Document:

EXHIBIT 10.11

THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE  "ACT"),  OR  APPLICABLE  STATE  SECURITIES  LAWS,  AND  MAY  NOT BE  SOLD,
TRANSFERRED,  PLEDGED OR  HYPOTHECATED  IN THE ABSENCE OF SUCH  REGISTRATION  OR
RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY
ACCEPTABLE  TO  THE  MAKER)  IN  THE  FORM,   SUBSTANCE  AND  SCOPE   REASONABLY
SATISFACTORY TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED,  HYPOTHECATED
OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
SUCH STATE SECURITIES LAWS.

                                        A
                       Secured Convertible Promissory Note
                               due April 23, 2004

No. CN-1                                                             $350,000.00
Dated:  April 23, 2002

     For value  received,  ARMITEC INC., a Delaware  corporation  (the "Maker"),
hereby promises to pay to the order of STONESTREET LIMITED PARTNERSHIP (together
with its successors,  representatives,  and permitted assigns, the "Holder"), in
accordance with the terms  hereinafter  provided,  the principal amount of three
hundred fifty Thousand Dollars ($350,000.00), together with interest thereon.

     All payments  under or pursuant to this Note shall be made in United States
Dollars  in  immediately  available  funds to the  Holder at the  address of the
Holder first set forth above or at such other place as the Holder may  designate
from time to time in  writing to the Maker or by wire  transfer  of funds to the
Holder's  account,  instructions for which are attached hereto as Exhibit A. The
outstanding principal balance of this Note shall be due and payable on April 23,
2004(the "Maturity Date") or at such earlier time as provided herein.

                                   ARTICLE I

     Section 1.1 Purchase  Agreement.  This Note has been executed and delivered
pursuant to the Convertible Note Purchase Agreement,  dated as of April 23, 2002
(the "Purchase Agreement"),  by and among the Maker and the Holder.  Capitalized
terms used and not  otherwise  defined  herein shall have the meanings set forth
for such terms in the Purchase Agreement.

     Section  1.2  Interest.  Beginning  on the  date  hereof,  the  outstanding
principal  balance of this Note shall bear interest,  in arrears,  at a rate per
annum  equal to seven  percent  (7%),  payable  October  1, 2002 and  thereafter
semi-annually  and upon  earlier  conversion  or  prepaid  as  provided  herein.

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Interest  shall be computed on the basis of a 360-day year of twelve (12) 30-day
months  and  shall  accrue  commencing  on the  issuance  date of this Note (the
"Issuance Date"). The interest shall be payable, at the option of the Holder, in
cash or shares of the Maker's  common  stock,  par value  $.00167 per share (the
"Common Stock");  provided, that if the Holder elects to receive any interest in
Common Stock, the Maker shall issue to the Holder registered and freely tradable
shares of Common  Stock.  The  number of shares of Common  Stock to be issued as
payment of accrued and unpaid  interest  shall be determined by dividing (a) the
total amount of accrued and unpaid interest to be converted into Common Stock by
the lesser of (i) $.07 and (ii) an amount  equal to 70% of the average Per Share
Market  Value (as  defined in Section  3.2(b)  hereof) for the three (3) Trading
Days (as  defined in Section  4.13  hereof)  having the lowest Per Share  Market
Value during the thirty (30) Trading Days prior to the date the interest payment
is due.  Furthermore,  upon the occurrence of an Event of Default (as defined in
Section 2.1  hereof),  then to the extent  permitted  by law, the Maker will pay
interest to the Holder,  payable on demand, on the outstanding principal balance
of the Note from the date of the Event of Default  until  payment in full at the
rate of fifteen percent (15%) per annum.

     Section 1.3 Payment on Non-Business  Days.  Whenever any payment to be made
shall be due on a  Saturday,  Sunday or a public  holiday  under the laws of the
State of New York, such payment may be due on the next  succeeding  business day
and such next  succeeding day shall be included in the calculation of the amount
of accrued interest payable on such date.

     Section 1.4 Transfer.  This Note may be transferred or sold, subject to the
provisions  of Section 4.8 of this Note, or pledged,  hypothecated  or otherwise
granted as security by the Holder.

     Section 1.5  Replacement.  Upon receipt of a duly  executed,  notarized and
unsecured  written  statement from the Holder with respect to the loss, theft or
destruction of this Note (or any replacement  hereof),  and without requiring an
indemnity bond or other security,  or, in the case of a mutilation of this Note,
upon surrender and  cancellation of such Note, the Maker shall issue a new Note,
of like tenor and amount, in lieu of such lost,  stolen,  destroyed or mutilated
Note.

                                   ARTICLE II

                           EVENTS OF DEFAULT; REMEDIES

     Section  2.1 Events of  Default.  The  occurrence  of any of the  following
events shall be an "Event of Default" under this Note:

     (a) the Maker  shall fail to make the  payment  of any amount of  principal
outstanding on the date such payment is due hereunder; or

     (b) the Maker shall fail to make any  payment of  interest  for a period of
five (5) days after the date such interest is due; or

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     (c) the failure of the Company in having the following:

          (i) the Form 8 K/A (Form 8-K shall be used for current  reports  under
Section 13 or 15(d) of the  Securities  Exchange Act of 1934,  filed pursuant to
Rule 13a-11 or Rule 15d-11 and for reports of nonpublic  information required to
be disclosed by Regulation  FD) with audited  financials  filed by June 20, 2002
and  all SEC  comments  cleared  by  June  30,  2002,  and  (ii)  the  Form  14C
informational  Proxy  (Information to holders of record prior to annual or other
meeting) filed no later than June 20, 2002, and

          (iii) the  Registration  Statement  ("as  defined in the  Registration
rights Agreement") filed no later than July 1, 2002, and

          (iv) the Registration  Statement, as amended to include all the shares
required  to be reserved  declared  effective  by the  Securities  and  Exchange
Commission ("SEC") on or prior to September 30, 2002; and

          (v) failure to reserve  8,611,371  shares for the holder upon closing;
and

          (vi) failure to reserve the shares  required to be reserved in Section
1.2 of the Convertible Note Purchase Agreement on or before July 1, 2002.

     (d) the Common Stock shall not be eligible for  quotation on and quoted for
trading on the OTC  Bulletin  Board  ("OTC') or listed for trading on the Nasdaq
SmallCap Market, New York Stock Exchange,  American Stock Exchange or the Nasdaq
National  Market (each,  a "Subsequent  Market") and shall not again be eligible
for and quoted or listed for trading thereon within five Trading Days; or

     (e)  the  Maker's  notice  to  the  Holder,  including  by  way  of  public
announcement,  at any time, of its inability to comply (including for any of the
reasons  described in Section 3.8(a) hereof) or its intention not to comply with
proper requests for conversion of this Note into shares of Common Stock; or

     (f) the Maker shall fail to (i) timely  delivery the shares of Common Stock
within five trading days after  delivery of notice of conversion of the Note and
any interest accrued and unpaid, (ii) timely file the Registration  Statement as
of the filing date (as defined in the  Registration  Rights  Agreement) or (iii)
make the  payment of any fees and/or  liquidated  damages  under this Note,  the
Purchase  Agreement or the Registration  Rights Agreement,  which failure in the
case of items (i) and (iii) of this Section 2.1(f) is not remedied  within seven
(7) business days after the incurrence thereof; or

     (g) while the Registration Statement is required to be maintained effective
pursuant to the terms of the Registration Rights Agreement, the effectiveness of
the Registration Statement lapses for any reason (including, without limitation,
the  issuance of a stop order) or is  unavailable  to the Holder for sale of the
Registrable  Securities  (as defined in the  Registration  Rights  Agreement) in
accordance with the terms of the Registration  Rights Agreement,  and such lapse
or unavailability  continues for a period of ten (10) consecutive  Trading Days,

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provided  that the cause of such lapse or  unavailability  is not due to factors
solely within the control of Holder; or

     (h)  default  shall be made in the  performance  or  observance  of (i) any
covenant, condition or agreement contained in this Note (other than as set forth
in clause (f) of this  Section  2.1) and such  default  upon notice is not fully
cured within seven (7) business  days after the  occurrence  thereof or (ii) any
material covenant, condition or agreement contained in the Purchase Agreement or
the  Registration  Rights Agreement which is not covered by any other provisions
of this Section 2.1 and such default upon notice is not fully cured within seven
(7) business days after the occurrence thereof; or

     (i) any material  representation or warranty made by the Maker herein or in
the Purchase Agreement or the Registration  Rights Agreement shall prove to have
been false or breached in a material respect on the date as of which made; or

     (j) the Maker shall issue any debt securities  which are not subordinate to
this Note on such terms as are  acceptable  to the  Holder of a majority  of the
outstanding principal amount of this holder

     (k) the Maker  shall (i) default in any payment of any amount or amounts of
principal  of or  interest  on any  Indebtedness  (other  than the  Indebtedness
hereunder) the aggregate  principal amount of which Indebtedness is in excess of
$75,000 or (ii) a material default in the observance or performance of any other
agreement  or  condition  relating  to  any  indebtedness  or  contained  in any
instrument or agreement  evidencing,  securing or relating thereto, or any other
material  event shall occur or condition  exist,  the effect of which default or
other  event or  condition  is to cause,  or to permit  the  holder or holder or
beneficiary or  beneficiaries  of such  Indebtedness to cause with the giving of
notice  if  required,  such  Indebtedness  to  become  due  prior to its  stated
maturity.  The  Maker  shall  have  seven  days to  cure  the  defaults  in this
subsection 2.1(l); or

     (l) the Maker shall (i) apply for or consent to the  appointment of, or the
taking of possession by, a receiver,  custodian, trustee or liquidator of itself
or of all or a substantial  part of its property or assets,  (ii) make a general
assignment  for the benefit of its  creditors,  (iii)  commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect) or under
the  comparable  laws of any  jurisdiction  (foreign or  domestic),  (iv) file a
petition  seeking to take advantage of any bankruptcy,  insolvency,  moratorium,
reorganization  or other  similar law affecting  the  enforcement  of creditors'
rights  generally,  (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States  Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction  (foreign or domestic),
or (vi) take any action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing; or

     (m) the Maker's failure to comply with a Conversion  Notice tendered within
five (5) business days after the receipt by the Maker of the  Conversion  Notice
and the certificates representing the Notes. The Note itself does not have to be
delivered  until  fully  paid.  In  the  event  the  shares  are  electronically
transferable,  then delivery of the Shares must be made by  electronic  transfer

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provided,  request for such electronic  transfer has been made by the Holder.  A
note  representing  the balance of the Note not so converted will be provided to
the Holder, if requested by Holder provided an original Note is delivered to the
Company.  To the event that the  Holder  elects  not to  surrender  the Note for
reissuance  upon  partial  payment or  conversion,  the Holder  indemnifies  the
Company against ant and all loss or damange  attributable to a third-party claim
in an amount in excess of the actual amount then due under the Note.

     Section 2.2 Remedies Upon An Event of Default. If an Event of Default shall
have occurred and shall be  continuing,  the Holder of this Note may at any time
at its option (a)  declare  the entire  unpaid  principal  balance of this Note,
together with all interest accrued hereon, due and payable,  and thereupon,  the
same shall be accelerated and so due and payable,  without presentment,  demand,
protest,  or  notice,  all of which are  hereby  expressly  unconditionally  and
irrevocably waived by the Maker; provided,  however, that upon the occurrence of
an  Event  of  Default  described  in (i)  Sections  2.1  (l),  (m) or (n),  the
outstanding   principal   balance  and  accrued  interest   hereunder  shall  be
automatically  due and  payable  and  (ii)  Sections  2.1  (a)-(k),  demand  the
prepayment  of this Note  pursuant to Section  3.7  hereof,  (b) demand that the
principal  amount of this Note  then  outstanding  and all  accrued  and  unpaid
interest  thereon shall be converted into shares of Common Stock at a conversion
price per share calculated pursuant to Section 3.1 hereof assuming that the date
that the Event of Default occurs is the  Conversion  Date (as defined in Section
3.1  hereof),  or (c)  exercise  or  otherwise  enforce  any  one or more of the
Holder's rights, powers, privileges, remedies and interests under this Note, the
Purchase  Agreement,  the  Registration  Rights  Agreement or applicable law. No
course of delay on the part of the Holder shall  operate as a waiver  thereof or
otherwise prejudice the right of the Holder. No remedy conferred hereby shall be
exclusive of any other remedy  referred to herein or now or hereafter  available
at law, in equity, by statute or otherwise.

                                  ARTICLE III

                      CONVERSION; ANTIDILUTION; PREPAYMENT

     Section 3.1 Conversion  Option.  Upon the earlier of the effectiveness date
of the definitive 14c to be filed that increases the authorized, this Note shall
be  convertible  (in  whole  or in  part),  at the  option  of the  Holder  (the
"Conversion  Option"),  into such number of fully paid and non-assessable shares
of Common Stock (the  "Conversion  Rate") as is  determined by dividing (x) that
portion of the  outstanding  principal  balance plus accrued and unpaid interest
under the Note as of such  date that the  Holder  elects to  convert  by (y) the
Conversion  Price (as  hereinafter  defined) then in effect on the date on which
the  Holder  faxes a  notice  of  conversion  (the  "Conversion  Notice"),  duly
executed, to the Maker (facsimile number (404) 842-9418,  Attn.: Chief Executive
Officer) (the "Conversion Date"),  provided,  however, that the Conversion Price
shall be subject to adjustment as described in Section 3.6 below.

     Section 3.2 Conversion Price.

