Exhibit 10.33

THIS  NOTE  HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE  "ACT"),  OR  APPLICABLE  STATE  SECURITIES  LAWS,  AND  MAY  NOT  BE SOLD,
TRANSFERRED,  PLEDGED  OR  HYPOTHECATED  IN  THE ABSENCE OF SUCH REGISTRATION OR
RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY
ACCEPTABLE  TO  THE  MAKER)  IN  THE  FORM,  SUBSTANCE  AND  SCOPE  REASONABLY
SATISFACTORY  TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
SUCH  STATE  SECURITIES  LAWS.



                             PEN INTERCONNECT, INC.

                           Convertible Promissory Note
                              due October  4, 2004



No.  CN-1                                                            $250,000.00
Dated:  October  4,  2001


     For  value  received,  PEN  INTERCONNECT,  INC.,  a  Utah  corporation (the
"Maker"), hereby promises to pay to the order of STONESTREET LIMITED PARTNERSHIP
(together  with  its  successors,  representatives,  and  permitted assigns, the
"Holder"),  in  accordance  with  the  terms hereinafter provided, the principal
amount  of  two  hundred  fifty  Thousand  Dollars  ($250,000.00), together with
interest  thereon.
All  payments  under  or  pursuant  to  this Note shall be made in United States
Dollars  in  immediately  available  funds  to  the Holder at the address of the
Holder  first set forth above or at such other place as the Holder may designate
from  time  to  time in writing to the Maker or by wire transfer of funds to the
Holder's  account, instructions for which are attached hereto as Exhibit A.  The
                                                                 ---------
outstanding  principal  balance of this Note shall be due and payable on October
4,  2004  (the "Maturity Date") or at such earlier time as provided herein. This
                -------------
Note  may  not  be  prepaid  by  the  Maker.

     Purchase  Agreement.  This Note has been executed and delivered pursuant to
the  Convertible  Note  Purchase  Agreement,  dated  as  of October 4, 2001 (the
"Purchase Agreement"), by and among the Maker and the Holder.  Capitalized terms
used and not otherwise defined herein shall have the meanings set forth for such
terms  in  the  Purchase  Agreement.
-Interest.  Beginning  on  the date hereof, the outstanding principal balance of
this  Note  shall  bear interest, in arrears, at a rate per annum equal to eight
percent  (8%), payable quarterly unless earlier converted or prepaid as provided
herein.  Interest  shall  be  computed  on the basis of a 360-day year of twelve
(12) 30-day months and shall accrue commencing on the issuance date of this Note
(the  "Issuance  Date").  The  interest  shall  be payable, at the option of the
Holder,  in cash or shares of the Maker's common stock, par value $.01 per share
(the  "Common  Stock");  provided,  that  if  the  Holder  elects to receive any
interest  in  Common  Stock,  the Maker shall issue to the Holder registered and
freely tradable shares of Common Stock.  The number of shares of Common Stock to
be  issued  as  payment  of  accrued  and unpaid interest shall be determined by
dividing  (a)  the  total  amount of accrued and unpaid interest to be converted
into  Common  Stock by the lesser of (i) $.02 and (ii) an amount equal to 70% of
the average Per Share Market Value (as defined in Section 3.2(b) hereof) for the
three (3) Trading Days (as defined in Section 4.13 hereof) having the lowest Per
Share  Market  Value  during  the thirty (30) Trading Days prior to the date the
interest  payment  is  due.  Furthermore,  upon  the  occurrence  of an Event of
Default (as defined in Section 2.1 hereof), then to the extent permitted by law,
the Maker will pay interest to the Holder, payable on demand, on the outstanding
principal  balance  of  the  Note  from  the  date of the Event of Default until
payment  in  full  at  the  rate  of  fifteen  percent  (15%)  per  annum.
Payment on Non-Business Days.  Whenever any payment to be made shall be due on a
Saturday,  Sunday  or  a public holiday under the laws of the State of New York,
such  payment  may  be  due  on  the  next succeeding business day and such next
succeeding  day  shall  be  included in the calculation of the amount of accrued
interest  payable  on  such  date.
-Transfer.  This  Note  may be transferred or sold, subject to the provisions of
Section  4.5  of  this  Note,  or  pledged, hypothecated or otherwise granted as
security  by  the  Holder.
-Replacement.  Upon  receipt of a duly executed, notarized and unsecured written
statement from the Holder with respect to the loss, theft or destruction of this
Note  (or  any  replacement  hereof), and without requiring an indemnity bond or
other security, or, in the case of a mutilation of this Note, upon surrender and
cancellation  of  such Note, the Maker shall issue a new Note, of like tenor and
amount,  in  lieu  of  such  lost,  stolen,  destroyed  or  mutilated  Note.

EVENTS  OF  DEFAULT;  REMEDIES
     -Events of Default.  The occurrence of any of the following events shall be
an  "Event of Default" under this Note: the Maker shall fail to make the payment
of  any  amount  of  principal  outstanding  on  the  date  such  payment is due
hereunder;  or the Maker shall fail to make any payment of interest for a period
of  five  (5)  days  after the date such interest is due;  or the failure of the
Registration  Statement  to be declared effective by the Securities and Exchange
Commission  ("SEC")  on  or  prior to the date which is one hundred twenty (120)
days  after  the  Filing Date (as defined in the Registration Rights Agreement);
or  the  suspension from listing or the failure of the Common Stock to be listed
on  the OTC Bulletin Board for a period of five (5) consecutive Trading Days; or
the  Maker's  notice  to the Holder, including by way of public announcement, at
any time, of its inability to comply (including for any of the reasons described
in  Section  3.8(a)  hereof) or its intention not to comply with proper requests
for conversion of this Note into shares of Common Stock; or the Maker shall fail
to (i) timely delivery the shares of Common Stock upon conversion of the Note or
any interest accrued and unpaid, (ii) timely file the Registration Statement (as
defined  in  the Registration Rights Agreement) or (iii) make the payment of any
fees  and/or  liquidated  damages under this Note, the Purchase Agreement or the
Registration  Rights Agreement, which failure in the case of items (i) and (iii)
of  this Section 2.1(f) is not remedied within seven (7) business days after the
incurrence  thereof;  or  while  the  Registration  Statement  is required to be
maintained effective pursuant to the terms of the Registration Rights Agreement,
the  effectiveness  of  the  Registration  Statement  lapses  for  any  reason
(including,  without limitation, the issuance of a stop order) or is unavailable
to  the  Holder  for  sale  of  the  Registrable  Securities  (as defined in the
Registration  Rights Agreement) in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period of ten
(10)  consecutive  Trading  Days,  provided  that  the  cause  of  such lapse or
                                   --------
unavailability  is  not  due  to factors solely within the control of Holder; or
default  shall  be  made  in  the performance or observance of (i) any covenant,
condition or agreement contained in this Note (other than as set forth in clause
(f)  of  this  Section 2.1) and such default is not fully cured within three (3)
business  days  after  the  occurrence  thereof  or  (ii) any material covenant,
condition  or  agreement contained in the Purchase Agreement or the Registration
Rights  Agreement  which  is not covered by any other provisions of this Section
2.1 and such default is not fully cured within seven (7) business days after the
occurrence  thereof;  or  any  material  representation  or warranty made by the
Maker  herein  or in the Purchase Agreement or the Registration Rights Agreement
shall prove to have been false or incorrect or breached in a material respect on
the  date  as  of which made; or the Maker shall issue any debt securities which
are  not subordinate to this Note on such terms as are acceptable to the Holders
of  a  majority  of  the outstanding principal amount of this Note and the other
Notes  purchased under the Purchase Agreement; or the consummation of any of the
following  transactions:  (i)  the  consolidation,  merger  or  other  business
combination  of  the  Maker  with  or  into  a  person or entity (other than (A)
pursuant  to  a migratory merger effected solely for the purpose of changing the
jurisdiction  of  incorporation  of  the Maker or (B) a consolidation, merger or
other  business  combination  in  which  holders  of  the  Maker's  voting power
immediately  prior  to  the  transaction continue after the transaction to hold,
directly  or  indirectly,  the  voting power of the surviving entity or entities
necessary to elect a majority of the members of the board of directors (or their
equivalent  if  other than a corporation) of such entity or entities), except if
in  the  case  of  a  consolidation  merger or other business combination of the
Maker, the Maker shall have given the Holder not less than fifteen (15) business
days  prior  written  notice  thereof  (the "Transaction Notice") and shall have
                                             ------------------
furnished  the  Holder with such information regarding the consolidation, merger
or other business combination (including, without limitation, the counterparties
thereto)  as  the  Holder  may  reasonably  request  in  order for the Holder to
determine  if  it  will  exercise  its  conversion rights hereunder prior to the
consummation  of  such consolidation, merger or other business combination; (ii)
the sale or transfer of all or substantially all of the Maker's assets; or (iii)
the  consummation of a purchase, tender or exchange offer made to the holders of
more  than  30%  of  the outstanding shares of Common Stock. The Maker shall (i)
default  in  any payment of any amount or amounts of principal of or interest on
any Indebtedness (other than the Indebtedness hereunder) the aggregate principal
amount  of  which  Indebtedness  is  in excess of $75,000 or (ii) default in the
observance  or  performance  of any other agreement or condition relating to any
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating  thereto, or any other event shall occur or condition exist, the effect
of  which  default  or  other  event  or condition is to cause, or to permit the
holder  or holders or beneficiary or beneficiaries of such Indebtedness to cause
with  the giving of notice if required, such Indebtedness to become due prior to
its  stated  maturity;  or  the  Maker  shall  (i)  apply  for or consent to the
appointment  of,  or the taking of possession by, a receiver, custodian, trustee
or  liquidator  of  itself  or  of  all or a substantial part of its property or
assets,  (ii)  make a general assignment for the benefit of its creditors, (iii)
commence  a  voluntary  case  under the United States Bankruptcy Code (as now or
hereafter  in  effect) or under the comparable laws of any jurisdiction (foreign
or  domestic), (iv) file a petition seeking to take advantage of any bankruptcy,
insolvency,  moratorium,  reorganization  or  other  similar  law  affecting the
enforcement  of  creditors'  rights  generally,  (v) acquiesce in writing to any
petition  filed against it in an involuntary case under United States Bankruptcy
Code  (as  now  or  hereafter  in  effect)  or  under the comparable laws of any
jurisdiction  (foreign  or  domestic), or (vi) take any action under the laws of
any  jurisdiction  (foreign or domestic) analogous to any of the foregoing; or a
proceeding  or  case  shall  be  commenced  in respect of the Maker, without its
application  or consent, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, moratorium, dissolution, winding up, or composition
or  readjustment  of  its  debts,  (ii)  the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of its
assets in connection with the liquidation or dissolution of the Company or (iii)
similar  relief  in  respect  of  it  under  any law providing for the relief of
debtors,  and  such  proceeding  or  case described in clause (i), (ii) or (iii)
shall  continue  undismissed,  or  unstayed and in effect, for a period of sixty
(60)  days or any order for relief shall be entered in an involuntary case under
United  States  Bankruptcy  Code  (as  now  or hereafter in effect) or under the
comparable  laws  of any jurisdiction (foreign or domestic) against the Maker or
action under the laws of any jurisdiction (foreign or domestic) analogous to any
of  the  foregoing  shall  be taken with respect to the Maker and shall continue
undismissed,  or  unstayed  and  in  effect  for  a  period  of sixty (60) days.

