THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE  HAVE  NOT  BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
     THE  SECURITIES  MAY NOT BE SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE
     ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT FOR THE  SECURITIES
     UNDER SAID ACT,  OR AN OPINION  OF  COUNSEL IN FORM,  SUBSTANCE  AND
     SCOPE  CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE  TRANSACTIONS
     THAT  REGISTRATION  IS NOT  REQUIRED  UNDER SAID ACT OR UNLESS  SOLD
     PURSUANT TO RULE 144 OR REGULATION S UNDER SAID ACT.

                        CALLABLE SECURED CONVERTIBLE NOTE

New York,, New York
_______, 2005                                                           $_______

                  FOR  VALUE  RECEIVED,  Astrata  Group  Incorporated,  a Nevada
corporation  (hereinafter called the "Borrower"),  hereby promises to pay to the
order of ___________ or registered assigns (the "Holder") the sum of $________ ,
on ___________, 200_ (the "Maturity Date"). Any amount of principal on this Note
which is not paid when due shall bear  interest  at the rate of fifteen  percent
(15%)  per annum  from the due date  thereof  until  the same is paid  ("Default
Interest").  All payments due hereunder (to the extent not converted into common
stock,  $0.0001 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. 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 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 October 7, 2005,  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  stockholders  of the  Borrower  and will not  impose
personal  liability  upon the holder  thereof.  The  obligations of the Borrower
under  this  Note  shall be  secured  by that  certain  Security  Agreement  and
Intellectual  Property  Security  Agreement,  each dated  October 7, 2005 by and
between the Borrower and the Holder.

<PAGE>

         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 on or prior to the earlier 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, the  Optional  Prepayment  Amount (as defined in
Section 5.1 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  (the  "Conversion  Price")
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 (including, without
limitation,  the  warrants  issued  by the  Borrower  pursuant  to the  Purchase
Agreement)  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  and  provided  further  that the  Holder  shall not be
entitled  to  convert  any  portion of this Note  during  any month  immediately
succeeding a Determination  Date on which the Borrower  exercises its prepayment
option  pursuant to Section 5.1 of this Note. 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,  and  Regulations  13D-G  thereunder,  except as otherwise  provided in
clause (1) of such  proviso.  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 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 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)  Default
Interest, if any, on the amounts referred to in the immediately preceding clause
(1) plus (3) at the Holder's option,  any amounts owed to the Holder pursuant to
Sections  1.3 and 1.4(g)  hereof or  pursuant  to Section  2(c) of that  certain
Registration  Rights  Agreement,  dated  as of  October  7,  2005,  executed  in
connection with the initial  issuance of this Note and the other Notes issued on
the Issue Date (the "Registration  Rights  Agreement").  The term "Determination
Date" means the last business day of each month after the Issue Date.

      1.2 Conversion Price.

                                       2
<PAGE>

            (a) Calculation of Conversion  Price.  The Conversion Price shall be
the lesser of (i) the Variable Conversion Price (as defined herein) and (ii) the
Fixed Conversion Price (as defined herein) (subject,  in each case, 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 the  Applicable  Percentage  (as defined  herein)  multiplied  by the
Market Price (as defined herein). "Market Price" means the average of the lowest
five (5)  Trading  Prices (as  defined  below) for the Common  Stock  during the
twenty  (20)  Trading  Day period  ending one  Trading Day prior to the date the
Conversion  Notice is sent by the  Holder to the  Borrower  via  facsimile  (the
"Conversion Date").  "Trading Price" means, for any security as of any date, the
intraday trading price on the  Over-the-Counter  Bulletin Board (the "OTCBB") as
reported  by  a  reliable  reporting  service  ("Reporting   Service")  mutually
acceptable  to  Borrower  and Holder and  hereafter  designated  by Holders of a
majority in interest of the Notes and the  Borrower  or, if the OTCBB is not the
principal  trading market for such security,  the intraday trading price of such
security  on the  principal  securities  exchange or trading  market  where such
security is listed or traded or, if no intraday  trading  price of such security
is  available  in any of the  foregoing  manners,  the  average of the  intraday
trading  prices of any market  makers for such  security  that are listed in the
"pink  sheets" by the Pink Sheets LLC. 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  traded  for any  period  on the  OTCBB,  or on the  principal
securities exchange or other securities market on which the Common Stock is then
being traded.  "Applicable  Percentage"  shall mean 60.0%. The "Fixed Conversion
Price"  shall  mean  $2.50.  Notwithstanding  anything  contained  herein to the
contrary,  the  Conversion  Price  shall be not less  than  the  product  of the
Applicable  Percentage multiplied by the Initial Market Price, which product may
be subject to the provisions of Section 1.6 hereof.