     (a) The term  "Conversion  Price"  shall  mean the  lesser of (A) $.07 (the
"Fixed  Conversion  Price") and (B) an amount equal to seventy  percent (70%) of
the average  Per Share  Market  Value for the three (3) Trading  Days having the

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lowest Per Share  Market  Value during the thirty (30) Trading Days prior to the
Conversion  Date,  except that if during any period (a  "Black-out  Period"),  a
Holder is unable to trade any Common Stock issued or issuable upon conversion of
the Notes  immediately due to the  postponement of filing or delay or suspension
of effectiveness of a registration  statement or because the Maker has otherwise
informed such Holder that an existing  prospectus cannot be used at that time in
the sale or transfer of such Common Stock, such Holder shall have the option but
not the obligation on any Conversion Date within ten (10) Trading Days following
the expiration of the Black-out  Period of using the Conversion Price applicable
on such  Conversion  Date or any  Conversion  Price selected by such Holder that
would have been  applicable  had such  Conversion  Date been at any earlier time
during the Black-out Period or within the ten (10) Trading Days thereafter.

     (b) The term "Per Share Market Value" means on any particular  date (a) the
closing bid price of the Common  Stock on such date on the OTC  Bulletin  Board,
The Nasdaq  Small-Cap  Market,  the Nasdaq National  Market or other  registered
national  stock exchange on which the Common Stock is then listed or if there is
no such price on such  date,  then the  closing  bid price on such  exchange  or
quotation  system on the date nearest  preceding such date, or (b) if the Common
Stock is not listed then on The Nasdaq  Small-Cap  Market,  the Nasdaq  National
Market or any registered  national stock  exchange,  the closing bid price for a
share of Common Stock in the  over-the-counter  market, as reported by NASDAQ or
in 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,  then the  average of the three (3)  lowest  closing  bid or closing
prices,  if applicable,  of the "Pink Sheet" quotes for the relevant thirty (30)
day trading conversion period, as determined in good faith by the Holder, or (d)
if the Common Stock is not then publicly traded the fair market value of a share
of Common Stock as determined by an Independent Appraiser (as defined in Section
4.13  hereof)  selected in good faith by the Holder of a majority in interest of
the Notes; provided, however, that the Maker, after receipt of the determination
by such  Independent  Appraiser,  shall  have the right to select an  additional
Independent  Appraiser,  in which case,  the fair market value shall be equal to
the  average  of the  determinations  by each such  Independent  Appraiser;  and
provided, further that all determinations of the Per Share Market Value shall be
appropriately  adjusted for any stock  dividends,  stock splits or other similar
transactions  during such period.  The  determination of fair market value by an
Independent  Appraiser  shall be based upon the fair market  value of the Issuer
determined  on a going  concern  basis as between a willing  buyer and a willing
seller and taking into account all relevant factors  determinative of value, and
shall be final and binding on all parties.  In determining the fair market value
of  any  shares  of  Common  Stock,  no  consideration  shall  be  given  to any
restrictions  on transfer of the Common Stock imposed by agreement or by federal
or state  securities laws, or to the existence or absence of, or any limitations
on, voting rights

     Section 3.3 Mechanics of Conversion.

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     (a) Not later than five (5) Trading  Days after any  Conversion  Date,  the
Maker will deliver to the applicable  Holder by express courier a certificate or
certificates which shall be free of restrictive legends and trading restrictions
(other  than  those   required  by  Section  5.1  of  the  Purchase   Agreement)
representing  the  number  of shares of Common  Stock  being  acquired  upon the
conversion  of  the  Notes.  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 Fifth  Trading  Day  after  the  Conversion  Date (the
"Delivery Date"), the Holder shall be entitled by written notice to the Maker at
any  time  on  or  before  its  receipt  of  such  certificate  or  certificates
thereafter,  to  rescind  such  conversion,  in  which  event  the  Maker  shall
immediately  return  the  certificates   representing  the  Notes  tendered  for
conversion,  whereupon  the Maker and the Holder shall each be restored to their
respective  positions  immediately  prior  to the  delivery  of such  notice  of
revocation,  except that any amounts  described in Sections 3.3(b) and (c) shall
be payable through the date notice of rescission is given to the Maker.

     (b) The Maker  understands  that a delay in the  delivery  of the shares of
Common Stock upon  conversion  of the Notes and failure to deliver  certificates
representing the unconverted  shares of the Notes beyond the Delivery Date could
result in  economic  loss to the  Holder.  If the Maker  fails to deliver to the
Holder such  certificate or certificates  pursuant to this Section  hereunder by
the Delivery  Date,  the Maker shall pay to such Holder,  in cash, an amount per
Trading Day for each Trading Day until such certificates are delivered, together
with  interest  on such amount at a rate of 10% per annum,  accruing  until such
amount and any accrued  interest thereon is paid in full, equal to (i) 1% of the
aggregate  principal amount of the Notes requested to be converted for the first
five (5)  Trading  Days  after the  Delivery  Date and (ii) 2% of the  aggregate
principal  amount of the Notes  requested to be  converted  for each Trading Day
thereafter  (which  amounts  shall be paid as  liquidated  damages  and not as a
penalty).  Nothing  herein shall limit a Holder's right to pursue actual damages
for the Maker's failure to deliver  certificates  representing  shares of Common
Stock upon conversion  within the period  specified herein  (including,  without
limitation,  damages  relating to any purchase of shares of Common Stock by such
Holder  to  make  delivery  on a sale  effected  in  anticipation  of  receiving
certificates  representing shares of Common Stock upon conversion,  such damages
to be in an amount equal to (A) the aggregate amount paid by such Holder for the
shares of Common Stock so purchased  minus (B) the aggregate value of the shares
on the date the shares were delivered),  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).
Notwithstanding  anything to the contrary  contained herein, the Holder shall be
entitled to withdraw a Conversion  Notice,  and upon such  withdrawal  the Maker
shall only be obligated to pay the liquidated damages accrued in accordance with
this Section 3.3(b) through the date that the liquidated damages are paid.

     (c) In addition to any other rights  available to the Holder,  if the Maker
fails to deliver to the Holder  such  certificate  or  certificates  pursuant to
Section  3.3(a) by the Delivery  Date and if after the Delivery  Date the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Holder of the Conversion  Shares which
the Holder  anticipated  receiving upon such  conversion (a "Buy-In"),  then the
Maker shall pay in cash to the Holder (in addition to any remedies  available to
or elected by the Holder) the amount by which (A) the  Holder's  total  purchase
price (including brokerage  commissions,  if any) for the shares of Common Stock

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so purchased  exceeds (B) the aggregate  principal amount of the Notes for which
such conversion was not timely honored, together with interest thereon at a rate
of 15% per annum, accruing until such amount and any accrued interest thereon is
paid in full  (which  amount  shall be paid as  liquidated  damages and not as a
penalty).  For example,  if the Holder purchases shares of Common Stock having a
total  purchase  price of $11,000 to cover a Buy-In with respect to an attempted
conversion of $10,000  aggregate  principal amount of the Notes, the Maker shall
be required to pay the Holder $1,000,  plus  interest.  The Holder shall provide
the Maker written notice indicating the amounts payable to the Holder in respect
of the Buy-In.

     Section 3.4  Ownership  Cap.  Notwithstanding  anything to the contrary set
forth in  Section 3 of this Note,  at no time may a holder of this Note  convert
this Note if the number of shares of Common Stock to be issued  pursuant to such
conversion  would exceed,  when aggregated with all other shares of Common Stock
owned by such  holder at such time,  the number of shares of Common  Stock which
would  result in such holder  owning more than 9.99% of all of the Common  Stock
outstanding  at such time;  provided,  however,  that upon a holder of this Note
providing the Company with 75 days notice  (pursuant to Section 4.1 hereof) (the
"Waiver  Notice")  that such  holder  would like to waive this  Section 3.4 with
regard to any or all shares of Common Stock  issuable  upon  conversion  of this
Note,  this  Section  3.4 will be of no force or effect  with regard to all or a
portion of the Note referenced in the Waiver Notice.

     Section 3.5 Intentionally Omitted.

     Section 3.6 Adjustment of Conversion Price.

     (a) The Fixed  Conversion Price shall be subject to adjustment from time to
time as follows:

          (i) Adjustments for Stock Splits and Combinations.  If the Maker shall
at any time or from time to time after the Issuance  Date,  effect a stock split
of the outstanding Common Stock, the applicable Fixed Conversion Price in effect
immediately prior to the stock split shall be proportionately  decreased. If the
Maker shall at any time or from time to time after the  Issuance  Date,  combine
the outstanding shares of Common Stock, the applicable Fixed Conversion Price in
effect immediately prior to the combination shall be proportionately  increased.
Any adjustments  under this Section 3.6(a)(i) shall be effective at the close of
business on the date the stock split or combination occurs.

          (ii) Adjustments for Certain Dividends and Distributions. If the Maker
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the  determination  of holder of Common Stock  entitled to
receive a dividend  or other  distribution  payable  in shares of Common  Stock,
then,  and in each  event,  the  applicable  Fixed  Conversion  Price in  effect
immediately  prior  to such  event  shall  be  decreased  as of the time of such
issuance  or, in the event such  record  date shall have been  fixed,  as of the
close of  business on such record  date,  by  multiplying,  as  applicable,  the
applicable Fixed Conversion Price then in effect by a fraction:

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                    (1) the  numerator  of which  shall be the  total  number of
shares of Common Stock issued and outstanding  immediately  prior to the time of
such issuance or the close of business on such record date; and

                    (2) the  denominator  of which shall be the total  number of
shares of Common Stock issued and outstanding  immediately  prior to the time of
such  issuance  or the close of  business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.

          (iii) Adjustment for Other Dividends and  Distributions.  If the Maker
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the  determination  of holder of Common Stock  entitled to
receive a dividend or other distribution  payable in other than shares of Common
Stock, then, and in each event, an appropriate  revision to the applicable Fixed
Conversion  Price shall be made and provision  shall be made (by  adjustments of
the Conversion Price or otherwise) so that the holder of the Notes shall receive
upon  conversions  thereof,  in addition to the number of shares of Common Stock
receivable thereon,  the number of securities of the Maker which they would have
received  had their Notes been  converted  into Common Stock on the date of such
event and had  thereafter,  during the period from the date of such event to and
including the  Conversion  Date,  retained such  securities  (together  with any
distributions  payable  thereon during such period),  giving  application to all
adjustments  called for during such period under this Section  3.6(a)(iii)  with
respect to the rights of the holder of the Notes.

          (iv) Adjustments for  Reclassification,  Exchange or Substitution.  If
the Common Stock issuable upon  conversion of the Notes at any time or from time
to time after the Issuance Date shall be changed to the same or different number
of  shares of any  class or  classes  of  stock,  whether  by  reclassification,
exchange,  substitution  or  otherwise  (other  than by way of a stock  split or
combination  of shares or stock  dividends  provided for in Sections  3.6(a)(i),
(ii) and (iii), or a reorganization,  merger,  consolidation,  or sale of assets
provided for in Section  3.6(a)(v)),  then,  and in each event,  an  appropriate
revision to the Fixed  Conversion  Price shall be made and  provisions  shall be
made (by adjustments of the Conversion Price or otherwise) so that the holder of
each of the Notes shall have the right  thereafter to convert such Note into the
kind and  amount  of  shares  of stock  and  other  securities  receivable  upon
reclassification,  exchange,  substitution  or other  change,  by  holder of the
number of shares of Common Stock into which such Note might have been  converted
immediately  prior to such  reclassification,  exchange,  substitution  or other
change, all subject to further adjustment as provided herein.

          (v) Adjustments for Reorganization,  Merger, Consolidation or Sales of
Assets.  If at any time or from time to time after the Issuance Date there shall
be a capital  reorganization of the Maker (other than by way of a stock split or
combination  of shares  or stock  dividends  or  distributions  provided  for in
Section  3.6(a)(i),   (ii)  and  (iii),  or  a  reclassification,   exchange  or
substitution  of shares  provided  for in  Section  3.6(a)(iv)),  or a merger or
consolidation of the Maker with or into another corporation,  or the sale of all
or substantially all of the Maker's properties or assets to any other person (an
"Organic Change"), then as a part of such Organic Change an appropriate revision
to the  Conversion  Price  shall  be  made  and  provision  shall  be  made  (by
adjustments  of the  Conversion  Price or  otherwise) so that the holder of each

                                       9
<PAGE>

Note shall  have the right  thereafter  to  convert  such Note into the kind and
amount of shares of stock and other  securities  or property of the Maker or any
successor   corporation  resulting  from  Organic  Change.  In  any  such  case,
appropriate  adjustment  shall be made in the  application  of the provisions of
this  Section  3.6(a)(v)  with  respect to the rights of the holder of the Notes
after  the  Organic  Change  to the end  that  the  provisions  of this  Section
3.6(a)(v)  (including any adjustment in the applicable  Conversion Price then in
effect and the number of shares of stock or other  securities  deliverable  upon
conversion  of the  Notes)  shall be  applied  after  that event in as nearly an
equivalent manner as may be practicable.

