in this Section 3, and the issuance and
delivery of a certificate or certificates evidencing the Shares purchased
pursuant to the conversion, Payee shall have no interest in, or any voting,
dividend, liquidation or dissolution rights with respect to any equity
securities of Maker.

            (e) Registration Right in Maker.

                  (i) No later than forty-five (45) days following the date of
            issuance of this Note (the "Filing Date"), Maker shall prepare and
            file with the Commission a registration statement (the "Registration
            Statement") covering exclusively the resale all of the shares of
            capital stock of the Maker issued or issuable pursuant to or in
            connection herewith (including without limitation the Shares and the
            Warrant Shares) (collectively, the "Registrable Securities"), which
            offering shall be made on a continuous basis pursuant to Rule 415
            under the Securities Act. The Registration Statement required
            hereunder shall be on Form F-1 or such other form appropriate form
            that the Maker is eligible for and that is exclusive to the Shares
            and the Warrant Shares. Maker shall use its commercially reasonable
            efforts to cause the Registration Statement to be declared effective
            under the Securities Act as promptly as possible after the filing
            thereof and shall use its commercially reasonable efforts to keep
            the Registration Statement continuously effective under the
            Securities Act until the date when all Registrable Securities
            covered by the Registration Statement (a) have been sold pursuant to
            the Registration Statement or an exemption from the registration
            requirements of the Securities Act or (b) may be sold without any
            volume or other restrictions pursuant to Rule 144(k) (the
            "Effectiveness Period"). Payee (or its designee(s)) shall also be
            provided with such other rights, and Maker shall have such
            obligations, as customarily accompany investor registration rights,
            including, without limitation, the right of Payee to customary
            indemnification by Maker, Maker's obligation to prepare and file
            with the Commission such amendments and supplements to such
            registration statement as may be necessary to keep such registration
            statement effective until the disposition of all securities covered
            by such registration statement, the obligation of Maker to register
            and qualify the securities covered by such registration statement
            under applicable state securities and blue sky laws, the obligation
            of Maker to cause the securities covered by such registration
            statement to be listed or quoted on the Trading Market on which
            Maker's securities are then listed or quoted and the obligation of
            Maker to cause to be provided customary legal opinions and comfort
            letters of its independent certified accountants if requested in
            connection with a sale pursuant to such registration statement).


                                       4
<PAGE>

                  (ii) Filing Default Liquidation Damages. If a Registration
            Statement is not filed on or prior to the Filing Date if required
            under Section 3(e)(i) hereof, then Maker shall pay to Payee an
            amount in cash, until the earlier of the date that the Registration
            Statement is filed and the Registrable Securities may be sold
            pursuant to Rule 144(k), as liquidated damages and not as a penalty,
            (i) one (1%) percent of the aggregate unpaid principal amount of
            this Note for the first forty-five (45) days (or a pro rata portion
            of one (1%) percent for any part thereof) following Maker's failure
            to file, and (ii) an additional one (1%) percent of the aggregate
            upaid principal amount of this Note for each thirty (30) day period
            subsequent thereto (or a pro rata portion of one (1%) percent for
            any part thereof), such payment(s) to be made in immediately
            available funds no later than five (5) days after the first date of
            each 30 or 45 day period (or any part thereof), as the case may be,
            during Maker's failure to file.

                  (iii) Effectiveness Default Liquidation Damages. In addition
            to any liquidated damages paid, accrued and/or to be paid pursuant
            to Section 3(e)(ii), if (1) the Registration Statement is not
            declared effective on or prior to one hundred and twenty (120) days
            following the issuance of the Note, or (2) if the Registration
            Statement has been declared effective and subsequent thereto is not
            effective (or otherwise does not permit the resale of the
            Registrable Securities covered thereby) for any period of time until
            the date Payee no longer owns any Registrable Securities (an
            "Effectiveness Default"), then Maker shall pay to Payee an amount in
            cash until the date the Registration Statement is declared effective
            (and permits the resale of the Registrable Securities covered
            thereby) (or if previously declared effective until the date the
            Registration Statement becomes effective (and otherwise permits the
            resale of the Registrable Securities covered thereby) again), as
            liquidated damages and not as a penalty, equal to (i) one (1%)
            percent of the aggregate unpaid principal amount of this Note for
            the first forty five (45) days (or a pro rata portion of one (1%)
            percent for any part thereof), and (ii) an additional one (1%)
            percent of the aggregate unpaid principal amount of this Note for
            each thirty (30) day period subsequent thereto (or a pro rata
            portion of one (1%) for any part thereof) until the earlier of such
            date (a) the Registration Statement is declared effective (or if
            previously declared effective until the date the Registration
            Statement becomes effective (and otherwise permits the resale of the
            Registrable Securities covered thereby) again), and (b) the
            Registrable Securities may be sold pursuant to Rule 144(k). Any such
            payment(s) shall be made in immediately available funds no later
            than five (5) days after the first day of each 30 or 45 day period
            (or any part thereof), as the case may be, of each such
            Effectiveness Default.

            (f) No Inconsistent Agreements. Maker agrees not to enter into any
other agreement providing which is inconsistent with the registration rights
provisions of this Note or contains registration rights provisions which are
senior to the registration rights granted in this Note.


