Document:

Exhibit 10.2

              THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE HAVE NOT
              BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
              (THE  "ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
              ASSIGNED  IN  THE  ABSENCE  OF   AN  EFFECTIVE  REGISTRATION
              STATEMENT  FOR  THE SECURITIES UNDER SAID ACT, OR AN OPINION
              OF  COUNSEL  IN  FORM,  SUBSTANCE  AND  SCOPE  CUSTOMARY FOR
              OPINIONS   OF   COUNSEL  IN   COMPARABLE  TRANSACTIONS  THAT
              REGISTRATION  IS  NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD
              PURSUANT  TO  RULE  144  OR  REGULATION  S  UNDER  SAID ACT.

                        CALLABLE SECURED CONVERTIBLE NOTE

Houston, Texas
May 30, 2006                                                            $363,600

     FOR  VALUE  RECEIVED,  PEDIATRIC  PROSTHETICS,  INC.,  an Idaho Corporation
(hereinafter  called the "BORROWER"), hereby promises to pay to the order of AJW
OFFSHORE,  LTD. or registered assigns (the "HOLDER") the sum of $363,600, on May
30,  2009  (the  "MATURITY  DATE"),  and to pay interest on the unpaid principal
balance  hereof  at the rate of six percent (6%) (the "INTEREST RATE") per annum
from  May  30,  2006  (the "ISSUE DATE") until the same becomes due and payable,
whether  at  maturity  or  upon  acceleration or by prepayment or otherwise. Any
amount  of  principal  or interest on this Note which is not paid when due shall
bear  interest  at the rate of fifteen percent (15%) per annum from the due date
thereof  until  the  same  is paid ("DEFAULT INTEREST"). Interest shall commence
accruing on the Issue Date, shall be computed on the basis of a 365-day year and
the  actual  number of days elapsed and shall be payable quarterly provided that
no  interest  shall  be due and payable for any month in which the Trading Price
(as such term is defined below) is greater than $.10375 for each Trading Day (as
such  term  is  defined  below) of the month. All payments due hereunder (to the
extent  not  converted into common stock, $.001 par value per share (the "COMMON
STOCK")  in  accordance  with the terms hereof) shall be made in lawful money of
the  United States of America. All payments shall be made at such address as the
Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a business day, the same shall
instead  be  due  on the next succeeding day which is a business day and, in the
case  of  any  interest payment date which is not the date on which this Note is
paid  in  full,  the  extension  of the due date thereof shall not be taken into
account  for purposes of determining the amount of interest due on such date. As
used  in  this  Note,  the  term  "business day" shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of New York, New
York are authorized or required by law or executive order to remain closed. Each

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capitalized  term used herein, and not otherwise defined, shall have the meaning
ascribed  thereto  in  that certain Securities Purchase Agreement, dated May 30,
2006,  pursuant  to  which  this  Note  was  originally  issued  (the  "PURCHASE
AGREEMENT").

     This  Note  is  free  from  all  taxes, liens, claims and encumbrances with
respect  to  the  issue thereof and shall not be subject to preemptive rights or
other  similar  rights  of  shareholders  of  the  Borrower  and will not impose
personal  liability  upon  the  holder  thereof. The obligations of the Borrower
under  this  Note  shall  be  secured  by  that  certain  Security Agreement and
Intellectual Property Security Agreement, each dated May 30, 2006 by and between
the  Borrower  and  the  Holder.

     The  following  terms  shall  apply  to  this  Note:

                          ARTICLE I. CONVERSION RIGHTS

          1.1  CONVERSION  RIGHT.  The  Holder shall have the right from time to
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     time,  and  at any time on or prior to the earlier of (i) the Maturity Date
     and  (ii)  the date of payment of the Default Amount (as defined in Article
     III)  pursuant  to  Section  1.6(a) or Article III, the Optional Prepayment
     Amount  (as defined in Section 5.1 or any payments pursuant to Section 1.7,
     each  in respect of the remaining outstanding principal amount of this Note
     to  convert  all or any part of the outstanding and unpaid principal amount
     of  this Note into fully paid and non-assessable shares of Common Stock, as
     such  Common Stock exists on the Issue Date, or any shares of capital stock
     or  other  securities  of  the  Borrower into which such Common Stock shall
     hereafter  be  changed  or  reclassified  at  the  conversion  price  (the
     "CONVERSION  PRICE")  determined  as  provided  herein  (a  "CONVERSION");
     provided, however, that in no event shall the Holder be entitled to convert
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     any  portion  of  this  Note  in  excess  of that portion of this Note upon
     conversion  of  which  the  sum of (1) the number of shares of Common Stock
     beneficially  owned  by the Holder and its affiliates (other than shares of
     Common  Stock  which may be deemed beneficially owned through the ownership
     of  the  unconverted portion of the Notes or the unexercised or unconverted
     portion  of  any  other  security  of  the  Borrower  (including,  without
     limitation,  the  warrants  issued by the Borrower pursuant to the Purchase
     Agreement)  subject  to a limitation on conversion or exercise analogous to
     the  limitations  contained  herein) and (2) the number of shares of Common
     Stock issuable upon the conversion of the portion of this Note with respect
     to  which  the determination of this proviso is being made, would result in
     beneficial ownership by the Holder and its affiliates of more than 4.99% of
     the outstanding shares of Common Stock and provided further that the Holder
                                                -------- -------
     shall  not be entitled to convert any portion of this Note during any month
     immediately succeeding a Determination Date on which the Borrower exercises
     its prepayment option pursuant to Section 5.2 of this Note. For purposes of
     the  proviso  to  the  immediately preceding sentence, beneficial ownership
     shall  be  determined  in  accordance  with Section 13(d) of the Securities
     Exchange  Act of 1934, as amended, and Regulations 13D-G thereunder, except
     as  otherwise  provided in clause (1) of such proviso. The number of shares
     of  Common  Stock  to  be issued upon each conversion of this Note shall be
     determined  by  dividing  the  Conversion  Amount (as defined below) by the
     applicable  Conversion  Price  then  in effect on the date specified in the
     notice of conversion, in the form attached hereto as Exhibit A (the "NOTICE
     OF CONVERSION"), delivered to the Borrower by the Holder in accordance with

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     Section  1.4  below; provided that the Notice of Conversion is submitted by
     facsimile (or by other means resulting in, or reasonably expected to result
     in,  notice)  to  the Borrower before 6:00 p.m., New York, New York time on
     such  conversion date (the "CONVERSION DATE"). The term "CONVERSION AMOUNT"
     means,  with  respect  to  any  conversion of this Note, the sum of (1) the
     principal  amount  of this Note to be converted in such conversion plus (2)
     accrued  and  unpaid  interest,  if  any,  on  such principal amount at the
     interest  rates  provided  in  this  Note to the Conversion Date, provided,
     however,  that  the Company shall have the right to pay any or all interest
     in  cash  plus  (3) Default Interest, if any, on the amounts referred to in
               ----
     the  immediately  preceding clauses (1) and/or (2) plus (4) at the Holder's
                                                        ----
     option,  any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g)
     hereof  or  pursuant  to  Section  2(c) of that certain Registration Rights
     Agreement,  dated  as  of  May  30,  2006,  executed in connection with the
     initial  issuance of this Note and the other Notes issued on the Issue Date
     (the  "REGISTRATION RIGHTS AGREEMENT"). The term "DETERMINATION DATE" means
     the  last  business  day  of  each  month  after  the  Issue  Date.

          1.2  CONVERSION  PRICE.
               -----------------

               (A)  CALCULATION  OF CONVERSION PRICE. The Conversion Price shall
                    --------------------------------
          be the Variable Conversion Price (as defined herein) (subject, in each
          case,  to  equitable  adjustments for stock splits, stock dividends or
          rights offerings by the Borrower relating to the Borrower's securities
          or  the  securities  of  any subsidiary of the Borrower, combinations,
          recapitalization,  reclassifications,  extraordinary distributions and
          similar  events).  The  "VARIABLE  CONVERSION  PRICE"  shall  mean the
          Applicable  Percentage  (as  defined  herein) multiplied by the Market
          Price  (as  defined  herein).  "MARKET PRICE" means the average of the
          lowest  three  (3)  Trading  Prices  (as defined below) for the Common
          Stock during the twenty (20) Trading Day period ending one Trading Day
          prior  to  the date the Conversion Notice is sent by the Holder to the
          Borrower via facsimile (the "CONVERSION DATE"). "TRADING PRICE" means,
          for  any  security  as  of any date, the intraday trading price on the
          Over-the-Counter  Bulletin  Board  (the  "OTCBB")  as  reported  by  a
          reliable  reporting  service ("REPORTING SERVICE") mutually acceptable
          to  Borrower  and  Holder  and  hereafter  designated  by Holders of a
          majority in interest of the Notes and the Borrower or, if the OTCBB is
          not  the  principal  trading  market  for  such security, the intraday
          trading price of such security on the principal securities exchange or
          trading  market  where  such  security  is  listed or traded or, if no
          intraday  trading  price  of  such security is available in any of the
          foregoing  manners,  the average of the intraday trading prices of any
          market  makers  for such security that are listed in the "pink sheets"
          by  the National Quotation Bureau, Inc. If the Trading Price cannot be
          calculated  for  such  security  on  such  date in the manner provided
          above,  the  Trading  Price shall be the fair market value as mutually
          determined  by  the Borrower and the holders of a majority in interest
          of  the Notes being converted for which the calculation of the Trading
          Price  is  required in order to determine the Conversion Price of such
          Notes.  "TRADING  DAY" shall mean any day on which the Common Stock is
          traded  for  any  period  on the OTCBB, or on the principal securities
          exchange  or other securities market on which the Common Stock is then
          being  traded.  "APPLICABLE  PERCENTAGE"  shall  mean  50%;  provided,
          however,  that the Applicable Percentage shall be increased to (i) 55%
          in  the  event  that  the  Registration  Statement  (as defined in the
          Registration  Rights  Agreement) is filed on or before the Filing Date
          (as  defined in the in the Registration Rights Agreement) and (ii) 60%
          in  the  event  that  the  Registration  Statement  (as defined in the
          Registration  Rights  Agreement)  becomes  effective  on or before the
          Effectiveness  Deadline  (as  defined  in  the  Registration  Rights
          Agreement).  In  addition, the Holder agrees that it will limit all of
          its  conversions  to  no  more  than  the  greater  of (1) $80,000 per

<PAGE>

          calendar  month;  or  (2)  the  average daily dollar volume calculated
          during  the  ten  (10)  business  days  prior  to  a  conversion,  per
          conversion.

               (B)  CONVERSION PRICE DURING MAJOR ANNOUNCEMENTS. Notwithstanding
                    -------------------------------------------
          anything contained in Section 1.2(a) to the contrary, in the event the
          Borrower  (i)  makes  a  public  announcement  that  it  intends  to
          consolidate  or  merge with any other corporation (other than a merger
          in  which  the Borrower is the surviving or continuing corporation and
          its  capital  stock  is  unchanged)  or  sell  or  transfer  all  or
          substantially  all  of  the assets of the Borrower or (ii) any person,
          group  or  entity (including the Borrower) publicly announces a tender
          offer  to  purchase 50% or more of the Borrower's Common Stock (or any
          other  takeover  scheme)  (the date of the announcement referred to in
          clause  (i)  or  (ii)  is hereinafter referred to as the "ANNOUNCEMENT
          DATE"),  then  the  Conversion  Price  shall,  effective  upon  the
          Announcement Date and continuing through the Adjusted Conversion Price
          Termination  Date (as defined below), be equal to the lower of (x) the
          Conversion  Price  which  would  have been applicable for a Conversion
          occurring  on  the Announcement Date and (y) the Conversion Price that
          would  otherwise  be in effect. From and after the Adjusted Conversion
          Price  Termination  Date,  the Conversion Price shall be determined as
          set  forth  in  this  Section  1.2(a).  For purposes hereof, "ADJUSTED
          CONVERSION  PRICE  TERMINATION  DATE"  shall mean, with respect to any
          proposed  transaction or tender offer (or takeover scheme) for which a
          public  announcement  as  contemplated by this Section 1.2(b) has been
          made,  the  date  upon  which  the Borrower (in the case of clause (i)
          above)  or  the  person,  group  or entity (in the case of clause (ii)
          above)  consummates  or  publicly  announces  the  termination  or
          abandonment  of  the proposed transaction or tender offer (or takeover
          scheme)  which  caused  this  Section  1.2(b)  to  become  operative.

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

<PAGE>

          If,  at any time a Holder of this Note submits a Notice of Conversion,
     and the Borrower does not have sufficient authorized but unissued shares of
     Common  Stock  available  to  effect such conversion in accordance with the
     provisions  of  this Article I (a "CONVERSION DEFAULT"), subject to Section
     4.8,  the  Borrower  shall  issue to the Holder all of the shares of Common
     Stock  which  are  then available to effect such conversion. The portion of
     this  Note  which  the  Holder  included in its Conversion Notice and which
     exceeds  the  amount  which  is  then  convertible into available shares of
     Common  Stock  (the "EXCESS AMOUNT") shall, notwithstanding anything to the
     contrary  contained  herein,  not  be  convertible  into  Common  Stock  in
     accordance  with  the terms hereof until (and at the Holder's option at any
     time  after)  the  date additional shares of Common Stock are authorized by
     the  Borrower to permit such conversion, at which time the Conversion Price
     in  respect  thereof shall be the lesser of (i) the Conversion Price on the
     Conversion Default Date (as defined below) and (ii) the Conversion Price on
     the Conversion Date thereafter elected by the Holder in respect thereof. In
     addition,  the  Borrower  shall  pay  to  the  Holder payments ("CONVERSION
     DEFAULT PAYMENTS") for a Conversion Default in the amount of (x) the sum of
                                                                          ------
     (1) the then outstanding principal amount of this Note plus (2) accrued and
                                                            ----
     unpaid  interest  on  the  unpaid principal amount of this Note through the
     Authorization Date (as defined below) plus (3) Default Interest, if any, on
                                           ----
     the  amounts  referred to in clauses (1) and/or (2), multiplied by (y) .24,
                                                          -------------
     multiplied  by  (z)  (N/365), where N = the number of days from the day the
     --------------
     holder  submits  a Notice of Conversion giving rise to a Conversion Default
     (the "CONVERSION DEFAULT DATE") to the date (the "AUTHORIZATION DATE") that
     the  Borrower  authorizes  a sufficient number of shares of Common Stock to
     effect  conversion  of the full outstanding principal balance of this Note.
     The Borrower shall use its best efforts to authorize a sufficient number of
     shares  of Common Stock as soon as practicable following the earlier of (i)
     such  time  that  the  Holder  notifies  the  Borrower or that the Borrower
     otherwise  becomes  aware  that  there  are  or likely will be insufficient
     authorized  and unissued shares to allow full conversion thereof and (ii) a
     Conversion  Default.  The  Borrower  shall send notice to the Holder of the
     authorization  of additional shares of Common Stock, the Authorization Date
     and the amount of Holder's accrued Conversion Default Payments. The accrued
     Conversion  Default  Payments for each calendar month shall be paid in cash
     or  shall  be  convertible  into  Common  Stock  (at such time as there are
     sufficient  authorized shares of Common Stock) at the applicable Conversion
     Price,  at  the  Borrower's  option,  as  follows:

               (A) In the event Holder elects to take such payment in cash, cash
          payment  shall  be  made to Holder by the fifth (5th) day of the month
          following  the  month  in  which  it  has  accrued;  and

               (B)  In  the  event  Holder elects to take such payment in Common
          Stock, the Holder may convert such payment amount into Common Stock at
          the  Conversion  Price (as in effect at the time of conversion) at any
          time  after the fifth day of the month following the month in which it
          has accrued in accordance with the terms of this Article I (so long as
          there  is  then  a  sufficient  number  of authorized shares of Common
          Stock).

          The  Holder's election shall be made in writing to the Borrower at any
     time  prior  to 6:00 p.m., New York, New York time, on the third day of the
     month  following  the  month  in  which  Conversion  Default  payments have
     accrued. If no election is made, the Holder shall be deemed to have elected
     to  receive  cash.  Nothing herein shall limit the Holder's right to pursue

<PAGE>

     actual damages (to the extent in excess of the Conversion Default Payments)
     for  the  Borrower's  failure to maintain a sufficient number of authorized
     shares  of Common Stock, and each holder shall have the right to pursue all
     remedies  available  at  law  or  in  equity  (including degree of specific
     performance  and/or  injunctive  relief).