          (vi) Adjustments for Issuance of Additional Shares of Common Stock. If
the Maker,  at any time after the  Issuance  Date,  shall  issue any  additional
shares of Common Stock (otherwise than as provided in the foregoing  subsections
(i) through (v) of this Section 3.6) (the "Additional  Shares of Common Stock"),
at a price per share less than the  applicable  Fixed  Conversion  Price then in
effect or without consideration, then the applicable Fixed Conversion Price upon
each such issuance shall be adjusted to that price (rounded to the nearest cent)
determined by multiplying the applicable  Fixed  Conversion Price then in effect
by a fraction:

                    (1) the  numerator of which shall be equal to the sum of (A)
the  number  of  shares of Common  Stock  outstanding  immediately  prior to the
issuance of such Additional Shares of Common Stock plus (B) the number of shares
of Common  Stock  (rounded  to the  nearest  whole  share)  which the  aggregate
consideration  for the total number of such Additional Shares of Common Stock so
issued  would  purchase  at a price  per  share  equal to the  applicable  Fixed
Conversion Price then in effect, and

                    (2) the denominator of which shall be equal to the number of
shares of Common  Stock  outstanding  immediately  after  the  issuance  of such
Additional Shares of Common Stock.

The  provisions  of this  subsection  (vi)  shall  not  apply  under  any of the
circumstances  for which an adjustment  is provided in  subsections  (i),  (ii),
(iii), (iv) or (v) of this Section 3.6(a). No adjustment of the applicable Fixed
Conversion  Price shall be made under this subsection  (a)(iv) upon the issuance
of any Additional Shares of Common Stock which are issued pursuant to any Common
Stock  Equivalent  (as defined  below) if upon the issuance of such Common Stock
Equivalent (x) any adjustment  shall have been made pursuant to subsection (vii)
of this Section 3.6(a) or (y) no adjustment was required  pursuant to subsection
(vii) of this Section 3.6(a).  No adjustment of the applicable  Fixed Conversion
Price shall be made under this  subsection (vi) in an amount less than $.005 per
share, but any such lesser adjustment shall be carried forward and shall be made
at the time and together  with the next  subsequent  adjustment,  if any,  which
together with any adjustments so carried forward shall amount to $.005 per share
or more;  provided that upon any adjustment of the applicable  Fixed  Conversion
Price as a result of any  dividend or  distribution  payable in Common  Stock or
Convertible  Securities (as defined below) or the reclassification,  subdivision
or combination  of Common Stock into a greater or smaller number of shares,  the
foregoing  figure of $.005 per share (or such figure as last adjusted)  shall be
adjusted (to the nearest  one-half  cent) in proportion to the adjustment in the
applicable Fixed Conversion Price.

                                       10
<PAGE>

          (vii) Issuance of Common Stock Equivalents.  If the Maker, at any time
after  the  Issuance  Date,  shall  issue  any  securities  convertible  into or
exchangeable   for,   directly  or   indirectly,   Common  Stock   ("Convertible
Securities"),  other than this Note,  or any  rights or  warrants  or options to
purchase any such Common  Stock or  Convertible  Securities,  shall be issued or
sold (collectively,  the "Common Stock Equivalents") and the price per share for
which Additional Shares of Common Stock may be issuable  thereafter  pursuant to
such Common Stock  Equivalent shall be less than the applicable Fixed Conversion
Price  then  in  effect,  or  if,  after  any  such  issuance  of  Common  Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be  issuable  thereafter  is amended or  adjusted,  and such price as so amended
shall be less than the applicable  Fixed  Conversion Price in effect at the time
of such amendment,  then the applicable  Fixed  Conversion  Price upon each such
issuance or  amendment  shall be  adjusted as provided in the first  sentence of
subsection  (vi) of this Section 3.6(a) on the basis that (1) the maximum number
of Additional  Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents  shall be deemed to have been  issued  (whether  or not such  Common
Stock Equivalents are actually then exercisable,  convertible or exchangeable in
whole or in part) as of the  earlier  of (A) the date on which the  Maker  shall
enter into a firm contract for the issuance of such Common Stock Equivalent,  or
(B) the date of actual  issuance of such Common  Stock  Equivalent,  and (2) the
aggregate  consideration  for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration  received or receivable by
the Maker for the issuance of such Additional Shares of Common Stock pursuant to
such Common Stock  Equivalent.  No adjustment of the applicable Fixed Conversion
Price  shall be made  under  this  subsection  (vii)  upon the  issuance  of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other  subscription  or  purchase  rights  therefor,  if  any  adjustment  shall
previously  have been made to the exercise price of such warrants then in effect
upon the issuance of such warrants or other rights  pursuant to this  subsection
(vii). If no adjustment is required under this subsection (vii) upon issuance of
any Common Stock  Equivalent or once an adjustment is made under this subsection
(vii)  based  upon the Per  Share  Market  Value in  effect  on the date of such
adjustment,  no further  adjustment  shall be made under this  subsection  (vii)
based solely upon a change in the Per Share Market Value after such date.

          (viii)  Consideration for Stock. In case any shares of Common Stock or
any Common Stock Equivalents shall be issued or sold:

                    (1) in connection with any merger or  consolidation in which
the Maker is the surviving  corporation  (other than any consolidation or merger
in which the previously outstanding shares of Common Stock of the Maker shall be
changed  to  or  exchanged  for  the  stock  or  other   securities  of  another
corporation),  the amount of consideration  therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Maker,  of such  portion of the assets and  business of the  nonsurviving
corporation  as such Board may  determine to be  attributable  to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or

                    (2) in the event of any consolidation or merger of the Maker
in which the Maker is not the surviving  corporation  or in which the previously
outstanding  shares  of  Common  Stock of the  Maker  shall be  changed  into or
exchanged for the stock or other  securities of another  corporation,  or in the
event of any sale of all or  substantially  all of the  assets  of the Maker for

                                       11
<PAGE>

stock or other securities of any corporation,  the Maker shall be deemed to have
issued a number of shares of its Common Stock for stock or  securities  or other
property of the other  corporation  computed on the basis of the actual exchange
ratio on which the transaction was predicated,  and for a consideration equal to
the  fair  market  value on the date of such  transaction  of all such  stock or
securities or other property of the other  corporation.  If any such calculation
results in adjustment of the applicable Fixed Conversion Price, or the number of
shares of Common Stock issuable upon conversion of the Notes, the  determination
of the applicable Fixed Conversion Price or the number of shares of Common Stock
issuable  upon  conversion  of the  Notes  immediately  prior  to  such  merger,
consolidation  or sale,  shall be made after giving effect to such adjustment of
the number of shares of Common Stock issuable upon conversion of the Notes.

     (b) Record  Date.  In case the Maker shall take record of the holder of its
Common  Stock for the purpose of  entitling  them to  subscribe  for or purchase
Common Stock or  Convertible  Securities,  then the date of the issue or sale of
the shares of Common Stock shall be deemed to be such record date.

     (c)   Certain   Issues   Excepted.   Anything   herein   to  the   contrary
notwithstanding,  the Maker shall not be required to make any  adjustment of the
number of shares of Common Stock issuable upon  conversion of the Notes upon the
grant after the Issuance  Date of, or the exercise  after the Issuance  Date of,
options or warrants or rights to purchase stock under the Maker's existing or to
be adopted  (issued)  stock  option  plan or options  or  warrants  or rights to
purchase stock issued to officers and/or directors of the Company.

     (d) No Impairment.  The Maker shall not, by amendment of its Certificate of
Incorporation or through any reorganization,  transfer of assets, consolidation,
merger, dissolution,  issue or sale of securities or any other voluntary action,
avoid or seek to avoid the  observance or  performance of any of the terms to be
observed  or  performed  hereunder  by the Maker,  but will at all times in good
faith,  assist in the carrying out of all the provisions of this Section 3.6 and
in the taking of all such action as may be necessary or  appropriate in order to
protect the Conversion Rights of the Holder against impairment.

In the event a Holder shall elect to convert any Notes as provided  herein,  the
Maker cannot  refuse  conversion  based on any claim that such Holder or any one
associated or  affiliated  with such Holder has been engaged in any violation of
law, violation of an agreement to which such Holder is a party or for any reason
whatsoever,  unless,  an injunction from a court, on notice,  restraining and or
adjoining  conversion  of all or of said Notes  shall  have been  issued and the
Maker posts a surety  bond for the benefit of such Holder in an amount  equal to
130% of the  amount of the Notes the Holder  has  elected  to  convert  plus the
amount of the Notes  outstanding,  which bond shall  remain in effect  until the
completion  of  arbitration/litigation  of the dispute and the proceeds of which
shall be payable to such Holder in the event it obtains judgment.

     (e)  Certificates as to Adjustments.  Upon occurrence of each adjustment or
readjustment of the Fixed  Conversion  Price or number of shares of Common Stock
issuable upon conversion of this Note pursuant to this Section 3.6, the Maker at
its expense shall promptly compute such adjustment or readjustment in accordance

                                       12
<PAGE>

with the terms hereof and furnish to the Holder a certificate setting forth such
adjustment  and  readjustment,  showing  in detail  the facts  upon  which  such
adjustment or  readjustment is based.  The Maker shall,  upon written request of
the Holder, at any time,  furnish or cause to be furnished to such holder a like
certificate  setting forth such  adjustments and  readjustments,  the applicable
Fixed Conversion Price in effect at the time, and the number of shares of Common
Stock and the amount,  if any, of other securities or property which at the time
would  be  received  upon  the  conversion  of this  Note.  Notwithstanding  the
foregoing, the Maker shall not be obligated to deliver a certificate unless such
certificate  would  reflect an increase or decrease of at least one percent (1%)
of such adjusted amount.

     (f) Issue  Taxes.  The Maker  shall pay any and all issue and other  taxes,
excluding  federal,  state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common  Stock on  conversion  of this Note
pursuant thereto;  provided,  however,  that the Maker shall not be obligated to
pay any transfer taxes  resulting  from any transfer  requested by any holder in
connection with any such conversion.

     (g) Fractional Shares. No fractional shares of Common Stock shall be issued
upon  conversion  of this Note.  In lieu of any  fractional  shares to which the
Holder  would  otherwise  be  entitled,  the Maker  shall pay cash  equal to the
product of such  fraction  multiplied  by the  average  of the Per Share  Market
Values of the Common Stock for the five (5) consecutive Trading Days immediately
preceding the Conversion Date.

     (h) Reservation of Common Stock.  The Maker shall reserve  8,611,371 shares
of common  stock for the holder  until the 14C proxy is deemed  effective by the
Securities  and Exchange  commission.  Subsequently  at all times when this Note
shall be  outstanding,  the Company shall reserve and keep  available out of its
authorized  but unissued  Common Stock,  such number of share of Common Stock as
shall from time to time be sufficient to effect the  conversion of this Note and
all interest accrued thereon; provided that the number of shares of Common Stock
so reserved shall at no time be less than 200% of the number of shares of Common
Stock  for which  this Note and all  interest  accrued  thereon  are at any time
convertible.  The Maker shall, from time to time in accordance with the Delaware
General Corporation Law, as amended, increase the authorized number of shares of
Common Stock if at any time the unissued  number of authorized  shares shall not
be sufficient to satisfy the Maker's obligations under this Section 3.6(h).

     (i) Regulatory Compliance. If any shares of Common Stock to be reserved for
the purpose of conversion of this Note or any interest  accrued  thereon require
registration or listing with or approval of any  governmental  authority,  stock
exchange or other  regulatory  body under any federal or state law or regulation
or  otherwise  before  such  shares  may be  validly  issued or  delivered  upon
conversion,  the Maker shall, at its sole cost and expense, in good faith and as
expeditiously  as  possible,  endeavor to secure such  registration,  listing or
approval, as the case may be.

     Section 3.7 Prepayment.

                                       13
<PAGE>

     (a) Prepayment  Upon an Event of Default.  Notwithstanding  anything to the
contrary contained herein,  upon the occurrence of an Event of Default described
in Sections 2.1(a)-(k) hereof, the Holder shall have the right, at such Holder's
option,  to require the Maker to prepay all or a portion of this Note at a price
equal to Prepayment Price (as defined in Section 3.7(c) below) applicable at the
time of such  request.  Nothing in this Section  3.7(a) shall limit the Holder's
rights under Section 2.2 hereof.

     (b)  Prepayment  Option  Upon Major  Transaction.  In addition to all other
rights of the  holder  of the  Notes  contained  herein,  simultaneous  with the
occurrence of a Major  Transaction (as defined below),  each holder of the Notes
shall have the right,  at such holder's  option,  to require the Maker to prepay
all or a portion of such  holder's  Notes at a price equal to the greater of (i)
115% of the aggregate  principal amount of the Notes and (ii) the product of (A)
the  Conversion  Rate and (B) the Per Share  Market Value of the Common Stock on
the Trading Day immediately preceding such Major Transaction ("Major Transaction
Prepayment Price").

     (c)  Prepayment  Option  Upon  Triggering  Event.  In addition to all other
rights of the holder of the Notes contained herein, after a Triggering Event (as
defined below),  each holder of the Notes shall have the right, at such holder's
option,  to require the Maker to prepay all or a portion of such holder's  Notes
at a price equal to the greater of (i) 130% of the aggregate principal amount of
the Notes and (ii) the product of (A) the  Conversion  Rate at such time and (B)
the Per  Share  Market  Value  of the  Common  Stock  calculated  as of the date
immediately  preceding such Triggering  Event on which the exchange or market on
which the Common Stock is traded is open  ("Triggering  Event Prepayment  Price"
and,  collectively with "Major  Transaction  Prepayment  Price," the "Prepayment
Price").

     (d)  "Major  Transaction."  A "Major  Transaction"  shall be deemed to have
occurred at such time as any of the  following  events:  (i) the  consolidation,
merger or other  business  combination  of the Maker with or into another Person
(as defined in Section  4.13  hereof)  (other  than (A)  pursuant to a migratory
merger  effected  solely  for  the  purpose  of  changing  the  jurisdiction  of
incorporation  of the Maker or (B) a  consolidation,  merger  or other  business
combination in which holder of the Maker's voting power immediately prior to the
transaction continue after the transaction to hold, directly or indirectly,  the
voting power of the surviving  entity or entities  necessary to elect a majority
of the members of the board of directors  (or their  equivalent  if other than a
corporation) of such entity or entities).

