Document:

EXHIBIT 10.16

THIS NOTE AND THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR IN ANY OTHER JURISDICTION. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES
LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

                  10% SUBORDINATED CONVERTIBLE PROMISSORY NOTE

Date: October 9, 2003                                               $300,000.00

            FOR VALUE RECEIVED, iSECUREtrac, Corp. a corporation organized under
the laws of Delaware (the "BORROWER"), hereby promises to pay to the order of
MicroCapital Fund Ltd., a Cayman Islands corporation, or its registered assigns
(the "HOLDER"), the sum of three hundred thousand dollars ($300,000.00) on
October 9, 2008 (the "SCHEDULED MATURITY DATE"), and to pay interest on the
unpaid principal balance hereof at the rate of ten percent (10%), as provided in
Article I below.

      The term "NOTE" and all references 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, issued in respect
hereof pursuant to that certain Securities Purchase Agreement, of even date
herewith, between Borrower and Holder thereto (the "SECURITIES PURCHASE
AGREEMENT"). The Note, the Securities Purchase Agreement and the Registration
Rights Agreement, of even date herewith, between Borrower and Holder (the
"REGISTRATION RIGHTS AGREEMENT") are collectively referred to herein as the
"TRANSACTION DOCUMENTS." All capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the
Securities Purchase Agreement.

                                   ARTICLE I

                        PAYMENT OF PRINCIPAL AND INTEREST

      A. Payment of Interest. Interest shall accrue on the unpaid principal
balance hereof from the Issuance Date until the same is paid, whether at
maturity, or upon prepayment, repayment, conversion or otherwise. Interest shall
be calculated based on a 365-day year and shall be payable quarterly in arrears
on March 31, June 30, September 30, and December 31 of each year (each, an
"INTEREST PAYMENT DATE"), commencing on December 31, 2003. Payment of each
installment of interest due hereunder shall be made in cash.

      B. Payment of Principal. The principal amount hereof, together with all
accrued and unpaid interest thereon, shall be due and payable on the Scheduled
Maturity Date. Payment of principal and accrued interest on the Scheduled
Maturity Date shall be made in cash.

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      C. Prepayment. Except as and to the extent otherwise provided herein, no
amounts of principal or interest due hereunder may be prepaid by Borrower
without the prior written consent of Holder.

      D. Manner of Payments. All cash payments of principal and interest shall
be made in, and all references herein to monetary denominations shall refer to,
lawful money of the United States of America. All payments shall be made at such
address as Holder shall have given or shall hereafter give to Borrower by
written notice made in accordance with the provisions of this Note. If any cash
payment to be made hereunder shall be due on a day other than a business day,
such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. If any payment due hereunder is not made when due, Holder shall
thereafter be entitled to interest on the amount of such delinquent payment at a
per annum rate equal to the lower of eighteen percent (18%) and the highest
interest rate permitted by applicable law until such amount is paid in full.

                                   ARTICLE II

                                   CONVERSION

      A. Conversion at the Option of Holder. Subject to the limitations on
conversions contained in Article VIII, Holder may, following ninety (90) days
after Closing Date, at any time and from time to time, convert (an "OPTIONAL
CONVERSION") all or any portion of the unpaid principal amount hereof and any
accrued interest thereon into a number of fully paid and non-assessable shares
of Common Stock as is equal to the quotient obtained by dividing (x) the amount
of principal and interest being so converted by (y) the Conversion Price then in
effect.

      B. Mechanics of Conversion. In order to effect an Optional Conversion,
Holder shall: (x) fax (or otherwise deliver) a copy of the fully executed Notice
of Conversion to Borrower (Attention: Secretary) and (y) surrender or cause to
be surrendered this Note, duly endorsed, along with a copy of the Notice of
Conversion as soon as practicable thereafter to Borrower. Upon receipt by
Borrower of a facsimile copy of a Notice of Conversion from Holder, Borrower
shall promptly send, via facsimile, a confirmation to Holder stating that the
Notice of Conversion has been received, the date upon which Borrower expects to
deliver the Common Stock issuable upon such conversion and the name and
telephone number of a contact person at Borrower regarding the conversion.
Borrower shall not be obligated to issue shares of Common Stock upon a
conversion unless this Note is delivered to Borrower as provided above, or
Holder notifies Borrower that this Note has been lost, stolen or destroyed and
delivers the documentation to Borrower required by Article X.B hereof.

            (i) Delivery of Common Stock Upon Conversion. Upon the surrender of
this Note accompanied by a Notice of Conversion, Borrower (itself, or through
its transfer agent) shall, no later than the later of (a) the second business
day following the Conversion Date and (b) the business day following the date of
such surrender (or, in the case of lost, stolen or destroyed certificates, after
provision of indemnity pursuant to Article X.B) (the "DELIVERY PERIOD"), issue
and deliver (i.e., deposit with a nationally recognized overnight courier
service postage prepaid) to Holder or its nominee (x) that number of shares of
Common Stock issuable upon conversion of that portion of this Note being
converted and (y) a new Note representing the principal balance of this Note not
being converted, if any. Notwithstanding the foregoing, if Borrower's transfer
agent is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, and so long as the certificates therefor do not
bear a legend (pursuant to the terms of the Securities Purchase Agreement) and
Holder thereof is not then required to return such certificate for the placement
of a legend thereon (pursuant to the terms of the Securities Purchase
Agreement), Borrower shall cause its transfer agent to promptly electronically
transmit the Common Stock issuable upon conversion to Holder by crediting the
account of Holder or its nominee with DTC through its Deposit Withdrawal Agent
Commission system ("DTC TRANSFER"). If the aforementioned conditions to a DTC
Transfer are not satisfied, Borrower shall deliver as provided above to Holder
physical certificates representing the Common Stock issuable upon conversion.
Further, Holder may instruct Borrower to deliver to Holder physical certificates
representing the Common Stock issuable upon conversion in lieu of delivering
such shares by way of DTC Transfer.

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            (ii) Taxes. Borrower shall pay any and all taxes that may be imposed
upon it with respect to the issuance and delivery of the shares of Common Stock
upon the conversion of this Note.

            (iii) No Fractional Shares. If any conversion of this Note would
result in the issuance of a fractional share of Common Stock (aggregating the
entire amount of principal and interest being converted pursuant to a given
Notice of Conversion), such fractional share shall be payable in cash based upon
the Closing Sales Price of the Common Stock at such time, and the number of
shares of Common Stock issuable upon conversion of this Note shall be the next
lower whole number of shares.

            (iv) Conversion Disputes. In the case of any dispute with respect to
a conversion, Borrower shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with subparagraph (i) above. If such
dispute involves the calculation of the Conversion Price, and such dispute is
not promptly resolved by discussion between Holder and Borrower, Borrower shall
submit the disputed calculations to an independent outside accountant (which
accountant shall be subject to the reasonable approval of Holder) via facsimile
within three business days of receipt of the Notice of Conversion. The
accountant shall promptly audit the calculations and notify Borrower and Holder
of the results no later than three business days from the date it receives the
disputed calculations. The accountant's calculation shall be deemed conclusive,
absent manifest error, and the party whose proposed calculation is further from
the calculation determined by the accountant shall bear all of the accountant's
expenses. Borrower shall then issue the appropriate number of shares of Common
Stock in accordance with subparagraph (i) above.

            (v) Payment of Accrued Amounts. Upon conversion of any unpaid
principal amount of this Note, all accrued interest on such amount through and
including the Conversion Date shall be paid on the Conversion Date in accordance
with one of the permitted payment methods set forth in Article I.A above.

      C. Mandatory Conversion into Common Stock. Subject to the limitations on
conversion contained in Article VIII, if at any time following the second
anniversary of the Issuance Date all of the Required Conditions are satisfied,
then, at the option of Borrower exercisable by the delivery of written notice to
Holder, delivered at least ten (10) days prior to the Conversion Date stated in
such notice, convert all, but not less than all, of the Notes originally issued
by Borrower and any of its related entities into a number of fully paid and
non-assessable shares of Common Stock determined in accordance with the formula
set forth in Paragraph A of this Article II (a "MANDATORY CONVERSION").
Thereafter, Borrower and Holder shall follow the applicable conversion
procedures set forth in Article II.B; provided, however, Holder shall not be
required to deliver a Notice of Conversion to Borrower in order for Borrower to
effect a Mandatory Conversion. In the event that Borrower is prohibited from
issuing shares of Common Stock upon a Mandatory Conversion pursuant to this
Article II.C as a result of the operation of the limitations set forth in
Article VIII, Borrower shall pay to each Holder an amount of cash equal to the
Closing Sales Price of the Common Stock on the Conversion Date multiplied by the
number of shares of Common Stock that Borrower is prohibited from issuing to
such Holder as a result of the operation of the limitations set forth in Article
VIII.

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                                  ARTICLE III

                      RESERVATION OF SHARES OF COMMON STOCK

      A. Reserved Amount. On or prior to the Issuance Date, Borrower shall
reserve a minimum of 2,000,000 shares of its authorized but unissued shares of
Common Stock for issuance upon conversion of the Notes pursuant to Article II,
and, thereafter, the number of authorized but unissued shares of Common Stock so
reserved (the "RESERVED AMOUNT") shall at all times be sufficient to provide for
the full conversion of the Notes at the then current Conversion Price thereof
(without giving effect to the limitations contained in Article VIII).

      B. Increases to Reserved Amount. If the Reserved Amount for any three
consecutive trading days (the last of such three trading days being the
"AUTHORIZATION TRIGGER DATE") shall be less than one hundred percent (100%) of
the number of shares of Common Stock issuable upon full conversion of all then
outstanding Notes (without giving effect to the limitations contained in Article
VIII), Borrower shall immediately notify Holder of such occurrence and shall
take immediate action (including, if necessary, seeking stockholder approval to
authorize the issuance of additional shares of Common Stock) to increase the
Reserved Amount to one hundred percent (100%) of the number of shares of Common
Stock then issuable upon full conversion of the Notes at the then current
Conversion Price (without giving effect to the limitations contained in Article
VIII). In the event Borrower fails to so increase the Reserved Amount within 90
days after an Authorization Trigger Date, Holder shall thereafter have the
option, exercisable in whole or in part at any time and from time to time, by
delivery of a Default Notice to Borrower, to require Borrower to prepay in cash,
for an amount equal to the Default Amount (as defined in Article V.B), that
portion of the unpaid principal amount hereof and accrued interest thereon such
that, after giving effect to such prepayment, the then unissued portion of
Holder's Reserved Amount is at least equal to one hundred percent (100%) of the
total number of shares of Common Stock issuable upon conversion of this Note by
Holder. If Borrower fails to prepay any portion of this Note as required hereby
within five business days after its receipt of such Default Notice, then Holder
shall be entitled to the remedies provided in Article V.C.

                                   ARTICLE IV

                         FAILURE TO SATISFY CONVERSIONS

      A. Conversion Defaults. If, at any time, (i) Holder submits a Notice of
Conversion and Borrower fails for any reason to deliver, on or prior to the
fifth business day following the expiration of the Delivery Period for such
conversion, such number of freely tradable shares of Common Stock to which
Holder is entitled upon such conversion, or (ii) Borrower provides written
notice to Holder (or makes a public announcement via press release) at any time
of its intention not to issue freely tradable shares of Common Stock upon
exercise by Holder of their conversion rights in accordance with the terms of
the Note (each of (i) and (ii) being a "CONVERSION DEFAULT"), then Holder may
elect, at any time and from time to time prior to the Default Cure Date for such
Conversion Default, by delivery of a Default Notice to Borrower, to have all or
any portion of the unpaid principal amount hereof and accrued interest thereto
prepaid by Borrower in cash, for an amount per share equal to the Default Amount
(as defined in Article V.B). If Borrower fails to prepay any portion of this
Note as required hereby within five business days after its receipt of such
Default Notice, then Holder shall be entitled to the remedies provided in
Article V.C.

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      B. Buy-In Cure. Unless Borrower has notified Holder in writing prior to
the delivery by Holder of a Notice of Conversion that Borrower is unable to
honor conversions, if (i) (a) Borrower fails to promptly deliver during the
Delivery Period shares of Common Stock to Holder upon a conversion of all or any
portion of this Note or (b) there shall occur a Legend Removal Failure (as
defined in Article V.A(iv) below) and (ii) thereafter, Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to make delivery in
satisfaction of a sale by Holder of the unlegended shares of Common Stock (the
"SOLD SHARES") which Holder anticipated receiving upon such conversion (a
"BUY-IN"), Borrower shall pay Holder, in addition to any other remedies
available to Holder, the amount by which (x) Holder's total purchase price
(including brokerage commissions, if any) for the unlegended shares of Common
Stock so purchased exceeds (y) the net proceeds received by Holder from the sale
of the Sold Shares. For example, if Holder purchases unlegended shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for $10,000, Borrower will be required to pay
Holder $1,000. Holder shall provide Borrower written notification and supporting
documentation indicating any amounts payable to Holder pursuant to this Article
IV.B.

                                   ARTICLE V

                                EVENTS OF DEFAULT

      A. Events of Default. In the event (each of the events described in
clauses (ii)-(ix) below after expiration of the applicable cure period (if any)
being an "EVENT OF DEFAULT"):

            (i) Borrower fails to pay in full an interest payment within fifteen
(15) days after a scheduled Interest Payment Date (each a "CONVERSION PRICE
EVENT OF DEFAULT").