          1.4  METHOD  OF  CONVERSION.
               ----------------------

               (A)  MECHANICS  OF  CONVERSION. Subject to Section 1.1, this Note
                    -------------------------
          may  be  converted  by the Holder in whole or in part at any time from
          time to time after the Issue Date, by (A) submitting to the Borrower a
          Notice  of  Conversion  (by  facsimile  or  other  reasonable means of
          communication  dispatched  on  the Conversion Date prior to 6:00 p.m.,
          New  York,  New  York  time)  and  (B)  subject  to  Section  1.4(b),
          surrendering  this  Note  at  the  principal  office  of the Borrower.

               (B)  SURRENDER  OF NOTE UPON CONVERSION. Notwithstanding anything
                    ----------------------------------
          to  the  contrary  set  forth  herein, upon conversion of this Note in
          accordance  with the terms hereof, the Holder shall not be required to
          physically  surrender  this  Note  to  the  Borrower unless the entire
          unpaid  principal  amount of this Note is so converted. The Holder and
          the  Borrower  shall  maintain records showing the principal amount so
          converted  and  the  dates of such conversions or shall use such other
          method,  reasonably satisfactory to the Holder and the Borrower, so as
          not  to  require  physical  surrender  of  this  Note  upon  each such
          conversion.  In  the event of any dispute or discrepancy, such records
          of  the Borrower shall be controlling and determinative in the absence
          of  manifest  error.  Notwithstanding the foregoing, if any portion of
          this  Note is converted as aforesaid, the Holder may not transfer this
          Note  unless  the  Holder first physically surrenders this Note to the
          Borrower, whereupon the Borrower will forthwith issue and deliver upon
          the  order  of  the Holder a new Note of like tenor, registered as the
          Holder  (upon  payment by the Holder of any applicable transfer taxes)
          may  request,  representing  in  the  aggregate  the  remaining unpaid
          principal  amount  of  this  Note.  The  Holder  and  any assignee, by
          acceptance  of this Note, acknowledge and agree that, by reason of the
          provisions  of  this  paragraph,  following conversion of a portion of
          this  Note,  the  unpaid and unconverted principal amount of this Note
          represented  by  this  Note  may be less than the amount stated on the
          face  hereof.

               (C)  PAYMENT  OF TAXES. The Borrower shall not be required to pay
                    -----------------
          any  tax  which  may be payable in respect of any transfer involved in
          the  issue  and delivery of shares of Common Stock or other securities
          or  property  on  conversion of this Note in a name other than that of
          the Holder (or in street name), and the Borrower shall not be required
          to  issue  or  deliver any such shares or other securities or property
          unless  and  until the person or persons (other than the Holder or the
          custodian  in  whose  street  name  such shares are to be held for the
          Holder's  account)  requesting the issuance thereof shall have paid to
          the  Borrower  the amount of any such tax or shall have established to
          the  satisfaction  of  the  Borrower  that  such  tax  has  been paid.

               (D) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon receipt by the
                   ----------------------------------------
          Borrower  from  the  Holder  of  a  facsimile  transmission  (or other
          reasonable  means  of communication) of a Notice of Conversion meeting
          the  requirements  for conversion as provided in this Section 1.4, the
          Borrower  shall  issue and deliver or cause to be issued and delivered
          to  or  upon the order of the Holder certificates for the Common Stock
          issuable  upon  such  conversion  within three (3) business days after

<PAGE>

          such  receipt  (and,  solely  in  the case of conversion of the entire
          unpaid  principal  amount  hereof, surrender of this Note) (such third
          business  day  being  hereinafter  referred  to  as the "DEADLINE") in
          accordance  with  the  terms  hereof  and  the  Purchase  Agreement
          (including, without limitation, in accordance with the requirements of
          Section 2(g) of the Purchase Agreement that certificates for shares of
          Common Stock issued on or after the effective date of the Registration
          Statement  upon conversion of this Note shall not bear any restrictive
          legend).

               (E)  OBLIGATION OF BORROWER TO DELIVER COMMON STOCK. Upon receipt
                    ----------------------------------------------
          by  the Borrower of a Notice of Conversion, the Holder shall be deemed
          to  be  the  holder  of  record of the Common Stock issuable upon such
          conversion, the outstanding principal amount and the amount of accrued
          and  unpaid  interest  on  this  Note shall be reduced to reflect such
          conversion, and, unless the Borrower defaults on its obligations under
          this  Article  I,  all rights with respect to the portion of this Note
          being  so  converted  shall  forthwith  terminate  except the right to
          receive the Common Stock or other securities, cash or other assets, as
          herein  provided, on such conversion. If the Holder shall have given a
          Notice  of Conversion as provided herein, the Borrower's obligation to
          issue  and deliver the certificates for Common Stock shall be absolute
          and  unconditional,  irrespective  of the absence of any action by the
          Holder  to enforce the same, any waiver or consent with respect to any
          provision  thereof, the recovery of any judgment against any person or
          any  action  to  enforce  the  same,  any  failure  or  delay  in  the
          enforcement  of  any other obligation of the Borrower to the holder of
          record,  or  any  setoff,  counterclaim,  recoupment,  limitation  or
          termination,  or  any  breach  or  alleged breach by the Holder of any
          obligation to the Borrower, and irrespective of any other circumstance
          which  might  otherwise  limit  such obligation of the Borrower to the
          Holder  in  connection  with  such  conversion.  The  Conversion  Date
          specified  in the Notice of Conversion shall be the Conversion Date so
          long  as  the  Notice of Conversion is received by the Borrower before
          6:00  p.m.,  New  York,  New  York  time,  on  such  date.

               (F)  DELIVERY  OF COMMON STOCK BY ELECTRONIC TRANSFER. In lieu of
                    ------------------------------------------------
          delivering  physical  certificates  representing  the  Common  Stock
          issuable  upon  conversion,  provided the Borrower's transfer agent is
          participating  in  the Depository Trust Company ("DTC") Fast Automated
          Securities  Transfer  ("FAST") program, upon request of the Holder and
          its  compliance  with  the  provisions contained in Section 1.1 and in
          this Section 1.4, the Borrower shall use its best efforts to cause its
          transfer  agent  to  electronically transmit the Common Stock issuable
          upon  conversion  to  the  Holder by crediting the account of Holder's
          Prime  Broker with DTC through its Deposit Withdrawal Agent Commission
          ("DWAC")  system.

               (G) FAILURE TO DELIVER COMMON STOCK PRIOR TO DEADLINE. Without in
                   -------------------------------------------------
          any  way  limiting  the  Holder's  right  to  pursue  other  remedies,
          including  actual  damages  and/or equitable relief, the parties agree
          that  if delivery of the Common Stock issuable upon conversion of this
          Note  is  more  than three (3) business days after the Deadline (other
          than  a  failure  due  to  the  circumstances described in Section 1.3
          above,  which  failure shall be governed by such Section) the Borrower
          shall  pay  to  the Holder $1,000 per day in cash, for each day beyond
          the  Deadline  that  the  Borrower fails to deliver such Common Stock.
          Such cash amount shall be paid to Holder by the fifth day of the month
          following  the  month in which it has accrued or, at the option of the
          Holder  (by  written  notice  to  the Borrower by the first day of the
          month  following the month in which it has accrued), shall be added to
          the  principal  amount  of  this  Note,  in which event interest shall
          accrue  thereon  in  accordance  with  the terms of this Note and such

<PAGE>

          additional  principal amount shall be convertible into Common Stock in
          accordance  with  the  terms  of  this  Note.

          1.5  CONCERNING  THE  SHARES. The shares of Common Stock issuable upon
               -----------------------
     conversion  of  this  Note  may  not be sold or transferred unless (i) such
     shares  are  sold pursuant to an effective registration statement under the
     Act  or  (ii)  the Borrower or its transfer agent shall have been furnished
     with  an  opinion of counsel (which opinion shall be in form, substance and
     scope  customary for opinions of counsel in comparable transactions) to the
     effect that the shares to be sold or transferred may be sold or transferred
     pursuant  to  an  exemption from such registration or (iii) such shares are
     sold  or  transferred  pursuant  to  Rule 144 under the Act (or a successor
     rule)  ("RULE  144")  or (iv) such shares are transferred to an "affiliate"
     (as  defined  in  Rule 144) of the Borrower who agrees to sell or otherwise
     transfer  the shares only in accordance with this Section 1.5 and who is an
     Accredited  Investor  (as  defined  in  the  Purchase Agreement). Except as
     otherwise  provided  in  the Purchase Agreement (and subject to the removal
     provisions  set forth below), until such time as the shares of Common Stock
     issuable upon conversion of this Note have been registered under the Act as
     contemplated  by the Registration Rights Agreement or otherwise may be sold
     pursuant to Rule 144 without any restriction as to the number of securities
     as of a particular date that can then be immediately sold, each certificate
     for  shares  of Common Stock issuable upon conversion of this Note that has
     not been so included in an effective registration statement or that has not
     been  sold  pursuant to an effective registration statement or an exemption
     that  permits  removal  of the legend, shall bear a legend substantially in
     the  following  form,  as  appropriate:

            "THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE  HAVE
             NOT  BEEN  REGISTERED  UNDER  THE SECURITIES ACT OF 1933, AS
             AMENDED.  THE  SECURITIES  MAY  NOT  BE SOLD, TRANSFERRED OR
             ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE  REGISTRATION
             STATEMENT  FOR  THE SECURITIES UNDER SAID ACT, OR AN OPINION
             OF  COUNSEL  IN  FORM,  SUBSTANCE  AND  SCOPE  CUSTOMARY FOR
             OPINIONS  OF  COUNSEL  IN  COMPARABLE  TRANSACTIONS,  THAT
             REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID ACT UNLESS SOLD
             PURSUANT  TO  RULE  144  OR  REGULATION  S  UNDER SAID ACT."

          The  legend  set  forth  above shall be removed and the Borrower shall
     issue  to the Holder a new certificate therefor free of any transfer legend
     if (i) the Borrower or its transfer agent shall have received an opinion of
     counsel,  in form, substance and scope customary for opinions of counsel in
     comparable  transactions,  to  the effect that a public sale or transfer of
     such  Common  Stock  may be made without registration under the Act and the
     shares  are  so sold or transferred, (ii) such Holder provides the Borrower
     or  its  transfer  agent  with  reasonable assurances that the Common Stock

<PAGE>

     issuable  upon  conversion  of this Note (to the extent such securities are
     deemed to have been acquired on the same date) can be sold pursuant to Rule
     144  or  (iii)  in the case of the Common Stock issuable upon conversion of
     this  Note,  such  security  is  registered for sale by the Holder under an
     effective  registration  statement  filed under the Act or otherwise may be
     sold  pursuant  to  Rule  144  without  any restriction as to the number of
     securities  as  of  a  particular  date  that can then be immediately sold.
     Nothing  in  this  Note shall (i) limit the Borrower's obligation under the
     Registration  Rights  Agreement  or  (ii)  affect  in  any way the Holder's
     obligations to comply with applicable prospectus delivery requirements upon
     the  resale  of  the  securities  referred  to  herein.

          1.6  EFFECT  OF  CERTAIN  EVENTS.
               ---------------------------

               (A)  EFFECT  OF  MERGER, CONSOLIDATION, ETC. At the option of the
                    --------------------------------------
          Holder,  the  sale,  conveyance or disposition of all or substantially
          all of the assets of the Borrower, the effectuation by the Borrower of
          a transaction or series of related transactions in which more than 50%
          of  the  voting  power  of  the  Borrower  is  disposed  of,  or  the
          consolidation,  merger  or  other business combination of the Borrower
          with  or  into any other Person (as defined below) or Persons when the
          Borrower  is  not  the  survivor  shall either: (i) be deemed to be an
          Event  of  Default  (as  defined in Article III) pursuant to which the
          Borrower  shall be required to pay to the Holder upon the consummation
          of  and  as  a  condition  to  such transaction an amount equal to the
          Default Amount (as defined in Article III) or (ii) be treated pursuant
          to  Section  1.6(b)  hereof.  "PERSON"  shall  mean  any  individual,
          corporation,  limited  liability  company,  partnership,  association,
          trust  or  other  entity  or  organization.

               (B) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, at any time
                   --------------------------------------------
          when  this  Note  is issued and outstanding and prior to conversion of
          all  of  the Notes, there shall be any merger, consolidation, exchange
          of  shares,  recapitalization, reorganization, or other similar event,
          as  a  result of which shares of Common Stock of the Borrower shall be
          changed into the same or a different number of shares of another class
          or  classes  of stock or securities of the Borrower or another entity,
          or  in  case  of any sale or conveyance of all or substantially all of
          the  assets  of  the  Borrower other than in connection with a plan of
          complete  liquidation  of  the  Borrower, then the Holder of this Note
          shall  thereafter  have  the  right to receive upon conversion of this
          Note,  upon  the  basis  and  upon  the terms and conditions specified
          herein  and  in  lieu  of  the  shares  of  Common  Stock  immediately
          theretofore issuable upon conversion, such stock, securities or assets
          which  the  Holder  would  have  been  entitled  to  receive  in  such
          transaction  had this Note been converted in full immediately prior to
          such  transaction (without regard to any limitations on conversion set
          forth  herein),  and  in any such case appropriate provisions shall be
          made  with  respect  to the rights and interests of the Holder of this
          Note  to  the  end  that  the  provisions  hereof  (including, without
          limitation,  provisions  for adjustment of the Conversion Price and of
          the  number  of  shares  issuable  upon  conversion of the Note) shall
          thereafter  be applicable, as nearly as may be practicable in relation
          to any securities or assets thereafter deliverable upon the conversion
          hereof.  The  Borrower  shall  not effect any transaction described in
          this  Section  1.6(b)  unless  (a)  it  first  gives,  to  the  extent
          practicable,  thirty  (30) days prior written notice (but in any event
          at least fifteen (15) days prior written notice) of the record date of
          the special meeting of shareholders to approve, or if there is no such
          record date, the consummation of, such merger, consolidation, exchange
          of  shares, recapitalization, reorganization or other similar event or
          sale  of  assets  (during  which  time the Holder shall be entitled to
          convert this Note) and (b) the resulting successor or acquiring entity
          (if not the Borrower) assumes by written instrument the obligations of
          this  Section  1.6(b).  The  above provisions shall similarly apply to
          successive  consolidations,  mergers,  sales,  transfers  or  share
          exchanges.

               (C) ADJUSTMENT DUE TO DISTRIBUTION. If the Borrower shall declare
                   ------------------------------
          or  make  any  distribution  of  its  assets (or rights to acquire its
          assets) to holders of Common Stock as a dividend, stock repurchase, by

<PAGE>

          way  of  return  of  capital  or  otherwise (including any dividend or
          distribution  to  the  Borrower's  shareholders  in cash or shares (or
          rights  to  acquire  shares) of capital stock of a subsidiary (i.e., a
          spin-off))  (a  "DISTRIBUTION"), then the Holder of this Note shall be
          entitled,  upon  any  conversion of this Note after the date of record
          for determining shareholders entitled to such Distribution, to receive
          the  amount of such assets which would have been payable to the Holder
          with  respect  to  the  shares  of  Common  Stock  issuable  upon such
          conversion  had  such  Holder been the holder of such shares of Common
          Stock  on  the  record  date  for  the  determination  of shareholders
          entitled  to  such  Distribution.

               (D) ADJUSTMENT DUE TO DILUTIVE ISSUANCE. If, at any time when any
                   -----------------------------------
          Notes  are issued and outstanding, the Borrower issues or sells, or in
          accordance with this Section 1.6(d) hereof is deemed to have issued or
          sold,  any  shares  of  Common  Stock  for  no  consideration or for a
          consideration  per  share  (before deduction of reasonable expenses or
          commissions  or  underwriting  discounts  or  allowances in connection
          therewith)  less than the Fixed Conversion Price in effect on the date
          of  such  issuance (or deemed issuance) of such shares of Common Stock
          (a  "DILUTIVE ISSUANCE"), then immediately upon the Dilutive Issuance,
          the  Variable  Conversion  Price  will be reduced to the amount of the
          consideration  per  share  received  by  the Borrower in such Dilutive
          Issuance;  provided  that  only  one  adjustment will be made for each
          Dilutive  Issuance.

