Document:

THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (TEE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii)
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER TO TEE EFFECT THAT REGISTRATION UNDER TEE ACT IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER AND THAT SUCH TRANSFER IS NOT IN
VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED
UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE.

                             LASER ENERGETICS, INC.

                          SUBORDINATED PROMISSORY NOTE
No. 1                                                                    $12,500

      LASER ENERGETICS, INC, a Florida corporation (the "Company") for value
received, hereby promises to pay in currency of the United States of America to
Richter Construction or registered assigns (the "Payee" or "Holder") on Apri1
20, 1999 (the "Maturity Date") at the offices of the Company, the principal
amount of Twelve Thousand Five Hundred ($12,500), along with interest on the
principal amount of this Note from time to time outstanding at the rate of
fifteen percent (15%) per annum, interest to compound annually, from the date
hereof through the Maturity Date or until sooner paid.

      This Note is issued pursuant to a Subscription Agreement dated as of April
20, 1999, between the Company and the Payee (the "Subscription Agreement"), a
copy of which Subscription Agreement is available for inspection at the
Company's principal office. Notwithstanding any provision to the contrary
contained herein, this Note is subject to certain terms, conditions, covenants
and agreements contained in the Subscription Agreement Any transferee or
transferees of the Note, by their acceptance hereof, assume the obligations of
the Payee in the Subscription Agreement with respect to the conditions and
procedures for transfer of the Note. Reference to the Subscription Agreement
shall in no way impair the absolute and unconditional obligation of the Company
to pay both principal and interest as provided herein.

      1. PREPAYMENT.

      The principal amount of this Note will be prepaid by the Company, in whole
or in part, quarterly, on a pro-rata basis, in an amount equal to twenty percent
(20%) of the revenues generated by the Company from the sale of the Company's
lab-created Alexandrite gemstones. Such payments will be made on the tenth day
of January, April, July, and October, for the quarter ended ten days earlier.

                                                                         /s/ RDB

<PAGE>

      2. COVENANTS OF COMPANY.

            The Company covenants and agrees that, so long as this Note shall be
outstanding, it will:

            (a) promptly pay and discharge all lawful taxes, assessments, and
governmental charges or levies imposed upon the Company or upon its income and
profits, or upon any of its property, before the same shall become in default,
as well as all lawful claims for labor, materials and supplies which, if unpaid,
might become a lien or charge upon such properties or any part thereof; provided
however, that the Company shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and the Company shall set
aside on its books adequate reserves with respect to any such tax, assessment,
charge, levy or claim so contested;

            (b) do or cause to be done all things reasonably necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises and comply with all laws applicable to the Company, except where the
failure to comply would not have a material adverse effect on the Company;

            (c) at all times maintain, preserve, protect and keep its property
used or useful in the conduct of its business in good repair, working order and
condition, and from time to time make all necessary and proper repairs,
renewals, replacements, betterments and improvements hereto as shall be
reasonably required in the conduct of its business;

            (d) to the extent necessary for the operation of its business, keep
adequately insured by financially sound and reputable insurers, all property of
a character usually insured by similar corporations and carry such other
insurance as is usually carried by similar corporations; and

            (e) at all times keep true and correct books, records and accounts.

                                                                         /s/ RDB

<PAGE>

      3. ADDITIONAL PROVISIONS.

            This Note is subject to the following additional provisions:

            (a) The Company shall be entitled to withhold from all payments of
principal of and interest on this Note any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments.

            (b) This Note has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Act, any applicable state securities laws and any applicable
securities laws of any other jurisdiction. Prior to due presentment for transfer
of this Note, the Company and any agent of the Company may treat the person in
whose name this Note is duly registered on the Company's Note Register as the
owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Note is overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.

            (c) No provision of this Note shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Note at the time, place and rate, and, in the coin or
currency, herein prescribed. This Note and all other Notes now or hereafter
issued of similar terms are direct obligations of the Company. This Note ranks
and ratably with all other Notes now or hereafter issued under the terms set
forth herein.