     -Remedies  Upon  An  Event  of  Default.  If an Event of Default shall have
occurred and shall be continuing, the Holder of this Note may at any time at its
option  (a)  declare  the entire unpaid principal balance of this Note, together
with all interest accrued hereon, due and payable, and thereupon, the same shall
be  accelerated and so due and payable, without presentment, demand, protest, or
notice, all of which are hereby expressly unconditionally and irrevocably waived
by the Maker; provided, however, that upon the occurrence of an Event of Default
described in (i) Sections 2.1 (l), (m) or (n), the outstanding principal balance
and  accrued  interest hereunder shall be automatically due and payable and (ii)
Sections 2.1 (c)-(k), demand the prepayment of this Note pursuant to Section 3.7
hereof,  (b)  demand that the principal amount of this Note then outstanding and
all accrued and unpaid interest thereon shall be converted into shares of Common
Stock  at a conversion price per share calculated pursuant to Section 3.1 hereof
assuming  that  the date that the Event of Default occurs is the Conversion Date
(as defined in Section 3.1 hereof), or (c) exercise or otherwise enforce any one
or more of the Holder's rights, powers, privileges, remedies and interests under
this  Note,  the  Purchase  Agreement,  the  Registration  Rights  Agreement  or
applicable law.  No course of delay on the part of the Holder shall operate as a
waiver  thereof  or  otherwise  prejudice  the  right  of the Holder.  No remedy
conferred  hereby  shall  be exclusive of any other remedy referred to herein or
now  or  hereafter  available  at  law,  in  equity,  by  statute  or otherwise.


-CONVERSION;  ANTIDILUTION;  PREPAYMENT
     -Conversion  Option.  At  any  time on or after October 25, 2001, this Note
shall  be  convertible  (in  whole or in part), at the option of the Holder (the
"Conversion  Option"),  into such number of fully paid and non-assessable shares
of  Common  Stock  (the "Conversion Rate") as is determined by dividing (x) that
portion  of  the  outstanding principal balance plus accrued and unpaid interest
under  the  Note  as  of  such date that the Holder elects to convert by (y) the
Conversion  Price  (as  hereinafter defined) then in effect on the date on which
the  Holder  faxes  a  notice  of  conversion  (the  "Conversion  Notice"), duly
executed,  to the Maker (facsimile number (949) 859-4380, Attn.: Chief Executive
Officer)  (the  "Conversion Date"), provided, however, that the Conversion Price
shall  be  subject  to  adjustment  as  described  in  Section  3.6  below.
Conversion  Price.
     (a)     The  term "Conversion Price" shall mean the lesser of (A) $.02 (the
                        ----------------
"Fixed  Conversion  Price")  and (B) an amount equal to seventy percent (70%) of
 ------------------------
the  average  Per  Share  Market Value for the three (3) Trading Days having the
 -
lowest  Per  Share Market Value during the thirty (30) Trading Days prior to the
 -
Conversion  Date,  except  that  if  during any period (a "Black-out Period"), a
                                                           ----------------
Holder is unable to trade any Common Stock issued or issuable upon conversion of
the  Notes  immediately due to the postponement of filing or delay or suspension
of  effectiveness of a registration statement or because the Maker has otherwise
informed  such Holder that an existing prospectus cannot be used at that time in
the sale or transfer of such Common Stock, such Holder shall have the option but
not the obligation on any Conversion Date within ten (10) Trading Days following
the  expiration of the Black-out Period of using the Conversion Price applicable
on  such  Conversion  Date  or any Conversion Price selected by such Holder that
would  have  been  applicable  had such Conversion Date been at any earlier time
during  the  Black-out  Period  or  within the ten (10) Trading Days thereafter.