            (ii) Borrower fails to pay in full an interest payment within twenty
(20) days after a scheduled Interest Payment Date, or fails to pay in full the
principal hereof, and/or the accrued and unpaid interest thereon, when due,
whether at maturity, upon acceleration or otherwise;

            (iii) the Common Stock (including any of the shares of Common Stock
issuable upon conversion of this Note) is suspended from trading on any of, or
is not listed (and authorized) for trading on at least one of, the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Nasdaq SmallCap Market or the OTC Bulletin Board for an aggregate of ten or more
trading days in any twelve month period;

            (iv) the registration statement required to be filed by Borrower
pursuant to the Registration Rights Agreement has not been declared effective by
the Registration Deadline (as defined in the Registration Rights Agreement) or
such registration statement, after being declared effective, cannot be utilized
by Holders for the resale of all of their Registrable Securities (as defined in
the Registration Rights Agreement) for an aggregate of more than 60 days;

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            (v) Borrower fails to remove any restrictive legend on any
certificate or any shares of Common Stock issued to Holder upon conversion of
this Note as and when required by the terms hereof and of the Securities
Purchase Agreement or the Registration Rights Agreement (a "LEGEND REMOVAL
FAILURE"), and any such failure continues uncured for ten business days after
Borrower has been notified thereof in writing by Holder;

            (vi) Borrower provides written notice (or otherwise indicates) to
Holder, or states by way of public announcement distributed via a press release,
at any time, of its intention not to issue, or otherwise refuses to issue,
shares of Common Stock to Holder upon conversion in accordance with the terms of
this Note (other than because such issuance would exceed Holder's allocated
portion of the Reserved Amount, for which failures Holder shall have the
remedies set forth in Article III);

            (vii) 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 it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed;

            (viii) bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for the relief of debtors shall be instituted
by or against Borrower or any subsidiary of Borrower and if instituted against
Borrower or any subsidiary of Borrower by a third party, shall not be dismissed
within 60 days of their initiation;

            (ix) Borrower shall:

                  (a) sell, convey or dispose of all or substantially all of its
assets (the presentation of any such transaction for stockholder approval being
conclusive evidence that such transaction involves the sale of all or
substantially all of the assets of Borrower), unless Holder has approved such
transaction pursuant to Article VII.B below;

                  (b) merge or consolidate with or into any person or entity,
which results in either (i) Holder of the voting securities of Borrower
immediately prior to such transaction holding or having the right to direct the
voting of fifty percent (50%) or less of the total outstanding voting securities
of Borrower or such other surviving or acquiring person or entity immediately
following such transaction or (ii) the members of the board of directors or
other governing body of Borrower comprising fifty percent (50%) or less of the
members of the board of directors or other governing body of Borrower or such
other surviving or acquiring person or entity immediately following such
transaction, unless Holder has approved such transaction pursuant to Article
VII.B below;

                  (c) either (i) fail to pay, when due, or within any applicable
grace period, any payment with respect to any indebtedness of Borrower in excess
of $250,000 due to any third party, other than payments contested by Borrower in
good faith, or otherwise be in breach or violation of any agreement for monies
owed or owing in an amount in excess of $250,000 which breach or violation
permits the other party thereto to declare a default or otherwise accelerate
amounts due thereunder, or (ii) suffer to exist any other default or event of
default under any agreement binding Borrower which default or event of default
would or is likely to have a material adverse effect on the business,
operations, properties, prospects or financial condition of Borrower;

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                  (d) have thirty-five percent (35%) or more of the voting power
of its capital stock owned beneficially by one person, entity or "group" (as
such term is used under Section 13(d) of the Securities Exchange Act of 1934, as
amended); or

            (x) except with respect to matters covered by subparagraph (ii) -
(ix) above, as to which such applicable subparagraphs shall apply, Borrower
otherwise shall breach any material term hereunder or under the other
Transaction Documents, including, without limitation, the representations and
warranties contained therein (i.e., in the event of a material breach as of the
date such representation and warranty was made) and if such breach is curable,
shall fail to cure such breach within ten business days after Borrower has been
notified thereof in writing by Holder;

then, upon the occurrence of any such Event of Default, at the option of Holder,
exercisable in whole or in part at any time and from time to time by delivery of
a written notice to such effect (a "DEFAULT NOTICE") to Borrower while such
Event of Default continues, Borrower shall prepay, in satisfaction of its
obligation to pay the outstanding principal amount of this Note and accrued and
unpaid interest thereon, an amount equal to the Default Amount (as defined in
Section V.B below); provided, however, that (a) in the case of an Event of
Default described in clauses (vii) and (viii) of this Article V.A, Borrower's
prepayment obligation hereunder shall be automatic and shall not require the
delivery of a Default Notice by Holder, (b) in the case of an Event of Default
resulting from a Legend Removal Failure, Borrower's prepayment obligation
hereunder shall only apply to that portion of the Note affected by such Legend
Removal Failure, and (c) in the case of a Conversion Price Event of Default, the
Conversion Price then in effect shall be reduced by 10% of the original
Conversion Price specified herein. Except in the case of a Conversion Price
Event of Default, such Default Amount, together with all other ancillary amounts
payable hereunder, shall immediately become due and payable, all without demand,
presentment or notice, all of which are hereby expressly waived, together with
all costs, including, without limitation, legal fees and expenses of collection,
and Holder shall be entitled to exercise all other rights and remedies available
at law or in equity. For the avoidance of doubt, the occurrence of any event
described in clauses (ii), (iii), (iv), (vii), (viii) and (ix) above shall
immediately constitute an Event of Default and there shall be no cure period.
Further, the occurrence of any event described in clause (i) above shall
immediately constitute a Conversion Price Event of Default and there shall be no
cure period; provided, however, that in the case that Borrower pays in full an
interest payment between fifteen (15) days and twenty (20) days after a
scheduled Interest Payment Date, Borrower shall be subject to the penalty for a
Conversion Price Event of Default only and not also subject to the additional
Default Amount provided in clause (ii) above for such payments greater than
twenty (20) days late. Upon Borrower's receipt of any Default Notice hereunder,
Borrower shall immediately (and in any event within one business day following
such receipt) deliver a written notice (a "DEFAULT ANNOUNCEMENT") to Holder
stating the date upon which Borrower received such Default Notice and the amount
of the Note covered thereby. Following the delivery of a Default Announcement
hereunder, at any time and from time to time, Holder may request (either orally
or in writing) information from Borrower with respect to the instant default and
Borrower shall furnish (either orally or in writing) as soon as practicable such
requested information to Holder.

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      B. Definition of Default Amount. The "DEFAULT AMOUNT" with respect to this
Note means an amount equal to the greater of:

                  (i)              V    x  M
                                  ---
                                  C P

         and      (ii)         V   X   R

            where:

            "V" means the aggregate principal amount outstanding of the Note
required to be prepaid plus all accrued and unpaid interest thereon through the
date of payment of the Default Amount hereunder;

            "CP" means the Conversion Price in effect on the date on which
Borrower receives the Default Notice;

            "M" means (i) with respect to all Events of Default other than
Events of Default described in subparagraph (a) or (b) of Article V.A(ix)
hereof, the highest Closing Sales Price of Borrower's Common Stock during the
period beginning on the date on which Borrower receives the Default Notice and
ending on the date immediately preceding the date of payment of the Default
Amount hereunder, and (ii) with respect to an Event of Default described in
subparagraph (a) or (b) of Article V.A(ix) hereof, the greater of (a) the amount
determined pursuant to clause (i) of this definition or (b) the fair market
value, as of the date on which Borrower receives the Default Notice, of the
consideration payable to Holder of a share of Common Stock pursuant to the
transaction which triggers the Event of Default. For purposes of this
definition, "fair market value" shall be determined by the mutual agreement of
Borrower and the Holder, or if such agreement cannot be reached within five
business days prior to the date of the Event of Default, by an investment
banking firm selected by Borrower and reasonably acceptable to the Holder, with
the costs of such appraisal to be borne by Borrower; and

            "R" means 115%.

      C. Failure to Pay Default Amounts. If Borrower fails to pay Holder the
Default Amount with respect to the Note within five business days after its
receipt of a Default Notice (the "PREPAYMENT DATE"), then Holder shall be
entitled to interest on the Default Amount at a per annum rate equal to the
lower of eighteen percent (18%) and the highest interest rate permitted by
applicable law from the date on which Borrower receives the Default Notice until
the date of payment of the Default Amount hereunder. In the event Borrower is
unable to prepay all of the outstanding Notes required to be prepaid hereunder,
Borrower shall prepay the outstanding Notes from each Holder pro rata, based on
the total amounts due on the Not5es at the time of prepayment and required on
Prepayment Date relative to the total amounts due under the Notes on the
Prepayment Date.

                                   ARTICLE VI

                       ADJUSTMENTS TO THE CONVERSION PRICE

      The Conversion Price shall be subject to adjustment from time to time as
follows:

      A. Stock Splits, Stock Dividends, Etc. If, at any time on or after the
Issuance Date, the number of outstanding shares of Common Stock is increased by
a stock split, stock dividend, combination, reclassification or other similar
event, the Conversion Price shall be proportionately reduced, or if the number
of outstanding shares of Common Stock is decreased by a reverse stock split,
combination, reclassification or other similar event, the Conversion Price shall
be proportionately increased. In such event, Borrower shall notify Borrower's
transfer agent of such change on or before the effective date thereof.

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      B. Merger, Consolidation, Etc. If, at any time after the Issuance Date,
there shall be (i) any reclassification or change of the outstanding shares of
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger of Borrower with any other entity
(other than a merger in which Borrower is the surviving or continuing entity and
its capital stock is unchanged), (iii) any sale or transfer of all or
substantially all of the assets of Borrower or (iv) any share exchange or other
transaction pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property (each of (i) - (iv) above being a
"CORPORATE CHANGE"), then Holder shall thereafter have the right to receive upon
conversion, in lieu of the shares of Common Stock otherwise issuable, such
shares of stock, securities and/or other property as would have been issued or
payable in such Corporate Change with respect to or in exchange for the number
of shares of Common Stock which would have been issuable upon conversion had
such Corporate Change not taken place (without giving effect to the limitations
contained in Article VIII), and in any such case, appropriate provisions (in
form and substance reasonably satisfactory to the Holder) shall be made with
respect to the rights and interests of Holder hereunder to the end that the
economic value of this Note is in no way diminished by such Corporate Change and
that the provisions hereof (including, without limitation, in the case of any
such consolidation, merger or sale in which the successor entity or purchasing
entity is not Borrower, an immediate adjustment of the Conversion Price so that
the Conversion Price immediately after the Corporate Change reflects the same
relative value as compared to the value of the surviving entity's common stock
that existed between the Conversion Price and the value of Borrower's Common
Stock immediately prior to such Corporate Change) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the conversion thereof. Borrower shall
not effect any Corporate Change unless (i) each Holder has received written
notice of such transaction at least 45 days prior thereto, but in no event later
than 15 days prior to the record date for the determination of stockholders
entitled to vote with respect thereto, and (ii) the resulting successor or
acquiring entity (if not Borrower) assumes by written instrument (in form and
substance reasonable satisfactory to Holder) the obligations under this Note
(including, without limitation, the obligation to make interest payments accrued
but unpaid through the date of such consolidation, merger or sale and accruing
thereafter). The above provisions shall apply regardless of whether or not there
would have been a sufficient number of shares of Common Stock authorized and
available for issuance upon conversion of this Note as of the date of such
transaction, and shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.

      C. Distributions. If, at any time after the Issuance Date, Borrower shall
declare or make any distribution of its assets (or rights to acquire its assets)
to the holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise (including any dividend or distribution to
Borrower's stockholders in cash or shares (or rights to acquire shares) of
capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then
Holder shall be entitled, upon any conversion of this Note after the date of
record for determining the stockholders entitled to such Distribution (or if no
such record is taken, the date on which such Distribution is declared or made),
to receive the amount of such assets which would have been payable to Holder
with respect to the shares of Common Stock issuable upon such conversion
(without giving effect to the limitations contained in Article VIII) had Holder
been the holder of such shares of Common Stock on the record date for the
determination of stockholders entitled to such Distribution (or if no such
record is taken, the date on which such Distribution is declared or made).

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      D. Convertible Securities and Purchase Rights. If, at any time after the
Issuance Date, Borrower issues any securities or other instruments which are
convertible into or exercisable or exchangeable for Common Stock ("CONVERTIBLE
SECURITIES") or options, warrants or other rights to purchase or subscribe for
Common Stock or Convertible Securities ("PURCHASE RIGHTS") pro rata to the
record holders of the Common Stock, whether or not such Convertible Securities
or Purchase Rights are immediately convertible, exercisable or exchangeable,
then Holder shall be entitled, upon any conversion of this Note after the date
of record for determining stockholder entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights are issued), to receive the
aggregate number of Convertible Securities or Purchase Rights which Holder would
have received with respect to the shares of Common Stock issuable upon such
conversion (without giving effect to the limitations contained in Article VIII)
had Holder been the holder of such shares of Common Stock on the record date for
the determination of stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights were issued). If the right to
exercise or convert any such Convertible Securities or Purchase Rights would
expire in accordance with their terms prior to the conversion of this Note, then
the terms of such Convertible Securities or Purchase Rights shall provide that
such exercise or convertibility right shall remain in effect until thirty (30)
days after the date Holder receives such Convertible Securities or Purchase
Rights pursuant to the conversion hereof.

      E. Dilutive Issuances.

            (i) Adjustment Upon Dilutive Issuance. If, at any time after the
Issuance Date, Borrower issues or sells, or in accordance with subparagraph (ii)
of this Article VI.E is deemed to have issued or sold, any shares of Common
Stock for no consideration or for a consideration per share less than the
Conversion Price on the date of issuance or sale (or deemed issuance or sale) (a
"DILUTIVE ISSUANCE"), then effective immediately upon the Dilutive Issuance, the
Conversion Price shall be adjusted so as to equal an amount determined by
multiplying such Conversion Price by the following fraction:

                                     N0 + N1
                              --------------------
                                     N0 + N2

                                     where:

                  N0 = the number of shares of Common Stock outstanding
immediately prior to the issuance, sale or deemed issuance or sale of such
additional shares of Common Stock in such Dilutive Issuance (without taking into
account any shares of Common Stock issuable upon conversion, exchange or
exercise of any Convertible Securities or Purchase Rights, including the Note);

                  N1 = the number of shares of Common Stock which the aggregate
consideration, if any, received or receivable by Borrower for the total number
of such additional shares of Common Stock so issued, sold or deemed issued or
sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale,
shall be calculated in accordance with subparagraph (ii) below) would purchase
at the Conversion Price in effect immediately prior to such Dilutive Issuance;
and

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<PAGE>

                  N2 = the number of such additional shares of Common Stock so
issued, sold or deemed issued or sold in such Dilutive Issuance.

Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Paragraph E if such adjustment would result in an increase in the Conversion
Price.

            (ii) Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under subparagraph (i) of this Article
VI.E, the following will be applicable:

                  (a) Issuance of Purchase Rights. If Borrower issues or sells
any Purchase Rights, whether or not immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such Purchase
Rights (and the price of any conversion of Convertible Securities, if
applicable) is less than the Conversion Price in effect on the date of issuance
or sale of such Purchase Rights, then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Purchase Rights (assuming
full conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Purchase Rights, be deemed
to be outstanding and to have been issued and sold by Borrower for 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 Purchase Rights" shall
be determined by dividing (A) the total amount, if any, received or receivable
by Borrower as consideration for the issuance or sale of all such Purchase
Rights, plus the minimum aggregate amount of additional consideration, if any,
payable to Borrower upon the exercise of all such Purchase Rights, plus, in the
case of Convertible Securities issuable upon the exercise of such Purchase
Rights, the minimum aggregate amount of additional consideration payable upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in subparagraph (ii)(b) of this Article VI.E) at
the time such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise of all such Purchase Rights (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Conversion Price shall be made upon the actual issuance of
such Common Stock upon the exercise of such Purchase Rights or upon the
conversion, exercise or exchange of Convertible Securities issuable upon
exercise of such Purchase Rights.

                  (b) Issuance of Convertible Securities. If Borrower issues or
sells any Convertible Securities, whether or not immediately convertible,
exercisable or exchangeable, and the price per share for which Common Stock is
issuable upon such conversion, exercise or exchange is less than the Conversion
Price in effect on the date of issuance or sale of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
conversion, exercise or exchange of all such Convertible Securities shall, as of
the date of the issuance or sale of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by Borrower for such price per
share. If the Convertible Securities so issued or sold do not have a fluctuating
conversion or exercise price or exchange ratio, then for the purposes of the
preceding sentence, the "price per share for which Common Stock is issuable upon
such conversion, exercise or exchange" shall be determined by dividing (A) the
total amount, if any, received or receivable by 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 Borrower upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in this subparagraph (ii)(b) of this Article VI.E)
at the time such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise, conversion or exchange of all such Convertible Securities. If
the Convertible Securities so issued or sold have a fluctuating conversion or
exercise price or exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then
for purposes of the next preceding sentence, the "price per share for which
Common Stock is issuable upon such conversion, exercise or exchange" shall be
deemed to be the lowest price per share which would be applicable (assuming all
holding period and other conditions to any discounts contained in such Variable
Rate Convertible Security have been satisfied) if the conversion price of such
Variable Rate Convertible Security on the date of issuance or sale thereof was
seventy-five percent (75%) of the actual conversion price on such date (the
"ASSUMED VARIABLE MARKET PRICE"), and, further, if the conversion price of such
Variable Rate Convertible Security at any time or times thereafter is less than
or equal to the Assumed Variable Market Price last used for making any
adjustment under this Article VI.E with respect to any Variable Rate Convertible
Security, the Conversion Price in effect at such time shall be readjusted to
equal the Conversion Price which would have resulted if the Assumed Variable
Market Price at the time of issuance of the Variable Rate Convertible Security
had been seventy-five percent (75%) of the actual conversion price of such
Variable Rate Convertible Security existing at the time of the adjustment
required by this sentence. No further adjustment to the Conversion Price shall
be made upon the actual issuance of such Common Stock upon conversion, exercise
or exchange of such Convertible Securities.

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<PAGE>

                  (c) Change in Option Price or Conversion Rate. If there is a
change at any time in (A) the amount of additional consideration payable to
Borrower upon the exercise of any Purchase Rights; (B) the amount of additional
consideration, if any, payable to Borrower upon the conversion, exercise or
exchange of any Convertible Securities; or (C) the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for Common Stock
(in each such case, other than under or by reason of provisions designed to
protect against dilution), the Conversion Price in effect at the time of such
change shall be readjusted to the Conversion Price which would have been in
effect at such time had such Purchase Rights or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion, exercise or exchange rate, as the case may be, at the time initially
issued or sold.

                  (d) Calculation of Consideration Received. If any Common
Stock, Purchase Rights or Convertible Securities are issued or sold for cash,
the consideration received therefor will be the amount received by Borrower
therefor. In case any Common Stock, Purchase Rights or Convertible Securities
are issued or sold for a consideration part or all of which shall be other than
cash, including in the case of a strategic or similar arrangement in which the
other entity will provide services to Borrower, purchase services from Borrower
or otherwise provide intangible consideration to Borrower, the amount of the
consideration other than cash received by Borrower (including the net present
value of the consideration expected by Borrower for the provided or purchased
services) shall be the fair market value of such consideration, except where
such consideration consists of securities, in which case the amount of
consideration received by Borrower will be the Closing Sales Price thereof as of
the date of receipt. In case any Common Stock, Purchase Rights or Convertible
Securities are issued in connection with any merger or consolidation in which
Borrower is the surviving corporation, the amount of consideration therefor will
be deemed to be the fair market value of such portion of the net assets and
business, including a reasonable value ascribed to "good will" as approved by a
majority of the outside Directors of the Company of the non-surviving Borrower
as is attributable to such Common Stock, Purchase Rights or Convertible
Securities, as the case may be. Notwithstanding anything else herein to the
contrary, if Common Stock, Purchase Rights or Convertible Securities are issued
or sold in conjunction with each other as part of a single transaction or in a
series of related transactions, Holder may elect to determine the amount of
consideration deemed to be received by Borrower therefor by deducting the fair
value of any type of securities (the "DISREGARDED SECURITIES") issued or sold in
such transaction or series of transactions. If Holder makes an election pursuant
to the immediately preceding sentence, no adjustment to the Conversion Price
shall be made pursuant to this Article VI.E for the issuance of the Disregarded
Securities or upon any conversion, exercise or exchange thereof. For example, if
Borrower were to issue convertible notes having a face value of $1,000,000 and
warrants to purchase shares of Common Stock at an exercise price equal to the
market price of the Common Stock on the date of issuance of such warrants in
exchange for $1,000,000 of consideration, the fair value of the warrants would
be subtracted from the $1,000,000 of consideration received by Borrower for the
purposes of determining whether the shares of Common Stock issuable upon
conversion of the convertible notes shall be deemed to be issued at a price per
share below the Conversion Price then in effect and, if so, for purposes of
determining any adjustment to the Conversion Price hereunder as a result of the
issuance of the convertible notes. Borrower shall calculate, using standard
commercial valuation methods appropriate for valuing such assets, the fair
market value of any consideration other than cash or securities; provided,
however, that if Holder does not agree to such fair market value calculation
within three business days after receipt thereof from Borrower, then such fair
market value shall be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by Borrower and reasonably
acceptable to Holder, with the costs of such appraisal to be borne by Borrower.

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<PAGE>

            (iii) Limitation on Adjustments for Dilutive Issuances.
Notwithstanding the foregoing or any other provision of this Note to the
contrary, in no event shall the Conversion Price be adjusted as a result of a
Dilutive Issuance to the extent (but only to the extent) that such adjustment
would result in this Note, (together with any portions of the Note that have
already been converted into Common Stock) being convertible into and exercisable
for more than an aggregate of 9.9% of the then-outstanding shares of Common
Stock.

      F. Exceptions to Adjustment of Conversion Price. Notwithstanding the
foregoing, no adjustment to the Conversion Price shall be made upon (i) the
issuance of Common Stock upon the exercise or conversion of any Convertible
Securities or Purchase Rights outstanding on the Issuance Date and disclosed in
the Disclosure Schedule to the Securities Purchase Agreement in accordance with
the terms of such Convertible Securities and Purchase Rights as of such date;
(ii) the grant of options to purchase Common Stock, with exercise prices not
less than the market price of the Common Stock on the date of grant, or the
grant of restricted shares of Common Stock, in each case which are issued to
employees, officers, directors or consultants of Borrower for the primary
purpose of soliciting or retaining their employment or service pursuant to an
equity compensation plan approved by Borrower's Board of Directors, and the
issuance of shares of Common Stock upon the exercise thereof; (iii) the issuance
of securities pursuant to a bona fide underwritten public offering; or (iv) the
issuance of shares of Common Stock upon conversion of the Notes; or (v) the
issuance of securities in a bona fide business acquisition.

      G. Other Action Affecting Conversion Price. If, at any time after the
Issuance Date, Borrower takes any action affecting the Common Stock that would
be covered by Article VI.A through E, but for the manner in which such action is
taken or structured, which would in any way diminish the value of the Note, then
the Conversion Price shall be adjusted in such manner as the Board of Directors
of Borrower shall in good faith determine to be equitable under the
circumstances.

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<PAGE>

      H. Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Article VI amounting to a
more than one percent (1%) change in such Conversion Price, or any change in the
number or type of stock, securities and/or other property issuable upon
conversion of the Note, Borrower, at its expense, shall promptly compute such
adjustment or readjustment or change and prepare and furnish to Holder a
certificate setting forth such adjustment or readjustment or change and showing
in detail the facts upon which such adjustment or readjustment or change is
based. Borrower shall, upon the written request at any time of Holder, furnish
to Holder a like certificate setting forth (i) such adjustment or readjustment
or change, (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.

                                  ARTICLE VII

                    CONSENT RIGHTS; NOTICE OF CERTAIN ACTIONS

      A. Consent Rights. So long as the Note is outstanding, Borrower shall not
take any of the following corporate actions (whether by merger, consolidation or
otherwise) without first obtaining the approval (by vote or written consent) of
Holder, which consent shall not be unreasonably withheld:

            (i) alter or change the rights, preferences or privileges of the
Note;

            (ii) issue any additional notes, other than bank notes, operating
leases and similar instruments issued in the ordinary course of business;

            (iii) redeem, repurchase or otherwise acquire, or declare or pay any
cash dividend or distribution on, any securities of Borrower, except pursuant to
any equity compensation plan approved by Borrower's Board of Directors;

            (iv) issue any debt securities or incur any indebtedness that would
have priority over the Note upon liquidation of Borrower, or redeem, repurchase,
prepay or otherwise acquire any outstanding debt securities or indebtedness of
Borrower, except as expressly required by the terms of such securities or
indebtedness, and except for operating leases and bank notes executed in the
ordinary course of business;

            (v) enter into any agreement, commitment, understanding or other
arrangement to take any of the foregoing actions; or

            (vi) cause or authorize any subsidiary of Borrower to engage in any
of the foregoing actions.

Notwithstanding the foregoing, no change pursuant to this Article VII shall be
effective e to the extent that, by its terms, it applies to less than all of the
Holders of the Notes then outstanding.

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<PAGE>

      B. Approval of Certain Transactions. In the event that Borrower desires to
enter into any transaction that would result in (i) the sale, conveyance or
disposition of all or substantially all of its assets (the presentation of any
such transaction for stockholder approval being conclusive evidence that such
transaction involves the sale of all or substantially all of the assets of
Borrower), or (ii) the merger or consolidation of Borrower with or into any
person or entity, which results in either (a) holders of the voting securities
of Borrower immediately prior to such transaction holding or having the right to
direct the voting of fifty percent (50%) or less of the total outstanding voting
securities of Borrower or such other surviving or acquiring person or entity
immediately following such transaction or (b) the members of the board of
directors or other governing body of Borrower comprising fifty percent (50%) or
less of the members of the board of directors or other governing body of
Borrower or such other surviving or acquiring person or entity immediately
following such transaction, then Borrower shall be permitted to seek the
approval of Holder for such transaction in advance of its entering into such
transaction, and if Holder so approves the transaction and Borrower enters into
and consummates such transaction within ninety (90) days following such approval
on terms no less favorable to Borrower than those presented to Holder for
purposes of obtaining such approval, then such transaction shall not constitute
an Event of Default under Section V.A(ix).

      C. Notice Rights. In addition to the foregoing consent rights, Borrower
shall provide Holder with prior notification of any meeting of the stockholders
(and copies of proxy materials and other information sent to stockholders). If
Borrower takes a record of its stockholders for the purpose of determining
stockholders entitled to (i) receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation or recapitalization) any share of any
class or any other securities or property, or to receive any other right, or
(ii) to vote in connection with any proposed sale, lease or conveyance of all or
substantially all of the assets of Borrower, or any proposed merger,
consolidation, liquidation, dissolution or winding up of Borrower, Borrower
shall mail a notice to Holder, at least 15 days prior to the record date
specified therein (or 45 days prior to the consummation of the transaction or
event, whichever is earlier, but in no event earlier than public announcement of
such proposed transaction), of the date on which any such record is to be taken
for the purpose of such vote, dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such vote, dividend,
distribution, right or other event to the extent known at such time.

                                  ARTICLE VIII

          LIMITATIONS ON CERTAIN CONVERSIONS, REDEMPTIONS AND TRANSFERS

In no event shall Borrower issue Common Stock to Holder in connection with the
repayment of this Note pursuant to Article I.B or Mandatory Conversion of this
Note pursuant to Article II.C, and in no event shall Holder have the right to
effect an Optional Conversion of this Note into shares of Common Stock or to
dispose of this Note to the extent that such repayment, conversion or right to
effect such conversion or disposition would result in Holder and its affiliates
together beneficially owning more than 9.9% of the outstanding shares of Common
Stock. For purposes of this Article VIII, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13D-G thereunder. The restriction contained in
this Article VIII may not be altered, amended, deleted or changed in any manner
whatsoever unless Holder of a majority of the outstanding shares of Common Stock
and Holder shall approve, in writing, such alteration, amendment, deletion or
change. In the event that Borrower is prohibited from issuing shares of Common
Stock in connection with the repayment of this Note pursuant to Article I.B as a
result of the operation of this Article VIII, Borrower shall make such repayment
in cash. In the event that Borrower is prohibited from issuing shares of Common
Stock upon a Mandatory Conversion pursuant to Article II.C as a result of the
operation of this Article VIII, Borrower shall pay to Holder an amount of cash
equal to the Closing Sales Price of the Common Stock on the Conversion Date
multiplied by the number of shares of Common Stock that Borrower is prohibited
from issuing as a result of the operation of this Article VIII.

