Document:

REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of August 2, 2000, among Universal Broadband Networks, Inc.,
a Delaware corporation (the "COMPANY"), and the investors signatory hereto (each
such investor is a "PURCHASER" and all such investors are, collectively, the
"PURCHASERS").

                  This Agreement is made pursuant to the Convertible Notes
Purchase Agreement, dated as of the date hereof among the Company and the
Purchasers (the "PURCHASE AGREEMENT").

                  The Company and the Purchasers hereby agree as follows:

         1.       DEFINITIONS

                  Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

                  "AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "CONTROL," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "AFFILIATED," "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.

                  "BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York or California are authorized or required by law or other
government actions to close.

                  "CLOSING DATE" shall have the meaning set forth in the
Purchase Agreement.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the Company's common stock, $.001 par
value, or such securities in to which that such stock shall hereafter be
reclassified.

                  "EFFECTIVENESS DATE" means, with respect to the initial
Registration Statement required to be filed hereunder, the 90th day following
the Closing Date and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the 90th day following the date
that notice of the requirement to file such additional Registration Statement is
provided.

                  "EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

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                  "FILING DATE" means the 30th day following the Closing Date
and, with respect to any additional Registration Statements which may be
required pursuant to Section 3(c), the 30th day following the date that notice
of the requirement to file such additional Registration Statement is provided.

                  "HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "INDEMNIFIED PARTY" shall have the meaning set forth in
Section 5(c).

                  "INDEMNIFYING PARTY" shall have the meaning set forth in
Section 5(c).

                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "NOTES" means the 8% Convertible Notes in the principal sum of
$8,295,000, issued or issuable to the Purchasers pursuant to the Purchase
Agreement.

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

                  "PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                  "REGISTRABLE SECURITIES" means the shares of Common Stock
issuable upon conversion in full of the Notes.

                  "REGISTRATION STATEMENT" means the registration statement and
any additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

                  "RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

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                  "RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "RULE 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "SPECIAL COUNSEL" means one special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

         2.       SHELF REGISTRATION

                  (a) On or prior to each Filing Date, the Company shall prepare
and file with the Commission a "Shelf" Registration Statement covering the
resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form) and shall contain (except if otherwise directed by the
Holders) the "Plan of Distribution" attached hereto as ANNEX A. The Company
shall use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the Effectiveness Date, and shall use its
best efforts to keep such Registration Statement continuously effective under
the Securities Act until the date which is two years after the date that such
Registration Statement is declared effective by the Commission or such earlier
date when all Registrable Securities covered by such Registration Statement have
been sold or may be sold without volume restrictions pursuant to Rule 144(k)
(the "EFFECTIVENESS PERIOD").

                  (b) The initial Registration Statement required to be filed
hereunder shall include (but not be limited to) a number of shares of Common
Stock equal to no less than 200% of the number of shares of Common Stock
issuable upon conversion in full of the outstanding principal amount of the
Notes, assuming all interest is paid in shares of Common Stock, that the Notes
remain outstanding for three years, and that such conversion occurred on the
Closing Date, the Filing Date or the Business Day preceding the date the Company
files an acceleration request with the Commission relating to the Registration
Statement, whichever yields the lowest Conversion Price (as defined in the
Notes).

                  (c) If (a) a Registration Statement is not filed on or prior
to its Filing Date (if the Company files such Registration Statement without
affording the Holder the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (a)), or (b) the Company fails to file with the Commission
a request for acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five days of the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or not subject to further review,
or (c) a Registration Statement filed hereunder is not declared effective by the
Commission on or prior to its Effectiveness Date, or (d) after a Registration
Statement is filed with and declared effective by the Commission, such

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Registration Statement ceases to be effective as to all Registrable Securities
to which it is required to relate at any time prior to the expiration of the
Effectiveness Period without being succeeded within ten Business Days by an
amendment to such Registration Statement or by a subsequent Registration
Statement filed with and declared effective by the Commission, or (e) the Common
Stock shall be delisted or suspended from trading on the Nasdaq National Market
("NASDAQ") or on the New York Stock Exchange, the American Stock Exchange or
Nasdaq Smallcap Market (each, a "SUBSEQUENT MARKET") for more than three Trading
Days (which need not be consecutive Trading Days), or (f) the conversion rights
of the Holders pursuant to the Notes are suspended for any reason, or (g) an
amendment to a Registration Statement is not filed by the Company with the
Commission within ten Business Days of the Commission's notifying the Company
that such amendment is required in order for such Registration Statement to be
declared effective (any such failure or breach being referred to as an "EVENT,"
and for purposes of clauses (a), (c) and (f) the date on which such Event
occurs, or for purposes of clause (b) the date on which such five day period is
exceeded, or for purposes of clauses (d) and (g) the date which such ten
Business Day-period is exceeded, or for purposes of clause (e) the date on which
such three Trading Day- period is exceeded, being referred to as "EVENT DATE"),
then, on (i) the Event Date, the Company shall pay to each Holder an amount in
cash, as liquidated damages and not as penalty, equal to 2.0% of the outstanding
principal amount of the Notes at such Event Date, and (ii) if the Event has not
been cured by the first monthly anniversary of the Event Date, on such first
monthly anniversary of the Event Date and each monthly anniversary thereafter
until the Event at issue is cured, the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as penalty, equal to 3.0% of the
outstanding principal amount of the Notes at each such monthly anniversary. If
the Company fails to pay any liquidated damages pursuant to this Section in full
within seven days after the date payable, the Company will pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law) to the Holder, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The liquidated damages pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of an
Event. At the election of the Holders, any liquidated damages accruing under
this Section shall be added to the principal amount owing under the Notes then
held by the Holder.

         3.       REGISTRATION PROCEDURES

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a) Not less than five Business Days prior to the filing of
each Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall, (i) furnish to the
Holders and their Special Counsel copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders and
their Special Counsel, and (ii) cause its officers and directors, counsel and

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<PAGE>

independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities and their Special Counsel shall reasonably object,
PROVIDED, the Company is notified of such objection no later than 3 (three)
Business Days after the Holders have been so furnished copies of such documents.

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within ten Business
Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to the Registration Statement; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

                  (c) File additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number of shares of Common
Stock then registered in all their existing Registration Statements hereunder.

                  (d) Notify the Holders of Registrable Securities to be sold
and their Special Counsel as promptly as reasonably possible (and, in the case
of (i)(A) below, not less than five Business Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than one
Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the
Holders); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Pro spectus or
for additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any

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notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                  (e) Promptly deliver to each Holder and their Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

                  (f) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
PROVIDED, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or subject the
Company to any material tax in any such jurisdiction where it is not then so
subject.

