Document:

EXHIBIT
        10.17

      

       

      August
        __, 2005

       

      Wedbush
        Morgan Securities Inc.

      1000
        Wilshire Blvd., 10th
        Floor

      Los
        Angeles, CA 90017

       

      Re:         
        Industrial Services Acquisition Corp.

       

      Ladies
        and Gentlemen:

       

      This
        letter will confirm the agreement of the undersigned to purchase warrants
        (each,
        a “Warrant” and collectively, “Warrants”) of Industrial Services Acquisition
        Corp.  (“Company”) included in the units (“Units”) being sold in the
        Company’s initial public offering (“IPO”) upon the terms and conditions set
        forth herein in accordance with guidelines specified by Rule 10b5-1 of the
        Securities Exchange Act of 1934, as amended.  Each Unit is comprised
        of one
        share of common stock of the Company (“Common Stock”) and one Warrant. 
        Each of the Common Stock and Warrants will trade separately within the first
        20
        trading days following the earlier to occur of the exercise in full or
        expiration of the underwriter’s over-allotment option.

       

      The
        undersigned agrees that this letter agreement constitutes an irrevocable
        order
        (“Order”) for Wedbush Morgan Securities Inc. (“Wedbush”) to purchase for the
        undersigned’s account within the sixty-trading day period commencing on the date
        separate trading of the Warrants commences (“Separation Date”) pursuant to
        provisions set forth in the warrant agreement governing the terms and conditions
        of such Warrants (“Warrant Agreement”) up to _______ Warrants at market prices
        not to exceed $1.20 per Warrant (“Maximum Warrant Purchase”).  Wedbush (or
        such other broker dealer(s) as Wedbush may assign the order to) agrees to
        fill
        such order in such amounts and at such times as it may determine, in its
        sole
        discretion, during the forty-trading day period commencing on the Separation
        Date.  Wedbush further agrees that it will not charge the undersigned
        any
        fees and/or commissions with respect to such purchase
        obligation. 

      

      As
        the
        date hereof, the undersigned represents and warrants that it is not aware
        of any
        material nonpublic information concerning the Company or any securities of
        the
        Company and is entering into this agreement in good faith and not as part
        of a
        plan or scheme to evade the prohibitions of Rule 10b5-1. The undersigned
        agrees
        that while this agreement is in effect, the undersigned shall comply with
        the
        prohibition set forth in Rule 10b5-1(c)(1)(i)(C) against entering into or
        altering a corresponding or hedging transaction or position with respect
        to the
        Company’s securities. The undersigned further agrees that it shall not, directly
        or indirectly, communicate any material nonpublic information relating to
        the
        Company or the Company’s securities to any employee of Wedbush. The undersigned
        does not have, and shall not attempt to exercise, any influence over how,
        when
        or whether to effect purchases of Warrants pursuant to this
        agreement.

       

      The
        undersigned agrees that he shall not sell or transfer the Warrants until
        the
        earlier of the consummation of a merger, capital stock exchange, asset
        acquisition or other similar business combination and acknowledges that,
        at the
        option of Wedbush, the certificates for such Warrants shall contain a legend
        indicating such restriction on transferability. 

      

      This
        letter shall be binding on the undersigned and his respective heirs, successors
        and assigns.

      

      This
        letter agreement shall be governed by and interpreted and construed in
        accordance with the laws of the State of California applicable to contracts
        formed and to be performed entirely within the State of California, without
        regard to the conflicts of law provisions thereof to the extent such principals
        or rules would require or permit the application of the laws of another
        jurisdiction.

      

      No
        term
        or provision of this letter agreement may be amended, changed, waived, altered
        or modified except by written instrument executed and delivered by the party
        against whom such amendment, change, waiver, alteration or modification is
        to be
        enforced.

       

      
        	 	
                Very
                  truly yours,

              
	
                 

              	
                 

              
	
                 

              	
                 

              
	 	 	 
	 	
                [Name]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

Seattle, Washington
August 16, 2005                                                        $[______]