     (b)     The  term "Per Share Market Value" means on any particular date (a)
                        ----------------------
the  closing  bid  price  of  the  Common Stock on such date on the OTC Bulletin
Board,  The  Nasdaq  Small-Cap  Market,  the  Nasdaq  National  Market  or other
registered  national  stock exchange on which the Common Stock is then listed or
if  there  is  no  such  price  on such date, then the closing bid price on such
exchange  or quotation system on the date nearest preceding such date, or (b) if
the  Common  Stock is not listed then on The Nasdaq Small-Cap Market, the Nasdaq
National Market or any registered national stock exchange, the closing bid price
for  a  share  of  Common  Stock  in the over-the-counter market, as reported by
NASDAQ  or in the National Quotation Bureau Incorporated or similar organization
or  agency  succeeding  to  its  functions  of reporting prices) at the close of
business  on  such date, then the average of the three (3) lowest closing bid or
closing  prices,  if  applicable,  of  the  "Pink Sheet" quotes for the relevant
                                             ----------
thirty  (30)  day  trading conversion period, as determined in good faith by the
Holder,  or  (d) if the Common Stock is not then publicly traded the fair market
value  of  a share of Common Stock as determined by an Independent Appraiser (as
defined  in  Section  4.13  hereof)  selected  in good faith by the Holders of a
majority  in  interest  of  the  Notes; provided, however, that the Maker, after
                                        --------  -------
receipt of the determination by such Independent Appraiser, shall have the right
to  select  an  additional Independent Appraiser, in which case, the fair market
value  shall  be  equal  to  the  average  of  the  determinations  by each such
Independent  Appraiser; and provided, further that all determinations of the Per
                            --------  -------
Share  Market  Value  shall  be  appropriately adjusted for any stock dividends,
stock  splits  or  other  similar  transactions  during  such  period.  The
determination  of  fair  market value by an Independent Appraiser shall be based
upon  the fair market value of the Issuer determined on a going concern basis as
between  a  willing  buyer  and  a  willing  seller  and taking into account all
relevant  factors  determinative of value, and shall be final and binding on all
parties.  In determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common Stock
imposed by agreement or by federal or state securities laws, or to the existence
or  absence  of,  or  any  limitations  on,  voting  rights.
     Mechanics  of  Conversion.
     Not  later  than five (5) Trading Days after any Conversion Date, the Maker
will  deliver  to  the applicable Holder by express courier (A) a certificate or
certificates which shall be free of restrictive legends and trading restrictions
(other  than  those  required  by  Section  5.1  of  the  Purchase  Agreement)
                                   ------------
representing  the  number  of  shares  of  Common  Stock being acquired upon the
conversion of the Notes and (B) one or more certificates representing the amount
of  Notes  not  converted.  If  in  the  case  of  any  Conversion  Notice  such
certificate  or  certificates  are  not  delivered  to  or  as  directed  by the
applicable  Holder  by  the  third  Trading  Day  after the Conversion Date (the
"Delivery Date"), the Holder shall be entitled by written notice to the Maker at
      --------
any  time  on  or  before  its  receipt  of  such  certificate  or  certificates
thereafter,  to  rescind  such  conversion,  in  which  event  the  Maker  shall
immediately  return  the  certificates  representing  the  Notes  tendered  for
conversion,  whereupon  the Maker and the Holder shall each be restored to their
respective  positions  immediately  prior  to  the  delivery  of  such notice of
revocation,  except  that any amounts described in Sections 3.3(b) and (c) shall
be  payable  through  the  date  notice  of  rescission  is  given to the Maker.
     The  Maker understands that a delay in the delivery of the shares of Common
Stock  upon  conversion  of  the  Notes  and  failure  to  deliver  certificates
representing  the unconverted shares of the Notes beyond the Delivery Date could
result  in  economic  loss  to the Holder.  If the Maker fails to deliver to the
Holder  such  certificate  or certificates pursuant to this Section hereunder by
the  Delivery  Date,  the Maker shall pay to such Holder, in cash, an amount per
Trading Day for each Trading Day until such certificates are delivered, together
with  interest  on  such  amount at a rate of 10% per annum, accruing until such
amount  and any accrued interest thereon is paid in full, equal to (i) 1% of the
aggregate  principal amount of the Notes requested to be converted for the first
five  (5)  Trading  Days  after  the  Delivery Date and (ii) 2% of the aggregate
principal  amount  of  the  Notes requested to be converted for each Trading Day
thereafter  (which  amounts  shall  be  paid  as liquidated damages and not as a
penalty).  Nothing  herein shall limit a Holder's right to pursue actual damages
for  the  Maker's  failure to deliver certificates representing shares of Common
Stock  upon  conversion  within  the period specified herein (including, without
limitation,  damages  relating to any purchase of shares of Common Stock by such
Holder  to  make  delivery  on  a  sale  effected  in  anticipation of receiving
certificates  representing  shares of Common Stock upon conversion, such damages
to be in an amount equal to (A) the aggregate amount paid by such Holder for the
shares  of  Common  Stock  so  purchased  minus  (B) the aggregate amount of net
proceeds,  if any, received by such Holder from the sale of the shares of Common
Stock  issued  by  the Maker pursuant to such conversion), and such Holder shall
have  the  right  to  pursue  all  remedies  available to it at law or in equity
(including,  without  limitation,  a  decree  of  specific  performance  and/or
injunctive  relief).  Notwithstanding anything to the contrary contained herein,
the  Holder  shall  be  entitled  to withdraw a Conversion Notice, and upon such
withdrawal  the  Maker  shall  only  be  obligated to pay the liquidated damages
accrued  in  accordance with this Section 3.3(b) through the date the Conversion
Notice  is  withdrawn.
In  addition  to any other rights available to the Holder, if the Maker fails to
deliver  to  the  Holder  such  certificate  or certificates pursuant to Section
3.3(a)  by the Delivery Date and if after the Delivery Date the Holder purchases
(in  an  open market transaction or otherwise) shares of Common Stock to deliver
in  satisfaction  of  a  sale  by such Holder of the Conversion Shares which the
Holder  anticipated  receiving upon such conversion (a "Buy-In"), then the Maker
                                                        ------
shall  pay  in  cash  to the Holder (in addition to any remedies available to or
elected by the Holder) the amount by which (A) the Holder's total purchase price
(including  brokerage  commissions,  if  any)  for the shares of Common Stock so
purchased exceeds (B) the aggregate principal amount of the Notes for which such
conversion  was  not timely honored, together with interest thereon at a rate of
15%  per  annum,  accruing until such amount and any accrued interest thereon is
paid  in  full  (which  amount  shall be paid as liquidated damages and not as a
penalty).  For  example, if the Holder purchases shares of Common Stock having a
total  purchase  price of $11,000 to cover a Buy-In with respect to an attempted
conversion  of  $10,000 aggregate principal amount of the Notes, the Maker shall
be  required  to pay the Holder $1,000, plus interest.  The Holder shall provide
the Maker written notice indicating the amounts payable to the Holder in respect
of  the  Buy-In.
     Ownership  Cap.  Notwithstanding  anything  to  the  contrary  set forth in
Section  3  of this Note, at no time may a holder of this Note convert this Note
if the number of shares of Common Stock to be issued pursuant to such conversion
would  exceed,  when  aggregated  with all other shares of Common Stock owned by
such  holder  at  such  time,  the  number of shares of Common Stock which would
result  in  such  holder  owning  more  than  9.99%  of  all of the Common Stock
outstanding  at  such  time;  provided, however, that upon a holder of this Note
providing  the Company with 75 days notice (pursuant to Section 4.1 hereof) (the
"Waiver  Notice")  that  such  holder  would like to waive this Section 3.4 with
regard  to  any  or  all shares of Common Stock issuable upon conversion of this
Note,  this  Section  3.4  will be of no force or effect with regard to all or a
portion  of  the  Note  referenced  in  the  Waiver  Notice.
Intentionally  Omitted.
-Adjustment  of  Conversion  Price.
The  Fixed  Conversion Price shall be subject to adjustment from time to time as
follows:
Adjustments  for  Stock Splits and Combinations.  If the Maker shall at any time
-----------------------------------------------
or  from  time  to  time  after  the  Issuance Date, effect a stock split of the
outstanding  Common  Stock,  the  applicable  Fixed  Conversion  Price in effect
immediately prior to the stock split shall be proportionately decreased.  If the
Maker  shall  at  any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Fixed Conversion Price in
effect  immediately prior to the combination shall be proportionately increased.
Any  adjustments under this Section 3.6(a)(i) shall be effective at the close of
business  on  the  date  the  stock  split  or  combination  occurs.
       (ii)    Adjustments for Certain Dividends and Distributions. If the Maker
              ---------------------------------------------------
shall at any time or from time to time after the Issuance Date, make or issue or
set  a  record date for the determination of holders of Common Stock entitled to
receive  a  dividend  or  other  distribution payable in shares of Common Stock,
then,  and  in  each  event,  the  applicable  Fixed  Conversion Price in effect
immediately  prior  to  such  event  shall  be  decreased as of the time of such
issuance  or,  in  the  event  such record date shall have been fixed, as of the
close  of  business  on  such  record  date,  by multiplying, as applicable, the
applicable  Fixed  Conversion  Price  then  in  effect  by  a  fraction:
     (1)     the  numerator  of  which  shall  be  the total number of shares of
Common  Stock  issued  and  outstanding  immediately  prior  to the time of such
issuance  or  the  close  of  business  on  such  record  date;  and
     (2)     the  denominator  of  which  shall be the total number of shares of
Common  Stock  issued  and  outstanding  immediately  prior  to the time of such
issuance  or the close of business on such record date plus the number of shares
of  Common  Stock  issuable  in  payment  of  such  dividend  or  distribution.
     (iii)     Adjustment  for  Other Dividends and Distributions.  If the Maker
               --------------------------------------------------
shall at any time or from time to time after the Issuance Date, make or issue or
set  a  record date for the determination of holders of Common Stock entitled to
receive  a dividend or other distribution payable in other than shares of Common
Stock,  then, and in each event, an appropriate revision to the applicable Fixed
Conversion  Price  shall  be made and provision shall be made (by adjustments of
the  Conversion  Price  or  otherwise)  so  that  the holders of the Notes shall
receive  upon conversions thereof, in addition to the number of shares of Common
Stock receivable thereon, the number of securities of the Maker which they would
have  received  had  their Notes been converted into Common Stock on the date of
such  event and had thereafter, during the period from the date of such event to
and  including  the Conversion Date, retained such securities (together with any
distributions  payable  thereon  during  such period), giving application to all
adjustments  called  for  during such period under this Section 3.6(a)(iii) with
respect  to  the  rights  of  the  holders  of  the  Notes.
       (iv)     Adjustments for Reclassification,  Exchange or Substitution.  If
              -------------------------------------------------------------
the  Common Stock issuable upon conversion of the Notes at any time or from time
to time after the Issuance Date shall be changed to the same or different number
of  shares  of  any  class  or  classes  of  stock, whether by reclassification,
exchange,  substitution  or  otherwise  (other  than  by way of a stock split or
combination  of  shares  or  stock dividends provided for in Sections 3.6(a)(i),
(ii)  and  (iii),  or a reorganization, merger, consolidation, or sale of assets
provided  for  in  Section  3.6(a)(v)),  then, and in each event, an appropriate
revision  to  the  Fixed  Conversion Price shall be made and provisions shall be
made (by adjustments of the Conversion Price or otherwise) so that the holder of
each  of the Notes shall have the right thereafter to convert such Note into the
kind  and  amount  of  shares  of  stock  and  other  securities receivable upon
reclassification,  exchange,  substitution  or  other  change, by holders of the
number  of shares of Common Stock into which such Note might have been converted
immediately  prior  to  such  reclassification,  exchange, substitution or other
change,  all  subject  to  further  adjustment  as  provided  herein.
       (v)     Adjustments for Reorganization, Merger, Consolidation or Sales of
             -------------------------------------------------------------------
Assets.  If at any time or from time to time after the Issuance Date there shall
be  a capital reorganization of the Maker (other than by way of a stock split or
combination  of  shares  or  stock  dividends  or  distributions provided for in
Section  3.6(a)(i),  (ii)  and  (iii),  or  a  reclassification,  exchange  or
substitution  of  shares  provided  for  in  Section 3.6(a)(iv)), or a merger or
consolidation  of the Maker with or into another corporation, or the sale of all
or substantially all of the Maker's properties or assets to any other person (an
"Organic Change"), then as a part of such Organic Change an appropriate revision
 --------------
to  the  Conversion  Price  shall  be  made  and  provision  shall  be  made (by
adjustments  of  the  Conversion  Price or otherwise) so that the holder of each
Note  shall  have  the  right  thereafter to convert such Note into the kind and
amount  of  shares of stock and other securities or property of the Maker or any
successor  corporation  resulting  from  Organic  Change.  In  any  such  case,
appropriate  adjustment  shall  be  made in the application of the provisions of
this  Section  3.6(a)(v)  with respect to the rights of the holders of the Notes
after  the  Organic  Change  to  the  end  that  the  provisions of this Section
3.6(a)(v)  (including  any adjustment in the applicable Conversion Price then in
effect  and  the  number of shares of stock or other securities deliverable upon
conversion  of  the  Notes)  shall  be  applied after that event in as nearly an
equivalent  manner  as  may  be  practicable.
       (vi)    Adjustments for Issuance of Additional Shares of Common Stock. If
            ---------------------------------------------------------------
the Maker, at any time after the Issuance Date,  shall issue any additional
shares of Common Stock (otherwise than as provided in the foregoing subsections
(i) through (v) of this Section 3.6) (the "Additional Shares of Common Stock"),
                                       ---------------------------------
at a price per share less than the applicable Fixed Conversion Price then in
effect or without consideration, then the applicable Fixed Conversion Price upon
each such issuance shall be adjusted to that price (rounded to the nearest cent)
determined  by  multiplying the applicable Fixed Conversion Price then in effect
by  a  fraction:
     (1)     the  numerator of which shall be equal to the sum of (A) the number
of  shares of Common Stock outstanding immediately prior to the issuance of such
Additional  Shares of Common Stock plus (B) the number of shares of Common Stock
                                   ----
(rounded  to  the nearest whole share) which the aggregate consideration for the
total  number of such Additional Shares of Common Stock so issued would purchase
at  a  price  per  share  equal to the applicable Fixed Conversion Price then in
effect,  and
     (2)     the denominator of which shall be  equal to the number of shares of
Common  Stock  outstanding  immediately  after  the  issuance of such Additional
Shares  of  Common  Stock.
The  provisions  of  this  subsection  (vi)  shall  not  apply  under any of the
circumstances  for  which  an  adjustment  is provided in subsections (i), (ii),
(iii),  (iv)  or  (v)  of  this Section 3.6(a).  No adjustment of the applicable
Fixed  Conversion  Price  shall  be  made under this subsection (a)(iv) upon the
issuance  of  any Additional Shares of Common Stock which are issued pursuant to
any  Common  Stock  Equivalent  (as  defined below) if upon the issuance of such
Common  Stock  Equivalent  (x)  any  adjustment shall have been made pursuant to
subsection  (vii)  of  this  Section  3.6(a)  or  (y) no adjustment was required
pursuant  to  subsection  (vii)  of  this  Section 3.6(a).  No adjustment of the
applicable Fixed Conversion Price shall be made under this subsection (vi) in an
amount  less  than  $.005  per  share,  but  any such lesser adjustment shall be
carried  forward  and  shall  be  made  at  the  time and together with the next
subsequent  adjustment,  if  any, which together with any adjustments so carried
forward  shall  amount  to  $.005  per  share  or  more;  provided that upon any
                                                          --------
adjustment  of the applicable Fixed Conversion Price as a result of any dividend
or  distribution  payable  in Common Stock or Convertible Securities (as defined
below)  or the reclassification, subdivision or combination of Common Stock into
a  greater  or smaller number of shares, the foregoing figure of $.005 per share
(or  such  figure  as  last adjusted) shall be adjusted (to the nearest one-half
cent)  in proportion to the adjustment in the applicable Fixed Conversion Price.
       (vii)     Issuance of Common Stock Equivalents. If the Maker, at any time
               -------------------------------------
after  the  Issuance  Date,  shall  issue  any  securities  convertible  into or
exchangeable  for,  directly  or  indirectly,  Common  Stock  ("Convertible
                                                                -----------
Securities"),  other  than  this  Note,  or any rights or warrants or options to
purchase  any  such  Common  Stock or Convertible Securities, shall be issued or
sold  (collectively, the "Common Stock Equivalents") and the price per share for
                          ------------------------
which  Additional  Shares of Common Stock may be issuable thereafter pursuant to
such  Common Stock Equivalent shall be less than the applicable Fixed Conversion
Price  then  in  effect,  or  if,  after  any  such  issuance  of  Common  Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be  issuable  thereafter  is  amended  or adjusted, and such price as so amended
shall  be  less than the applicable Fixed Conversion Price in effect at the time
of  such  amendment,  then  the applicable Fixed Conversion Price upon each such
issuance  or  amendment  shall  be adjusted as provided in the first sentence of
subsection  (vi) of this Section 3.6(a) on the basis that (1) the maximum number
of  Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents  shall  be  deemed  to  have been issued (whether or not such Common
Stock  Equivalents are actually then exercisable, convertible or exchangeable in
whole  or  in  part)  as of the earlier of (A) the date on which the Maker shall
enter  into a firm contract for the issuance of such Common Stock Equivalent, or
(B)  the  date  of  actual issuance of such Common Stock Equivalent, and (2) the
aggregate  consideration  for such maximum number of Additional Shares of Common
Stock  shall be deemed to be the minimum consideration received or receivable by
the Maker for the issuance of such Additional Shares of Common Stock pursuant to
such  Common Stock Equivalent.  No adjustment of the applicable Fixed Conversion
Price  shall  be  made  under  this  subsection  (vii)  upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other  subscription  or  purchase  rights  therefore, if  any  adjustment  shall
previously  have been made to the exercise price of such warrants then in effect
upon  the  issuance of such warrants or other rights pursuant to this subsection
(vii).  If  no  adjustment is required under this subsection (vii) upon issuance
of  any  Common  Stock  Equivalent  or  once  an  adjustment  is made under this
subsection  (vii) based upon the Per Share Market Value in effect on the date of
such adjustment, no further adjustment shall be made under this subsection (vii)
based  solely  upon  a  change  in  the  Per Share Market Value after such date.
       (viii)     Consideration  for Stock.  In case any shares of Common Stock
           -------------------------
or any Common  Stock  Equivalents  shall  be  issued  or  sold:
     (1)     in  connection  with any merger or consolidation in which the Maker
is  the  surviving  corporation (other than any consolidation or merger in which
the  previously outstanding shares of Common Stock of the Maker shall be changed
to  or  exchanged for the stock or other securities of another corporation), the
amount  of  consideration  therefore  shall  be, deemed to be the fair value, as
determined  reasonably and in good faith by the Board of Directors of the Maker,
of  such  portion  of the assets and business of the nonsurviving corporation as
such  Board  may  determine  to  be attributable to such shares of Common Stock,
Convertible  Securities,  rights  or warrants or options, as the case may be; or
     (2)   in the event of any consolidation or merger of the Maker in which the
Maker  is  not  the surviving corporation or in which the previously outstanding
shares  of  Common Stock of the Maker shall be changed into or exchanged for the
stock or other securities of another corporation, or in the event of any sale of
all  or  substantially  all  of  the  assets  of  the  Maker  for stock or other
securities of any corporation, the Maker shall be deemed to have issued a number
of  shares  of its Common Stock for stock or securities or other property of the
other  corporation  computed  on the basis of the actual exchange ratio on which
the transaction was predicated, and for a consideration equal to the fair market
value  on  the date of such transaction of all such stock or securities or other
property  of  the  other  corporation.  If  any  such  calculation  results  in
adjustment  of the applicable Fixed Conversion Price, or the number of shares of
Common  Stock  issuable  upon  conversion of the Notes, the determination of the
applicable  Fixed  Conversion  Price  or  the  number  of shares of Common Stock
issuable  upon  conversion  of  the  Notes  immediately  prior  to  such merger,
consolidation  or  sale, shall be made after giving effect to such adjustment of
the  number  of  shares  of  Common Stock issuable upon conversion of the Notes.
     (b)     Record Date.  In case the Maker shall take record of the holders of
             -----------
its  Common Stock for the purpose of entitling them to subscribe for or purchase
Common  Stock  or  Convertible Securities, then the date of the issue or sale of
the  shares  of  Common  Stock  shall  be  deemed  to  be  such  record  date.
     (c)     Certain  Issues  Excepted.  Anything  herein  to  the contrary
            -------------------------
notwithstanding,  the  Maker shall not be required to make any adjustment of the
number  of shares of Common Stock issuable upon conversion of the Notes upon the
grant  after  the  Issuance Date of, or the exercise after the Issuance Date of,
options or warrants or rights to purchase stock under the Maker's existing stock
option  plan  or  options  or  warrants  or  rights  to purchase stock issued to
officers  and/or  directors  of  the  Company.