                  (g) Upon the occurrence of any event contemplated by Section
3(d)(vi), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  (h) Comply with all applicable rules and regulations of the
Commission.

         4. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the NASDAQ and any Subsequent Market on which the

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Common Stock is then listed for trading, and (B) in compliance with applicable
state securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the Holders),
(iii) messenger, tele phone and delivery expenses, (iv) fees and disbursements
of counsel for the Company and Special Counsel for the Holders, which shall not
exceed the sum of $7,500 for each additional registration statement and (v) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary herein, the Company shall not be obligated to pay any
brokers or underwriters fees, discounts or commissions owed by the Holders in
connection with the resales of the Registrable Securities.

         5.       INDEMNIFICATION

                  (a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "LOSSES"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (2) in the case of an occurrence of an event of the type specified in Section
3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.

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<PAGE>

                  (b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's pro posed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(e). In no event shall the liability of
any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

                  (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of

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the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

                  All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Business Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; PROVIDED, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

                  (d) CONTRIBUTION. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limita tions set forth in Section 5(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by PRO
RATA allocation or by any other method of allo cation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

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                  The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.

         6.       MISCELLANEOUS

                  (a) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least a two-thirds of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; PROVIDED, HOWEVER, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

                  (b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of
its subsidiaries has entered, as of the date hereof, nor shall the Company or
any of its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Except as and to the extent specified in SCHEDULE 6(B)
hereto, neither the Company nor any of its subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person.

                  (c) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
specified in SCHEDULE 6(B) hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.

                  (d) COMPLIANCE. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

                  (e) DISCONTINUED DISPOSITION. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(g),
or until it is advised in writing (the "ADVICE") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.
The Company may provide appropriate stop orders to enforce the provisions of
this paragraph.

                                      -10-
<PAGE>

                  (f) PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered.

                  (g) NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 6:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

         If to the Company:   Universal Broadband Networks, Inc.
                              2030 Main, Suite 550
                              Irvine, California 92614
                              Facsimile No.: (949) 261-2714
                              Attn: Jeffrey R. Matsen, Executive Vice President

         With copies to:      Pillsbury Madison & Sutro, LLP
                              650 Town Center Drive, 7th Floor
                              Costa Mesa, California 92626
                              Facsimile No.: (714) 436-2800
                              Attn: Christopher A. Wilson, Esq.

         If                   to a Purchaser: To the address set
                              forth under such Purchaser's name on
                              the signature pages hereto.

         If to any other Person who is then the registered Holder:

                              To the address of such Holder as it appears in the
                              stock transfer books of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                                      -11-
<PAGE>

                  (h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.

                  (i) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (j) GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

                  (k) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (l) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

                  (m) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                                      -12-
<PAGE>

                  (n) INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS.
The obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                           SIGNATURE PAGES TO FOLLOW]

                                      -13-
<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                    UNIVERSAL BROADBAND NETWORKS, INC.

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES OF PURCHASER TO FOLLOW]

<PAGE>

                           HERKIMER LLC

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

                           Address for Notice:

                           Herkimer LLC
                           c/o Citco Trustees (Cayman) Limited
                           Commercial Centre
                           P.O. Box 31106 SMB
                           Grand Cayman
                           Cayman Islands
                           British West Indies
                           Facsimile No.: (345) 945-7566

                           With copies to:
                           Robinson Silverman Pearce Aronsohn & Berman LLP
                           1290 Avenue of the Americas
                           New York, NY  10104
                           Facsimile No.:  (212) 541-4630 and (212) 541-1432
                           Attn: Eric L. Cohen, Esq.

<PAGE>

                                                                         ANNEX A
                                                                         -------

                              PLAN OF DISTRIBUTION
                              --------------------

         The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

o        ordinary brokerage transactions and transactions in which the
         broker-dealer solicits purchasers;

o        block trades in which the broker-dealer will attempt to sell the shares
         as agent but may position and resell a portion of the block as
         principal to facilitate the transaction;

o        purchases by a broker-dealer as principal and resale by the
         broker-dealer for its account;

o        an exchange distribution in accordance with the rules of the applicable
         exchange;

o        privately negotiated transactions;

o        short sales

o        broker-dealers may agree with the Selling Stockholders to sell a
         specified number of such shares at a stipulated price per share;

o        a combination of any such methods of sale; and

o        any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares. The Selling Stockholders have advised the Company
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their shares other
than ordinary course brokerage arrangements, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
Selling Stockholders.

                                      -16-

<PAGE>

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.

         The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

                                      -17-NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

No. 2                                                                 $2,500,000

                       UNIVERSAL BROADBAND NETWORKS, INC.
                               8% CONVERTIBLE NOTE
                               DUE AUGUST 2, 2003

         THIS Note is one of a series of duly authorized and issued notes of
Universal Broadband Networks, Inc., a Delaware corporation, having a principal
place of business at 2800 Post Oak Blvd., Houston, TX 77056 (the "COMPANY"),
designated as its 8% Convertible Notes, due August 2, 2003, in the aggregate
principal amount of Eight Million Seven Hundred Ninety Five Thousand Dollars
($8,795,000) (the "NOTES").

         FOR VALUE RECEIVED, the Company promises to pay to Herkimer LLC, or its
registered assigns (the "HOLDER"), the principal sum of Two Million Five Hundred
Thousand Dollars ($2,500,000), on August 2, 2003 or such earlier date as the
Notes are required or permitted to be repaid as provided hereunder (the
"MATURITY DATE") and to pay interest to the Holder on the aggregate unconverted
and then outstanding principal amount of this Note at the rate of 8% per annum,
in cash or shares of Common Stock (as defined in Section 6), on each Conversion
Date (as defined herein) and on the Maturity Date. Subject to the terms and
conditions herein, the decision whether to pay interest hereunder in shares of
Common Stock or cash shall be at the discretion of the Company. Not less than
ten Trading Days (as defined in Section 6) prior to each Conversion Date, the
Company shall provide the Holder with written notice of its election to pay
interest hereunder either in cash or shares of Common Stock pursuant to the
terms of Section 4(a)(i) (the Company may indicate in such notice that the
election contained in such notice shall continue for later periods until
revised). Failure to timely provide such written notice shall be deemed an
election by the Company to pay the interest on such Conversion Date in shares of
Common Stock pursuant to the terms of Section 4(a)(i). Interest shall be
calculated on the basis on a 360-day year and shall accrue daily commencing on
the Original Issue Date (as defined in Section 6) until payment in full of the
principal sum, together with all accrued and unpaid interest and other amounts
which may become due hereunder, has been made. Interest hereunder will be paid
to the Person (as defined in Section 6) in whose name this Note is registered on

                                      -1-
<PAGE>

the records of the Company regarding registration and transfers of Notes (the
"NOTE REGISTER"). All overdue accrued and unpaid interest to be paid in cash
hereunder shall entail a late fee at the rate of 18% per annum (or such lower
maximum amount of interest permitted to be charged under applicable law) (to
accrue daily, from the date such interest is due hereunder through and including
the date of payment), payable in cash.