            (b)  Conversion  Price During Major  Announcements.  Notwithstanding
anything contained in Section 1.2(b) 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(b). 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

                                       3
<PAGE>

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.

      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  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 and the other Notes  issued  pursuant to the Purchase  Agreement.  The
Borrower is required at all times to have  authorized and reserved two times the
number of shares that is actually  issuable  upon full  conversion  of the Notes
(based  on the  Conversion  Price  of the  Notes  or the  Exercise  Price of the
Warrants  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  4(h) 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.

      If, at any time a Holder of this Note submits a Notice of Conversion,  and
the Borrower does not have  sufficient  authorized but unissued shares of Common
Stock  available to effect such  conversion in accordance with the provisions of
this Article I (a  "Conversion  Default"),  subject to Section 4.8, the Borrower
shall  issue to the  Holder  all of the  shares of Common  Stock  which are then
available to effect such  conversion.  The portion of this Note which the Holder
included in its  Conversion  Notice and which  exceeds the amount  which is then
convertible  into available  shares of Common Stock (the "Excess Amount") shall,
notwithstanding  anything to the contrary  contained herein,  not be convertible
into Common Stock in accordance with the terms hereof until (and at the Holder's
option  at any time  after)  the date  additional  shares  of  Common  Stock are
authorized  by the  Borrower  to  permit  such  conversion,  at  which  time the
Conversion  Price in respect  thereof shall be the lesser of (i) the  Conversion
Price on the Conversion  Default Date (as defined below) and (ii) the Conversion
Price on the  Conversion  Date  thereafter  elected  by the  Holder  in  respect
thereof. In addition, the Borrower shall pay to the Holder payments ("Conversion
Default  Payments") for a Conversion Default in the amount of (x) the sum of (1)
the then outstanding principal amount of this Note plus (2) Default Interest, if
any, on the amounts referred to in clause (1), multiplied by (y) .24, multiplied
by (z) (N/365),  where N = the number of days from the day the holder  submits a
Notice of  Conversion  giving  rise to a  Conversion  Default  (the  "Conversion
Default  Date")  to the  date  (the  "Authorization  Date")  that  the  Borrower
authorizes a sufficient number of shares of Common Stock to effect conversion of
the full outstanding principal balance of this Note.

                                       4
<PAGE>

The Borrower  shall use its best  efforts to  authorize a  sufficient  number of
shares of Common Stock as soon as practicable  following the earlier of (i) such
time that the  Holder  notifies  the  Borrower  or that the  Borrower  otherwise
becomes  aware  that there are or likely  will be  insufficient  authorized  and
unissued shares to allow full conversion thereof and (ii) a Conversion  Default.
The Borrower shall send notice to the Holder of the  authorization of additional
shares  of Common  Stock,  the  Authorization  Date and the  amount of  Holder's
accrued Conversion Default Payments. The accrued Conversion Default Payments for
each calendar  month shall be paid in cash or shall be  convertible  into Common
Stock (at such time as there are sufficient  authorized  shares of Common Stock)
at the applicable Conversion Price, at the Borrower's option, as follows:

            (a) In the event Holder  elects to take such  payment in cash,  cash
payment  shall be made to Holder by the fifth  (5th) day of the month  following
the month in which it has accrued; and

            (b) In the event Holder elects to take such payment in Common Stock,
the Holder may convert such payment  amount into Common Stock at the  Conversion
Price (as in effect at the time of  conversion)  at any time after the fifth day
of the month  following the month in which it has accrued in accordance with the
terms  of this  Article  I (so  long as there  is then a  sufficient  number  of
authorized shares of Common Stock).

