ex-10_2.htm


    
      Exhibit
        10.2

       

      


       

      


       

      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

       

      Great
        Neck, NY

      September
        13, 2007                                                                                       $540,600

       

      FOR
        VALUE RECEIVED, JUNIPER GROUP, INC., a Nevada corporation (hereinafter called
        the “Borrower”), hereby promises to pay to the order of AJW Master Fund, Ltd. or
        registered assigns (the “Holder”) the sum of $540,600, on September 13, 2010
        (the “Maturity Date”), and to pay interest on the unpaid principal balance
        hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from
        September 13, 2007 (the “Issue Date”) until the same becomes due and payable,
        whether at maturity or upon acceleration or by prepayment or
        otherwise.  Any amount of principal or interest 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”).  Interest shall commence accruing on the Issue Date, shall
        be computed on the basis of a 365-day year and the actual number of days
        elapsed
        and shall be payable quarterly provided that no interest shall be due and
        payable for any month in which the Trading Price (as such term is defined
        below)
        is greater than $.0375 for each Trading Day (as such term is defined below)
        of
        the month. All payments due hereunder (to the extent not converted into common
        stock, $.001 par value per share (the “Common Stock”) in accordance with the
        terms hereof) shall be made in lawful money of the United States of
        America.  All payments shall be made at such address as the Holder
        shall hereafter give to the Borrower by written notice made in accordance
        with
        the provisions of this Note.  Whenever any amount expressed to be due
        by the terms of this Note is due on any day which is not a business day,
        the
        same shall instead be due on the next succeeding day which is a business
        day
        and, in the case of any interest payment date which is not the date on which
        this Note is paid in full, the extension of the due date thereof shall not
        be
        taken into account for purposes of determining the amount of interest due
        on
        such date.  As used in this Note, the term “business day” shall mean
        any day other than a Saturday, Sunday or a day on which commercial banks
        in the
        city of New York, New York are authorized or required by law 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 September 13, 2007, pursuant to which
        this
        Note was originally issued (the “Purchase Agreement”).

       

      This
        Note is free from all taxes, liens, claims and encumbrances with respect
        to the
        issue thereof and shall not be subject to preemptive rights or other similar
        rights of shareholders of the Borrower and will not impose personal liability
        upon the holder thereof.  The obligations of the Borrower under this
        Note shall be secured by that certain Security Agreement and Intellectual
        Property Security Agreement, each dated September 13, 2007 by and between
        the
        Borrower and the Holder.

       

      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
        or any payments pursuant to Section 1.7, each in respect of the remaining
        outstanding principal amount of this Note to convert all or any part of the
        outstanding and unpaid principal amount of this Note into fully paid and
        non-assessable shares of Common Stock, as such Common Stock exists on the
        Issue
        Date, or any shares of capital stock or other securities of the Borrower
        into
        which such Common Stock shall hereafter be changed or reclassified at the
        conversion price  (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 providedfurther 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 5.2 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) at the Borrower’s option, accrued
        and unpaid interest, if any, on such principal amount at the interest rates
        provided in this Note to the Conversion Date, provided, however, that the
        Company shall have the right to pay any or all interest in cash plus (3)
        at the Borrower’s option, Default Interest, if any, on the amounts referred to
        in the immediately preceding clauses (1) and/or (2) plus (4) at the
        Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and
        1.4(g) hereof or pursuant to Section 2(c) of that certain Registration Rights
        Agreement, dated as of September 13, 2007, 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.

       

      (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 (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 three
        (3) 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 National Quotation Bureau, Inc.  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
        50.0%. The “Fixed Conversion Price” shall mean $.05.