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<PAGE>

                                   ARTICLE IX

                                  SUBORDINATION

      Borrower's obligation for payment of this Note is subordinated to all
indebtedness as set forth on the Indebtedness Schedule attached hereto as
Exhibit "B" as of the execution of this Note.

                                   ARTICLE X

                               CERTAIN DEFINITIONS

      For purposes of this Note, in addition to the other terms defined herein,
the following terms shall have the following meanings:

      A. "BUSINESS DAY" means any day, other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law, regulation or executive order to close.

      B. "CLOSING SALES PRICE" means, for any security as of any date, the last
sales price of such security on the principal trading market where such security
is listed or traded as reported by Bloomberg Financial Markets (or a comparable
reporting service of national reputation selected by Borrower and reasonably
acceptable to the Holder if Bloomberg Financial Markets is not then reporting
closing bid prices of such security) (in any case, "BLOOMBERG"), or if the
foregoing does not apply, the last reported sales price of such security on a
national exchange or in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no such price is
reported for such security by Bloomberg, the average of the bid prices of all
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a
trading day for such security, on the next preceding date which was a trading
day. If the Closing Sales Price cannot be calculated for such security as of
either of such dates on any of the foregoing bases, the Closing Sales Price of
such security on such date shall be the fair market value as reasonably
determined by an investment banking firm selected by Borrower and reasonably
acceptable to the Holder, with the costs of such appraisal to be borne by
Borrower.

      C. "COMMON STOCK" means the common stock of Borrower, no par value per
share.

      D. "CONVERSION DATE" means, as applicable, (i) for any Optional Conversion
(as defined in Article II.A), the date specified in the notice of conversion in
the form attached hereto (the "NOTICE OF CONVERSION"), so long as a copy of the
Notice of Conversion is faxed (or delivered by other means resulting in notice)
to Borrower before 11:59 p.m., Omaha time, on the Conversion Date indicated in
the Notice of Conversion; provided, however, that if the Notice of Conversion is
not so faxed or otherwise delivered before such time, then the Conversion Date
shall be the date Holder faxes or otherwise delivers the Notice of Conversion to
Borrower; and (ii) for any Mandatory Conversion (as defined in Article II.C),
that date specified in the notice delivered to Holder in the event that such
Mandatory Conversion occurs.

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<PAGE>

      E. "CONVERSION PRICE" means fifty cents ($0.50), and shall be subject to
adjustment as provided herein.

      F. "DEFAULT CURE DATE" means, as applicable, (i) with respect to a
Conversion Default described in clause (i) of Article IV.A, the date Borrower
effects the conversion of the full amount of this Note being converted, (ii)
with respect to a Conversion Default described in clause (ii) of Article IV.A,
the date Borrower issues freely tradable shares of Common Stock in satisfaction
of the conversion of the full amount of this Note being converted in accordance
with Article II, or (iii) with respect to either type of a Conversion Default,
the date on which Borrower prepay this Note pursuant to Article IV.A.

      G. "ISSUANCE DATE" means the date of the closing under the Securities
Purchase Agreement, pursuant to which Borrower issued, and such purchasers
purchased, the Notes.

      H. "REQUIRED CONDITIONS" means all of the following: (i) the registration
statement required to be filed by Borrower pursuant to the Registration Rights
Agreement shall have been declared effective by the Securities and Exchange
Commission (and is not the subject of any stop order or other suspension of
effectiveness); (ii) the Closing Sales Price of the Common Stock is greater
$2.00 per share (subject to price adjustments, if any, as provided herein) for
sixty (60) consecutive trading days; (iii) all shares of Common Stock issuable
upon conversion of the Notes are then (a) authorized and reserved for issuance,
(b) registered under the Securities Act for resale by Holder and (c) listed or
traded on any of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, the Nasdaq SmallCap Market or the OTC Bulletin Board (or
the successor to any of them); (iv) no Event of Default (as defined in Article
V.A) shall have occurred without having been cured; and (v) all amounts, if any,
then accrued or payable under the Note (including, without limitation, all
interest) or the Registration Rights Agreement shall have been paid.

      I. "TRADING DAY" means any day on which the principal United States
securities exchange or trading market where the Common Stock is then listed or
traded, is open for trading.

                                   ARTICLE XI

                                  MISCELLANEOUS

      A. Failure or Indulgency Not Waiver. No failure or delay on the part of
any Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.

      B. Lost or Stolen Notes. Upon receipt by Borrower of (i) evidence of the
loss, theft, destruction or mutilation of any Note and (ii) (y) in the case of
loss, theft or destruction, of indemnity (without any bond or other security)
reasonably satisfactory to Borrower, or (z) in the case of mutilation, the Notes
(surrendered for cancellation), Borrower shall execute and deliver a new Note of
like tenor and date. However, Borrower shall not be obligated to reissue such
lost, stolen, destroyed or mutilated Note if Holder contemporaneously requests
Borrower to convert such Note.

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<PAGE>

      C. Allocation of Reserved Amount. The initial Reserved Amount shall be
allocated pro rata among Holders of the Notes based on the principal amount of
Notes issued to each Holder. Each increase to the Reserved Amount shall be
allocated pro rata among Holders of the Notes based on the principal amount of
Notes held by each Holder at the time of the increase in the 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
Reserved Amount. Any portion of the Reserved Amount that remains allocated to
any person or entity that does not hold any Notes shall be allocated to the
remaining Holder of the Notes, pro rata based on the principal balance of Notes
then held by such Holder.

      D. Quarterly Statements of Available Shares. For each calendar quarter
beginning in the quarter in which the initial registration statement required to
be filed pursuant to the Registration Rights Agreement is declared effective and
thereafter for so long as any Notes are outstanding, Borrower shall deliver (or
cause its transfer agent to deliver) to Holder a written report notifying Holder
of any occurrence that prohibits Borrower from issuing Common Stock upon any
conversion. The report shall also specify (i) the total principal amount of
Notes outstanding as of the end of such quarter, (ii) the total number of shares
of Common Stock issued upon all conversions of Notes prior to the end of such
quarter, (iii) the total number of shares of Common Stock which are reserved for
issuance upon conversion of the Notes as of the end of such quarter and (iv) the
total number of shares of Common Stock which may thereafter be issued by
Borrower upon conversion of the Notes before Borrower would exceed the Reserved
Amount. Borrower (or its transfer agent) shall use its best efforts to deliver
the report for each quarter to Holder prior to the tenth day of the calendar
month following the quarter to which such report relates. In addition, Borrower
(or its transfer agent) shall provide, as promptly as practicable following
delivery to Borrower of a written request by Holder, any of the information
enumerated in clauses (i) - (iv) of this Paragraph D as of the date of such
request.

      E. Status as Stockholder. Upon submission of a Notice of Conversion by
Holder, (i) the shares covered thereby (other than the shares, if any, which
cannot be issued because their issuance would exceed Holder's allocated portion
of the Reserved Amount) shall be deemed converted into shares of Common Stock
and (ii) Holder's rights as a holder of such converted 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 Holder because of a failure by Borrower to comply with the terms
of this Note. Notwithstanding the foregoing, if Holder has not received
certificates for all shares of Common Stock prior to the sixth business day
after the expiration of the Delivery Period with respect to a conversion of this
Note for any reason, then (unless Holder otherwise elects to retain its status
as a holder of Common Stock by so notifying Borrower within five business days
after the expiration of such six business day period after expiration of the
Delivery Period) Holder shall regain the rights of a holder of this Note and
Borrower shall, as soon as practicable, return such unconverted Note to Holder.
In all cases, Holder shall retain all of its rights and remedies for Borrower's
failure to convert this Note.

      F. Remedies Cumulative. The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under this Note, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit Holder's right to pursue
actual damages for any failure by Borrower to comply with the terms of this
Note. Borrower acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to Holder and that the remedy at law for any such
breach may be inadequate. Borrower therefore agrees, in the event of any such
breach or threatened breach that Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

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<PAGE>

      G. Waiver. Notwithstanding any provision in this Note to the contrary, any
provision contained herein and any right of the Holders granted hereunder may be
waived as to all Notes (and Holders thereof) only upon the written consent of
all of the Holders.

      H. Notices. Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt requested)
or delivered personally, by responsible overnight carrier or by confirmed
facsimile, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
responsible overnight carrier or confirmed facsimile, in each case addressed to
a party. The addresses for such communications are:

            (i) if to Borrower, to:

                           iSECUREtrac, CORP.
                           5022 South 114th Street, Suite 103
                           Omaha, NE 68137
                           Telephone: (402) 537-0022
                           Facsimile: (402) 537-9847

                           Attention:  Michael  May,  Chairman  & Chief
                                       Executive Officer

            (ii) if to Holder, to the address set forth under Holder's name on
the execution page to the Securities Purchase Agreement, or such other address
as may be designated in writing hereafter, in the same manner, by such person.

      I. Amendment Provision. This Note and any provision hereof may be amended
only by an instrument in writing signed by Borrower and Holder.

      J. Assignability. This Note shall be binding upon Borrower and its
successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. Notwithstanding anything to the contrary contained in
this Note or the Transaction Documents, this Note may be pledged and all rights
of Holder under this Note may be assigned to any affiliate or to any other
person or entity without the consent of Borrower.

      K. Cost of Collection. If an Event of Default occurs hereunder, Borrower
shall pay Holder hereof costs of collection, including reasonable attorneys'
fees.

      L. Governing Law; Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. Borrower
irrevocably consents to the jurisdiction of the United States federal courts and
the state courts located in the City and County of San Francisco, California, in
any suit or proceeding based on or arising under this Note and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in such courts. Borrower irrevocably waives the defense of an inconvenient forum
to the maintenance of such suit or proceeding in such forum. Borrower further
agrees that service of process upon Borrower mailed by first class mail shall be
deemed in every respect effective service of process upon Borrower in any such
suit or proceeding. Nothing herein shall affect the right of Holder to serve
process in any other manner permitted by law. Borrower agrees 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.

                                      139
<PAGE>

      M. Denominations. At the request of the Holders, upon surrender of this
Note, Borrower shall promptly issue new Notes in the aggregate outstanding
principal amount hereof, in the form hereof, in such denominations of at least
$25,000 as Holder shall request.

      N. Certain Waivers. Borrower and each endorser hereby waive presentment,
notice of nonpayment or dishonor, protest, notice of protest and all other
notices in connection with the delivery, acceptance, performance, default or
enforcement of payment of this Note, and hereby waive all notice or right of
approval of any extensions, renewals, modifications or forbearances which may be
allowed.

      O. Severability. If any provision of this Note shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Note or the
validity or enforceability of this Note in any other jurisdiction.

      P. Maximum Interest Rate. If the effective interest rate on this Note
would otherwise violate any applicable usury law, then the interest rate shall
be reduced to the maximum permissible rate and any payment received by Holder in
excess of the maximum permissible rate shall be treated as a prepayment of the
principal of this Note.

                                      140
<PAGE>

              [SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE - LTD]

IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its duly
authorized officer as of the date first written above.

                                 iSECUREtrac, CORP.

                                 By:
                                       ----------------------------------
                                 Name: Michael May
                                 Title: Chairman & Chief Executive Officer

                                      141
<PAGE>

                                                                       EXHIBIT A

                          NOTICE OF OPTIONAL CONVERSION

          iSECUREtrac, Corp.
          5022 South 114th Street, Suite 103
          Omaha, NE 68137
          Facsimile: (402) 537-9847
          Attention: Michael May, Chairman

The undersigned hereby irrevocably elects to convert $____________ of the
outstanding principal balance of, and accrued interest on, the Note (the
"CONVERSION"), into shares of common stock ("COMMON STOCK") of iSECUREtrac,
Corp. (the "CORPORATION") according to the conditions of the 10% Convertible
Promissory Note dated October ____, 2003 (the "NOTE"), 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. No fee will be charged to Holder for any conversion, except for
transfer taxes, if any. A copy of the Note is attached hereto (or evidence of
loss, theft or destruction thereof).

Except as may be provided below, the Corporation shall electronically transmit
the Common Stock issuable pursuant to this Notice of Conversion to the account
of the undersigned or its nominee (which is ________________) with DTC through
its Deposit Withdrawal Agent Commission System ("DTC TRANSFER").

In the event of partial exercise, please reissue an appropriate Note(s) for the
principal balance that shall not have been converted.

The undersigned acknowledges and agrees that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Note have been or will be made only pursuant to an effective registration of the
transfer of the Common Stock under the Securities Act of 1933, as amended (the
"ACT"), or pursuant to an exemption from registration under the Act.

Check Box if Applicable:

o     In lieu of receiving the shares of Common Stock issuable pursuant to this
      Notice of Conversion by way of DTC Transfer, the undersigned hereby
      requests that the Corporation issue and deliver to the undersigned or its
      nominee (if applicable) physical certificates representing such shares of
      Common Stock.

                     Date of Conversion:___________________________

                     Applicable Conversion Price:__________________

                     Number of Shares of
                     Common Stock to be Issued:____________________

                     Signature:____________________________________

                     Name:_________________________________________

                     Address: _____________________________________

                                      142
<PAGE>

                                                                       EXHIBIT B

                              INDEBTEDNESS SCHEDULE

                      Senior Debt As of September 30, 2003

Westburg Media Capital Loan                                       3,451,602.00

Various Ongoing Capital Lease Obligations                         1,349,382.00

Note Payable-- US Bank                                              301,159.84
Note Payable-- Nebraska State Bank                                   73,366.01
Note Payable-- Wells Fargo Bank                                   1,000,000.00

                                      143EXHIBIT 10.17

            THIS NOTE AND THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR IN ANY OTHER JURISDICTION.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

                  10% SUBORDINATED CONVERTIBLE PROMISSORY NOTE

Date: October 9, 2003                                                $700,000.00

            FOR VALUE RECEIVED, iSECUREtrac, Corp. a corporation organized under
the laws of Delaware (the "BORROWER"), hereby promises to pay to the order of
Micro Capital Fund LP, a Delaware limited partnership, or its registered assigns
(the "HOLDER"), the sum of seven hundred thousand dollars ($700,000.00) on
October 9, 2008 (the "SCHEDULED MATURITY DATE"), and to pay interest on the
unpaid principal balance hereof at the rate of ten percent (10%), as provided in
Article I below.