               The  Borrower  shall  be  deemed to have issued or sold shares of
          Common  Stock  if  the  Borrower  in  any  manner issues or grants any
          warrants,  rights  or  options  (not  including  employee stock option
          plans), whether or not immediately exercisable, to subscribe for or to
          purchase  Common  Stock  or  other  securities  convertible  into  or
          exchangeable  for  Common  Stock  ("CONVERTIBLE  SECURITIES")  (such
          warrants,  rights  and options to purchase Common Stock or Convertible
          Securities are hereinafter referred to as "OPTIONS") and the price per
          share  for  which  Common  Stock is issuable upon the exercise of such
          Options  is  less  than  the Variable Conversion Price then in effect,
          then  the  Variable  Conversion Price shall be equal to such price per
          share.  For  purposes  of the preceding sentence, the "price per share
          for  which Common Stock is issuable upon the exercise of such Options"
          is  determined  by  dividing (i) the total amount, if any, received or
          receivable  by  the  Borrower  as  consideration  for  the issuance or
          granting  of  all  such  Options, plus the minimum aggregate amount of
          additional  consideration,  if  any,  payable to the Borrower upon the
          exercise  of  all  such  Options,  plus,  in  the  case of Convertible
          Securities  issuable  upon  the  exercise of such Options, the minimum
          aggregate  amount  of  additional  consideration  payable  upon  the
          conversion or exchange thereof at the time such Convertible Securities
          first  become  convertible  or exchangeable, by (ii) the maximum total
          number  of  shares  of  Common Stock issuable upon the exercise of all
          such  Options  (assuming full conversion of Convertible Securities, if
          applicable).  No  further  adjustment  to the Conversion Price will be
          made  upon  the actual issuance of such Common Stock upon the exercise
          of  such  Options  or  upon  the conversion or exchange of Convertible
          Securities  issuable  upon  exercise  of  such  Options.

               Additionally, the Borrower shall be deemed to have issued or sold
          shares  of  Common Stock if the Borrower in any manner issues or sells
          any  Convertible  Securities,  whether  or not immediately convertible
          (other than where the same are issuable upon the exercise of Options),
          and  the  price per share for which Common Stock is issuable upon such
          conversion or exchange is less than the Variable Conversion Price then
          in  effect,  then the Variable Conversion Price shall be equal to such
          price  per  share.  For  the  purposes  of the preceding sentence, the

<PAGE>

          "price  per  share  for  which  Common  Stock  is  issuable  upon such
          conversion  or  exchange"  is  determined  by  dividing  (i) the total
          amount,  if  any,  received  or  receivable  by  the  Borrower  as
          consideration  for  the  issuance  or  sale  of  all  such Convertible
          Securities,  plus  the  minimum  aggregate  amount  of  additional
          consideration,  if any, payable to the Borrower upon the conversion or
          exchange  thereof at the time such Convertible Securities first become
          convertible  or  exchangeable,  by  (ii)  the  maximum total number of
          shares of Common Stock issuable upon the conversion or exchange of all
          such  Convertible  Securities.  No  further adjustment to the Variable
          Conversion  Price will be made upon the actual issuance of such Common
          Stock  upon  conversion  or  exchange  of such Convertible Securities.

               (E)  PURCHASE  RIGHTS.  If, at any time when any Notes are issued
                    ----------------
          and  outstanding,  the  Borrower  issues any convertible securities or
          rights  to purchase stock, warrants, securities or other property (the
          "PURCHASE  RIGHTS")  pro  rata  to  the record holders of any class of
          Common  Stock,  then  the  Holder  of  this  Note  will be entitled to
          acquire,  upon  the  terms  applicable  to  such  Purchase Rights, the
          aggregate  Purchase  Rights  which  such Holder could have acquired if
          such  Holder  had held the number of shares of Common Stock acquirable
          upon  complete  conversion  of  this  Note  (without  regard  to  any
          limitations  on  conversion  contained  herein) immediately before the
          date  on  which  a  record is taken for the grant, issuance or sale of
          such  Purchase  Rights  or, if no such record is taken, the date as of
          which  the record holders of Common Stock are to be determined for the
          grant,  issue  or  sale  of  such  Purchase  Rights.

               (F) NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment
                   ---------------------
          or  readjustment  of  the  Conversion  Price as a result of the events
          described  in  this  Section  1.6, the Borrower, at its expense, shall
          promptly  compute  such  adjustment  or  readjustment  and prepare and
          furnish  to  the Holder of a certificate setting forth such adjustment
          or  readjustment  and  showing  in  detail  the  facts upon which such
          adjustment  or  readjustment  is  based.  The Borrower shall, upon the
          written  request  at  any time of the Holder, furnish to such Holder a
          like  certificate  setting  forth (i) such adjustment or readjustment,
          (ii)  the  Conversion Price at the time in effect and (iii) the number
          of  shares of Common Stock and the amount, if any, of other securities
          or property which at the time would be received upon conversion of the
          Note.

          1.7  RESERVED
               --------

          1.8  STATUS  AS SHAREHOLDER. Upon submission of a Notice of Conversion
               ----------------------
     by a Holder, (i) the shares covered thereby (other than the shares, if any,
     which  cannot  be  issued because their issuance would exceed such Holder's
     allocated  portion of the Reserved Amount or Maximum Share Amount) shall be
     deemed  converted  into shares of Common Stock and (ii) the Holder's rights
     as  a  Holder  of  such  converted  portion  of  this  Note shall cease and
     terminate, excepting only the right to receive certificates for such shares
     of  Common Stock and to any remedies provided herein or otherwise available
     at  law or in equity to such Holder because of a failure by the Borrower to
     comply  with  the  terms  of this Note. Notwithstanding the foregoing, if a
     Holder  has  not received certificates for all shares of Common Stock prior
     to  the tenth (10th) business day after the expiration of the Deadline with
     respect  to  a  conversion of any portion of this Note for any reason, then
     (unless  the  Holder  otherwise  elects to retain its status as a holder of
     Common  Stock  by  so  notifying  the Borrower) the Holder shall regain the
     rights  of  a Holder of this Note with respect to such unconverted portions
     of  this  Note  and the Borrower shall, as soon as practicable, return such
     unconverted  Note  to  the Holder or, if the Note has not been surrendered,
     adjust  its  records to reflect that such portion of this Note has not been

<PAGE>

     converted.  In  all  cases,  the  Holder shall retain all of its rights and
     remedies  (including,  without  limitation,  (i)  the  right  to  receive
     Conversion  Default Payments pursuant to Section 1.3 to the extent required
     thereby  for  such Conversion Default and any subsequent Conversion Default
     and  (ii) the right to have the Conversion Price with respect to subsequent
     conversions  determined  in accordance with Section 1.3) for the Borrower's
     failure  to  convert  this  Note.

                          ARTICLE II. CERTAIN COVENANTS

          2.1 DISTRIBUTIONS ON CAPITAL STOCK. So long as the Borrower shall have
              ------------------------------
     any obligation under this Note, the Borrower shall not without the Holder's
     written  consent  (a)  pay,  declare  or  set  apart  for such payment, any
     dividend  or  other  distribution  (whether  in  cash,  property  or  other
     securities)  on  shares  of capital stock other than dividends on shares of
     Common Stock solely in the form of additional shares of Common Stock or (b)
     directly  or indirectly or through any subsidiary make any other payment or
     distribution  in  respect  of  its  capital  stock except for distributions
     pursuant  to  any shareholders' rights plan which is approved by a majority
     of  the  Borrower's  disinterested  directors.

          2.2  RESTRICTION  ON  STOCK REPURCHASES. So long as the Borrower shall
               ----------------------------------
     have  any  obligation  under  this Note, the Borrower shall not without the
     Holder's  written  consent redeem, repurchase or otherwise acquire (whether
     for  cash  or in exchange for property or other securities or otherwise) in
     any one transaction or series of related transactions any shares of capital
     stock  of  the  Borrower  or any warrants, rights or options to purchase or
     acquire  any  such  shares.

          2.3  BORROWINGS.  So  long  as  the Borrower shall have any obligation
               ----------
     under  this  Note,  the  Borrower  shall  not, without the Holder's written
     consent,  create,  incur,  assume  or  suffer  to  exist  any liability for
     borrowed money, except (a) borrowings in existence or committed on the date
     hereof  and  of  which the Borrower has informed Holder in writing prior to
     the  date  hereof,  (b)  indebtedness  to  trade  creditors  or  financial
     institutions incurred in the ordinary course of business or (c) borrowings,
     the  proceeds  of  which  shall  be  used  to  repay  this  Note.

          2.4  SALE OF ASSETS. So long as the Borrower shall have any obligation
               --------------
     under  this  Note,  the  Borrower  shall  not, without the Holder's written
     consent, sell, lease or otherwise dispose of any significant portion of its
     assets  outside  the  ordinary  course  of  business.  Any  consent  to the
     disposition  of  any  assets  may  be conditioned on a specified use of the
     proceeds  of  disposition.

          2.5  ADVANCES  AND  LOANS.  So  long  as  the  Borrower shall have any
               --------------------
     obligation  under  this  Note, the Borrower shall not, without the Holder's
     written  consent,  lend  money, give credit or make advances to any person,
     firm,  joint  venture  or  corporation,  including,  without  limitation,
     officers,  directors,  employees,  subsidiaries  and  affiliates  of  the
     Borrower,  except  loans, credits or advances (a) in existence or committed
     on  the  date  hereof and which the Borrower has informed Holder in writing
     prior  to  the  date hereof, (b) made in the ordinary course of business or
     (c)  not  in  excess  of  $100,000.

<PAGE>

          2.6  CONTINGENT  LIABILITIES.  So  long as the Borrower shall have any
               -----------------------
     obligation  under  this  Note, the Borrower shall not, without the Holder's
     written  consent,  which  shall  not  be  unreasonably  withheld,  assume,
     guarantee,  endorse,  contingently  agree  to  purchase or otherwise become
     liable  upon the obligation of any person, firm, partnership, joint venture
     or  corporation,  except  by  the endorsement of negotiable instruments for
     deposit  or collection and except assumptions, guarantees, endorsements and
     contingencies  (a)  in  existence or committed on the date hereof and which
     the  Borrower  has informed Holder in writing prior to the date hereof, and
     (b)  similar  transactions  in  the  ordinary  course  of  business.

                         ARTICLE III. EVENTS OF DEFAULT

          If  any  of  the  following  events  of  default  (each,  an "EVENT OF
     DEFAULT")  shall  occur:

          3.1  FAILURE  TO  PAY PRINCIPAL OR INTEREST. The Borrower fails to pay
               --------------------------------------
     the  principal hereof or interest thereon when due on this Note, whether at
     maturity,  upon  a Trading Market Prepayment Event pursuant to Section 1.7,
     upon  acceleration  or  otherwise;

          3.2  CONVERSION  AND THE SHARES. The Borrower fails to issue shares of
               --------------------------
     Common  Stock  to  the  Holder  (or announces or threatens that it will not
     honor  its  obligation  to  do  so)  upon  exercise  by  the  Holder of the
     conversion  rights of the Holder in accordance with the terms of this Note,
     fails  to  transfer or cause its transfer agent to transfer (electronically
     or  in certificated form) any certificate for shares of Common Stock issued
     to  the Holder upon conversion of or otherwise pursuant to this Note as and
     when  required  by this Note or the Registration Rights Agreement, or fails
     to  remove  any  restrictive  legend  (or  to  withdraw  any  stop transfer
     instructions  in  respect  thereof)  on  any  certificate for any shares of
     Common  Stock issued to the Holder upon conversion of or otherwise pursuant
     to  this  Note as and when required by this Note or the Registration Rights
     Agreement  (or makes any announcement, statement or threat that it does not
     intend  to  honor the obligations described in this paragraph) and any such
     failure  shall  continue  uncured (or any announcement, statement or threat
     not  to  honor its obligations shall not be rescinded in writing) for three
     (3)  business  days  after  the  Borrower  shall have received a conversion
     request  by  the  Holder;

          3.3  FAILURE  TO  TIMELY FILE REGISTRATION OR EFFECT REGISTRATION. The
               ------------------------------------------------------------
     Borrower  fails  to  file the Registration Statement within sixty (60) days
     following the Closing Date (as defined in the Purchase Agreement) or obtain
     effectiveness  with  the  Securities  and  Exchange  Commission  of  the
     Registration  Statement  within one hundred forty-five (145) days following
     the  Closing  Date  (as  defined  in  the  Purchase  Agreement)  or  such
     Registration  Statement lapses in effect (or sales cannot otherwise be made
     thereunder  effective, whether by reason of the Borrower's failure to amend
     or  supplement  the  prospectus  included  therein  in  accordance with the
     Registration  Rights  Agreement  or  otherwise)  for  more  than  ten  (10)
     consecutive  days  or twenty (20) days in any twelve month period after the
     Registration  Statement  becomes  effective;

          3.4  BREACH  OF COVENANTS. The Borrower breaches any material covenant
               --------------------
     or  other  material term or condition contained in Sections 1.3, 1.6 or 1.7

<PAGE>

     of this Note, or Sections 4(c), 4(e), 4(h), 4(i), 4(j) or 5 of the Purchase
     Agreement  and  such  breach  continues for a period of ten (10) days after
     written  notice  thereof  to  the  Borrower  from  the  Holder;

          3.5  BREACH  OF  REPRESENTATIONS AND WARRANTIES. Any representation or
               ------------------------------------------
     warranty  of  the  Borrower  made  herein or in any agreement, statement or
     certificate  given  in  writing  pursuant  hereto or in connection herewith
     (including, without limitation, the Purchase Agreement and the Registration
     Rights  Agreement),  shall  be  false or misleading in any material respect
     when  made  and  the  breach of which has (or with the passage of time will
     have) a material adverse effect on the rights of the Holder with respect to
     this  Note,  the  Purchase  Agreement or the Registration Rights Agreement;

          3.6  RECEIVER  OR  TRUSTEE.  The  Borrower  or  any  subsidiary of the
               ---------------------
     Borrower  shall  make  an assignment for the benefit of creditors, or apply
     for  or consent to the appointment of a receiver or trustee for it or for a
     substantial part of its property or business, or such a receiver or trustee
     shall  otherwise  be  appointed;

          3.7  JUDGMENTS.  Any  money judgment, writ or similar process shall be
               ---------
     entered  or filed against the Borrower or any subsidiary of the Borrower or
     any  of  its  property  or  other  assets for more than $100,000, and shall
     remain  unvacated,  unbonded  or  unstayed for a period of twenty (20) days
     unless  otherwise  consented  to  by  the Holder, which consent will not be
     unreasonably  withheld;

          3.8  BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
               ----------
     proceedings or other proceedings for relief under any bankruptcy law or any
     law  for  the  relief  of  debtors  shall  be  instituted by or against the
     Borrower or any subsidiary of the Borrower, unless such proceeding shall be
     stayed  within  thirty  (30)  days;

          3.9  LISTING  OF COMMON STOCK. The Borrower shall fail to maintain the
               ------------------------
     listing  of  the Common Stock on at least one of the OTCBB or an equivalent
     replacement  exchange,  the  Nasdaq  National  Market,  the Nasdaq SmallCap
     Market,  the New York Stock Exchange, or the American Stock Exchange within
     180  days  from  the  date  of  Closing;  or

          3.10  DEFAULT  UNDER OTHER NOTES. An Event of Default has occurred and
                --------------------------
     is  continuing under any of the other Notes issued pursuant to the Purchase
     Agreement,

     then,  upon  the  occurrence  and  during  the continuation of any Event of
     Default specified in Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at
     the  option  of the Holders of a majority of the aggregate principal amount
     of  the  outstanding  Notes  issued  pursuant  to  the  Purchase  Agreement
     exercisable  through the delivery of written notice to the Borrower by such
     Holders  (the  "DEFAULT  NOTICE"),  and  upon the occurrence of an Event of
     Default  specified  in  Section 3.6 or 3.8 (unless, under Section 3.8, such
     proceeding  shall  be  stayed  within  30  days),  the  Notes  shall become
     immediately  due  and  payable and the Borrower shall pay to the Holder, in
     full  satisfaction  of  its  obligations  hereunder, an amount equal to the
     greater  of  (i)  130%  times the sum of (w) the then outstanding principal
                             -----     ---
     amount  of  this  Note  plus  (x) accrued and unpaid interest on the unpaid
                             ----
     principal  amount  of  this  Note  to  the  date of payment (the "MANDATORY
     PREPAYMENT  DATE")  plus  (y)  Default  Interest,  if  any,  on the amounts
                         ----
     referred  to  in  clauses  (w)  and/or (x) plus (z) any amounts owed to the
                                                ----
     Holder  pursuant  to  Sections 1.3 and 1.4(g) hereof or pursuant to Section

<PAGE>

     2(c)  of  the Registration Rights Agreement (the then outstanding principal
     amount  of this Note to the date of payment plus the amounts referred to in
                                                 ----
     clauses  (x), (y) and (z) shall collectively be known as the "DEFAULT SUM")
     or  (ii)  the "parity value" of the Default Sum to be prepaid, where parity
     value  means (a) the highest number of shares of Common Stock issuable upon
     conversion  of or otherwise pursuant to such Default Sum in accordance with
     Article  I,  treating  the  Trading Day immediately preceding the Mandatory
     Prepayment  Date  as  the "Conversion Date" for purposes of determining the
     lowest  applicable  Conversion  Price, unless the Default Event arises as a
     result  of  a breach in respect of a specific Conversion Date in which case
     such  Conversion  Date shall be the Conversion Date), multiplied by (b) the
                                                           -------------
     highest  Closing  Price for the Common Stock during the period beginning on
     the  date  of  first  occurrence of the Event of Default and ending one day
     prior to the Mandatory Prepayment Date (the "DEFAULT AMOUNT") and all other
     amounts  payable  hereunder  shall  immediately become due and payable, all
     without  demand,  presentment  or notice, all of which hereby are expressly
     waived,  together with all costs, including, without limitation, legal fees
     and  expenses,  of collection, and the Holder shall be entitled to exercise
     all  other  rights  and  remedies  available  at  law  or in equity. If the
     Borrower  fails  to pay the Default Amount within five (5) business days of
     written  notice  that such amount is due and payable, then the Holder shall
     have the right at any time, so long as the Borrower remains in default (and
     so  long and to the extent that there are sufficient authorized shares), to
     require the Borrower, upon written notice, to immediately issue, in lieu of
     the  Default  Amount,  the number of shares of Common Stock of the Borrower
     equal to the Default Amount divided by the Conversion Price then in effect.