            (d) No recourse shall be had for the payment of the principal of, or
the interest on, this Note, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

            (e) The Holder of this Note, by acceptance hereof, agrees that this
Note is being acquired for investment and that such Holder will not offer, sell
or otherwise dispose of this Note until: (i) a registration statement under the
Act shall have become effective with respect thereto; or (ii) receipt by the
Company of an opinion of counsel reasonably satisfactory to the Company to the
effect that registration under the Act is not required in connection with such
proposed transfer and that such transfer is not in violation of any applicable
state or foreign securities laws.

                                                                         /s/ RDB

      4. EVENTS OF DEFAULT.

            (a) This Note shall become and be due and payable upon written
demand made by the Holder hereof if one or more of the following events,
hereinafter called events of default, shall happen and be continuing:

<PAGE>

                  (i) default in the payment of the principal and accrued
interest on this Note then and as the same shall become due and payable, whether
by acceleration or otherwise;

                  (ii) default in the due observance or performance of any
material covenant, condition or agreement on the part of the Company to be
observed or performed pursuant to the terms hereof if such default shall
continue uncured for fifteen (15) days after written notice thereof, specifying
such default, shall have been given to the Company by the Holder of the Note;

                  (iii) The Company shall (1) commence any proceeding or other
action relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, receivership, dissolution, liquidation, winding-up,
composition or any other relief under the Bankruptcy Act, as amended, or under
any other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law; of any
jurisdiction, domestic or foreign, now or hereafter existing; or (2) admit the
material allegations of any petition or pleading in connection with any such
proceeding; or (3) apply for, or consent or acquiesce to, the appointment of a
receiver, conservator, trustee or similar officer for it or for all or a
substantial part of its property; or (4) make a general assignment for the
benefit of creditors;

                  (iv) Commencement of any proceeding or the taking of any other
action against the Company in bankruptcy, or seeking reorganization,
arrangement, readjustment of its debts, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law of any
jurisdiction, domestic or foreign, now or hereafter existing and the continuance
of any such events for sixty (60) days undismissed, unbonded or undischarged; or
the appointment of a receiver, conservator, trustee or similar officer of the
Company or for all or substantially all of its property and the continuance of
any such events for sixty (60) days undismissed, unbonded or undischarged;

                  (v) a breach of the Company's representations contained in
Section 1 of the Subscription Agreement;

            (b) The Company agrees that notice of the occurrence of any event of
default will be promptly given to the Holder at his or her registered address by
certified mail.

            (c) In case any one or more of the events of default specified above
shall happen and be continuing, the Holder of this Note may proceed to protect
and enforce his rights by suit in the specified performance of any covenant or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note or may proceed to enforce the payment of this Note or to enforce
any other legal or equitable rights as such Holder may have.

                                                                         /s/ RDB

<PAGE>

      5. SUBORDINATION OF NOTES TO SENIOR INDEBTEDNESS

            (a) The Company, for itself, its successors and assigns, covenants
and agrees, and each Holder of this Note, by his acceptance thereof, likewise
covenants and agrees, that the payment of the principal of and interest on, each
and all of the Notes is hereby expressly subordinated in right of payment, to
the prior payment in full of any indebtedness now outstanding or hereinafter
incurred, to a bank, financial institution engaged in lending money, insurance
company or other similar institutional lender ("Senior Indebtedness"). Each
Holder of this Note shall, upon the Company's reasonable request, execute and
deliver to the Company such documents as may be necessary or appropriate to
evidence or confirm the foregoing subordination.

            (b) Notwithstanding the subordination described in Section 5(a)
above, until: (i) the occurrence of an event of default by the Company under any
document evidencing Senior Indebtedness; or (ii) the Company makes any
assignment for the benefit of creditors; or (iii) any bankruptcy proceedings are
instituted by or against the Company; or (iv) any receiver for the Company's
business or assets is appointed; or (v) there is any dissolution or winding up
of the affairs of the Company, whichever of the foregoing occurs earliest, the
Company may make and the Holders of this Note may receive any and all payments
due under this Note.

            (c) In the event of any insolvency or bankruptcy (voluntary or
involuntary) proceedings or any receivership, liquidation, reorganization or
other similar proceedings in connection therewith, related to the Company or to
its creditors, as such, or to its property, or in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, then the holders of Senior
Indebtedness shall be entitled to receive payment in full of all principal and
interest on all Senior Indebtedness before the Holder of this Note is entitled
to receive any payment on account of principal or interest on this Note and to
that end the holder of Senior Indebtedness shall be entitled to receive for
application in payment thereof any payment or distribution of any kind or
character, whether in cash or property or securities, which may be payable or
deliverable in any such proceedings in respect of this Note, except securities
which are subordinate and junior in right or payment to the payment of Senior
Indebtedness.