          (ii) the sale or transfer of all or  substantially  all of the Maker's
assets; or

          (iii) consummation of a purchase, tender or exchange offer made to the
holder of more than 30% of the outstanding shares of Common Stock.

     (e)  "Triggering  Event."  A  "Triggering  Event"  shall be  deemed to have
occurred at such time as any of the following events:

          (i) the failure of the Registration Statement to be declared effective
by the SEC on or prior to September 30, 2002, provided that the Maker has failed

                                       14
<PAGE>

to file the  Registration  Statement on or before the Filing Date (as defined in
the  Registration  Rights  Agreement)  or  respond  to any and each of the SEC's
comments  within  fifteen (15) days of the Maker's  receipt of each of the SEC's
comments;

          (ii) while the  Registration  Statement  is required to be  maintained
effective  pursuant  to the  terms of the  Registration  Rights  Agreement,  the
effectiveness  of the Registration  Statement lapses for any reason  (including,
without  limitation,  the  issuance  of a stop order) or is  unavailable  to the
holder of the Notes for sale of the  Registrable  Securities  (as defined in the
Registration  Rights Agreement) in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period of ten
(10) consecutive  Trading Days, provided that the cause of such lapse is not due
to factors  within the control of the Maker and not due to factors solely within
the control of such holder of the Notes;

          (iii) the  suspension  from trading or the failure of the Common Stock
to be traded  on the OTC  Bulletin  Board  for a period of five (5)  consecutive
days.

          (iv) the Maker's  notice to any holder of the Notes,  including by way
of public  announcement,  and SEC filing at any time, of its inability to comply
(including for any of the reasons described in Section 3.8) or its intention not
to comply with proper requests for conversion of any of the Notes into shares of
Common Stock;

          (v) the Maker breaches any representation, warranty, covenant or other
term or condition of the Purchase  Agreement,  the Registration Rights Agreement
or any other agreement,  document,  certificate or other instrument delivered in
connection with the transactions contemplated thereby or hereby.

     (f) Mechanics of Prepayment at Option of Buyer Upon Major  Transaction.  No
sooner  than  fifteen  (15)  days nor  later  than ten  (10)  days  prior to the
consummation of a Major Transaction, but not prior to the public announcement of
such Major  Transaction,  the Maker shall  deliver  written  notice  thereof via
facsimile and overnight  courier ("Notice of Major  Transaction") to each holder
of the Notes. At any time after receipt of a Notice of Major Transaction (or, in
the event a Notice of Major  Transaction is not delivered at least ten (10) days
prior to a Major Transaction,  at any time within ten (10) days prior to a Major
Transaction),  any holder of the Notes then outstanding may require the Maker to
prepay,   effective   immediately  prior  to  the  consummation  of  such  Major
Transaction,  all of the holder's Notes then  outstanding by delivering  written
notice  thereof via facsimile and  overnight  courier  ("Notice of Prepayment at
Option  of  Buyer  Upon  Major  Transaction")  to the  Maker,  which  Notice  of
Prepayment  at Option of Buyer Upon Major  Transaction  shall  indicate  (i) the
number of Notes that such holder is  electing to prepay and (ii) the  applicable
Major  Transaction  Prepayment  Price, as calculated  pursuant to Section 3.7(b)
above.

     (g)  Mechanics  of  Prepayment  at Option of Buyer Upon  Triggering  Event.
Within one (1) day after the occurrence of a Triggering  Event,  the Maker shall
deliver written notice thereof via facsimile and overnight  courier  ("Notice of
Triggering Event") to each holder of the Notes. At any time after the earlier of
a holder's  receipt of a Notice of  Triggering  Event and such  holder  becoming

                                       15
<PAGE>

aware of a  Triggering  Event,  any  holder of the Notes  then  outstanding  may
require  the  Maker to  prepay  all of the Notes by  delivering  written  notice
thereof via facsimile and overnight  courier ("Notice of Prepayment at Option of
Buyer Upon Triggering Event") to the Maker, which Notice of Prepayment at Option
of Buyer Upon Triggering  Event shall indicate (i) the number of Notes that such
holder is electing to prepay and (ii) the applicable Triggering Event Prepayment
Price, as calculated pursuant to Section 3.7(c) above.

     (h) Payment of Prepayment Price. Upon the Maker's receipt of a Notice(s) of
Prepayment at Option of Buyer Upon Triggering Event or a Notice(s) of Prepayment
at Option of Buyer Upon  Major  Transaction  from any  holder of the Notes,  the
Maker shall  immediately  notify each  holder of the Notes by  facsimile  of the
Maker's  receipt  of such  Notice(s)  of  Prepayment  at  Option  of Buyer  Upon
Triggering  Event or  Notice(s)  of  Prepayment  at Option of Buyer  Upon  Major
Transaction  and each holder which has sent such a notice shall promptly  submit
to the Maker such holder's certificates representing the Notes which such holder
has elected to have prepaid.  The Maker shall deliver the applicable  Triggering
Event Prepayment Price, in the case of a prepayment  pursuant to Section 3.7(g),
to such holder  within  five (5)  business  days after the Maker's  receipt of a
Notice of Prepayment at Option of Buyer Upon  Triggering  Event and, in the case
of a  prepayment  pursuant  to  Section  3.7(f),  the Maker  shall  deliver  the
applicable  Major   Transaction   Prepayment  Price  immediately  prior  to  the
consummation  of the Major  Transaction;  provided that a holder's  certificates
representing  the Notes  shall have been so  delivered  to the  Maker;  provided
further  that if the Maker is unable to prepay  all of the Notes to be  prepaid,
the Maker shall  prepay an amount  from each  holder of the Notes being  prepaid
equal to such  holder's  pro-rata  amount  (based on the number of Notes held by
such  holder  relative  to the number of Notes  outstanding)  of all Notes being
prepaid.  If the Maker  shall  fail to prepay  all of the  Notes  submitted  for
prepayment (other than pursuant to a dispute as to the arithmetic calculation of
the  Prepayment  Price),  in addition to any remedy such holder of the Notes may
have under this Note and the Purchase Agreement, the applicable Prepayment Price
payable in respect of such Notes not prepaid  shall bear interest at the rate of
2.0% per month (prorated for partial months) until paid in full. Until the Maker
pays such unpaid  applicable  Prepayment  Price in full to a holder of the Notes
submitted for prepayment,  such holder shall have the option (the "Void Optional
Prepayment  Option")  to, in lieu of  prepayment,  require the Maker to promptly
return to such  holder(s) all of the Notes that were submitted for prepayment by
such holder(s)  under this Section 3.7 and for which the  applicable  Prepayment
Price has not been paid,  by  sending  written  notice  thereof to the Maker via
facsimile (the "Void Optional Prepayment  Notice").  Upon the Maker's receipt of
such  Void  Optional  Prepayment  Notice(s)  and  prior to  payment  of the full
applicable  Prepayment Price to such holder,  (i) the Notice(s) of Prepayment at
Option of Buyer Upon  Triggering  Event or the Notice(s) of Prepayment at Option
of Buyer Upon Major Transaction, as the case may be, shall be null and void with
respect to those Notes  submitted for  prepayment  and for which the  applicable
Prepayment Price has not been paid, (ii) the Maker shall immediately  return any
Notes  submitted to the Maker by each holder for  prepayment  under this Section
3.7(h) and for which the applicable Prepayment Price has not been paid and (iii)
the  Conversion  Price of such returned Notes shall be adjusted to the lesser of
(A) the  Conversion  Price as in effect  on the date on which the Void  Optional
Prepayment  Notice(s)  is  delivered  to the Maker and (B) the  lowest Per Share
Market Value during the period  beginning on the date on which the  Notice(s) of
Prepayment  of  Option of Buyer  Upon  Major  Transaction  or the  Notice(s)  of
Prepayment  at Option of Buyer  Upon  Triggering  event,  as the case may be, is
delivered  to the  Maker  and  ending  on the  date on which  the Void  Optional
Prepayment  Notice(s)  is delivered to the Maker;  provided  that no  adjustment
shall be made if such  adjustment  would result in an increase of the Conversion

                                       16
<PAGE>

Price then in effect. A holder's  delivery of a Void Optional  Prepayment Notice
and  exercise of its rights  following  such notice shall not effect the Maker's
obligations  to make any payments  which have accrued  prior to the date of such
notice.  Payments  provided  for in this  Section  3.7 shall  have  priority  to
payments to other stockholder in connection with a Major Transaction.

     Section 3.8 Optional Prepayment.

     (a) Subject to Section  3.8(b)  below,  the  Company  shall have the right,
exercisable  at any time and from time to time after the Original Issue Date, in
accordance with the terms hereof and upon ten Trading Days' prior written notice
to the Holder to be prepaid (an "Optional Prepayment Notice"),  to prepay all or
any portion of the outstanding  principal amount of the Debentures which has not
previously been repaid or for which Conversion  Notices have not previously been
delivered.  The prepayment  price  applicable to prepayments  under this Section
5(a) shall  equal 130% of the unpaid  principal  and shall be paid in cash.  Any
such prepayment  shall be free of any claim of  subordination.  The Holder shall
have the right to  tender,  and the  Company  shall  honor,  Conversion  Notices
delivered  prior to the expiration of the tenth Trading Day after receipt by the
Holder of an Optional  Prepayment  Notice for such Debentures (the tenth Trading
Day after receipt by the Holder of an Optional  Prepayment Notice is referred to
herein as the "Optional Prepayment Date")

     (b) The Company  shall not be  entitled  to deliver an Optional  Prepayment
Notice to the Holder (and, if after  delivery  thereof and prior to the Optional
Prepayment  Date,  any of the following  conditions  shall cease to be met, such
notice,  at the option of the Holder,  shall be deemed no longer  effective) if:
(i) the number of shares of Common  Stock at the time  authorized,  unissued and
unreserved for all purposes is insufficient to satisfy the Company's  conversion
obligations of the aggregate principal amount of Debentures then outstanding, or
(ii) there is neither an  effective  Underlying  Shares  Registration  Statement
under which the Holder can resell all of the issued Underlying Shares and all of
the Underlying  Shares as are issuable upon  conversion in full of the principal
amount of  Debentures  subject to an Optional  Prepayment  Notice nor may all of
such issued and issuable Underlying Shares be sold by the Holder subject to such
prepayment  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 to the Company's  transfer agent in the form
and substance  acceptable to the Holder and such  transfer  agent,  or (iii) the
Common  Stock  is not then  listed  or  quoted  for  trading  on the OTC or on a
Subsequent Market.

     (c) If any portion of the Prepayment Price shall not be paid by the Company
by the second (2nd)  Trading Day  following the Optional  Prepayment  Date,  the
Prepayment  Price shall be  increased  by 15% per annum (or such lesser  maximum
amount that is permitted to be paid by applicable  law) to accrue daily from the
date such  interest is due  hereunder  through and including the date of payment
(which  amount  shall be paid as  liquidated  damages and not as a penalty).  In
addition,  if any portion of the  Prepayment  Price remains  unpaid  through the
expiration  of  the  Optional  Prepayment  Date,  the  Holder  subject  to  such

                                       17
<PAGE>

prepayment  may elect by  written  notice to the  Company  to either  (x) 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 Debentures for which the
Prepayment Price, plus accrued  liquidated damages and accrued interest thereon,
has not been paid in full (the "Unpaid Prepayment  Principal Amount"),  in which
event the  applicable Per Share Market Value shall be the lower of the Per Share
Market Value calculated on the Optional Prepayment Date and the Per Share Market
Value as of the Holder's  written  demand for  conversion,  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
five 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 Company shall  promptly,  and in any event not later than
five Trading Days from receipt of notice of such election,  return to the Holder
new  Debentures  for the full Unpaid  Prepayment  Principal  Amount and shall no
longer have any  prepayment  rights under this  Debenture.  If, upon an election
under option (x) above, the Company fails to deliver  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,
$2,500 per day until the Company delivers such certificates to the Holder.

     Section 3.9 Inability to Fully Convert.

     (a) Holder's  Option if Maker Cannot  Fully  Convert.  If, upon the Maker's
receipt of a  Conversion  Notice,  the Maker cannot issue shares of Common Stock
registered  for  resale  under  the  Registration   Statement  for  any  reason,
including, without limitation,  because the Maker (w) does not have a sufficient
number of shares of Common  Stock  authorized  and  available,  (x) is otherwise
prohibited  by  applicable  law or by the  rules  or  regulations  of any  stock
exchange,  interdealer  quotation system or other  self-regulatory  organization
with  jurisdiction  over the Maker or any of its securities  from issuing all of
the Common  Stock which is to be issued to the Holder  pursuant to a  Conversion
Notice or (y)  fails to have a  sufficient  number  of  shares  of Common  Stock
registered  for resale under the  Registration  Statement,  then the Maker shall
issue as many shares of Common Stock as it is able to issue in  accordance  with
the Holder's  Conversion Notice and, with respect to the unconverted  portion of
the Note, the Holder, solely at Holder's option, can elect to:

          (i) require the Maker to prepay that portion of the Note for which the
Maker is unable to issue Common Stock in accordance with the Holder's Conversion
Notice (the "Mandatory Prepayment") at a price per share equal to the Prepayment
Price as of such Conversion Date (the "Mandatory Prepayment Price");

          (ii) if the Maker's  inability to fully  convert  require the Maker to
issue  restricted  shares of Common  Stock equal to one hundred  twenty  percent
(120%) of the number of shares of Common Stock the Maker is unable to deliver in
accordance with such holder's Conversion Notice;

                                       18
<PAGE>

          (iii) void its Conversion  Notice and retain or have returned,  as the
case may be, the Note that was to be converted pursuant to the Conversion Notice
(provided that the Holder's  voiding its Conversion  Notice shall not effect the
Maker's obligations to make any payments which have accrued prior to the date of
such notice).