                                       5
<PAGE>

      4. REPRESENTATIONS AND WARRANTIES OF THE PAYEE.

            (a) the Payee has had an opportunity to discuss the Maker's
business, management and financial affairs with its management and to obtain any
additional information which the Payee has deemed necessary or appropriate for
deciding whether or not to accept the Note and grant the Maker with funding in
exchange for the Note, and has had an opportunity to receive, review and
understand the disclosures and information regarding the Maker's financial
statements, capitalization and other business information as set forth in
Maker's filings with the Securities and Exchange Commission.

            (b) The Payee has such knowledge and experience in financial and
business matters, including investments in other early stage companies, that it
is capable of evaluating the merits and risks of funding the Maker in exchange
for the Note, and it is able to bear the economic risk of such loan. Further,
the Payee has such knowledge and experience in financial and business matters
that he or it is capable of utilizing the information made available to him or
it in connection with the funding.

            (c) If the Payee is a corporation, partnership, trust or estate: (i)
the individual executing and delivering this Note on behalf of the Payee has
been duly authorized and is duly qualified to execute and deliver this Agreement
on behalf of the Payee and (ii) the signature of such individual is binding upon
the Payee.

      5. REPRESENTATIONS AND WARRANTIES OF THE MAKER

            (a) Duly Incorporated. Maker and each of its subsidiaries, all of
which are set forth on Schedule 5(a) attached hereto (the "Subsidiaries"), are
corporations duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, with the requisite power and
authority to own, lease and operate its respective properties and conduct its
business as presently conducted or proposed to be conducted, and is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect (as defined below). Opposite the name of the Maker and the Subsidiaries
on Schedule 5(a) hereto is the jurisdiction of incorporation for the Maker and
each of its Subsidiaries and the jurisdiction(s) in which each such entity
maintains an office or material assets and/or is qualified to do business.
Except as set forth on Schedule 5(a), each of the Subsidiaries is a wholly owned
subsidiary of the Maker.

            (b) Corporate Power. The execution and delivery of this Note, the
Warrant, the Security Agreements and any other document or instrument executed
in connection herewith or therewith (the "Transaction Documents") are within
Maker's powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. The Transaction Documents have been duly executed
and delivered by Maker and each constitutes a legal, valid and binding
obligation of Maker enforceable in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
general equity principles (whether considered in a proceeding in equity or at
law).

            (c) Capitalization. The capitalization of the Company is as set
forth Schedule 5(c) attached hereto. Except as set forth on Schedule 5(a)
attached hereto, the Company does not have any subsidiaries or own directly or
indirectly any of the capital stock or other equity or long-term debt securities
of or have any equity interest in any other person; all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights and are owned free and
clear of all liens, encumbrances, equities, and restrictions on transferability
(other than those imposed by the Securities Act and the state securities or
"Blue Sky" laws) or voting. All of the outstanding shares of capital stock of
the Subsidiaries are owned, directly or indirectly, by the Company. Except as
set forth on Schedule 5(c) attached hereto, no options, warrants or other rights
to purchase from the Company or any Subsidiary, agreements or other obligations
of the Company or any Subsidiary to issue or other rights to convert any
obligation into, or exchange any securities for, shares of capital stock of or
ownership interests in the Company or any Subsidiary are outstanding. Except as
set forth on Schedule 5(c), there is no agreement, understanding or arrangement
among the Company or any Subsidiary and each of their respective stockholders or
any other person relating to the ownership or disposition of any capital stock
of the Company or any Subsidiary or the election of directors of the Company or
any Subsidiary or the governance of the Company's or any Subsidiary's affairs,
and, if any, such agreements, understandings and arrangements will not be
breached or violated as a result of the execution and delivery of, or the
consummation of the transactions contemplated by, the Transaction Documents.


                                       6
<PAGE>

            (d) No Consents. The execution and delivery of the Transaction
Documents and the issuance of the equity securities underlying such securities
(i) does not require any consent or approval of, registration or filing with, or
any other action by any governmental authority, (ii) will not violate any
applicable law or regulation applicable to Maker or any of its subsidiaries or
the articles of incorporation or bylaws of Maker or other agreement of Maker or
any of its subsidiaries or any order of any governmental authority applicable to
Maker or any of its subsidiaries, (iii) will not violate any agreement of Maker
or any of its subsidiaries or result in a default under any agreement or
instrument evidencing or governing any indebtedness of Maker or any of its
subsidiaries or assets of Maker or any of its subsidiaries or give rise to a
right thereunder to require any payment to be made by Maker, and (iv) will not
result in the creation or imposition of any lien on any asset of Maker or any of
its subsidiaries.

            (e) SEC Reports; Financial Statements; Sarbanes-Oxley Act
Compliance.