                            ARTICLE IV. MISCELLANEOUS

          4.1  FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
               --------------------------------
     of  the  Holder  in the exercise of any power, right or privilege hereunder
     shall operate as a waiver thereof, nor shall any single or partial exercise
     of  any  such  power, right or privilege preclude other or further exercise
     thereof or of any other right, power or privileges. All rights and remedies
     existing  hereunder  are cumulative to, and not exclusive of, any rights or
     remedies  otherwise  available.

          4.2 NOTICES. Any notice herein required or permitted to be given shall
              -------
     be  in writing and may be personally served or delivered by courier or sent
     by  United  States mail and shall be deemed to have been given upon receipt
     if  personally  served  (which  shall  include  telephone  line  facsimile
     transmission) or sent by courier or three (3) days after being deposited in
     the  United  States  mail,  certified,  with  postage pre-paid and properly
     addressed,  if  sent  by  mail. For the purposes hereof, the address of the
     Holder shall be as shown on the records of the Borrower; and the address of
     the Borrower shall be 12926 Willowchase Drive, Houston, TX 77070, facsimile
     number:  (281). Both the Holder and the Borrower may change the address for
     service  by  service  of  written  notice  to the other as herein provided.

          4.3 AMENDMENTS. This Note and any provision hereof may only be amended
              ----------
     by an instrument in writing signed by the Borrower and the Holder. The term
     "Note" and all reference thereto, as used throughout this instrument, shall
     mean  this  instrument (and the other Notes issued pursuant to the Purchase
     Agreement)  as  originally  executed,  or if later amended or supplemented,
     then  as  so  amended  or  supplemented.

<PAGE>

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

          4.5  COST  OF  COLLECTION.  If  default is made in the payment of this
               --------------------
     Note,  the  Borrower  shall  pay  the  Holder  hereof  costs of collection,
     including  reasonable  attorneys'  fees.

          4.6  GOVERNING  LAW.  THIS  NOTE  SHALL  BE  ENFORCED, GOVERNED BY AND
               --------------
     CONSTRUED  IN  ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
     TO  AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
     REGARD  TO  THE PRINCIPLES OF CONFLICT OF LAWS. THE BORROWER HEREBY SUBMITS
     TO  THE  EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED
     IN  NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS NOTE,
     THE  AGREEMENTS  ENTERED  INTO  IN  CONNECTION HEREWITH OR THE TRANSACTIONS
     CONTEMPLATED  HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE
     OF  AN  INCONVENIENT  FORUM  TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
     BOTH  PARTIES  FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY
     FIRST  CLASS  MAIL  SHALL  BE  DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
     PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
     AFFECT  EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
     BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH
     SUIT  OR  PROCEEDING  SHALL  BE  CONCLUSIVE  AND  MAY  BE ENFORCED IN OTHER
     JURISDICTIONS  BY  SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE
     PARTY  WHICH  DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL
     BE  RESPONSIBLE  FOR  ALL  FEES  AND  EXPENSES,  INCLUDING ATTORNEYS' FEES,
     INCURRED  BY  THE  PREVAILING  PARTY  IN  CONNECTION  WITH  SUCH  DISPUTE.

          4.7  CERTAIN  AMOUNTS.  Whenever pursuant to this Note the Borrower is
               ----------------
     required to pay an amount in excess of the outstanding principal amount (or
     the  portion  thereof  required  to  be paid at that time) plus accrued and
     unpaid  interest  plus  Default Interest on such interest, the Borrower and
     the  Holder agree that the actual damages to the Holder from the receipt of
     cash  payment  on this Note may be difficult to determine and the amount to
     be  so paid by the Borrower represents stipulated damages and not a penalty
     and  is  intended  to  compensate  the  Holder  in  part  for  loss  of the
     opportunity  to  convert  this  Note  and to earn a return from the sale of
     shares  of Common Stock acquired upon conversion of this Note at a price in
     excess  of  the  price  paid  for  such  shares  pursuant to this Note. The
     Borrower and the Holder hereby agree that such amount of stipulated damages
     is not plainly disproportionate to the possible loss to the Holder from the
     receipt of a cash payment without the opportunity to convert this Note into
     shares  of  Common  Stock.

<PAGE>

          4.8  ALLOCATIONS  OF  MAXIMUM  SHARE  AMOUNT  AND RESERVED AMOUNT. The
               ------------------------------------------------------------
     Maximum  Share Amount and Reserved Amount shall be allocated pro rata among
     the  Holders of Notes based on the principal amount of such Notes issued to
     each  Holder. Each increase to the Maximum Share Amount and Reserved Amount
     shall  be  allocated  pro  rata  among  the  Holders  of Notes based on the
     principal  amount  of  such  Notes  held  by each Holder at the time of the
     increase  in  the  Maximum  Share Amount or Reserved Amount. In the event a
     Holder  shall  sell  or otherwise transfer any of such Holder's Notes, each
     transferee  shall  be  allocated  a  pro  rata portion of such transferor's
     Maximum  Share Amount and Reserved Amount. Any portion of the Maximum Share
     Amount  or  Reserved Amount which remains allocated to any person or entity
     which  does  not hold any Notes shall be allocated to the remaining Holders
     of Notes, pro rata based on the principal amount of such Notes then held by
     such  Holders.

          4.9 DAMAGES SHARES. The shares of Common Stock that may be issuable to
              --------------
     the  Holder  pursuant  to  Sections  1.3  and 1.4(g) hereof and pursuant to
     Section  2(c) of the Registration Rights Agreement ("DAMAGES SHARES") shall
     be  treated  as  Common Stock issuable upon conversion of this Note for all
     purposes hereof and shall be subject to all of the limitations and afforded
     all  of  the rights of the other shares of Common Stock issuable hereunder,
     including  without limitation, the right to be included in the Registration
     Statement filed pursuant to the Registration Rights Agreement. For purposes
     of calculating interest payable on the outstanding principal amount hereof,
     except  as  otherwise  provided  herein,  amounts  convertible into Damages
     Shares  ("DAMAGES  AMOUNTS")  shall not bear interest but must be converted
     prior  to  the conversion of any outstanding principal amount hereof, until
     the  outstanding  Damages  Amounts  is  zero.

          4.10  DENOMINATIONS.  At  the request of the Holder, upon surrender of
                -------------
     this  Note,  the  Borrower  shall promptly issue new Notes in the aggregate
     outstanding  principal  amount  hereof,  in  the  form  hereof,  in  such
     denominations  of  at  least  $50,000  as  the  Holder  shall  request.

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

          4.12  NOTICE  OF CORPORATE EVENTS. Except as otherwise provided below,
                ---------------------------
     the  Holder  of  this Note shall have no rights as a Holder of Common Stock
     unless and only to the extent that it converts this Note into Common Stock.
     The  Borrower  shall  provide  the  Holder  with  prior notification of any
     meeting  of  the Borrower's shareholders (and copies of proxy materials and
     other  information sent to shareholders). In the event of any taking by the
     Borrower  of  a  record  of its shareholders for the purpose of determining
     shareholders  who  are entitled to receive payment of any dividend or other
     distribution,  any  right  to  subscribe for, purchase or otherwise acquire
     (including  by  way  of  merger,  consolidation,  reclassification  or
     recapitalization)  any  share  of  any  class  or  any  other securities or
     property,  or to receive any other right, or for the purpose of determining
     shareholders who are entitled to vote in connection with any proposed sale,
     lease  or  conveyance  of  all  or  substantially  all of the assets of the
     Borrower  or  any  proposed  liquidation,  dissolution or winding up of the
     Borrower,  the  Borrower shall mail a notice to the Holder, at least twenty

<PAGE>

     (20)  days  prior to the record date specified therein (or thirty (30) days
     prior  to  the  consummation  of  the  transaction  or  event, whichever is
     earlier),  of  the  date  on  which  any such record is to be taken for the
     purpose  of  such dividend, distribution, right or other event, and a brief
     statement  regarding  the  amount  and  character  of  such  dividend,
     distribution,  right  or  other event to the extent known at such time. The
     Borrower  shall  make  a  public  announcement  of  any  event  requiring
     notification  to the Holder hereunder substantially simultaneously with the
     notification  to  the  Holder  in accordance with the terms of this Section
     4.12.

          4.13  REMEDIES.  The  Borrower acknowledges that a breach by it of its
                --------
     obligations  hereunder  will  cause  irreparable  harm  to  the  Holder, by
     vitiating  the  intent  and purpose of the transaction contemplated hereby.
     Accordingly,  the Borrower acknowledges that the remedy at law for a breach
     of  its  obligations  under this Note will be inadequate and agrees, in the
     event of a breach or threatened breach by the Borrower of the provisions of
     this  Note,  that  the  Holder  shall be entitled, in addition to all other
     available  remedies  at  law or in equity, and in addition to the penalties
     assessable  herein, to an injunction or injunctions restraining, preventing
     or curing any breach of this Note and to enforce specifically the terms and
     provisions  thereof,  without  the  necessity  of showing economic loss and
     without  any  bond  or  other  security  being  required.

                             ARTICLE V. CALL OPTION

          5.1 CALL OPTION. Notwithstanding anything to the contrary contained in
              -----------
     this Article V, so long as no Event of Default or Trading Market Prepayment
     Event  shall have occurred and be continuing, the Borrower has a sufficient
     number of authorized shares of Common Stock reserved for issuance upon full
     conversion  of  the  Notes,  then at any time after the Issue Date, and the
     Common Stock is trading at or below $.20 per share, the Borrower shall have
     the right, exercisable on not less than ten (10) Trading Days prior written
     notice  to  the  Holders  of the Notes (which notice may not be sent to the
     Holders  of  the  Notes until the Borrower is permitted to prepay the Notes
     pursuant  to  this  Section 5.1), to prepay all of the outstanding Notes in
     accordance  with  this  Section 5.1. Any notice of prepayment hereunder (an
     "OPTIONAL  PREPAYMENT")  shall  be delivered to the Holders of the Notes at
     their  registered  addresses  appearing  on  the  books  and records of the
     Borrower  and  shall state (1) that the Borrower is exercising its right to
     prepay  all  of  the  Notes  issued  on  the Issue Date and (2) the date of
     prepayment  (the  "OPTIONAL  PREPAYMENT  NOTICE").  On  the  date fixed for
     prepayment  (the  "OPTIONAL  PREPAYMENT  DATE"),  the  Borrower  shall make
     payment of the Optional Prepayment Amount (as defined below) to or upon the
     order of the Holders as specified by the Holders in writing to the Borrower
     at least one (1) business day prior to the Optional Prepayment Date. If the
     Borrower  exercises  its right to prepay the Notes, the Borrower shall make
     payment  to  the  holders  of  an  amount in cash (the "OPTIONAL PREPAYMENT
     AMOUNT")  equal  to  either  (i) 120% (for prepayments occurring within 180
     (180)  days of the Issue Date), (ii) 130% for prepayments occurring between
     one  hundred and eighty-one (181) and three hundred and sixty (360) days of
     the  Issue  Date,  or (iii) 140% (for prepayments occurring after the three
     hundred  and  sixtieth (360th) day following the Issue Date), multiplied by
     the  sum of (w) the then outstanding principal amount of this Note plus (x)
                                                                        ----
     accrued  and unpaid interest on the unpaid principal amount of this Note to
     the  Optional  Prepayment  Date  plus  (y) Default Interest, if any, on the
                                      ----
     amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the
                                                ----
     Holder  pursuant  to  Sections 1.3 and 1.4(g) hereof or pursuant to Section

<PAGE>

     2(c)  of  the Registration Rights Agreement (the then outstanding principal
     amount  of this Note to the date of payment plus the amounts referred to in
                                                 ----
     clauses  (x),  (y)  and  (z)  shall  collectively be known as the "OPTIONAL
     PREPAYMENT  SUM").  Notwithstanding  notice  of an Optional Prepayment, the
     Holders  shall  at all times prior to the Optional Prepayment Date maintain
     the  right  to  convert  all or any portion of the Notes in accordance with
     Article  I  and  any  portion  of  Notes  so  converted after receipt of an
     Optional  Prepayment  Notice  and prior to the Optional Prepayment Date set
     forth  in  such  notice  and  payment  of the aggregate Optional Prepayment
     Amount  shall  be  deducted  from  the  principal amount of Notes which are
     otherwise  subject  to  prepayment pursuant to such notice. If the Borrower
     delivers  an  Optional  Prepayment  Notice  and  fails  to pay the Optional
     Prepayment  Amount  due to the Holders of the Notes within two (2) business
     days  following  the  Optional  Prepayment Date, the Borrower shall forever
     forfeit  its  right  to  redeem  the  Notes  pursuant  to this Section 5.1.

          5.2  PARTIAL  CALL  OPTION.  Notwithstanding  anything to the contrary
               ---------------------
     contained  in  this Article V, in the event that the Average Daily Price of
     the Common Stock, as reported by the Reporting Service, for each day of the
     month  ending  on any Determination Date is below the Initial Market Price,
     the  Borrower  may,  at  its  option,  prepay  a portion of the outstanding
     principal  amount of the Notes equal to 101% of the principal amount hereof
     divided  by  thirty-six  (36)  plus  one month's interest and will stay all
     conversions  for that month. The term "INITIAL MARKET PRICE" shall mean the
     volume  weighted average price of the Common Stock for the five (5) Trading
     Days  immediately  preceding  the  Closing  which  is  $.20.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

     IN  WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by  its  duly  authorized  officer  this  30th  day  of  May,  2006.

                          PEDIATRIC  PROSTHETICS,  INC.

                          By: /s/ Linda Putback-Bean
                             --------------------------
                             Linda  Putback-Bean
                             Chief  Executive  Officer

<PAGE>

                                    EXHIBIT A

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

     The  undersigned hereby irrevocably elects to convert $__________ principal
amount  of the Note (defined below) into shares of common stock, par value $.001
per share ("COMMON STOCK"), of Pediatric Prosthetics, Inc., an Idaho corporation
(the  "BORROWER")  according  to  the conditions of the convertible Notes of the
Borrower  dated  as of May 30, 2006 (the "NOTES"), as of the date written below.
If  securities  are  to  be  issued  in  the  name  of  a  person other than the
undersigned,  the  undersigned  will pay all transfer taxes payable with respect
thereto  and is delivering herewith such certificates. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. A copy of each
Note  is  attached  hereto  (or evidence of loss, theft or destruction thereof).

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

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

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

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

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

           Date  of  Conversion:
                                ------------------------------------
           Applicable  Conversion  Price:
                                         ---------------------------
           Number  of  Shares  of  Common  Stock  to  be  Issued  Pursuant  to
           Conversion  of  the  Notes:
                                      ------------------------------
           Signature:
                     -----------------------------------------------
           Name:
                ----------------------------------------------------
           Address:
                   -------------------------------------------------

<PAGE>

The  Borrower  shall  issue  and  deliver shares of Common Stock to an overnight
courier  not  later  than  three business days following receipt of the original
Note(s)  to  be converted, and shall make payments pursuant to the Notes for the
number  of  business  days  such  issuance  and  delivery  is  late.