            (d) In the event that this Note is declared due and payable before
its expressed maturity because of the occurrence of an event of default
hereunder (under circumstances when the provisions of the foregoing clause (c)
shall not be applicable), the holders of Senior Indebtedness outstanding at the
time the Note so becomes due and payable because of such occurrence of a default
thereunder shall he entitled to receive payment in full of all principal and
interest on all Senior Indebtedness before the Holder of the Note is entitled to
receive payment on account of the principal or interest upon this@ Note.

            (e) In the event of any default in payment of any principal of or
any interest on any Senior Indebtedness and during the continuance of any such
default, no amount shall be paid by the Company and the Holder of this Note
shall not be entitled to receive any amount, in respect

                                                                         /s/ RDB

<PAGE>

to the principal of or interest on the Note. No present or future holder of
Senior Indebtedness shall be prejudiced in his right to enforce subordination of
this Note by any act or failure to act on the part of the Company. The Company
shall render written notice to the Holder of this Note immediately upon the
occurrence of each such default in the payment of any principal of or any
interest on any Senior Indebtedness describing such default in detail.

            (f) Nothing contained in the subordination herein is intended to or
shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness, and the Holder of this Note the obligation of the Company,
which is absolute and unconditional, to pay to the persons entitled thereto
under the terms thereof the principal of and interest on this Note, as and when
the same shall become due and payable in accordance with its terms, or to
affect the relative rights of the Holder of this Note and creditors of the
Company other than the holders of Senior Indebtedness, nor shall anything herein
prevent the Holder of this Note from exercising all remedies otherwise permitted
by applicable law upon default under the Note, subject to the rights, if any,
under the subordination herein, of the holders of Senior Indebtedness in respect
of cash, property or securities of the Company received upon the exercise of any
such remedy.

      6. MISCELLANEOUS.

            (a) This Note has been issued by the Company pursuant to
authorization of the Board of Directors of the Company which provides for an
aggregate of up to $1,250,000 in face amount of identical Notes to be issued.

            (b) The Company may consider and treat the person in whose name this
Note shall be registered as the absolute owner thereof for all purposes
whatsoever (whether or not this Note shall be overdue) and the Company shall not
be affected by any notice to the contrary. The registered owner of this Note
shall have the right to transfer it by assignment (subject to the limitations on
transfer contained in this Note and in the Subscription Agreement) and the
transferee thereof shall, upon his registration as owner of this Note, become
vested with all the powers and rights of the transferor. Registration of any new
owner shall take place upon presentation of this Note to the Company at its
offices at 4044 Quaker Bridge Road, Mercerville; New Jersey 08619, together with
a duly authenticated assignment. In case of transfer by operation of law, the
transferee agrees to notify the Company of such transfer and of his address, and
to submit appropriate evidence regarding the transfer so that this Note may be
registered in the name of the transferee. This Note is transferable only on the
books of the Company by the holder hereof, in person or by attorney, on the
surrender hereof, duly endorsed. Communications sent to any registered owner
shall be effective as against all holders or transferees of the Note not
registered at the time of sending the communication.

            (c) Payment of principal and interest shall be made to the
registered owner of this Note upon presentation of this Note upon or after
maturity.

            (d) The Company hereby waives presentment for payment, demand and
protest and notice of dishonor.

                                                                         /s/ RDB

<PAGE>

            (e) Neither this Note nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.

            (f) All notices, requests, demands and other communications to the
Company hereunder shall be in writing and shall be deemed given if delivered
personally or mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows or to such other addresses as the
Company may designate in writing to the holder hereof:

                           Laser Energetics, Inc.
                           4044 Quaker Bridge Road
                           Mercerville, New Jersey 08619
                           Attention: Robert D. Battis

            (g) This Note shall be construed and enforced in accordance with the
internal laws of the State of New Jersey without regard to such state's
principles of conflicts of law.

                                                                         /s/ RDB

<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name by the undersigned.

Dated: April 22, 1999

                                        LASER ENERGETICS, INC.