            The term "NOTE" and all references 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, issued in respect
hereof pursuant to that certain Securities Purchase Agreement, of even date
herewith, between Borrower and Holder thereto (the "SECURITIES PURCHASE
AGREEMENT"). The Note, the Securities Purchase Agreement and the Registration
Rights Agreement, of even date herewith, between Borrower and Holder (the
"REGISTRATION RIGHTS AGREEMENT") are collectively referred to herein as the
"TRANSACTION DOCUMENTS." All capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the
Securities Purchase Agreement.

                                  ARTICLE XII

                        PAYMENT OF PRINCIPAL AND INTEREST

      Q. Payment of Interest. Interest shall accrue on the unpaid principal
balance hereof from the Issuance Date until the same is paid, whether at
maturity, or upon prepayment, repayment, conversion or otherwise. Interest shall
be calculated based on a 365-day year and shall be payable quarterly in arrears
on March 31, June 30, September 30, and December 31 of each year (each, an
"INTEREST PAYMENT DATE"), commencing on December 31, 2003. Payment of each
installment of interest due hereunder shall be made in cash.

      R. Payment of Principal. The principal amount hereof, together with all
accrued and unpaid interest thereon, shall be due and payable on the Scheduled
Maturity Date. Payment of principal and accrued interest on the Scheduled
Maturity Date shall be made in cash.

      S. Prepayment. Except as and to the extent otherwise provided herein, no
amounts of principal or interest due hereunder may be prepaid by Borrower
without the prior written consent of Holder.

                                      144
<PAGE>

      T. Manner of Payments. All cash payments of principal and interest shall
be made in, and all references herein to monetary denominations shall refer to,
lawful money of the United States of America. All payments shall be made at such
address as Holder shall have given or shall hereafter give to Borrower by
written notice made in accordance with the provisions of this Note. If any cash
payment to be made hereunder shall be due on a day other than a business day,
such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. If any payment due hereunder is not made when due, Holder shall
thereafter be entitled to interest on the amount of such delinquent payment at a
per annum rate equal to the lower of eighteen percent (18%) and the highest
interest rate permitted by applicable law until such amount is paid in full.

                                  ARTICLE XIII

                                   CONVERSION

      U. Conversion at the Option of Holder. Subject to the limitations on
conversions contained in Article VIII, Holder may, following ninety (90) days
after Closing Date, at any time and from time to time, convert (an "OPTIONAL
CONVERSION") all or any portion of the unpaid principal amount hereof and any
accrued interest thereon into a number of fully paid and non-assessable shares
of Common Stock as is equal to the quotient obtained by dividing (x) the amount
of principal and interest being so converted by (y) the Conversion Price then in
effect.

      V. Mechanics of Conversion. In order to effect an Optional Conversion,
Holder shall: (x) fax (or otherwise deliver) a copy of the fully executed Notice
of Conversion to Borrower (Attention: Secretary) and (y) surrender or cause to
be surrendered this Note, duly endorsed, along with a copy of the Notice of
Conversion as soon as practicable thereafter to Borrower. Upon receipt by
Borrower of a facsimile copy of a Notice of Conversion from Holder, Borrower
shall promptly send, via facsimile, a confirmation to Holder stating that the
Notice of Conversion has been received, the date upon which Borrower expects to
deliver the Common Stock issuable upon such conversion and the name and
telephone number of a contact person at Borrower regarding the conversion.
Borrower shall not be obligated to issue shares of Common Stock upon a
conversion unless this Note is delivered to Borrower as provided above, or
Holder notifies Borrower that this Note has been lost, stolen or destroyed and
delivers the documentation to Borrower required by Article X.B hereof.

            (i) Delivery of Common Stock Upon Conversion. Upon the surrender of
this Note accompanied by a Notice of Conversion, Borrower (itself, or through
its transfer agent) shall, no later than the later of (a) the second business
day following the Conversion Date and (b) the business day following the date of
such surrender (or, in the case of lost, stolen or destroyed certificates, after
provision of indemnity pursuant to Article X.B) (the "DELIVERY PERIOD"), issue
and deliver (i.e., deposit with a nationally recognized overnight courier
service postage prepaid) to Holder or its nominee (x) that number of shares of
Common Stock issuable upon conversion of that portion of this Note being
converted and (y) a new Note representing the principal balance of this Note not
being converted, if any. Notwithstanding the foregoing, if Borrower's transfer
agent is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, and so long as the certificates therefor do not
bear a legend (pursuant to the terms of the Securities Purchase Agreement) and
Holder thereof is not then required to return such certificate for the placement
of a legend thereon (pursuant to the terms of the Securities Purchase
Agreement), Borrower shall cause its transfer agent to promptly electronically
transmit the Common Stock issuable upon conversion to Holder by crediting the
account of Holder or its nominee with DTC through its Deposit Withdrawal Agent
Commission system ("DTC TRANSFER"). If the aforementioned conditions to a DTC
Transfer are not satisfied, Borrower shall deliver as provided above to Holder
physical certificates representing the Common Stock issuable upon conversion.
Further, Holder may instruct Borrower to deliver to Holder physical certificates
representing the Common Stock issuable upon conversion in lieu of delivering
such shares by way of DTC Transfer.

                                      145
<PAGE>

            (ii) Taxes. Borrower shall pay any and all taxes that may be imposed
upon it with respect to the issuance and delivery of the shares of Common Stock
upon the conversion of this Note.

            (iii) No Fractional Shares. If any conversion of this Note would
result in the issuance of a fractional share of Common Stock (aggregating the
entire amount of principal and interest being converted pursuant to a given
Notice of Conversion), such fractional share shall be payable in cash based upon
the Closing Sales Price of the Common Stock at such time, and the number of
shares of Common Stock issuable upon conversion of this Note shall be the next
lower whole number of shares.

            (iv) Conversion Disputes. In the case of any dispute with respect to
a conversion, Borrower shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with subparagraph (i) above. If such
dispute involves the calculation of the Conversion Price, and such dispute is
not promptly resolved by discussion between Holder and Borrower, Borrower shall
submit the disputed calculations to an independent outside accountant (which
accountant shall be subject to the reasonable approval of Holder) via facsimile
within three business days of receipt of the Notice of Conversion. The
accountant shall promptly audit the calculations and notify Borrower and Holder
of the results no later than three business days from the date it receives the
disputed calculations. The accountant's calculation shall be deemed conclusive,
absent manifest error, and the party whose proposed calculation is further from
the calculation determined by the accountant shall bear all of the accountant's
expenses. Borrower shall then issue the appropriate number of shares of Common
Stock in accordance with subparagraph (i) above.

            (v) Payment of Accrued Amounts. Upon conversion of any unpaid
principal amount of this Note, all accrued interest on such amount through and
including the Conversion Date shall be paid on the Conversion Date in accordance
with one of the permitted payment methods set forth in Article I.A above.

      W. Mandatory Conversion into Common Stock. Subject to the limitations on
conversion contained in Article VIII, if at any time following the second
anniversary of the Issuance Date all of the Required Conditions are satisfied,
then, at the option of Borrower exercisable by the delivery of written notice to
Holder, delivered at least ten (10) days prior to the Conversion Date stated in
such notice, convert all, but not less than all, of the Notes originally issued
by Borrower and any of its related entities into a number of fully paid and
non-assessable shares of Common Stock determined in accordance with the formula
set forth in Paragraph A of this Article II (a "MANDATORY CONVERSION").
Thereafter, Borrower and Holder shall follow the applicable conversion
procedures set forth in Article II.B; provided, however, Holder shall not be
required to deliver a Notice of Conversion to Borrower in order for Borrower to
effect a Mandatory Conversion. In the event that Borrower is prohibited from
issuing shares of Common Stock upon a Mandatory Conversion pursuant to this
Article II.C as a result of the operation of the limitations set forth in
Article VIII, Borrower shall pay to each Holder an amount of cash equal to the
Closing Sales Price of the Common Stock on the Conversion Date multiplied by the
number of shares of Common Stock that Borrower is prohibited from issuing to
such Holder as a result of the operation of the limitations set forth in Article
VIII.

                                      146
<PAGE>

                                  ARTICLE XIV

                      RESERVATION OF SHARES OF COMMON STOCK

      X. Reserved Amount. On or prior to the Issuance Date, Borrower shall
reserve a minimum of 2,000,000 shares of its authorized but unissued shares of
Common Stock for issuance upon conversion of the Notes pursuant to Article II,
and, thereafter, the number of authorized but unissued shares of Common Stock so
reserved (the "RESERVED AMOUNT") shall at all times be sufficient to provide for
the full conversion of the Notes at the then current Conversion Price thereof
(without giving effect to the limitations contained in Article VIII).

      Y. Increases to Reserved Amount. If the Reserved Amount for any three
consecutive trading days (the last of such three trading days being the
"AUTHORIZATION TRIGGER DATE") shall be less than one hundred percent (100%) of
the number of shares of Common Stock issuable upon full conversion of all then
outstanding Notes (without giving effect to the limitations contained in Article
VIII), Borrower shall immediately notify Holder of such occurrence and shall
take immediate action (including, if necessary, seeking stockholder approval to
authorize the issuance of additional shares of Common Stock) to increase the
Reserved Amount to one hundred percent (100%) of the number of shares of Common
Stock then issuable upon full conversion of the Notes at the then current
Conversion Price (without giving effect to the limitations contained in Article
VIII). In the event Borrower fails to so increase the Reserved Amount within 90
days after an Authorization Trigger Date, Holder shall thereafter have the
option, exercisable in whole or in part at any time and from time to time, by
delivery of a Default Notice to Borrower, to require Borrower to prepay in cash,
for an amount equal to the Default Amount (as defined in Article V.B), that
portion of the unpaid principal amount hereof and accrued interest thereon such
that, after giving effect to such prepayment, the then unissued portion of
Holder's Reserved Amount is at least equal to one hundred percent (100%) of the
total number of shares of Common Stock issuable upon conversion of this Note by
Holder. If Borrower fails to prepay any portion of this Note as required hereby
within five business days after its receipt of such Default Notice, then Holder
shall be entitled to the remedies provided in Article V.C.

                                   ARTICLE XV

                         FAILURE TO SATISFY CONVERSIONS

      Z. Conversion Defaults. If, at any time, (i) Holder submits a Notice of
Conversion and Borrower fails for any reason to deliver, on or prior to the
fifth business day following the expiration of the Delivery Period for such
conversion, such number of freely tradable shares of Common Stock to which
Holder is entitled upon such conversion, or (ii) Borrower provides written
notice to Holder (or makes a public announcement via press release) at any time
of its intention not to issue freely tradable shares of Common Stock upon
exercise by Holder of their conversion rights in accordance with the terms of
the Note (each of (i) and (ii) being a "CONVERSION DEFAULT"), then Holder may
elect, at any time and from time to time prior to the Default Cure Date for such
Conversion Default, by delivery of a Default Notice to Borrower, to have all or
any portion of the unpaid principal amount hereof and accrued interest thereto
prepaid by Borrower in cash, for an amount per share equal to the Default Amount
(as defined in Article V.B). If Borrower fails to prepay any portion of this
Note as required hereby within five business days after its receipt of such
Default Notice, then Holder shall be entitled to the remedies provided in
Article V.C.

                                      147
<PAGE>

      AA. Buy-In Cure. Unless Borrower has notified Holder in writing prior to
the delivery by Holder of a Notice of Conversion that Borrower is unable to
honor conversions, if (i) (a) Borrower fails to promptly deliver during the
Delivery Period shares of Common Stock to Holder upon a conversion of all or any
portion of this Note or (b) there shall occur a Legend Removal Failure (as
defined in Article V.A(iv) below) and (ii) thereafter, Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to make delivery in
satisfaction of a sale by Holder of the unlegended shares of Common Stock (the
"SOLD SHARES") which Holder anticipated receiving upon such conversion (a
"BUY-IN"), Borrower shall pay Holder, in addition to any other remedies
available to Holder, the amount by which (x) Holder's total purchase price
(including brokerage commissions, if any) for the unlegended shares of Common
Stock so purchased exceeds (y) the net proceeds received by Holder from the sale
of the Sold Shares. For example, if Holder purchases unlegended shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for $10,000, Borrower will be required to pay
Holder $1,000. Holder shall provide Borrower written notification and supporting
documentation indicating any amounts payable to Holder pursuant to this Article
IV.B.

                                  ARTICLE XVI

                                EVENTS OF DEFAULT

      BB. Events of Default. In the event (each of the events described in
clauses (ii)-(ix) below after expiration of the applicable cure period (if any)
being an "EVENT OF DEFAULT"):

            (i) Borrower fails to pay in full an interest payment within fifteen
(15) days after a scheduled Interest Payment Date (each a "CONVERSION PRICE
EVENT OF DEFAULT").