         This Note is subject to the following additional provisions:

         SECTION 1. This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.

         SECTION 2. This Note has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement (as
defined in Section 6) and may be transferred or exchanged only in compliance
with the Purchase Agreement. Prior to due presentment to the Company for
transfer of this Note, the Company and any agent of the Company may treat the
Person (as defined in Section 6) in whose name this Note is duly registered on
the Note Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Note is overdue,
and neither the Company nor any such agent shall be affected by notice to the
contrary.

         SECTION 3.        EVENTS OF DEFAULT.

                  (a) "EVENT OF DEFAULT", wherever used herein, means any one of
the following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                           (i) any default in the payment of the principal of,
         interest on or liquidated damages in respect of, any Notes, free of any
         claim of subordination, as and when the same shall become due and
         payable (whether on a Conversion Date or the Maturity Date or by
         acceleration or otherwise);

                           (ii) the Company shall fail to observe or perform any
         other covenant, agreement or warranty contained in, or otherwise commit
         any breach of any of the Transaction Documents (as defined in Section
         6), and such failure or breach shall not have been remedied within
         fifteen days after the date on which notice of such failure or breach
         shall have been given;

                                      -2-
<PAGE>

                           (iii) the Company or any of its Material Subsidiaries
         (as defined in Section 6) shall commence, or there shall be commenced
         against the Company or any such Material Subsidiary a case under any
         applicable bankruptcy or insolvency laws as now or hereafter in effect
         or any successor thereto, or the Company commences any other proceeding
         under any reorganization, arrangement, adjustment of debt, relief of
         debtors, dissolution, insolvency or liquidation or similar law of any
         jurisdiction whether now or hereafter in effect relating to the Company
         or any subsidiary thereof or there is commenced against the Company or
         any Material Subsidiary thereof any such bankruptcy, insolvency or
         other proceeding which remains undismissed for a period of 60 days; or
         the Company or any Material Subsidiary thereof is adjudicated insolvent
         or bankrupt; or any order of relief or other order approving any such
         case or proceeding is entered; or the Company or any Material
         Subsidiary thereof suffers any appointment of any custodian or the like
         for it or any substantial part of its property which continues
         undischarged or unstayed for a period of 60 days; or the Company or any
         Material Subsidiary thereof makes a general assignment for the benefit
         of creditors; or the Company shall fail to pay, or shall state that it
         is unable to pay, or shall be unable to pay, its debts generally as
         they become due; or the Company or any Material Subsidiary thereof
         shall call a meeting of its creditors with a view to arranging a
         composition, adjustment or restructuring of its debts; or the Company
         or any Material Subsidiary thereof shall by any act or failure to act
         expressly indicate its consent to, approval of or acquiescence in any
         of the foregoing; or any corporate or other action is taken by the
         Company or any Material Subsidiary thereof for the purpose of effecting
         any of the foregoing;

                           (iv) the Company shall default in any of its
         obligations under any other Note or any mortgage, credit agreement or
         other facility, indenture agreement, factoring agreement or other
         instrument under which there may be issued, or by which there may be
         secured or evidenced any indebtedness for borrowed money or money due
         under any long term leasing or factoring arrangement of the Company in
         an amount exceeding an aggregate of two hundred thousand dollars
         ($200,000), whether such indebtedness now exists or shall hereafter be
         created and such default shall result in such indebtedness becoming or
         being declared due and payable prior to the date on which it would
         otherwise become due and payable;

                           (v) the Common Stock either be delisted from the
         Nasdaq National Market ("NASDAQ") or suspended from trading on the
         NASDAQ without resuming trading and/or being relisted or thereon or
         listed on the New York Stock Exchange, American Stock Exchange or
         Nasdaq SmallCap Market (each, a "SUBSEQUENT MARKET") or having such
         suspension lifted, in either case, for more than the lesser of five
         consecutive Trading Days or an aggregate of eight Trading Days (which
         need not be consecutive Trading Days);

                           (vi) the Company shall be a party to any Change of
         Control Transaction (as defined in Section 6), shall agree to sell or
         dispose all or in excess of 33% of its assets in one or more
         transactions (whether or not such sale would constitute a Change of
         Control Transaction), or shall redeem or repurchase more than a de
         minimis number of shares of Common Stock or other equity securities of
         the Company (other than redemptions of Underlying Shares (as defined in
         Section 6));

                                      -3-
<PAGE>

                           (vii) an Underlying Shares Registration Statement (as
         defined in Section 6) shall not have been declared effective by the
         Commission (as defined in Section 6) on or prior to the 180th day after
         the Original Issue Date;

                           (viii) if, during the Effectiveness Period (as
         defined in the Registration Rights Agreement (as defined in Section
         6)), the effectiveness of the Underlying Shares Registration Statement
         lapses for any reason or the Holder shall not be permitted to resell
         Registrable Securities (as defined in the Registration Rights
         Agreement) under the Underlying Shares Registration Statement, in
         either case, for more than seven consecutive Trading Days or an
         aggregate of ten Trading Days (which need not be consecutive Trading
         Days);

                           (ix) an Event (as defined in the Registration Rights
         Agreement) shall not have been cured to the satisfaction of the Holder
         prior to the expiration of thirty days from the Event Date (as defined
         in the Registration Rights Agreement) relating thereto (other than an
         Event resulting from a failure of an Underlying Shares Registration
         Statement to be declared effective by the Commission on or prior to the
         180th day after the Original Issue Date, which shall be covered by
         Section 3(a)(vii));

                           (x) the Company shall fail for any reason to deliver
         certificates to a Holder prior to the twelfth (12th) day after a
         Conversion Date pursuant to and in compliance with Section 4(b) or the
         Company shall provide notice to the Holder, including by way of public
         announcement, at any time, of its intention not to comply with requests
         for conversions of any Notes in accordance with the terms hereof;

                           (xi) the Company shall fail for any reason to deliver
         the payment in cash pursuant to a Buy-In (as defined herein) within
         nine days after notice is deemed delivered hereunder; or

                           (xii) there shall occur an Event of Default (as
         defined in the Pledge Agreement, dated as of August 2, 2000 among the
         Company, the original Holders and Mary E. Blake (the "PLEDGE
         AGREEMENT")) pursuant to the Pledge Agreement.

