THIS
      SUBORDINATED CONVERTIBLE NOTE REPLACES A SUBORDINATED CONVERTIBLE NOTE BETWEEN
      GEORGE D. SCHAEFER AND S2 NEW YORK DESIGN CORP. THIS NOTE WAS ASSUMED AND
      REISSUED BY INCA DESIGNS, INC. PURSUANT TO TERMS OF THE SECURITIES EXCHANGE
      AGREEMENT BETWEEN INCA DESIGNS, INC. AND S2 NEW YORK DESIGN CORP. DATED MAY
      21,
      2007, MAKING THE ORIGINAL INSTRUMENT NULL AND VOID. ALL TERMS CONTAINED HEREIN
      ARE THE SAME AS THE TERMS IN THE ORIGINAL INSTRUMENT WITH THE EXCEPTION THAT
      THE
      NAME OF THE COMPANY WAS CHANGED TO INCA DESIGNS, INC. AND ALL TERMS OUTLINED
      THEREIN NOW RELATE TO THE COMMON STOCK OF INCA DESIGNS, INC.


    


    THIS
      NOTE
      AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
      FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

    


    SUBORDINATED
      CONVERTIBLE NOTE

    


    FOR
      VALUE
      RECEIVED, INCA
      Designs, Inc.,
      a
      Nevada company (hereinafter called “Borrower”), hereby promises to pay to
George
      D. Schaefer,
      (the
“Holder”) or its registered assigns or successors in interest or order, without
      demand, the sum of One Hundred Thousand Dollars ($100,000) (“Principal Amount”),
      with simple and unpaid interest thereon, on or before September 30, 2007 (the
      “Maturity Date”), if not sooner paid.

    


    This
      Note
      has been entered into pursuant to the terms of a Securities Purchase Agreement
      between the Borrower, the Holder and certain other holders (the “Other Holders”)
      of convertible Notes (the “Other Notes”), dated of even date herewith (the
“Securities Purchase Agreement”), and shall be governed by the terms of such
      Securities Purchase Agreement. Unless otherwise separately defined herein,
      all
      capitalized terms used in this Note shall have the same meaning as is set forth
      in the Securities Purchase Agreement. The following terms shall apply to this
      Note:

    


    ARTICLE
      I

    


    INTEREST;
      AMORTIZATION

    


    1.1.  Interest
      Rate.
      Subject
      to Section 5.7 hereof, interest payable on this Note shall accrue at a rate
      per
      annum (the “Interest Rate”) of twenty-four percent (24%). Interest on the
      Principal Amount shall accrue from the date of this Note and shall be payable
      on
      the Maturity Date. Interest on the Notes will be computed on the basis of a
      360-day year of twelve 30-day months.

    


    1.2
      Default
      Interest Rate.
      Following the occurrence and during the continuance of an Event of Default,
      which, if susceptible to cure is not cured within twenty (20) days, otherwise
      then from the first date of such occurrence, the annual interest rate on this
      Note shall (subject to Section 5.7) automatically be increased to the highest
      percentage allowed by law. 



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ARTICLE
      II

    


    CONVERSION
      RIGHTS

    


    2.1. Holder’s
      Conversion Rights.
      Subject
      to Section 2.2, the Holder shall have the right, but not the obligation at
      any
      time from the date of issuance of this Note, to convert all or any portion
      of
      the then aggregate outstanding Principal Amount of this Note, into shares of
      Common Stock, subject to the terms and conditions set forth in this Article
      II
      at a forty percent (40%) discount to the market price of the Borrower’s Common
      Stock or $.50 per share, whichever is lower. The “market price” shall be
      determined at the average of the closing bid of the Company’s Common Stock for
      the twenty (20) trading days immediately prior to the date of conversion. The
      Holder may exercise such right by delivery to the Borrower of a written Notice
      of Conversion pursuant to Section 3.3. 