                  (i) Maker has filed all reports required to be filed by it
            under the Securities Act and the Securities Exchange Act of 1934, as
            amended (the "Exchange Act"), including pursuant to Section 13(a) or
            Section 15(d) of the Exchange Act, for the three (3) years preceding
            the date hereof (or such shorter period as Maker was required by law
            to file such material) (the foregoing materials, including the
            exhibits thereto, being collectively referred to herein as the "SEC
            Reports"). As of their respective dates, the SEC Reports complied in
            all material respects with the requirements of the Securities Act
            and the Exchange Act and the rules and regulations of the Commission
            promulgated thereunder, as applicable, and none of the SEC Reports,
            when filed, contained any untrue statement of a material fact or
            omitted to state a material fact required to be stated therein or
            necessary in order to make the statements therein, in light of the
            circumstances under which they were made, not misleading. The staff
            of the Division of Corporation Finance of the Commission has never
            provided Maker with any comments on any registration statement,
            report or other document filed with the Commission under the
            Securities Act or the Exchange Act. The financial statements of
            Maker included in the SEC Reports comply in all material respects
            with applicable accounting requirements and the rules and
            regulations of the Commission with respect thereto as in effect at
            the time of filing. Such financial statements have been prepared in
            accordance with generally accepted accounting principles applied on
            a consistent basis during the periods involved ("GAAP"), except as
            may be otherwise specified in such financial statements or the notes
            thereto and except that unaudited financial statements may not
            contain all footnotes required by GAAP, and fairly present in all
            material respects the financial position of Maker and its
            consolidated subsidiaries as of and for the dates thereof and the
            results of operations and cash flows for the periods then ended,
            subject, in the case of unaudited statements, to normal, immaterial,
            year-end audit adjustments. Kost, Forer & Gabbay, which have
            certified certain financial statements of Maker and its consolidated
            subsidiaries included in the SEC Reports, are independent public
            accountants as required by the Securities Act, the Exchange Act and
            the respective rules and regulations of the Commission thereunder
            and are registered and in good standing with the Public Company
            Accounting Oversight Board in accordance with the Sarbanes-Oxley Act
            of 2002. Maker is in compliance with all applicable requirements of
            the Sarbanes-Oxley Act of 2002 and applicable rules and regulations
            promulgated by the Commission thereunder in effect as of the date of
            this Note, except where the failure to be so would not have a
            material adverse effect on the Maker. Maker does not have pending
            before the Commission any request for confidential treatment of
            information. Notwithstanding anything contained in this Section
            5(e)(i) to the contrary, a breach of the representations and
            warranties contained in this Section 5(e)(i) shall only occur if
            such breach has a material adverse effect on the Maker's performance
            of its obligations related to or in connection with this Note or the
            practical realization by the Payee of any benefit or remedy Payee
            may have hereunder.


                                       7
<PAGE>

                  (ii) Attached hereto is a draft of the registration statement
            of the Maker on Form F-1 ("Draft F-1") which accurate, true and
            complete in all material respects and does not contain any untrue
            statement of a material fact or omit to state a material fact
            required to be stated therein or necessary in order to make the
            statements therein, in light of the circumstances under which they
            were made, not misleading. The financial statements of Maker
            included in the Draft F-1 comply in all material respects with
            applicable accounting requirements and the rules and regulations of
            the Commission with respect thereto as in effect at the time of
            filing except where the failure to so comply does not have material
            adverse effect on the Maker's performance of its obligations related
            to or in connection with this Note or the practical realization by
            the Payee of any benefit or remedy Payee may have hereunder. Such
            financial statements have been prepared in accordance with GAAP,
            except as may be otherwise specified in such financial statements or
            the notes thereto and except that unaudited financial statements may
            not contain all footnotes required by GAAP, and fairly present in
            all material respects the financial position of Maker and its
            consolidated subsidiaries as of and for the dates thereof and the
            results of operations and cash flows for the periods then ended,
            subject, in the case of unaudited statements, to normal, immaterial,
            year-end audit adjustments.

            (f) Material Changes. Except as set forth on Schedule 5(f) hereto,
since the date of the latest audited financial statements included within the
Draft F-1, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect,
(ii) Maker has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in Maker's financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) Maker has
not altered its method of accounting, (iv) Maker has not declared or made any
dividend or distribution of cash or other property to its holders of Common
Stock or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock and (v) Maker has not issued any equity securities
to any officer, director or affiliate, except pursuant to existing Company stock
option plans. For purposes herein, a "Material Adverse Effect" shall mean (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Documents, (ii) a material adverse effect on the results of
operations, assets, business or financial condition or prospects of Maker and
the Subsidiaries, taken as a whole, or (iii) a material adverse effect on
Maker's ability to perform in any material respect on a timely basis its
obligations under this Note.


                                       8
<PAGE>

            (g) Litigation. Except as set forth on Schedule 5(g) hereto, there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of Maker, threatened against or affecting Maker,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency and/or regulatory authority
(federal, state, county, local or foreign), including, but not limited to, the
Commission or any State Attorney General (collectively, an "Action") which (i)
adversely affects or challenges or could adversely affect or challenge the
legality, validity or enforceability of any of the Transaction Documents or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither Maker nor any Subsidiary, nor, to
the knowledge of Maker, any current director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
is not pending or, to the knowledge of Maker, contemplated, any investigation by
the Commission and/or other entity involving Maker or any current directors or
officers of Maker. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by Maker or any
Subsidiary under the Exchange Act or the Securities Act.