                  (b) During the time that any portion of this Note remains
outstanding, if any Event of Default occurs and is continuing, the full
principal amount of this Note (and, at the Holder's option, all other Notes then
held by such Holder), together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become, at the Holder's election,
immediately due and payable in cash. The aggregate amount payable upon an Event
of Default shall be equal to the sum of (i) the Mandatory Prepayment Amount (as
defined in Section 6) plus (ii) the product of (A) the number of Underlying
Shares issued in respect of conversions hereunder within thirty days of the date
of a declaration of an Event of Default and then held by the Holder and (B) the
Per Share Market Value (as defined in Section 6) on the date prepayment is due
or the date the full prepayment price is paid, whichever is greater. Interest
shall accrue on the prepayment amount hereunder from the seventh day after such
amount is due (being the date of an Event of Default) through the date of

                                      -4-
<PAGE>

prepayment in full thereof at the rate of 18% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law), to accrue daily from the
date such payment is due hereunder through and including the date of payment.
All Notes and Underlying Shares for which the full prepayment price hereunder
shall have been paid in accordance herewith shall promptly be surrendered to or
as directed by the Company. The Holder need not provide and the Company hereby
waives any presentment, demand, protest or other notice of any kind, and the
Holder may immediately and without expiration of any grace period enforce any
and all of its rights and remedies hereunder and all other remedies available to
it under applicable law. Such declaration may be rescinded and annulled by
Holder at any time prior to payment hereunder. No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent
thereon.

         SECTION 4.        CONVERSION.

                  (a) (i) CONVERSION AT OPTION OF HOLDER. (A) If the Company
shall have failed to both deliver an Optional Prepayment Notice (as defined in
Section 5) and pay the Optional Prepayment Amount (as defined in Section 5) in
full on or prior to the 91th day following the Original Issue Date (such 91st
day, the "TARGET DATE"), then this Note shall, at the option of the Holder, be
convertible into shares of Common Stock, in whole or in part at any time and
from time to time, after the Target Date (subject to the limitations on
conversion set forth in Section 4(a)(ii) hereof). The number of shares of Common
Stock issuable upon a conversion hereunder shall be determined by adding the sum
of (i) the quotient obtained by dividing (x) the outstanding principal amount of
this Note to be converted and (y) the Conversion Price (as defined herein), and
(ii) the amount equal to the product of (x) the outstanding principal amount of
this Note to be converted and (y)(I) the product of (1) the quotient obtained by
dividing .08 by 360 and (2) the number of days for which such principal amount
was outstanding, divided by (II) the Conversion Price on the Conversion Date,
PROVIDED, that if the Company shall have timely elected to pay the interest due
on a Conversion Date in cash pursuant to the terms hereof, subsection (ii) shall
not be used in the calculation of the number of shares of Common Stock issuable
upon a conversion hereunder, unless the Company fails to deliver such cash
payment in period required in which case the Holder shall have the right to
demand such payment in the form of shares of Common Stock pursuant to the
calculations of subsection (ii) hereof.

                           (B) Notwithstanding anything to the contrary
contained herein, if on any Conversion Date:

                           (1) the number of shares of Common Stock at the time
         authorized, unissued and unreserved for all purposes, or held as
         treasury stock, is insufficient to pay interest hereunder in shares of
         Common Stock;

                           (2) after the Interest Effectiveness Date (as defined
         in Section 6) such shares of Common Stock (x) are not registered for
         resale pursuant to an effective Underlying Shares Registration
         Statement and (y) may not be sold without volume restrictions pursuant
         to Rule 144(k) promulgated under the Securities Act (as defined in
         Section 6), as determined by counsel to the Company pursuant to a
         written opinion letter, addressed to the Company's transfer agent in
         the form and substance acceptable to the applicable Holder and such
         transfer agent;

                                      -5-
<PAGE>

                           (3) the Common Stock is not listed or quoted on the
         NASDAQ or on a Subsequent Market;

                           (4) the Company has failed to timely satisfy its
         conversion obligations hereunder; or

                           (5) the issuance of such shares of Common Stock would
         result in a violation of Section 4(a)(ii),

                           then, at the option of the Holder, the Company, in
lieu of delivering shares of Common Stock pursuant to Section 4(a)(i)(A)(ii),
shall deliver, within three Trading Days of each applicable Conversion Date, an
amount in cash equal to the product of (a) the outstanding principal amount of
the Notes to be converted on such Conversion Date and (b) the product of (x) the
quotient obtained by dividing .08 by 360 and (y) the number of days for which
such principal amount was outstanding.

                           (C) Unless the Holder is converting all of the
principal amount represented by the Notes, the Holder shall effect conversions
by delivery of a conversion notice attached hereto as EXHIBIT A (a "CONVERSION
NOTICE") to the Company. Each Conversion Notice shall specify the principal
amount of Notes to be converted, the principal amount of Notes remaining
subsequent to the conversion at hand, the applicable Conversion Price and the
date on which such conversion is to be effected, which date may not be prior to
the date such Conversion Notice is deemed to have been delivered hereunder (a
"CONVERSION DATE"). If no Conversion Date is specified in a Conversion Notice,
the Conversion Date shall be the date that such Conversion Notice is deemed
delivered hereunder. Subject to Section 4(b), each Conversion Notice, once
given, shall be irrevocable. Upon delivery to the converting Holder by the
Company of the Conversion Notice counter-signed by the Company, the principal
amount of Notes remaining subsequent to the conversion at hand, as reflected in
such Conversion Notice, shall control, PROVIDED, that in the absence of the
delivery of such counter-signed Conversion Notice, the Company's delivery to the
Holder of the shares of Common Stock pursuant to its receipt of a Conversion
Notice from the Holder, shall be indicative of the Company's agreement of the
principal amount of Notes remaining subsequent to the conversion at hand, as
reflected in such Conversion Notice. If the Holder is converting all of the
principal amount represented by a Note, then such Note shall be delivered to the
Company together with the Conversion Notice.

                           (ii) CERTAIN CONVERSION RESTRICTIONS.

                                      -6-
<PAGE>

                                    (A) A Holder may not convert Notes or
receive shares of Common Stock as payment of interest hereunder to the extent
such conversion or receipt of such interest payment would result in the Holder,
together with any affiliate thereof, beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act (as defined in Section 6) and
the rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon conversion
of, and payment of interest on, the Notes held by such Holder after application
of this Section. Since the Holder will not be obligated to report to the Company
the number of shares of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue would result in the issuance of shares
of Common Stock in excess of 4.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section will
limit any particular conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the principal amount of Notes are convertible
shall be the responsibility and obligation of the Holder. If the Holder has
delivered a Conversion Notice for a principal amount of Notes that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder,
the Company shall notify the Holder of this fact and shall honor the conversion
for the maximum principal amount permitted to be converted on such Conversion
Date in accordance with the periods described in Section 4(b) and, at the option
of the Holder, either retain any principal amount tendered for conversion in
excess of the permitted amount hereunder for future conversions or return such
excess principal amount to the Holder. The provisions of this Section may be
waived by a Holder (but only as to itself and not to any other Holder) upon not
less than 61 days prior notice to the Company. Other Holders shall be unaffected
by any such waiver.