    


    2.2. Conversion
      Limitation.
      The
      Holder shall not be entitled to convert on a Conversion Date that amount of
      the
      Note in connection with that number of shares of Common Stock which would be
      in
      excess of the sum of (i) the number of shares of Common Stock beneficially
      owned
      by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock
      issuable in connection with the unconverted portion of the Note, and (iii)
      the
      number of shares of Common Stock issuable upon the conversion of the Note with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Holder and
      its affiliates of more than 4.99% of the outstanding shares of Common Stock
      of
      the Borrower on such Conversion Date. For the purposes of the provision 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 Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
      shall not be limited to aggregate conversions of only 4.99% and aggregate
      conversion by the Holder may exceed 4.99%. The Holder shall have the authority
      and obligation to determine whether the restriction contained in this Section
      2.2 will limit any conversion hereunder and to the extent that the Holder
      determines that the limitation contained in this Section applies, the
      determination of which portion of the Notes are convertible shall be the
      responsibility and obligation of the Holder. The Holder may waive the conversion
      limitation described in this Section 2.2, in whole or in part, upon and
      effective after 61 days prior written notice to the Borrower. 

    


    2.3. Mechanics
      of Holder’s Conversion.
      

    


    (a) In
      the
      event that the Holder elects to convert any amounts outstanding under this
      Note
      into Common Stock, the Holder shall give notice of such election by delivering
      an executed and completed notice of conversion (a “Notice of Conversion”) to the
      Borrower, which Notice of Conversion shall provide a breakdown in reasonable
      detail of the Principal Amount, accrued interest and amounts being converted.
      The original Note is not
      required
      to be surrendered to the Borrower
      until
      all sums due under the Note have been paid. On each Conversion Date (as
      hereinafter defined) and in accordance with its Notice of Conversion, the Holder
      shall make the appropriate reduction to the Principal Amount, accrued interest
      and fees as entered in its records. Each date on which a Notice of Conversion
      is
      delivered or telecopied to the Borrower in accordance with the provisions hereof
      shall be deemed a “Conversion Date.” A form of Notice of Conversion
      to be employed by the Holder is annexed hereto as Exhibit A.

    


    (b) Pursuant
      to the terms of a Notice of Conversion, the Borrower will issue instructions
      to
      the transfer agent accompanied by an opinion of counsel, if so required by
      the
      Borrower’s transfer agent and shall cause the transfer agent to issue
      and
      deliver at such office to the Holder a certificate or certificates for the
      number of Common Shares to which such Holder shall be entitled as aforesaid.
      The
      person or persons entitled to receive the Common Shares issuable upon such
      conversion shall be treated for all purposes as the record holder or holders
      of
      such shares of Common Stock on the later of the date of the Conversion Notice
      or
      the date of compliance by the Holder with all the provisions of this Section
      2.3.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.4. Conversion
      Mechanics.

     

    (a) The
      number of shares of Common Stock to be issued upon each conversion of this
      Note
      pursuant to this Article II shall be determined by dividing that portion of
      the
      Principal Amount and interest and fees to be converted, if any, by the then
      applicable Fixed Conversion Price .

    


    (b) The
      number and kind of shares or other securities to be issued upon conversion
      shall
      be subject to adjustment from time to time upon the happening of certain events
      while this conversion right remains outstanding, as follows:

    


    i. Merger,
      Sale of Assets, etc.
      If the
      Borrower at any time shall consolidate with or merge into or sell or convey
      all
      or substantially all its assets to any other corporation, this Note, as to
      the
      unpaid principal portion thereof and accrued interest thereon, shall thereafter
      be deemed to evidence the right to purchase such number and kind of shares
      or
      other securities and property as would have been issuable or distributable
      on
      account of such consolidation, merger, sale or conveyance, upon or with respect
      to the securities subject to the conversion or purchase right immediately prior
      to such consolidation, merger, sale or conveyance. The foregoing provision
      shall
      similarly apply to successive transactions of a similar nature by any such
      successor or purchaser. Without limiting the generality of the foregoing, the
      anti-dilution provisions of this Section shall apply to such securities of
      such
      successor or purchaser after any such consolidation, merger, sale or
      conveyance.