     (d)     No  Impairment.  The  Maker  shall  not,  by  amendment of its
             --------------
Certificate  of Incorporation or through any reorganization, transfer of assets,
consolidation,  merger,  dissolution,  issue  or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the  terms  to  be observed or performed hereunder by the Maker, but will at all
times  in  good  faith, assist in the carrying out of all the provisions of this
Section  3.6  and  in  the  taking  of  all  such  action as may be necessary or
appropriate  in  order  to  protect  the Conversion Rights of the Holder against
impairment.  In  the event a Holder shall elect to convert any Notes as provided
herein,  the  Maker cannot refuse conversion based on any claim that such Holder
or  any  one  associated  or affiliated with such Holder has been engaged in any
violation  of  law, violation of an agreement to which such Holder is a party or
for  any  reason  whatsoever,  unless,  an  injunction  from a court, on notice,
restraining  and or adjoining conversion of all or of said Notes shall have been
issued  and  the  Maker posts a surety bond for the benefit of such Holder in an
amount  equal  to  130%  of  the  amount  of the Notes the Holder has elected to
convert  plus  the  amount  of the Notes outstanding, which bond shall remain in
effect  until  the  completion  of arbitration/litigation of the dispute and the
proceeds  of  which  shall  be  payable  to  such Holder in the event it obtains
judgment.