      The Holder's election shall be made in writing to the Borrower at any time
prior to 6:00  p.m.,  New  York,  New York  time,  on the third day of the month
following the month in which  Conversion  Default  payments have accrued.  If no
election is made,  the Holder shall be deemed to have  elected to receive  cash.
Nothing  herein shall limit the Holder's  right to pursue actual damages (to the
extent in excess of the Conversion  Default Payments) for the Borrower's failure
to maintain a sufficient  number of authorized  shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

      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 or other  reasonable  means of  communication  dispatched  on the
Conversion  Date prior to 6:00 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 be
controlling and

                                       5
<PAGE>

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  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 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 two (2)
business days after such receipt  (and,  solely in the case of conversion of the
entire  unpaid  principal  amount  hereof,  surrender of this Note) (such second
business day being hereinafter referred to as the "Deadline") in accordance with
the terms hereof and the Purchase Agreement (including,  without limitation,  in
accordance with the requirements of Section 2(g) of the Purchase  Agreement that
certificates for shares of Common Stock issued on or after the effective date of
the  Registration  Statement  upon  conversion  of this Note  shall not bear any
restrictive legend).

            (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

                                       6
<PAGE>

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 6:00 p.m.,  New York,  New York time,  on such
date.

            (f)  Delivery of Common  Stock by  Electronic  Transfer.  In lieu of
delivering  physical  certificates  representing  the Common Stock issuable upon
conversion,  provided the  Borrower's  transfer  agent is  participating  in the
Depository  Trust Company ("DTC") Fast Automated  Securities  Transfer  ("FAST")
program,  upon request of the Holder's  broker and the Holder's  compliance with
the  provisions  contained  in Section 1.1 and in this Section 1.4, the Borrower
shall  use its  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
Agent Commission ("DWAC") system.

            (g) Failure to Deliver  Common Stock Prior to  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 more than two (2) business
days after 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 $500 per day in cash,  for each day beyond the
Deadline that the Borrower fails to deliver such Common Stock.  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.

      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 as contemplated by the Registration Rights Agreement 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:

                                       7
<PAGE>

     "THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE  NOT  BEEN
     REGISTERED  UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED.  THE
     SECURITIES  MAY NOT BE SOLD,  TRANSFERRED OR ASSIGNED IN THE ABSENCE
     OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
     ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY
     FOR   OPINIONS   OF  COUNSEL  IN   COMPARABLE   TRANSACTIONS,   THAT
     REGISTRATION  IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO
     RULE 144 OR REGULATION S UNDER SAID ACT."

      The legend set forth above shall be removed and the  Borrower  shall issue
to the Holder a new certificate  therefor 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 Common Stock
may be made  without  registration  under the Act and the  shares are so sold or
transferred,  (ii) such Holder  provides the Borrower or its transfer agent with
reasonable  assurances  that the Common Stock  issuable upon  conversion of this
Note (to the extent such securities are deemed to have been acquired on the same
date) can be sold  pursuant to Rule 144 or (iii) 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.
Nothing  in this  Note  shall  (i) limit  the  Borrower's  obligation  under the
Registration Rights Agreement or (ii) affect in any way the Holder's obligations
to comply with applicable  prospectus  delivery  requirements upon the resale of
the securities referred to herein.

      1.6 Effect of Certain Events.

            (a) Effect of Merger,  Consolidation,  Etc.  Except as  permitted by
Sections  4(e)  and  4(j)  of  the  Securities  Purchase  Agreement,  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, at the option of the Holder,  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

                                       8
<PAGE>

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
effect 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  stockholders  to approve,  or if there is no such record
date,  the  consummation  of, such  merger,  consolidation,  exchange of shares,
recapitalization,  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 stockholders
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 stockholders 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 stockholders entitled to such Distribution.