            (h) Labor Relations. No material labor dispute exists or, to the
knowledge of Maker, is imminent with respect to any of the employees of Maker
which could reasonably be expected to result in a Material Adverse Effect.

            (i) Compliance. Except as set forth in Schedule 5(i) hereto, neither
Maker nor any Subsidiary (a) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by Maker or any Subsidiary under), nor has
Maker or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (b) is in violation of any order of any court, arbitrator or
governmental body, or (c) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws applicable to its business, except in the
case of clauses (a), (b) and (c) as would not result in a Material Adverse
Effect.

            (j) Regulatory Permits. Maker and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such permits would
not have or reasonably be expected to result in a Material Adverse Effect
("Material Permits"), and neither Maker nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material
Permit.

            (k) Title to Assets. All property and assets owned by the Maker and
the Subsidiaries are owned outright free and clear of mortgages, pledges,
security interests, liens, charges and other encumbrances, except for (i) liens
for current taxes not yet due, (ii) minor imperfections of title, if any, not
material in amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations of the Maker or
(iii) set forth on Schedule 5(k) hereto.


                                       9
<PAGE>

            (l) Intellectual Property Rights.

                  (i) Maker and its Subsidiaries own, or possess adequate rights
            or licenses to use all trademarks, trademark applications, trade
            names, service marks, service mark registrations, service names,
            patents, patent applications, patent rights, copyrights, copyright
            applications, inventions, licenses, permits, approvals, governmental
            authorizations, know-how (including trade secrets and other
            unpatented and/or unpatentable proprietary and confidential
            information, systems or procedures) and other intellectual property
            rights (collectively, "Intellectual Property Rights") necessary to
            conduct their respective businesses as now conducted or proposed to
            be conducted. Maker's Intellectual Property Rights are valid and
            enforceable, and no registration relating thereto has lapsed,
            expired or been abandoned or cancelled or is the subject of
            cancellation or other adversarial proceedings, or is expected to
            expire or terminate within two years from the date of this Note, and
            all applications therefor are pending and in good standing. Maker
            and its Subsidiaries do not have any knowledge of any infringement
            by Maker or its Subsidiaries of Intellectual Property Rights of
            others, or of any such development of similar or identical trade
            secrets or technical information by others and no claim, action or
            proceeding has been made or brought against, or to Maker's
            knowledge, has been threatened against, Maker or its Subsidiaries
            regarding infringement of Intellectual Property Rights. All
            personnel, including employees, agents, consultants and contractors,
            who have contributed to or participated in the conception and
            development of Maker's Intellectual Property Rights have either (a)
            been a party to a "work for hire" arrangement or agreement with
            Maker or a Subsidiary, in accordance with federal or state law, that
            by its terms accords to Maker or a Subsidiary ownership of all
            tangible or intangible property thereby arising, or (b) have
            executed appropriate instruments of assignment in favor of Maker or
            a Subsidiary as assignee that by their terms validly convey to Maker
            or a Subsidiary complete and sole ownership of all tangible and
            intangible property thereby arising, and Maker and its Subsidiaries
            have taken other reasonable security measures to protect the
            secrecy, confidentiality and value of all of their Intellectual
            Property Rights.

                  (ii) Neither Maker nor any Subsidiary is in default under or
            in violation of (and no event has occurred that has not been waived
            that, with notice or lapse of time or both, would result in a
            default by Maker or any Subsidiary under), nor has Maker or any
            Subsidiary received notice of a claim that it is in default under or
            that it is in violation of, any license agreement, collaboration
            agreement, development agreement or similar agreement relating to
            their respective businesses.


                                       10
<PAGE>

            (m) Transactions With Affiliates and Employees. Except as set forth
on Schedule 5(m), none of the officers, directors, employees and/or affiliates
of Maker or the Subsidiaries is a party to any transaction with Maker or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director employee or such affiliate or, to the knowledge of Maker, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee, partner or affiliate other than (a) for
payment of salary or consulting fees for services rendered, (b) reimbursement
for expenses incurred on behalf of Maker and (c) for other employee benefits,
including stock option agreements under any stock option plan of Maker, which in
the aggregate (for the total amount in (a), (b) and (c) combined) does not
exceed the amount of $5,000 for any officer, director, employee or affiliate.

            (n) Disclosure Controls and Procedures; Internal Accounting
Controls. The management of Maker has (i) designed disclosure controls and
procedures to ensure that material information relating to Maker, including its
Subsidiaries, is made known to the management of Maker by others within those
entities, and (ii) has disclosed, based on its most recent evaluation, to
Maker's outside auditors and the audit committee of the Board of Directors (A)
any significant deficiencies in the design or operation of internal controls
which could adversely affect Maker's ability to record, process, summarize and
report financial data and have identified for Maker's outside auditors any
material weaknesses in internal controls and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Maker's internal controls. Maker and each of its Subsidiaries maintains
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

            (o) Listing and Maintenance Requirements. Maker is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all listing and maintenance requirements of the trading market
on which the Common Stock is traded.