       

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

       

      1.3  Authorized
        Shares.  Subject to Stockholder Approval (as such term is defined
        in Section 4(k) of the Securities Purchase Agreement), 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) accrued and unpaid interest on the unpaid principal
        amount of
        this Note through the Authorization Date (as defined below) plus (3)
        Default Interest, if any, on the amounts referred to in clauses (1) and/or
        (2),
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.  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 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 three (3) business
        days
        after such receipt (and, solely in the case of conversion of the entire unpaid
        principal amount hereof, surrender of this Note) (such third 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 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 and its 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 $2,000 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:

       

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

       

      (b)  Adjustment
        Due to Merger, Consolidation, Etc.  If, at any time when this Note
        is issued and outstanding and prior to conversion of all of the Notes, there
        shall be any merger, consolidation, exchange of shares, recapitalization,
        reorganization, or other similar event, as a result of which shares of Common
        Stock of the Borrower shall be changed into the same or a different number
        of
        shares of another class or classes of stock or securities of the Borrower
        or
        another entity, or in case of any sale or conveyance of all or substantially
        all
        of the assets of the Borrower other than in connection with a plan of complete
        liquidation of the Borrower, then the Holder of this Note shall thereafter
        have
        the right to receive upon conversion of this Note, upon the basis and upon
        the
        terms and conditions specified herein and in lieu of the shares of Common
        Stock
        immediately theretofore issuable upon conversion, such stock, securities
        or
        assets which the Holder would have been entitled to receive in such transaction
        had this Note been converted in full immediately prior to such transaction
        (without regard to any limitations on conversion set forth herein), and in
        any
        such case appropriate provisions shall be made with respect to the rights
        and
        interests of the Holder of this Note to the end that the provisions hereof
        (including, without limitation, provisions for adjustment of the Conversion
        Price and of the number of shares issuable upon conversion of the Note) shall
        thereafter be applicable, as nearly as may be practicable in relation to
        any
        securities or assets thereafter deliverable upon the conversion
        hereof.  The Borrower shall not 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 shareholders
        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 shareholders
        in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
        (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be
        entitled, upon any conversion of this Note after the date of record for
        determining shareholders entitled to such Distribution, to receive the amount
        of
        such assets which would have been payable to the Holder with respect to the
        shares of Common Stock issuable upon such conversion had such Holder been
        the
        holder of such shares of Common Stock on the record date for the determination
        of shareholders entitled to such Distribution.

       

      (d)  Adjustment
        Due to Dilutive Issuance.  If, at any time when any Notes are
        issued and outstanding, the Borrower issues or sells, or in accordance with
        this
        Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common
        Stock for no consideration or for a consideration per share (before deduction
        of
        reasonable expenses or commissions or underwriting discounts or allowances
        in
        connection therewith) less than the Fixed Conversion Price in effect on the
        date
        of such issuance (or deemed issuance) of such shares of Common Stock (a
“Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Fixed
        Conversion Price will be reduced to the amount of the consideration per share
        received by the Borrower in such Dilutive Issuance; provided that only
        one adjustment will be made for each Dilutive Issuance. Notwithstanding anything
        contained in this Section 1.6 to the contrary, the Holder hereby acknowledges
        that the issuance of any shares of Common Stock in connection with any of
        the
        transactions set forth on Schedule A, attached hereto, shall not be
        deemed a Dilutive Issuance and accordingly there will be no reduction
        to  the Fixed Conversion Price.

       

      The
        Borrower shall be deemed to have issued or sold shares of Common Stock if
        the
        Borrower in any manner issues or grants any warrants, rights or options (not
        including employee stock option plans), whether or not immediately exercisable,
        to subscribe for or to purchase Common Stock or other securities convertible
        into or exchangeable for Common Stock (“Convertible Securities”) (such warrants,
        rights and options to purchase Common Stock or Convertible Securities are
        hereinafter referred to as “Options”) and the price per share for which Common
        Stock is issuable upon the exercise of such Options is less than the Fixed
        Conversion Price then in effect, then the Fixed Conversion Price shall be
        equal
        to such price per share.  For purposes of the preceding sentence, the
“price per share for which Common Stock is issuable upon the exercise of such
        Options” is determined by dividing (i) the total amount, if any, received or
        receivable by the Borrower as consideration for the issuance or granting
        of all
        such Options, plus the minimum aggregate amount of additional consideration,
        if
        any, payable to the Borrower upon the exercise of all such Options, plus,
        in the
        case of Convertible Securities issuable upon the exercise of such Options,
        the
        minimum aggregate amount of additional consideration payable upon the conversion
        or exchange thereof at the time such Convertible Securities first become
        convertible or exchangeable, by (ii) the maximum total number of shares of
        Common Stock issuable upon the exercise of all such Options (assuming full
        conversion of Convertible Securities, if applicable).  No further
        adjustment to the Conversion Price will be made upon the actual issuance
        of such
        Common Stock upon the exercise of such Options or upon the conversion or
        exchange of Convertible Securities issuable upon exercise of such
        Options.