                                        By: /s/ Robert D. Battis
                                            ------------------------------------
                                            Name: Robert D. Battis
                                            Title: President and Chief Executive
                                                   Officer

                                                                         /s/ RDB[LETTERHEAD OF LASER ENERGETICS, INC.]

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
MOREOVER, THIS NOTE IS NON-NEGOTIABLE AND, AS SUCH, NON-TRANSFERABLE. REGARDLESS
OF WHETHER THIS NOTE CONTINUES TO BE NON-NEGOTIABLE OR IS AMENDED TO BE
NEGOTIABLE, NO INTEREST IN THIS NOTE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO
(i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER SAID ACT WHERE THE HOLDER
HAS FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

                             LASER ENERGETICS, INC.

                       NON-NEGOTIABLE 15% PROMISSORY NOTE

$ 250,000                                                As of July 7, 1999
                                                         Mercerville, New Jersey

      FOR VALUE RECEIVED, the undersigned, Laser Energetics, Inc., a F1orida
corporation (the "Payor"), having its executive office and principal place of
business at 4044 Quaker Bridge Road, Mercerville, New Jersey 08619, hereby
promises to pay to Sidney Dworkin (the "Payee"), on the sooner of (i) June 30,
200l or (ii) the date of closing of an initial public offering of Common Stock
by the Payor (the "Maturity Date"), at the Payee's address as indicated by the
records of the Payor or, at such other place as the Payee shall hereafter
specify in writing, the principal sum of Two Hundred Fifty Thousand Dollars
($250,000.00), in such coin or currency of the United States of America as at
the time shall be legal tender for the payment of public and private debts.

      1. Interest and Payment.

            1.1. The unpaid principal amount hereof shall bear simple interest
from the date hereof at the rate of 15% per annum until the Maturity Date
(or until any such earlier date of payment if this Note is prepaid as
hereinafter provided).

            1.2. Interest shall be payable on the Maturity Date.

            1.3. In no event shall the Payee be entitled to receive interest,
however characterized and including other consideration received in connection
with this Note, at an effective rate in excess of the maximum rate permitted by
law. In the event that a court of competent jurisdiction shall determine that
such amounts paid or agreed to be paid by the Payor in connection with this Note
causes the effective interest rate on this Note to exceed the maximum rate
permitted by law, such interest or other consideration shall automatically be

<PAGE>

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reduced to a rate which results in an effective interest rate under this Note
equal to the maximum rate permitted by law over the term hereof, and, in such
event, the Payee shall either apply to the reduction of the unpaid principal
balance of this Note any amounts received by it deemed to constitute excessive
interest or refund such excess to Payor.

      2. Replacement of Note.

            2.1 In case this Note is mutilated, destroyed, lost or stolen, the
Payor shall, at its sole expense, execute, register and deliver, a new Note, in
exchange and substitution for this Note, if mutilated, or in lieu of and
substitution for this Note, if destroyed, lost or stolen. In the case of
destruction, loss or theft, the Payee shall furnish to the Payor indemnity
reasonably satisfactory to the Payor, and in the case of mutilation, the Payee
shall also furnish to the Payor evidence to its reasonable satisfaction of the
mutilation, destruction, loss or theft of this Note and of the ownership
thereof. Any replacement Note so issued shall be in the same outstanding
principal amount as this Note and dated the date to which interest shall have
been paid on this Note, or if no interest shall have yet been paid, dated the
date of this Note.

            2.2. Every Note issued pursuant to the provisions of Section 2.1
hereof in substitution for this Note shall constitute an additional contractual
obligation of the Payor, whether or not this Note shall be found at any time, or
be enforceable by anyone.

      3. Prepayment. At the option of the Payor, this Note may be prepaid in
whole at any time, or in part from time to time, without penalty or premium.
Each partial prepayment of this Note shall first be applied to interest accrued
through the date of prepayment and then to principal.