                                    (B) A Holder may not convert Notes or
receive shares of Common Stock as payment of interest hereunder to the extent
such conversion or receipt of such interest payment would result in the Holder,
together with any affiliate thereof, beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of, and payment of
interest on, the Notes held by such Holder after application of this Section.
Since the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of a conversion hereunder, unless
the conversion at issue would result in the issuance of shares of Common Stock
in excess of 9.999% of the then outstanding shares of Common Stock without
regard to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of
which portion of the principal amount of Notes are convertible shall be the
responsibility and obligation of the Holder. If the Holder has delivered a
Conversion Notice for a principal amount of Notes that would result in the
issuance of in excess of the permitted amount hereunder, without regard to any
other shares that the Holder or its affiliates may beneficially own, the Company
shall notify the Holder of this fact and shall honor the conversion for the
maximum principal amount permitted to be converted on such Conversion Date in
accordance with the periods described in Section 4(b) and, at the option of the
Holder, either retain any principal amount tendered for conversion in excess of
the permitted amount hereunder for future conversions or return such excess
principal amount to the Holder. The provisions of this Section may be waived by
a Holder (but only as to itself and not to any other Holder) upon not less than
61 days prior notice to the Company. Other Holders shall be unaffected by any
such waiver.

                                      -7-
<PAGE>

                                    (C) If the Common Stock is then listed for
trading on the NASDAQ or the Nasdaq National Market and the Company has not
obtained the Shareholder Approval (as defined below), then the Company may not
issue in excess of 4,178,610 shares of Common Stock (which equals 19.999% of the
number of shares of Common Stock outstanding immediately prior to the closing of
transactions set forth in the Purchase Agreement) upon conversions of Notes at a
price per share that is less than the Per Share Market Value on the Trading Day
immediately preceding the Original Issue Date (such number of shares, the
"ISSUABLE MAXIMUM"). If on any Conversion Date (A) the Common Stock is listed
for trading on the NASDAQ or the Nasdaq National Market, (B) the Conversion
Price then in effect is such that the aggregate number of shares of Common Stock
that would then be issuable upon conversion in full of all then outstanding
Notes and as payment of interest thereon in shares of Common Stock, together
with any shares of Common Stock previously issued upon conversion of Notes and
as payment of interest thereon, would exceed the Issuable Maximum, and (C) the
Company shall not have previously obtained the vote of shareholders (the
"SHAREHOLDER APPROVAL"), if any, as may be required by the applicable rules and
regulations of the Nasdaq Stock Market (or any successor entity) applicable to
approve the issuance of shares of Common Stock in excess of the Issuable Maximum
pursuant to the terms hereof, then the Company shall issue to the Holder
requesting a conversion a number of shares of Common Stock equal to the Issuable
Maximum and, with respect to the remainder of the principal amount of Notes then
held by such Holder for which a conversion in accordance with the Conversion
Price would result in an issuance of shares of Common Stock in excess of the
Issuable Maximum (the "EXCESS PRINCIPAL"), the converting Holder shall have the
option to require the Company to either (1) use its best efforts to obtain the
Shareholder Approval applicable to such issuance as soon as is possible, but in
any event not later than the 75th day after such request, or (2) pay cash to the
converting Holder in an amount equal to the Mandatory Prepayment Amount for the
Excess Principal. If the converting Holder shall have elected the first option
pursuant to the immediately preceding sentence and the Company shall have failed
to obtain the Shareholder Approval on or prior to the 75th day after such
request, then within three days of the later to occur of such 75th day or the
date of the request therefor, the Company shall pay cash to the converting
Holder an amount equal to the Mandatory Prepayment Amount for the Excess
Principal. If the Company fails to pay the Mandatory Prepayment Amount in full
pursuant to this Section within seven days of the date payable, the Company will
pay interest thereon at a rate of 18% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the converting Holder,
accruing daily from the Conversion Date until such amount, plus all such
interest thereon, is paid in full. In the event there is more than one holder of
Notes, the Issuable Maximum applicable to each Note holder shall be determined
pro rata by reference to the percentage of the principal amount of the Note at
issue and $8,795,000, PROVIDED that if one or more Notes shall have been
redeemed or converted without having been issued its pro rata allocated portion
of the Issuable Maximum such unissued shares shall be allocated pro rata to the
remaining Holders. It is understood and agreed that shares of Common Stock
delivered to and held by the Holder or one of its affiliates on account of
conversion hereunder may not cast votes on the matter of Shareholder Approval.
Shares delivered on account of conversion hereunder and not held by the Holder
or its affiliates may cast votes on the matter of Shareholder Approval.

                                      -8-
<PAGE>

                  (b) (i) Not later than three Trading Days after any Conversion
Date, the Company will deliver to the Holder: (i) a certificate or certificates
which shall be free of restrictive legends and trading restrictions (other than
those required by Section 3.1(b) of the Purchase Agreement) representing the
number of shares of Common Stock being acquired upon the conversion of Notes
(subject to the limitations set forth in Section 4(a)(ii) hereof), (ii) a
counter- signed Conversion Notice, and (iii) a bank check in the amount of
accrued and unpaid interest (if the Company has timely elected or is required to
pay accrued interest in cash). The Company shall, upon request of the Holder, if
available, use its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions. If in the case of any Conversion
Notice such certificate or certificates are not delivered to or as directed by
the applicable Holder by the third Trading Day after a Conversion Date, the
Holder shall be entitled by written notice to the Company at any time on or
before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return the
certificates representing the principal amount of Notes tendered for conversion.

                           (ii) If the Company fails to deliver to the Holder
such certificate or certificates pursuant to Section 4(b)(i) by the fourth
Trading Day after the Conversion Date, the Company shall pay to such Holder, in
cash, as liquidated damages and not as a penalty, $5,000 for each Trading Day
after such fourth Trading Day until such certificates are delivered. Nothing
herein shall limit a Holder's right to pursue actual damages or declare an Event
of Default pursuant to Section 3 herein for the Company's failure to deliver
certificates representing shares of Common Stock upon conversion within the
period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holders from seeking to enforce damages
pursuant to any other Section hereof or under applicable law. Further, if the
Company shall not have delivered any cash due in respect of conversions of Notes
or as payment of interest thereon by the fourth Trading Day after the Conversion
Date, the Holder may, by notice to the Company, require the Company to issue
shares of Common Stock pursuant to Section 4(c), except that for such purpose
the Conversion Price applicable thereto shall be the lesser of the Conversion
Price on the Conversion Date and the Conversion Price on the date of such Holder
demand. Any such shares will be subject to the provision of this Section.