     (b) Mechanics of Fulfilling Holder's Election.  The Maker shall immediately
send  via  facsimile  to the  Holder,  upon  receipt  of a  facsimile  copy of a
Conversion  Notice from the Holder which cannot be fully  satisfied as described
in Section 3.9(a) above, a notice of the Maker's  inability to fully satisfy the
Conversion Notice (the "Inability to Fully Convert  Notice").  Such Inability to
Fully  Convert  Notice shall  indicate (i) the reason why the Maker is unable to
fully satisfy such holder's Conversion Notice, (ii) the amount of the Note which
cannot be converted and (iii) the applicable  Mandatory  Prepayment  Price.  The
Holder shall notify the Maker of its election  pursuant to Section  3.8(a) above
by delivering  written notice via facsimile to the Maker ("Notice in Response to
Inability to Convert").

     (c)  Payment of  Prepayment  Price.  If the Holder  shall elect to have its
shares  prepaid  pursuant to Section  3.9(a)(i)  above,  the Maker shall pay the
Mandatory  Prepayment  Price in cash to the Holder within five (5) business days
of the  Maker's  receipt of the  Holder's  Notice in Response  to  Inability  to
Convert,  provided that prior to the Maker's  receipt of the Holder's  Notice in
Response to  Inability  to Convert  the Maker has not  delivered a notice to the
Holder stating,  to the satisfaction of the Holder,  that the event or condition
resulting in the Mandatory  Prepayment has been cured and all Conversion  Shares
issuable  to the Holder can and will be  delivered  to the Holder in  accordance
with the terms of this  Note.  If the  Maker  shall  fail to pay the  applicable
Mandatory  Prepayment Price to the Holder on a timely basis as described in this
Section 3.8(c) (other than pursuant to a dispute as to the  determination of the
arithmetic  calculation of the Prepayment  Price), in addition to any remedy the
Holder may have under this Note and the Purchase  Agreement,  such unpaid amount
shall bear interest at the rate of 2.0% per month  (prorated for partial months)
until paid in full. Until the full Mandatory Prepayment Price is paid in full to
the Holder,  the Holder may (i) void the  Mandatory  Prepayment  with respect to
that portion of the Note for which the full Mandatory  Prepayment  Price has not
been paid,  (ii) receive back such Note,  and (iii) require that the  Conversion
Price of such  returned  Note be  adjusted  to the lesser of (A) the  Conversion
Price  as in  effect  on the date on  which  the  Holder  voided  the  Mandatory
Prepayment and (B) the lowest Per Share Market Value during the period beginning
on the  Conversion  Date and ending on the date the Holder  voided the Mandatory
Prepayment.

     Section 3.9 No Rights as Shareholder.  Nothing contained in this Note shall
be construed as  conferring  upon the Holder,  prior to the  conversion  of this
Note,  the right to vote or to  receive  dividends  or to  consent or to receive
notice as a  shareholder  in  respect  of any  meeting  of  shareholder  for the
election of directors of the Maker or of any other  matter,  or any other rights
as a shareholder  of the Maker.  Upon the issuance of a Conversion  Notice,  the
Holder shall have all rights as a shareholder of the Maker.

                                       19
<PAGE>

                                   ARTICLE IV

                                  MISCELLANEOUS
                                  -------------

     Section  4.1  Notices.  Any  notice,  demand,   request,  waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received),  telecopy or  facsimile  at the address or number  designated  in the
Purchase  Agreement (if delivered on a business day during normal business hours
where such notice is to be received),  or the first  business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address,  or upon actual receipt of such mailing,  whichever  shall first occur.
The Maker will give written notice to the Holder at least twenty (20) days prior
to the date on which  the  Maker  closes  its  books or takes a record  (x) with
respect to any dividend or distribution  upon the Common Stock, (y) with respect
to any pro  rata  subscription  offer  to  holder  of  Common  Stock  or (z) for
determining  rights to vote with  respect to any  Organic  Change,  dissolution,
liquidation  or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public.  The Maker will
also give  written  notice to the Holder at least  twenty (20) days prior to the
date on which any Organic  Change,  dissolution,  liquidation or winding-up will
take place and in no event shall such notice be provided to the Holder  prior to
such information being made known to the public.

     Section 4.2 Governing  Law. This Note shall be governed by and construed in
accordance  with the  internal  laws of the  State of New York,  without  giving
effect to the choice of law  provisions.  This Note shall not be  interpreted or
construed  with any  presumption  against  the  party  causing  this  Note to be
drafted.

     Section  4.3  Headings.  Article  and  section  headings  in this  Note are
included  herein for purposes of  convenience  of  reference  only and shall not
constitute a part of this Note for any other purpose.

     Section 4.4 Remedies,  Characterizations,  Other Obligations,  Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other  remedies  available  under this Note, at law or in equity
(including,  without limitation,  a decree of specific  performance and/or other
injunctive  relief),  no  remedy  contained  herein  shall be deemed a waiver of
compliance  with the  provisions  giving rise to such remedy and nothing  herein
shall  limit a holder's  right to pursue  actual  damages for any failure by the
Maker to comply with the terms of this Note.  Amounts set forth or provided  for
herein with respect to payments,  conversion  and the like (and the  computation
thereof)  shall be the amounts to be  received  by the holder  thereof and shall
not, except as expressly  provided herein, be subject to any other obligation of
the Maker (or the performance thereof).  The Maker acknowledges that a breach by
it of its obligations  hereunder will cause irreparable and material harm to the
Holder  and  that  the  remedy  at law for any such  breach  may be  inadequate.
Therefore  the Maker agrees that,  in the event of any such breach or threatened
breach, the Holder shall be entitled,  in addition to all other available rights
and remedies,  at law or in equity,  to seek and obtain such  equitable  relief,
including  but not  limited  to an  injunction  restraining  any such  breach or
threatened  breach,  without the necessity of showing  economic loss and without
any bond or other security being required.

                                       20
<PAGE>

     Section 4.5  Enforcement  Expenses.  The Maker  agrees to pay all costs and
expenses of enforcement of this Note, including, without limitation,  reasonable
attorneys' fees and expenses.

     Section 4.6 Binding Effect. The obligations of the Maker and the Holder set
forth  herein  shall be binding  upon the  successors  and  assigns of each such
party,  whether or not such  successors  or assigns are  permitted  by the terms
hereof.

     Section  4.7  Amendments.  This Note may not be  modified or amended in any
manner except in writing executed by the Maker and the Holder.

Section  4.8  Compliance  with   Securities   Laws.  The  Holder  of  this  Note
acknowledges  that this  Note is being  acquired  solely  for the  Holder's  own
account and not as a nominee for any other party,  and for investment,  and that
the Holder shall not offer,  sell or otherwise  dispose of this Note.  This Note
and any Note issued in substitution or replacement therefore shall be stamped or
imprinted with a legend in substantially the following form:

        " THIS  NOTE HAS  NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
        1933,  AS AMENDED (THE "ACT"),  OR  APPLICABLE  STATE  SECURITIES
        LAWS, AND MAY NOT BE SOLD,  TRANSFERRED,  PLEDGED OR HYPOTHECATED
        IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN
        OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY  ACCEPTABLE
        TO THE  MAKER)  IN  THE  FORM,  SUBSTANCE  AND  SCOPE  REASONABLY
        SATISFACTORY   TO  THE   MAKER   THAT  THIS  NOTE  MAY  BE  SOLD,
        TRANSFERRED,  HYPOTHECATED  OR  OTHERWISE  DISPOSED  OF, UNDER AN
        EXEMPTION  FROM  REGISTRATION   UNDER  THE  ACT  AND  SUCH  STATE
        SECURITIES LAWS."

     Section 4.9 Consent to  Jurisdiction.  Each of the Maker and the Holder (i)
hereby  irrevocably  submits to the exclusive  jurisdiction of the United States
District  Court  sitting in the Southern  District of New York and the courts of
the State of New York  located in New York county for the  purposes of any suit,
action or  proceeding  arising  out of or  relating to this Note and (ii) hereby
waives,  and agrees not to assert in any such suit,  action or  proceeding,  any
claim that it is not personally  subject to the jurisdiction of such court, that
the suit,  action or proceeding is brought in an inconvenient  forum or that the
venue of the suit,  action or proceeding is improper.  Each of the Maker and the
Holder  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 the Purchase  Agreement and agrees that such service  shall  constitute
good and  sufficient  service of process  and  notice  thereof.  Nothing in this
Section 4.9 shall affect or limit any right to serve process in any other manner
permitted by law.

                                       21
<PAGE>

     Section 4.10 Parties in Interest. This Note shall be binding upon, inure to
the benefit of and be enforceable by the Maker,  the Holder and their respective
successors and permitted assigns.

     Section 4.11 Failure or Indulgence  Not Waiver.  No failure or delay on the
part of the Holder in the exercise of any power,  right or  privilege  hereunder
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.

     Section  4.12 Maker  Waivers.  Except as  otherwise  specifically  provided
herein,  the Maker and all others that may become  liable for all or any part of
the obligations evidenced by this Note, hereby waive presentment, demand, notice
of nonpayment, protest and all other demands' and notices in connection with the
delivery,  acceptance,  performance  and enforcement of this Note, and do hereby
consent to any number of renewals of  extensions  of the time or payment  hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon,  all without affecting the liability
of the other persons, firms or Maker liable for the payment of this Note, AND DO
HEREBY WAIVE TRIAL BY JURY.

     (a) No delay or omission on the part of the Holder in exercising its rights
under this Note, or course of conduct relating hereto, shall operate as a waiver
of such  rights or any other  right of the  Holder,  nor shall any waiver by the
Holder of any such right or rights on any one occasion be deemed a waiver of the
same right or rights on any future occasion.

     (b) THE MAKER  ACKNOWLEDGES  THAT THE  TRANSACTION  OF WHICH THIS NOTE IS A
PART IS A COMMERCIAL  TRANSACTION,  AND TO THE EXTENT ALLOWED BY APPLICABLE LAW,
HEREBY  WAIVES ITS RIGHT TO NOTICE AND HEARING WITH  RESPECT TO ANY  PREJUDGMENT
REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

     Section 4.13  Definitions.  For the purposes  hereof,  the following  terms
shall have the following meanings:

     "Independent  Appraiser"  means a nationally  recognized or major  regional
investment  banking firm or firm of independent  certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements  of  the  Issuer)  that  is  regularly  engaged  in the  business  of
appraising  the Capital  Stock or assets of  corporations  or other  entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of any Warrant.

     "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.

     "Trading  Day" means (a) a day on which the  Common  Stock is traded on The
Nasdaq Small-Cap Market, the Nasdaq National Market or other registered national
stock  exchange on which the Common Stock has been listed,  or (b) if the Common
Stock is not listed on The Nasdaq Small-Cap  Market,  the Nasdaq National Market

                                       22
<PAGE>

or any registered  national stock  exchange,  a day or which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(c) if the Common Stock is not quoted on the OTC Bulletin  Board, a day on which
the Common  Stock is 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,  however,  that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean 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 are authorized or required by law or other  government  action
to close.

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

                                            ARMITEC, INC,

                                            By:  /s/ Bruce R. Davis
                                               ---------------------------------
                                                Name: Bruce R. Davis
                                                Title:   Chief Executive Officer

                                       23
<PAGE>

                                    EXHIBIT A

                               WIRE INSTRUCTIONS.

Payee: _______________________________________________________

Bank:  _______________________________________________________

Address: _____________________________________________________

         _____________________________________________________

Bank No.: ____________________________________________________

Account No.:  ________________________________________________

Account Name: ________________________________________________

                                       24
<PAGE>

                                     FORM OF

                              NOTICE OF CONVERSION

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

The undersigned hereby  irrevocably elects to convert $ ________________  of the
principal  amount  of the above  Note No.  ___ into  shares  of Common  Stock of
ARMITEC,  INC. (the "Maker")  according to the conditions hereof, as of the date
written below.

Date of Conversion  ____________________________________________________________

Applicable Conversion Price * __________________________________________________

* Lesser of (A) $.07 (the "Fixed  Conversion  Price") and (B) an amount equal to
seventy  percent  (70%) of the average Per Share  Market Value for the three (3)
Trading  Days having the lowest Per Share  Market  Value  during the thirty (30)
Trading Days prior to the Conversion Date.

(Please  attach  printout  of stock  prices and a worksheet  showing  conversion
calculation)

Signature_______________________________________________________________________

         [Name]

Address:________________________________________________________________________

        ________________________________________________________________________

                                       25EXHIBIT 10.12

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION 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.

                               WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                                  ARMITEC, INC.