            (ii) Borrower fails to pay in full an interest payment within twenty
(20) days after a scheduled Interest Payment Date, or fails to pay in full the
principal hereof, and/or the accrued and unpaid interest thereon, when due,
whether at maturity, upon acceleration or otherwise;

            (iii) the Common Stock (including any of the shares of Common Stock
issuable upon conversion of this Note) is suspended from trading on any of, or
is not listed (and authorized) for trading on at least one of, the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Nasdaq SmallCap Market or the OTC Bulletin Board for an aggregate of ten or more
trading days in any twelve month period;

            (iv) the registration statement required to be filed by Borrower
pursuant to the Registration Rights Agreement has not been declared effective by
the Registration Deadline (as defined in the Registration Rights Agreement) or
such registration statement, after being declared effective, cannot be utilized
by Holders for the resale of all of their Registrable Securities (as defined in
the Registration Rights Agreement) for an aggregate of more than 60 days;

            (v) Borrower fails to remove any restrictive legend on any
certificate or any shares of Common Stock issued to Holder upon conversion of
this Note as and when required by the terms hereof and of the Securities
Purchase Agreement or the Registration Rights Agreement (a "LEGEND REMOVAL
FAILURE"), and any such failure continues uncured for ten business days after
Borrower has been notified thereof in writing by Holder;

                                      148
<PAGE>

            (vi) Borrower provides written notice (or otherwise indicates) to
Holder, or states by way of public announcement distributed via a press release,
at any time, of its intention not to issue, or otherwise refuses to issue,
shares of Common Stock to Holder upon conversion in accordance with the terms of
this Note (other than because such issuance would exceed Holder's allocated
portion of the Reserved Amount, for which failures Holder shall have the
remedies set forth in Article III);

            (vii) 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 it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed;

            (viii) bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for the relief of debtors shall be instituted
by or against Borrower or any subsidiary of Borrower and if instituted against
Borrower or any subsidiary of Borrower by a third party, shall not be dismissed
within 60 days of their initiation;

            (ix) Borrower shall:

                  (a) sell, convey or dispose of all or substantially all of its
assets (the presentation of any such transaction for stockholder approval being
conclusive evidence that such transaction involves the sale of all or
substantially all of the assets of Borrower), unless Holder has approved such
transaction pursuant to Article VII.B below;

                  (b) merge or consolidate with or into any person or entity,
which results in either (i) Holder of the voting securities of Borrower
immediately prior to such transaction holding or having the right to direct the
voting of fifty percent (50%) or less of the total outstanding voting securities
of Borrower or such other surviving or acquiring person or entity immediately
following such transaction or (ii) the members of the board of directors or
other governing body of Borrower comprising fifty percent (50%) or less of the
members of the board of directors or other governing body of Borrower or such
other surviving or acquiring person or entity immediately following such
transaction, unless Holder has approved such transaction pursuant to Article
VII.B below;

                  (c) either (i) fail to pay, when due, or within any applicable
grace period, any payment with respect to any indebtedness of Borrower in excess
of $250,000 due to any third party, other than payments contested by Borrower in
good faith, or otherwise be in breach or violation of any agreement for monies
owed or owing in an amount in excess of $250,000 which breach or violation
permits the other party thereto to declare a default or otherwise accelerate
amounts due thereunder, or (ii) suffer to exist any other default or event of
default under any agreement binding Borrower which default or event of default
would or is likely to have a material adverse effect on the business,
operations, properties, prospects or financial condition of Borrower;

                  (d) have thirty-five percent (35%) or more of the voting power
of its capital stock owned beneficially by one person, entity or "group" (as
such term is used under Section 13(d) of the Securities Exchange Act of 1934, as
amended); or

                                      149
<PAGE>

            (x) except with respect to matters covered by subparagraph (ii) -
(ix) above, as to which such applicable subparagraphs shall apply, Borrower
otherwise shall breach any material term hereunder or under the other
Transaction Documents, including, without limitation, the representations and
warranties contained therein (i.e., in the event of a material breach as of the
date such representation and warranty was made) and if such breach is curable,
shall fail to cure such breach within ten business days after Borrower has been
notified thereof in writing by Holder;

then, upon the occurrence of any such Event of Default, at the option of Holder,
exercisable in whole or in part at any time and from time to time by delivery of
a written notice to such effect (a "DEFAULT NOTICE") to Borrower while such
Event of Default continues, Borrower shall prepay, in satisfaction of its
obligation to pay the outstanding principal amount of this Note and accrued and
unpaid interest thereon, an amount equal to the Default Amount (as defined in
Section V.B below); provided, however, that (a) in the case of an Event of
Default described in clauses (vii) and (viii) of this Article V.A, Borrower's
prepayment obligation hereunder shall be automatic and shall not require the
delivery of a Default Notice by Holder, (b) in the case of an Event of Default
resulting from a Legend Removal Failure, Borrower's prepayment obligation
hereunder shall only apply to that portion of the Note affected by such Legend
Removal Failure, and (c) in the case of a Conversion Price Event of Default, the
Conversion Price then in effect shall be reduced by 10% of the original
Conversion Price specified herein. Except in the case of a Conversion Price
Event of Default, such Default Amount, together with all other ancillary amounts
payable hereunder, shall immediately become due and payable, all without demand,
presentment or notice, all of which are hereby expressly waived, together with
all costs, including, without limitation, legal fees and expenses of collection,
and Holder shall be entitled to exercise all other rights and remedies available
at law or in equity. For the avoidance of doubt, the occurrence of any event
described in clauses (ii), (iii), (iv), (vii), (viii) and (ix) above shall
immediately constitute an Event of Default and there shall be no cure period.
Further, the occurrence of any event described in clause (i) above shall
immediately constitute a Conversion Price Event of Default and there shall be no
cure period; provided, however, that in the case that Borrower pays in full an
interest payment between fifteen (15) days and twenty (20) days after a
scheduled Interest Payment Date, Borrower shall be subject to the penalty for a
Conversion Price Event of Default only and not also subject to the additional
Default Amount provided in clause (ii) above for such payments greater than
twenty (20) days late. Upon Borrower's receipt of any Default Notice hereunder,
Borrower shall immediately (and in any event within one business day following
such receipt) deliver a written notice (a "DEFAULT ANNOUNCEMENT") to Holder
stating the date upon which Borrower received such Default Notice and the amount
of the Note covered thereby. Following the delivery of a Default Announcement
hereunder, at any time and from time to time, Holder may request (either orally
or in writing) information from Borrower with respect to the instant default and
Borrower shall furnish (either orally or in writing) as soon as practicable such
requested information to Holder.

      CC. Definition of Default Amount. The "DEFAULT AMOUNT" with respect to
this Note means an amount equal to the greater of:

                  (i)      V    x M
                          ---
                          C P

         and      (ii)     V   X   R

            where:

                                      150
<PAGE>

            "V" means the aggregate principal amount outstanding of the Note
required to be prepaid plus all accrued and unpaid interest thereon through the
date of payment of the Default Amount hereunder;

            "CP" means the Conversion Price in effect on the date on which
Borrower receives the Default Notice;

            "M" means (i) with respect to all Events of Default other than
Events of Default described in subparagraph (a) or (b) of Article V.A(ix)
hereof, the highest Closing Sales Price of Borrower's Common Stock during the
period beginning on the date on which Borrower receives the Default Notice and
ending on the date immediately preceding the date of payment of the Default
Amount hereunder, and (ii) with respect to an Event of Default described in
subparagraph (a) or (b) of Article V.A(ix) hereof, the greater of (a) the amount
determined pursuant to clause (i) of this definition or (b) the fair market
value, as of the date on which Borrower receives the Default Notice, of the
consideration payable to Holder of a share of Common Stock pursuant to the
transaction which triggers the Event of Default. For purposes of this
definition, "fair market value" shall be determined by the mutual agreement of
Borrower and the Holder, or if such agreement cannot be reached within five
business days prior to the date of the Event of Default, by an investment
banking firm selected by Borrower and reasonably acceptable to the Holder, with
the costs of such appraisal to be borne by Borrower; and

            "R" means 115%.

      DD. Failure to Pay Default Amounts. If Borrower fails to pay Holder the
Default Amount with respect to the Note within five business days after its
receipt of a Default Notice (the "PREPAYMENT DATE"), then Holder shall be
entitled to interest on the Default Amount at a per annum rate equal to the
lower of eighteen percent (18%) and the highest interest rate permitted by
applicable law from the date on which Borrower receives the Default Notice until
the date of payment of the Default Amount hereunder. In the event Borrower is
unable to prepay all of the outstanding Notes required to be prepaid hereunder,
Borrower shall prepay the outstanding Notes from each Holder pro rata, based on
the total amounts due on the Not5es at the time of prepayment and required on
Prepayment Date relative to the total amounts due under the Notes on the
Prepayment Date.

                                  ARTICLE XVII

                       ADJUSTMENTS TO THE CONVERSION PRICE

      The Conversion Price shall be subject to adjustment from time to time as
follows:

      EE. Stock Splits, Stock Dividends, Etc. If, at any time on or after the
Issuance Date, the number of outstanding shares of Common Stock is increased by
a stock split, stock dividend, combination, reclassification or other similar
event, the Conversion Price shall be proportionately reduced, or if the number
of outstanding shares of Common Stock is decreased by a reverse stock split,
combination, reclassification or other similar event, the Conversion Price shall
be proportionately increased. In such event, Borrower shall notify Borrower's
transfer agent of such change on or before the effective date thereof.

                                      151
<PAGE>

      FF. Merger, Consolidation, Etc. If, at any time after the Issuance Date,
there shall be (i) any reclassification or change of the outstanding shares of
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger of Borrower with any other entity
(other than a merger in which Borrower is the surviving or continuing entity and
its capital stock is unchanged), (iii) any sale or transfer of all or
substantially all of the assets of Borrower or (iv) any share exchange or other
transaction pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property (each of (i) - (iv) above being a
"CORPORATE CHANGE"), then Holder shall thereafter have the right to receive upon
conversion, in lieu of the shares of Common Stock otherwise issuable, such
shares of stock, securities and/or other property as would have been issued or
payable in such Corporate Change with respect to or in exchange for the number
of shares of Common Stock which would have been issuable upon conversion had
such Corporate Change not taken place (without giving effect to the limitations
contained in Article VIII), and in any such case, appropriate provisions (in
form and substance reasonably satisfactory to the Holder) shall be made with
respect to the rights and interests of Holder hereunder to the end that the
economic value of this Note is in no way diminished by such Corporate Change and
that the provisions hereof (including, without limitation, in the case of any
such consolidation, merger or sale in which the successor entity or purchasing
entity is not Borrower, an immediate adjustment of the Conversion Price so that
the Conversion Price immediately after the Corporate Change reflects the same
relative value as compared to the value of the surviving entity's common stock
that existed between the Conversion Price and the value of Borrower's Common
Stock immediately prior to such Corporate Change) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the conversion thereof. Borrower shall
not effect any Corporate Change unless (i) each Holder has received written
notice of such transaction at least 45 days prior thereto, but in no event later
than 15 days prior to the record date for the determination of stockholders
entitled to vote with respect thereto, and (ii) the resulting successor or
acquiring entity (if not Borrower) assumes by written instrument (in form and
substance reasonable satisfactory to Holder) the obligations under this Note
(including, without limitation, the obligation to make interest payments accrued
but unpaid through the date of such consolidation, merger or sale and accruing
thereafter). The above provisions shall apply regardless of whether or not there
would have been a sufficient number of shares of Common Stock authorized and
available for issuance upon conversion of this Note as of the date of such
transaction, and shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.

      GG. Distributions. If, at any time after the Issuance Date, Borrower shall
declare or make any distribution of its assets (or rights to acquire its assets)
to the holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise (including any dividend or distribution to
Borrower's stockholders in cash or shares (or rights to acquire shares) of
capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then
Holder shall be entitled, upon any conversion of this Note after the date of
record for determining the stockholders entitled to such Distribution (or if no
such record is taken, the date on which such Distribution is declared or made),
to receive the amount of such assets which would have been payable to Holder
with respect to the shares of Common Stock issuable upon such conversion
(without giving effect to the limitations contained in Article VIII) had Holder
been the holder of such shares of Common Stock on the record date for the
determination of stockholders entitled to such Distribution (or if no such
record is taken, the date on which such Distribution is declared or made).

                                      152
<PAGE>

      HH. Convertible Securities and Purchase Rights. If, at any time after the
Issuance Date, Borrower issues any securities or other instruments which are
convertible into or exercisable or exchangeable for Common Stock ("CONVERTIBLE
SECURITIES") or options, warrants or other rights to purchase or subscribe for
Common Stock or Convertible Securities ("PURCHASE RIGHTS") pro rata to the
record holders of the Common Stock, whether or not such Convertible Securities
or Purchase Rights are immediately convertible, exercisable or exchangeable,
then Holder shall be entitled, upon any conversion of this Note after the date
of record for determining stockholder entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights are issued), to receive the
aggregate number of Convertible Securities or Purchase Rights which Holder would
have received with respect to the shares of Common Stock issuable upon such
conversion (without giving effect to the limitations contained in Article VIII)
had Holder been the holder of such shares of Common Stock on the record date for
the determination of stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which
such Convertible Securities or Purchase Rights were issued). If the right to
exercise or convert any such Convertible Securities or Purchase Rights would
expire in accordance with their terms prior to the conversion of this Note, then
the terms of such Convertible Securities or Purchase Rights shall provide that
such exercise or convertibility right shall remain in effect until thirty (30)
days after the date Holder receives such Convertible Securities or Purchase
Rights pursuant to the conversion hereof.

      II. Dilutive Issuances.

            (i) Adjustment Upon Dilutive Issuance. If, at any time after the
Issuance Date, Borrower issues or sells, or in accordance with subparagraph (ii)
of this Article VI.E is deemed to have issued or sold, any shares of Common
Stock for no consideration or for a consideration per share less than the
Conversion Price on the date of issuance or sale (or deemed issuance or sale) (a
"DILUTIVE ISSUANCE"), then effective immediately upon the Dilutive Issuance, the
Conversion Price shall be adjusted so as to equal an amount determined by
multiplying such Conversion Price by the following fraction:

                                     N0 + N1
                                  ------------
                                     N0 + N2

            where:

                  N0 = the number of shares of Common Stock outstanding
immediately prior to the issuance, sale or deemed issuance or sale of such
additional shares of Common Stock in such Dilutive Issuance (without taking into
account any shares of Common Stock issuable upon conversion, exchange or
exercise of any Convertible Securities or Purchase Rights, including the Note);

                  N1 = the number of shares of Common Stock which the aggregate
consideration, if any, received or receivable by Borrower for the total number
of such additional shares of Common Stock so issued, sold or deemed issued or
sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale,
shall be calculated in accordance with subparagraph (ii) below) would purchase
at the Conversion Price in effect immediately prior to such Dilutive Issuance;
and

                  N2 = the number of such additional shares of Common Stock so
issued, sold or deemed issued or sold in such Dilutive Issuance.