    


    ii. Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid principal portion thereof and accrued interest
      thereon, shall thereafter be deemed to evidence the right to purchase an
      adjusted number of such securities and kind of securities as would have been
      issuable as the result of such change with respect to the Common Stock
      immediately prior to such reclassification or other change.

    


    iii. Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      in shares of Common Stock, the Conversion Price shall be proportionately reduced
      in case of subdivision of shares or stock dividend or proportionately increased
      in the case of combination of shares, in each such case by the ratio which
      the
      total number of shares of Common Stock outstanding immediately after such event
      bears to the total number of shares of Common Stock outstanding immediately
      prior to such event.

    


    (c) Whenever
      the Conversion Price is adjusted pursuant to Section 2.4(b) above, the Borrower
      shall promptly mail to the Holder a notice setting forth the Conversion Price
      after such adjustment and setting forth a statement of the facts requiring
      such
      adjustment.

    


    (d) Nothing
      herein contained shall prohibit the Company from raising additional funds at
      a
      purchase price higher than the Fixed Conversion Price and any issuance of shares
      under these circumstances will not effect he number of shares to be issued
      hereunder.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.5. Reservation.
      During
      the period the conversion right exists, Borrower will reserve from its
      authorized and unissued Common Stock not less than
      one
      hundred
      seventy-five
      percent
      (175%)
      of the
      number of shares to provide for the issuance of Common Stock upon the full
      conversion of this Note.
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully
      paid and
      non-assessable. Borrower agrees that its issuance of this Note shall constitute
      full authority to its officers, agents, and transfer agents who are charged
      with
      the duty of executing and issuing stock certificates to execute and issue the
      necessary certificates for shares of Common Stock upon the conversion of this
      Note.

    


    2.6 Issuance
      of Replacement Note.
      Upon
      any partial conversion of this Note, a replacement Note containing the same
      date
      and provisions of this Note shall,
      at the
      written request of the Holder, be
      issued
      by the Borrower to the Holder for the outstanding Principal Amount of this
      Note
      and accrued interest which shall not have been converted or paid, provided
      Holder has surrendered an original Note to the Company. In the event that the
      Holder elects not to surrender a Note for reissuance upon partial payment or
      conversion, the Holder hereby indemnifies the Borrower against any and all
      loss
      or damage attributable to a third-party claim in an amount in excess of the
      actual amount then due under the Note.

    


    ARTICLE
      III

    


    EVENTS
      OF DEFAULT

    


    The
      occurrence of any of the following events of default (“Event of Default”) shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below:

    


    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay any installment of Principal Amount, interest or other
      sum
      due under this Note or any Transaction Document when due and such failure
      continues for a period of ten (10) business days after the due
      date.

    


    3.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other term or condition of the
      Securities Purchase Agreement, this Note or Transaction Document in any material
      respect and such breach, if subject to cure, continues for a period of ten
      (10)
      business days after written notice to the Borrower from the Holder.

    


    3.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in the
      Securities Purchase Agreement, Transaction Document or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      herewith or therewith shall be false or misleading in any material respect
      as of
      the date made and the Closing Date.

    


    3.4 Receiver
      or Trustee.
      The
      Borrower or any Subsidiary of Borrower shall make an assignment for the benefit
      of creditors, or apply for or consent to the appointment of a receiver or
      trustee for them or for a substantial part of their property or business; or
      such a receiver or trustee shall otherwise be appointed.

    


    3.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      Borrower or any subsidiary of Borrower or any of their property or other assets
      for more than $25,000
      and shall remain unvacated, unbonded or unstayed for a period of forty-five
      (45)
days.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.6 Non-Payment.
      The
      Borrower shall have received a notice of default, which remains uncured for
      a
      period of more than twenty (20) business days, on the payment of any one or
      more
      debts or obligations aggregating in excess of $25,000 beyond any applicable
      grace period;

    


    3.7 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower or any Subsidiary of Borrower and if
      instituted against them are not dismissed within sixty (60) days
      of
      initiation.