      4. Events of Default. If any of the following conditions events or acts
shall occur:

            4.1. The dissolution of the Payor or any vote in favor thereof by
the Board of Directors and shareholders of the Company; or

            4.2. The Payor's insolvency, assignment for the benefit of
creditors, application for or appointment of a receiver, filing of a voluntary
or involuntary petition under any provision of the Federal Bankruptcy Code or
amendments thereto or any other federal or state statute affording relief to
debtors; or there shall be commenced against the Payor any such proceeding or
filed against the Payor any such application or petition which proceeding,
application or petition is not dismissed or withdrawn within thirty (30) days of
commencement or filing as the case may be; or

            4.3. The failure by the Payor to make any payment of any amount of
principal on, or accrued interest under, this Note, which failure shall continue
for a period of five (5) days, as and when the same shall become due and
payable; or

                                                                         /s/ RDB

                                       2
<PAGE>

                                                                          [LOGO]

            4.4. The admission in writing of the Payor's inability to pay its
debts as they mature.

      5. Suits for Enforcement and Remedies. If any one or more defaults shall
occur and be continuing, the Payee may proceed to protect and enforce such
Payee's rights either by suit in equity or by action at law, or both, whether
for the specific performance of any covenant, condition or agreement contained
in this Note or in any agreement or document referred to herein or in aid of the
exercise of any power granted in this Note or in any agreement or document
referred to herein, or proceed to enforce the payment of this Note or to enforce
any other legal or equitable right of the Payee of this Note. No right or remedy
herein or in any other agreement or instrument conferred upon the holder of this
Note is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and shall be in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.

      6. Unconditional Obligation; Fees, Waivers, Other.

            6.1. The obligations to make the payments provided for in this Note
are absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever.

            6.2. If the Payee shall institute any action to enforce the
collection of any amount of principal of and/or interest on this Note, there
shall be immediately due and payable from the Payor, in addition to the then
unpaid sum of this Note, all reasonable costs and expenses incurred by the Payee
in connection therewith, including, without limitation, reasonable attorneys'
fees and disbursements, except in the event the action by Payee is not
meritorious.

            6.3. No forbearance, indulgence, delay or failure to exercise any
right or remedy with respect to this Note shall operate as a waiver, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy.

            6.4. This Note may not be modified except by a writing duly executed
by the Payor and the Payee.

            6.5. The Payor hereby expressly waives demand and presentment for
payment, notice of nonpayment, notice of dishonor, protest, notice of protest,
bringing of suit, and diligence in taking any action to collect amounts called
for hereunder, and shall be directly and primarily liable for the payment of all
sums owing and to be owing herein, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount called
for hereunder or in connection with any right, lien, interest or property at any
and all times which the Payee had or is existing as security for any amount
called for hereunder.

            6.6. The Payor shall bear all of its expenses, including attorneys'
fees incurred in connection with the preparation of this Note.

                                                                         /s/ RDB

                                       3
<PAGE>

                                                                          [LOGO]

      7. Restriction on Transfer. By its acceptance of this Note, the Payee
acknowledges that this Note is non-negotiable and, as such, non-transferable and
has not been registered under the securities laws of the United States of
America or any state thereof and represents that this Note has been acquired for
investment and, even if subsequently amended to be negotiable, no interest in
this Note may be offered for sale, sold, delivered after sale, transferred,
pledged, or hypothecated in the absence of registration and qualification of
this Note under applicable federal and state securities laws or an opinion of
counsel of the Payee reasonably satisfactory to the Payor that such registration
and qualification are not required.

      8. Initial Public Offering. The Payor agrees that the Payee shall have the
right to subscribe for a minimum of such number of shares as may be purchased at
the initial public offering price using the proceeds of the principal and
interest due on the Maturity Date under this Note. The Payor will use its best
efforts to make available such additional shares as may be requested by the
Payee.

      9. Miscellaneous.

            9.1. The headings of the various paragraphs of this Note are for
convenience of reference only and shall in no way modify any of the terms or
provisions of this Note.

            9.2. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given when personally
delivered or three (3) days after being sent by registered or certified mail,
return receipt requested, postage prepaid, to the address of the intended
recipient as indicated by the records of the Payor or at such other address as
the intended recipient shall have hereafter given to the other party hereto
pursuant to the provisions hereof.

            9.3. This Note and the obligations of the Payor and the rights of
the Payee shall be governed by and construed in accordance with the laws of the
State of New Jersey with respect to contracts made and to be fully performed
therein.

            9.4. This Note shall bind the Payor and its successors and assigns.

                                                        LASER ENERGETICS, INC.

                                                        By: /s/ Robert D. Battis
                                                            --------------------
                                                            Robert D. Battis

                                       4

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