     (e)     Certificates as to Adjustments. Upon occurrence of each adjustment
             --------------------------------
or  readjustment  of the Fixed  Conversion Price or number of shares of Common
Stock issuable upon conversion of this Note pursuant to  this  Section  3.6, the
Maker at its expense shall promptly compute such adjustment or readjustment in
Accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment and readjustment, showing  in detail the facts  upon which
such adjustment or readjustment is based.  The Maker shall, upon written request
of the Holder, at any time, furnish or cause to be furnished to such holder a
like certificate setting forth such adjustments and readjustments,the applicable
Fixed Conversion Price in effect at the time, and 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  the  conversion  of  this  Note.  Notwithstanding the
foregoing, the Maker shall not be obligated to deliver a certificate unless such
certificate  would  reflect an increase or decrease of at least one percent (1%)
of  such  adjusted  amount.
     (f)    Issue  Taxes. The Maker shall pay any and all issue and other taxes,
            ------------
excluding  federal,  state or local income taxes, that may be payable in respect
of  any  issue  or delivery of shares of Common Stock on conversion of this Note
pursuant  thereto;  provided,  however, that the Maker shall not be obligated to
                    --------   -------
pay  any  transfer  taxes resulting from any transfer requested by any holder in
connection  with  any  such  conversion.
     (g)     Fractional Shares. No fractional shares of Common Stock shall be
             -----------------
issued upon conversion of this Note.  In lieu of any fractional shares to which
the Holder would otherwise be entitled,  the  Maker  shall pay cash equal to the
product  of  such  fraction  multiplied  by  the average of the Per Share Market
Values of the Common Stock for the five (5) consecutive Trading Days immediately
preceding  the  Conversion  Date.
     (h)     Reservation  of  Common  Stock. The Maker shall at all times when
             ------------------------------
this Note shall be outstanding, reserve and keep available out of its authorized
but unissued  Common Stock, such number of share of Common Stock as shall from
time  to time  be  sufficient  to effect the  conversion of this Note and all
interest accrued thereon; provided that the number of shares of Common Stock so
                  --------
reserved shall  at  no time be less than 150% of the number of shares of Common
Stock  for  which  this  Note  and all interest accrued thereon are at any  time
convertible. The Maker shall, from time to time in accordance with the Delaware
General Corporation Law, as amended, increase the authorized number of shares of
Common Stock if at any time the unissued number of authorized shares  shall not
Be sufficient to satisfy the  Maker's  obligations  under  this  Section 3.6(h).
     (i)     -Regulatory  Compliance.  If  any  shares  of  Common  Stock  to be
              ----------------------
reserved  for  the  purpose  of  conversion of this Note or any interest accrued
thereon  require  registration  or  listing with or approval of any governmental
authority,  stock  exchange  or other regulatory body under any federal or state
law  or  regulation  or  otherwise  before  such shares may be validly issued or
delivered  upon  conversion,  the  Maker shall, at its sole cost and expense, in
good  faith  and  as  expeditiously  as  possible,  endeavor  to  secure  such
registration,  listing  or  approval,  as  the  case  may  be.