      FOR VALUE RECEIVED, VERIDICOM INTERNATIONAL,  INC., a Delaware corporation
(hereinafter  called the  "Borrower"),  hereby  promises  to pay to the order of
[______] or  registered  assigns  (the  "Holder")  the sum of  [______]  Dollars
$[______])  payable  $[______]  (the "Monthly  Amount") on the first day of each
month commencing on November 16, 2005 (each, a "Repayment Date") with any unpaid
principal  balance  due on August 16,  2008 (the  "Maturity  Date"),  and to pay
interest on the unpaid principal balance hereof at the rate of ten percent (10%)
(the  "Interest  Rate") per annum from August 16, 2005 (the "Issue  Date") until
the same becomes due and payable, whether at maturity or upon acceleration or by
prepayment or  otherwise;  provided,  however,  that on the last business day of
each month after the Issue Date (each, a "Determination  Date"),  if the Average
Daily Price (as defined herein) of the common stock,  $.001 par value per share,
of the  Borrower  (the  "Common  Stock") for each day of the month ending on the
applicable  Determination Date exceeds one hundred twenty five percent (125%) of
the Initial Market Price (as defined  herein),  the Interest Rate for such month
shall  automatically be reduced to zero percent (0.0%).  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 monthly in arrears. All payments due hereunder
(to the extent not  converted  into 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 February 25, 2005, pursuant to
which this Note was originally issued (the "Purchase Agreement").

<PAGE>

      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  Intellectual  Security
Agreement,  dated  February 25, 2005, by and among the Borrower,  the Holder and
the other parties thereto (the "IP Security Agreement").

      The following terms shall apply to this Note:

                                   ARTICLE I.
                           CONVERSION REPAYMENT OPTION

      1.1  Payment of  Monthly  Amount in Cash or Common  Stock.  Subject to the
terms hereof, the Holder shall have the option to elect to accept payment of the
Monthly  Amount  on each  Repayment  Date  either in cash or in shares of Common
Stock,  or a  combination  of both.  Each month by the fifth (5th)  business day
prior to each  Repayment Date (the "Notice  Date"),  the Holder shall deliver to
Borrower a written notice in the form of Exhibit B attached  hereto  electing to
convert the Monthly  Amount payable on the next Repayment Date in either cash or
Common Stock, or a combination of both (each, a "Repayment Election Notice"). If
a  Repayment  Election  Notice is not  delivered  by the Holder on or before the
applicable  Notice Date for such Repayment Date, then the Borrower shall pay the
Monthly  Amount due on such  Repayment  Date in cash. Any portion of the Monthly
Amount paid in cash on a Repayment  Date,  shall be paid to the Holder an amount
equal to the  portion  of the  Monthly  Amount  due and  owing to  Holder on the
Repayment Dale. If the Holder converts all or a portion of the Monthly Amount in
shares of Common  Stock,  the number of such shares to be issued by the Borrower
to the Holder on such Repayment Date shall be the number  determined by dividing
(x) the portion of the Monthly  Amount to be paid in shares of Common Stock,  by
(y) the then applicable Conversion Price.

      1.2 Credit Against  Monthly  Amount.  Any amounts  converted by the Holder
pursuant to Section 2.1 shall be deemed to  constitute  payments of  outstanding
principal  applying to Monthly  Amounts  for the  remaining  Repayment  Dates in
chronological order.

                                       2
<PAGE>

                         ARTICLE II. CONVERSION RIGHTS

      2.1  Conversion  Right.  If the  average of the Average  Daily  Prices (as
defined in Section  2.2(a)) for the  preceding  five (5) trading days is greater
than the Initial Market Price (as defined in Section  2.2(a)),  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 IV)  pursuant to Section  2.6(a) or Article IV, the  Optional
Prepayment Amount (as defined in Section 6.1 or any payments pursuant to Section
2.7, each in respect of the remaining  outstanding principal amount of this Note
to convert all or any part of the outstanding 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 if an Event of Default
shall  have  occurred  and be  continuing,  the  Holder  shall have the right to
convert all or any part of the  outstanding  principal  amount of this Note into
fully  paid  and  non-assessable  shares  of  Common  Stock  at any  time at the
Conversion  Price;  provided,  further  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 4.9% of the outstanding  shares of Common
Stock.  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
2.4 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) accrued and unpaid  interest,  if any, on
such  principal  amount  at the  interest  rates  provided  in this  Note to the
Conversion Date plus (3) 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  2.3 and 2.4(g)
hereof  or  pursuant  to  Section  2(c)  of  that  certain  Registration  Rights
Agreement,  dated as of  February  25,  2005,  executed in  connection  with the
initial  issuance of this Note and the other Notes issued on the Issue Date (the
"Registration Rights Agreement").