            (p) Tax Status. Maker and each of its Subsidiaries has made or filed
all foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, and has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations
or to Maker's knowledge otherwise due and payable, except those being contested
in good faith and has set aside on its books reserves in accordance with GAAP
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of Maker know of no basis for any such claim.

            (q) Right of First Refusal; Anti-Dilution Right. Except as set forth
on Schedule 5(q), no person is a party to any agreement, contract or
understanding, written or oral entitling such party to (i) a right of first
refusal or (ii) purchase or otherwise receive any securities of Maker, at any
time, in each case with respect to offerings of securities by Maker.


                                       11
<PAGE>

            (r) Insurance. Each of Maker and its Subsidiaries maintain insurance
of the types and in the amounts deemed adequate for its business, including, but
not limited to, product liability insurance, insurance covering real and
personal property owned or leased by Maker and its subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.

            (s) Environmental. Maker and each of its Subsidiaries is, to the
best of its knowledge, in compliance with all applicable published rules and
regulations (and applicable standards and requirements) of the United States
Environmental Protection Agency (the "EPA") and of any similar foreign or state
agency. There is no suit, claim, action or proceeding now pending before any
court, governmental agency or board, or other forum, nor is any of the same
threatened by any Person; and, there is no fact or circumstance actually known
to Maker which could reasonably be anticipated to be the basis for any such
suit, claim, action or proceeding, for (i) noncompliance by Maker with any
environmental law, rule, regulation or requirement, or (ii) relating to the
release or threatened release into the environment by Maker of any pollutant,
toxic or hazardous material, oil, or waste generated by Maker. Maker has not
released any Hazardous Materials (as hereinafter defined) at any site owned or
leased by Maker or shipped any Hazardous Materials for treatment, storage or
disposal at any other site of facility. For purposes of this Section 5(s),
"Hazardous Materials" shall mean and include any solid, hazardous or toxic
waste, substance or material as defined in the United States Resource
Conservation and Recovery Act; the Clean Air Act; the Clean Water Act; the Toxic
Substances Control Act; the Comprehensive Environmental Response, Compensation
and Liability Act; applicable foreign and state laws for the protection of the
environment, and the regulations promulgated under any of the foregoing.

            (t) Conduct of Business. Except as set forth on Schedule 5(t)
hereto, since December 31, 2003, Maker has not (a) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, except current liabilities incurred in the usual and
ordinary course of business, having a Material Adverse Effect, (b) made or
suffered any changes in its contingent obligations by way of guaranty,
endorsement (other than the endorsement of checks for deposit in the usual and
ordinary course of business), indemnity, warranty or otherwise, (c) discharged
or satisfied any liens other than those securing, or paid any obligation or
liability other than, current liabilities shown on the balance sheet dated as at
December 31, 2003, and forming part of the SEC Documents, and current
liabilities incurred since December 31, 2003, in each case in the usual and
ordinary course of business, (d) mortgaged, pledged or subjected to lien any of
its assets, tangible or intangible, (e) sold, transferred or leased any of its
assets except in the usual and ordinary course of business, (f) cancelled or
compromised any debt or claim, or waived or released any right, of material
value, (g) suffered any physical damage, destruction or loss (whether or not
covered by insurance) adversely affecting the properties or business of Maker,
(h) entered into any transaction other than in the usual and ordinary course of
business except for this Note and the related agreements referred to herein, (i)
encountered any labor difficulties or labor union organizing activities, (j)
made or granted any wage or salary increase or entered into any employment
agreement, (k) issued or sold any shares of capital stock or other securities or
granted any options with respect thereto, or modified any equity security of
Maker, (l) declared or paid any dividends on or made any other distributions
with respect to, or purchased or redeemed, any of its outstanding equity
securities, (m) suffered or experienced any change in, or condition affecting,
its condition (financial or otherwise), properties, assets, liabilities,
business operations or results of operations other than changes, events or
conditions in the usual and ordinary course of its business, having (either by
itself or in conjunction with all such other changes, events and conditions) a
Material Adverse Effect, (n) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization policies or
rates theretofore adopted, or (o) entered into any agreement or otherwise
obligated itself, to do any of the foregoing.


                                       12
<PAGE>

            (u) Conversion Securities. The equity securities issuable upon
conversion of this Note and the exercise of the Warrant, when issued in
compliance with the provisions of this Note (assuming the holder of this Note
converts this Note into equity securities) or the Warrant, as applicable, will
be duly authorized and validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances created by Maker.

            (v) Registration. The execution, issuance or delivery of the
Transaction Documents or the issuance and sale of the securities of the Maker
issuable upon conversion of the Notes will be exempt from registration under the
Securities Act.

      6. COVENANTS.

            (a) Until the latter to occur of: (A) the one year anniversary of
the date of execution of this Note or (B) the date on which this Note no longer
is outstanding,

            (i) Maintaining Properties, Assets. Maker shall reasonably maintain
in good repair, working order and condition its properties and other assets, and
those of any Subsidiary, and from time to time make all reasonably necessary
repairs, renewals and replacements thereto.