     Section  3.7     Prepayment.
     (a)     Prepayment  Upon  an Event of Default.  Notwithstanding anything to
             -------------------------------------
the  contrary  contained  herein,  upon  the  occurrence  of an Event of Default
described  in  Sections  2.1(c)-(k)  hereof, the Holder shall have the right, at
such  Holder's  option,  to require the Maker to prepay all or a portion of this
Note  at  a price equal to Prepayment Price (as defined in Section 3.7(c) below)
applicable  at  the  time of such request.  Nothing in this Section 3.7(a) shall
limit  the  Holder's  rights  under  Section  2.2  hereof.
     (b)     Prepayment Option Upon Major Transaction.  In addition to all other
rights  of  the  holders  of  the  Notes contained herein, simultaneous with the
occurrence  of  a Major Transaction (as defined below), each holder of the Notes
shall  have  the  right, at such holder's option, to require the Maker to prepay
all  or  a portion of such holder's Notes at a price equal to the greater of (i)
115%  of the aggregate principal amount of the Notes and (ii) the product of (A)
the  Conversion  Rate  and (B) the Per Share Market Value of the Common Stock on
the Trading Day immediately preceding such Major Transaction ("Major Transaction
Prepayment  Price").
     (c)     Prepayment Option Upon Triggering Event.  In addition  to all other
rights  of  the  holders of the Notes contained herein, after a Triggering Event
(as  defined  below),  each  holder  of  the Notes shall have the right, at such
holder's  option,  to  require  the  Maker  to  prepay  all or a portion of such
holder's  Notes  at  a  price  equal to the greater of (i) 130% of the aggregate
principal amount of the Notes and (ii) the product of (A) the Conversion Rate at
such  time  and (B) the Per Share Market Value of the Common Stock calculated as
of the date immediately preceding such Triggering Event on which the exchange or
market on which the Common Stock is traded is open ("Triggering Event Prepayment
Price"  and,  collectively  with  "Major  Transaction  Prepayment  Price,"  the
"Prepayment  Price").
     (d)     "Major Transaction."  A "Major Transaction" shall be deemed to have
occurred  at  such  time  as  any  of  the  following  events:
       (i)     the consolidation, merger  or  other  business combination of the
Maker  with  or  into  another Person (as defined in Section 4.13 hereof) (other
than  (A)  pursuant  to  a  migratory  merger effected solely for the purpose of
changing  the jurisdiction of incorporation of the Maker or (B) a consolidation,
merger  or  other  business  combination  in which holders of the Maker's voting
power  immediately  prior  to  the transaction continue after the transaction to
hold,  directly  or  indirectly,  the  voting  power  of the surviving entity or
entities  necessary to elect a majority of the members of the board of directors
(or  their  equivalent if other than a corporation) of such entity or entities).
       (ii)     the sale or transfer of all or substantially all of the Maker's
assets; or
       (iii)    consummation  of  a  purchase,  tender  or  exchange offer made
to the holders  of more than 30% of the  outstanding  shares  of  Common  Stock.
     (e)     "Triggering  Event."  A  "Triggering Event" shall be deemed to have
occurred  at  such  time  as  any  of  the  following  events:
       (i)    the failure of the Registration Statement to be declared effective
by  the  SEC  on  or prior to the date which is 270 days after the Closing Date,
provided  that  the  Maker  has  failed to file the Registration Statement on or
before  the  Filing  Date  (as  defined in the Registration Rights Agreement) or
respond  to  any  and each of the SEC's comments within fifteen (15) days of the
Maker's  receipt  of  each  of  the  SEC's  comments;
       (ii)     while the  Registration  Statement is  required to be maintained
effective pursuant  to  the  terms  of the  Registration  Rights  Agreement, the
effectiveness of the Registration Statement lapses for any reason (including,
without limitation,  the  issuance  of a stop order) or  is unavailable to the
holder of the Notes for sale  of  the  Registrable  Securities  (as  defined  in
the  Registration  Rights Agreement) in  accordance  with the terms of the
Registration Rights Agreement, and  such lapse or unavailability continues for a
period of ten (10) consecutive Trading  Days, provided that the  cause of such
lapse or unavailability is due to
               --------
factors within the control of the Maker and not due to factors solely within the
control  of  such  holder  of  the  Notes;
       (iii)     the suspension  from trading or the failure of the Common Stock
to be traded on the  OTC Bulletin  Board for a period  of five (5) consecutive
days, provided,  that  such  suspension from listing or  failure to be listed is
due to factors  within the control of the Maker, including, but not limited to,
failure to timely file all reports required to be filed with the SEC or to meet
the net tangible  assets  requirements  for  listing,  if  any;
       (iv)   the Maker's notice to any holder of the Notes, including by way of
public  announcement, at any time, of its inability to comply (including for any
of  the  reasons  described  in Section 3.8) or its intention not to comply with
proper  requests for conversion of any of the Notes into shares of Common Stock;
       (v)   the Maker's failure to comply with a Conversion Notice tendered
within ten  (10)  business days after the receipt by the Maker of the Conversion
Notice and  the  certificates  representing  the  Notes;  or
       (vi)   the Maker breaches any representation, warranty, covenant or other
term or condition of the Purchase Agreement, the Registration Rights Agreement
or any other  agreement, document, certificate or  other instrument  delivered
in connection  with  the  transactions  contemplated  thereby  or  hereby.
     (f)     Mechanics  of Prepayment at Option of Buyer Upon Major Transaction.
No  sooner  than  fifteen  (15)  days  nor later than ten (10) days prior to the
consummation of a Major Transaction, but not prior to the public announcement of
such  Major  Transaction,  the  Maker  shall  deliver written notice thereof via
facsimile  and  overnight courier ("Notice of Major Transaction") to each holder
of  the  Notes.  At any time after receipt of a Notice of Major Transaction (or,
in  the  event  a Notice of Major Transaction is not delivered at least ten (10)
days  prior  to a Major Transaction, at any time within ten (10) days prior to a
Major  Transaction),  any  holder  of the Notes then outstanding may require the
Maker  to  prepay, effective immediately prior to the consummation of such Major
Transaction,  all  of  the holder's Notes then outstanding by delivering written
notice  thereof  via  facsimile  and overnight courier ("Notice of Prepayment at
Option  of  Buyer  Upon  Major  Transaction")  to  the  Maker,  which  Notice of
Prepayment  at  Option  of  Buyer  Upon Major Transaction shall indicate (i) the
number  of  Notes that such holder is electing to prepay and (ii) the applicable
Major  Transaction  Prepayment  Price,  as calculated pursuant to Section 3.7(b)
above.
     (g)     Mechanics of Prepayment at Option of  Buyer  Upon Triggering Event.
Within  one  (1) day after the occurrence of a Triggering Event, the Maker shall
deliver  written  notice thereof via facsimile and overnight courier ("Notice of
Triggering  Event")  to each holder of the Notes.  At any time after the earlier
of  a  holder's receipt of a Notice of Triggering Event and such holder becoming
aware  of  a  Triggering  Event,  any  holder  of the Notes then outstanding may
require  the  Maker  to  prepay  all  of  the Notes by delivering written notice
thereof  via facsimile and overnight courier ("Notice of Prepayment at Option of
Buyer Upon Triggering Event") to the Maker, which Notice of Prepayment at Option
of  Buyer Upon Triggering Event shall indicate (i) the number of Notes that such
holder is electing to prepay and (ii) the applicable Triggering Event Prepayment
Price,  as  calculated  pursuant  to  Section  3.7(c)  above.
     (h)    Payment of Prepayment Price. Upon the Maker's receipt of a Notice(s)
of Prepayment at Option of Buyer Upon Triggering Event or a Notice(s) of
Prepayment at  Option  of  Buyer  Upon  Major Transaction from any holder of the
Notes, the Maker shall immediately notify  ach  holder of the Notes by facsimile
of the Maker's  receipt of such  Notice(s)  of  Prepayment  at  Option  of Buyer
Upon Triggering Event or Notice(s) of Prepayment  at  Option of Buyer Upon Major
Transaction  and  each holder which has sent such a notice shall promptly submit
to the Maker such holder's certificates representing the Notes which such holder
has  elected to have prepaid.  The Maker shall deliver the applicable Triggering
Event  Prepayment Price, in the case of a prepayment pursuant to Section 3.7(g),
to  such  holder  within  five  (5) business days after the Maker's receipt of a
Notice  of  Prepayment at Option of Buyer Upon Triggering Event and, in the case
of  a  prepayment  pursuant  to  Section  3.7(f),  the  Maker  shall deliver the
applicable  Major  Transaction  Prepayment  Price  immediately  prior  to  the
consummation  of  the  Major  Transaction; provided that a holder's certificates
representing  the  Notes  shall  have  been  so delivered to the Maker; provided
further  that  if  the Maker is unable to prepay all of the Notes to be prepaid,
the  Maker  shall  prepay  an amount from each holder of the Notes being prepaid
equal  to  such  holder's  pro-rata amount (based on the number of Notes held by
such  holder  relative  to  the  number of Notes outstanding) of all Notes being
prepaid.  If  the  Maker  shall  fail  to  prepay all of the Notes submitted for
prepayment (other than pursuant to a dispute as to the arithmetic calculation of
the  Prepayment  Price),  in addition to any remedy such holder of the Notes may
have under this Note and the Purchase Agreement, the applicable Prepayment Price
payable  in respect of such Notes not prepaid shall bear interest at the rate of
2.0%  per  month  (prorated  for  partial months) until paid in full.  Until the
Maker  pays  such  unpaid applicable Prepayment Price in full to a holder of the
Notes  submitted  for  prepayment,  such holder shall have the option (the "Void
Optional  Prepayment  Option")  to,  in lieu of prepayment, require the Maker to
promptly  return  to  such  holder(s)  all  of the Notes that were submitted for
prepayment by such holder(s) under this Section 3.7 and for which the applicable
Prepayment  Price  has  not  been paid, by sending written notice thereof to the
Maker  via facsimile (the "Void Optional Prepayment Notice").   Upon the Maker's
receipt  of  such Void Optional Prepayment Notice(s) and prior to payment of the
full applicable Prepayment Price to such holder, (i) the Notice(s) of Prepayment
at  Option  of  Buyer  Upon  Triggering  Event or the Notice(s) of Prepayment at
Option  of  Buyer  Upon Major Transaction, as the case may be, shall be null and
void  with  respect  to  those  Notes submitted for prepayment and for which the
applicable  Prepayment Price has not been paid, (ii) the Maker shall immediately
return any Notes submitted to the Maker by each holder for prepayment under this
Section  3.7(h)  and for which the applicable Prepayment Price has not been paid
and  (iii)  the Conversion Price of such returned Notes shall be adjusted to the
lesser  of  (A)  the Conversion Price as in effect on the date on which the Void
Optional  Prepayment  Notice(s) is delivered to the Maker and (B) the lowest Per
Share  Market  Value  during  the  period  beginning  on  the  date on which the
Notice(s)  of  Prepayment  of  Option  of  Buyer  Upon  Major Transaction or the
Notice(s)  of  Prepayment  at Option of Buyer Upon Triggering event, as the case
may  be,  is  delivered  to  the  Maker and ending on the date on which the Void
Optional  Prepayment  Notice(s)  is  delivered  to  the  Maker; provided that no
adjustment  shall  be made if such adjustment would result in an increase of the
Conversion  Price  then  in  effect.  A  holder's  delivery  of  a Void Optional
Prepayment  Notice  and  exercise  of its rights following such notice shall not
effect  the Maker's obligations to make any payments which have accrued prior to
the  date  of such notice.  Payments provided for in this Section 3.7 shall have
priority  to  payments  to  other  stockholders  in  connection  with  a  Major
Transaction.
     Section  3.8     Inability  to  Fully  Convert.
                      -----------------------------
     (a)     Holder's  Option  if  Maker  Cannot  Fully  Convert.  If,  upon the
             ---------------------------------------------------
Maker's  receipt of a Conversion Notice, the Maker cannot issue shares of Common
Stock  registered  for  resale  under the Registration Statement for any reason,
including,  without limitation, because the Maker (w) does not have a sufficient
number  of  shares  of  Common  Stock authorized and available, (x) is otherwise
prohibited  by  applicable  law  or  by  the  rules  or regulations of any stock
exchange,  interdealer  quotation  system  or other self-regulatory organization
with  jurisdiction  over  the Maker or any of its securities from issuing all of
the  Common  Stock  which is to be issued to the Holder pursuant to a Conversion
Notice  or  (y)  fails  to  have  a  sufficient number of shares of Common Stock
registered  for  resale  under  the Registration Statement, then the Maker shall
issue  as  many shares of Common Stock as it is able to issue in accordance with
the  Holder's  Conversion Notice and, with respect to the unconverted portion of
the  Note,  the  Holder,  solely  at  Holder's  option,  can  elect  to:
         (i)  require the Maker to prepay that portion of the Note for which the
Maker is unable to issue Common Stock in accordance with the Holder's Conversion
Notice (the "Mandatory Prepayment") at a price per share equal to the Prepayment
             --------------------
Price  as  of  such  Conversion  Date  (the  "Mandatory  Prepayment  Price");
                                              ----------------------------
     if  the Maker's inability to fully convert is pursuant to Section 3.8(a)(y)
above, require the Maker to issue restricted shares of Common Stock equal to one
hundred  twenty percent (120%) of the number of shares of Common Stock the Maker
is  unable  to  deliver  in  accordance  with  such  holder's Conversion Notice;
void  its Conversion Notice and retain or have returned, as the case may be, the
Note  that  was to be converted pursuant to the Conversion Notice (provided that
the  Holder's  voiding  its  Conversion  Notice  shall  not  effect  the Maker's
obligations  to  make  any payments which have accrued prior to the date of such
notice).
     (b)     Mechanics  of  Fulfilling  Holder's  Election.  The  Maker  shall
             ---------------------------------------------
immediately  send  via facsimile to the Holder, upon receipt of a facsimile copy
of  a  Conversion  Notice  from  the  Holder  which cannot be fully satisfied as
described  in  Section  3.8(a) above, a notice of the Maker's inability to fully
satisfy  the  Conversion Notice (the "Inability to Fully Convert Notice").  Such
                                      ---------------------------------
Inability to Fully Convert Notice shall indicate (i) the reason why the Maker is
unable  to fully satisfy such holder's Conversion Notice, (ii) the amount of the
Note  which  cannot  be  converted and (iii) the applicable Mandatory Prepayment
Price.  The  Holder  shall  notify the Maker of its election pursuant to Section
3.8(a) above by delivering written notice via facsimile to the Maker ("Notice in
                                                                       ---------
Response  to  Inability  to  Convert").
------------------------------------
     (c)     Payment of Prepayment Price. If the  Holder shall elect to have its
        ------------------------------
shares  prepaid  pursuant  to  Section  3.8(a)(i) above, the Maker shall pay the
Mandatory  Prepayment  Price  in  cash to the Holder within five (5) days of the
Maker's  receipt  of  the  Holder's  Notice in Response to Inability to Convert,
provided that prior to the Maker's receipt of the Holder's Notice in Response to
Inability to Convert the Maker has not delivered a notice to the Holder stating,
to  the satisfaction of the Holder, that the event or condition resulting in the
Mandatory  Prepayment  has  been cured and all Conversion Shares issuable to the
Holder  can  and will be delivered to the Holder in accordance with the terms of
this  Note.  If  the Maker shall fail to pay the applicable Mandatory Prepayment
Price to the Holder on a timely basis as described in this Section 3.8(c) (other
than pursuant to a dispute as to the determination of the arithmetic calculation
of  the  Prepayment  Price), in addition to any remedy the Holder may have under
this  Note and the Purchase Agreement, such unpaid amount shall bear interest at
the  rate  of  2.0%  per month (prorated for partial months) until paid in full.
Until  the  full  Mandatory  Prepayment Price is paid in full to the Holder, the
Holder may (i) void the Mandatory Prepayment with respect to that portion of the
Note  for  which  the  full  Mandatory  Prepayment Price has not been paid, (ii)
receive  back  such  Note,  and  (iii) require that the Conversion Price of such
returned Note be adjusted to the lesser of (A) the Conversion Price as in effect
on  the  date  on  which  the Holder voided the Mandatory Prepayment and (B) the
lowest Per Share Market Value during the period beginning on the Conversion Date
and  ending  on  the  date  the  Holder  voided  the  Mandatory  Prepayment.
     Section  3.9     No  Rights as Shareholder.  Nothing contained in this Note
shall  be  construed  as  conferring upon the Holder, prior to the conversion of
this Note, the right to vote or to receive dividends or to consent or to receive
notice  as  a  shareholder  in  respect  of  any meeting of shareholders for the
election  of  directors of the Maker or of any other matter, or any other rights
as  a  shareholder  of the Maker.  Upon the issuance of a Conversion Notice, the
Holder  shall  have  all  rights  as  a  shareholder  of  the  Maker.