                             Expires April 23, 2007

No. W-1                                                       Irvine, California
                                                                  April 23, 2002

     FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth,  the
undersigned, ARMITEC, INC., a Delaware corporation (together with its successors
and assigns, the "Issuer"), hereby certifies that

                         STONESTREET LIMITED PARTNERSHIP

or its registered assigns is entitled to subscribe for and purchase,  during the
period specified in this Warrant,  up to 3,500,000 shares (subject to adjustment
as hereinafter provided) of the duly authorized,  validly issued, fully paid and
non-assessable  Common Stock of the Issuer, at an exercise price per share equal
to 105% of the  market  price  at  closing  ($____),  subject,  however,  to the
provisions and upon the terms and conditions hereinafter set forth.  Capitalized
terms used in this  Warrant  and not  otherwise  defined  herein  shall have the
respective meanings specified in Section 8 hereof.

     1.   Term. The right to subscribe for and purchase  shares of Warrant Stock
represented  hereby shall commence on May 1, 2002 and shall expire at 5:00 p.m.,
New York City time, on April 23, 2007 (such period being the "Term").

     2.   Method of Exercise  Payment:  Issuance of New  Warrant:  Transfer  and
Exchange.

     (a)  Time of Exercise.  The purchase rights represented by this Warrant may
be  exercised  in whole or in part at any time and from time to time  during the
Term commencing on April 23, 2002.

     (b)  Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment  to the  Issuer  of an  amount of  consideration  therefor  equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of  Warrant  Stock  with  respect  to which  this  Warrant  is then being
exercised, payable by certified or official bank check.

<PAGE>

     (c)  Issuance of Stock  Certificates.  In the event of any  exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and  conditions  hereof,  (i)  certificates  for the shares of Warrant  Stock so
purchased shall be delivered to the Holder hereof within a reasonable  time, not
exceeding five Trading Days after such exercise,  and the Holder hereof shall be
deemed for all  purposes  to be the  Holder of the  shares of  Warrant  Stock so
purchased  as of the date of such  exercise,  and (ii) unless  this  Warrant has
expired,  a new Warrant  representing  the number of shares of Warrant Stock, if
any, with respect to which this Warrant shall not then have been exercised (less
any amount thereof which shall have been cancelled in payment or partial payment
of the Warrant Price as hereinabove provided) shall also be issued to the Holder
hereof at the Issuer's expense within such time.

     (d)  Transferability  of Warrant.  This Warrant may not be transferred by a
Purchaser without the prior written consent of the Company,  such consent not to
be unreasonably  withheld. If transferred pursuant to this paragraph and subject
to the  provisions  of  subsection  (e) of this  Section 2, this  Warrant may be
transferred on the books of the Issuer by the Holder hereof in person or by duly
authorized  attorney,  upon surrender of this Warrant at the principal office of
the Issuer, properly endorsed (by the Holder executing an assignment in the form
attached  hereto)  and  upon  payment  of any  necessary  transfer  tax or other
governmental charge imposed upon such transfer.  This Warrant is exchangeable at
the  principal  office of the Issuer for  Warrants  for the purchase of the same
aggregate  number of shares of Warrant Stock,  each new Warrant to represent the
right to purchase  such number of shares of Warrant  Stock as the Holder  hereof
shall  designate at the time of such exchange.  All Warrants issued on transfers
or exchanges  shall be dated the Original Issue Date and shall be identical with
this  Warrant  except  as to the  number of shares  of  Warrant  Stock  issuable
pursuant hereto.

     (e)  Compliance with Securities Laws.

          (i)  The Holder of this Warrant,  by acceptance  hereof,  acknowledges
that this  Warrant and the shares of Warrant  Stock to be issued  upon  exercise
hereof are being  acquired  solely for the  Holder's  own  account  and not as a
nominee for any other party,  and for  investment,  and that the Holder will not
offer,  sell or otherwise dispose of this Warrant or any shares of Warrant Stock
to be issued upon exercise hereof except  pursuant to an effective  registration
statement,  or an exemption from registration,  under the Securities Act and any
applicable state securities laws.

          (ii) Except as provided in paragraph (iii) below, this Warrant and all
certificates  representing  shares of Warrant Stock issued upon exercise  hereof
shall be stamped or imprinted with a legend in substantially the following form:

          THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED WITH THE
SECURITIES   AND  EXCHANGE   COMMISSION  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.

          (iii)The  restrictions   imposed  by  this  subsection  (e)  upon  the
transfer of this Warrant and the shares of Warrant  Stock to be  purchased  upon
exercise  hereof  shall  terminate  (A) when  such  securities  shall  have been
effectively  registered  under the Securities Act, (B) upon the Issuer's receipt
of an opinion of counsel, in form and substance  reasonably  satisfactory to the
Issuer,  addressed  to the Issuer to the effect  that such  restrictions  are no
longer  required to ensure  compliance  with the  Securities Act or (C) upon the
Issuer's  receipt of other evidence  reasonably  satisfactory to the Issuer that
such registration is not required.  Whenever such  restrictions  shall cease and
terminate as to any such  securities,  the Holder  thereof  shall be entitled to

<PAGE>

receive from the Issuer (or its transfer agent and  registrar),  without expense
(other than applicable transfer taxes, if any), new Warrants (or, in the case of
shares of Warrant Stock,  new stock  certificates) of like tenor not bearing the
applicable  legends  required by paragraph (ii) above relating to the Securities
Act and state securities laws.

     (f)  Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant,  upon the request of the Holder hereof
or of any shares of Warrant  Stock  issued upon such  exercise,  acknowledge  in
writing  the  extent,  if any, of its  continuing  obligation  to afford to such
Holder all rights to which such Holder shall  continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if any such
Holder  shall fail to make any such  request,  the failure  shall not affect the
continuing obligation of the Issuer to afford such rights to such Holder.

     (g)  Cashless Exercise.

          (i)  Payment  may be  made  either  in (1)  cash  or by  certified  or
official bank check payable to the order of the Company equal to the  applicable
aggregate  Purchase  Price,  (2) by delivery of  Warrants,  Common  Stock and/or
Common Stock receivable upon exercise of the Warrants in accordance with Section
(ii) below,  or (3) by a combination  of any of the foregoing  methods,  for the
number of Common Shares specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable  to the holder  per the terms of this  Warrant)  and the  holder  shall
thereupon be entitled to receive the number of duly authorized,  validly issued,
fully-paid  and  non-assessable  shares  of Common  Stock (or Other  Securities)
determined as provided herein.

          (ii) Notwithstanding  any  provisions  herein to the contrary,  if the
Fair  Market  Value of one share of Common  Stock is greater  than the  Purchase
Price (at the date of  calculation  as set forth  below),  in lieu of exercising
this  Warrant for cash,  upon  consent of the  Company,  the holder may elect to
receive shares equal to the value (as determined  below) of this Warrant (or the
portion  thereof being  cancelled) by surrender of this Warrant at the principal
office of the Company together with the properly  endorsed  Subscription Form in
which event the  Company  shall issue to the holder a number of shares of Common
Stock computed using the following formula:

               X=Y (A-B)

          Where    X=      the number of shares of Common  Stock to be issued to
                           the holder

                   Y=      the  number of shares  of  Common  Stock  purchasable
                           under  the  Warrant  or,  if  only a  portion  of the
                           Warrant  is  being  exercised,  the  portion  of  the
                           Warrant   being   exercised  (at  the  date  of  such
                           calculation)

                   A=      the Fair Market  Value of one share of the  Company's
                           Common Stock (at the date of such calculation)

                   B=      Purchase  Price  (as  adjusted  to the  date  of such
                           calculation)

<PAGE>

     3.   Stock Fully Paid: Reservation and Listing of Shares: Covenants.

     (a)  Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will, upon issuance,  be duly  authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges  created by or through Issuer.  The Issuer further  covenants and agrees
that during the period  within which this Warrant may be  exercised,  the Issuer
will at all times have authorized and reserved for the purpose of the issue upon
exercise  of this  Warrant a  sufficient  number  of  shares of Common  Stock to
provide for the exercise of this Warrant.

     (b)  Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any governmental  authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its best efforts as  expeditiously  as possible at its expense to
cause such shares to be duly  registered or qualified.  If the Issuer shall list
any shares of Common Stock on any securities  exchange or market it will, at its
expense,  list thereon,  maintain and increase when necessary such listing,  of,
all  shares of Warrant  Stock from time to time  issued  upon  exercise  of this
Warrant or as otherwise provided hereunder, and, to the extent permissible under
the applicable  securities  exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder,  so long as any shares of Common Stock
shall be so listed. The Issuer will also so list on each securities  exchange or
market, and will maintain such listing of, any other securities which the Holder
of this  Warrant  shall be entitled to receive upon the exercise of this Warrant
if at the time  any  securities  of the  same  class  shall  be  listed  on such
securities exchange or market by the Issuer.

     (c)  Covenants.  The  Issuer  shall not by any  action  including,  without
limitation,  amending the  Certificate  of  Incorporation  or the by-laws of the
Issuer,  or through  any  reorganization,  transfer  of  assets,  consolidation,
merger,  dissolution,  issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such  actions as may be  necessary  or  appropriate  to
protect  the  rights  of the  Holder  hereof  against  dilution  (to the  extent
specifically provided herein) or impairment.  Without limiting the generality of
the  foregoing,  the Issuer  will (i) not permit the par value,  if any,  of its
Common  Stock to exceed  the then  effective  Warrant  Price,  (ii) not amend or
modify any  provision  of the  Certificate  of  Incorporation  or by-laws of the
Issuer  in any  manner  that  would  adversely  affect  in any way  the  powers,
preferences or relative  participating,  optional or other special rights of the
Common  Stock or which would  adversely  affect the rights of the Holders of the
Warrants,  (iii) take all such action as may be  reasonably  necessary  in order
that the Issuer may  validly  and  legally  issue  fully paid and  nonassessable
shares of Common Stock,  free and clear of any liens,  claims,  encumbrances and
restrictions  (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such  authorizations,  exemptions or
consents from any public regulatory body having  jurisdiction  thereof as may be
reasonably  necessary to enable the Issuer to perform its obligations under this
Warrant.

     (d)  Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

     (e)  Rights and Obligations under the Registration  Rights  Agreement.  The
Warrant  Stock are  entitled  to the  benefits  and  subject to the terms of the
Registration  Rights Agreement dated as of even date herewith between the Issuer

<PAGE>

and the Holders  listed on the signature  pages thereof (as amended from time to
time, the "Registration Rights Agreement"). The Issuer shall keep or cause to be
kept a copy of the Registration Rights Agreement, and any amendments thereto, at
its chief executive office and shall furnish,  without charge, copies thereof to
the Holder upon request.

     4.   Adjustment of Warrant  Price and Warrant Share Number.  The number and
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to  adjustment  from time to time upon the  happening  of
certain events as follows:

     (a)  Recapitalization,   Reorganization,  Reclassification,  Consolidation,
Merger or Sale.  (i) In case the Issuer after the  Original  Issue Date shall do
any of the following (each, a "Triggering  Event") (a) consolidate with or merge
into any other  Person and the Issuer shall not be the  continuing  or surviving
corporation of such  consolidation or merger,  or (b) permit any other Person to
consolidate with or merge into the Issuer and the Issuer shall be the continuing
or surviving Person but, in connection with such  consolidation  or merger,  any
Capital Stock of the Issuer shall be changed into or exchanged for Securities of
any  other  Person  or  cash  or any  other  property,  or (c)  transfer  all or
substantially all of its properties or assets to any other Person, or (d) effect
a capital  reorganization or reclassification of its Capital Stock, then, and in
the case of each such Triggering Event,  proper provision shall be made so that,
upon the basis and the terms and in the manner  provided  in this  Warrant,  the
Holder of this Warrant  shall be entitled  (x) upon the  exercise  hereof at any
time after the consummation of such Triggering Event, to the extent this Warrant
is not exercised  prior to such  Triggering  Event, or is redeemed in connection
with such  Triggering  Event,  to receive at the Warrant  Price in effect at the
time  immediately  prior to the consummation of such Triggering Event in lieu of
the Common  Stock  issuable  upon such  exercise of this  Warrant  prior to such
Triggering  Event, the Securities,  cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if such Holder
had exercised the rights represented by this Warrant  immediately prior thereto,
subject to adjustments  and increases  (subsequent to such corporate  action) as
nearly  equivalent  as possible  to the  adjustments  provided  for in Section 4
hereof or (y) to sell this Warrant  (or, at such  Holder's  election,  a portion
hereof) to the Person continuing after or surviving such Triggering Event, or to
the Issuer (if Issuer is the  continuing  or surviving  Person) at a sales price
equal to the amount of cash, property and/or Securities to which a holder of the
number of shares of Common Stock which would  otherwise have been delivered upon
the exercise of this Warrant would have been entitled upon the effective date or
closing of any such  Triggering  Event  (the  "Event  Consideration"),  less the
amount or portion of such Event  Consideration  having a fair value equal to the
aggregate  Warrant  Price  applicable  to this Warrant or the portion  hereof so
sold.

     (ii) Notwithstanding  anything  contained in this Warrant to the  contrary,
the  Issuer  will  not  effect  any  Triggering  Event  unless,   prior  to  the
consummation  thereof, each Person (other than the Issuer) which may be required
to deliver any Securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to, and reasonably
satisfactory  to, the Holder of this Warrant,  (A) the obligations of the Issuer
under this  Warrant (and if the Issuer shall  survive the  consummation  of such
Triggering Event, such assumption shall be in addition to, and shall not release
the Issuer from,  any  continuing  obligations of the Issuer under this Warrant)
and (B) the obligation to deliver to such Holder such shares of Securities, cash
or property as, in accordance  with the foregoing  provisions of this subsection
(a),  such  Holder  shall be entitled  to  receive,  and such Person  shall have
similarly delivered to such Holder an opinion of counsel for such Person,  which
counsel  shall be  reasonably  satisfactory  to such  Holder,  stating that this
Warrant shall thereafter  continue in full force and effect and the terms hereof
(including,  without  limitation,  all of the provisions of this subsection (a))
shall be applicable to the Securities, cash or property which such Person may be
required to deliver  upon any  exercise of this  Warrant or the  exercise of any
rights pursuant hereto.