    


    3.8 Failure
      to Deliver Common Stock or Replacement Note.
      Borrower’s failure to timely deliver Common Stock to the Holder pursuant to and
      in the form required by this Note or the Securities Purchase Agreement, and,
      if
      requested by Borrower, a replacement Note,
      and
      such failure continues for a period of five (5) business days after the due
      date.

     

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

    


    3.10 Cross
      Default.
      A
      default by the Borrower of a material term, covenant, warranty or undertaking
      of
      any Transaction Document or other agreement to which the Borrower and Holder
      are
      parties, or the occurrence of a material event of default under any such other
      agreement which is not cured after any required notice and/or cure
      period.

    


    ARTICLE
      IV

    


    MISCELLANEOUS

    


    4.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of Holder hereof 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. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    


    4.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

      
        	
                for
                  the Company:

              	
                INCA
                  Designs, Inc.

              
	 	
                53
                  West 36th
                  Street, 9th
                  Floor

              
	 	
                New
                  York, NY 10018

              
	 	
                Tel:  
                  (212) 967-5212

              
	 	
                Fax:  (212)
                  967-5218

              
	 	 
	
                for
                  the Holder:

              	
                George
                  D. Schaefer

              
	 	
                3666
                  Shady Lane

              
	 	
                Palm
                  Harbor, FL 34683

              


      

    

    


    4.3 Amendment
      Provision.
      The
      term “Note” and all reference thereto, as used throughout this instrument, shall
      mean this instrument 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 the benefit of the Holder and its successors and
      assigns.

    


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

    


    4.6 Governing
      Law.
      This
      Note
      shall be governed by and construed in accordance with the laws of the State
      of
      New York, without regard to conflicts
      of laws
      principles that would result in the application of the substantive laws of
      another jurisdiction. Any
      action brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the State of New York. The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney’s fees and costs. In the event that any provision of this
      Note is invalid or unenforceable under any applicable statute or rule of law,
      then such provision shall be deemed inoperative to the extent that it may
      conflict therewith and shall be deemed modified to conform with such statute
      or
      rule of law. Any such provision which may prove invalid or unenforceable under
      any law shall not affect the validity or unenforceability of any other provision
      of this Note. Nothing contained herein shall be deemed or operate to preclude
      the Holder from bringing suit or taking other legal action against the Borrower
      in any other jurisdiction to collect on the Borrower’s obligations to Holder, to
      realize on any collateral or any other security for such obligations, or to
      enforce a judgment or other court in favor of the Holder.

    


    4.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

    


    4.8. Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against
      the other.

    


    4.9 Shareholder
      Status.
      The
      Holder shall not have rights as a shareholder of the Borrower with respect
      to
      unconverted portions of this Note. However, the Holder will have the rights
      of a
      shareholder of the Borrower with respect to the Shares of Common Stock to be
      received after delivery by the Holder of a Conversion Notice to the
      Borrower.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the 20th
      day of
      November, 2006.

    
      	 	 	 
	 	INCA
              DESIGNS,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Donald
              R.
              Mastropietro
	 	
              

            
	 	Donald
              R. Mastropietro, President


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    NOTICE
      OF CONVERSION

    


    (To
      be
      executed by the Registered Holder in order to convert the Note)


    


    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by INCA Designs, Inc. (the “Borrower”) on
      November 20, 2006 into Shares of Common Stock of the Borrower according to
      the
      conditions set forth in such Note, as of the date written below.

     

     

    
      
        	
                Date
                  of Conversion:

              	 


      

       

      
        
          	
                  
                    Conversion Price:
                      

                  

                	 


        



      


      Number
        of
        Shares of Common Stock Beneficially Owned on the Conversion Date:
        Less
        than 4.99% of the outstanding Common Stock of Borrower

      


      


      
        	
                Shares
                  To Be Delivered: 

              	 
	 
	 
	
                Signature:
                  

              	 
	 
	 
	
                Print
                  Name: 

              	 
	 
	 
	
                Address:
                  

              	 
	 
	 


      

       

      
        
          
          

        

        
          8