-MISCELLANEOUS
     -Notices.  Any  notice,  demand,  request,  waiver  or  other communication
required  or  permitted  to  be given hereunder shall be in writing and shall be
effective  (a)  upon hand delivery by telex (with correct answer back received),
telecopy  or  facsimile  at  the  address  or  number designated in the Purchase
Agreement  (if  delivered  on  a business day during normal business hours where
such  notice  is  to  be  received),  or  the  first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address,  or  upon  actual receipt of such mailing, whichever shall first occur.
The Maker will give written notice to the Holder at least twenty (20) days prior
to  the  date  on  which  the  Maker closes its books or takes a record (x) with
respect  to any dividend or distribution upon the Common Stock, (y) with respect
to  any  pro  rata  subscription  offer  to  holders  of Common Stock or (z) for
determining  rights  to  vote  with  respect to any Organic Change, dissolution,
liquidation  or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public.  The Maker will
also  give  written  notice to the Holder at least twenty (20) days prior to the
date  on  which  any Organic Change, dissolution, liquidation or winding-up will
take  place and in no event shall such notice be provided to the Holder prior to
such  information  being  made  known  to  the  public.
Governing  Law.  This Note shall be governed by and construed in accordance with
the  internal laws of the State of New York, without giving effect to the choice
of  law  provisions.  This  Note  shall not be interpreted or construed with any
presumption  against  the  party  causing  this  Note  to  be  drafted.
-Headings.  Article  and  section  headings in this Note are included herein for
purposes  of  convenience  of  reference only and shall not constitute a part of
this  Note  for  any  other  purpose.
Remedies,  Characterizations, Other Obligations, Breaches and Injunctive Relief.
The  remedies  provided  in this Note shall be cumulative and in addition to all
other  remedies  available  under  this  Note,  at  law or in equity (including,
without  limitation,  a  decree  of specific performance and/or other injunctive
relief),  no remedy contained herein shall be deemed a waiver of compliance with
the  provisions  giving  rise  to  such  remedy and nothing herein shall limit a
holder's  right  to pursue actual damages for any failure by the Maker to comply
with  the  terms  of  this  Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be  the  amounts  to  be received by the holder thereof and shall not, except as
expressly  provided  herein, be subject to any other obligation of the Maker (or
the  performance  thereof).  The  Maker  acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Holder and
that  the  remedy  at  law  for any such breach may be inadequate. Therefore the
Maker  agrees  that,  in  the event of any such breach or threatened breach, the
Holder  shall  be  entitled,  in  addition  to  all  other  available rights and
remedies,  at  law  or  in  equity,  to  seek  and obtain such equitable relief,
including  but  not  limited  to  an  injunction  restraining any such breach or
threatened  breach,  without  the necessity of showing economic loss and without
any  bond  or  other  security  being  required.
-Enforcement  Expenses.  The  Maker  agrees  to  pay  all  costs and expenses of
enforcement  of  this Note, including, without limitation, reasonable attorneys'
fees  and  expenses.
-Binding  Effect.   The obligations of the Maker and the Holder set forth herein
shall  be binding upon the successors and assigns of each such party, whether or
not  such  successors  or  assigns  are  permitted  by  the  terms  hereof.
-Amendments.  This  Note  may not be modified or amended in any manner except in
writing  executed  by  the  Maker  and  the  Holder.
-Compliance  with  Securities  Laws.  The  Holder of this Note acknowledges that
this  Note  is  being  acquired solely for the Holder's own account and not as a
nominee  for  any other party, and for investment, and that the Holder shall not
offer, sell or otherwise dispose of this Note.  This Note and any Note issued in
substitution  or  replacement  therefore  shall  be  stamped or imprinted with a
legend  in  substantially  the  following  form:
" THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE  "ACT"),  OR  APPLICABLE  STATE  SECURITIES  LAWS,  AND  MAY  NOT  BE SOLD,
TRANSFERRED,  PLEDGED  OR  HYPOTHECATED  IN  THE ABSENCE OF SUCH REGISTRATION OR
RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY
ACCEPTABLE  TO  THE  MAKER)  IN  THE  FORM,  SUBSTANCE  AND  SCOPE  REASONABLY
SATISFACTORY  TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
SUCH  STATE  SECURITIES  LAWS."