<PAGE>Exhibit 10.3

              THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE HAVE NOT
              BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
              (THE  "ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
              ASSIGNED  IN  THE  ABSENCE  OF   AN  EFFECTIVE  REGISTRATION
              STATEMENT  FOR  THE SECURITIES UNDER SAID ACT, OR AN OPINION
              OF  COUNSEL  IN  FORM,  SUBSTANCE  AND  SCOPE  CUSTOMARY FOR
              OPINIONS   OF   COUNSEL  IN   COMPARABLE  TRANSACTIONS  THAT
              REGISTRATION  IS  NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD
              PURSUANT  TO  RULE  144  OR  REGULATION  S  UNDER  SAID ACT.

                        CALLABLE SECURED CONVERTIBLE NOTE

Houston, Texas
May 30, 2006                                                             $61,200

     FOR  VALUE  RECEIVED,  PEDIATRIC  PROSTHETICS,  INC.,  an Idaho Corporation
(hereinafter  called the "BORROWER"), hereby promises to pay to the order of AJW
PARTNERS, LLC  or registered assigns (the "HOLDER") the sum of $61,200, on May
30,  2009  (the  "MATURITY  DATE"),  and to pay interest on the unpaid principal
balance  hereof  at the rate of six percent (6%) (the "INTEREST RATE") per annum
from  May  30,  2006  (the "ISSUE DATE") until the same becomes due and payable,
whether  at  maturity  or  upon  acceleration or by prepayment or otherwise. Any
amount  of  principal  or interest on this Note which is not paid when due shall
bear  interest  at the rate of fifteen percent (15%) per annum from the due date
thereof  until  the  same  is paid ("DEFAULT INTEREST"). Interest shall commence
accruing on the Issue Date, shall be computed on the basis of a 365-day year and
the  actual  number of days elapsed and shall be payable quarterly provided that
no  interest  shall  be due and payable for any month in which the Trading Price
(as such term is defined below) is greater than $.10375 for each Trading Day (as
such  term  is  defined  below) of the month. All payments due hereunder (to the
extent  not  converted into common stock, $.001 par value per share (the "COMMON
STOCK")  in  accordance  with the terms hereof) shall be made in lawful money of
the  United States of America. All payments shall be made at such address as the
Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a business day, the same shall
instead  be  due  on the next succeeding day which is a business day and, in the
case  of  any  interest payment date which is not the date on which this Note is
paid  in  full,  the  extension  of the due date thereof shall not be taken into
account  for purposes of determining the amount of interest due on such date. As
used  in  this  Note,  the  term  "business day" shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of New York, New
York are authorized or required by law or executive order to remain closed. Each

<PAGE>

capitalized  term used herein, and not otherwise defined, shall have the meaning
ascribed  thereto  in  that certain Securities Purchase Agreement, dated May 30,
2006,  pursuant  to  which  this  Note  was  originally  issued  (the  "PURCHASE
AGREEMENT").

     This  Note  is  free  from  all  taxes, liens, claims and encumbrances with
respect  to  the  issue thereof and shall not be subject to preemptive rights or
other  similar  rights  of  shareholders  of  the  Borrower  and will not impose
personal  liability  upon  the  holder  thereof. The obligations of the Borrower
under  this  Note  shall  be  secured  by  that  certain  Security Agreement and
Intellectual Property Security Agreement, each dated May 30, 2006 by and between
the  Borrower  and  the  Holder.

     The  following  terms  shall  apply  to  this  Note:

                          ARTICLE I. CONVERSION RIGHTS

          1.1  CONVERSION  RIGHT.  The  Holder shall have the right from time to
               -----------------
     time,  and  at any time on or prior to the earlier of (i) the Maturity Date
     and  (ii)  the date of payment of the Default Amount (as defined in Article
     III)  pursuant  to  Section  1.6(a) or Article III, the Optional Prepayment
     Amount  (as defined in Section 5.1 or any payments pursuant to Section 1.7,
     each  in respect of the remaining outstanding principal amount of this Note
     to  convert  all or any part of the outstanding and unpaid principal amount
     of  this Note into fully paid and non-assessable shares of Common Stock, as
     such  Common Stock exists on the Issue Date, or any shares of capital stock
     or  other  securities  of  the  Borrower into which such Common Stock shall
     hereafter  be  changed  or  reclassified  at  the  conversion  price  (the
     "CONVERSION  PRICE")  determined  as  provided  herein  (a  "CONVERSION");
     provided, however, that in no event shall the Holder be entitled to convert
     --------  -------
     any  portion  of  this  Note  in  excess  of that portion of this Note upon
     conversion  of  which  the  sum of (1) the number of shares of Common Stock
     beneficially  owned  by the Holder and its affiliates (other than shares of
     Common  Stock  which may be deemed beneficially owned through the ownership
     of  the  unconverted portion of the Notes or the unexercised or unconverted
     portion  of  any  other  security  of  the  Borrower  (including,  without
     limitation,  the  warrants  issued by the Borrower pursuant to the Purchase
     Agreement)  subject  to a limitation on conversion or exercise analogous to
     the  limitations  contained  herein) and (2) the number of shares of Common
     Stock issuable upon the conversion of the portion of this Note with respect
     to  which  the determination of this proviso is being made, would result in
     beneficial ownership by the Holder and its affiliates of more than 4.99% of
     the outstanding shares of Common Stock and provided further that the Holder
                                                -------- -------
     shall  not be entitled to convert any portion of this Note during any month
     immediately succeeding a Determination Date on which the Borrower exercises
     its prepayment option pursuant to Section 5.2 of this Note. For purposes of
     the  proviso  to  the  immediately preceding sentence, beneficial ownership
     shall  be  determined  in  accordance  with Section 13(d) of the Securities
     Exchange  Act of 1934, as amended, and Regulations 13D-G thereunder, except
     as  otherwise  provided in clause (1) of such proviso. The number of shares
     of  Common  Stock  to  be issued upon each conversion of this Note shall be
     determined  by  dividing  the  Conversion  Amount (as defined below) by the
     applicable  Conversion  Price  then  in effect on the date specified in the
     notice of conversion, in the form attached hereto as Exhibit A (the "NOTICE
     OF CONVERSION"), delivered to the Borrower by the Holder in accordance with

<PAGE>

     Section  1.4  below; provided that the Notice of Conversion is submitted by
     facsimile (or by other means resulting in, or reasonably expected to result
     in,  notice)  to  the Borrower before 6:00 p.m., New York, New York time on
     such  conversion date (the "CONVERSION DATE"). The term "CONVERSION AMOUNT"
     means,  with  respect  to  any  conversion of this Note, the sum of (1) the
     principal  amount  of this Note to be converted in such conversion plus (2)
     accrued  and  unpaid  interest,  if  any,  on  such principal amount at the
     interest  rates  provided  in  this  Note to the Conversion Date, provided,
     however,  that  the Company shall have the right to pay any or all interest
     in  cash  plus  (3) Default Interest, if any, on the amounts referred to in
               ----
     the  immediately  preceding clauses (1) and/or (2) plus (4) at the Holder's
                                                        ----
     option,  any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g)
     hereof  or  pursuant  to  Section  2(c) of that certain Registration Rights
     Agreement,  dated  as  of  May  30,  2006,  executed in connection with the
     initial  issuance of this Note and the other Notes issued on the Issue Date
     (the  "REGISTRATION RIGHTS AGREEMENT"). The term "DETERMINATION DATE" means
     the  last  business  day  of  each  month  after  the  Issue  Date.

          1.2  CONVERSION  PRICE.
               -----------------

               (A)  CALCULATION  OF CONVERSION PRICE. The Conversion Price shall
                    --------------------------------
          be the Variable Conversion Price (as defined herein) (subject, in each
          case,  to  equitable  adjustments for stock splits, stock dividends or
          rights offerings by the Borrower relating to the Borrower's securities
          or  the  securities  of  any subsidiary of the Borrower, combinations,
          recapitalization,  reclassifications,  extraordinary distributions and
          similar  events).  The  "VARIABLE  CONVERSION  PRICE"  shall  mean the
          Applicable  Percentage  (as  defined  herein) multiplied by the Market
          Price  (as  defined  herein).  "MARKET PRICE" means the average of the
          lowest  three  (3)  Trading  Prices  (as defined below) for the Common
          Stock during the twenty (20) Trading Day period ending one Trading Day
          prior  to  the date the Conversion Notice is sent by the Holder to the
          Borrower via facsimile (the "CONVERSION DATE"). "TRADING PRICE" means,
          for  any  security  as  of any date, the intraday trading price on the
          Over-the-Counter  Bulletin  Board  (the  "OTCBB")  as  reported  by  a
          reliable  reporting  service ("REPORTING SERVICE") mutually acceptable
          to  Borrower  and  Holder  and  hereafter  designated  by Holders of a
          majority in interest of the Notes and the Borrower or, if the OTCBB is
          not  the  principal  trading  market  for  such security, the intraday
          trading price of such security on the principal securities exchange or
          trading  market  where  such  security  is  listed or traded or, if no
          intraday  trading  price  of  such security is available in any of the
          foregoing  manners,  the average of the intraday trading prices of any
          market  makers  for such security that are listed in the "pink sheets"
          by  the National Quotation Bureau, Inc. If the Trading Price cannot be
          calculated  for  such  security  on  such  date in the manner provided
          above,  the  Trading  Price shall be the fair market value as mutually
          determined  by  the Borrower and the holders of a majority in interest
          of  the Notes being converted for which the calculation of the Trading
          Price  is  required in order to determine the Conversion Price of such
          Notes.  "TRADING  DAY" shall mean any day on which the Common Stock is
          traded  for  any  period  on the OTCBB, or on the principal securities
          exchange  or other securities market on which the Common Stock is then
          being  traded.  "APPLICABLE  PERCENTAGE"  shall  mean  50%;  provided,
          however,  that the Applicable Percentage shall be increased to (i) 55%
          in  the  event  that  the  Registration  Statement  (as defined in the
          Registration  Rights  Agreement) is filed on or before the Filing Date
          (as  defined in the in the Registration Rights Agreement) and (ii) 60%
          in  the  event  that  the  Registration  Statement  (as defined in the
          Registration  Rights  Agreement)  becomes  effective  on or before the
          Effectiveness  Deadline  (as  defined  in  the  Registration  Rights
          Agreement).  In  addition, the Holder agrees that it will limit all of
          its  conversions  to  no  more  than  the  greater  of (1) $80,000 per

<PAGE>

          calendar  month;  or  (2)  the  average daily dollar volume calculated
          during  the  ten  (10)  business  days  prior  to  a  conversion,  per
          conversion.

               (B)  CONVERSION PRICE DURING MAJOR ANNOUNCEMENTS. Notwithstanding
                    -------------------------------------------
          anything contained in Section 1.2(a) to the contrary, in the event the
          Borrower  (i)  makes  a  public  announcement  that  it  intends  to
          consolidate  or  merge with any other corporation (other than a merger
          in  which  the Borrower is the surviving or continuing corporation and
          its  capital  stock  is  unchanged)  or  sell  or  transfer  all  or
          substantially  all  of  the assets of the Borrower or (ii) any person,
          group  or  entity (including the Borrower) publicly announces a tender
          offer  to  purchase 50% or more of the Borrower's Common Stock (or any
          other  takeover  scheme)  (the date of the announcement referred to in
          clause  (i)  or  (ii)  is hereinafter referred to as the "ANNOUNCEMENT
          DATE"),  then  the  Conversion  Price  shall,  effective  upon  the
          Announcement Date and continuing through the Adjusted Conversion Price
          Termination  Date (as defined below), be equal to the lower of (x) the
          Conversion  Price  which  would  have been applicable for a Conversion
          occurring  on  the Announcement Date and (y) the Conversion Price that
          would  otherwise  be in effect. From and after the Adjusted Conversion
          Price  Termination  Date,  the Conversion Price shall be determined as
          set  forth  in  this  Section  1.2(a).  For purposes hereof, "ADJUSTED
          CONVERSION  PRICE  TERMINATION  DATE"  shall mean, with respect to any
          proposed  transaction or tender offer (or takeover scheme) for which a
          public  announcement  as  contemplated by this Section 1.2(b) has been
          made,  the  date  upon  which  the Borrower (in the case of clause (i)
          above)  or  the  person,  group  or entity (in the case of clause (ii)
          above)  consummates  or  publicly  announces  the  termination  or
          abandonment  of  the proposed transaction or tender offer (or takeover
          scheme)  which  caused  this  Section  1.2(b)  to  become  operative.

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

<PAGE>

          If,  at any time a Holder of this Note submits a Notice of Conversion,
     and the Borrower does not have sufficient authorized but unissued shares of
     Common  Stock  available  to  effect such conversion in accordance with the
     provisions  of  this Article I (a "CONVERSION DEFAULT"), subject to Section
     4.8,  the  Borrower  shall  issue to the Holder all of the shares of Common
     Stock  which  are  then available to effect such conversion. The portion of
     this  Note  which  the  Holder  included in its Conversion Notice and which
     exceeds  the  amount  which  is  then  convertible into available shares of
     Common  Stock  (the "EXCESS AMOUNT") shall, notwithstanding anything to the
     contrary  contained  herein,  not  be  convertible  into  Common  Stock  in
     accordance  with  the terms hereof until (and at the Holder's option at any
     time  after)  the  date additional shares of Common Stock are authorized by
     the  Borrower to permit such conversion, at which time the Conversion Price
     in  respect  thereof shall be the lesser of (i) the Conversion Price on the
     Conversion Default Date (as defined below) and (ii) the Conversion Price on
     the Conversion Date thereafter elected by the Holder in respect thereof. In
     addition,  the  Borrower  shall  pay  to  the  Holder payments ("CONVERSION
     DEFAULT PAYMENTS") for a Conversion Default in the amount of (x) the sum of
                                                                          ------
     (1) the then outstanding principal amount of this Note plus (2) accrued and
                                                            ----
     unpaid  interest  on  the  unpaid principal amount of this Note through the
     Authorization Date (as defined below) plus (3) Default Interest, if any, on
                                           ----
     the  amounts  referred to in clauses (1) and/or (2), multiplied by (y) .24,
                                                          -------------
     multiplied  by  (z)  (N/365), where N = the number of days from the day the
     --------------
     holder  submits  a Notice of Conversion giving rise to a Conversion Default
     (the "CONVERSION DEFAULT DATE") to the date (the "AUTHORIZATION DATE") that
     the  Borrower  authorizes  a sufficient number of shares of Common Stock to
     effect  conversion  of the full outstanding principal balance of this Note.
     The Borrower shall use its best efforts to authorize a sufficient number of
     shares  of Common Stock as soon as practicable following the earlier of (i)
     such  time  that  the  Holder  notifies  the  Borrower or that the Borrower
     otherwise  becomes  aware  that  there  are  or likely will be insufficient
     authorized  and unissued shares to allow full conversion thereof and (ii) a
     Conversion  Default.  The  Borrower  shall send notice to the Holder of the
     authorization  of additional shares of Common Stock, the Authorization Date
     and the amount of Holder's accrued Conversion Default Payments. The accrued
     Conversion  Default  Payments for each calendar month shall be paid in cash
     or  shall  be  convertible  into  Common  Stock  (at such time as there are
     sufficient  authorized shares of Common Stock) at the applicable Conversion
     Price,  at  the  Borrower's  option,  as  follows:

               (A) In the event Holder elects to take such payment in cash, cash
          payment  shall  be  made to Holder by the fifth (5th) day of the month
          following  the  month  in  which  it  has  accrued;  and

               (B)  In  the  event  Holder elects to take such payment in Common
          Stock, the Holder may convert such payment amount into Common Stock at
          the  Conversion  Price (as in effect at the time of conversion) at any
          time  after the fifth day of the month following the month in which it
          has accrued in accordance with the terms of this Article I (so long as
          there  is  then  a  sufficient  number  of authorized shares of Common
          Stock).

          The  Holder's election shall be made in writing to the Borrower at any
     time  prior  to 6:00 p.m., New York, New York time, on the third day of the
     month  following  the  month  in  which  Conversion  Default  payments have
     accrued. If no election is made, the Holder shall be deemed to have elected
     to  receive  cash.  Nothing herein shall limit the Holder's right to pursue

<PAGE>

     actual damages (to the extent in excess of the Conversion Default Payments)
     for  the  Borrower's  failure to maintain a sufficient number of authorized
     shares  of Common Stock, and each holder shall have the right to pursue all
     remedies  available  at  law  or  in  equity  (including degree of specific
     performance  and/or  injunctive  relief).