                                       3
<PAGE>

      2.2 Conversion Price.

            (a) Calculation of Conversion  Price.  The Conversion Price shall be
equal to seventy  percent (70%) of the Initial Market Price (as defined  herein)
(subject,  in each  case,  to  equitable  adjustments  for stock  splits,  stock
dividends  or  rights  offerings  by the  Borrower  relating  to the  Borrower's
securities or the  securities of any  subsidiary of the Borrower,  combinations,
recapitalization,  reclassifications,  extraordinary  distributions  and similar
events);  provided however,  that if an Event of Default shall have occurred and
be continuing,  the  Conversion  Price shall be equal to the lesser of (i) fifty
percent (50%) of the Initial Market Price or (ii) the Variable Conversion Price.
The "Initial  Market Price" shall mean $1.81.  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
Average  Daily Prices (as defined  herein) for the Common Stock for the five (5)
days  prior to the date  the  Conversion  Notice  is sent by the  Holder  to the
Borrower via facsimile (the "Conversion Date"). "Average Daily Price" means, for
any security as of any date, the price based on the VWAP.  "VWAP" shall mean the
daily volume weighted average price of the Common Stock on the principal trading
market for such security as reported by Bloomberg, L.P. using the VWAP function.
If the Average Daily Price cannot be  calculated  for such security on such date
in the manner provided  above,  the Average Daily 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 Average
Daily 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%.

            (b)  Conversion  Price During Major  Announcements.  Notwithstanding
anything contained in Section 2.2(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 Section  2.2(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 2.2(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  2.2(b) to become
operative.

                                       4
<PAGE>

      2.3 Authorized  Shares.  The Borrower covenants that during the period the
conversion  right  exists,  the Borrower  will reserve from its  authorized  and
unissued  Common  Stock a  sufficient  number of  shares,  free from  preemptive
rights,  to provide for the issuance of Common Stock upon the full conversion of
this Note and the other Notes  issued  pursuant to the Purchase  Agreement.  The
Borrower is required at all times to have  authorized and reserved two times the
number of shares that is actually  issuable  upon full  conversion  of the Notes
(based  on the  Conversion  Price  of the  Notes  or the  Exercise  Price of the
Warrants  in effect from time to time) (the  "Reserved  Amount").  The  Reserved
Amount shall be increased  from time to time in accordance  with the  Borrower's
obligations  pursuant to Section  4(h) of the Purchase  Agreement.  The Borrower
represents  that upon  issuance,  such shares  will be duly and validly  issued,
fully paid and  non-assessable.  In addition,  if the  Borrower  shall issue any
securities  or make any change to its capital  structure  which would change the
number of shares of Common  Stock into which the Notes shall be  convertible  at
the then current  Conversion  Price,  the  Borrower  shall at the same time make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock  authorized  and  reserved,  free from  preemptive  rights,  for
conversion of the outstanding  Notes. The Borrower (i) acknowledges  that it has
irrevocably  instructed its transfer agent to issue  certificates for the Common
Stock  issuable upon  conversion of this Note, and (ii) agrees that its issuance
of this Note shall  constitute full authority to its officers and agents who are
charged with the duty of executing  stock  certificates to execute and issue the
necessary  certificates  for shares of Common Stock in accordance with the terms
and conditions of this Note.

      If, at any time a Holder of this Note submits a Notice of Conversion,  and
the Borrower does not have  sufficient  authorized but unissued shares of Common
Stock  available to effect such  conversion in accordance with the provisions of
this Article II (a "Conversion  Default"),  subject to Section 5.8, 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:

                                       5
<PAGE>

            (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  II (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).

      2.4 Method of Conversion.

            (a) Mechanics of  Conversion.  Subject to Section 2.1, 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 2.4(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.

                                       6
<PAGE>

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

            (e) Obligation of Borrower to Deliver Common Stock.  Upon receipt by
the  Borrower of a Notice of  Conversion,  the Holder  shall be deemed to be the
holder  of  record of the  Common  Stock  issuable  upon  such  conversion,  the
outstanding  principal  amount and the amount of accrued and unpaid  interest on
this Note shall be reduced to reflect such conversion,  and, unless the Borrower
defaults on its  obligations  under this  Article II, 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.

                                       7
<PAGE>

            (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 2.1 and in this  Section  2.4,  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 three (3) days
after the Deadline (other than a failure due to the  circumstances  described in
Section 2.3 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.

      2.5  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  2.5 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."

                                       8
<PAGE>

      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.

      2.6 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  IV)  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 IV) or (ii) be treated  pursuant to Section 2.6(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
2.6(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
2.6(b). The above provisions shall similarly apply to successive consolidations,
mergers, sales, transfers or share exchanges.