                           (iii) In addition to any other rights available to
the Holder, if the Company fails to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the fourth Trading Day after the
Conversion Date, and if after such fourth Trading Day the Holder purchases (in
an open market transaction or otherwise) Common Stock to deliver in satisfaction
of a sale by such Holder of the Underlying Shares which the Holder anticipated
receiving upon such conversion (a "BUY-IN"), then the Company shall (A) pay in
cash to the Holder (in addition to any remedies available to or elected by the

                                      -9-
<PAGE>

Holder) the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the
product of (1) the aggregate number of shares of Common Stock that such Holder
anticipated receiving from the conversion at issue multiplied by (2) the market
price of the Common Stock at the time of the sale giving rise to such purchase
obligation and (B) at the option of the Holder, either reissue Notes in
principal amount equal to the principal amount of the attempted conversion or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its delivery requirements under
Section 4(b)(i). For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
conversion of Notes with respect to which the market price of the Underlying
Shares on the date of conversion was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In. Notwithstanding anything
contained herein to the contrary, if a Holder requires the Company to make
payment in respect of a Buy-In for the failure to timely deliver certificates
hereunder and the Company timely pays in full such payment, the Company shall
not be required to pay such Holder liquidated damages under Section 4(b)(ii) in
respect of the certificates resulting in such Buy-In.

                  (c) (i) The conversion price in effect on any Conversion Date
(the "CONVERSION PRICE") shall be 75% of the average of the five Per Share
Market Values immediately preceding the applicable Conversion Date (subject to
adjustment as provided herein), PROVIDED, that, at the option of the Holder,
such five Trading Day period shall be extended for the number of Trading Days
during such period in which (A) trading in the Common Stock is suspended by the
NASDAQ or a Subsequent Market on which the Common Stock is then listed, (B) the
Common Stock shall not be listed for trading on either the NASDAQ or a
Subsequent Market or (C) after the date declared effective by the Commission,
the Underlying Shares Registration Statement is either not effective, or may not
be used by the Holder for the resale of Underlying Shares.

                           (ii) If the Company, at any time while any Notes are
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Per Share Market Value at the
record date mentioned below, then the Conversion Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock (excluding treasury shares, if any) outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered would purchase at such Per Share Market Value. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants. However, upon the expiration of any

                                      -10-
<PAGE>

such right, option or warrant to purchase shares of the Common Stock the
issuance of which resulted in an adjustment in the Conversion Price pursuant to
this Section, if any such right, option or warrant shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such expiration
be recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such rights, options or
warrants actually exercised.

                           (iii) If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents (as defined below), at any
time while any Notes are outstanding, shall issue shares of Common Stock or
rights, warrants, options or other securities or debt that is convertible into
or exchangeable for shares of Common Stock ("COMMON STOCK EQUIVALENTS"),
entitling any Person to acquire shares of Common Stock at a price per share less
than the lower of the Conversion Price and the closing sales price of the Common
Stock on the date of such issuance (if the holder of the Common Stock or Common
Stock Equivalent so issued could at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights issued in connection
with such issuance, be entitled to receive shares of Common Stock at a price
less than the Conversion Price and the Per Share Market Value on the date of
such issuance, such issuance shall be deemed to have occurred for less than the
Conversion Price and the closing sales price of the Common Stock on the date of
such issuance), then, at the Holder's option, the Conversion Price shall be
adjusted to the conversion, reset, purchase, exchange or other price paid or
that could be paid for such lower priced security (for example if the new
security is measured by the lowest of three Per Share Market Values during a
period of ten Trading Days and the Holder believes such pricing is more
beneficial than the Conversion Price, then the Holder can adjust the Conversion
Price to incorporate such conversion terms). Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued.

                           (iv) If the Company, at any time while Notes are
outstanding, shall distribute to all holders of Common Stock (and not to
Holders) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security, then in each such case the Conversion
Price at which Notes shall thereafter be convertible shall be determined by
multiplying the Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Per Share Market Value
determined as of the record date mentioned above, and of which the numerator
shall be such Per Share Market Value on such record date less the then fair
market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

                                      -11-
<PAGE>

                           (v) In case of any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, the Holders shall have the
right thereafter to, at their option, (A) convert the then outstanding principal
amount, together with all accrued but unpaid interest and any other amounts then
owing hereunder in respect of this Note only into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
the Common Stock following such reclassification or share exchange, and the
Holders of the Notes shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Company
into which the then outstanding principal amount, together with all accrued but
unpaid interest and any other amounts then owing hereunder in respect of this
Note could have been converted immediately prior to such reclassification or
share exchange would have been entitled or (B) require the Company to prepay the
aggregate of its outstanding principal amount of Notes, plus all interest and
other amounts due and payable thereon, at a price determined in accordance with
Section 3(b). The entire prepayment price shall be paid in cash. This provision
shall similarly apply to successive reclassifications or share exchanges.

                           (vi) All calculations under this Section 4 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
No adjustments in either the Conversion Price shall be required if such
adjustment is less than $0.01, PROVIDED, that any adjustments which by reason of
this Section are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.

                           (vii) Whenever either the Conversion Price is
adjusted pursuant to any of Section 4(c)(ii) - (v), the Company shall promptly
mail to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

                           (viii) If (A) the Company shall declare a dividend
(or any other distribution) on the Common Stock; (B) the Company shall declare a
special nonrecurring cash dividend on or a redemption of the Common Stock; (C)
the Company shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of capital stock of
any class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Notes, and shall cause
to be mailed to the Holders at their last addresses as they shall appear upon
the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,

                                      -12-
<PAGE>

distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, PROVIDED, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert Notes during the 20-day period
commencing the date of such notice to the effective date of the event triggering
such notice.