      Reserved.

      (d)  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 and other  than for fair  consideration  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.

                                       9
<PAGE>

      (e) 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  of  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 Reserved.

      1.8 Status as Stockholder.  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.

                         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 stockholders'  rights plan which
is approved by a majority of the Borrower's disinterested directors.

                                       10
<PAGE>

      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 or suffer to exist any liability for borrowed  money,  except (a)
borrowings  in  existence  or  committed  on the date  hereof  and of which  the
Borrower  has  informed  Holder  in  writing  prior  to  the  date  hereof,  (b)
indebtedness  to trade  creditors  or  financial  institutions  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,  except as prescribed in sections 4.e.
and 4.j. of the Securities Purchase Agreement,  sell, lease or otherwise dispose
of any  significant  portion  of its  assets  outside  the  ordinary  course  of
business,  without first obtaining the Holder's written  consent,  which consent
shall not be  unreasonably  denied,  withheld  or  delayed.  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 $50,000.

      2.6  Contingent  Liabilities.  So  long as the  Borrower  shall  have  any
obligation under this Note, the Borrower shall not, without the Holder's written
consent, which shall not be unreasonably withheld,  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  and except
assumptions,  guarantees,  endorsements  and  contingencies  (a) in existence or
committed  on the date  hereof and which the  Borrower  has  informed  Holder in
writing prior to the date hereof,  and (b) similar  transactions in the ordinary
course of business.

                         ARTICLE III. EVENTS OF DEFAULT

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

                                       11
<PAGE>

      3.1 Failure to Pay  Principal.  The  Borrower  fails to pay the  principal
hereof  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 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 (for a period of at least sixty
(60) days, if such failure is solely as a result of the  circumstances  governed
by  Section  1.3 and the  Borrower  is using its best  efforts  to  authorize  a
sufficient  number of shares of Common Stock as soon as  practicable),  fails to
transfer  or  cause  its  transfer  agent  to  transfer  (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 or the Registration  Rights Agreement,  or fails to remove
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 the  Registration  Rights  Agreement  (or  makes any  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
announcement,  statement  or threat  not to honor its  obligations  shall not be
rescinded  in  writing)  for ten (10) days  after the  Borrower  shall have been
notified thereof in writing by the Holder;

      3.3  Failure  to Timely  File  Registration  or Effect  Registration.  The
Borrower fails to file the Registration  Statement  within  forty-five (45) days
following  the Closing  Date (as defined in the  Purchase  Agreement)  or obtain
effectiveness  with the Securities and Exchange  Commission of the  Registration
Statement  within one hundred and five (105) days following the Closing Date (as
defined in the Purchase  Agreement)  or such  Registration  Statement  lapses in
effect (or sales  cannot  otherwise  be made  thereunder  effective,  whether by
reason of the Borrower's failure to amend or supplement the prospectus  included
therein in accordance with the  Registration  Rights Agreement or otherwise) for
more than ten (10)  consecutive  days or twenty  (20) days in any  twelve  month
period after the Registration Statement becomes effective;

      3.4 Breach of Covenants.  The Borrower  breaches any material  covenant or
other  material term or condition  contained in Sections 1.3, 1.6 or 1.7 of this
Note, or Sections 4(c), 4(e),  4(h),  4(i), 4(j) or 5 of 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 and the  Registration
Rights  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,
the Purchase Agreement or the Registration Rights Agreement;

      3.6 Receiver or Trustee.  The Borrower or any  subsidiary  of the Borrower
shall make an assignment  for the benefit of creditors,  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;  provided,  however, that if a receiver or trustee has been appointed
but is discharged within forty-five (45) thereafter,  such appointment shall not
constitute an Event of Default;

                                       12
<PAGE>

      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 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;  provided,  however,  that if such  proceedings have
been  instituted  against the  Borrower but  dismissed  within  forty-five  (45)
thereafter, such occurrence shall not constitute an Event of Default;