                                       9
<PAGE>

            (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  2.6(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 Initial Market 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
Initial  Market  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.

            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, 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  Initial  Market  Price then in effect,  then the
Initial Market 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.

                                       10
<PAGE>

            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
Initial  Market  Price then in effect,  then the Initial  Market  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  Initial  Market  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  2.6,  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.

                                       11
<PAGE>

            (g) Exceptions to Adjustment of Conversion  Price.  No adjustment to
the Conversion Price will be made (i) upon the exercise of any warrants, options
or  convertible  securities  granted,  issued  and  outstanding  on the  date of
issuance  of this Note;  (ii) upon the grant or exercise of any stock or options
which may  hereafter be granted or exercised  under any employee  benefit  plan,
stock option plan or restricted stock plan of the Borrower now existing or to be
implemented  in the future,  so long as the issuance of such stock or options is
approved by a majority of the  independent  members of the Board of Directors of
the  Borrower  or a  majority  of the  members  of a  committee  of  independent
directors  established  for such  purpose;  or (iii)  upon the  exercise  of the
Warrants or conversion of the Notes.

      2.7 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 pro rata share thereof determined in accordance with Section 5.8 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.

                                       12
<PAGE>

      2.8 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 2.3 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 2.3) for the Borrower's failure to convert this Note.

                         ARTICLE III. CERTAIN COVENANTS

      3.1 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.

      3.2 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.

                                       13
<PAGE>

      3.3 Limitation on Liens. So long as the Borrower shall have any obligation
under this Note, the Borrower will not transfer, pledge, hypothecate,  encumber,
license  (except  for  non-exclusive  licenses  granted by the  Borrower  in the
ordinary  course  of  business),  sell  or  otherwise  dispose  of  any  of  the
Intellectual  Property  (as  defined in the IP Security  Agreement)  without the
prior written consent of the Holder.

      3.4 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.

      3.5 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.

      3.6  Contingent  Liabilities.  So  long as the  Borrower  shall  have  any
obligation under this Note, the Borrower shall not, without the Holder's written
consent, 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 IV. EVENTS OF DEFAULT

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

      4.1 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  2.7,  upon
acceleration or otherwise;

      4.2  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  2.3 and the  Borrower  is using its best  efforts  to  authorize  a
sufficient  number of shares of Common Stock as soon as  practicable),  fails to
transfer  or  cause  its  transfer  agent  to  transfer  (electronically  or  in
certificated  form) any  certificate  for shares of Common  Stock  issued to the
Holder  upon  conversion  of or  otherwise  pursuant  to this  Note as and  when
required by this Note or the Registration  Rights Agreement,  or fails to remove
any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any  certificate for any shares of Common Stock issued to the Holder
upon  conversion  of or otherwise  pursuant to this Note as and when required by
this Note or the  Registration  Rights  Agreement  (or  makes any  announcement,
statement or threat that it does not intend to honor the  obligations  described
in  this  paragraph)  and  any  such  failure  shall  continue  uncured  (or any
announcement,  statement  or threat  not to honor its  obligations  shall not be
rescinded  in  writing)  for ten (10) days  after the  Borrower  shall have been
notified thereof in writing by the Holder;

                                       14
<PAGE>

      4.3 Failure to Maintain Registration. The 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 twenty (20)  consecutive  days or forty (40) days in any twelve  month
period after the Registration Statement becomes effective;

      4.4 Breach of Covenants.  The Borrower  breaches any material  covenant or
other  material term or condition  contained in Sections 2.3, 2.6 or 2.7 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;

      4.5  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;

      4.6 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;

      4.7  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  $100,000,  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;

      4.8  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;

      4.9  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

                                       15
<PAGE>

      4.10 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 4.1, 4.2, 4.3, 4.4, 4.5, 4.7, 4.9, or 4.10, 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
4.6 or 4.8, the Notes shall become  immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations  hereunder,  an
amount  equal  to the  greater  of (i)  130%  times  the  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  2.3 and 2.4(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 V. MISCELLANEOUS

      5.1 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.

                                       16
<PAGE>

      5.2 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 3800-999 3rd
Avenue,  Seattle,  Washington 98104,  facsimile number:  206-224-6207.  Both the
Holder and the Borrower may change the address for service by service of written
notice to the other as herein provided.

      5.3 Amendments.  This Note and any provision hereof may only be amended by
an instrument in writing  signed by the Borrower and the majority in interest of
the Holders.  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.