                           (ix) In case of any (1) merger or consolidation of
the Company with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company in one or a series of related
transactions, a Holder shall have the right, in addition to its rights under
Section 3(b) hereof, to: (A) convert its aggregate principal amount of Notes
then outstanding into the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and such Holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the shares of Common Stock into which such
aggregate principal amount of Notes could have been converted immediately prior
to such merger, consolidation or sales would have been entitled, or (B) in the
case of a merger or consolidation, (x) require the surviving entity to issue
shares of convertible preferred stock or convertible debentures with such
aggregate stated value or in such face amount, as the case may be, equal to the
aggregate principal amount of Notes then held by such Holder, plus all accrued
and unpaid interest and other amounts owing thereon, which newly issued shares
of preferred stock or debentures shall have terms identical (including with
respect to conversion) to the terms of this Note (except, in the case of
preferred stock, as may be required to reflect the differences between equity
and debt) and the holder of such security shall be entitled to all of the rights
and privileges of a Holder of Notes set forth herein and the agreements pursuant
to which the Notes were issued (including, without limitation, as such rights
relate to the acquisition, transferability, registration and listing of such
shares of stock other securities issuable upon conversion thereof), and (y)
simultaneously with the issuance of such convertible preferred stock or
convertible debentures, shall have the right to convert such instrument only
into shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of Common Stock following such merger or
consolidation. In the case of clause (A), the conversion price applicable for
the newly issued shares of convertible preferred stock or convertible debentures
shall be based upon the amount of securities, cash and property that each share
of Common Stock would receive in such transaction and the Conversion Price in
effect immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall include
such terms so as to continue to give the Holders the right to receive the
securities, cash and property set forth in this Section upon any conversion or
redemption following such event. This provision shall similarly apply to
successive such events.

                                      -13-
<PAGE>

                  (d) The Company covenants that it will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of the Notes and payment of
interest on the Notes, each as herein provided, free from preemptive rights or
any other actual contingent purchase rights of persons other than the Holders,
not less than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b)) upon the conversion of the
outstanding principal amount of the Notes and payment of interest hereunder. The
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid,
nonassessable and, if the Underlying Shares Registration Statement has been
declared effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.

                  (e) Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the Holder
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.

                  (f) The issuance of certificates for shares of the Common
Stock on conversion of the Notes shall be made without charge to the Holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of such Notes so converted
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.

                  (g) Any and all notices or other communications or deliveries
to be provided by the Holders hereunder, including, without limitation, any
Conversion Notice, shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to the Company, 2030 Maine
Street, Suite 550, Irvine, CA 92614, facsimile No.: (949) 261-2714, attention:
Jeffrey R. Matsen, or such other address or facsimile number as the Company may
specify for such purposes by notice to the Holders delivered in accordance with
this Section, with a copy to Pillsbury Madison & Sutro, LLP (facsimile number
(714) 436-2800), attention: Christopher A. Wilson. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service or sent by certified or registered mail, postage
prepaid, addressed to each Holder at the facsimile telephone number or address
of such Holder appearing on the books of the Company, or if no such facsimile
telephone number or address appears, at the principal place of business of the
holder. Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if

                                      -14-
<PAGE>

such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 6:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) four days
after deposit in the United States mail, (iv) the Business Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(v) upon actual receipt by the party to whom such notice is required to be
given.

         SECTION 5.        PREPAYMENT AT THE OPTION OF THE COMPANY.

         (a) The Company shall have the right at all time and any time after the
Original Issue Date, upon seven Trading Days' notice to the Holders (an
"OPTIONAL PREPAYMENT NOTICE" and the date such notice is received by the
Holders, the "NOTICE DATE"), to prepay all or a portion of the Notes then held
by the Holders at a cash price equal to the Optional Prepayment Price (as
defined below). After the 90th day following the Original Issue Date, the
Company may only deliver an Optional Prepayment Notice to the Holders if, on the
Notice Date: (i) either there is an effective Underlying Shares Registration
Statement pursuant to which the Holders are permitted to utilize the prospectus
thereunder to resell all of the issued Underlying Shares and all of the
Underlying Shares as are issuable upon conversion in full of the Notes subject
to the Optional Prepayment Notice nor may all of such issued or issuable
Underlying Shares be sold without volume restrictions pursuant to Rule 144
promulgated under the Securities Act, as determined by counsel to the Company
pursuant to a written opinion letter, addressed and delivered prior to the
Notice Date to the Company's transfer agent in the form and substance acceptable
to the Holders and such transfer agent and (ii) the Common Stock is listed for
trading on the NASDAQ or on a Subsequent Market. If any of the foregoing
conditions shall cease to be in effect during the period between the Notice Date
and the date the Optional Prepayment Date is paid in full, then the Holders
subject to such prepayment may elect, by written notice to the Company given at
any time after any of the foregoing conditions shall cease to be in effect, to
invalidate AB INITIO such prepayment, notwithstanding anything herein contained
to the contrary. After the 90th day following the Original Issue Date, the
Holders may convert any portion of the outstanding principal amount of the Notes
subject to an Optional Redemption Notice prior to the date that the Optional
Prepayment Price is due and paid in full.

         (b) The Optional Prepayment Price is due on the seventh Trading Day
following the Notice Date (the "DUE DATE"). If any portion of the Optional
Prepayment Price shall not be paid by the Company by the Due Date, interest
shall accrue thereon at the rate of 18% per annum (or the maximum rate permitted
by applicable law, whichever is less) until the Optional Prepayment Price plus
all such interest is paid in full. In addition, if any portion of the Optional
Prepayment Price remains unpaid after such date, the Holder subject to such
prepayment may elect by written notice to the Company to either (x) at any time
after the 90th day following the Original Issue Date, demand conversion in
accordance with the formula and the time period therefor set forth in Section 4
of any portion of the principal amount of the Note for which the Optional
Prepayment Price, plus accrued liquidated damages thereof, has not been paid in
full (the "UNPAID PREPAYMENT PRINCIPAL AMOUNT"), in which event the applicable

                                      -15-
<PAGE>

Per Share Market Value shall be the lower of the Per Share Market Value
calculated on the Due Date and the Per Share Market Value as of the Holder's
written demand for exchange, or (y) invalidate AB INITIO such optional
prepayment, notwithstanding anything herein contained to the contrary. If the
Holder elects option (x) above, the Company shall, within three (3) Trading Days
after such election is deemed delivered hereunder, deliver to the Holder the
shares of Common Stock issuable upon conversion of the Unpaid Prepayment
Principal Amount subject to such conversion demand and otherwise perform its
obligations hereunder with respect thereto. If the Holder elects option (y)
above, the aggregate principal amount under this Note and all interest due
hereunder shall be increased by the Unpaid Prepayment Principal Amount and the
Company shall no longer have any prepayment rights under this Note. If, upon an
election under option (x) above, the Company fails to deliver the certificates
representing the shares of Common Stock issuable upon conversion of the Unpaid
Prepayment Principal Amount within the time period set forth in this Section,
the Company shall pay to the Holder in cash, as liquidated damages and not as a
penalty, $5,000 per day until the Company delivers such certificates to the
Holder.

         (c) The "OPTIONAL PREPAYMENT PRICE" for the principal amount of the
Notes to be prepaid shall equal the sum of: (i) 133% of the principal amount of
the Notes to be prepaid and (ii) all interest, other amounts, costs, expenses
and liquidated damages due in respect of such Notes.