            (ii) No Transfer of Intellectual Property. Maker shall not, and
shall not permit any of its Subsidiaries, to transfer any of its Intellectual
Property Rights to any affiliate or third party without the written consent of
Payee. For avoidance of doubt, Maker shall not be restricted from selling
products and/or non exclusive licenses based on its Intellectual Property in the
Maker's ordinary course of business and consistent with past practice.

            (iii) Liens. Maker shall not, and shall not permit any of its
Subsidiaries to, create, incur or suffer to exist any security interests, liens,
claims or encumbrances ("Liens") upon any of its or its Subsidiaries' assets or
properties, except for (i) Liens created by operation of law such as
materialmen's liens, mechanic's liens and other similar Liens; (ii) deposits,
pledges or Liens securing obligations incurred in respect of workers'
compensation, unemployment insurance or other forms of governmental insurance or
benefits; (iii) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or that are being contested in good faith by
appropriate proceedings with the establishment of adequate reserves on the
balance sheet of Maker; or (iv) Liens in existence as of the date hereof as set
forth on Schedule 6(c) hereto (collectively, the "Permitted Liens").

            (iv) Extraordinary Actions. The Maker shall not nor shall it permit
any Subsidiary to: (i) make or approve any changes in accounting methods or
policies (other than as required by GAAP), (ii) incur any indebtedness for
borrowed money, unless payment of such indebtedness is subordinated to the
payment of this Note pursuant to a subordination agreement to be entered into
which shall be satisfactory to Payee, (iii) sell or otherwise transfer any
material assets or rights of the Maker or a Subsidiary or enter into any
contract or agreement relating to the sale of assets, (iv) enter into any
contract, agreement or transaction with any officer, director, stockholder or
affiliate of the Maker or a Subsidiary other than ordinary course transactions
that are consistent with past practice and pursuant to arms length terms, (v)
directly or indirectly pay or declare any dividend or make any distribution
upon, redeem, retire or repurchase or otherwise acquire, any shares of capital
stock or other securities of the Maker or a Subsidiary, (vi) acquire or dispose
(whether in a single transaction or series of transactions) any business (or any
material part of any business) or any shares or interests in any subsidiary of
Maker (except for transactions in which the consideration (including assumed
debt) does not exceed in the aggregate on an annual basis more than 20% of the
Maker's total assets measured at the beginning of each fiscal year), (vii) enter
into any partnership, joint venture or merger with any other person or party,
(viii) incur a capital expenditure in excess of $20,000 (except for capital
expenditures that are required to be made by the Maker pursuant to agreements
that are in effect as of the date hereof) or (ix) materially change the Maker's
line of business as currently conducted.


                                       13
<PAGE>

            (b) For so long as this Note, the Warrant or any Registrable
Securities remain outstanding,

            (i) Non-Public Information. Maker covenants and agrees that neither
it nor any other person acting on its behalf will provide Payee or its agents or
counsel with any information that Maker believes constitutes material non-public
information, and, in any event, Maker hereby agrees that Payee shall not have
any duty of confidentiality or any other obligation with respect to any such
information if any such disclosure occurs, subject to such Payee complying with
all applicable securities laws.

            (ii) Form D and Blue Sky. If required, Maker shall file a Form D
with respect to the issuance of the Notes (or the issuance of Common Stock or
other equity securities upon conversion of this Note) as required under
Regulation D under the Securities Act and, upon written request, provide a copy
thereof to Payee promptly after such filing. Maker shall take such action as
Maker shall reasonably determine is necessary in order to obtain an exemption
for or to qualify the Note for sale to Payee pursuant to this Note (or the
issuance of Common Stock or other equity securities upon conversion of this
Note) under applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to Payee promptly
after such filing.

            (iii) Reservation of Common Stock. As of the date hereof, Maker has
reserved and Maker shall continue to reserve and keep available at all times,
free of preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling Maker to issue the Shares upon conversion of this Note and
the full exercise of the Warrant.

            (iv) Listing of Common Stock. Maker hereby agrees to maintain the
listing and trading of the Common Stock on its current trading market, and to
file with the trading market to list the applicable shares of Common Stock
issuable in connection herewith on the trading market. Maker further agrees, if
Maker applies to have the Common Stock traded on any other trading market, it
will include in such application the shares of Common Stock issuable in
connection herewith and will take such other action as is necessary or desirable
in the opinion of Payee to cause such shares to be listed on such other trading
market as promptly as possible. Maker will take all action necessary to continue
the listing and trading of its Common Stock on its current trading market and
will comply in all material respects with Maker's reporting, filing and other
obligations under the bylaws or rules of the trading market.


                                       14
<PAGE>

            (v) Furnishing of Information. Maker covenants and agrees to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by Maker after the date hereof
pursuant to the Exchange Act. Until the later of the date Payee no longer owns
this Note, the Warrant or any Registrable Securities, if Maker is not required
to file reports pursuant to the Exchange Act, it will prepare and furnish to
Payee and make publicly available in accordance with Rule 144(c) such
information as is required for Payee to sell its shares of Common Stock under
Rule 144. Maker further covenants and agrees that it will take such further
action as Payee may reasonably request, all to the extent required from time to
time to enable such person to sell any shares of Common Stock without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.