<PAGE>

     (iii)If with respect to any  Triggering  Event,  the Holder of this Warrant
has  exercised its right as provided in clause (y) of  subparagraph  (i) of this
subsection (a) to sell this Warrant or a portion thereof, the Issuer agrees that
as a condition to the consummation of any such Triggering Event the Issuer shall
secure such right of Holder to sell this Warrant to the Person  continuing after
or  surviving  such  Triggering  Event and the Issuer  shall not effect any such
Triggering Event unless upon or prior to the consummation thereof the amounts of
cash, property and/or Securities required under such clause (y) are delivered to
the Holder of this Warrant. The obligation of the Issuer to secure such right of
the Holder to sell this Warrant  shall be subject to such  Holder's  cooperation
with  the  Issuer,  including,  without  limitation,  the  giving  of  customary
representations  and  warranties to the  purchaser in  connection  with any such
sale.  Prior notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.

     (b)  Subdivision or Combination of Shares. If the Issuer, at any time while
this  Warrant is  outstanding,  shall  subdivide or combine any shares of Common
Stock,  (i) in case of  subdivision  of  shares,  the  Warrant  Price  shall  be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer  shall take a record of Holders of its Common Stock for the purpose of so
subdividing,  as at the applicable record date, whichever is earlier) to reflect
the  increase in the total  number of shares of Common  Stock  outstanding  as a
result of such subdivision,  or (ii) in the case of a combination of shares, the
Warrant Price shall be  proportionately  increased (as at the effective  date of
such  combination or, if the Issuer shall take a record of Holders of its Common
Stock  for the  purpose  of so  combining,  as at the  applicable  record  date,
whichever is earlier) to reflect the  reduction in the total number of shares of
Common Stock outstanding as a result of such combination.

     (c)  Certain Dividends and Distributions.  If the Issuer, at any time while
this Warrant is outstanding, shall:

          (i)  Stock   Dividends.   Pay  a  dividend   in,  or  make  any  other
distribution to its stockholders (without consideration  therefor) of, shares of
Common  Stock,  the Warrant  Price shall be adjusted,  as at the date the Issuer
shall take a record of the Holders of the Issuer's Capital Stock for the purpose
of receiving such dividend or other distribution (or if no such record is taken,
as at the date of such payment or other distribution),  to that price determined
by multiplying the Warrant Price in effect immediately prior to such record date
(or if no such record is taken,  then immediately prior to such payment or other
distribution),  by a  fraction  (1) the  numerator  of which  shall be the total
number of shares of Common Stock outstanding  immediately prior to such dividend
or  distribution,  and (2) the denominator of which shall be the total number of
shares  of  Common  Stock   outstanding   immediately  after  such  dividend  or
distribution (plus in the event that the Issuer paid cash for fractional shares,
the number of additional shares which would have been outstanding had the Issuer
issued fractional shares in connection with said dividends); or

          (ii) Other  Dividends.  Pay a dividend on, or make any distribution of
its  assets  upon  or  with  respect  to  (including,  but  not  limited  to,  a
distribution of its property as a dividend in liquidation or partial liquidation
or by way of return of  capital),  the Common  Stock (other than as described in
clause (i) of this subsection (c)), or in the event that the Company shall offer
options or rights to subscribe for shares of Common  Stock,  or issue any Common
Stock  Equivalents,  to all of its holders of Common  Stock,  then on the record
date for such  payment,  distribution  or offer or, in the  absence  of a record
date,  on the date of such  payment,  distribution  or offer,  the Holder  shall
receive  what the Holder would have  received  had it exercised  this Warrant in
full immediately prior to the record date of such payment, distribution or offer
or,  in the  absence  of a record  date,  immediately  prior to the date of such
payment, distribution or offer.

<PAGE>

     (d)  Other Provisions  Applicable to Adjustments  Under this Section 4. The
following  provisions  shall be applicable to the making of  adjustments  in the
Warrant Price hereinbefore provided in Section 4:

          (i)  Computation of Consideration.  The consideration  received by the
Issuer shall be deemed to be the  following:  to the extent that any  Additional
Shares of Common  Stock or any Common  Stock  Equivalents  shall be issued for a
cash  consideration,  the consideration  received by the Issuer therefor,  or if
such Additional  Shares of Common Stock or Common Stock  Equivalents are offered
by the Issuer for subscription,  the subscription  price, or, if such Additional
Shares of Common Stock or Common Stock  Equivalents  are sold to underwriters or
dealers for public offering without a subscription offering, the public offering
price,  in any such case  excluding any amounts paid or  receivable  for accrued
interest  or  accrued  dividends  and  without  deduction  of any  compensation,
discounts,  commissions,  or  expenses  paid or incurred by the Issuer for or in
connection  with the  underwriting  thereof or otherwise in connection  with the
issue  thereof;  to the extent that such issuance  shall be for a  consideration
other than cash, then, except as herein otherwise expressly  provided,  the fair
market value of such consideration at the time of such issuance as determined in
good faith by the Board. The  consideration  for any Additional Shares of Common
Stock  issuable   pursuant  to  any  Common  Stock   Equivalents  shall  be  the
consideration  received by the Issuer for issuing such Common Stock Equivalents,
plus the  additional  consideration  payable  to the Issuer  upon the  exercise,
conversion or exchange of such Common Stock Equivalents. In case of the issuance
at any time of any Additional Shares of Common Stock or Common Stock Equivalents
in payment or  satisfaction  of any dividend  upon any class of Capital Stock of
the Issuer other than Common Stock,  the Issuer shall be deemed to have received
for such  Additional  Shares  of  Common  Stock or Common  Stock  Equivalents  a
consideration equal to the amount of such dividend so paid or satisfied.  In any
case in which the consideration to be received or paid shall be other than cash,
the Board shall  notify the Holder of this Warrant of its  determination  of the
fair market value of such  consideration  prior to payment or accepting  receipt
thereof.  If,  within  thirty days after  receipt of said  notice,  the Majority
Holders  shall  notify  the  Board  in  writing  of  their   objection  to  such
determination,  a determination  of the fair market value of such  consideration
shall be made by an Independent  Appraiser selected by the Majority Holders with
the approval of the Board (which approval shall not be  unreasonably  withheld),
whose fees and expenses shall be paid by the Issuer.

          (ii) Readjustment of Warrant Price. Upon the expiration or termination
of the right to convert,  exchange or exercise any Common Stock  Equivalent  the
issuance of which  effected an adjustment in the Warrant  Price,  if such Common
Stock  Equivalent  shall not have been converted,  exercised or exchanged in its
entirety,  the  number  of  shares of  Common  Stock  deemed  to be  issued  and
outstanding  by reason of the fact that  they  were  issuable  upon  conversion,
exchange  or exercise of any such  Common  Stock  Equivalent  shall no longer be
computed as set forth above, and the Warrant Price shall forthwith be readjusted
and  thereafter be the price which it would have been (but  reflecting any other
adjustments in the Warrant Price made pursuant to the provisions of this Section
4 after the issuance of such Common Stock  Equivalent) had the adjustment of the
Warrant Price been made in accordance with the issuance or sale of the number of
Additional  Shares of Common Stock actually issued upon conversion,  exchange or
issuance  of such  Common  Stock  Equivalent  and  thereupon  only the number of
Additional  Shares of Common  Stock  actually so issued  shall be deemed to have
been issued and only the consideration actually received by the Issuer (computed
as in clause (i) of this  subsection  (g)) shall be deemed to have been received
by the Issuer.

          (iii)Outstanding  Common  Stock.  The number of shares of Common Stock
at any time  outstanding  shall (A) not include any shares thereof then directly
or  indirectly  owned or held by or for the  account of the Issuer or any of its
Subsidiaries,  and (B) be deemed to  include  all  shares of Common  Stock  then

<PAGE>

issuable upon conversion,  exercise or exchange of any then  outstanding  Common
Stock  Equivalents  or any other  evidences of  Indebtedness,  shares of Capital
Stock or other  Securities  which are or may be at any time  convertible into or
exchangeable for shares of Common Stock or Other Common Stock.

     (e)  Other Action  Affecting Common Stock. In case after the Original Issue
Date the Issuer shall take any action affecting its Common Stock,  other than an
action  described in any of the  foregoing  subsections  (a) through (d) of this
Section 4,  inclusive,  and the failure to make any adjustment  would not fairly
protect the purchase  rights  represented by this Warrant in accordance with the
essential  intent and  principle of this Section 4, then the Warrant Price shall
be  adjusted  in such  manner  and at such time as the  Board may in good  faith
determine to be equitable in the circumstances.

     (f)  Adjustment  of  Warrant  Share  Number.  Upon each  adjustment  in the
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted,  to the nearest one hundredth of a whole
share,  to  the  product  obtained  by  multiplying  the  Warrant  Share  Number
immediately  prior to such  adjustment in the Warrant  Price by a fraction,  the
numerator of which shall be the Warrant Price  immediately  before giving effect
to such  adjustment  and the  denominator  of which shall be the  Warrant  Price
immediately  after giving effect to such  adjustment.  If the Issuer shall be in
default  under any  provision  contained  in  Section 3 of this  Warrant so that
shares  issued at the Warrant Price  adjusted in accordance  with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing  sentence shall  nonetheless be made and the Holder of this
Warrant  shall be  entitled  to purchase  such  greater  number of shares at the
lowest price at which such shares may then be validly  issued  under  applicable
law. Such exercise  shall not  constitute a waiver of any claim arising  against
the Issuer by reason of its default under Section 3 of this Warrant.

     (g)  Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

     5.   Notice of  Adjustments.  Whenever the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the option of the Holder of this  Warrant be  submitted  to one of the  national
accounting  firms  currently  known as the "big five"  selected  by the  Holder,
provided  that the Issuer shall have ten days after  receipt of notice from such
Holder  of its  selection  of such firm to object  thereto,  in which  case such
Holder shall select another such firm and the Issuer shall have no such right of
objection.  The firm  selected by the Holder of this  Warrant as provided in the
preceding  sentence shall be instructed to deliver a written  opinion as to such
matters to the Issuer and such Holder within thirty days after  submission to it
of such dispute.  Such opinion shall be final and binding on the parties hereto.
The fees and expenses of such accounting firm shall be paid by the Issuer.

     6.   Fractional  Shares.  No  fractional  shares of  Warrant  Stock will be
issued in connection  with and exercise  hereof,  but in lieu of such fractional
shares,  the Issuer  shall make a cash payment  therefor  equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.

     7.   Warrant Exercise Restriction. Notwithstanding anything to the contrary
set forth in this Warrant, at no time may a holder of this Warrant exercise this

<PAGE>

Warrant,  or a portion  hereof,  if the  number of shares of Common  Stock to be
issued  pursuant to such exercise would exceed,  when  aggregated with all other
shares of Common  Stock owned by such holder at such time,  would result in such
holder owning more than 9.99% of all of the Common Stock issued and  outstanding
at such time;  provided,  however,  that upon a holder of this Warrant providing
the Issuer  with 75 days notice  (pursuant  to Section 11 hereof)  (the  "Waiver
Notice")  that such holder  would like to waive  Section 7 of this  Warrant with
regard to any or all  shares of  Common  Stock  issuable  upon  exercise  of the
Warrant, this Section 7 will be of no further force or effect with regard to the
number of shares exercisable  pursuant to the Warrant, or the applicable portion
thereof, referenced in the Waiver Notice.

     8.   Definitions.  For the purposes of this Warrant,  the  following  terms
have the following meanings:

          "Additional  Shares of Common  Stock" means all shares of Common Stock
issued by the Issuer  after the  Original  Issue  Date,  and all shares of Other
Common,  if any, issued by the Issuer after the Original Issue Date,  except (i)
Warrant Stock,  (ii) any shares of Common Stock issuable upon  conversion of the
Notes  pursuant  to the  Purchase  Agreement,  (iii) any shares of Common  Stock
issuable upon  conversion of the  promissory  notes and exercise of the warrants
issued pursuant to the Convertible Note Purchase Agreement dated April 23, 2002,
and (iv)  options or  warrants or rights to  purchase  stock  issued to officers
and/or  directors  of the Maker and any  shares of Common  Stock  issuable  upon
exercise of the Stock Options.

          "Board" shall mean the Board of Directors of the Issuer.

          "Capital Stock" means and includes (i) any and all shares,  interests,
participations  or other  equivalents  of or interests  in (however  designated)
corporate  stock,  including,   without  limitation,   shares  of  preferred  or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a  partnership,  (iii) all  membership  interests or limited
liability  company  interests  in any limited  liability  company,  and (iv) all
equity or ownership interests in any Person of any other type.

          "Certificate of Incorporation"  means the Certificate of Incorporation
of the Issuer as in effect on the Original  Issue Date,  and as  hereafter  from
time to time amended, modified,  supplemented or restated in accordance with the
terms hereof and thereof and pursuant to applicable law.

          "Original Issue Date" means April 23, 2002.

          "Common  Stock"  means the Common  Stock,  $.00167  par value,  of the
Issuer and any other  Capital  Stock into  which  such  stock may  hereafter  be
changed.