       

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

       

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

       

      (f)  Notice
        of Adjustments.  Upon the occurrence of each adjustment or
        readjustment of the Conversion Price as a result of the events described
        in this
        Section 1.6, the Borrower, at its expense, shall promptly compute such
        adjustment or readjustment and prepare and furnish to the Holder 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  Trading
        Market Limitations.  Unless permitted by the applicable rules and
        regulations of the principal securities market on which the Common Stock
        is then
        listed or traded, in no event shall the Borrower issue upon conversion of
        or
        otherwise pursuant to this Note and the other Notes issued pursuant to the
        Purchase Agreement more than the maximum number of shares of Common Stock
        that
        the Borrower can issue pursuant to any rule of the principal United States
        securities market on which the Common Stock is then traded (the “Maximum Share
        Amount”), which shall be 19.99% of the total shares outstanding on the Closing
        Date (as defined in the Purchase Agreement), subject to equitable adjustment
        from time to time for stock splits, stock dividends, combinations, capital
        reorganizations and similar events relating to the Common Stock occurring
        after
        the date hereof.  Once the Maximum Share Amount has been issued (the
        date of which is hereinafter referred to as the “Maximum Conversion Date”), if
        the Borrower fails to eliminate any prohibitions under applicable law or
        the
        rules or regulations of any stock exchange, interdealer quotation system
        or
        other self-regulatory organization with jurisdiction over the Borrower or
        any of
        its securities on the Borrower’s ability to issue shares of Common Stock in
        excess of the Maximum Share Amount (a “Trading Market Prepayment Event”), in
        lieu of any further right to convert this Note, and in full satisfaction
        of the
        Borrower’s obligations under this Note, the Borrower shall pay to the Holder,
        within fifteen (15) business days of the Maximum Conversion Date (the “Trading
        Market Prepayment Date”), an amount equal to 130% times the sum of
        (a) the then outstanding principal amount of this Note immediately following
        the
        Maximum Conversion Date, plus (b) accrued and unpaid interest on the
        unpaid principal amount of this Note to the Trading Market Prepayment Date,
        plus (c) Default Interest, if any, on the amounts referred to in clause
        (a) and/or (b) above, plus (d) any optional amounts that may be added
        thereto at the Maximum Conversion Date by the Holder in accordance with the
        terms hereof (the then outstanding principal amount of this Note immediately
        following the Maximum Conversion Date, plus the amounts referred to in
        clauses (b), (c) and (d) above shall collectively be referred to as the
“Remaining Convertible Amount”).  With respect to each Holder of
        Notes, the Maximum Share Amount shall refer to such Holder’s
prorata share thereof determined in accordance with Section 4.8
        below.  In the event that the sum of (x) the aggregate number of
        shares of Common Stock issued upon conversion of this Note and the other
        Notes
        issued pursuant to the Purchase Agreement plus (y) the aggregate number
        of shares of Common Stock that remain issuable upon conversion of this Note
        and
        the other Notes issued pursuant to the Purchase Agreement, represents at
        least
        one hundred percent (100%) of the Maximum Share Amount (the “Triggering Event”),
        the Borrower will use its best efforts to seek and obtain Shareholder Approval
        (or obtain such other relief as will allow conversions hereunder in excess
        of
        the Maximum Share Amount) as soon as practicable following the Triggering
        Event
        and before the Maximum Conversion Date.  As used herein, “Shareholder
        Approval” means approval by the shareholders of the Borrower to authorize the
        issuance of the full number of shares of Common Stock which would be issuable
        upon full conversion of the then outstanding Notes but for the Maximum Share
        Amount.