                                      153
<PAGE>

Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Paragraph E if such adjustment would result in an increase in the Conversion
Price.

            (ii) Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under subparagraph (i) of this Article
VI.E, the following will be applicable:

                  (a) Issuance of Purchase Rights. If Borrower issues or sells
any Purchase Rights, whether or not immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such Purchase
Rights (and the price of any conversion of Convertible Securities, if
applicable) is less than the Conversion Price in effect on the date of issuance
or sale of such Purchase Rights, then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Purchase Rights (assuming
full conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Purchase Rights, be deemed
to be outstanding and to have been issued and sold by Borrower for 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 Purchase Rights" shall
be determined by dividing (A) the total amount, if any, received or receivable
by Borrower as consideration for the issuance or sale of all such Purchase
Rights, plus the minimum aggregate amount of additional consideration, if any,
payable to Borrower upon the exercise of all such Purchase Rights, plus, in the
case of Convertible Securities issuable upon the exercise of such Purchase
Rights, the minimum aggregate amount of additional consideration payable upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in subparagraph (ii)(b) of this Article VI.E) at
the time such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise of all such Purchase Rights (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Conversion Price shall be made upon the actual issuance of
such Common Stock upon the exercise of such Purchase Rights or upon the
conversion, exercise or exchange of Convertible Securities issuable upon
exercise of such Purchase Rights.

                  (b) Issuance of Convertible Securities. If Borrower issues or
sells any Convertible Securities, whether or not immediately convertible,
exercisable or exchangeable, and the price per share for which Common Stock is
issuable upon such conversion, exercise or exchange is less than the Conversion
Price in effect on the date of issuance or sale of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
conversion, exercise or exchange of all such Convertible Securities shall, as of
the date of the issuance or sale of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by Borrower for such price per
share. If the Convertible Securities so issued or sold do not have a fluctuating
conversion or exercise price or exchange ratio, then for the purposes of the
preceding sentence, the "price per share for which Common Stock is issuable upon
such conversion, exercise or exchange" shall be determined by dividing (A) the
total amount, if any, received or receivable by 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 Borrower upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in this subparagraph (ii)(b) of this Article VI.E)
at the time such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise, conversion or exchange of all such Convertible Securities. If
the Convertible Securities so issued or sold have a fluctuating conversion or
exercise price or exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then
for purposes of the next preceding sentence, the "price per share for which
Common Stock is issuable upon such conversion, exercise or exchange" shall be
deemed to be the lowest price per share which would be applicable (assuming all
holding period and other conditions to any discounts contained in such Variable
Rate Convertible Security have been satisfied) if the conversion price of such
Variable Rate Convertible Security on the date of issuance or sale thereof was
seventy-five percent (75%) of the actual conversion price on such date (the
"ASSUMED VARIABLE MARKET PRICE"), and, further, if the conversion price of such
Variable Rate Convertible Security at any time or times thereafter is less than
or equal to the Assumed Variable Market Price last used for making any
adjustment under this Article VI.E with respect to any Variable Rate Convertible
Security, the Conversion Price in effect at such time shall be readjusted to
equal the Conversion Price which would have resulted if the Assumed Variable
Market Price at the time of issuance of the Variable Rate Convertible Security
had been seventy-five percent (75%) of the actual conversion price of such
Variable Rate Convertible Security existing at the time of the adjustment
required by this sentence. No further adjustment to the Conversion Price shall
be made upon the actual issuance of such Common Stock upon conversion, exercise
or exchange of such Convertible Securities.

                                      154
<PAGE>

            (c) Change in Option Price or Conversion Rate. If there is a change
at any time in (A) the amount of additional consideration payable to Borrower
upon the exercise of any Purchase Rights; (B) the amount of additional
consideration, if any, payable to Borrower upon the conversion, exercise or
exchange of any Convertible Securities; or (C) the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for Common Stock
(in each such case, other than under or by reason of provisions designed to
protect against dilution), the Conversion Price in effect at the time of such
change shall be readjusted to the Conversion Price which would have been in
effect at such time had such Purchase Rights or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion, exercise or exchange rate, as the case may be, at the time initially
issued or sold.

            (d) Calculation of Consideration Received. If any Common Stock,
Purchase Rights or Convertible Securities are issued or sold for cash, the
consideration received therefor will be the amount received by Borrower
therefor. In case any Common Stock, Purchase Rights or Convertible Securities
are issued or sold for a consideration part or all of which shall be other than
cash, including in the case of a strategic or similar arrangement in which the
other entity will provide services to Borrower, purchase services from Borrower
or otherwise provide intangible consideration to Borrower, the amount of the
consideration other than cash received by Borrower (including the net present
value of the consideration expected by Borrower for the provided or purchased
services) shall be the fair market value of such consideration, except where
such consideration consists of securities, in which case the amount of
consideration received by Borrower will be the Closing Sales Price thereof as of
the date of receipt. In case any Common Stock, Purchase Rights or Convertible
Securities are issued in connection with any merger or consolidation in which
Borrower is the surviving corporation, the amount of consideration therefor will
be deemed to be the fair market value of such portion of the net assets and
business, including a reasonable value ascribed to "good will" as approved by a
majority of the outside Directors of the Company of the non-surviving Borrower
as is attributable to such Common Stock, Purchase Rights or Convertible
Securities, as the case may be. Notwithstanding anything else herein to the
contrary, if Common Stock, Purchase Rights or Convertible Securities are issued
or sold in conjunction with each other as part of a single transaction or in a
series of related transactions, Holder may elect to determine the amount of
consideration deemed to be received by Borrower therefor by deducting the fair
value of any type of securities (the "DISREGARDED SECURITIES") issued or sold in
such transaction or series of transactions. If Holder makes an election pursuant
to the immediately preceding sentence, no adjustment to the Conversion Price
shall be made pursuant to this Article VI.E for the issuance of the Disregarded
Securities or upon any conversion, exercise or exchange thereof. For example, if
Borrower were to issue convertible notes having a face value of $1,000,000 and
warrants to purchase shares of Common Stock at an exercise price equal to the
market price of the Common Stock on the date of issuance of such warrants in
exchange for $1,000,000 of consideration, the fair value of the warrants would
be subtracted from the $1,000,000 of consideration received by Borrower for the
purposes of determining whether the shares of Common Stock issuable upon
conversion of the convertible notes shall be deemed to be issued at a price per
share below the Conversion Price then in effect and, if so, for purposes of
determining any adjustment to the Conversion Price hereunder as a result of the
issuance of the convertible notes. Borrower shall calculate, using standard
commercial valuation methods appropriate for valuing such assets, the fair
market value of any consideration other than cash or securities; provided,
however, that if Holder does not agree to such fair market value calculation
within three business days after receipt thereof from Borrower, then such fair
market value shall be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by Borrower and reasonably
acceptable to Holder, with the costs of such appraisal to be borne by Borrower.

                                      155
<PAGE>

            (iii) Limitation on Adjustments for Dilutive Issuances.
Notwithstanding the foregoing or any other provision of this Note to the
contrary, in no event shall the Conversion Price be adjusted as a result of a
Dilutive Issuance to the extent (but only to the extent) that such adjustment
would result in this Note, (together with any portions of the Note that have
already been converted into Common Stock) being convertible into and exercisable
for more than an aggregate of 9.9% of the then-outstanding shares of Common
Stock.

      JJ. Exceptions to Adjustment of Conversion Price. Notwithstanding the
foregoing, no adjustment to the Conversion Price shall be made upon (i) the
issuance of Common Stock upon the exercise or conversion of any Convertible
Securities or Purchase Rights outstanding on the Issuance Date and disclosed in
the Disclosure Schedule to the Securities Purchase Agreement in accordance with
the terms of such Convertible Securities and Purchase Rights as of such date;
(ii) the grant of options to purchase Common Stock, with exercise prices not
less than the market price of the Common Stock on the date of grant, or the
grant of restricted shares of Common Stock, in each case which are issued to
employees, officers, directors or consultants of Borrower for the primary
purpose of soliciting or retaining their employment or service pursuant to an
equity compensation plan approved by Borrower's Board of Directors, and the
issuance of shares of Common Stock upon the exercise thereof; (iii) the issuance
of securities pursuant to a bona fide underwritten public offering; or (iv) the
issuance of shares of Common Stock upon conversion of the Notes; or (v) the
issuance of securities in a bona fide business acquisition.

      KK. Other Action Affecting Conversion Price. If, at any time after the
Issuance Date, Borrower takes any action affecting the Common Stock that would
be covered by Article VI.A through E, but for the manner in which such action is
taken or structured, which would in any way diminish the value of the Note, then
the Conversion Price shall be adjusted in such manner as the Board of Directors
of Borrower shall in good faith determine to be equitable under the
circumstances.

                                      156
<PAGE>

      LL. Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Article VI amounting to a
more than one percent (1%) change in such Conversion Price, or any change in the
number or type of stock, securities and/or other property issuable upon
conversion of the Note, Borrower, at its expense, shall promptly compute such
adjustment or readjustment or change and prepare and furnish to Holder a
certificate setting forth such adjustment or readjustment or change and showing
in detail the facts upon which such adjustment or readjustment or change is
based. Borrower shall, upon the written request at any time of Holder, furnish
to Holder a like certificate setting forth (i) such adjustment or readjustment
or change, (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.

                                 ARTICLE XVIII

                    CONSENT RIGHTS; NOTICE OF CERTAIN ACTIONS

      MM. Consent Rights. So long as the Note is outstanding, Borrower shall not
take any of the following corporate actions (whether by merger, consolidation or
otherwise) without first obtaining the approval (by vote or written consent) of
Holder, which consent shall not be unreasonably withheld:

            (i) alter or change the rights, preferences or privileges of the
Note;

            (ii) issue any additional notes, other than bank notes, operating
leases and similar instruments issued in the ordinary course of business;

            (iii) redeem, repurchase or otherwise acquire, or declare or pay any
cash dividend or distribution on, any securities of Borrower, except pursuant to
any equity compensation plan approved by Borrower's Board of Directors;

            (iv) issue any debt securities or incur any indebtedness that would
have priority over the Note upon liquidation of Borrower, or redeem, repurchase,
prepay or otherwise acquire any outstanding debt securities or indebtedness of
Borrower, except as expressly required by the terms of such securities or
indebtedness, and except for operating leases and bank notes executed in the
ordinary course of business;

            (v) enter into any agreement, commitment, understanding or other
arrangement to take any of the foregoing actions; or

            (vi) cause or authorize any subsidiary of Borrower to engage in any
of the foregoing actions.

Notwithstanding the foregoing, no change pursuant to this Article VII shall be
effective e to the extent that, by its terms, it applies to less than all of the
Holders of the Notes then outstanding.

                                      157
<PAGE>

      NN. Approval of Certain Transactions. In the event that Borrower desires
to enter into any transaction that would result in (i) the sale, conveyance or
disposition of all or substantially all of its assets (the presentation of any
such transaction for stockholder approval being conclusive evidence that such
transaction involves the sale of all or substantially all of the assets of
Borrower), or (ii) the merger or consolidation of Borrower with or into any
person or entity, which results in either (a) holders of the voting securities
of Borrower immediately prior to such transaction holding or having the right to
direct the voting of fifty percent (50%) or less of the total outstanding voting
securities of Borrower or such other surviving or acquiring person or entity
immediately following such transaction or (b) the members of the board of
directors or other governing body of Borrower comprising fifty percent (50%) or
less of the members of the board of directors or other governing body of
Borrower or such other surviving or acquiring person or entity immediately
following such transaction, then Borrower shall be permitted to seek the
approval of Holder for such transaction in advance of its entering into such
transaction, and if Holder so approves the transaction and Borrower enters into
and consummates such transaction within ninety (90) days following such approval
on terms no less favorable to Borrower than those presented to Holder for
purposes of obtaining such approval, then such transaction shall not constitute
an Event of Default under Section V.A(ix).

      OO. Notice Rights. In addition to the foregoing consent rights, Borrower
shall provide Holder with prior notification of any meeting of the stockholders
(and copies of proxy materials and other information sent to stockholders). If
Borrower takes a record of its stockholders for the purpose of determining
stockholders entitled to (i) receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation or recapitalization) any share of any
class or any other securities or property, or to receive any other right, or
(ii) to vote in connection with any proposed sale, lease or conveyance of all or
substantially all of the assets of Borrower, or any proposed merger,
consolidation, liquidation, dissolution or winding up of Borrower, Borrower
shall mail a notice to Holder, at least 15 days prior to the record date
specified therein (or 45 days prior to the consummation of the transaction or
event, whichever is earlier, but in no event earlier than public announcement of
such proposed transaction), of the date on which any such record is to be taken
for the purpose of such vote, dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such vote, dividend,
distribution, right or other event to the extent known at such time.

                                  ARTICLE XIX

          LIMITATIONS ON CERTAIN CONVERSIONS, REDEMPTIONS AND TRANSFERS

In no event shall Borrower issue Common Stock to Holder in connection with the
repayment of this Note pursuant to Article I.B or Mandatory Conversion of this
Note pursuant to Article II.C, and in no event shall Holder have the right to
effect an Optional Conversion of this Note into shares of Common Stock or to
dispose of this Note to the extent that such repayment, conversion or right to
effect such conversion or disposition would result in Holder and its affiliates
together beneficially owning more than 9.9% of the outstanding shares of Common
Stock. For purposes of this Article VIII, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13D-G thereunder. The restriction contained in
this Article VIII may not be altered, amended, deleted or changed in any manner
whatsoever unless Holder of a majority of the outstanding shares of Common Stock
and Holder shall approve, in writing, such alteration, amendment, deletion or
change. In the event that Borrower is prohibited from issuing shares of Common
Stock in connection with the repayment of this Note pursuant to Article I.B as a
result of the operation of this Article VIII, Borrower shall make such repayment
in cash. In the event that Borrower is prohibited from issuing shares of Common
Stock upon a Mandatory Conversion pursuant to Article II.C as a result of the
operation of this Article VIII, Borrower shall pay to Holder an amount of cash
equal to the Closing Sales Price of the Common Stock on the Conversion Date
multiplied by the number of shares of Common Stock that Borrower is prohibited
from issuing as a result of the operation of this Article VIII.