          1.4  METHOD  OF  CONVERSION.
               ----------------------

               (A)  MECHANICS  OF  CONVERSION. Subject to Section 1.1, this Note
                    -------------------------
          may  be  converted  by the Holder in whole or in part at any time from
          time to time after the Issue Date, by (A) submitting to the Borrower a
          Notice  of  Conversion  (by  facsimile  or  other  reasonable means of
          communication  dispatched  on  the Conversion Date prior to 6:00 p.m.,
          New  York,  New  York  time)  and  (B)  subject  to  Section  1.4(b),
          surrendering  this  Note  at  the  principal  office  of the Borrower.

               (B)  SURRENDER  OF NOTE UPON CONVERSION. Notwithstanding anything
                    ----------------------------------
          to  the  contrary  set  forth  herein, upon conversion of this Note in
          accordance  with the terms hereof, the Holder shall not be required to
          physically  surrender  this  Note  to  the  Borrower unless the entire
          unpaid  principal  amount of this Note is so converted. The Holder and
          the  Borrower  shall  maintain records showing the principal amount so
          converted  and  the  dates of such conversions or shall use such other
          method,  reasonably satisfactory to the Holder and the Borrower, so as
          not  to  require  physical  surrender  of  this  Note  upon  each such
          conversion.  In  the event of any dispute or discrepancy, such records
          of  the Borrower shall be controlling and determinative in the absence
          of  manifest  error.  Notwithstanding the foregoing, if any portion of
          this  Note is converted as aforesaid, the Holder may not transfer this
          Note  unless  the  Holder first physically surrenders this Note to the
          Borrower, whereupon the Borrower will forthwith issue and deliver upon
          the  order  of  the Holder a new Note of like tenor, registered as the
          Holder  (upon  payment by the Holder of any applicable transfer taxes)
          may  request,  representing  in  the  aggregate  the  remaining unpaid
          principal  amount  of  this  Note.  The  Holder  and  any assignee, by
          acceptance  of this Note, acknowledge and agree that, by reason of the
          provisions  of  this  paragraph,  following conversion of a portion of
          this  Note,  the  unpaid and unconverted principal amount of this Note
          represented  by  this  Note  may be less than the amount stated on the
          face  hereof.

               (C)  PAYMENT  OF TAXES. The Borrower shall not be required to pay
                    -----------------
          any  tax  which  may be payable in respect of any transfer involved in
          the  issue  and delivery of shares of Common Stock or other securities
          or  property  on  conversion of this Note in a name other than that of
          the Holder (or in street name), and the Borrower shall not be required
          to  issue  or  deliver any such shares or other securities or property
          unless  and  until the person or persons (other than the Holder or the
          custodian  in  whose  street  name  such shares are to be held for the
          Holder's  account)  requesting the issuance thereof shall have paid to
          the  Borrower  the amount of any such tax or shall have established to
          the  satisfaction  of  the  Borrower  that  such  tax  has  been paid.

               (D) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon receipt by the
                   ----------------------------------------
          Borrower  from  the  Holder  of  a  facsimile  transmission  (or other
          reasonable  means  of communication) of a Notice of Conversion meeting
          the  requirements  for conversion as provided in this Section 1.4, the
          Borrower  shall  issue and deliver or cause to be issued and delivered
          to  or  upon the order of the Holder certificates for the Common Stock
          issuable  upon  such  conversion  within three (3) business days after

<PAGE>

          such  receipt  (and,  solely  in  the case of conversion of the entire
          unpaid  principal  amount  hereof, surrender of this Note) (such third
          business  day  being  hereinafter  referred  to  as the "DEADLINE") in
          accordance  with  the  terms  hereof  and  the  Purchase  Agreement
          (including, without limitation, in accordance with the requirements of
          Section 2(g) of the Purchase Agreement that certificates for shares of
          Common Stock issued on or after the effective date of the Registration
          Statement  upon conversion of this Note shall not bear any restrictive
          legend).

               (E)  OBLIGATION OF BORROWER TO DELIVER COMMON STOCK. Upon receipt
                    ----------------------------------------------
          by  the Borrower of a Notice of Conversion, the Holder shall be deemed
          to  be  the  holder  of  record of the Common Stock issuable upon such
          conversion, the outstanding principal amount and the amount of accrued
          and  unpaid  interest  on  this  Note shall be reduced to reflect such
          conversion, and, unless the Borrower defaults on its obligations under
          this  Article  I,  all rights with respect to the portion of this Note
          being  so  converted  shall  forthwith  terminate  except the right to
          receive the Common Stock or other securities, cash or other assets, as
          herein  provided, on such conversion. If the Holder shall have given a
          Notice  of Conversion as provided herein, the Borrower's obligation to
          issue  and deliver the certificates for Common Stock shall be absolute
          and  unconditional,  irrespective  of the absence of any action by the
          Holder  to enforce the same, any waiver or consent with respect to any
          provision  thereof, the recovery of any judgment against any person or
          any  action  to  enforce  the  same,  any  failure  or  delay  in  the
          enforcement  of  any other obligation of the Borrower to the holder of
          record,  or  any  setoff,  counterclaim,  recoupment,  limitation  or
          termination,  or  any  breach  or  alleged breach by the Holder of any
          obligation to the Borrower, and irrespective of any other circumstance
          which  might  otherwise  limit  such obligation of the Borrower to the
          Holder  in  connection  with  such  conversion.  The  Conversion  Date
          specified  in the Notice of Conversion shall be the Conversion Date so
          long  as  the  Notice of Conversion is received by the Borrower before
          6:00  p.m.,  New  York,  New  York  time,  on  such  date.

               (F)  DELIVERY  OF COMMON STOCK BY ELECTRONIC TRANSFER. In lieu of
                    ------------------------------------------------
          delivering  physical  certificates  representing  the  Common  Stock
          issuable  upon  conversion,  provided the Borrower's transfer agent is
          participating  in  the Depository Trust Company ("DTC") Fast Automated
          Securities  Transfer  ("FAST") program, upon request of the Holder and
          its  compliance  with  the  provisions contained in Section 1.1 and in
          this Section 1.4, the Borrower shall use its best efforts to cause its
          transfer  agent  to  electronically transmit the Common Stock issuable
          upon  conversion  to  the  Holder by crediting the account of Holder's
          Prime  Broker with DTC through its Deposit Withdrawal Agent Commission
          ("DWAC")  system.

               (G) FAILURE TO DELIVER COMMON STOCK PRIOR TO DEADLINE. Without in
                   -------------------------------------------------
          any  way  limiting  the  Holder's  right  to  pursue  other  remedies,
          including  actual  damages  and/or equitable relief, the parties agree
          that  if delivery of the Common Stock issuable upon conversion of this
          Note  is  more  than three (3) business days after the Deadline (other
          than  a  failure  due  to  the  circumstances described in Section 1.3
          above,  which  failure shall be governed by such Section) the Borrower
          shall  pay  to  the Holder $1,000 per day in cash, for each day beyond
          the  Deadline  that  the  Borrower fails to deliver such Common Stock.
          Such cash amount shall be paid to Holder by the fifth day of the month
          following  the  month in which it has accrued or, at the option of the
          Holder  (by  written  notice  to  the Borrower by the first day of the
          month  following the month in which it has accrued), shall be added to
          the  principal  amount  of  this  Note,  in which event interest shall
          accrue  thereon  in  accordance  with  the terms of this Note and such

<PAGE>

          additional  principal amount shall be convertible into Common Stock in
          accordance  with  the  terms  of  this  Note.

          1.5  CONCERNING  THE  SHARES. The shares of Common Stock issuable upon
               -----------------------
     conversion  of  this  Note  may  not be sold or transferred unless (i) such
     shares  are  sold pursuant to an effective registration statement under the
     Act  or  (ii)  the Borrower or its transfer agent shall have been furnished
     with  an  opinion of counsel (which opinion shall be in form, substance and
     scope  customary for opinions of counsel in comparable transactions) to the
     effect that the shares to be sold or transferred may be sold or transferred
     pursuant  to  an  exemption from such registration or (iii) such shares are
     sold  or  transferred  pursuant  to  Rule 144 under the Act (or a successor
     rule)  ("RULE  144")  or (iv) such shares are transferred to an "affiliate"
     (as  defined  in  Rule 144) of the Borrower who agrees to sell or otherwise
     transfer  the shares only in accordance with this Section 1.5 and who is an
     Accredited  Investor  (as  defined  in  the  Purchase Agreement). Except as
     otherwise  provided  in  the Purchase Agreement (and subject to the removal
     provisions  set forth below), until such time as the shares of Common Stock
     issuable upon conversion of this Note have been registered under the Act as
     contemplated  by the Registration Rights Agreement or otherwise may be sold
     pursuant to Rule 144 without any restriction as to the number of securities
     as of a particular date that can then be immediately sold, each certificate
     for  shares  of Common Stock issuable upon conversion of this Note that has
     not been so included in an effective registration statement or that has not
     been  sold  pursuant to an effective registration statement or an exemption
     that  permits  removal  of the legend, shall bear a legend substantially in
     the  following  form,  as  appropriate:

            "THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE  HAVE
             NOT  BEEN  REGISTERED  UNDER  THE SECURITIES ACT OF 1933, AS
             AMENDED.  THE  SECURITIES  MAY  NOT  BE SOLD, TRANSFERRED OR
             ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE  REGISTRATION
             STATEMENT  FOR  THE SECURITIES UNDER SAID ACT, OR AN OPINION
             OF  COUNSEL  IN  FORM,  SUBSTANCE  AND  SCOPE  CUSTOMARY FOR
             OPINIONS  OF  COUNSEL  IN  COMPARABLE  TRANSACTIONS,  THAT
             REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID ACT UNLESS SOLD
             PURSUANT  TO  RULE  144  OR  REGULATION  S  UNDER SAID ACT."

          The  legend  set  forth  above shall be removed and the Borrower shall
     issue  to the Holder a new certificate therefor free of any transfer legend
     if (i) the Borrower or its transfer agent shall have received an opinion of
     counsel,  in form, substance and scope customary for opinions of counsel in
     comparable  transactions,  to  the effect that a public sale or transfer of
     such  Common  Stock  may be made without registration under the Act and the
     shares  are  so sold or transferred, (ii) such Holder provides the Borrower
     or  its  transfer  agent  with  reasonable assurances that the Common Stock

<PAGE>

     issuable  upon  conversion  of this Note (to the extent such securities are
     deemed to have been acquired on the same date) can be sold pursuant to Rule
     144  or  (iii)  in the case of the Common Stock issuable upon conversion of
     this  Note,  such  security  is  registered for sale by the Holder under an
     effective  registration  statement  filed under the Act or otherwise may be
     sold  pursuant  to  Rule  144  without  any restriction as to the number of
     securities  as  of  a  particular  date  that can then be immediately sold.
     Nothing  in  this  Note shall (i) limit the Borrower's obligation under the
     Registration  Rights  Agreement  or  (ii)  affect  in  any way the Holder's
     obligations to comply with applicable prospectus delivery requirements upon
     the  resale  of  the  securities  referred  to  herein.

          1.6  EFFECT  OF  CERTAIN  EVENTS.
               ---------------------------

               (A)  EFFECT  OF  MERGER, CONSOLIDATION, ETC. At the option of the
                    --------------------------------------
          Holder,  the  sale,  conveyance or disposition of all or substantially
          all of the assets of the Borrower, the effectuation by the Borrower of
          a transaction or series of related transactions in which more than 50%
          of  the  voting  power  of  the  Borrower  is  disposed  of,  or  the
          consolidation,  merger  or  other business combination of the Borrower
          with  or  into any other Person (as defined below) or Persons when the
          Borrower  is  not  the  survivor  shall either: (i) be deemed to be an
          Event  of  Default  (as  defined in Article III) pursuant to which the
          Borrower  shall be required to pay to the Holder upon the consummation
          of  and  as  a  condition  to  such transaction an amount equal to the
          Default Amount (as defined in Article III) or (ii) be treated pursuant
          to  Section  1.6(b)  hereof.  "PERSON"  shall  mean  any  individual,
          corporation,  limited  liability  company,  partnership,  association,
          trust  or  other  entity  or  organization.

               (B) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, at any time
                   --------------------------------------------
          when  this  Note  is issued and outstanding and prior to conversion of
          all  of  the Notes, there shall be any merger, consolidation, exchange
          of  shares,  recapitalization, reorganization, or other similar event,
          as  a  result of which shares of Common Stock of the Borrower shall be
          changed into the same or a different number of shares of another class
          or  classes  of stock or securities of the Borrower or another entity,
          or  in  case  of any sale or conveyance of all or substantially all of
          the  assets  of  the  Borrower other than in connection with a plan of
          complete  liquidation  of  the  Borrower, then the Holder of this Note
          shall  thereafter  have  the  right to receive upon conversion of this
          Note,  upon  the  basis  and  upon  the terms and conditions specified
          herein  and  in  lieu  of  the  shares  of  Common  Stock  immediately
          theretofore issuable upon conversion, such stock, securities or assets
          which  the  Holder  would  have  been  entitled  to  receive  in  such
          transaction  had this Note been converted in full immediately prior to
          such  transaction (without regard to any limitations on conversion set
          forth  herein),  and  in any such case appropriate provisions shall be
          made  with  respect  to the rights and interests of the Holder of this
          Note  to  the  end  that  the  provisions  hereof  (including, without
          limitation,  provisions  for adjustment of the Conversion Price and of
          the  number  of  shares  issuable  upon  conversion of the Note) shall
          thereafter  be applicable, as nearly as may be practicable in relation
          to any securities or assets thereafter deliverable upon the conversion
          hereof.  The  Borrower  shall  not effect any transaction described in
          this  Section  1.6(b)  unless  (a)  it  first  gives,  to  the  extent
          practicable,  thirty  (30) days prior written notice (but in any event
          at least fifteen (15) days prior written notice) of the record date of
          the special meeting of shareholders to approve, or if there is no such
          record date, the consummation of, such merger, consolidation, exchange
          of  shares, recapitalization, reorganization or other similar event or
          sale  of  assets  (during  which  time the Holder shall be entitled to
          convert this Note) and (b) the resulting successor or acquiring entity
          (if not the Borrower) assumes by written instrument the obligations of
          this  Section  1.6(b).  The  above provisions shall similarly apply to
          successive  consolidations,  mergers,  sales,  transfers  or  share
          exchanges.

               (C) ADJUSTMENT DUE TO DISTRIBUTION. If the Borrower shall declare
                   ------------------------------
          or  make  any  distribution  of  its  assets (or rights to acquire its
          assets) to holders of Common Stock as a dividend, stock repurchase, by

<PAGE>

          way  of  return  of  capital  or  otherwise (including any dividend or
          distribution  to  the  Borrower's  shareholders  in cash or shares (or
          rights  to  acquire  shares) of capital stock of a subsidiary (i.e., a
          spin-off))  (a  "DISTRIBUTION"), then the Holder of this Note shall be
          entitled,  upon  any  conversion of this Note after the date of record
          for determining shareholders entitled to such Distribution, to receive
          the  amount of such assets which would have been payable to the Holder
          with  respect  to  the  shares  of  Common  Stock  issuable  upon such
          conversion  had  such  Holder been the holder of such shares of Common
          Stock  on  the  record  date  for  the  determination  of shareholders
          entitled  to  such  Distribution.

               (D) ADJUSTMENT DUE TO DILUTIVE ISSUANCE. If, at any time when any
                   -----------------------------------
          Notes  are issued and outstanding, the Borrower issues or sells, or in
          accordance with this Section 1.6(d) hereof is deemed to have issued or
          sold,  any  shares  of  Common  Stock  for  no  consideration or for a
          consideration  per  share  (before deduction of reasonable expenses or
          commissions  or  underwriting  discounts  or  allowances in connection
          therewith)  less than the Fixed Conversion Price in effect on the date
          of  such  issuance (or deemed issuance) of such shares of Common Stock
          (a  "DILUTIVE ISSUANCE"), then immediately upon the Dilutive Issuance,
          the  Variable  Conversion  Price  will be reduced to the amount of the
          consideration  per  share  received  by  the Borrower in such Dilutive
          Issuance;  provided  that  only  one  adjustment will be made for each
          Dilutive  Issuance.