      5.4  Assignability.  This Note shall be binding  upon the Borrower and its
successors and assigns,  and shall inure to be the benefit of the Holder and its
successors  and assigns.  Each  transferee  of this Note must be an  "accredited
investor" (as defined in Rule 501(a) of the 1933 Act).  Notwithstanding anything
in this  Note to the  contrary,  this  Note  may be  pledged  as  collateral  in
connection with a bona fide margin account or other lending arrangement.

      5.5 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.

      5.6 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.

                                       17
<PAGE>

      5.7  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.

      5.8 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.

      5.9 Damages Shares. The shares of Common Stock that may be issuable to the
Holder  pursuant to Sections 2.3 and 2.4(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.

      5.10  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.

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

                                       18
<PAGE>

      5.12 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
5.12.

      5.13  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.

                                       19
<PAGE>

                            ARTICLE VI. CALL OPTION

      6.1 Call Option.  Notwithstanding  anything to the  contrary  contained in
this Article VII so long as (i) no Event of Default or Trading Market Prepayment
Event  shall  have  occurred  and be  continuing,  and (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, 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 6.1), to prepay all of the  outstanding  Notes in
accordance  with this  Section  6.1.  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 (1) if the  Common  Stock is  trading at or below
$3.00  per  share,  130%  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  2.3 and  2.4(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") or (2) if the Common Stock is trading above $3.00
per share,  the  Optional  Prepayment  Sum plus the product of (A) the number of
shares of Common Stock then  issuable  upon full  conversion of this Note (based
upon the then applicable  Conversion  Price and without regard to the limitation
set forth in Section 2.1)  multiplied by (B) the difference  between the average
of the Average Daily Prices for the Common Stock for the preceding five (5) days
minus  the  then  applicable  Conversion  Price.  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 II 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 6.1.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

      IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by its duly authorized officer this 16th day of August, 2005.

                                       VERIDICOM INTERNATIONAL, INC.

                                       By:
                                           --------------------------------
                                           Paul Mann
                                           President and Chief Executive
                                           Officer

                                       21
<PAGE>

                                    EXHIBIT A

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

      The undersigned hereby irrevocably elects to convert $__________ principal
amount of the Note (defined below) into shares of common stock,  par value $.001
per share  ("Common  Stock"),  of  Veridicom  International,  Inc.,  a  Delaware
corporation  (the  "Borrower")  according to the  conditions of the  convertible
Notes of the Borrower dated as of August 16, 2005 (the "Notes"),  as of the date
written below. If securities are to be issued in the name of a person other than
the  undersigned,  the  undersigned  will pay all  transfer  taxes  payable with
respect  thereto and is delivering  herewith such  certificates.  No fee will be
charged to the Holder for any  conversion,  except for transfer taxes, if any. A
copy of each Note is attached hereto (or evidence of loss,  theft or destruction
thereof).

      The Borrower  shall  electronically  transmit  the Common  Stock  issuable
pursuant to this Notice of Conversion to the account of the  undersigned  or its
nominee with DTC through its Deposit  Withdrawal Agent Commission  system ("DWAC
Transfer").

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

      In lieu of  receiving  shares of Common  Stock  issuable  pursuant to this
Notice of Conversion by way of a DWAC Transfer,  the undersigned hereby requests
that the Borrower issue a certificate or  certificates  for the number of shares
of  Common  Stock set  forth  below  (which  numbers  are based on the  Holder's
calculation  attached hereto) in the name(s) specified  immediately below or, if
additional space is necessary, on an attachment hereto:

         Name:
              -------------------------------------------------------------
         Address:
                 ----------------------------------------------------------

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

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

                                       22
<PAGE>

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.

                                       23
<PAGE>

                                    EXHIBIT B

                           CONVERSION ELECTION NOTICE

(To be  executed  by the  Holder  in order to  convert  all or part of a Monthly
Amount into Common Stock)

[Name and Address of Holder]

Holder hereby elects to convert $_______________ of the Monthly Amount due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
VERIDICOM INTERNATIONAL, INC. dated August 16, 2005 by delivery of Shares of
Common Stock of VERIDICOM INTERNATIONAL, INC. on and subject to the conditions
set forth in Article II of such Note.

1. Initial Market Price: $___________________

2. Amount to be Paid: $___________________

3. Shares To Be Delivered (2 divided by 1):      _______________________

4. Cash payment to be made by Borrower:         $_______________________

Date:
     -------------------------------             -------------------------------

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

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