                                      158
<PAGE>

                                   ARTICLE XX

                                  SUBORDINATION

      Borrower's obligation for payment of this Note is subordinated to all
indebtedness as set forth on the Indebtedness Schedule attached hereto as
Exhibit "B" as of the execution of this Note.

                                  ARTICLE XXI

                               CERTAIN DEFINITIONS

      For purposes of this Note, in addition to the other terms defined herein,
the following terms shall have the following meanings:

      PP. "BUSINESS DAY" means any day, other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law, regulation or executive order to close.

      QQ. "CLOSING SALES PRICE" means, for any security as of any date, the last
sales price of such security on the principal trading market where such security
is listed or traded as reported by Bloomberg Financial Markets (or a comparable
reporting service of national reputation selected by Borrower and reasonably
acceptable to the Holder if Bloomberg Financial Markets is not then reporting
closing bid prices of such security) (in any case, "BLOOMBERG"), or if the
foregoing does not apply, the last reported sales price of such security on a
national exchange or in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no such price is
reported for such security by Bloomberg, the average of the bid prices of all
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a
trading day for such security, on the next preceding date which was a trading
day. If the Closing Sales Price cannot be calculated for such security as of
either of such dates on any of the foregoing bases, the Closing Sales Price of
such security on such date shall be the fair market value as reasonably
determined by an investment banking firm selected by Borrower and reasonably
acceptable to the Holder, with the costs of such appraisal to be borne by
Borrower.

      RR. "COMMON STOCK" means the common stock of Borrower, no par value per
share.

      SS. "CONVERSION DATE" means, as applicable, (i) for any Optional
Conversion (as defined in Article II.A), the date specified in the notice of
conversion in the form attached hereto (the "NOTICE OF CONVERSION"), so long as
a copy of the Notice of Conversion is faxed (or delivered by other means
resulting in notice) to Borrower before 11:59 p.m., Omaha time, on the
Conversion Date indicated in the Notice of Conversion; provided, however, that
if the Notice of Conversion is not so faxed or otherwise delivered before such
time, then the Conversion Date shall be the date Holder faxes or otherwise
delivers the Notice of Conversion to Borrower; and (ii) for any Mandatory
Conversion (as defined in Article II.C), that date specified in the notice
delivered to Holder in the event that such Mandatory Conversion occurs.

      TT. "CONVERSION PRICE" means fifty cents ($0.50), and shall be subject to
adjustment as provided herein.

                                      159
<PAGE>

      UU. "DEFAULT CURE DATE" means, as applicable, (i) with respect to a
Conversion Default described in clause (i) of Article IV.A, the date Borrower
effects the conversion of the full amount of this Note being converted, (ii)
with respect to a Conversion Default described in clause (ii) of Article IV.A,
the date Borrower issues freely tradable shares of Common Stock in satisfaction
of the conversion of the full amount of this Note being converted in accordance
with Article II, or (iii) with respect to either type of a Conversion Default,
the date on which Borrower prepay this Note pursuant to Article IV.A.

      VV. "ISSUANCE DATE" means the date of the closing under the Securities
Purchase Agreement, pursuant to which Borrower issued, and such purchasers
purchased, the Notes.

      WW. "REQUIRED CONDITIONS" means all of the following: (i) the registration
statement required to be filed by Borrower pursuant to the Registration Rights
Agreement shall have been declared effective by the Securities and Exchange
Commission (and is not the subject of any stop order or other suspension of
effectiveness); (ii) the Closing Sales Price of the Common Stock is greater
$2.00 per share (subject to price adjustments, if any, as provided herein) for
sixty (60) consecutive trading days; (iii) all shares of Common Stock issuable
upon conversion of the Notes are then (a) authorized and reserved for issuance,
(b) registered under the Securities Act for resale by Holder and (c) listed or
traded on any of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, the Nasdaq SmallCap Market or the OTC Bulletin Board (or
the successor to any of them); (iv) no Event of Default (as defined in Article
V.A) shall have occurred without having been cured; and (v) all amounts, if any,
then accrued or payable under the Note (including, without limitation, all
interest) or the Registration Rights Agreement shall have been paid.

      XX. "TRADING DAY" means any day on which the principal United States
securities exchange or trading market where the Common Stock is then listed or
traded, is open for trading.

                                  ARTICLE XXII

                                  MISCELLANEOUS

      YY. Failure or Indulgency Not Waiver. No failure or delay on the part of
any Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.

      ZZ. Lost or Stolen Notes. Upon receipt by Borrower of (i) evidence of the
loss, theft, destruction or mutilation of any Note and (ii) (y) in the case of
loss, theft or destruction, of indemnity (without any bond or other security)
reasonably satisfactory to Borrower, or (z) in the case of mutilation, the Notes
(surrendered for cancellation), Borrower shall execute and deliver a new Note of
like tenor and date. However, Borrower shall not be obligated to reissue such
lost, stolen, destroyed or mutilated Note if Holder contemporaneously requests
Borrower to convert such Note.

      AAA. Allocation of Reserved Amount. The initial Reserved Amount shall be
allocated pro rata among Holders of the Notes based on the principal amount of
Notes issued to each Holder. Each increase to the Reserved Amount shall be
allocated pro rata among Holders of the Notes based on the principal amount of
Notes held by each Holder at the time of the increase in the 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
Reserved Amount. Any portion of the Reserved Amount that remains allocated to
any person or entity that does not hold any Notes shall be allocated to the
remaining Holder of the Notes, pro rata based on the principal balance of Notes
then held by such Holder.

                                      160
<PAGE>

      BBB. Quarterly Statements of Available Shares. For each calendar quarter
beginning in the quarter in which the initial registration statement required to
be filed pursuant to the Registration Rights Agreement is declared effective and
thereafter for so long as any Notes are outstanding, Borrower shall deliver (or
cause its transfer agent to deliver) to Holder a written report notifying Holder
of any occurrence that prohibits Borrower from issuing Common Stock upon any
conversion. The report shall also specify (i) the total principal amount of
Notes outstanding as of the end of such quarter, (ii) the total number of shares
of Common Stock issued upon all conversions of Notes prior to the end of such
quarter, (iii) the total number of shares of Common Stock which are reserved for
issuance upon conversion of the Notes as of the end of such quarter and (iv) the
total number of shares of Common Stock which may thereafter be issued by
Borrower upon conversion of the Notes before Borrower would exceed the Reserved
Amount. Borrower (or its transfer agent) shall use its best efforts to deliver
the report for each quarter to Holder prior to the tenth day of the calendar
month following the quarter to which such report relates. In addition, Borrower
(or its transfer agent) shall provide, as promptly as practicable following
delivery to Borrower of a written request by Holder, any of the information
enumerated in clauses (i) - (iv) of this Paragraph D as of the date of such
request.

      CCC. Status as Stockholder. Upon submission of a Notice of Conversion by
Holder, (i) the shares covered thereby (other than the shares, if any, which
cannot be issued because their issuance would exceed Holder's allocated portion
of the Reserved Amount) shall be deemed converted into shares of Common Stock
and (ii) Holder's rights as a holder of such converted 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 Holder because of a failure by Borrower to comply with the terms
of this Note. Notwithstanding the foregoing, if Holder has not received
certificates for all shares of Common Stock prior to the sixth business day
after the expiration of the Delivery Period with respect to a conversion of this
Note for any reason, then (unless Holder otherwise elects to retain its status
as a holder of Common Stock by so notifying Borrower within five business days
after the expiration of such six business day period after expiration of the
Delivery Period) Holder shall regain the rights of a holder of this Note and
Borrower shall, as soon as practicable, return such unconverted Note to Holder.
In all cases, Holder shall retain all of its rights and remedies for Borrower's
failure to convert this Note.

      DDD. Remedies Cumulative. The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under this Note, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit Holder's right to pursue
actual damages for any failure by Borrower to comply with the terms of this
Note. Borrower acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to Holder and that the remedy at law for any such
breach may be inadequate. Borrower therefore agrees, in the event of any such
breach or threatened breach that Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

      EEE. Waiver. Notwithstanding any provision in this Note to the contrary,
any provision contained herein and any right of the Holders granted hereunder
may be waived as to all Notes (and Holders thereof) only upon the written
consent of all of the Holders.

                                      161
<PAGE>

      FFF. Notices. Any notices required or permitted to be given under the
terms hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by responsible overnight carrier or by
confirmed facsimile, and shall be effective five days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by responsible overnight carrier or confirmed facsimile, in each case
addressed to a party. The addresses for such communications are:

      (i)   if to Borrower, to:

                           iSECUREtrac, CORP.
                           5022 South 114th Street, Suite 103
                           Omaha, NE 68137
                           Telephone: (402) 537-0022
                           Facsimile: (402) 537-9847

                           Attention: Michael May, Chairman & Chief Executive
                                      Officer

            (ii) if to Holder, to the address set forth under Holder's name on
the execution page to the Securities Purchase Agreement, or such other address
as may be designated in writing hereafter, in the same manner, by such person.

      GGG. Amendment Provision. This Note and any provision hereof may be
amended only by an instrument in writing signed by Borrower and Holder.

      HHH. Assignability. This Note shall be binding upon Borrower and its
successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. Notwithstanding anything to the contrary contained in
this Note or the Transaction Documents, this Note may be pledged and all rights
of Holder under this Note may be assigned to any affiliate or to any other
person or entity without the consent of Borrower.

      III. Cost of Collection. If an Event of Default occurs hereunder, Borrower
shall pay Holder hereof costs of collection, including reasonable attorneys'
fees.

      JJJ. Governing Law; Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. Borrower
irrevocably consents to the jurisdiction of the United States federal courts and
the state courts located in the City and County of San Francisco, California, in
any suit or proceeding based on or arising under this Note and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in such courts. Borrower irrevocably waives the defense of an inconvenient forum
to the maintenance of such suit or proceeding in such forum. Borrower further
agrees that service of process upon Borrower mailed by first class mail shall be
deemed in every respect effective service of process upon Borrower in any such
suit or proceeding. Nothing herein shall affect the right of Holder to serve
process in any other manner permitted by law. Borrower agrees 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.

      KKK. Denominations. At the request of the Holders, upon surrender of this
Note, Borrower shall promptly issue new Notes in the aggregate outstanding
principal amount hereof, in the form hereof, in such denominations of at least
$25,000 as Holder shall request.

                                      162
<PAGE>

      LLL. Certain Waivers. Borrower and each endorser hereby waive presentment,
notice of nonpayment or dishonor, protest, notice of protest and all other
notices in connection with the delivery, acceptance, performance, default or
enforcement of payment of this Note, and hereby waive all notice or right of
approval of any extensions, renewals, modifications or forbearances which may be
allowed.

      MMM. Severability. If any provision of this Note shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Note or the
validity or enforceability of this Note in any other jurisdiction.

      NNN. Maximum Interest Rate. If the effective interest rate on this Note
would otherwise violate any applicable usury law, then the interest rate shall
be reduced to the maximum permissible rate and any payment received by Holder in
excess of the maximum permissible rate shall be treated as a prepayment of the
principal of this Note.

                                      163
<PAGE>

               [SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE- LP]

IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its duly
authorized officer as of the date first written above.

                                  iSECUREtrac, CORP.

                                  By:
                                      ---------------------------------------
                                      Name: Michael May
                                      Title: Chairman & Chief Executive Officer

                                      164
<PAGE>

                                                                       EXHIBIT A

                          NOTICE OF OPTIONAL CONVERSION

             iSECUREtrac, Corp.
             5022 South 114th Street, Suite 103
             Omaha, NE 68137
             Facsimile: (402) 537-9847

             Attention: Michael May, Chairman

The undersigned hereby irrevocably elects to convert $____________ of the
outstanding principal balance of, and accrued interest on, the Note (the
"CONVERSION"), into shares of common stock ("COMMON STOCK") of iSECUREtrac,
Corp. (the "CORPORATION") according to the conditions of the 10% Convertible
Promissory Note dated October ____, 2003 (the "NOTE"), 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. No fee will be charged to Holder for any conversion, except for
transfer taxes, if any. A copy of the Note is attached hereto (or evidence of
loss, theft or destruction thereof).

Except as may be provided below, the Corporation shall electronically transmit
the Common Stock issuable pursuant to this Notice of Conversion to the account
of the undersigned or its nominee (which is ________________) with DTC through
its Deposit Withdrawal Agent Commission System ("DTC TRANSFER").

In the event of partial exercise, please reissue an appropriate Note(s) for the
principal balance that shall not have been converted.

The undersigned acknowledges and agrees that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Note have been or will be made only pursuant to an effective registration of the
transfer of the Common Stock under the Securities Act of 1933, as amended (the
"ACT"), or pursuant to an exemption from registration under the Act.

Check Box if Applicable:

o        In lieu of receiving the shares of Common Stock issuable pursuant to
         this Notice of Conversion by way of DTC Transfer, the undersigned
         hereby requests that the Corporation issue and deliver to the
         undersigned or its nominee (if applicable) physical certificates
         representing such shares of Common Stock.

                     Date of Conversion:___________________________

                     Applicable Conversion Price:__________________

                     Number of Shares of
                     Common Stock to be Issued:____________________

                     Signature:____________________________________

                     Name:_________________________________________

                     Address: _____________________________________

                                      165
<PAGE>

                                                                       EXHIBIT B

                              INDEBTEDNESS SCHEDULE

                      Senior Debt As of September 30, 2003

Westburg Media Capital Loan                                        3,451,602.00

Various Ongoing Capital Lease Obligations                          1,349,382.00

Note Payable-- US Bank                                               301,159.84
Note Payable-- Nebraska State Bank                                    73,366.01
Note Payable-- Wells Fargo Bank                                    1,000,000.00

                                      166

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