-Consent  to  Jurisdiction.  Each  of  the  Maker and the Holder (i) hereby
irrevocably  submits to the exclusive jurisdiction of the United States District
Court  sitting  in the Southern District of New York and the courts of the State
of  New  York located in New York county for the purposes of any suit, action or
proceeding  arising  out of or relating to this Note and (ii) hereby waives, and
agrees  not  to assert in any such suit, action or proceeding, any claim that it
is  not  personally  subject  to  the jurisdiction of such court, that the suit,
action  or  proceeding  is brought in an inconvenient forum or that the venue of
the  suit,  action  or proceeding is improper.  Each of the Maker and the Holder
consents  to  process  being  served  in  any such suit, action or proceeding by
mailing  a copy thereof to such party at the address in effect for notices to it
under  the Purchase Agreement and agrees that such service shall constitute good
and  sufficient  service of process and notice thereof.  Nothing in this Section
4.9  shall  affect  or  limit  any  right  to  serve process in any other manner
permitted  by  law.
-Parties  in Interest.  This Note shall be binding upon, inure to the benefit of
and  be enforceable by the Maker, the Holder and their respective successors and
permitted  assigns.
-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  privilege.
-Maker Waivers.  Except as otherwise specifically provided herein, the Maker and
all  others  that  may  become  liable  for  all  or any part of the obligations
evidenced  by this Note, hereby waive presentment, demand, notice of nonpayment,
protest  and  all  other  demands'  and notices in connection with the delivery,
acceptance,  performance  and enforcement of this Note, and do hereby consent to
any  number  of  renewals  of extensions of the time or payment hereof and agree
that  any  such  renewals  or  extensions may be made without notice to any such
persons  and  without affecting their liability herein and do further consent to
the  release of any person liable hereon, all without affecting the liability of
the  other  persons,  firms or Maker liable for the payment of this Note, AND DO
HEREBY  WAIVE  TRIAL  BY  JURY.
     No  delay  or  omission  on the part of the Holder in exercising its rights
under this Note, or course of conduct relating hereto, shall operate as a waiver
of  such  rights  or  any other right of the Holder, nor shall any waiver by the
Holder of any such right or rights on any one occasion be deemed a waiver of the
same  right  or  rights  on  any  future  occasion.
THE  MAKER  ACKNOWLEDGES  THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL  TRANSACTION,  AND  TO  THE  EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
WAIVES  ITS  RIGHT  TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY
WHICH  THE  HOLDER  OR  ITS  SUCCESSORS  OR  ASSIGNS  MAY  DESIRE  TO  USE.
     Section 4.13     Definitions.  For the purposes hereof, the following terms
                      -----------
shall  have  the  following  meanings:

     "Independent  Appraiser"  means  a  nationally recognized or major regional
      ----------------------
investment  banking  firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements  of  the  Issuer)  that  is  regularly  engaged  in  the  business of
appraising  the  Capital  Stock  or  assets of corporations or other entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of  any  Warrant.

     "Person"  means  an  individual  or  a  corporation,  partnership,  trust,
      ------
incorporated  or  unincorporated  association,  joint venture, limited liability
company,  joint stock company, government (or an agency or political subdivision
thereof)  or  other  entity  of  any  kind.

     "Trading  Day"  means  (a) a day on which the Common Stock is traded on The
      ------------
Nasdaq Small-Cap Market, the Nasdaq National Market or other registered national
stock  exchange  on which the Common Stock has been listed, or (b) if the Common
Stock  is  not listed on The Nasdaq Small-Cap Market, the Nasdaq National Market
or  any  registered  national stock exchange, a day or which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(c)  if the Common Stock is not quoted on the OTC Bulletin Board, 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  its  functions  of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) and
(c)  hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State  of  New York are authorized or required by law or other government action
to  close.


                           PEN  INTERCONNECT,  INC.



                           By:  /s/  Jose  Candia
                           Name:  Jose  Candia
                           Title: Chief  Executive  Officer


<PAGE>

                                    EXHIBIT A

                               WIRE INSTRUCTIONS.

Payee:        ________________________________________________________
Bank:         ________________________________________________________
Address:      ________________________________________________________
              ________________________________________________________
Bank No.      ________________________________________________________
Account  No . ________________________________________________________
Account  Name ________________________________________________________



<PAGE>
                                     FORM OF
                              NOTICE OF CONVERSION
     (To be Executed by the Registered Holder in order to Convert the Note)
The  undersigned  hereby irrevocably elects to convert $ ________________ of the
principal  amount  of  the above Note No. ___ into shares of Common Stock of PEN
INTERCONNECT,  INC.  (the "Maker") according to the conditions hereof, as of the
date  written  below.
Date  of  Conversion*  _________________________________________________________
Applicable Conversion Price * __________________________________________________
Signature_____________________________________________________________
         [Name]
Address:____________________________________________________________
      ____________________________________________________________