               The  Borrower  shall  be  deemed to have issued or sold shares of
          Common  Stock  if  the  Borrower  in  any  manner issues or grants any
          warrants,  rights  or  options  (not  including  employee stock option
          plans), whether or not immediately exercisable, to subscribe for or to
          purchase  Common  Stock  or  other  securities  convertible  into  or
          exchangeable  for  Common  Stock  ("CONVERTIBLE  SECURITIES")  (such
          warrants,  rights  and options to purchase Common Stock or Convertible
          Securities are hereinafter referred to as "OPTIONS") and the price per
          share  for  which  Common  Stock is issuable upon the exercise of such
          Options  is  less  than  the Variable Conversion Price then in effect,
          then  the  Variable  Conversion Price shall be equal to such price per
          share.  For  purposes  of the preceding sentence, the "price per share
          for  which Common Stock is issuable upon the exercise of such Options"
          is  determined  by  dividing (i) the total amount, if any, received or
          receivable  by  the  Borrower  as  consideration  for  the issuance or
          granting  of  all  such  Options, plus the minimum aggregate amount of
          additional  consideration,  if  any,  payable to the Borrower upon the
          exercise  of  all  such  Options,  plus,  in  the  case of Convertible
          Securities  issuable  upon  the  exercise of such Options, the minimum
          aggregate  amount  of  additional  consideration  payable  upon  the
          conversion or exchange thereof at the time such Convertible Securities
          first  become  convertible  or exchangeable, by (ii) the maximum total
          number  of  shares  of  Common Stock issuable upon the exercise of all
          such  Options  (assuming full conversion of Convertible Securities, if
          applicable).  No  further  adjustment  to the Conversion Price will be
          made  upon  the actual issuance of such Common Stock upon the exercise
          of  such  Options  or  upon  the conversion or exchange of Convertible
          Securities  issuable  upon  exercise  of  such  Options.

               Additionally, the Borrower shall be deemed to have issued or sold
          shares  of  Common Stock if the Borrower in any manner issues or sells
          any  Convertible  Securities,  whether  or not immediately convertible
          (other than where the same are issuable upon the exercise of Options),
          and  the  price per share for which Common Stock is issuable upon such
          conversion or exchange is less than the Variable Conversion Price then
          in  effect,  then the Variable Conversion Price shall be equal to such
          price  per  share.  For  the  purposes  of the preceding sentence, the

<PAGE>

          "price  per  share  for  which  Common  Stock  is  issuable  upon such
          conversion  or  exchange"  is  determined  by  dividing  (i) the total
          amount,  if  any,  received  or  receivable  by  the  Borrower  as
          consideration  for  the  issuance  or  sale  of  all  such Convertible
          Securities,  plus  the  minimum  aggregate  amount  of  additional
          consideration,  if any, payable to the Borrower upon the conversion or
          exchange  thereof at the time such Convertible Securities first become
          convertible  or  exchangeable,  by  (ii)  the  maximum total number of
          shares of Common Stock issuable upon the conversion or exchange of all
          such  Convertible  Securities.  No  further adjustment to the Variable
          Conversion  Price will be made upon the actual issuance of such Common
          Stock  upon  conversion  or  exchange  of such Convertible Securities.

               (E)  PURCHASE  RIGHTS.  If, at any time when any Notes are issued
                    ----------------
          and  outstanding,  the  Borrower  issues any convertible securities or
          rights  to purchase stock, warrants, securities or other property (the
          "PURCHASE  RIGHTS")  pro  rata  to  the record holders of any class of
          Common  Stock,  then  the  Holder  of  this  Note  will be entitled to
          acquire,  upon  the  terms  applicable  to  such  Purchase Rights, the
          aggregate  Purchase  Rights  which  such Holder could have acquired if
          such  Holder  had held the number of shares of Common Stock acquirable
          upon  complete  conversion  of  this  Note  (without  regard  to  any
          limitations  on  conversion  contained  herein) immediately before the
          date  on  which  a  record is taken for the grant, issuance or sale of
          such  Purchase  Rights  or, if no such record is taken, the date as of
          which  the record holders of Common Stock are to be determined for the
          grant,  issue  or  sale  of  such  Purchase  Rights.

               (F) NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment
                   ---------------------
          or  readjustment  of  the  Conversion  Price as a result of the events
          described  in  this  Section  1.6, the Borrower, at its expense, shall
          promptly  compute  such  adjustment  or  readjustment  and prepare and
          furnish  to  the Holder of a certificate setting forth such adjustment
          or  readjustment  and  showing  in  detail  the  facts upon which such
          adjustment  or  readjustment  is  based.  The Borrower shall, upon the
          written  request  at  any time of the Holder, furnish to such Holder a
          like  certificate  setting  forth (i) such adjustment or readjustment,
          (ii)  the  Conversion Price at the time in effect and (iii) the number
          of  shares of Common Stock and the amount, if any, of other securities
          or property which at the time would be received upon conversion of the
          Note.

          1.7  RESERVED
               --------

          1.8  STATUS  AS SHAREHOLDER. Upon submission of a Notice of Conversion
               ----------------------
     by a Holder, (i) the shares covered thereby (other than the shares, if any,
     which  cannot  be  issued because their issuance would exceed such Holder's
     allocated  portion of the Reserved Amount or Maximum Share Amount) shall be
     deemed  converted  into shares of Common Stock and (ii) the Holder's rights
     as  a  Holder  of  such  converted  portion  of  this  Note shall cease and
     terminate, excepting only the right to receive certificates for such shares
     of  Common Stock and to any remedies provided herein or otherwise available
     at  law or in equity to such Holder because of a failure by the Borrower to
     comply  with  the  terms  of this Note. Notwithstanding the foregoing, if a
     Holder  has  not received certificates for all shares of Common Stock prior
     to  the tenth (10th) business day after the expiration of the Deadline with
     respect  to  a  conversion of any portion of this Note for any reason, then
     (unless  the  Holder  otherwise  elects to retain its status as a holder of
     Common  Stock  by  so  notifying  the Borrower) the Holder shall regain the
     rights  of  a Holder of this Note with respect to such unconverted portions
     of  this  Note  and the Borrower shall, as soon as practicable, return such
     unconverted  Note  to  the Holder or, if the Note has not been surrendered,
     adjust  its  records to reflect that such portion of this Note has not been

<PAGE>

     converted.  In  all  cases,  the  Holder shall retain all of its rights and
     remedies  (including,  without  limitation,  (i)  the  right  to  receive
     Conversion  Default Payments pursuant to Section 1.3 to the extent required
     thereby  for  such Conversion Default and any subsequent Conversion Default
     and  (ii) the right to have the Conversion Price with respect to subsequent
     conversions  determined  in accordance with Section 1.3) for the Borrower's
     failure  to  convert  this  Note.

                          ARTICLE II. CERTAIN COVENANTS

          2.1 DISTRIBUTIONS ON CAPITAL STOCK. So long as the Borrower shall have
              ------------------------------
     any obligation under this Note, the Borrower shall not without the Holder's
     written  consent  (a)  pay,  declare  or  set  apart  for such payment, any
     dividend  or  other  distribution  (whether  in  cash,  property  or  other
     securities)  on  shares  of capital stock other than dividends on shares of
     Common Stock solely in the form of additional shares of Common Stock or (b)
     directly  or indirectly or through any subsidiary make any other payment or
     distribution  in  respect  of  its  capital  stock except for distributions
     pursuant  to  any shareholders' rights plan which is approved by a majority
     of  the  Borrower's  disinterested  directors.

          2.2  RESTRICTION  ON  STOCK REPURCHASES. So long as the Borrower shall
               ----------------------------------
     have  any  obligation  under  this Note, the Borrower shall not without the
     Holder's  written  consent redeem, repurchase or otherwise acquire (whether
     for  cash  or in exchange for property or other securities or otherwise) in
     any one transaction or series of related transactions any shares of capital
     stock  of  the  Borrower  or any warrants, rights or options to purchase or
     acquire  any  such  shares.

          2.3  BORROWINGS.  So  long  as  the Borrower shall have any obligation
               ----------
     under  this  Note,  the  Borrower  shall  not, without the Holder's written
     consent,  create,  incur,  assume  or  suffer  to  exist  any liability for
     borrowed money, except (a) borrowings in existence or committed on the date
     hereof  and  of  which the Borrower has informed Holder in writing prior to
     the  date  hereof,  (b)  indebtedness  to  trade  creditors  or  financial
     institutions incurred in the ordinary course of business or (c) borrowings,
     the  proceeds  of  which  shall  be  used  to  repay  this  Note.

          2.4  SALE OF ASSETS. So long as the Borrower shall have any obligation
               --------------
     under  this  Note,  the  Borrower  shall  not, without the Holder's written
     consent, sell, lease or otherwise dispose of any significant portion of its
     assets  outside  the  ordinary  course  of  business.  Any  consent  to the
     disposition  of  any  assets  may  be conditioned on a specified use of the
     proceeds  of  disposition.

          2.5  ADVANCES  AND  LOANS.  So  long  as  the  Borrower shall have any
               --------------------
     obligation  under  this  Note, the Borrower shall not, without the Holder's
     written  consent,  lend  money, give credit or make advances to any person,
     firm,  joint  venture  or  corporation,  including,  without  limitation,
     officers,  directors,  employees,  subsidiaries  and  affiliates  of  the
     Borrower,  except  loans, credits or advances (a) in existence or committed
     on  the  date  hereof and which the Borrower has informed Holder in writing
     prior  to  the  date hereof, (b) made in the ordinary course of business or
     (c)  not  in  excess  of  $100,000.

<PAGE>

          2.6  CONTINGENT  LIABILITIES.  So  long as the Borrower shall have any
               -----------------------
     obligation  under  this  Note, the Borrower shall not, without the Holder's
     written  consent,  which  shall  not  be  unreasonably  withheld,  assume,
     guarantee,  endorse,  contingently  agree  to  purchase or otherwise become
     liable  upon the obligation of any person, firm, partnership, joint venture
     or  corporation,  except  by  the endorsement of negotiable instruments for
     deposit  or collection and except assumptions, guarantees, endorsements and
     contingencies  (a)  in  existence or committed on the date hereof and which
     the  Borrower  has informed Holder in writing prior to the date hereof, and
     (b)  similar  transactions  in  the  ordinary  course  of  business.

                         ARTICLE III. EVENTS OF DEFAULT

          If  any  of  the  following  events  of  default  (each,  an "EVENT OF
     DEFAULT")  shall  occur:

          3.1  FAILURE  TO  PAY PRINCIPAL OR INTEREST. The Borrower fails to pay
               --------------------------------------
     the  principal hereof or interest thereon when due on this Note, whether at
     maturity,  upon  a Trading Market Prepayment Event pursuant to Section 1.7,
     upon  acceleration  or  otherwise;

          3.2  CONVERSION  AND THE SHARES. The Borrower fails to issue shares of
               --------------------------
     Common  Stock  to  the  Holder  (or announces or threatens that it will not
     honor  its  obligation  to  do  so)  upon  exercise  by  the  Holder of the
     conversion  rights of the Holder in accordance with the terms of this Note,
     fails  to  transfer or cause its transfer agent to transfer (electronically
     or  in certificated form) any certificate for shares of Common Stock issued
     to  the Holder upon conversion of or otherwise pursuant to this Note as and
     when  required  by this Note or the Registration Rights Agreement, or fails
     to  remove  any  restrictive  legend  (or  to  withdraw  any  stop transfer
     instructions  in  respect  thereof)  on  any  certificate for any shares of
     Common  Stock issued to the Holder upon conversion of or otherwise pursuant
     to  this  Note as and when required by this Note or the Registration Rights
     Agreement  (or makes any announcement, statement or threat that it does not
     intend  to  honor the obligations described in this paragraph) and any such
     failure  shall  continue  uncured (or any announcement, statement or threat
     not  to  honor its obligations shall not be rescinded in writing) for three
     (3)  business  days  after  the  Borrower  shall have received a conversion
     request  by  the  Holder;

          3.3  FAILURE  TO  TIMELY FILE REGISTRATION OR EFFECT REGISTRATION. The
               ------------------------------------------------------------
     Borrower  fails  to  file the Registration Statement within sixty (60) days
     following the Closing Date (as defined in the Purchase Agreement) or obtain
     effectiveness  with  the  Securities  and  Exchange  Commission  of  the
     Registration  Statement  within one hundred forty-five (145) days following
     the  Closing  Date  (as  defined  in  the  Purchase  Agreement)  or  such
     Registration  Statement lapses in effect (or sales cannot otherwise be made
     thereunder  effective, whether by reason of the Borrower's failure to amend
     or  supplement  the  prospectus  included  therein  in  accordance with the
     Registration  Rights  Agreement  or  otherwise)  for  more  than  ten  (10)
     consecutive  days  or twenty (20) days in any twelve month period after the
     Registration  Statement  becomes  effective;

          3.4  BREACH  OF COVENANTS. The Borrower breaches any material covenant
               --------------------
     or  other  material term or condition contained in Sections 1.3, 1.6 or 1.7

<PAGE>

     of this Note, or Sections 4(c), 4(e), 4(h), 4(i), 4(j) or 5 of the Purchase
     Agreement  and  such  breach  continues for a period of ten (10) days after
     written  notice  thereof  to  the  Borrower  from  the  Holder;

          3.5  BREACH  OF  REPRESENTATIONS AND WARRANTIES. Any representation or
               ------------------------------------------
     warranty  of  the  Borrower  made  herein or in any agreement, statement or
     certificate  given  in  writing  pursuant  hereto or in connection herewith
     (including, without limitation, the Purchase Agreement and the Registration
     Rights  Agreement),  shall  be  false or misleading in any material respect
     when  made  and  the  breach of which has (or with the passage of time will
     have) a material adverse effect on the rights of the Holder with respect to
     this  Note,  the  Purchase  Agreement or the Registration Rights Agreement;

          3.6  RECEIVER  OR  TRUSTEE.  The  Borrower  or  any  subsidiary of the
               ---------------------
     Borrower  shall  make  an assignment for the benefit of creditors, or apply
     for  or consent to the appointment of a receiver or trustee for it or for a
     substantial part of its property or business, or such a receiver or trustee
     shall  otherwise  be  appointed;

          3.7  JUDGMENTS.  Any  money judgment, writ or similar process shall be
               ---------
     entered  or filed against the Borrower or any subsidiary of the Borrower or
     any  of  its  property  or  other  assets for more than $100,000, and shall
     remain  unvacated,  unbonded  or  unstayed for a period of twenty (20) days
     unless  otherwise  consented  to  by  the Holder, which consent will not be
     unreasonably  withheld;

          3.8  BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
               ----------
     proceedings or other proceedings for relief under any bankruptcy law or any
     law  for  the  relief  of  debtors  shall  be  instituted by or against the
     Borrower or any subsidiary of the Borrower, unless such proceeding shall be
     stayed  within  thirty  (30)  days;

          3.9  LISTING  OF COMMON STOCK. The Borrower shall fail to maintain the
               ------------------------
     listing  of  the Common Stock on at least one of the OTCBB or an equivalent
     replacement  exchange,  the  Nasdaq  National  Market,  the Nasdaq SmallCap
     Market,  the New York Stock Exchange, or the American Stock Exchange within
     180  days  from  the  date  of  Closing;  or

          3.10  DEFAULT  UNDER OTHER NOTES. An Event of Default has occurred and
                --------------------------
     is  continuing under any of the other Notes issued pursuant to the Purchase
     Agreement,

     then,  upon  the  occurrence  and  during  the continuation of any Event of
     Default specified in Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at
     the  option  of the Holders of a majority of the aggregate principal amount
     of  the  outstanding  Notes  issued  pursuant  to  the  Purchase  Agreement
     exercisable  through the delivery of written notice to the Borrower by such
     Holders  (the  "DEFAULT  NOTICE"),  and  upon the occurrence of an Event of
     Default  specified  in  Section 3.6 or 3.8 (unless, under Section 3.8, such
     proceeding  shall  be  stayed  within  30  days),  the  Notes  shall become
     immediately  due  and  payable and the Borrower shall pay to the Holder, in
     full  satisfaction  of  its  obligations  hereunder, an amount equal to the
     greater  of  (i)  130%  times the sum of (w) the then outstanding principal
                             -----     ---
     amount  of  this  Note  plus  (x) accrued and unpaid interest on the unpaid
                             ----
     principal  amount  of  this  Note  to  the  date of payment (the "MANDATORY
     PREPAYMENT  DATE")  plus  (y)  Default  Interest,  if  any,  on the amounts
                         ----
     referred  to  in  clauses  (w)  and/or (x) plus (z) any amounts owed to the
                                                ----
     Holder  pursuant  to  Sections 1.3 and 1.4(g) hereof or pursuant to Section

<PAGE>

     2(c)  of  the Registration Rights Agreement (the then outstanding principal
     amount  of this Note to the date of payment plus the amounts referred to in
                                                 ----
     clauses  (x), (y) and (z) shall collectively be known as the "DEFAULT SUM")
     or  (ii)  the "parity value" of the Default Sum to be prepaid, where parity
     value  means (a) the highest number of shares of Common Stock issuable upon
     conversion  of or otherwise pursuant to such Default Sum in accordance with
     Article  I,  treating  the  Trading Day immediately preceding the Mandatory
     Prepayment  Date  as  the "Conversion Date" for purposes of determining the
     lowest  applicable  Conversion  Price, unless the Default Event arises as a
     result  of  a breach in respect of a specific Conversion Date in which case
     such  Conversion  Date shall be the Conversion Date), multiplied by (b) the
                                                           -------------
     highest  Closing  Price for the Common Stock during the period beginning on
     the  date  of  first  occurrence of the Event of Default and ending one day
     prior to the Mandatory Prepayment Date (the "DEFAULT AMOUNT") and all other
     amounts  payable  hereunder  shall  immediately become due and payable, all
     without  demand,  presentment  or notice, all of which hereby are expressly
     waived,  together with all costs, including, without limitation, legal fees
     and  expenses,  of collection, and the Holder shall be entitled to exercise
     all  other  rights  and  remedies  available  at  law  or in equity. If the
     Borrower  fails  to pay the Default Amount within five (5) business days of
     written  notice  that such amount is due and payable, then the Holder shall
     have the right at any time, so long as the Borrower remains in default (and
     so  long and to the extent that there are sufficient authorized shares), to
     require the Borrower, upon written notice, to immediately issue, in lieu of
     the  Default  Amount,  the number of shares of Common Stock of the Borrower
     equal to the Default Amount divided by the Conversion Price then in effect.