          "Common Stock Equivalent"  means any Convertible  Security or warrant,
option or other right to  subscribe  for or purchase  any  Additional  Shares of
Common Stock or any Convertible Security.

          "Convertible  Securities" means the Notes,  evidences of Indebtedness,
shares of  Capital  Stock or other  Securities,  which are or may be at any time
convertible into or exchangeable for Additional Shares of Common Stock. The term
"Convertible Security" means one of the Convertible Securities.

          "Governmental   Authority"  means  any  governmental,   regulatory  or
self-regulatory  entity,  department,  body,  official,  authority,  commission,
board, agency or instrumentality,  whether federal,  state or local, and whether
domestic or foreign.

          "Holders"  mean  the  Persons  who  shall  from  time to time  own any
Warrant. The term "Holder" means one of the Holders.

<PAGE>

          "Independent   Appraiser"  means  a  nationally  recognized  or  major
regional  investment  banking  firm  or  firm of  independent  certified  public
accountants  of  recognized  standing  (which  may be the  firm  that  regularly
examines the financial  statements  of the Issuer) that is regularly  engaged in
the business of appraising the Capital Stock or assets of  corporations or other
entities as going  concerns,  and which is not affiliated with either the Issuer
or the Holder of any Warrant.

          "Issuer"   means  Armitec  Inc,  a  Delaware   Corporation,   and  its
successors.

          "Majority   Holders"  means  at  any  time  the  Holders  of  Warrants
exercisable  for a majority of the shares of Warrant  Stock  issuable  under the
Warrants at the time outstanding.

          "NASDAQ"  means  the  National   Association  of  Securities   Dealers
Automated Quotation System.

          "Notes" means the convertible  promissory notes issued pursuant to the
Purchase Agreement.

          "Other  Common"  means any other  Capital  Stock of the  Issuer of any
class  which  shall be  authorized  at any time  after the date of this  Warrant
(other than Common Stock) and which shall have the right to  participate  in the
distribution  of  earnings  and assets of the Issuer  without  limitation  as to
amount.

          "Person" means an individual,  corporation, limited liability company,
partnership,  joint stock company,  trust,  unincorporated  organization,  joint
venture, Governmental Authority or other entity of whatever nature.

          "Per Share Market Value" means on any particular  date (a) the closing
bid price per share of the  Common  Stock on such date on The  Nasdaq  Small-Cap
Market,  the Nasdaq National Market or other registered  national stock exchange
on which the  Common  Stock is then  listed or if there is no such price on such
date,  then the closing bid price on such  exchange or  quotation  system on the
date nearest  preceding such date, or (b) if the Common Stock is not listed then
on The Nasdaq  Small-Cap  Market,  the Nasdaq  National Market or any registered
national  stock  exchange,  the closing bid price for a share of Common Stock in
the over-the-counter  market, as reported by NASDAQ or in 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  Common  Stock  is 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
Common  Stock is not then  publicly  traded the fair market  value of a share of
Common Stock as determined by an Independent Appraiser selected in good faith by
the Majority Holders;  provided,  however, that the Issuer, after receipt of the
determination by such Independent  Appraiser,  shall have the right to select an
additional Independent Appraiser,  in which case, the fair market value shall be
equal to the average of the  determinations by each such Independent  Appraiser;
and  provided,  further  that all  determinations  of the Per Share Market Value
shall be appropriately  adjusted for any stock dividends,  stock splits or other
similar  transactions during such period. The determination of fair market value
by an  Independent  Appraiser  shall be based upon the fair market  value of the
Issuer  determined  on a going  concern  basis as between a willing  buyer and a
willing  seller and taking into account all relevant  factors  determinative  of
value,  and shall be final and binding on all parties.  In determining  the fair
market value of any shares of Common Stock, no  consideration  shall be given to
any  restrictions  on transfer of the Common  Stock  imposed by  agreement or by
federal or state  securities  laws,  or to the  existence  or absence of, or any
limitations on, voting rights.

<PAGE>

          "Purchase  Agreement"  means the Convertible  Note Purchase  Agreement
dated as of April 23, 2002 among the Issuer and the purchaser named therein.

          "Registration  Rights  Agreement" has the meaning specified in Section
3(e) hereof.

          "Securities"  means  any  debt or  equity  securities  of the  Issuer,
whether  now  or  hereafter  authorized,  any  instrument  convertible  into  or
exchangeable  for  Securities  or a Security,  and any option,  warrant or other
right  to  purchase  or  acquire  any  Security.  "Security"  means  one  of the
Securities.

          "Securities Act" means the Securities Act of 1933, as amended,  or any
similar federal statute then in effect.

          "Stock  Options"  means  options to  purchase  shares of Common  Stock
issued by the  Issuer on the  Original  Issue  Date to  certain  members  of the
Issuer's  senior  management,  as the  same may  from  time to time be  amended,
modified or supplemented in accordance with their terms.

          "Subsidiary"  means any corporation at least 50% of whose  outstanding
Voting Stock shall at the time be owned  directly or indirectly by the Issuer or
by one or  more of its  Subsidiaries,  or by the  Issuer  and one or more of its
Subsidiaries.

          "Trading  Day" means (a) a day on which the Common  Stock is traded on
The Nasdaq  Small-Cap  Market,  the Nasdaq National  Market or other  registered
national stock exchange on which the Common Stock has been listed, or (b) if the
Common Stock is not listed on The Nasdaq Small-Cap  Market,  the Nasdaq National
Market or any  registered  national  stock  exchange,  a day or which the Common
Stock is traded in the over-the-counter  market, as reported by the OTC Bulletin
Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day
on which the Common Stock is 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, however, that in
the event that the Common Stock is not listed or quoted as set forth in (a), (b)
and (c) hereof, then Trading Day shall mean 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 are  authorized  or  required  by law or other  government
action to close.

          "Term" has the meaning specified in Section 1 hereof.

          "Voting  Stock",  as applied to the Capital Stock of any  corporation,
means Capital Stock of any class or classes (however designated) having ordinary
voting  power for the  election  of a  majority  of the  members of the Board of
Directors  (or other  governing  body) of such  corporation,  other than Capital
Stock having such power only by reason of the happening of a contingency.

          "Warrants" means the Warrants issued and sold pursuant to the Purchase
Agreement,  including,  without limitation, this Warrant, and any other warrants
of like tenor issued in substitution or exchange for any thereof pursuant to the
provisions  of  Section  2(c),  2(d) or  2(e)  hereof  or of any of  such  other
Warrants.

          "Warrant  Price" means  initially 105% of the market price at closing,
as such  price  may be  adjusted  from  time to time as  shall  result  from the
adjustments specified in Section 4 hereof.

          "Warrant  Share  Number"  means at any time the  aggregate  number  of
shares of Warrant  Stock which may at such time be  purchased  upon  exercise of
this Warrant, after giving effect to all prior adjustments and increases to such
number made or required to be made under the terms hereof.

<PAGE>

          "Warrant  Stock"  means  Common Stock  issuable  upon  exercise of any
Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

     8.   Other Notices. In case at any time:

          (A)  the Issuer shall make any  distributions to the holders of Common
Stock; or

          (B)  the Issuer  shall  authorize  the  granting to all holders of its
Common Stock of rights to subscribe  for or purchase any shares of Capital Stock
of any class or of any Common Stock  Equivalents  or  Convertible  Securities or
other rights; or

          (C)  there shall be any  reclassification  of the Capital Stock of the
Issuer; or

          (D)  there shall be any capital reorganization by the Issuer; or

          (E)  there  shall be any (i)  consolidation  or merger  involving  the
Issuer or (ii) sale,  transfer or other  disposition of all or substantially all
of the  Issuer's  property,  assets  or  business  (except  a  merger  or  other
reorganization  in which the Issuer shall be the surviving  corporation  and its
shares of Capital  Stock shall  continue to be  outstanding  and  unchanged  and
except a consolidation,  merger, sale, transfer or other disposition involving a
wholly-owned Subsidiary); or

          (F)  there  shall  be  a   voluntary   or   involuntary   dissolution,
liquidation or winding-up of the Issuer or any partial liquidation of the Issuer
or distribution to holders of Common Stock;

          then, in each of such cases,  the Issuer shall give written  notice to
the  Holder of the date on which (i) the books of the  Issuer  shall  close or a
record shall be taken for such dividend,  distribution or subscription rights or
(ii) such reorganization, reclassification,  consolidation, merger, disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
days prior to the action in question  and not less than twenty days prior to the
record  date or the date on which the  Issuer's  transfer  books  are  closed in
respect thereto.  The Issuer shall give to the Holder notice of all meetings and
actions by written  consent  of its  stockholders,  at the same time in the same
manner as notice of any  meetings  of  stockholders  is  required to be given to
stockholders who do not waive such notice (or, if such requires no notice,  then
two Trading Days written notice thereof describing the matters upon which action
is to be  taken).  The Holder  shall have the right to send two  representatives
selected by it to each meeting,  who shall be permitted to attend,  but not vote
at, such meeting and any adjournments  thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.

     9.   Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.

<PAGE>

     10.  Governing  Law.  THIS  WARRANT  SHALL BE GOVERNED BY AND  CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW  YORK,  WITHOUT  GIVING  EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.

     11.  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 earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone number specified for notice prior to 5:00 p.m.,  Atlanta 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 for notice later than 5:00 p.m., Atlanta City time, on any date
and earlier than 11:59 p.m.,  Atlanta time, on such date, (iii) the Business Day
following  the  date of  mailing,  if sent by  nationally  recognized  overnight
courier  service  or (iv)  actual  receipt  by the party to whom such  notice is
required  to be  given.  The  addresses  for such  communications  shall be with
respect  to the  Holder of this  Warrant or of  Warrant  Stock  issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

          Armitec, Inc.
          4479 Atlanta Road
          Smyrna, Georgia 30080
          Attention:  Chief Executive Officer
          Facsimile No.: (404) 842-9418

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have  designated in writing to the other parties  hereto
by such  notice.  Greenberg  Traurig  LLP.,  Attn:  Robert  E.  Altenbach,  3290
Northside  Parkway,  Suite 400,  Atlanta,  Georgia  30327,  Facsimile No.: (678)
553-2188 .

     12.  Warrant  Agent.  The Issuer may,  by written  notice to each Holder of
this  Warrant,  appoint  an agent  having an office in Texas for the  purpose of
issuing  shares of Warrant  Stock on the  exercise of this  Warrant  pursuant to
subsection  (b) of  Section  2  hereof,  exchanging  this  Warrant  pursuant  to
subsection  (d) of  Section 2 hereof  or  replacing  this  Warrant  pursuant  to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

<PAGE>

     13.  Registration  Rights.  The initial holder of this Warrant (and certain
assignees  thereof) is entitled  to the benefit of such  registration  rights in
respect  of the  Warrant  Shares  as are set  forth in the  Registration  Rights
Agreement.  The terms of the  Registration  Rights  Agreement  are  incorporated
herein by this reference.

     If the  Registration  Statement is not filed or deemed effective as defined
in the Registration  Right  Agreement,  within the time periods set forth in the
Registration  Right  Agreement,  and the Company is unable to issue Common Stock
upon  exercise of this Warrant that has been  registered  within the time period
specified  in this  document,  then upon demand made by the Holder,  the Company
will pay to the Holder of this Warrant,  in lieu of delivering  Common Stock,  a
sum equal to the closing  price of the  Company's  Common stock on the Principal
Market (as defined in the Registration  Right Agreement) or such other principal
trading  market for the Company's  Common Stock on the trading date  immediately
preceding the date notice is given by the Holder,  less the purchase price,  for
each share of Common Stock designated in such notice from the Holder.

     14.  Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

     15.  Successors and Assigns.  This Warrant and the rights  evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock

     16.  Modification and  Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

     17.  Headings.  The  headings  of the  Sections  of  this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

     IN WITNESS WHEREOF,  the Issuer has executed this Warrant as of the day and
year first above written.

                          ARMITEC, INC.

                          By: /s/ Bruce R. Davis
                             -----------------------
                             Bruce R. Davis
                             Chief Executive Officer

<PAGE>

                              FORM OF SUBSCRIPTION
                   (to be signed only on exercise of Warrant)

To: _________________________

The undersigned,  pursuant to the provisions set forth in the attached  Warrant,
hereby irrevocably elects to purchase (check applicable box)):

____ ____________ shares of the Common Stock covered by such Warrant; or

___ the  maximum  number  of  shares of Common  Stock  covered  by such  Warrant
pursuant to the cashless exercise procedure set forth in Section 2 (g).

The  undersigned  herewith  makes  payment of the full  purchase  price for such
shares at the price per share provided for is Warrant, which is $ _____________.
Such payment takes the form of (check applicable box or boxes);

___ $ ____________ in lawful money of the United States; and/or

___ the  cancellation of such portion of the attached  Warrant as is exercisable
for a total of _______  shares of Common  Stock  (using a Fair Market Value of $
______ per share for purposes of this calculation); and/or

___ the  cancellation  of such number of shares of Common Stock as is necessary,
in  accordance  with the formula  set forth in Section 2 (g),  to exercise  this
Warrant with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2 (g).

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to _____________________________________ whose address is
________________________________________________________________________________
______________________________________________________________________________ .

The  undersigned  represents  and  Warrants  that all  offers  and  sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933,  as amended  (the  "Securities  Act"),  or pursuant to an  exemption  from
registration under the Securities Act.

Dated: ___________                  ____________________________________________
                                    (Signature must conform to name of holder as
                                    specified on the face of the Warrant)

                                    ____________________________________________
                                    ____________________________________________
                                    (address)

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