       

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

       

       

      ARTICLE
        II.                                           CERTAIN
        COVENANTS

       

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

       

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

       

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

       

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

       

      3.1  Failure
        to Pay Principal or Interest.  The Borrower fails to pay the
        principal hereof or interest thereon when due on this Note, whether at maturity,
        upon a Trading Market Prepayment Event pursuant to Section 1.7, 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 three (3) business 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 twenty (120) 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;

       

      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,
        unless
        such proceeding shall be stayed within thirty (30) days;

       

      3.9  Delisting
        of Common Stock.  The Borrower shall fail to maintain the listing
        of the Common Stock on at least one of the OTCBB or an equivalent replacement
        exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New
        York
        Stock Exchange, or the American Stock Exchange; 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 (unless, under Section 3.8, such proceeding shall be stayed within
        30
        days), 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 sum of (w) the then
        outstanding principal amount of this Note plus (x) accrued and unpaid
        interest on the unpaid principal amount of this Note to the date of payment
        (the
“Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the
        amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed
        to the Holder pursuant to Sections 1.3 and 1.4(g) hereof 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 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.

       

       

      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 60 Cutter Mill Road,
        Great Neck, NY 11021, facsimile number: (516) 829-4691.  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 bonafide
        margin account or other lending arrangement.

       

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

       

      4.8  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 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.  For purposes of calculating interest
        payable on the outstanding principal amount hereof, except as otherwise provided
        herein, amounts convertible into Damages Shares (“Damages Amounts”) shall not
        bear interest but must be converted prior to the conversion of any outstanding
        principal amount hereof, until the outstanding Damages Amounts is
        zero.

       

      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 shareholders (and copies of proxy materials and other information
        sent to shareholders).  In the event of any taking by the Borrower of
        a record of its shareholders for the purpose of determining shareholders
        who are
        entitled to receive payment of any dividend or other distribution, any right
        to
        subscribe for, purchase or otherwise acquire (including by way of merger,
        consolidation, reclassification or recapitalization) any share of any class
        or
        any other securities or property, or to receive any other right, or for the
        purpose of determining shareholders who are entitled to vote in connection
        with
        any proposed sale, lease or conveyance of all or substantially all of the
        assets
        of the Borrower or any proposed liquidation, dissolution or winding up of
        the
        Borrower, the Borrower shall mail a notice to the Holder, at least twenty
        (20)
        days prior to the record date specified therein (or thirty (30) days prior
        to
        the consummation of the transaction or event, whichever is earlier), of the
        date
        on which any such record is to be taken for the purpose of such dividend,
        distribution, right or other event, and a brief statement regarding the amount
        and character of such dividend, distribution, right or other event to the
        extent
        known at such time.  The Borrower shall make a public announcement of
        any event requiring notification to the Holder hereunder substantially
        simultaneously with the notification to the Holder in accordance with the
        terms
        of this Section 4.12.

       

      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 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 or Trading Market
        Prepayment Event 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 $.15 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) 135%
        for prepayments occurring between thirty-one (31) and sixty  (60) days
        of the Issue Date, or (iii) 150% (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 (x) accrued and unpaid interest on the unpaid
        principal amount of this Note to the Optional Prepayment Date plus (y)
        Default Interest, if any, on the amounts referred to in clauses (w) and (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 “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.

       

      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 $.15 per share, 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.

       

      


       

      


       

      


       

      


       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

      IN
        WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by
        its
        duly authorized officer this 13th day of September,
        2007.

       

      


      JUNIPER
        GROUP, INC.

      


      


      


      By:       /s/Vlado
        P. Hreljanovic

      Chief
        Executive Officer

       

       

      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 $.001 per
        share
        (“Common Stock”), of Juniper Group, Inc., a Nevada corporation (the “Borrower”)
        according to the conditions of the convertible Notes of the Borrower dated
        as of
        September 13, 2007 (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:____________________________________

       

      The
        Borrower shall issue and deliver shares of Common Stock to an overnight courier
        not later than three business days following receipt of the original Note(s)
        to
        be converted, and shall make payments pursuant to the Notes for the number
        of
        business days such issuance and delivery is late.