         SECTION 6. DEFINITIONS. For the purposes hereof, the following terms
shall have the following meanings:

                  "BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York or the State of Texas are authorized or required by law or
other government action to close.

                  "CHANGE OF CONTROL TRANSACTION" means the occurrence of any of
(i) an acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more than one-half of the members of the Company's board of directors which is
not approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (iii) the merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
50% or more of the assets of the Company in one or a series of related
transactions, or (iv) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the common stock, $.001 par value, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.

                                      -16-
<PAGE>

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

                  "INTEREST EFFECTIVENESS DATE" means the earlier to occur of
(x) the Effectiveness Date (as define in the Registration Rights Agreement) and
(y) the date that an Underlying Shares Registration Statement is declared
effective by the Commission.

                  "MANDATORY PREPAYMENT AMOUNT" for any Notes shall equal the
sum of (i) the greater of (A) 133% of the principal amount of Notes to be
prepaid, plus all accrued and unpaid interest thereon, and (B) the principal
amount of Notes to be prepaid, plus all accrued and unpaid interest thereon,
divided by the Conversion Price on (x) the date the Mandatory Prepayment Amount
is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is
paid in full, whichever is less, multiplied by the Per Share Market Value on (x)
the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the
date the Mandatory Prepayment Amount is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
such Notes.

                  "MATERIAL SUBSIDIARIES" shall mean any subsidiary of the
Company that either owns 10% or more of the Company's assets or is responsible
for 10% or more of the Company's net income for any given year.

                  "ORIGINAL ISSUE DATE" shall mean the date of the first
issuance of the Notes regardless of the number of transfers of any Note and
regardless of the number of instruments which may be issued to evidence such
Note.

                  "PER SHARE MARKET VALUE" means on any particular date (a) the
closing bid price per share of Common Stock on such date on the NASDAQ or on
such Subsequent Market on which the shares of Common Stock are then listed or
quoted, or if there is no such price on such date, then the closing bid price on
the NASDAQ or on such Subsequent Market on the date nearest preceding such date,
or (b) if the shares of Common Stock are not then listed or quoted on the NASDAQ
or a Subsequent Market, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the shares of
Common Stock are not then reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant conversion
period, as determined in good faith by the Holder, or (d) if the shares of
Common Stock are not then publicly traded the fair market value of a share of
Common Stock as determined by an Appraiser selected in good faith by the Holders
of a majority in interest of the principal amount of Notes then outstanding.

                  "PERSON" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

                                      -17-
<PAGE>

                  "PURCHASE AGREEMENT" means the Convertible Note Purchase
Agreement, dated as of August 2, 2000, to which the Company and the original
Holder are parties, as amended, modified or supplemented from time to time in
accordance with its terms.

                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of August 2, 2000, to which the Company and the original
Holder are parties, as amended, modified or supplemented from time to time in
accordance with its terms.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "TRADING DAY" means (a) a day on which the shares of Common
Stock are traded on the NASDAQ or on such Subsequent Market on which the shares
of Common Stock are then listed or quoted, or (b) if the shares of Common Stock
are not listed on the NASDAQ or a Subsequent Market, a day on which the shares
of Common Stock are traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (c) if the shares of Common Stock are not quoted on the
OTC Bulletin Board, a day on which the shares of Common Stock are quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); PROVIDED, that in the event that the shares of Common Stock
are not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading
Day shall mean any day except a Business Day.

                  "TRANSACTION DOCUMENTS" shall have the meaning set forth in
the Purchase Agreement.

                  "UNDERLYING SHARES" means the shares of Common Stock issuable
upon conversion of Notes or as payment of interest in accordance with the terms
hereof.

                  "UNDERLYING SHARES REGISTRATION STATEMENT" means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement, covering among other things the resale of the Underlying
Shares and naming the Holder as a "selling stockholder" thereunder.

         SECTION 7. Except as expressly provided herein, no provision of this
Note shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, interest and liquidated damages (if any)
on, this Note at the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct obligation of the Company. This Note ranks
PARI PASSU with all other Notes now or hereafter issued under the terms set
forth herein. As long as there are Notes outstanding, the Company shall not and
shall cause it subsidiaries not to, without the consent of the Holders, (i)
amend its certificate of incorporation, bylaws or other charter documents so as
to adversely affect any rights of the Holders; (ii) repay, repurchase or offer
to repay, repurchase or otherwise acquire shares of its Common Stock or other
equity securities other than as to the Underlying Shares to the extent permitted
or required under the Transaction Documents; or (iii) enter into any agreement
with respect to any of the foregoing. The Company may only voluntarily prepay
the outstanding principal amount on the Notes in accordance with Section 5
hereof.

                                      -18-
<PAGE>

         SECTION 8. This Note shall not entitle the Holder to any of the rights
of a stockholder of the Company, including without limitation, the right to
vote, to receive dividends and other distributions, or to receive any notice of,
or to attend, meetings of stockholders or any other proceedings of the Company,
unless and to the extent converted into shares of Common Stock in accordance
with the terms hereof.

         SECTION 9. If this Note shall be mutilated, lost, stolen or destroyed,
the Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Note, and of the ownership hereof, and
indemnity, if requested, all reasonably satisfactory to the Company.

         SECTION 10. Except as set forth in Schedule 2.1(o) of the Purchase
Agreement, no indebtedness of the Company is senior to this Note in right of
payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. The Company will not and will not permit any of its
subsidiaries to, directly or indirectly, enter into, create, incur, assume or
suffer to exist any indebtedness of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom.

         SECTION 11. This Note shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to conflicts of
laws thereof. The Company and the Holder hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.

         SECTION 12. Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note. Any waiver must be
in writing.

                                      -19-
<PAGE>

         SECTION 13. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.

         SECTION 14. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

                                      -20-
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Convertible
Note to be duly executed by a duly authorized officer as of the date first above
indicated.

                                      UNIVERSAL BROADBAND NETWORKS, INC.

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

                                      -21-
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby elects to convert the attached Note into shares of common
stock, $.001 par value per share (the "Common Stock"), of Universal Broadband
Networks, Inc. (the "Company") according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:
                                   _____________________________________________
                                   Date to Effect Conversion

                                   _____________________________________________
                                   Principal Amount of Notes to be Converted

                                   _____________________________________________
                                   Remaining Principal Amount of Notes

                                   _____________________________________________
                                   Number of shares of Common Stock to be Issued

                                   _____________________________________________
                                   Applicable Conversion Price

                                   _____________________________________________
                                   Signature

                                   _____________________________________________
                                   Name

                                   _____________________________________________
                                   Address

ACCEPTED AND AGREED:

UNIVERSAL BROADBAND NETWORKS, INC.

By:_____________________________________
    Name:
    Title:

                                      -22-

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