      3.9  Delisting of Common  Stock.  The Borrower  shall fail to maintain the
listing of the Common  Stock on any of the Nasdaq  National  Market,  the Nasdaq
SmallCap Market, the New York Stock Exchange,  or the American Stock Exchange or
shall fail to file its periodic  reports in accordance with the  requirements of
the Securities  Exchange Act of 1934, as amended,  such that its common stock no
longer  qualifies  to be  quoted  on  the  OTCBB  or an  equivalent  replacement
quotation medium; or

      3.10 Default  Under Other  Notes.  An Event of Default has occurred and is
continuing  under  any  of the  other  Notes  issued  pursuant  to the  Purchase
Agreement,

then,  upon the occurrence and during the  continuation  of any Event of Default
specified in Section 3.1,  3.2,  3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
of  the  Holders  of a  majority  of  the  aggregate  principal  amount  of  the
outstanding Notes issued pursuant to the Purchase Agreement  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 in Section
3.6 or 3.8, the Notes 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 the  greater of (i) 130% times the then  outstanding  principal
amount of this Note (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 or
pursuant  to  Section  2(c)  of the  Registration  Rights  Agreement  (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) 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
Closing  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

                                       13
<PAGE>

other rights and remedies  available at law or in equity.  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.  Notwithstanding  anything to the contrary
contained herein, in the Purchase  Agreement,  or in any other agreement between
the parties hereto in respect of any of the transactions  contemplated hereby or
thereby,  no default in the payment of principal or interest due hereunder shall
be deemed an Event of Default unless and until written notice thereof shall have
been provided in writing by the Holder to the Maker and,  through the expiration
of the 45-day period immediately  thereafter,  the Maker shall not have tendered
to the Holder all of such  unpaid  principal  payment and any accrued and unpaid
interest  due  concurrently  with  such  principal  payment.  Further,  upon the
expiration of such 45-day  period,  if uncured,  such Event of Default shall not
act as any  cross-default in respect of any other Callable  Secured  Convertible
Note of the Maker in favor of any person or entity  that  purchased  the same in
the transactions contemplated by the Purchase Agreement.

                           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.  Any notice herein required or permitted to be given shall be
in  writing  and may be  personally  served or  delivered  by courier or sent by
United  States  mail and  shall be deemed to have been  given  upon  receipt  if
personally served (which shall include telephone line facsimile transmission) or
sent by courier or three (3) days after  being  deposited  in the United  States
mail, certified,  with postage pre-paid and properly addressed, if sent by mail.
For the  purposes  hereof,  the  address of the Holder  shall be as shown on the
records of the Borrower;  and the address of the Borrower  shall be 1801 Century
Park East, Suite 1830, Los Angeles,  CA 90067,  facsimile number:  310-226-8553.
Both the Holder and the  Borrower  may change the address for service by service
of written notice to the other as herein provided.

      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.

                                       14
<PAGE>

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

      4.6 Governing Law. THIS NOTE SHALL BE ENFORCED,  GOVERNED BY AND CONSTRUED
IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK  APPLICABLE TO AGREEMENTS
MADE AND TO BE  PERFORMED  ENTIRELY  WITHIN  SUCH STATE,  WITHOUT  REGARD TO THE
PRINCIPLES  OF CONFLICT OF LAWS.  THE BORROWER  HEREBY  SUBMITS TO THE EXCLUSIVE
JURISDICTION  OF THE UNITED STATES  FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK
WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES   IRREVOCABLY  WAIVE  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE
OF  PROCESS  UPON A PARTY  MAILED BY FIRST  CLASS  MAIL SHALL BE DEEMED IN EVERY
RESPECT  EFFECTIVE  SERVICE  OF  PROCESS  UPON THE  PARTY  IN ANY  SUCH  SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY  OTHER  MANNER   PERMITTED  BY  LAW.   BOTH  PARTIES   AGREE  THAT  A  FINAL
NON-APPEALABLE  JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER  JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL  MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE  ARISING  UNDER
THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES,  INCLUDING  ATTORNEYS'
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