            (vi) Shareholders Rights Plan. No claim will be made or enforced by
Maker or any other person that Payee is an "Acquiring Person" under any
shareholders rights plan or similar plan or arrangement in effect or hereafter
adopted by Maker, or that Payee could be deemed to trigger the provisions of any
such plan or arrangement, by virtue of receiving Registrable Securities under
this Note or under any other agreement between Maker and Payee.

            (vii) Reporting Obligations. Maker shall continue to file or furnish
pursuant to the Exchange Act or the Securities Act, and Maker shall use
commercially reasonable best efforts to maintain its status as an issuer
required to file such reports under the Exchange Act. In addition, Maker shall
take all actions necessary to continue to meet the "registrant eligibility"
requirements set forth in the general instructions to Form SB-2 or any successor
form thereto, to continue to be eligible to register the resale of the Shares
under the Securities Act on such Form.

      7. EVENTS OF DEFAULT. The following are "Events of Default" hereunder:

            (a) any failure by Maker to pay when due all or any principal or
accrued interest hereunder;

            (b) any representation or warranty made by or on behalf of Maker in
this Note or the Warrant proves to have been incorrect, false or misleading in
any material respect on the date of which made;

            (c) any failure by Maker to perform any covenant or agreement under
this Note, the Security Agreements, the Warrant or any other agreement, document
or instrument contemplated hereby or thereby and such failure shall remain
uncured for a period of five (5) days after receipt by Maker of written notice
of such failure from Payee;

            (d) if Maker or any subsidiary of Maker shall (i) apply for or
consent to the appointment of a receiver, trustee, custodian or liquidator or
any of its property, (ii) admit in writing its inability to pay its debts as
they mature, (iii) make a general assignment for the benefit of creditors, (iv)
be adjudicated bankrupt or insolvent or be the subject of an order for relief
under Title 11 of the United States Bankruptcy Code, (v) file a voluntary
petition in bankruptcy or a petition for bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law and such petition or proceeding shall remain undismissed or unstayed
for thirty (30) days, or (vi) take or permit to be taken any action in
furtherance of or for the purpose of effecting any of the foregoing;


                                       15
<PAGE>

            (e) any dissolution, liquidation or winding up of Maker or any
substantial portion of its business;

            (f) any cessation of operations by Maker or Maker is otherwise
generally unable to pay its debts as such debts become due;

            (g) the failure by Maker 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);

            (h) the merger, consolidation or reorganization of Maker with or
into another corporation or person or entity (other than with or into a
wholly-owned subsidiary), or the sale of capital stock of Maker by Maker or the
holders thereof, in any case under circumstances in which the holders of a
majority of the voting power of the outstanding capital stock of Maker
immediately prior to such transaction shall own less than a majority in voting
power of the outstanding capital stock of Maker or the surviving or resulting
corporation or other entity, as the case may be, immediately following such
transaction.

            (i) if a default with respect to payment of indebtedness of $20,000
or more occurs under any other loan agreement, note or other instrument or
evidence of indebtedness of Maker or its subsidiaries and continues beyond any
applicable grace period therein provided; or

            (j) final, non-appealable judgments for the payment of money, which
judgments in the aggregate exceed $20,000, shall be rendered against Maker or
its subsidiaries by a court of competent jurisdiction.

provided, however, that with respect to any Event of Default (other than under
Section 7(a) (with respect to payment of principal), 7(d), 7(e) or 7(h)), the
Maker shall give the Payee written notice of any such event (within forty-eight
(48) hours of its occurrence) and, upon giving such notice, the Maker shall have
ten (10) business days to cure such Event of Default; in the event that Maker
fails to give written notice of the occurrence of such event, the Maker shall
have no opportunity to cure such default (unless separately consented to by
Payee); provided, further however with respect to any Event of Default under
Section 7(a) (with respect to payment of principal), 7(d), 7(e) or 7(h), the
Maker shall give the Payee notice immediately upon such occurrence and there
shall be no opportunity to cure such default.

      8. REMEDIES ON DEFAULT. If any Event of Default shall occur and be
continuing, then the entire principal and all accrued interest under this Note
shall, at the option of Payee (except in the case of an Event of Default under
Section 7(d) or 7(e) above, in which event acceleration shall be automatic),
become immediately due and payable, without notice or demand. Notwithstanding
anything contained herein to the contrary, upon an Event of Default: (a) all
outstanding principal shall be repaid at a premium equal to 120% of the
outstanding principal balance and (b) for each 30 day period (or fraction
thereof) commencing on the occurrence of an Event of Default and ending on the
date on which all amounts due under this Note are paid back in full, the Maker
shall issue to the Payee shares of Common Stock having a value equal to $500
(based on a price per share equal to the then current Conversion Price) (such
premium and issuance of shares shall be considered as liquidated damages and not
as a penalty and shall be in addition to and not in lieu of any interest, late
fees, penalties or other amounts due hereunder).


                                       16
<PAGE>

      9. SENIORITY. The payment of this Note shall be senior to all obligations
of Maker, whether now existing or hereinafter incurred, other than those set
forth on Schedule 9(a) hereto.