                            ARTICLE IV. MISCELLANEOUS

          4.1  FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
               --------------------------------
     of  the  Holder  in the exercise of any power, right or privilege hereunder
     shall operate as a waiver thereof, nor shall any single or partial exercise
     of  any  such  power, right or privilege preclude other or further exercise
     thereof or of any other right, power or privileges. All rights and remedies
     existing  hereunder  are cumulative to, and not exclusive of, any rights or
     remedies  otherwise  available.

          4.2 NOTICES. Any notice herein required or permitted to be given shall
              -------
     be  in writing and may be personally served or delivered by courier or sent
     by  United  States mail and shall be deemed to have been given upon receipt
     if  personally  served  (which  shall  include  telephone  line  facsimile
     transmission) or sent by courier or three (3) days after being deposited in
     the  United  States  mail,  certified,  with  postage pre-paid and properly
     addressed,  if  sent  by  mail. For the purposes hereof, the address of the
     Holder shall be as shown on the records of the Borrower; and the address of
     the Borrower shall be 12926 Willowchase Drive, Houston, TX 77070, facsimile
     number:  (281). Both the Holder and the Borrower may change the address for
     service  by  service  of  written  notice  to the other as herein provided.

          4.3 AMENDMENTS. This Note and any provision hereof may only be amended
              ----------
     by an instrument in writing signed by the Borrower and the Holder. The term
     "Note" and all reference thereto, as used throughout this instrument, shall
     mean  this  instrument (and the other Notes issued pursuant to the Purchase
     Agreement)  as  originally  executed,  or if later amended or supplemented,
     then  as  so  amended  or  supplemented.

<PAGE>

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

          4.5  COST  OF  COLLECTION.  If  default is made in the payment of this
               --------------------
     Note,  the  Borrower  shall  pay  the  Holder  hereof  costs of collection,
     including  reasonable  attorneys'  fees.

          4.6  GOVERNING  LAW.  THIS  NOTE  SHALL  BE  ENFORCED, GOVERNED BY AND
               --------------
     CONSTRUED  IN  ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
     TO  AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
     REGARD  TO  THE PRINCIPLES OF CONFLICT OF LAWS. THE BORROWER HEREBY SUBMITS
     TO  THE  EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED
     IN  NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS NOTE,
     THE  AGREEMENTS  ENTERED  INTO  IN  CONNECTION HEREWITH OR THE TRANSACTIONS
     CONTEMPLATED  HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE
     OF  AN  INCONVENIENT  FORUM  TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
     BOTH  PARTIES  FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY
     FIRST  CLASS  MAIL  SHALL  BE  DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
     PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
     AFFECT  EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
     BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH
     SUIT  OR  PROCEEDING  SHALL  BE  CONCLUSIVE  AND  MAY  BE ENFORCED IN OTHER
     JURISDICTIONS  BY  SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE
     PARTY  WHICH  DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL
     BE  RESPONSIBLE  FOR  ALL  FEES  AND  EXPENSES,  INCLUDING ATTORNEYS' FEES,
     INCURRED  BY  THE  PREVAILING  PARTY  IN  CONNECTION  WITH  SUCH  DISPUTE.

          4.7  CERTAIN  AMOUNTS.  Whenever pursuant to this Note the Borrower is
               ----------------
     required to pay an amount in excess of the outstanding principal amount (or
     the  portion  thereof  required  to  be paid at that time) plus accrued and
     unpaid  interest  plus  Default Interest on such interest, the Borrower and
     the  Holder agree that the actual damages to the Holder from the receipt of
     cash  payment  on this Note may be difficult to determine and the amount to
     be  so paid by the Borrower represents stipulated damages and not a penalty
     and  is  intended  to  compensate  the  Holder  in  part  for  loss  of the
     opportunity  to  convert  this  Note  and to earn a return from the sale of
     shares  of Common Stock acquired upon conversion of this Note at a price in
     excess  of  the  price  paid  for  such  shares  pursuant to this Note. The
     Borrower and the Holder hereby agree that such amount of stipulated damages
     is not plainly disproportionate to the possible loss to the Holder from the
     receipt of a cash payment without the opportunity to convert this Note into
     shares  of  Common  Stock.

<PAGE>

          4.8  ALLOCATIONS  OF  MAXIMUM  SHARE  AMOUNT  AND RESERVED AMOUNT. The
               ------------------------------------------------------------
     Maximum  Share Amount and Reserved Amount shall be allocated pro rata among
     the  Holders of Notes based on the principal amount of such Notes issued to
     each  Holder. Each increase to the Maximum Share Amount and Reserved Amount
     shall  be  allocated  pro  rata  among  the  Holders  of Notes based on the
     principal  amount  of  such  Notes  held  by each Holder at the time of the
     increase  in  the  Maximum  Share Amount or Reserved Amount. In the event a
     Holder  shall  sell  or otherwise transfer any of such Holder's Notes, each
     transferee  shall  be  allocated  a  pro  rata portion of such transferor's
     Maximum  Share Amount and Reserved Amount. Any portion of the Maximum Share
     Amount  or  Reserved Amount which remains allocated to any person or entity
     which  does  not hold any Notes shall be allocated to the remaining Holders
     of Notes, pro rata based on the principal amount of such Notes then held by
     such  Holders.

          4.9 DAMAGES SHARES. The shares of Common Stock that may be issuable to
              --------------
     the  Holder  pursuant  to  Sections  1.3  and 1.4(g) hereof and pursuant to
     Section  2(c) of the Registration Rights Agreement ("DAMAGES SHARES") shall
     be  treated  as  Common Stock issuable upon conversion of this Note for all
     purposes hereof and shall be subject to all of the limitations and afforded
     all  of  the rights of the other shares of Common Stock issuable hereunder,
     including  without limitation, the right to be included in the Registration
     Statement filed pursuant to the Registration Rights Agreement. For purposes
     of calculating interest payable on the outstanding principal amount hereof,
     except  as  otherwise  provided  herein,  amounts  convertible into Damages
     Shares  ("DAMAGES  AMOUNTS")  shall not bear interest but must be converted
     prior  to  the conversion of any outstanding principal amount hereof, until
     the  outstanding  Damages  Amounts  is  zero.

          4.10  DENOMINATIONS.  At  the request of the Holder, upon surrender of
                -------------
     this  Note,  the  Borrower  shall promptly issue new Notes in the aggregate
     outstanding  principal  amount  hereof,  in  the  form  hereof,  in  such
     denominations  of  at  least  $50,000  as  the  Holder  shall  request.

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

          4.12  NOTICE  OF CORPORATE EVENTS. Except as otherwise provided below,
                ---------------------------
     the  Holder  of  this Note shall have no rights as a Holder of Common Stock
     unless and only to the extent that it converts this Note into Common Stock.
     The  Borrower  shall  provide  the  Holder  with  prior notification of any
     meeting  of  the Borrower's shareholders (and copies of proxy materials and
     other  information sent to shareholders). In the event of any taking by the
     Borrower  of  a  record  of its shareholders for the purpose of determining
     shareholders  who  are entitled to receive payment of any dividend or other
     distribution,  any  right  to  subscribe for, purchase or otherwise acquire
     (including  by  way  of  merger,  consolidation,  reclassification  or
     recapitalization)  any  share  of  any  class  or  any  other securities or
     property,  or to receive any other right, or for the purpose of determining
     shareholders who are entitled to vote in connection with any proposed sale,
     lease  or  conveyance  of  all  or  substantially  all of the assets of the
     Borrower  or  any  proposed  liquidation,  dissolution or winding up of the
     Borrower,  the  Borrower shall mail a notice to the Holder, at least twenty

<PAGE>

     (20)  days  prior to the record date specified therein (or thirty (30) days
     prior  to  the  consummation  of  the  transaction  or  event, whichever is
     earlier),  of  the  date  on  which  any such record is to be taken for the
     purpose  of  such dividend, distribution, right or other event, and a brief
     statement  regarding  the  amount  and  character  of  such  dividend,
     distribution,  right  or  other event to the extent known at such time. The
     Borrower  shall  make  a  public  announcement  of  any  event  requiring
     notification  to the Holder hereunder substantially simultaneously with the
     notification  to  the  Holder  in accordance with the terms of this Section
     4.12.

          4.13  REMEDIES.  The  Borrower acknowledges that a breach by it of its
                --------
     obligations  hereunder  will  cause  irreparable  harm  to  the  Holder, by
     vitiating  the  intent  and purpose of the transaction contemplated hereby.
     Accordingly,  the Borrower acknowledges that the remedy at law for a breach
     of  its  obligations  under this Note will be inadequate and agrees, in the
     event of a breach or threatened breach by the Borrower of the provisions of
     this  Note,  that  the  Holder  shall be entitled, in addition to all other
     available  remedies  at  law or in equity, and in addition to the penalties
     assessable  herein, to an injunction or injunctions restraining, preventing
     or curing any breach of this Note and to enforce specifically the terms and
     provisions  thereof,  without  the  necessity  of showing economic loss and
     without  any  bond  or  other  security  being  required.

                             ARTICLE V. CALL OPTION

          5.1 CALL OPTION. Notwithstanding anything to the contrary contained in
              -----------
     this Article V, so long as no Event of Default or Trading Market Prepayment
     Event  shall have occurred and be continuing, the Borrower has a sufficient
     number of authorized shares of Common Stock reserved for issuance upon full
     conversion  of  the  Notes,  then at any time after the Issue Date, and the
     Common Stock is trading at or below $.20 per share, the Borrower shall have
     the right, exercisable on not less than ten (10) Trading Days prior written
     notice  to  the  Holders  of the Notes (which notice may not be sent to the
     Holders  of  the  Notes until the Borrower is permitted to prepay the Notes
     pursuant  to  this  Section 5.1), to prepay all of the outstanding Notes in
     accordance  with  this  Section 5.1. Any notice of prepayment hereunder (an
     "OPTIONAL  PREPAYMENT")  shall  be delivered to the Holders of the Notes at
     their  registered  addresses  appearing  on  the  books  and records of the
     Borrower  and  shall state (1) that the Borrower is exercising its right to
     prepay  all  of  the  Notes  issued  on  the Issue Date and (2) the date of
     prepayment  (the  "OPTIONAL  PREPAYMENT  NOTICE").  On  the  date fixed for
     prepayment  (the  "OPTIONAL  PREPAYMENT  DATE"),  the  Borrower  shall make
     payment of the Optional Prepayment Amount (as defined below) to or upon the
     order of the Holders as specified by the Holders in writing to the Borrower
     at least one (1) business day prior to the Optional Prepayment Date. If the
     Borrower  exercises  its right to prepay the Notes, the Borrower shall make
     payment  to  the  holders  of  an  amount in cash (the "OPTIONAL PREPAYMENT
     AMOUNT")  equal  to  either  (i) 120% (for prepayments occurring within 180
     (180)  days of the Issue Date), (ii) 130% for prepayments occurring between
     one  hundred and eighty-one (181) and three hundred and sixty (360) days of
     the  Issue  Date,  or (iii) 140% (for prepayments occurring after the three
     hundred  and  sixtieth (360th) day following the Issue Date), multiplied by
     the  sum of (w) the then outstanding principal amount of this Note plus (x)
                                                                        ----
     accrued  and unpaid interest on the unpaid principal amount of this Note to
     the  Optional  Prepayment  Date  plus  (y) Default Interest, if any, on the
                                      ----
     amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the
                                                ----
     Holder  pursuant  to  Sections 1.3 and 1.4(g) hereof or pursuant to Section

<PAGE>

     2(c)  of  the Registration Rights Agreement (the then outstanding principal
     amount  of this Note to the date of payment plus the amounts referred to in
                                                 ----
     clauses  (x),  (y)  and  (z)  shall  collectively be known as the "OPTIONAL
     PREPAYMENT  SUM").  Notwithstanding  notice  of an Optional Prepayment, the
     Holders  shall  at all times prior to the Optional Prepayment Date maintain
     the  right  to  convert  all or any portion of the Notes in accordance with
     Article  I  and  any  portion  of  Notes  so  converted after receipt of an
     Optional  Prepayment  Notice  and prior to the Optional Prepayment Date set
     forth  in  such  notice  and  payment  of the aggregate Optional Prepayment
     Amount  shall  be  deducted  from  the  principal amount of Notes which are
     otherwise  subject  to  prepayment pursuant to such notice. If the Borrower
     delivers  an  Optional  Prepayment  Notice  and  fails  to pay the Optional
     Prepayment  Amount  due to the Holders of the Notes within two (2) business
     days  following  the  Optional  Prepayment Date, the Borrower shall forever
     forfeit  its  right  to  redeem  the  Notes  pursuant  to this Section 5.1.

          5.2  PARTIAL  CALL  OPTION.  Notwithstanding  anything to the contrary
               ---------------------
     contained  in  this Article V, in the event that the Average Daily Price of
     the Common Stock, as reported by the Reporting Service, for each day of the
     month  ending  on any Determination Date is below the Initial Market Price,
     the  Borrower  may,  at  its  option,  prepay  a portion of the outstanding
     principal  amount of the Notes equal to 101% of the principal amount hereof
     divided  by  thirty-six  (36)  plus  one month's interest and will stay all
     conversions  for that month. The term "INITIAL MARKET PRICE" shall mean the
     volume  weighted average price of the Common Stock for the five (5) Trading
     Days  immediately  preceding  the  Closing  which  is  $.20.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

     IN  WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by  its  duly  authorized  officer  this  30th  day  of  May,  2006.

                          PEDIATRIC  PROSTHETICS,  INC.

                          By: /s/ Linda Putback-Bean
                             --------------------------
                             Linda  Putback-Bean
                             Chief  Executive  Officer

<PAGE>

                                    EXHIBIT A

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

     The  undersigned hereby irrevocably elects to convert $__________ principal
amount  of the Note (defined below) into shares of common stock, par value $.001
per share ("COMMON STOCK"), of Pediatric Prosthetics, Inc., an Idaho corporation
(the  "BORROWER")  according  to  the conditions of the convertible Notes of the
Borrower  dated  as of May 30, 2006 (the "NOTES"), as of the date written below.
If  securities  are  to  be  issued  in  the  name  of  a  person other than the
undersigned,  the  undersigned  will pay all transfer taxes payable with respect
thereto  and is delivering herewith such certificates. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. A copy of each
Note  is  attached  hereto  (or evidence of loss, theft or destruction thereof).

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

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

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

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

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

           Date  of  Conversion:
                                ------------------------------------
           Applicable  Conversion  Price:
                                         ---------------------------
           Number  of  Shares  of  Common  Stock  to  be  Issued  Pursuant  to
           Conversion  of  the  Notes:
                                      ------------------------------
           Signature:
                     -----------------------------------------------
           Name:
                ----------------------------------------------------
           Address:
                   -------------------------------------------------

<PAGE>

The  Borrower  shall  issue  and  deliver shares of Common Stock to an overnight
courier  not  later  than  three business days following receipt of the original
Note(s)  to  be converted, and shall make payments pursuant to the Notes for the
number  of  business  days  such  issuance  and  delivery  is  late.

<PAGE>

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