      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),  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 Allocations of Maximum Share Amount and Reserved  Amount.  The Maximum
Share Amount and Reserved  Amount shall be allocated  pro rata among the Holders
of Notes based on the principal amount of such Notes issued to each Holder. Each
increase to the Maximum Share Amount and Reserved  Amount shall be allocated pro
rata among the Holders of Notes based on the principal amount of such Notes held
by each  Holder  at the time of the

                                       15
<PAGE>

increase in the Maximum Share Amount or Reserved  Amount.  In the event a Holder
shall sell or otherwise  transfer any of such Holder's  Notes,  each  transferee
shall be allocated a pro rata portion of such transferor's  Maximum Share Amount
and Reserved Amount.  Any portion of the Maximum Share Amount or Reserved Amount
which  remains  allocated  to any person or entity which does not hold any Notes
shall be  allocated  to the  remaining  Holders of Notes,  pro rata based on the
principal amount of such Notes then held by such Holders.

      4.9 Damages Shares. The shares of Common Stock that may be issuable to the
Holder  pursuant to Sections 1.3 and 1.4(g)  hereof and pursuant to Section 2(c)
of the  Registration  Rights  Agreement  ("Damages  Shares") shall be treated as
Common Stock issuable upon  conversion of this Note for all purposes  hereof and
shall be subject to all of the limitations and afforded all of the rights of the
other shares of Common Stock issuable  hereunder,  including without limitation,
the right to be included in the  Registration  Statement  filed  pursuant to the
Registration Rights Agreement.

      4.10  Denominations.  At the request of the Holder, upon surrender of this
Note, the Borrower  shall promptly issue new Notes in the aggregate  outstanding
principal amount hereof, in the form hereof,  in such  denominations of at least
$50,000 as the Holder shall request.

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

      4.12 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  stockholders  (and copies of proxy  materials and other  information
sent to stockholders). In the event of any taking by the Borrower of a record of
its stockholders for the purpose of determining stockholders who are entitled to
receive  payment of any dividend or other  distribution,  any right to subscribe
for, purchase or otherwise 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  stockholders  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
4.12.

      4.13  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

                                       16
<PAGE>

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.

                             ARTICLE V. CALL OPTION

      5.1 Call Option.  Notwithstanding  anything to the  contrary  contained in
this  Article V, so long as (i) no Event of Default  shall have  occurred and be
continuing,  (ii) the Borrower has a sufficient  number of authorized  shares of
Common Stock  reserved for issuance upon full  conversion of the Notes,  then at
any time after the Issue Date, and (iii) the Common Stock is trading at or below
$2.55 per share, the Borrower shall have the right, exercisable on not less than
ten (10)  Trading Days prior  written  notice to the Holders of the Notes (which
notice  may not be sent to the  Holders  of the  Notes  until  the  Borrower  is
permitted to prepay the Notes  pursuant to this Section  5.1),  to prepay all of
the  outstanding  Notes in  accordance  with this  Section  5.1.  Any  notice of
prepayment  hereunder  (an  "Optional  Prepayment")  shall be  delivered  to the
Holders of the Notes at their  registered  addresses  appearing on the books and
records of the Borrower and shall state (1) that the Borrower is exercising  its
right to prepay  all of the Notes  issued on the Issue  Date and (2) the date of
prepayment (the "Optional Prepayment Notice").  On the date fixed for prepayment
(the  "Optional  Prepayment  Date"),  the  Borrower  shall  make  payment of the
Optional  Prepayment  Amount  (as  defined  below)  to or upon the  order of the
Holders as  specified by the Holders in writing to the Borrower at least one (1)
business day prior to the Optional  Prepayment  Date. If the Borrower  exercises
its right to prepay the Notes, the Borrower shall make payment to the holders of
an amount in cash (the  "Optional  Prepayment  Amount") equal to either (i) 125%
(for prepayments occurring within thirty (30) days of the Issue Date), (ii) 130%
for  prepayments  occurring  between  thirty-one (31) and sixty (60) days of the
Issue Date, or (iii) 135% (for  prepayments  occurring after the sixtieth (60th)
day following the Issue Date), multiplied by the sum of (w) the then outstanding
principal amount of this Note plus (y) Default Interest,  if any, on the amounts
referred  to in clause (w) plus (z) any amounts  owed to the Holder  pursuant to
Sections 1.3 and 1.4(g)  hereof or pursuant to Section 2(c) of the  Registration
Rights Agreement (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 "Optional Prepayment Sum").  Notwithstanding notice
of an Optional Prepayment,  the Holders shall at all times prior to the Optional
Prepayment Date maintain the right to convert all or any portion of the Notes in
accordance with Article I and any portion of Notes so converted after receipt of
an Optional  Prepayment  Notice and prior to the  Optional  Prepayment  Date set
forth in such notice and payment of the  aggregate  Optional  Prepayment  Amount
shall be deducted from the principal amount of Notes which are otherwise subject
to  prepayment  pursuant to such notice.  If the  Borrower  delivers an Optional
Prepayment  Notice and fails to pay the  Optional  Prepayment  Amount due to the
Holders  of the Notes  within  two (2)  business  days  following  the  Optional
Prepayment  Date,  the Borrower  shall  forever  forfeit its right to redeem the
Notes pursuant to this Section 5.1.