      10. USE OF PROCEEDS. Maker covenants and agrees that all of the net
proceeds that it receives from the sale of the Notes, although distributed,
allocated and expended by Maker in its sole discretion, shall be used for
working capital and general corporate purposes.

      11. CERTAIN WAIVERS. Except as otherwise expressly provided in this Note,
Maker hereby waives diligence, demand, presentment for payment, protest,
dishonor, nonpayment, default and notice of any and all of the foregoing.

      12. NO IMPAIRMENT. Maker will not, by amendment of its articles of
incorporation, bylaws, or through reorganization, consolidation, merger,
dissolution, sale of assets, or another voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Note, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of Payee against impairment.

      13. AMENDMENTS. This Note may not be changed orally, but only by an
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.

      14. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. THIS NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK; PROVIDED HOWEVER, AT PAYEE's SOLE ELECTION, THE ENFORCEMENT OF THE MAKER'S
OBLIGATIONS HEREUNDER WITH RESPECT TO ASSETS LOCATED IN ISRAEL MAY BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ISRAEL. MAKER
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT (EXCEPT FOR THE ENFORCEMENT OF ANY JUDGEMENT IN
THE STATE OF ISRAEL WHICH THE MAKER HEREBY CONSENTS TO THE JURISDICTION OF A
COURT OF COMPETENT JURISDICTION IN THE STATE OF ISRAEL), AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS
NOTE OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS NOTE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. MAKER HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OR
COLLECTION OF THIS NOTE.


                                       17
<PAGE>

      15. NOTICES. All notices and communications shall be in writing and shall
be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

            If to Maker:       Technoprises Ltd.
                               Raoul Wallenberg 12
                               Ramat Hachayal, Tel Aviv 69719
                               Israel
                               Fax: 972-3-6444-207
                               Attn: Adam Ofek

            with a copy to:    Bach, Arad, Scharf & Co.
                               2 Hashlom Road
                               Tel-Aviv 67892
                               Israel
                               Fax: 011-972-356-25304
                               Attn: Udi Arad

            If to Payee:       DCOFI Master LDC
                               c/o 830 Third Avenue, 14th Floor
                               New York, New York 10022

      16. TRANSACTION AND ENFORCEMENT COSTS. In the event that Payee shall,
after the occurrence and during the continuance of an Event of Default (and
provided that Payee shall be permitted, at such time, to enforce its rights
hereunder and retain payments received hereunder), turn this Note over to an
attorney for collection, Maker shall further be obligated to Payee for Payee's
reasonable attorneys' fees and expenses incurred in connection with such
collection as well as any other reasonable costs incurred by Payee in connection
with the collection of all amounts due hereunder.

      17. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon notice by Payee
to Maker of the loss, theft, destruction or mutilation of this Note, and upon
surrender and cancellation of this Note, if mutilated, Maker, as its expense,
will make and deliver a new note of like tenor, in lieu of this Note.


                                       18
<PAGE>

      18. SUCCESSORS AND ASSIGNS. This Note and the obligations and rights of
Maker hereunder, shall be binding upon and inure to the benefit of Maker, the
holder of this Note, and their respective successors and assigns. This Note is
assignable by Payee to any other person or entity without the consent of Maker.

      19. SEVERABILITY. In the event that any provision of this Note becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Note will continue in full force and effect without said provision
and the parties agree to replace such provision with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such provisions; provided, however, that no such severability
will be effective against a party if it materially and adversely changes the
economic benefits of this Note to such party.

      20. FURTHER ASSURANCES. Maker and its agents shall each cooperate with
Payee and use (or cause its agents to use) its best efforts to promptly (i) take
or cause to be taken all necessary actions, and do or cause to be done all
things necessary, proper or advisable under this Note and applicable laws to
consummate and make effective all transactions contemplated by this Note as soon
as practicable following the request of Payee, and (ii) obtain all approvals
required to be obtained from any third party necessary, proper or advisable to
the transactions contemplated by this Note.

      21. USURY. Notwithstanding any provision to the contrary contained in this
Note, or any and all other instruments or documents executed in connection
herewith, Maker and Payee intend that the obligations evidenced by this Note
conform strictly to the applicable usury laws from time to time in force. If,
under any circumstances whatsoever, fulfillment of any provisions thereof or any
other document, at the time performance of such provisions shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity.

      22. INDEMNITY. Maker hereby agrees to defend, indemnify and hold Payee
harmless from and against all claims, damages, investigations, judgments,
penalties, costs and expenses (including attorneys' fees and court costs now or
hereafter arising from the aforesaid enforcement of this clause) arising
directly or indirectly from Maker or third parties with whom the Maker has a
contractual relationship, from the use of the proceeds of this Note, or arising
directly or indirectly from the violation of any rule, regulation, statute or
law, whether such claims are asserted by any governmental entity or any other
person.

             [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

<PAGE>

      IN WITNESS WHEREOF, Maker has duly caused this Note to be signed on its
behalf, in its company name and by its duly authorized officer as of the date
first set forth above.

                                        TECHNOPRISES LTD.

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

ACKNOWLEDGED BY:

DCOFI MASTER LDC


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


                                       19