                                       17
<PAGE>

      5.2  Partial  Call  Option.   Notwithstanding  anything  to  the  contrary
contained  in this  Article V, in the event that the Average  Daily Price of the
Common Stock,  as reported by the Reporting  Service,  for each day of the month
ending on any Determination Date is below the Initial Market Price, the Borrower
may, at its option,  prepay a portion of the outstanding principal amount of the
Notes equal to 104% of the principal  amount hereof  divided by thirty-six  (36)
plus one month's interest.  The term "Initial Market Price" means shall mean the
volume weighted  average price of the Common Stock for the five (5) Trading Days
immediately preceding the Closing which is $1.20.



                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       18
<PAGE>

      IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by its duly authorized officer this ___ day of ___________, 2005.

                                                ASTRATA GROUP INCORPORATED


                                                By:
                                                         -----------------------
                                                         Martin Euler
                                                         Chief Financial Officer


                                       19
<PAGE>




                                    EXHIBIT A

                              NOTICE OF CONVERSION
                    (To be Executed by the Registered Holder
                         in order to Convert the Notes)

      The undersigned hereby irrevocably elects to convert $__________ principal
amount of the Note (defined below) into shares of common stock, par value $.0001
per share ("Common Stock"), of Astrata Group Incorporated,  a Nevada corporation
(the  "Borrower")  according to the conditions of the  convertible  Notes of the
Borrower  dated as of  __________,  2005 (the  "Notes"),  as of the date written
below.  If  securities  are to be issued in the name of a person  other than the
undersigned,  the  undersigned  will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates.  No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. A copy of each
Note is attached hereto (or evidence of loss, theft or destruction thereof).

      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 Agent Commission  system ("DWAC
Transfer").

         Name of DTC Prime Broker:
                                  ----------------------------------------------
         Account Number:
                        --------------------------------------------------------

                  In lieu of receiving shares of Common Stock issuable pursuant
to this Notice of Conversion by way of a DWAC Transfer, 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:
              ------------------------------------------------------------------
         Address:
                 ---------------------------------------------------------------

      The  undersigned  represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Notes  shall be made  pursuant  to  registration  of the  securities  under  the
Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from
registration under the Act.

                  Date of Conversion:___________________________
                  Applicable Conversion Price:____________________
                  Number of Shares of Common Stock to be Issued Pursuant to
                  Conversion of the Notes:______________
                  Signature:___________________________________
                  Name:______________________________________
                  Address:____________________________________


                                       20